by Dennis Crouch

Impact of Sonos on Patent Prosecution: The recent Sonos v. Google decision threatens to grind to a halt, or at least significantly restrict, a once-common patent prosecution strategy – keeping continuation applications pending for years to obtain new claims that cover marketplace developments. Sonos Inc. v. Google LLC, 20-06754 WHA, 2023 WL 6542320 (N.D. Cal. Oct. 6, 2023).  In Sonos, Judge Alsup found Sonos’s patents unenforceable due to prosecution laches, despite Sonos diligently prosecuting related applications for 13 years; serially filing a continuation with each allowance. The decision casts doubt on the viability of pending continuation applications over a long period, even absent any evident applicant delay — especially in situations where new claims are drafted in response to emerging technologies or market demands. Although claim fluidity remains an integral principle in patent law, Sonos adds considerable viscosity to the practice. The viability of continuation strategies, especially in rapidly evolving technologies, may face a reckoning in the wake of Sonos.  The patentee will certainly appeal, but it is not clear that the Federal Circuit will change the path in any way.

Understanding Claim Fluidity: One feature of the US patent system is claim fluidity.  Most claims are amended during prosecution. Most patents claim priority back to an earlier filing with different claims.  Claims can later be amended during a post-grant proceeding. And, to make things clear the reissue state permits a patentee to alter the claims to cover in situations where the original patent claims “more or less than he had a right to claim in the patent.” 35 U.S.C. 251.

Although reissue applications are always available during the life of a patent, they have major downsides, including the two year post-grant timeline for enlarging patent scope. Id. The alternative approach followed by most is to “keep a family member alive” in areas involving technology important to the patentee.  As one family-member patent is about to issue (or be abandoned), the patentee makes sure to file a continuation application with a new set of patent claims and claiming priority back to the original filing documents.

In developing that new set of claims, the patentee will typically consider the marketplace. What market developments have occurred since the original filing date? Some of these developments may be internal — looking at their own current and future product line.  Some of the developments will also be external — looking to see how others have begun using aspects of the disclosed invention.  We then craft claims that cover these new developments; being wary to ensure that the patentee has “a right to claim” this new coverage.  This right to claim is ordinarily measured by the doctrines of enablement and written description and during prosecution we also look to the prohibition on new-matter under 35 U.S.C. § 132.

Sonos v. Google: Judge Alsup’s new decision in Sonos v. Google suggests that this common approach should come to an end. In particular, the court concluded that Sonos’ asserted claims were unenforceable because they had been added to a continuation application filed 13-years after the original priority document in a way that was prejudicial to the behemoth Google.

The essence of this order is that the patents issued after an unreasonable, inexcusable, and prejudicial delay of over thirteen years by the patent holder, Sonos. Sonos filed the provisional application from which the patents in suit claim priority in 2006.

Sonos Inc. v. Google LLC, 20-06754 WHA, 2023 WL 6542320 (N.D. Cal. Oct. 6, 2023).  Judge Alsup goes on:

Trial brought to light what happened here. This was not a case of an inventor leading the industry to something new. This was a case of the industry leading with something new and, only then, an inventor coming out of the woodwork to say that he had come up with the idea first — wringing fresh claims to read on a competitor’s products from an ancient application. . . . It is wrong that our patent system was used in this way. With its constitutional underpinnings, this system is intended to promote and protect innovation. Here, by contrast, it was used to punish an innovator and to enrich a pretender by delay and sleight of hand. It has taken a full trial to learn this sad fact, but, at long last, a measure of justice is done.

Id.

The basic setup here is not simply a delay.  Judge Alsup concluded that Sonos learned of a particular feature from Google (allowing a speaker to be in two different zones). And, that Sonos later filed a continuation application that included claims to the new feature. Meanwhile Google invested in the technology and launched its own products.

New Matter and Priority Claims: An odd aspect of the decision is that Judge Alsup concluded that the new feature constituted “new matter” that “[u]nder black letter patent law … necessarily sunk any claim of priority.”   Of course, “new matter” does not actually tank priority claims.  Rather, the priority question depends upon a proper claim and sufficient support as guided by the doctrines of enablement and written description. But Judge Alsup appears to have felt misled regarding the priority issue earlier in the case. At that prior stage, Google had failed to present certain evidence showing lack of priority. Judge Alsup seems to feel he was duped into accepting Sonos’ priority claim. As he put it:

Put another way, ‘I got a half a deck of cards’ and ‘I was not told the complete truth.’ . . . To repeat, the judge was not made aware in the briefing (or at the hearing, or otherwise until trial,) that this sentence had been inserted by amendment in August 2019. That, alone, would have been a red flag.

Id.  The opinion shows Judge Alsup’s displeasure at feeling he was not given the full story by Sonos earlier in the case. He seems to take particular issue with Sonos relying on specification language that was added years later by amendment.  He similarly did not fault Google for failing to discover the issue since the prosecution history is quite complex.

Potential Repercussions for Patent Prosecutors and Portfolio Managers: The case is obviously a major one that patent prosecutors and portfolio managers should consider.  The decision suggests strongly that the common patent prosecution strategy of keeping continuation applications pending to obtain new claims may be disfavored – at least when done over a decade or more as well its use to obtain new claims covering market developments.

Diligence in Prosecution Not a Justification for Delay: Unlike prior cases such as Hyatt, the patentee was diligently prosecuting the patents during the entire period. However, the court found that diligence “does not render the delay any less unreasonable and inexcusable. Indeed, it renders the delay all the more unreasonable and inexcusable.” The court explained that Sonos “could have filed parallel applications with new claims covering the invention” and did not have to “run out its string of inert applications before turning to claim the invention that mattered.”

Patent Term and Prosecution Laches: The Hyatt and Lemelson cases adopted by the Federal Circuit focused on pre-1995 patent applications. The old system provided an incentive for delay during prosecution because the patent term of 17 years began running as of the patent issuance date.  The result was the potential of greatly increasing the effective patent term.  That incentive for delay no longer exists because post-1995 patents (like those of Sonos) have a patent term that runs from the non-provisional filing date.  Thus, each  day of delay ate into the Sonos patent term.  There is some support for the idea that prosecution laches no longer applies in this new system because of the congressionally created limited term of 20 years that begins with the start of prosecution in a manner that is closely parallel to a statute of limitations.  In recent cases, the Supreme Court has held that laches is not a proper defense to damages claims when a statute of limitations is in place.  Still, Judge Alsup concluded that the change in patent term has no impact on the doctrine of prosecution laches.

The Future of Claim Fluidity and Patent Strategy: In the case, a jury had sided with the patent holder Sonos and awarded $32 million in back damages.  Judge Alsup’s decision flips that verdict and also kills any plans Sonos had to exert its exclusive rights over the marketplace. While claim fluidity remains an integral feature of patent law, Sonos has added considerable viscosity to the system.

by Dennis Crouch

The US Supreme Court heard oral arguments today in the major internet-law case of Gonzalez v. Google, focusing on Section 230(c) of the Telecommunications Act of 1996.  That provision creates a wide safe harbor for internet service providers; shielding them from liability associated with publishing third-party content.  Section 230 fostered the dominant social media business model where almost all of the major internet media services rely primarily upon user-provided content.  Think YouTube, Instagram, Facebook, Twitter, TikTok, LinkedIn, etc.  Likewise, search engines like Google and Bing are essentially providing a concierge recommendation service for user-developed content and data.  The new AI models also work by using a large corpus of user-created data.  But, AI may be different since it is more  content-generative than most social-media.

The safe-harbor statute particularly states that the service provider will not be treated as the “publisher” of information content provided by someone else (“another information content provider.”)  47 U.S.C. 203(c).  At common law, a publisher could be held liable for publishing and distributing defamatory material, and the safe-harbor eliminates that potential liability.  Thus, if someone posts a defamatory YouTube video, YouTube (Google) won’t be held liable for publishing the video. (The person who posted the video could be held liable, if you can find him).

Liability for Recommending: In addition to publishing videos, all of the social media companies use somewhat sophisticated algorithms to recommend content to users. For YouTube, the basic idea is to keep users engaged for longer and thus increase advertising revenue.  The case before the Supreme Court asks whether the Section 230(c) safe harbor protects social media companies from liability when their recommendations cause harm.  If you have ever wasted an hour death-scrolling on TikTok, you can recognize that the the service provided was a steady stream of curated content designed to keep you watching. Each individual vid is something, but really you were latched-into the stream.  The question then is whether the safe-harbor statute excuses that entire interaction, or is it limited to each individual posting.

For me, in some ways it is akin to the Supreme Court’s struggle over 4th Amendment privacy interests related to cell-phone location information. While a single point of information might not be constitutionally protected; 127 days of information is an entirely different matter.  See Carpenter v. United States, 138 S.Ct. 2206 (2018).  Here, the safe harbor applies to a single video or posting by a user, but the sites compile and curate those into a steady stream that might also be seen as an entirely different matter.

Gonzalez’ child, Nohemi Gonzalez, was killed in the 2015 Paris terrorist attacks coordinated by ISIS.  In the lawsuit, Gonzales allege that YouTube is partially responsible because its algorithms provided tailor made recommendations of pro-ISIS videos to susceptible individuals who then participated in and supported the terrorist attacks that killed their child.  You may be thinking that Gonzales may have difficulty proving causation.  I think that is right, but the case was cut-short on Section 230 grounds before really reaching that issue.

The Ninth Circuit ruled in favor of Google, and the Supreme Court then agreed to hear the case on the following question:

Does section 230(c)(1) immunize interactive computer services when they make targeted recommendations of information provided by another information content provider, or only limit the liability of interactive computer services when they engage in traditional editorial functions (such as deciding whether to display or withdraw) with regard to such information?

80+ briefs were filed with the Supreme Court arguing various positions.  This is a very large number for a Supreme Court case.  Many of the briefs argue that shrinking the scope of Section 230 would radically diminish the pluralism and generativity that we see online.  I might be OK with that if it gets TikTok out of my house.

As noted above, the plaintiffs case seems to lack some causal links, and in my view there is a very good chance that the court will decide the case on that grounds (via the sister case involving Twitter).  Justice Alito’s early question for petitioner highlights the problem.

Justice Alito: I’m afraid I’m completely confused by whatever argument you’re making at the present time.

I also appreciated Justice Sotomayor’s humility on behalf of the court.

Justice Sotomayor: We’re a court. We really don’t know about these things. These are not the nine greatest experts on the internet.

Congress passed a separate safe-harbor in the copyright context as part of the DMCA.  A key difference there was that copyright holders were able to lobby for more limits on the safe harbor. For instance, a social media company needs to take down infringing content once it is on notice. DCMA notice-and-takedown-provision.  Section 230 does not include any takedown requirements. Thus, even after YouTube is notified of defamatory or otherwise harmful content, it can keep the content up without risk of liability until specifically ordered to take it down by a court.  Oral arguments had some discussion about whether the algorithms were “neutral,” but the plaintiff’s counsel provided a compelling closing statement: “You can’t call it neutral once the defendant knows its algorithm is doing it.”

[Note – I apologize, I started writing this and accidentally hit publish too early.  A garbled post was up for about an hour while I was getting my haircut and eating breakfast.]

by Dennis Crouch

The Federal Circuit’s new eligibility decision in CareDx, Inc. v. Natera, Inc., — 4th — (Fed. Cir. 2022) should cause patent attorneys to pause once again as they draft patent applications and consider any characterizations of the technology as “conventional”; “well known”; or even “known in the art.” At times some characterization will be useful for satisfying disclosure requirements.  Still, the statements will also potentially haunt the patentee both on the obviousness side and, as here, with eligibility.

Stanford owns several biotech patents claiming methods of diagnosing organ transplant rejection. U.S. Patents 8,703,652, 9,845,497, and 10,329,607.  Stanford and its exclusive licensee CareDx sued Naterta and Eurofins for patent infringement.  But, Chief Judge Connolly (D.Del) dismissed the case–finding the claims ineligible under Section 101.  On appeal, the Federal Circuit has affirmed.  This is another major case that could set-up Supreme Court review.

The technology in this case is somewhat similar to the prenatal testing methods in the Illumina and Sequenom cases.  The key difference is that the prenatal technology looked for fetal DNA floating in the mother’s bloodstream while this graft technology looked for DNA of the transplanted-organ floating in the stream.  Transplant rejection is a major immune response and involves eating-away of the transplanted cells. That process releases bits of DNA into the bloodstream.  The Stanford researchers found that the amount of Donor DNA floating in the blood stream of the recipient is indicative of whether the transplant is being rejected.

The claims at issue all share a common four step approach for detecting cell free DNA (cfDNA) in the recipient:

1. “obtaining” or “providing” a “sample” from the recipient that contains cfDNA;
2. “genotyping” the transplant donor and/or recipient to develop “polymorphism” or “SNP” “profiles”;
3. “sequencing” the cfDNA from the sample using “multiplex” or “high-throughput” sequencing; or performing “digital PCR” with certain error rates; and
4. “determining” or “quantifying” the amount of donor cfDNA.

Slip Opinion.  On summary judgment, the district court concluded that these claims were all directed to a patent ineligible natural phenomena. In particular, the claims are directed to “the presence of donor cfDNA in a transplant recipient and the correlation between donor cfDNA and transplant rejection.”  Since the particular techniques used to obtain and analyze the cfDNA were all conventional, the court concluded that nothing in the claims transformed their nature into a patent-eligible invention.

On appeal, the Federal Circuit affirmed, holding that “[t]his is not a case involving a method of preparation or a new measurement technique.”

The claimed methods are indistinguishable from other diagnostic method claims the Supreme Court found ineligible in Mayo and that we found ineligible on multiple occasions. . . . Here, as in Ariosa, the claims boil down to collecting a bodily sample, analyzing the cfDNA using conventional techniques, including PCR, identifying naturally occurring DNA from the donor organ, and then using the natural correlation between heightened cfDNA levels and transplant health to identify a potential rejection, none of which was inventive. The claims here are equally as ineligible as those in Ariosa.

Slip Op. If the claims in Mayo & in Ariosa are invalid, then the Federal Circuit is likely correct that–so are the claims in this case.

= = =

Alice Step Two: One important caveat on conventionality of the technology.  CareDx argued that the particular technological approach was new and different from prior efforts.  It had been theorized for years that cfDNA of the donor tissue could be used as a measure of tissue failure, prior researchers had repeatedly tried and failed.

Despite many attempts over the following decade, even accomplished researchers could not invent a satisfactory way to measure donor cf-DNA in the recipient’s bloodstream sufficient to monitor organ rejection. At best, preexisting techniques worked only in a small subset of cases. This decade of failure culminated in a discouraging announcement in 2008 by a prominent research group that using cf-DNA to monitor organ rejection was “difficult” and “impractical.” . . .

Not only had there been many reported failures and outright disbelief that a viable cf-DNA organ rejection test could be developed, but attempting to measure cf-DNA, rather than cellular DNA was foreboding. As even defendants’ expert concedes, cf-DNA was believed at the time to be “more challenging” than other analytes to measure because cf-DNA is smaller, not random, typically present in low concentrations, and because this “detection analysis is difficult with techniques prior to 2009.”

CareDx Opening Appellate Brief.  The particular approach that worked for the Stanford Researches was their application of newly created digital PCR and next-generation sequencing (“NGS”) techniques.  And, those advances are part of the claims.

The problem though was a number of boilerplate statements found within the patent document that the courts saw as admissions that the technology was wholly conventional:

The practice of the present invention employs, unless otherwise indicated, conventional techniques of immunology, biochemistry, chemistry, molecular biology, microbiology, cell biology, genomics and recombinant DNA, which are within the skill of the art.

‘607 Patent, Col 5, line 55.  The patent also discussed the availability of commercial high throughput sequencing products and stated that high-throughput genotyping is “known in the art.”  According to the Federal Circuit, these statements from the specification characterize “the claimed techniques in terms that confirm their conventionality.”  As such, the court found no reason to disturb the summary judgment finding.

Judges LOURIE, BRYSON, and HUGHES. Authored by LOURIE, Circuit Judge.  The case was argued by world class attorneys with Ed Reines (Weil Gotshal) for Stanford/CareDx; Willy Jay (Goodwin Procter) for Eurofins; and Gabriel Bell (Latham & Watkins) for Natera.

By Paul R. Gugliuzza, Temple University Beasley School of Law; Jonas Anderson, American University Washington College of Law; and Jason Rantanen, University of Iowa College of Law. This is the second in a new series on venue transfer requests and mandamus at the Federal Circuit.

Litigants shouldn’t get to choose the judge who decides their case. To us, that seems like an uncontroversial proposition. The ability to “judge shop” is the primary reason patentees once flocked to the Marshall Division of the Eastern District of Texas to file their infringement suits and are now flocking to the Waco Division of the Western District of Texas, where they’re guaranteed to have their case assigned to Judge Alan Albright. Judge shopping, we’ve argued elsewhere, raises concerns about court bias and capture and can make litigation unnecessarily costly and inefficient.

Numerous scholars, members of Congress, and even the Chief Justice have raised concerns about judge shopping, with a particular eye toward patent cases. Likewise, the Federal Circuit has indicated skepticism about the rapid accumulation of patent suits in Waco. In the past two years, the court has used the extraordinary writ of mandamus to order over twenty patent cases filed in Waco to be transferred elsewhere under 28 U.S.C. § 1404(a), which permits transfer “[f]or the convenience of parties and witnesses, in the interest of justice.” (Over the same time period, the Federal Circuit granted only two § 1404(a) mandamus petitions arising from any other court, both from the Eastern District of Texas.)

Though we think the harms caused by a party being able to choose its own judge are clear and indisputable, there is a counternarrative. It goes something like this: the Federal Circuit is polluted with “anti-patent sentiment.” It is captured by the big tech companies that are the most frequent targets of infringement suits—Apple, Google, and the like. And the Federal Circuit is thwarting patentees (and innovation) by sending infringement cases away from patentees’ chosen courts in Texas to places that are friendlier to defendants, such as the Northern District of California.

Fortunately, data we have collected as part of our comprehensive empirical study of mandamus practice at the Federal Circuit can help us assess whether, when it comes to questions about patent venue, the Federal Circuit is really in the pocket of big tech.

First off, it is true that mandamus petitions seeking transfer from Texas to the Northern District of California are more likely to be granted than petitions seeking transfer to other districts. As the table below shows, from 2008 through 2021, the Federal Circuit granted 32.0% of mandamus petitions seeking to overturn a district court decision denying transfer from the Eastern District of Texas to the Northern District of California as compared to 25.6% of petitions seeking transfer from the Eastern District of Texas to any district besides the Northern District of California. Likewise, the Federal Circuit granted 63.2% of mandamus petitions seeking to overturn a district court decision denying transfer from the Western District of Texas to the Northern District of California as compared to 46.2% of petitions seeking transfer from the Western District of Texas to any district besides the Northern District of California.Overall, mandamus petitions seeking to overturn a district court decision denying transfer from either Texas district to the Northern District of California were granted 45.5% of the time, while petitions seeking transfer from either Texas district to any district besides the Northern District of California were granted only 30.8% of the time.

To be clear, this disparity in grant rates among transferee courts doesn’t establish that the Federal Circuit unduly favors Silicon Valley-based tech companies. Rather, it may be that cases filed against those companies in Texas present particularly strong cases for transfer given that the defendants’ offices, employees, documents, and R&D facilities tend to be located in California. Regardless, the data does make clear that a mandamus petition seeking transfer from Texas to the Northern District of California is nearly 40% more likely to be granted than a petition seeking transfer from Texas to any other district.

To better gauge big tech’s success at the Federal Circuit, we can also look at the grant rates for individual mandamus petitioners. We found these results, frankly, a little surprising. First of all, there are not as many repeat petitioners as one might think. In total, from 2008 through 2021, roughly 185 individual parties joined one or more petitions for a writ of mandamus seeking to overturn a decision by the Eastern or Western District of Texas denying transfer under § 1404(a). (For the purpose of this analysis, we combined obviously related corporate entities, such as Samsung Electronics and Samsung Electronics America. Also, because many petitions are joined by multiple parties, the total number of petitioners is much larger than the number of Federal Circuit decisions.)

The most frequent petitioner in our dataset is Apple, which filed 16 petitions over the 14 years covered by our study. The Federal Circuit granted 4 of those petitions. The most successful petitioner of note is Google, which prevailed on 4 of its 6 petitions. But those numbers are small, making it hard to draw definitive conclusions.

The table below shows the results of Federal Circuit mandamus decisions in which the Eastern or Western District of Texas denied transfer under § 1404(a), limited to petitioners who appeared in three or more decisions from 2008 through 2021.As indicated on the first table above, the overall grant rate for Federal Circuit mandamus petitions challenging denials of § 1404(a) transfer motions by the Eastern or Western District of Texas is 37.5%, so these frequent petitioners do about average. (Though of course the mandamus grant rates in cases out of the Eastern and Western Districts of Texas are much higher than in cases filed elsewhere.)

If we added the Federal Circuit’s mandamus decisions from 2022 (after we closed the dataset for our study at the end of 2021), the numbers would change somewhat. Apple is 2-0 this year, which ups its grant rate to 33.3%. Google also won its only petition in 2022, bumping its grant rate up even higher, to 71.4%. Samsung likewise is 1-0 this year, so its rate is now 50%. Still, we would hesitate to say that any of this establishes that the Federal Circuit is biased against patentees and in thrall to big tech.

To be sure, the world’s richest corporations, like Apple and Google, enjoy massive advantages any time they litigate; the notion that we have an impartial court system indifferent to litigants’ economic power is fanciful. But it’s also specious to claim that the Federal Circuit’s mandamus practice indicates court capture by big tech. More likely, the Federal Circuit is using the imperfect tools at its disposal to fix a real problem: the questionable incentives for both judges and litigants in a system where the party filing a case gets to choose its judge.

Guest Post by Prof. Paul R. Gugliuzza (Temple U.)

A rare thing happened at the Federal Circuit today. The court heard oral argument on a petition for a writ of mandamus. The petition was filed by the tech behemoth, Apple, in a patent infringement case filed against it in the Western District of Texas. In the petition, Apple seeks an order sending the case to the Northern District of California under 28 U.S.C. § 1404, which permits transfer “[f]or the convenience of parties and witnesses, in the interest of justice.”

Though transfer petitions are relatively common in patent cases, the Federal Circuit almost always decides them on the briefs alone. That the court scheduled oral argument—in a case arising out of the Western District of Texas, no less—has been interpreted as reflecting concern by the Federal Circuit about the judge shopping occurring in the Western District.

As Jonas Anderson and I showed in a recent Patently-O post and discuss in more detail in a draft article, the Western District’s case assignment rules permit plaintiffs to predict, with absolute certainty, which judge will hear their case. And plaintiffs are overwhelmingly choosing Judge Alan Albright, whose procedural rules and substantive decisions they find quite favorable.

That said, the Federal Circuit’s decision to hold oral argument on Apple’s petition could also reflect the fact that, in the midst of the COVID pandemic, it’s a pretty easy thing to do. For the past six months—and for the foreseeable future—the Federal Circuit has been conducting oral argument entirely by telephone. Indeed, that’s how I was able to listen to today’s arguments, live.

Before getting to a summary of that argument, some background about the case. The plaintiff is, like many plaintiffs in the Western District, a prolific non-practicing entity, Uniloc 2017 LLC. In September 2019, Uniloc sued Apple for infringing a patent on a system for controlling software updates.

Like more than 800 other patent cases over the past two years, Uniloc filed its case in the Waco Division of the Western District of Texas and—like 100% of cases filed in the Waco Division—it was assigned to Judge Albright. Apple sought transfer to the Northern District of California, noting that, out of 24 prior cases Uniloc had filed against it in the Eastern and Western Districts of Texas, 21 had been transferred.

But Judge Albright denied Apple’s motion in an order from the bench in May 2020. As covered here on PatentlyO, it took Judge Albright more than a month to issue an order explaining why he was doing so. When that order eventually issued, it noted, among other things, that Apple has stronger connections to the Western District of Texas than to the Eastern District and that the cases previously transferred out of the Western District (by Judge Lee Yeakel) were distinguishable because Apple’s activities in the Western District had grown significantly over the past couple years.

The Federal Circuit argument, it’s worth noting, wasn’t part of the court’s normal calendar of arguments, which typically take place during the first week of the month. Rather, it was the only case heard by a panel consisting of Chief Judge Prost, Judge Moore, and Judge Hughes.

Mel Bostwick, from Orrick, Herrington & Sutcliffe’s Washington, D.C., office, presented argument for Apple. In her view, the district court made two critical errors in denying transfer: First, it relied too heavily on the progress it had already made in the case as well as its already-scheduled trial date (which, under Judge Albright’s extremely speedy default schedule, is less than 18 months after the initial case management conference).

Second, according to Apple, the district court erred in applying the “cost to willing witnesses” factor in the transfer analysis. Though both Apple and Uniloc identified witnesses in California, Judge Albright, according to Apple, inappropriately discounted the relevance of those witnesses because they were willing to travel. But, Apple contended, the relevant question is the cost of their travel, not their willingness to do so.

Apple faced skeptical questioning from Judge Moore, who was, in fact, the only judge to ask a question of Apple until rebuttal. Judge Moore focused initially on the standard of review. To receive the extraordinary writ of mandamus, a party must show a “clear abuse of discretion” by the district judge. The fact that this case has some factual connection to the Western District—namely, Apple has a campus in Austin and a third party makes accused products in the district—seemed to raise doubts in Judge Moore’s mind about whether any error by the district court met that high bar.

Christian Hurt of the Davis Firm in Longview, Texas argued on behalf of Uniloc. He began by emphasizing the concerns about parties and witnesses located in the Western District that were initially raised by Judge Moore. Apple didn’t dispute, Uniloc noted, that it has an 8,000 employee campus in Austin, technical witnesses work there, and a third-party contractor makes accused products in the district.

Almost all the questions for Uniloc came from Chief Judge Prost. She asked about matters including: the exact location of the witnesses, whether it was clearly an abuse of discretion for the district court to rely on its progress and projected schedule in denying transfer, and whether Apple might have an alternative means of seeking relief, such as through a later mandamus petition or by seeking a stay pending related litigation elsewhere.

Toward the end of Uniloc’s argument, Judge Moore chimed in to ask whether, if the court found the district court had made errors in its transfer analysis, it would be appropriate for the Federal Circuit to vacate the decision and remand the case for further proceedings, rather than ordering transfer—a step the very same panel of Federal Circuit judges basically took in a  recent Western District case filed against the file storage company, Dropbox.

During Apple’s rebuttal argument, Judge Moore asked why transfer to California was warranted given the local interest in the case. Apple, Judge Moore observed, is one of the largest employers in the Western District—a far cry from the Eastern District, where Apple doesn’t even have stores anymore, for fear of aiding patent plaintiffs in establishing venue there. Judge Moore was unconvinced (to put it mildly) by Apple’s assertion that the local interest isn’t the interest of Western District of Texas and its residents, but the interest of “the people who created the accused technology,” in Cupertino.

*          *          *

So, what’s my take? The atmospherics are clearly troubling. There’s no doubt that Judge Albright is successfully courting patentees to file in his courtroom both by explicitly advertising to them and by adopting procedural rules and making substantive decisions that clearly favor them. But those larger dynamics, though they were discussed in Apple’s brief, weren’t even mentioned at oral argument. (Bostwick, Apple’s attorney, seemed to want to go there during rebuttal, but ran out of time.)

In this case, the Federal Circuit might struggle to find a legal justification for ordering transfer, particularly given high standard for mandamus. That said, the Federal Circuit rarely hesitated to transfer cases out of the Eastern District during its heyday as the nation’s patent litigation capital. In several cases, the Federal Circuit used the extraordinary writ of mandamus to engage in what seemed like pure error correction. It’s not out the question that the Federal Circuit would do something similar with the Western District, whether in this case or one of the other nearly 600 filed before Judge Albright this year alone.

Moreover, though the court competition and judge shopping that’s going on in the Western District is troubling, interlocutory appeals like the one Apple is pursuing can be costly and disruptive. That will be even more so if the Federal Circuit makes a habit of simply vacating orders denying transfer and remanding for further consideration, as Judge Moore suggested. The end result would be another round of briefing and argument—and possibly even discovery—on an issue entirely tangential to the merits of the case.

Whatever the outcome, this case between Apple and Uniloc shows how difficult it will be for the Federal Circuit, which can only hear the disputes that come before it, to change the systemic incentives that encourage judges to compete for patent cases and for plaintiffs to shop for those judges. As we suggest in our article, legislation or administrative rules mandating random case assignment and more particularly defining plaintiffs’ venue choices may be the only solution.

Paul Gugliuzza is Professor of Law at Temple University Beasley School of Law

By Sarah Burstein, Professor of Law at the University of Oklahoma College of Law

Despite the protestations of Columbia and its amici in support of the petition for rehearing, the Federal Circuit’s decision in Columbia v. Seirus is not the end of design patent law as we know it. (For prior Patently-O coverage, of this case and the pending petition, see here and here.)

It would be better for everyone if the court had been clearer on one key point but—even if that part is not corrected—the sky still will not fall.

The paragraph that has spurred these declarations of designpocalypse reads as follows:

The district court relied on one precedent from this court—L.A. Gear—for the proposition that logos should be wholly disregarded in the design-infringement analysis. In that case, the parties did not dispute that the patented and accused designs were substantially similar. L.A. Gear, 988 F.2d at 1125. In fact, “copying [was] admitted.” Id. In evaluating infringement there, we explained that design infringement is not avoided “by labelling.” Id. at 1126. A would-be infringer should not escape liability for design patent infringement if a design is copied but labeled with its name. But L.A. Gear does not prohibit the fact finder from considering an ornamental logo, its placement, and its appearance as one among other potential differences between a patented design and an accused one. Indeed, the fact finder is tasked with determining whether an ordinary observer would find the “effect of the whole design substantially the same.” Gorham, 81 U.S. at 530. It would be inconsistent with this mandate to ignore elements of the accused design entirely, simply because those elements included the name of the defendant.

Columbia v. Seirus, 942 F.3d 1119 at 1131. Columbia and its amici argue that the court’s decision in Columbia is inconsistent with a “holding” in L.A. Gear and will wreak destruction and devastation on design patent law. Columbia and its amici are wrong on both counts.

First, the statement in L.A. Gear that pertained to “labelling” was not a holding. As the Columbia panel noted, the issue of whether the designs were sufficiently similar was not before the court in L.A. Gear. In the briefs, none of the parties involved in L.A. Gear argued that “labelling” was relevant to design patent infringement. Nothing in the decision in L.A. Gear suggests that the issue came up in oral argument. The issue of whether “labelling” was relevant to the issue of design patent infringement was simply not before the Federal Circuit in L.A. Gear. Thus, nothing the Federal Circuit said about “labelling” vis-à-vis design patents constituted a decision of any kind—let alone a holding.

It’s not clear why the L.A. Gear panel chose to include that bit of “labelling” dicta. But it is dicta.

And even if it weren’t, not all uses of logos, brand names, etc. constitute “labelling.” As the panel appreciated, these visual elements can be used decoratively. (For many good examples, consider Louis Vuitton’s textile designs.) If we were to have a rule against “labelling,” some thoughtful development and line-drawing may be required.

Second, Columbia argues (and some of its amici echo) that the decision in Columbia v. Seirus will require courts to issue judgments of noninfringement whenever a defendant “simply emblazon[s] [its] brand name or logo on another’s design.” The panel decision says no such thing. It merely says that courts don’t have to ignore any and all uses of logos.

The three traditional types of protectable designs are: (1) configuration (a/k/a shape), separate and apart from any surface ornamentation; (2) surface ornamentation, separate and apart from the underlying configuration; and (3) a combination of both. The USPTO currently interprets the second category broadly, including any and all “surface treatment.”

In Columbia v. Seirus, the claimed design was for surface ornamentation only. Despite the broad language used by the panel, the panel had no occasion to—and could issue no holding as to—all possible types of designs. This decision simply does not apply to designs that claim configuration only. If patent owners wish to avoid having brand names, logos, etc. considered as part of the infringement analysis, they are free to keep claiming configuration-only designs (such as those shown in Bison’s amicus brief). Read properly, the panel’s decision in Columbia v. Seirus, merely says that, when surface ornamentation is claimed as part of the design, a court should consider the entire surface design—even if the surface design includes logos or brand names.

That ruling is consistent, by the way, with the USPTO’s current treatment of logos, brand names, etc. in the prosecution context. Logos, brand names, etc. can—and are—claimed as (or as part of) “surface treatments.” Here are just a few examples:

It would be odd to say that these kinds of elements count as “designs” (or parts thereof) for the purposes of patentability but must be ignored entirely when it comes to infringement. Such a rule would not only be odd, it would also significantly undermine the notice function of design patents.

Of course, we could have a system where we said that logos, brand names, etc. aren’t protectable as “designs” and should be irrelevant to both patentability and scope. But that’s not the system we have today. Perhaps it’s a conversation we should have.

The panel’s decision in Columbia v. Seirus could put some pressure on patentees to be clearer about whether they’re claiming a configuration-only or combination design. After all, the latter involves surface designs while the former does not. But that wouldn’t be a bad thing. Greater clarity in this area would promote competition and greater public notice and could be achieved with minimal cost or complication for design patent applicants.

One final note: It’s not clear why the panel in Columbia v. Seirus put such emphasis on “copying.” Copying is neither necessary nor sufficient to support a finding of design patent infringement. (For more on the contemporary test for design patent infringement, see this short piece.) The references to copying are unhelpful at best; pernicious dicta at worst.

To summarize, if the panel in Columbia v. Seirus wanted to issue a revised decision that made it clear that they’re talking about surface designs—not configuration-only designs—that would probably be helpful. And the part about “copying” could go. But the sky is not falling.

= = = = =

The following briefs have been filed in the pending en banc petition for the case:

• 5 – Columbia Petition for Panel Rehearing
• 6 – IDSA motion and amicus brief
• 6 – Practitioners motion and amicus brief
• 6 – Bison motion and amicus brief
• 7 – Seirus Response

by Dennis Crouch

Techtronic Indus. v. International Trade Commission and The Chamberlain Group (Fed. Cir. 2019) (TechtronicvITC)

Chamberlain’s patent at issue here claims a garage door opener motor drive unit with two microcontrollers — one of which is sited in a “wall console” and the other presumably in the head unit, although this second portion is unclaimed. U.S. patent No. 7,161,319.

1. An improved garage door opener comprising a motor drive unit for opening and closing a garage door,

said motor drive unit having a microcontroller and a wall console,

said wall console having a microcontroller,

said microcontroller of said motor drive unit being connected to the microcontroller of the wall console by means of a digital data bus.

The accused infringer is Hong-Kong based TTI. TTI owns Ryobi, and Ryobi makes the accused garage door opening system.  hamberlain filed its case in the USITC which issued exclusion orders against the appellants.  On appeal, the Federal Circuit has reversed and vacated on claim construction.

Infrared Detector: It is clear from the patent document that the inventor’s saw the main point of their invention as a passive infrared detector housed in a wall console.

SUMMARY OF THE INVENTION: A passive infrared detector for a garage door operator … contained in a wall control unit.

‘319 patent, invention summary. This focus on the passive infrared detector is found throughout the patent document.  Consider the inventor’s statement of the problem to be solved by the invention:

What is needed then is a passive infrared detector for controlling illumination from a garage door operator which could be quickly and easily retrofitted to existing garage door operators with a minimum of trouble and without voiding the warranty.

‘319 patent, background.  The easy retrofit solution was to create a wall-unit with an infrared detector. Further, the only described embodiment places the passive infrared detector in the wall console.

Now, look back up at claim 1 and notice that a passive infrared detector is not expressly claimed. That limitation was spelled out in claims of the parent patent, but Chamberlain’s patent attorney at Fitch Even removed it from this continuation patent.

USITC decisions are made by the six commissioners (currently only five), but the Commission tasks an Administrative Law Judge (ALJ) to conduct the trial.  Here, the ALJ narrowly construed the “wall console” term — holding that “Chamberlain
… disavowed wall consoles lacking a passive infrared detector.”  This construction is important because Ryobi’s wall console does not have a passive infrared detector — thus, the narrow construction meant no infringement.

The Commissioners then took-up the ALJ’s decision and disagreed — ultimately giving “wall console” its ordinary broad meaning that resulted in an easy infringement finding (and resulting exclusion order preventing importation of Ryobi products).

On appeal, the Federal Circuit reviewed the claim construction de novo and found that the ALJ’s original decision was correct. “Chamberlain disavowed coverage of wall consoles without a passive infrared detector.”

[W]here the inventor … has manifested that the invention does or does not include a particular aspect, that intention is regarded as dispositive.

Here, such statements regarding the invention fall into the disavowal category – and must be “clear” although not necessarily “explicit.”

We conclude that the ’319 patent disavows coverage of wall consoles lacking a passive infrared detector because the specification, in each of its sections, discloses as the invention a garage door opener improved by moving the passive infrared detector from the head unit to the wall console. It is axiomatic that, where the specification “describes ‘the present invention’ as having [a] feature,” that representation may disavow contrary embodiments. See Poly-America (“[A]n inventor may disavow claims lacking a particular feature when the specification describes ‘the present invention’ as having that feature.” The ’319 patent, by consistently representing the invention as the placement of the detector in the wall console, has thus effected a disavowal of alternative locations.

According to the background section, the prior art taught the use of passive infrared detectors in the head unit of the garage door opener to control the garage’s lighting, but that locating the detector in the head unit was expensive, complicated, and unreliable. The ’319 patent therefore sets out to solve the need for “a passive infrared detector for controlling illumination from a garage door operator which could be quickly and easily retrofitted to existing garage door operators with a minimum of trouble and without voiding the warranty.”

The remaining sections of the patent—even the abstract—disclose a straightforward solution: moving the detector to the wall console.

Chamberlain argued that the patent recites a separate relating to programming of the microcontrollers. However, the Court rejected that argument:

The suggestion that the patent recites another invention—related to programming the microcontroller—in no way undermines the conclusion that the infrared detector must be on the wall unit. . . . But the entire purpose of [the microcontroller programming] part of the description is to enable placement of the detector in the wall console, and it never discusses programming the microcontroller or applying digital signaling techniques for any purpose other than transmitting lighting commands from the wall console.

The court appears to note that one problem with this additional invention is that the specification was not very specific.  The claimed “digital data bus”, for instance, is not expressly discussed in the specification other than an oblique reference to “lines carrying the normal wall control switch signals.”

Chamberlain also argues that disavowal is not clear because nothing in the specification suggests that it would be impossible or infeasible to put a passive infrared detector elsewhere.  On appeal, the Federal Circuit found some merit to that argument, but concluded that the specification here “plainly represents the scope of the invention to the exclusion of some embodiments.”

Here, the entire specification focuses on enabling placement of the passive infrared detector in the wall console, which is both responsive to the prior art deficiency the ’319 patent identifies and repeatedly set forth as the objective of the invention. Thus, the ’319 patent disavows locating the detector elsewhere, even without an express concession to that effect.

Slip Op.  Although not cited here, this case reminds me substantially of Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998) and its maligned “omitted elements” test.

By Jason Rantanen and Nikola Datzov. Professor Datzov is an Assistant Professor  at the University of North Dakota School of Law.

The Mayo/Alice framework used to determine patent eligibility has been a lightning rod for criticism since the Supreme Court’s decisions a decade ago. Some have argued that the two-step framework is inconsistent with earlier patent eligibility precedent, while others have focused their objections on its purported negative effects on innovation. But arguably the most popular narrative is the asserted fatal flaw that the framework lacks administrability and cannot be applied predictably.

Too many critics to count—including academics, practitioners, legislators, and judges—have lambasted the patent eligibility framework as an unpredictable morass of confusion. Even some judges on the Federal Circuit have labeled the eligibility framework as an “incoherent doctrine”[1] that might tempt district courts into “an effective coin toss,”[2] while others have openly confessed that “the nation’s lone patent court … [is] at a loss as to how to uniformly apply § 101.”[3] The latest legislative attempt to reframe patent eligibility is similarly premised on “extensive confusion and lack of consistency [in applying the 101 exceptions] throughout the judicial branch of the Federal Government and Federal agencies.”[4] These concerns for unpredictability are undoubtedly echoed by countless practitioners who have been in the trenches of litigating this polarizing issue. Given the particular emphasis on bringing predictability to patent law in creating the Federal Circuit, these criticisms raise a grave concern regarding one of the most important areas in patent law.

Yet, empirical analysis suggests that those claims of unpredictability may stand on shaky grounds. In an attempt to better understand whether judges have been able to predictably apply the doctrine, we analyzed the Federal Circuit’s entire body of 368 cases on § 101 from 2012-2022 at a more granular level than any prior study. To evaluate the level of predictability within § 101 jurisprudence, we used a multi-dimensional approach that considered: (1) whether lower tribunals are reaching the legally correct outcome (i.e., reversal rates); (2) whether lower tribunals are correctly applying existing law in each case (i.e., error rates); and (3) whether appellate judges demonstrate disagreement in applying the law (i.e., dissent rates).

What we found shocked us. It turns out that patent eligible subject matter jurisprudence looks remarkably like other patent law issues at the Federal Circuit and lacks the kinds of empirical hallmarks that we would expect given the rhetoric for unpredictability. In fact, under one of the most well-established metrics for measuring the predictability in the law, § 101 proved to be more predictable than other areas of patent law over the past decade.

Importantly, our goal was not to examine or argue where the line should be drawn for determining what is eligible for a patent. Instead, we just sought to evaluate whether judges can tell where the line has been drawn by the Supreme Court in Mayo. In other words, whether the Mayo/Alice framework has proven workable and predictable through ten years of litigation. As to that question, our analysis suggests that the popular narrative that § 101 and the Mayo/Alice framework cannot be predictably applied, particularly by judges might be more of a misconception than an accurate narrative.

Below are some of our key findings regarding predictability from the research study.  If you’d like to jump ahead to the draft paper itself, here’s a link: http://ssrn.com/abstract=4380434.

 A Historically High Affirmance Rate

Our examination of the Federal Circuit’s body of case law on § 101 revealed that from the Federal Circuit’s perspective, the district courts and the PTO are getting the right result nearly every time, boasting an overall 87.2% affirmance rate.

Figure 1

Figure 1 shows that the Federal Circuit believes district courts and the PTO are getting the right result in a very high percentage of cases. This is especially notable given that 98.2% of the district court decisions reviewed by the Federal Circuit arose in the context of a Rule 12 motion, summary judgment, or JMOL—procedural postures in which the standard of review on appeal owes no deference to the district court.

Thinking about these numbers in context, the high affirmance rate on patent eligibility is not only a far cry from the Federal Circuit’s one-time 50% affirmance rate on claim construction, it’s higher than the Federal Circuit’s track record on obviousness. In fact, this may be the highest affirmance rate of any significant patent law issue tracked over a significant period of time.

District Courts Very Rarely Err in Their Analysis

To take a deeper look, we also examined the Federal Circuit’s analysis when it did affirm to see whether maybe the lower tribunal got the right result but for the wrong reason.  Although an analysis of affirmance rates has been an established and important marker in measuring the predictability of the law, it provides a somewhat incomplete picture of judges’ ability to apply the law predictably because it focuses only on the outcomes and not the process of making the decision. It’s possible that a judge can err in the legal analysis (or incorrectly apply a legal standard) and still reach the correct overall result—in other words, get the right result for the wrong reasons. Thus, looking beyond mere outcomes to determine how often a judge applies the correct analysis is an important perspective in determining whether a law can be predictably applied.

We found that district court and PTAB judges not only rarely get the outcome wrong, they also make very few errors in applying the law. When district courts reached the right outcome (i.e., complete affirmance on § 101), the Federal Circuit noted a mistake in the district court’s § 101 analysis a mere 4.5% of the time—and 0% of the time for PTAB judges. There were a mere 7 errors in 153 affirming opinions (excluding Rule 36 affirmances). If looking only to precedential opinions (those written for the bar and interested persons other than the parties), there were 4 errors in 67 opinions, resulting in a comparable 6.0% error rate. Overall, taking into account reversals and vacated decisions, more than 80% of the time for the district court—and 95.5% of the time for the PTAB—the judge’s Mayo/Alice analysis was error free.

This type of granular examination of appellate outcomes has been largely absent from earlier empirical studies, so it’s difficult to put the § 101 error rate in historical context. Still, the low rate of errors in district court and PTO § 101 decisions appears to be remarkably low for an area of law identified to be in crises.  Indeed, it appears to be another strong indicator that district courts and the PTO understand how to apply the law, overall.

Federal Circuit Judges Rarely Disagree Regarding § 101 Outcomes

Athena Diagnostics v. Mayo, 927 F.3d 1333 (Fed. Cir. 2019) and American Axle v. Neapco, 966 F.3d 1347 (Fed. Cir. 2020) are § 101 decisions frequently cited as exemplars of what some—including several judges on the Federal Circuit—have argued to be a complete breakdown among the Federal Circuit on how to apply § 101 law. Surprisingly, despite the attention § 101 has received, there have been almost no empirical studies to examine this question on a deeper level.

Yet, in what may be the most surprising finding from our study, in all but a few cases, Federal Circuit judges have shown remarkable agreement (93.5%) in deciding § 101 issues over the past decade. In fact, under this measure of predictability, § 101 proved to be more predictable than the other areas of patent law.  In the 368 § 101 cases decided by the Federal Circuit from 2012 to 2022, there were just 24 dissenting opinions relating to § 101. As shown below, the number of cases in which there was a dissenting opinion on § 101 has remained consistently low and peaked in 2019-2020:

Figure 2

Putting the § 101 dissent rates over the past decade in historical and subject matter context further indicates that § 101 law has not been the subject of more disagreement than other areas of patent law.

Figure 3

The summary tables above show that the dissent rate in Federal Circuit decisions involving § 101 over the period 2012-2022 is identical to the rate among all other Federal Circuit decisions, and was lower than in non-101 patent decisions. And while the rate of dissents in § 101 opinions is somewhat higher than in all other opinions that don’t involve § 101, it’s still lower than the dissent rate in non-101 patent opinions generally and nearly identical for patent opinions arising from the district courts—likely because a substantial number of § 101 appeals are summarily affirmed. With that in mind, it’s remarkable that the dissent rate for § 101 decisions (including Rule 36 affirmances) arising from the district courts is actually lower than the court’s dissent rate in appeals from the district courts that don’t involve § 101.

***

More details on the methodology and analysis—as well as additional findings on the types of appeals, procedural posture of decisions, breakdowns by exception type, and invalidity outcomes—can be found in the working draft paper on SSRN: http://ssrn.com/abstract=4380434. In addition to our core findings on predictability, we also provide updated data on § 101 issues studied by previous scholars. Comments are welcome, and can be communicated by email to Jason Rantanen.

[1] Interval Licensing LLC v. AOL, Inc., 896 F.3d 1335, 1348 (Fed. Cir. 2018) (Plager, J., concurring-in-part and dissenting-in-part).

[2] Realtime Data LLC v. Reduxio Sys., Inc., 831 F. App’x 492, 493 (Fed. Cir. 2020) (emphasis added).

[3] Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 977 F.3d 1379, 1382 (Fed. Cir. 2020) (Moore, J., concurring).

[4] Patent Eligibility Restoration Act of 2023, S. 2140, 118th Cong. § 2(3) (2023) https://www.congress.gov/118/bills/s2140/BILLS-118s2140is.pdf.

by Dennis Crouch

Today’s post introduces the new decision in Sisvel International S. A. v. Sierra Wireless, Inc., No. 22-1493 (Fed. Cir. Oct. 6, 2023).  Here, I focus on two distinct issues. The first part has to do with motivation-to-combine, with the decision offering some good language for patent prosecutors attempting to overcome weakly worded office actions.  The second part focuses on means-plus-function language and concludes with my rant about the court’s unduly complicated layers of tests.  The case also upholds a single-reference obviousness holding, but I didn’t write about that portion of the decision.

Justifying a Motivation to Combine

In the IPR, the PTAB cancelled some claims of Sisvel’s U.S. Patent No. 6,529,561 based upon a single-reference obviousness determination (Chen; WO 99/26371), but sided with the patentee as to other claims. The Board particularly found no motivation to combine One of the key reasons was because of a lack of motivation to combine Chen with other GSM references.

On appeal, the Federal Circuit affirmed these findings.  US patent law has a long history of debate with regard to combination claims, with the Supreme Court’s most recent pronouncement in KSR reaffirming its old pronouncement that a combination of known elements is likely obvious absent some justification for deciding otherwise.  KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007).

[I]f a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill. . . . The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.

Id.  Referencing Sakraida v. Ag Pro, Inc., 425 U.S. 273 (1976); Anderson’s-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57 (1969); and Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147 (1950).

Despite this lower bar, IPR petitioners still have the burden of at least explaining why a skilled artisan would have been be motivated to combine various references to form the claimed invention.  This is so, even if that explanation is simply a showing of how its case fits the model set out in KSR.

Here, however, the Board concluded that the IPR petitioner had failed that low burden.  In particular, in this case the petitioner offered “reasons to combine [that] were merely assertions that the references were analogous art, which, without more, is an insufficient articulation for motivation to combine.”  Rather, as KSR suggests, the known elements need to be combined “according to known methods” and yield only “predictable results.”  Although the petitioner might have recited these legal conclusions in its petition, the Board found them too conclusory and lacking in clarity.  Rather, the Board indicated that a proper motivation to combine analysis would explain how the primary reference is modified by the GSM reference.  As I mentioned above, this is a fairly low standard under KSR, but the Board explained that the petition failed to explain: “what reference is the primary versus secondary reference, what elements are missing from the primary reference, what elements should be added from the secondary reference to reach the claimed invention, or why those particular elements would be obvious to add.”

On appeal, the Federal Circuit affirmed the lack of motivation to combine – holding that “we cannot fault the Board for being at a loss in trying to decipher Cross-Appellants kitchen-sink of unclear and confusing motivation-to-combine arguments.”

Sisvel’s ’561 patent, owned by Sisvel, relates to improving channel coding techniques in transmitting data for radio systems. Channel coding adds redundant data bits to a data block before transmission to allow a receiver to better detect and correct errors caused by noise or other interference. The invention particularly employs “link adaptation” and “incremental redundancy” to optimize channel coding. Link adaptation allows the transmitter to adjust the code rate between data block transmissions by changing the number of redundant bits. Incremental redundancy allows the receiver to combine original and retransmitted data blocks to improve decoding.

The Federal Circuit’s affirmance on motivation to combine could be useful for patent prosecutors facing obviousness rejections. While the explanatory burden on an IPR petitioner is higher on the IPR petitioner than on a patent examiner, prosecutors may find Sisvel helpful in arguing an examiner provided inadequate rationale for combining references. Patent applicants could cite Sisvel in contending an office action improperly combines references without particularly explaining: (1) the primary and secondary references; (2) missing elements supplied by the secondary reference; (3) why a skilled artisan would have looked to the secondary reference to fill gaps in the primary reference; (4) why adding the secondary reference’s teaching would yield predictable results; etc. Although Sisvel arose in the context of invalidity allegations by an IPR petitioner, the motivation to combine principles apply equally during prosecution. By requiring examiner explanations meet KSR’s standards, applicants may succeed in overcoming some obviousness rejections.

= = =

The Noah Test as One Layer of Means Plus Function Analysis

The case also includes an interesting discussion about a means-plus-function limitation found in some of the claims, and the question of whether the claim is indefinite.  As you know, a claimed means plus function limitation is interpreted as covering the corresponding structures disclosed within the specification along with their equivalents.  35 U.S.C. 112(f).  But we have a special null case — if no such structures are disclosed then the Federal Circuit has ruled that the associated claim is automatically invalid as indefinite.  This gets a bit trickier for inter partes review proceedings since the petitioner is not permitted to challenge claims based upon indefiniteness. In Intel Corp. v. Qualcomm Inc., 21 F.4th 801 (Fed. Cir. 2021), the Federal Circuit instructed the PTAB to take the following approach to potentially indefinite MPF claims:

1. Impossibility: Determine that the claim is indefinite and then decide whether the indefiniteness prevents a prior art analysis (the “impossibility” conclusion); or
2. Possibility: Explain why it is able to construe the claim and resolve the prior art issues despite potential indefiniteness.

In either case, the PTAB needs to make some moves toward determining whether the limitation includes sufficient structural support in the specification.

Here, Claim 5 of the ’561 patent requires a “means for detecting a need for retransmission.”  The specification does not specify a particular algorithm to accomplish this goal, but does disclose protocols like “ARQ” and “hybrid ARQ.”  In situations like this, the Federal Circuit has created an unduly complicated framework  to determine whether expert testimony can be used to fill gaps in the structural explanation of algorithmic MPF claims. Noah Systems, Inc. v. Intuit Inc., 675 F.3d 1302 (Fed. Cir. 2012). At step one, the Noah framework specifically asks whether any algorithm is disclosed.  If no algorithm then no expert. In Noah step two, where an algorithm is disclosed but arguably inadequate, its sufficiency is judged based on a skilled artisan’s perspective and expert testimony is permitted to support the conclusions. Id.

Here, the PTAB found that references to “ARQ” and “Hybrid ARQ” were not algorithms.  On appeal the Federal Circuit found error in that conclusion. In particular, the court held the PTAB erred by not evaluating the protocol names under the step two framework. The court explained that even “brief disclosures” may warrant assessing expert views on their import to a skilled artisan. Because the specification explicitly referenced protocols, it was not wholly devoid of structure. The court vacated and remanded for the PTAB to conduct a step two analysis, including evaluating expert testimony.

This holding provides useful guidance for assessing computer-implemented means-plus-function claims. The Federal Circuit appropriately avoided rigid formalism, recognizing algorithm disclosures need not detail every step and by recognizing that  reference to commercially available tools can satisfy the structural requirement of 112(f).  Still, I would have simplified this approach and simply held that the claim covered the disclosed protocols. After Sisvel, courts evaluating software means-plus-function limitations must carefully walk the line between Noah’s step one and two.

Conclusions: The means-plus-function doctrine was originally designed to allow patent applicants to claim an element by the functions it performs rather than reciting structure, with the goal of providing a simple and flexible claiming technique. However, as evidenced by the complicated Noah framework sitting atop Williamson and Donaldson, Sisvel’s nuanced analysis of whether disclosed protocols qualify as algorithms, means-plus-function claims have become one of the more complex and controversial doctrines in patent law. The current morass of rules, exceptions, and expert testimony required to assess even basic computer-implemented means-plus-function claims suggests the doctrine has veered far from its original purpose. In my view, courts should seek to simplify the rules and refocus on whether the specification provides sufficient information to allow a skilled artisan to understand the boundaries of the functional claim element.

= = =

• Sisvel International S.A.: Represented by Robert Gajarsa, Timothy Devlin, and Neil Benchell of Devlin Law Firm.
• Sierra Wireless, Inc.: Represented by Kourtney Merrill of Perkins Coie LLP and Amanda Tessar.
• Telit Cinterion: Represented by Guy Yonay of Pearl Cohen and Kyle Auteri.
• Opinion: Authored by Judge Chen and joined by Chief Judge Moore and Judge Clevenger.

by Dennis Crouch

The law of appellate jurisdiction routes almost every patent appeal to the Court of Appeals for the Federal Circuit.  This result is by design to ensure more national uniformity in application of the U.S. patent laws.  The court’s recent decision in Teradata Corp. v. SAP SE, 22-1286 (Fed. Cir. Aug. 1, 2023) provides an exception to the general rule.  In its decision, the Federal Circuit held it lacked jurisdiction over Teradata’s appeal because the patent infringement allegations only been raised in a permissive counterclaim.  Although the counterclaims might have been compulsory if compared against Teradata’s original complaint, during the litigation Teradata narrowed its claims in a way that caused separation from the counterclaims.

After a brief partnership pursued under an NDA, SAP began offering a product similar to that of Teradata.  Teradata then sued for trade secret misappropriation and antitrust violations.  SAP responded with denials and also added patent infringement counterclaims.

Counterclaims: The Federal Rules of Civil Procedure permit a defendant to file counterclaims against the plaintiff. The rules divide the counterclaims roughly into two categories: compulsory and permissive.  Although no one actually forces defendant to any counterclaims, failure to assert the compulsory counterclaims is seen as a forfeiture of those claims.  Permissive counterclaims are not lost and instead can be raised in a separate, subsequent lawsuit (so long as a statute of limitations has not run, etc.). The rules spell out the following test for compulsory counterclaims:

(A) arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim; and (B) does not require adding another party over whom the court cannot acquire jurisdiction.

FRCP 13(a).   Compulsory Counterclaims are important for Federal Circuit jurisdiction because the court’s jurisdictional statute routes cases to the Federal Circuit if either (1) the plaintiff asserts a clam that arises under the US patent laws; or (2) a party asserts a compulsory counterclaim that arises under the US patent laws.  Note here the gap — The Federal Circuit does not get jurisdiction if only patent claim is filed as a permissive counterclaim (or a crossclaim or third-party claim).  A final quirk of the appellate jurisdiction is that the jurisdiction statute applies even if non-patent issues are the only ones being appealed.

In Teradata, the district court initially declined to sever SAP’s patent, finding they arose from the same transaction or occurrence as Teradata’s claims.  Eventually though the district court entered summary judgment on the antitrust and certain “technical” trade secret claims in SAP’s favor.  The court then entered partial final judgment under Rule 54(b) on those claims while staying remaining “business” trade secrets claim and the patent counterclaims.  R.54(b) partial final judgment is designed to sever aspects of the case and allow those to be immediately appealed.

Teradata appealed the antitrust and trade secret losses to the Federal Circuit. The court has rejected the appeal, holding that it lacks jurisdiction over Teradata’s appeal because SAP’s patent infringement counterclaims were not compulsory.  Rather, holding the appeal should be heard by the appropriate regional circuit court of appeals. For this case that is the 9th Circuit because the lower court is located in Northern California.

The Federal Circuit applies three tests in analyzing the same transaction test quoted above from R.13: (1) whether the legal and factual issues are largely the same; (2) whether substantially the same evidence supports or refutes the claims; and (3) whether there is a logical relationship between the claims.  In this analysis, the court looks to the complaints and counterclaims as filed. In addition, the Federal Circuit treats claims dismissed without prejudice as having never been filed.  Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178, 1189 (Fed. Cir. 2004)

In its initial complaint Teradata had asserted a wide range of trade secret claims that would arguably overlap with the asserted patents.  However, the company narrowed the scope of its claims via amended complaint and later stipulated dismissal without prejudice.  On appeal, the Federal Circuit concluded that those actions narrowed the operative claim to only what was finally asserted by Teradata.  In the case, this was particularly the “batched merge” functionality.  But, the patents asserted by SAP focus on a different technology and different products than batched merge.  This weighed heavily in the Federal Circuit’s analysis, distinguishing this case from prior compulsory counterclaim precedents.  The court noted that the legal and factual issues, as well as the evidence required, are not largely the same or substantially similar between Teradata’s narrowed trade secret claims and SAP’s patent counterclaims.  As a result, there is not a sufficient logical relationship between the narrowed trade secret claims and the patent counterclaims to make the latter compulsory.

= = =

At the district court, Teradata was seeking to have the patent claims severed for a separate trial and, at that time, SAP provided evidence it claimed “demonstrates the substantial overlap between Teradata’s alleged trade secrets and SAP’s asserted patents.”  This statement on the record apparently occurred after the narrowing of the trade secrets claims.  On appeal the sides were reversed.  In particular, SAP stepped back from the argument because it preferred to have the 9th Circuit decide the case rather than the Federal Circuit.  When questioned about its prior statements, SAP responded that estoppel cannot be used to shift a court’s jurisdictional requirements.

= = =

A strange aspect of the case has to do with the trade secret claims that were dropped during litigation.  There does not appear to be an express statement in the record that they were dropped “without prejudice.” And, even if they were dropped without prejudice, res judicata likely still applies to block those trade secrecy claims from being raised in a subsequent lawsuit.  Res judicata would apply because they are clearly part of the same transaction-or-occurrence of the other trade secrecy claims that were litigated.  During oral arguments, Judge Taranto asked an astute question of SAP’s lawyers seeking an admission that Teradata would have a right to relitigate those claims.  SAP’s lawyers refused to make that admission.  The opinion itself offers nothing here and appears to simply assume that the dismissals were without prejudice.

Not a perfect triangle: Even though the dropped trade secret claims likely relate to the same transaction or occurrence as the remaining “batched merge” trade secret claims; AND the dropped trade secret claims likely relate to the same transaction or occurrence as SAP’s patent counterclaims; It does NOT necessarily follow that the remaining “batched merge” trade secret claims arise from the same transaction or occurrence as the patent counterclaims. The relationship between the claims is not transitive – each comparison must be made directly based on the elements and facts required to prove each claim.

= = =

The underlying appeal is interesting and relates to per se antitrust violations and market analysis.

by Dennis Crouch

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

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

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

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

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

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

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

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

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

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

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

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

by Dennis Crouch

In re Volkswagen Group of America; In re Hyundai Motor America (Fed. Cir. 2022)

On appeal here, the Federal Circuit delved into franchise law — holding that independently owned and operated VW/Hyundai car dealerships located in the W.D. Texas do not count as a “place of business” of the car distributors.   As such, venue is improper under 28 U.S.C. 1400(b).

In ordinary civil actions, venue is proper in any district that would have personal jurisdiction over the defendant. 28 U.S.C. 1391.  Thus, for most federal cases, venue is not a major hurdle. But, in the 1800s, Congress created a special statute that substantially limits proper venue in patent cases (well before the expansion seen in Section 1391.  In Fourco (1957), and again in TC Heartland (2017), the Supreme Court gave weight to the patent-focused statute.  Today, there are two ways to show proper venue over a US corporate defendant:

1. The defendant is incorporated in the state; or
2. The defendant committed acts of infringement in the district and also has a “regular and established place of business” in the district.

TC Heartland, interpreting Section 1400(b).

In 2020, StratosAudio sued VW Group of America (VW) for patent infringement in Judge Albright’s court located in Waco, Texas.  VW is incorporated NJ and does not have its own “place of business” in the district.  However, there are VW dealerships in Waco and Austin.  The question is whether those can count as a “place of business” for the defendant.

The laws of most states, including Texas, prohibit auto manufacturers and distributors from operating a dealership within the state. Still, Judge Albright found sufficient control by the distributor as well as ratification by the distributors.

On mandamus, the court further defined its requirements to determine whether a dealership can count as the place of business for a manufacturer or  distributor:

1. Is the dealership the VW’s agent?
2. Does the dealership conduct VW’s business?; and
3. Has VW ratified the dealership as its place of business?

Slip Op.  These requirements stem from the court’s 2020 Google decision requiring physical presence of an “agent of the defendant conducting the defendant’s business at the alleged place of business.” In re Google LLC, 949 F.3d 1338 (Fed. Cir. 2020).  In addition, the ratification requirement appears in Cray: “Thus, the defendant must establish or ratify the place of business. It is not enough that the employee does so on his or her own.” In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017).   These three elements are independent requirements that must each be met before a place-of-business maintained by a separate legal entity will “count” as the place-of-business of the defendant.

Not Agents: Here in particular, the court found that the dealerships located in W.D.Texas are not agents of VW Group of America.  And, therefore, the dealerships are not a place-of-business of VW Group.  The court’s approach was to follow the Restatement (Third) of Agency in focusing on the right of control/direction by the principal; and consent to the agency relationship by both the principal and agent.  In the end, the court found that the dealerships had “full control over their day-to-day operations, such as sales.”  Thus, the court found no agency relationship there.  The court admitted some control over things such as:

1. who can be employed, what roles are required, and other employment requirements;
2. minimum inventory;
3. requirement of performing warranty work (warranty is promised by VW, not the dealer);
4. use specified tools when performing warranty and maintenance work;
5. use distributor-approved computer hardware and software;
6. compliance with distributors’ standards regarding dealership appearance and use of signs and brand logos;
7. maintaining working capital;
8. attending mandatory training and or certificates.

However, the court found that there was a lack of “interim control” once those parameters are set.

No agent, no place of business, no venue.

Fed Cir: a building that says VOLKSWAGEN, has VOLKSWAGEN signage all over it, has employees in it all wearing VOLKSWAGEN uniforms, and that exclusively sells and services VOLKSWAGEN vehicles, is not, in fact, VOLKSWAGEN’s place of business. https://t.co/f4GHOKD9Oq

— Paul R. Gugliuzza (@prgugliuzza) March 9, 2022

by Dennis Crouch

The Supreme Court has not yet granted a writ of certiorari in any patent cases this term, and has denied certiorari in several dozen cases.  A handful of important petitions are pending whose outcome could be transformative to the law.

Eligibility: American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, No. 20-891. The Federal Circuit concluded that American Axle’s  vehicle-manufacturing claims are ineligible under the two-part tests of Alice and Mayo.  U.S. Patent No. 7,774,911 (Claim 22). The claims here are directed to a method of manufacturing an automobile drive-shaft with reduced vibration.  The basic idea is to insert a liner into a hollow shaft.  The liner though is special — it is made of a “reactive absorber” and its mass and stiffness have been “tuned” all for the purpose of attenuating both “shell mode vibrations” and “bending mode vibrations” of the shaft.  The petition asks two questions:

1. What does it mean to be “directed to” an ineligible concept? (Alice Step 1).
2. Is eligibility a pure questions of law (based upon the claims); or is it a “question of fact for the jury based upon the state of the art at the time of the patent?”

The Federal Circuit released a first opinion in the case followed by a toned-down second opinion.  Both opinions were opposed by Judge Moore who explained that even the second try was an “unprecedented expansion of § 101.”  The en banc petition failed, but in a 6-6 tie.  The petition includes several features making certiorari more likely: Issue of historic interest to the Supreme Court; Divided lower court; Multiple amici in support of hearing the case; Multiple similar petitions in other cases; and Prior statement from US Gov’t (Trump Admin) that the Post-Alice eligibility setup needs recalibration.  The Court has also shown signs of interest, including an order for responsive briefing from Neapco, and a request for the views of the Solicitor General (CVSG).  We are now awaiting those views, and I expect that the SG’s brief will give us the best clue as to the likely outcome.  The Supreme Court requested briefing almost 8 months ago – on May 3, 2021. The five most recent CVSG briefs took an average of 5.5 months from the request to the brief. So, we’re at the extreme end of the scale for this one.

There are two other eligibility cases pending: Yanbin Yu, et al. v. Apple Inc., No. 21-811; and WhitServe LLC v. Dropbox, Inc., No. 21-812.  Neither of these are likely to garner interest.

PTAB Practice: The Supreme Court has shown extensive interest in various aspects of AIA Trials.  The top pending case in this area is Mylan v. Janssen.  Mylan filed an IPR petition that was denied based upon the six-factor NHK-Fintiv Rule established under Dir. Iancu. NHK-Fintiv permits the PTAB to deny IPR institution in situations where a parallel district court litigation is already well under way.  Mylan appealed the IPR institution denial, but the Federal Circuit dismissed for lack of appellate jurisdiction, citing 35 U.S.C. § 314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”) In its petition, Mylan asks two questions:

1. Does 35 U.S.C. § 314(d) categorically preclude appeal of all decisions not to institute inter partes review?
2. Is the NHK-Fintiv Rule substantively and procedurally unlawful?

Mylan Laboratories Ltd. v. Janssen Pharmaceutica, N.V., No. 21-202.  The petition has received amicus support as has a parallel petition in Apple Inc. v. Optis Cellular Technology, LLC, No. 21-118.  Apple asks whether the law permits either appeal or mandamus in situations where the PTO exceeds its authority in a way that “is arbitrary or capricious, or was adopted without required notice-and-comment rulemaking.”

More Appellate Standing: A third PTAB related appellate standing case is Apple Inc. v. Qualcomm Incorporated, No. 21-746, this one focusing on standing to appeal a final written decision.  The patent act is clear that any “person” other than the patentee can file an IPR petition and, if granted, participate in the trial as a party.  The statute goes on to indicate that “a party dissatisfied with the final written decision” has a right to appeal that decision to the Federal Circuit. 35 U.S.C. 319.   Despite the statutory right to appeal, the Federal Circuit has still refused to hear appeals in situations where the appellant cannot show concrete injury caused by the PTAB decision and redressability of that injury.  The appellate court’s grounding stems from the Constitutional requirement from Article III of an actual case or controversy.

Here, Apple licensed a large number of Qualcomm patents as part of a portfolio license, but has only challenged a couple of them via IPR.  The PTAB sided with Qualcomm and Apple appealed.  On appeal, the Federal Circuit found that Apple had not provided any immediate concrete injury associated with the patent’s existence and so dismissed the appeal. In particular, (1) the court was not shown how the license would change in any way if those patents fell-out; and (2) although the license was set to expire prior to the patents, the court found that potential infringement liability a few years now was too speculative.  Apple has now petitioned for writ of certiorari with the following question: Whether a licensee has Article III standing to challenge the validity of a patent covered by a license agreement that covers multiple patents.  As you can see, this question attempts to tie the case directly to MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) where the Supreme Court found standing for a licensee to challenge a patent.

Prior Art for IPRs: An interesting statutory interpretation petition was recently filed in Baxter Corporation Englewood v. Beckton, Dickinson and Company, No. 21-819.  Congress was careful to limit the scope of IPR proceedings.  The IPR petition may request claims “only on the basis of prior art consisting of patents or printed publications.”  35 U.S.C. 314(b).  In the case, expert testimony was used to fill a gap in the prior art, and the question is whether the use of expert testimony in this manner violates the statutory provision.

Full Scope Enablement: LDL (“bad cholesterol”) is removed by LDL receptors in the liver.  That’s a good thing. But, the body also makes PCSK9, a protein that can bind to the LDL receptors and destroy them.  Amgen’s solution is an antibody that competitively binds to PCSK9 in a way that prevents them from binding and harming the LDL receptors.  The result then is lowering of LDL in the body.

A monoclonal antibody is a type of protein made up of amino acids.  Amgen’s claims at issue here do not recite the particular amino acid sequence or how the protein is structured and chemically linked.  Rather, the claims are directed to a whole genus of monoclonal antibodies defined by the ability to bind with PCSK9 in a way that blocks PCSK9 from also binding with the LDL receptor.

The jury sided with the patentee on the issue of enablement, but the district court rejected the verdict on renewed JMOL. On appeal, the Federal Circuit sided with the accused infringer — holding that enablement is a question of law, and that the claims were so broad that full-scope-enablement is virtually impossible. In its petition, Amgen argues that (1) enablement should be seen as a question of fact; and (2) that the law does not require “full scope enablement” to the extent demanded by the Federal Circuit here.

A Novel form of Preclusion, the Kessler Doctrine: Finally, we get to res judicata. Lawyers all learned about claim preclusion and issue preclusion. Those two principles of law are designed to ensure finality of judgment and avoid relitigation.  History shows substantial confusion about both terminology and scope, but things have been substantially clear and steady since the adoption of the Restatement (Second) of Judgments in 1982.  One aspect of the historic confusion stems from the Supreme Court’s 1907 decision of Kessler v. Eldred.  Kessler has been on a back-burner for decades, but in 2014 the Federal Circuit revived the case and found that it deserved to co-equal — a preclusion doctrine separate and distinct from issue or claim preclusion.  That 2014 Brain Life decision was followed by a further expansion of Kessler in Speedtrack (Fed. Cir. 2015)  and again in PersonalWeb Techs. (2020). 

PersonalWeb’s certiorari petition the Supreme Court asks two questions:

1. Whether the Federal Circuit correctly interpreted Kessler to create a freestanding preclusion doctrine that [applies] even when claim and issue preclusion do not.
2. Whether the Federal Circuit properly extended its Kessler doctrine to cases where the prior judgment was a voluntary dismissal.

The Supreme Court has shown interest in the case, and recently called for the Solicitor General to submit a brief on behalf of the U.S. Gov’t.   I have an article on the case coming out in the Akron Law Review that I’ll post in a week or so (after fixing a few citations).

Two More: Although no petitions have been filed yet, the parties in two other cases have  publicly indicated their intent to file petitions by the end of 2021:

• Intel Corporation v. VLSI Technology LLC (Follow-on case to Mylan v. Janssen and Apple v. Optis); and
• Ikorongo Texas LLC v. Samsung Electronics Co., Ltd. (proper venue in a situation where the plaintiff holds territorially limited patent right).

See you in January.

TecSec, Inc. v. Adobe Inc.  (Fed. Cir. 2020)

The simple setup in this case:

• 2011: Following claim construction, TecSec stipulated that use of Adobe’s product does not infringe the asserted patents.
• 2013: Claim construction is reversed on appeal, and the infringement case started-up again.

The question on appeal:

• During the 2011-2013 timeline — is it legally possible for Adobe to induce infringement? In other words, could Adobe have the have the requisite intent necessary to induce infringement?

The Answer:

• Yes, intent to cause infringement may still be provable based upon subjective-bad-faith, even if the behavior was “objectively reasonable.”
• The court writes: “As a logical matter, a defendant may have the liability-supporting subjective state of mind even if a person could believe, with objective reasonableness (though wrongly), that the induced conduct was not infringing. To make the point in terms of this case, Adobe may have had the requisite knowledge of infringement if it believed (as we ultimately held in 2013) that the March 3, 2011 claim construction was incorrect, even if that construction was objectively reasonable.”

= = = =

This case has been ongoing since 2010.  Back in 2011, the district court issued a narrowing claim-construction with the result of a stipulated dismissal of non-infringement.  The Federal Circuit reversed that outcome in 2013 with a broader construction — setting up the eventual 2018 trial.

TecSec’s theory focused on both direct and induced infringement.  Just before trial, the district court granted Adobe’s motion in limine to prevent TecSec from presenting any inducement evidence from between the 2011 claim construction and the 2013 reversal.

Defendant Adobe lacked the requisite intent to induce infringement or willfully infringe during the time period where the Court had reasonably, though erroneously, ruled in Adobe’s favor on infringement and TecSec had entered a stipulation of noninfringement.

InLimineOrder.  The trial went on and TecSec was able to convince the jury on the direct infringement claim, but not on inducement. [Verdict.] The Jury also awarded $1.75 million in compensatory damages.  At that point, however, the district court issued a JNOV order (renewed JMOL) that reduced the award down to ZERO DOLLARS — holding that the damages evidence was all tied to the inducement theory.

The record is … devoid of qualified testimony regarding appropriate damages for Adobe’s direct infringement … [T]he jury’s damages award of $1.75 million must be vacated in its entirety as inherently speculative and unsupported by the record.

DCT JMOL Opinion [JMOL Opinion].   

On appeal, the Federal Circuit has reversed — holding that it was not proper to exclude the evidence of 2011-2013 inducement as noted above.

Although this looks like a win for the patentee, on remand I expect that the district court will open the door for a pretrial summary judgment motion regarding whether TecSec can prove subjective-intent to infringe.

by Dennis Crouch

Once a patent issues, it is presumed valid. “A patent shall be presumed valid.” 35 U.S.C. 282(a). In patent litigation, this has traditionally meant that a complaint for infringement need not re-establish the patent’s validity. Rather, validity challenges arise as affirmative defenses as part of the answer.

That traditional approach is no longer followed by the courts in the Post-Alice patent eligibility era.  Courts now regularly dismiss patent cases upon finding that the patentee failed to state a claim because the patent is invalid under Section 101.  In response to that potential, patentees are have begun preemptively bulking-up their complaints with factual allegations to support the patent’s validity.

A new petition for writ of certiorari in Whitserve LLC v. Donuts Inc. (2020) highlights this issue.  Back in 2018, Whitserve sued Donuts for infringing the claims of its two patents covering a method for managing due-date reminders for clients of professional-services.  U.S. Patent Nos. 5,895,468 and 6,182,078.  On a R. 12(b)(6) motion, the district court dismissed the complaint – finding that the patent was invalid as a matter of law and that – therefore – the complaint failed to state a legally cognizable claim for relief. On appeal, the Federal Circuit affirmed – explaining again that “patent eligibility can be determined at the Rule 12(b)(6) stage if there are no plausible factual allegations to impede such a resolution.” (Quoting Aatrix).  The suggestion here is that plaintiffs really do need to be making their validity case within the pleadings.

Now, the case is up before the Supreme Court on Whitserve’s recently filed petition. Question presented:

If a patentee makes factual assertions that its claimed invention is directed to patent eligible subject matter under 35 U.S.C. § 101, including assertions that the claimed invention does not consist of well understood, routine, or  conventional activity and that the claimed invention is supported by evidence of commercial success, is a district court permitted to overlook the patentee’s assertions, find that the claimed invention is directed to patent ineligible subject matter, and dismiss the patentee’s complaint under Rule 12(b)(6) given the requirements of Rule 12(b)(6) analyses and the statutory presumption of § 282(a)?

[Petition].

When I read the question presented, I instantly wanted to make some amendments — in particular, I wanted to focus not on bar “factual assertions that” but rather on “non-conclusory factual assertions showing that patent is plausibly eligible.”  My transformation focuses on the plausibility standard from Iqbal and Twombly.  In those cases, the Supreme Court raised the standard for “showing that the pleader is entitled to relief” under R.8(a).  On my second time through, however, I began to really question this approach.

We are talking here about a pleading that attempts to preempt a potential affirmative defense — normally the plaintiff does not even need to plead a response to an affirmative defense.

[E]ven after the defendant has pleaded an affirmative defense, the federal rules impose on the plaintiff no obligation to file a responsive pleading.

Fernandez v. Clean House LLC, 883 F.3d 1296 (10th Cir. 2018).  And, when a Reply to an affirmative defense is ordered, it is sufficient to simply deny the allegations of the defense rather than explain or offer competing factual allegations.  In that situation, the non-conclusory / plausibility standard of Iqbal does not apply.

All this leads me to say that – for 12(b)(6) purposes, even conclusory factual allegations regarding eligibility may be sufficient to overcome a motion to dismiss. Of course, at that point, the court can jump quickly to a R.56 Summary Judgment question — allowing special early discovery on the eligibility issue to see whether there is any evidence to support the allegations.

* Note, the image above comes from a design patent owned by Krispy Kreme parent company HDN Development.