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Supreme Court Slows its Patent Law Jurisprudence?

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The Supreme Court had denied petitions for certiorari in three IP cases out of the Federal Circuit:

  • Google v. Oracle (Federal Circuit held that the Java API naming scheme was copyrightable and not an ineligible “system or method of operation”).
  • Google v. Vederi (Federal Circuit held that an amendment during prosecution to overcome a rejection need not be “strictly construed against the applicant”).
  • Ultramercial v. WildTangent (Federal Circuit held the patented method of distributing media content with advertising to be a patent ineligible abstract idea).

Apart from leaving-stand the particular holdings, these outcomes may collectively signal a time of out-breath for Supreme Court patent law jurisprudence.  By my count, there are no patent decisions pending before the Court (with certiorari granted) and none of the petitions on file carry a substantial chance of being granted.

Guest Post by Michael Risch: America’s First Patents

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Guest Post by Michael Risch, Associate Professor of Law, Villanova University School of Law

My forthcoming Florida Law Review article, America’s First Patents, examines every available patent issued during the first 50 years of patenting in the United States.  A full draft is accessible at this SSRN page. The article reaches three conclusions:

  1. Our patentable subject matter jurisprudence with respect to methods can, in part, blame its current unclarity on early decisions by a few important judges to import British law into the new patent system.
  2. Early patenting trends suggest that Congress has never intended new subject areas be limited until Congress explicitly allowed the new subject area.
  3. The machine-or-transformation test, which allows a method patent only if the process involves a machine or transforms matter, has no basis in historic patenting practices.

When the Federal Circuit first issued its en banc opinion in In re Bilski, I believed that its machine or transformation rule could not have been based on history. I wrote in my 2010 article Forward to the Past that:

in its effort to deal with high technology, the [Federal Circuit] abandoned low technology. There are many patented processes that have nothing to do with machines or transformations—methods for measuring fabric, methods for harvesting fruit, and methods for manufacturing products by hand (for example, forming wrought iron). At worst, these types of historically patentable inventions would now be unpatentable. At best, determining what is patentable and what is excluded became much more difficult.

However, I did not have any real proof to support this statement, so I thought I would test the assertion with some quasi-empirical evidence. I spent the summers of 2010 and 2011 working with several research assistants, and we read every available patent we could find, a total of about 2500 before 1836 (most of our pre-1836 patents were destroyed in an 1836 Patent Office fire), and 1200 between 1836 and 1839. The goal was, first, to categorize patents as methods and, second, to determine whether each method used a machine or transformed matter to a new thing.

This was no easy task. Many early patents were difficult to read, and not just because they were handwritten. At the time, inventors did not have to claim their subject matter. As a result, patents usually described how to make or do something, and nothing more. It was often difficult to tell whether the making or the thing made was purportedly inventive. Even after more inventors started using claims, patentees would claim the exclusive right to “manufacture product X by doing Y,” which still left matters unclear.

This difficulty leads to my first conclusion. While courts often talked about “principles” in early judicial opinions, quite often they were attempting to determine the “principle of the machine” to identify what was patented for infringement purposes. Even when courts mentioned that principles were not patentable, the statement was usually a side issue and “principles” meant very basic principles, like “motion.” Because principles were not patentable, courts attempted to construe the patent in a way that was not a principle. This, it seems, is contrary to how we do things under recent cases.

In reading this old history, I discovered something interesting (and I don’t claim to be the first person to discover it – merely the first to tie the content of old patents to support the conclusion). Specifically, early judges imported British law into interpretation of the American statute. This might seem reasonable, except that methods were not patentable in England until after 1840.  But methods were explicitly patentable (called “art” in the statute) in the U.S. Indeed, the very first patent covered a method of making pot and pearl ash. But Justice Story, who sat as a Circuit Justice in many patent cases, did not think methods should be patentable, and as such issued statements in many cases about what could not be patented – statements that have been repeated even until today. My article looks at these statements in detail, and shows how unclarity in early patents allowed the courts to perpetuate a (wrong) view that we must limit method patents in particular ways.

In the second part of the article, I discuss some general findings about the patents. Some were dangerous (lead paint and asbestos), some were ridiculous, and some were enduring. There were many business methods related to teaching , music, and exercise, and there was even a rudimentary software patent (on a Jacquard loom, though I know some think that this is not really software). This was an entertaining part of the article to write; it was interesting to see how industries developed through patents. However, there is one overriding theme: the patents started simple, grew more complex over time, and expanded to new subject matter over time. Further, very little of the subject matter that dominates today’s inventions—such as electronics, chemicals, and pharmaceuticals—was apparent in early patenting. My conclusion from this analysis is that the patent system was designed to handle new subject matter as it is invented, and that Congress never expected to step in and approve new subject matter over time.

The final part of the article examines the motivating issue: whether the machine or transformation test was historically used. Because patents from 1793-1836 were not examined by the Patent Office but those from 1836-1839 were, I could test whether inventors had a different view of this issue than patent examiners had. It turns out that the groups did not differ; the results are statistically the same before and after 1836.

And those results show that our first inventors did not limit methods to those that used machines or transformed matter. About 40% of the methods patents between 1790 and 1793 did not use a machine or transform matter.  These would all be invalid under the modern test. To be sure, the test was very good at identifying business methods—nearly all of the business methods fell into that 40%, so it is hard to fault the test for failing to identify early business methods.  Of course, today’s business methods do use machines, so I am not sure how accurate the test would be today.

However, there were many patents –many more than the business methods—that did not use a machine or transform matter.  This, to me, suggests that among the tests other failings, it has no real basis in past practice or understanding. While we can debate the merits of the recent Prometheus opinion, I applaud its rejection (again) of the machine or transformation test as a way to determine patentable subject matter.

This post presents the basic conclusions of my article. There is obviously much more in this 50 page paper than I can write here. I detail my methodology (and its limits), 19th century law, and the patents in the full paper.

Abandoning software patents?

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Editorial by Ciarán O'Riordan, Exective Director of End Software Patents

Scope

On Monday, November 9th, the Supreme Court will hear the case of Bilski's business method patent. Being the first review of patentable subject matter since 1981, this decision could make the rules for decades to come. The court will review the 2008 ruling of the CAFC which created the "particular machine or transformation" test. This test, depending on who's reading it, could significantly narrow the scope for patenting software ideas.

The Supreme Court isn't obliged to rule on the patentability of software ideas. Bilski's patent is a business method patent, not a software patent. So why might the court make a broad ruling which would cover software? For people who are already aware of the legal arguments, I'd like to offer a review of the socio-economic arguments for abandoning software patents.

Practitioner profile

To see how different software is from most patentable fields, you just have to look at the practitioners. There is a small number of large companies with well known products, and there is a mass of small companies. The low cost of entry to software development means the number of small companies is particularly large, but we'll leave that aside to look at a bigger difference. In most patentable fields, this pyramid of big and small companies describes how products are made. If this were true for software, then the decision of patentability would be an economic decision, and some costs might have to be reduced, but there'd be no fundamental incompatibilty. But in software, this is only half the story.

In software, unlike in other patentable fields, there are two additional categories of developers. The first is the software developers that sit in the IT departments of every medium sized company. They're the folk that keep the emails flowing, who make internal software, extend software bought by the company, and who run the website. The second group is individuals, informal groups and communities who program for their own benefit or for social reasons such as providing alternatives to software seen as overly restrictive.

The existence of these two categories changes everything because it's obviously unreasonable to require them to work within the patent system, and it's unjustly restrictive. Not only are patent incentives obviously not necessary to motivate IT departments to fix problems, the timeline and budgets are orders of magnitude out of sync with the speed and costs of writing software. When a company manager reports a website problem, they don't expect the IT department to reply about first seeking legal advice for a patent search, and they don't expect to later have a bill from a patent holder because of the way in which the IT department happened to fix the problem.

For user communities programming to suit their own needs, the costs and timeline are also unreasonable, but there is also the bigger problem that the patent holder gains veto power over the distribution of the software. If the software is written for the purpose of having a freely redistributable program, then this third-party veto spoils the developer's efforts. There will be no direct profits from which to offer royalty payments, so the result is a lose-lose situation where the developer's goal is blocked, and there's isn't even anything in it for the patent holder (although the patent will still be enforced to sink the piece of software so that computer users are pushed toward a program which will pay royalties to the patent holder).

Standards

This issue is further exasperated by a problem which applies to all types of software developer: in no other domain are modern standards as crucial as they are in software. If you want to cure rubber, there are many ways to do it. When patents block a product developer from using one method, there's the possibility of useful innovation when that developer looks for an alternative method. In software, being blocked from using an email, image, or document format equates to being prohibited from writing a functional email reader, image viewer or word processor. Can you imagine the utility of an innovative word processor that can't read any existing documents? Nobody would use this, which means any innovations therein would have been wasted effort.

For video, this problem is a reality. The MPEG-LA group claims to represent more than twenty patent holders which each have one or more essential patents for implementing the commonly used mpeg video format. There's no licence available for freely redistributable software, and even royalty payers have to agree to MPEG-LA's terms. The committee developing the next standard for webpages, HTML5, spent months searching and debating which video format they could recommend in the standard, and the final answer was that, due to software patents, there is today no format they can recommend.(ref-1)

When "user communities" grow up

Now, it's important to look at the output of the mentioned user communities. If like, say, hobbiest watchmakers, they just catered for themselves and a few friends without attracting the attention of patent holders, then this wouldn't be a big problem. The system would still be unjust, but if the injustice never manifested itself, then it would be theoretical issue.

Indeed, freely redistributable software and the work that was begun by idealists and hobbyists has now lead to the world's most used webserver, the world's second most used web browser, and the GNU/Linux operating system. Indeed, the "users" are nowadays often employees, and their collaborative development models have emerged as the primary competitors in many software domains. Blocking collaboration turns out not only to be a restriction on useful individual activities, but it also stiffles competition and the mass production of useful software.

In software, rather than supporting innovators, patents protect the old against the new.

Although large firms now contribute to these projects, many of the developers are still individuals and people who don't directly profit. The terms of distribution for this software are the same now as they always have been. It's a proven formula, and a key clause is that you can't distribute if patent royalties will be required.

Example: GNU/Linux

The kernel of the GNU/Linux operating system was examined by patent attorney Dan Ravicher, who announced on August 2, 2004, that he had found no court-validated patents to be infringed but 283 *issued patents* existed which could potentially be used to support patent claims.(ref-2) Thereafter, Microsoft in the 2007 began claiming that the kernel violates 235 of its patents – although the patents have never been specified.(ref-3) Neither could be precise, but they these give us ballpark figures.

The kernel one component, and because the human-written source code is online, we can see it contains approximately 4,000,000 lines of source code. Given that a distribution of the GNU/Linux operating system, complete with applications, can contain software with more than 225 million lines of source code, when we extrapolate from the kernel numbers, we arrive at the possibility of 13,160 or 15,848 patent infringements per complete distribution.(ref-4) All of this in something that can be distributed once or a thousand times, usually at no cost, sometimes large corporations, sometimes by individuals.

This is a degree of uncertainty that can't be fixed by changes in evaluation standards.

As for innovation, lists and lists of research suggests that patents reduce software innovation.

There was a time when if you wrote something, you owned it, you could sell it, you could give it away. It could be put in the accounts and it could be used as the base for collaboration. Now, ownership of a piece of software is hopeful speculation. There is no reliable way to have a settled expectation regarding the boundaries or the extent to which you own a piece of software. This uncertainty, and this unfair regulation is what the Supreme Court has the chance to rid us of by giving the USPTO a reliable tool for excluding software ideas from patentable subject matter.

— Ciarán O'Riordan is Exective Director of End Software Patents

Certiorari Denied in Eligibility Cases

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The Supreme Court has denied certiorari in the three leading patent eligibility petitions:

  • HP Inc. v. Berkheimer (18-415)
  • Hikma Pharmas v. Vanda Pharmas (18-817)
  • Athena Diagnostics, Inc. v. Mayo Collaborative (19-430)

Although there are several other pending eligibility petitions, I gave these three the highest potential for certiorari.  The result here is that the Supreme Court is now highly unlikely to take up eligibility anew this term.  The one exception is the copyright case of Google v. Oracle where the court will likely discuss a dividing line between patentable and copyrightable subject matter.

Additional cases denied certiorari on Jan 13, 2020:

  • Power Analytics Corporation v. Operation Technology, Inc., et al., No. 19-43 (eligibility)
  • Regents of the University of Minnesota v. LSI Corporation, et al., No. 19-337 (sovereign immunity)
  • Garmin USA, Inc., et al. v. Cellspin Soft, Inc., No. 19-400 (eligibility)
  • Medtronic, Inc. v. Barry, No. 19-414 (meaning “ready for patenting” for on sale bar)
  • Chestnut Hill Sound Inc. v. Apple Inc., et al., No. 19-591 (due process and R.36 affirmances)
  • Nuvo Pharmaceuticals, et al. v. Dr. Reddy’s Laboratories, et al., No. 19-584 (written description need for experimental data proving claimed effectiveness)
  • Mushkin, Inc. v. Anza Technology, Inc., No. 19-610 (relation back to the original complaint)

There are several petitions that remain viable for this term:

  • ChargePoint, Inc. v. SemaConnect, Inc., No. 19-521 (eligibility)
  • Trading Technologies International, Inc. v. IBG LLC, et al., No. 19-522; Trading Technologies International, Inc. v. IBG LLC, et al., No. 19-353  (eligibility)
  • Apple Inc. v. VirnetX Inc., et al., No. 19-832 (apportionment and preclusion)
  • Maxell, Ltd. v. Fandango Media, LLC, No. 19-852 (eligibility)
  • Collabo Innovations, Inc. v. Sony Corporation, No. 19-601 (due process and takings for IPR proceedings against Pre-AIA patents)
  • Cisco Systems, Inc. v. SRI International, Inc., No. 19-619 (eligibility)
  • Chrimar Systems, Inc. v. Juniper Networks, Inc., et al., No. 19-829 (role of evidence beyond that raised in the IPR petition)
  • Morris Reese v. Sprint Nextel Corporation, et al., No. 19-597 (eligibility)

Although several of these petitions raise important points, none of them have received the attention or support of the ones denied today.

 

 

Manufacturers Locking-In Consumers with Design Patents

Patent

by Dennis Crouch

Automotive Body Parts Ass’n v. Ford Global Techs. (Fed. Cir. 2019)

Car manufacturers regularly use design patents to control the repair marketplace.  In this case, Ford accused members of the ABPA of infringing its U.S. Patent No. D489,299 (F150 truck hood) and U.S. Patent No. D501,685 (F150 headlamp) and APBA responded with a declaratory judgment lawsuit — arguing that the patented designs are functional rather than ornamental and therefore invalid.

A design patent must be directed to an “ornamental design for an article of
manufacture” and not one “dictated by function.”  High Point Design LLC v.
Buyers Direct, Inc., 730 F.3d 1301, 1315 (Fed. Cir. 2013) (interpreting 35 U.S.C. § 171(a)).   Although the article of manufacture itself is typically functional, the design itself may not be “primarily functional.”

The Federal Circuit has applied a multi-factor approach that basically asks whether the claimed design is “essential to the use of the article.” Factors:

[W]hether the protected design represents the best design; whether alternative designs would adversely affect the utility of the specified article; whether there are any concomitant utility patents; whether the advertising touts particular features of the design as having specific utility; and whether there are any elements in the design or an overall appearance clearly not dictated by function.

Berry Sterling Corp. v. Pescor Plastics, Inc., 122 F.3d 1452 (Fed. Cir. 1997).

ABPA’s argument here is that anyone repairing a damaged F150 truck will want replacement parts that match the original design.  In particular, APBA “argues
that Ford’s hood and headlamp designs are functional because they aesthetically match the F-150 truck.”  On appeal, the Federal Circuit rejected this theory of functionality: “the aesthetic appeal of a design to consumers is inadequate to render that design functional” —  “even in this context of a consumer preference for a particular design to match other parts of a whole.”  According to the court, market advantage via aesthetic appeal is the exact type of market advantage that design patents are supposed to provide.

The holding here gives a powerful nod of approval to the already rampant use of design patents to lock-in consumers for repair parts and for manufacturers to use design patents to prohibit unauthorized interconnections.  In this form, the case sits closely alongside the Federal Circuit’s decision on Google v. Oracle that is pending certiorari before the Supreme Court.  The case also reaffirms the tradition that the functional limit in design patents is a very weak test — even weaker than that of copyright and trademark law. 

Auto insurance companies have long lobbied congress to weaken design patent coverage on repair parts. This case may trigger a resurgence in that activity.  The case also suggests a potential marketplace for after-market parts that are slightly different from OEM but still functional.  I’d probably prefer an F150 that doesn’t look like the original.  

McCarthy on the Federal Circuit as a trademark court

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by Dennis Crouch

Thomas McCarthy and Dina Roumiantseva have published a new article titled: Divert All Trademark Appeals to the Federal Circuit? We Think Not.  They write:

With some regularity over the years, a proposal is made to change the Lanham Act so that appeals in all Lanham Act trademark and false advertising cases from district courts across the United States will be diverted from the regional circuit courts of appeal to the Court of Appeals for the Federal Circuit. We think it is time to discuss this proposal head on and hopefully to convince the reader that this diversion is not a good idea and should never be implemented. Advocates of this proposal claim that trademark law would benefit from the consistency that a single appeals court could provide and that the Federal Circuit has exceptional expertise in trademark law. We believe, however, that trademark law does not suffer from the kind of circuit conflict that led to the channeling of all patent appeals to the Federal Circuit in 1982. Moreover, our review of case law suggests that some regional circuits have a comparable or greater experience with trademark law. We argue that no change in the present system of trademark appeals is needed.

I see merit to the McCarthy-Roumiantseva argument.  However, I also see a major problem with the current intellectual property system is its disjointed implementation nature.  Copyright is adminstered by a branch of the Library of Congress. Patent and Trademark registration is handled by a single agency, except for state-law and FDA exclusivity issues. And, the appellate courts that hear most copyright and trademark infringement actions almost never hear any patent infringement actions – and vice versa. Trade secret is almost (but not quite) entirely state law derived. These major divides in administration and adjudication have led to a system that lacks substantial coherence across doctrinal silos and has opened the door for special interests to tweak individual portions of the law toward their favor.

The PATENT Act of 2015

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Earlier today, Senator Grassley (R-Iowa) introduced the bipartisan Protecting American Talent and Entrepreneurship Act of 2015 (PATENT) Act.  The PATENT Act is a revised version of prior proposed legislation that addresses some of the most severe criticisms of those proposals.  It’s also well situated to move forward, as it’s supported by leaders from both parties.  From the bill’s summarv (Sec. 1 is the title and table of contents; Sec. 2 are definitions; if the formatting is messed up, click the link for the original source):

SEC. 3. PLEADING AND EARLY DISCLOSURE REQUIREMENTS: Form 18 is
eliminated. Plaintiffs must identify each patent and claim allegedly infringed,
which products or processes are infringing, and describe the alleged infringement.
Allows plaintiffs to describe information in general terms if it is not accessible to
them. Clarifies that pleadings can be amended and allows for confidential
information to be filed under seal. Exempts 271(e) (Hatch-Waxman and biosimilars)
proceedings. Requires plaintiffs to make additional disclosures to the court and the
PTO about the plaintiff and the asserted patents shortly after filing.

SEC. 4. CUSTOMER STAY: Allows a case against a customer to be stayed while
the manufacturer litigates the alleged infringement, provided that the
manufacturer is involved in a lawsuit in the US involving the same issues. The
customer stay is available only to those at the end of the supply chain, who are
selling or using a technology that they acquired from a manufacturer, without
materially modifying it. Allows for a stay to be lifted where it would cause undue
prejudice or be manifestly unjust.

SEC. 5. DISCOVERY LIMITS: Requires a court to stay expensive discovery
pending resolution of preliminary motions—specifically motions to dismiss, transfer
venue, and sever accused infringers. Gives a court discretion to allow limited
discovery necessary to resolve these motions or a motion for a preliminary
injunction, or if it finds that additional discovery is necessary to preserve evidence
or otherwise prevent specific prejudice to a party. Allows parties to consent to be
excluded from discovery limitations. Exempts Section 271(e) (Hatch-Waxman and
biosimilars) cases. Clarifies that timelines for responsive pleadings provided by the
Federal Rules of Civil Procedure are not altered, and nothing prohibits a court from
ordering or local rules from requiring the exchange of contentions.

SEC. 6. JUDICIAL CONFERENCE DISCOVERY REFORMS: Requires the
Judicial Conference to develop rules or procedures to address additional issues
involving discovery in patent cases. These include to what extent each party is
entitled to “core documentary evidence” and if they should be responsible for the
costs of production, and other issues involving discovery sequence and scope. Asks
the Judicial Conference to implement case management procedures for patent
cases.

SEC. 7. FEES AND RECOVERY: Provides that reasonable attorney fees will be
awarded if a court determines the position or conduct of the non-prevailing party
(plaintiff or defendant) was not objectively reasonable, unless special circumstances
make an award unjust. The winner must show that the non-prevailing party’s
position was not objectively reasonable and the judge must make a ruling for fees to shift – this is not a presumptive fee shifting rule. Fee shifting extends to cases
where a party attempts to unilaterally withdraw from a case on the eve of a trial.
Keeps 271(e) (Hatch-Waxman and biosimilars) proceedings under current law.
Fee Recovery: Requires a plaintiff to identify interested parties in the litigation,
and provides a process for a court to recover fees where the abusive litigant is
judgement-proof. If a plaintiff cannot certify it has sufficient funds to satisfy a fee
award, it must notify interested parties, who can opt out of their interest. Permits a
court to exempt institutions of higher education and qualifying parties in the
interest of justice.

SEC. 8. PRE-SUIT NOTICE/DEMAND LETTERS: Prevents vague patent
infringement demand letters from being preludes to litigation by requiring that
certain information be included in order for the letter to be considered evidence that
subsequent infringement was “willful”. If the required information is not in the
written notice, the recipient’s time to respond to a later complaint is extended by 30
days.

SEC. 9. ABUSIVE DEMAND LETTERS: Provides that, if someone violates Section
5 of the FTC Act in connection with patent assertion and has engaged in
widespread demand letters abuse, civil penalties for FTC rule violations will attach.
The provision does not impinge on legitimate licensing activity or expand the
authority of the FTC.

SEC. 10. TRANSPARENCY: Requires patent holders to disclose to the PTO
whenever there is an assignment of interest in the patent that results in a change of
ultimate parent entity. If a patent holder fails to disclose, it will not be able to
recover increased damages of attorney fees (unless this would be manifestly unjust).

SEC. 11. IP LICENSES IN BANKRUPTCY: Makes clear that as a matter of public
policy, US courts will not recognize the action of a foreign court to unilaterally
cancel a license to a US patent or trademark if the licensor goes bankrupt. Extends
current protection of licensees of US patents in bankruptcy to trademarks.

SECTION 12. SMALL BUSINESS PROVISIONS: Directs the PTO to develop
educational resources for small businesses targeted in patent suits and to provide
support to companies named in infringement actions. Instructs PTO to create a
section on its website that will list pending patent cases, so that recipients of
demand letters and defendants in lawsuits can more easily identify ongoing
litigation that may relate to their case.

SEC. 13. STUDIES: Provides for three studies on 1) the secondary market for
patents; 2) the possibility of a pilot program for a patent small claims program: and
3) business method patent quality.

SEC. 14. TECHNICAL CORRECTIONS: Technical corrections and improvements
to the AIA.

SEC. 15. EFFECTIVE DATE: Date of enactment except as otherwise provided.

SEC 16. SEVERABILITY: Should any portion of the law be held invalid, this
provision allows the rest to stand.

The full text of the bill is available here: http://www.judiciary.senate.gov/imo/media/doc/PATENT%20Act.pdf

(Entirely unrelated but also in Sen. Grassley’s Instagram feed: a few hours later he met with my Dean and the Deans of the University of Iowa College of Engineering and Division of Continuing Education.)

IN DEFENSE OF SOFTWARE PATENTS – PART 2

Articles and Publications, Patent, Patentable Subject Matter, Software, ,

Guest Post by Martin Goetz

 

Back on November 30, 2009, Patently-O published my article “In Defense of Software Patents” in response to the editorial “Abandoning Software Patents” by Ciaran O’Riordan, Director of End Software Patents (posted on Patently-O on November 6, 2009) which had as its premise that software companies are trying to protect “software ideas”.

 

In this article I comment on the Bilski Opinion as well as give some concrete examples of software-only patents as well as hardware/software patents. Also, my previous article received hundreds of comments, many being negative, and part of this new post is in response to those negative comments.

 

Since the June 28th Supreme Court Bilski decision there have been many articles[1] on what the Opinion stated and inferred about the patentability of software.

 

The Opinion restated what previous Supreme Courts concluded: that laws of nature, physical phenomena, mathematics, mathematical formulas (by themselves), algorithms (by themselves), and abstract ideas (which would include software ideas) are not eligible for patent protection.

 

While the Bilski Opinion never directly questioned the patentability of software, the Justices wrote extensively about the meaning of Section 101, the meaning of the term “process” and why the test for patent eligibility should not exclusively be “the machine-or –transformation test”. Justice Kennedy, with the concurrence of all other Supreme Court members, wrote that the Information Age puts innovation in the hands of more people and raises new difficulties for the patent law (and the Patent Office) to determine who should or should not receive patent protection.[2]

 

My November 2009 Patently-O article “In Defense of Software Patents” produced hundreds of comments. Many wrote that they were against the patenting of software because software was an “algorithm” or “mathematics”. In that article my primary argument was that a computer software invention is as patentable as a computer hardware invention and the only difference is the mode of implementation. My thesis was that Software Product companies in the Software Industry are looking to patent a machine process and not a computer program, which is protected by the copyright law. I showed why software product companies can be viewed as high technology manufacturing entities and should be just as eligible for patent protection as computer hardware companies.   

 

In this article I give examples of patents where the preferred implementation of an inventive machine process is in software (via a computer program[3]), hardware (via circuitry), or a combination of both software and hardware.

 

There is little argument that “processes” and “machine processes” are patentable subject matter[4] The question has always been about the nature of software and what one is trying to patent. For over 40 years I have been involved in that argument since I received the first software patent in 1968 for an innovative way to sort large amounts data on a computer that had tape drives that could only read and write data in a forward direction (See Patent # 3,380,029, Sorting System, Issued April 23, 1968).

 

The Sorting System patent was dubbed a software patent but it could also have been a computer hardware patent. It was dubbed a software patent solely because the preferred implementation (the disclosure) was a logic chart (which is recognized by the patent office as a proper disclosure). My Sorting System patent would not have been controversial if the disclosure had been hardware circuitry since there were many hardware patents for sorting data on special-purpose computers and special apparatus. In my patent application I referenced six of those patents which all had unique hardware circuitry in their patent disclosure. Three of them are available online, courtesy of Google Patent Search[5].

 

From 1968 through 1980 my previous company, Applied Data Research filed Amicus briefs in the Prater & Wei, Benson, Johnson, Flook, and Diehr cases in which we argued that a machine process patentable in hardware is equally patentable in software. Here is exactly how we posed a “Question of Law” “in our 1980 Diehr brief:

Whether a computerized machine or industrial process that is patentable subject matter under 35 USC 101 when constructed with a hardware program (wired circuits) would also be patentable subject matter when constructed with a stored computer program (i.e., firmware or software)?

The USPTO is currently in agreement with that “Question of Law” when in 1996 it published its Examination Guidelines for Computer-Related Inventions (Final Version).  The Guidelines stated in its Introduction the following: “The Guidelines alter the procedure office personnel will follow when examining applications drawn to computer-related inventions and are equally applicable to claimed inventions implemented in hardware or software.”

 

In that 1980 Diehr brief we also posed the following argument to the Supreme Court:

An inventor demonstrates his new invention to his patent attorney with great pride; he has developed a cabinet for reading books out loud to the blind. The cabinet contains both a reading and talking computer. After the demonstration, the patent attorney responds:

 

What's inside the cabinet? Did you build it with software or hardware (a stored program or hardware circuitry)? If built with a hardware program, your machine would be patentable. But if you built it with a stored program, the Patent Office would say it was merely mathematics and, therefore, unpatentable.”

The example above of a hypothetical “cabinet for the blind” invention was back in 1980 in our Diehr Amicus brief.

 

Twenty years later, in 2000, a renowned inventor, Ray Kurzweil received a patent named Reading System which Reads Aloud From An Image Representation Of A Document. The patent disclosure shows a diagram of a monitor, scanner, speakers, and a PC computer composed of a processor, storage and a keyboard. The essence of the disclosure and the invention is a logic chart describing a machine system which interacts with a speech synchronizer and the various devices.  

 

The first sentence of the abstract in the patent stated “a reading system includes a computer and a mass storage device including software comprising instructions for causing a computer to accept an image file generated from optically scanning an image of a document.”

 

At that time, Ray Kurzweil’s company, Kurzweil Educational Systems marketed a special purpose hardware/software system called the Kurzweil 3000 Reading Machine which was marketed to the blind and poor readers. Their 2000 year patent protected this product from imitators. Today the company sells a software only system called Kurzweil 3000 and continues to have the protection of the patent system thru his original 2000 patent and with additional patents e.g., Reducing processing latency in optical character recognition for portable reading machine (which is a software-only patent).

 

Few would argue that the Kurzweil 3000 Reading Machine was not an invention and not deserving of a patent.

 

While I am a strong advocate for software-related patents I have always been opposed to the patenting of Business Method Patents (BMPs). In my 2006 article Patents: Where's the Invention? I stated that the Patent Office should do what the European Patent Convention did when it  ruled that anything that consists of "schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers" is not an invention and therefore not patentable.” Justice Stevens, in his Opinion[6] also wanted to ban BMP’s from being patentable subject matter when he concluded that a method of doing business is not a “process” under 101.

 

Although the Bilski Opinion disallowed the Bilski application they stated that under certain conditions business methods could still be patentable subject matter. On July 27th the USPTO set up more stringent rules for the issuance of BMPs in their Interim Guidance for Determining Subject Matter Eligibility for Process Claims in View of Bilski v. Kappos. In many ways those guidelines are similar to the way computer software and hardware patents are currently being treated under the 1996 Guidelines for Computer-Related Inventions.    

 

One of the greatest challenges facing the Patent office today for BMPs, software or hardware patent applications is in discovering prior art and determining if there is an invention. The USPTO “Peer to Patent” pilot project” which  allows the public (including professionals in their respective fields) to comment on patent applications is still in its infancy, but offers the potential to assist the Patent Office in rejecting the large number of applications that are filed each year. The stated goal of the pilot project was to “connect the USPTO to an open network of experts online.”   Also, private companies e.g., the Article One Partners, a patent research firm, have the potential to significantly reduce the large number of patent litigation cases.

 

In conclusion, while I am a strong proponent of software patents I am very aware, and agree with, many of the arguments against patents because of patent trolls, frivolous patents, e.g. Amazon’s one-click patent, and frivolous patent litigation that can put companies out of business. And I support changes in the Patent Law to reduce those problems. But if one believes in the how the Patent System has fostered innovation and helped the US grow and prosper, then there is no rational reason to eliminate technology inventions that use software as its implementation.

 

In my previous article there were many comments from die-hards that continued to believe that software companies are trying to patent a computer program,  Whether those die-hards still  believe that a computer program is mathematics, or a mathematical formula, or an algorithm, or an abstract idea, so be it. Computer software programs are not what software companies are trying to patent. A software patent invention is on a unique machine process —- nothing more and nothing less. And the criteria should be 1. Innovation 2. A proper disclosure and 3. Usefulness — the same requirement that is the criteria for all patentable subject matter.

[1] Click below for a sample of many of these articles. Reading the Bilski Tea Leaves For What The Supreme Court Thinks Of Software Patents Comments on Bilski and Software Patents; Here's Bilski: It's Affirmed, But . . .No Decision on Software Patentability; Supreme Court Decision Raises Software Patent Questions; Supreme Court 'Bilski' ruling doesn't rule out software, business-method patents; Software patent debate rages on; Software, pharmaceutical, and business method patents survive; Patent Office Says No to Supreme Court and Software Patents; Death Knell For Software Patents; Software Is Not Necessarily Business Method; Software Patents and Business Method Patents Still Possible after Bilski Supreme Court Decision.

 

[2](Underlining and bold added) (pages 9 & 10) “The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age—for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals. See, e.g., Brief for Business Software Alliance 24– 25; Brief for Biotechnology Industry Organization et al. 14–27; Brief for Boston Patent Law Association 8–15; Brief for Houston Intellectual Property Law Association 17–22; Brief for Dolby Labs., Inc., et al.”

 

The Opinion went on to state:

It is important to emphasize that the Court today is not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection. This Age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Nothing in this opinion should be read to take a position on where that balance ought to be struck.

[3] While the implementation is in a computer program, the disclosure for one skilled in the art, are thru flow charts (also called logic charts) and thru block diagrams.

[4]. The Bilski Opinion closely examined the meaning and the words of 35 U.S.C 101. From 35 U.S.C. 101: Inventions patentable: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent there for, subject to the conditions and requirements of this title.

[5] The Sorting Patents below were described thru and/or gates, and as methods and apparatus for sorting data. Sorting Device, Fillebrown, 5/1961 #2,985,864; Sorting Apparatus, Guerber, 5/1960 #2,935,732; Apparatus for sorting of Recorded Digital data, Dirks 3/1966 #3,242,466.

 

[6] (page 15) Because the text of §101 does not on its face convey the scope of patentable processes, it is necessary, in my view, to review the history of our patent law in some detail. This approach yields a much more straightforward answer to this case than the Court’s. As I read the history, it strongly supports the conclusion that a method of doing business is not a “process” under §101.

 

Federal Circuit Affirms Finding of Indefiniteness in Dispute Over Mobile Phone and Camera Patents

Patent

by Dennis Crouch

The U.S. Court of Appeals for the Federal Circuit recently affirmed a finding by  Western District of Texas Judge Alan Albright that certain claims in two patents owned by WSOU Investments LLC were invalid as indefinite under 35 U.S.C. §112.  WSOU Invs., LLC v. Google LLC, Nos. 22-1066, -1067 (Fed. Cir. Sept. 25, 2023).  Although the decision is designated nonprecedential, it includes a number of interesting lessons on the requirements for definiteness and disclosure of corresponding structure under 35 U.S.C. §112.

The Technology at Issue

The first patent at issue was U.S. Patent No. 7,304,563 (“the ‘563 patent”), entitled “Alarm clock.” This patent claimed an alarm clock feature for mobile phones where the alarm involved initiating a connection to another device over a network to cause that device to signal the alarm.

Claim 16 is is recited in means-plus-function form:

issuing means for issuing an alert when the current time matches the alert time by initiating a connection to another communication terminal over a network so as to cause that other terminal to locally signal the incidence of the connection incoming thereto

‘563 Patent, claim 16. Claim 16 is clearly written in means-plus-function form, but the focus of the appeal was on claim 1, which was substantially similar.  The key difference though is that the claim 1 limitation was directed to “an alerting unit” rather than an “issuing means:”

an alerting unit configured to issue an alert when the current time matches the alert time, the alerting unit being configured to issue the alert by initiating a connection to another communication terminal over a network so as to cause that other terminal to locally signal the incidence of the connection incoming thereto

‘563 Patent, claim 1.  Judge Albright found both claims to be in means-plus-function form and the Federal Circuit affirmed on appeal.

In patent law, “means-plus-function” (MPF) claiming is a way to define an element of a patent claim by the function it performs rather than by its specific structure. This type of claiming is governed by 35 U.S.C. § 112(f), which allows patentees to express a claim limitation as “a means or step for performing a specified function.” When a claim is interpreted under § 112(f), the claim limited to the specific structure disclosed in the specification and equivalents thereof.   This limitation to actually disclosed structure (and equivalents) severely limits the scope of MPF claims that often seem much broader when read in the abstract.  But, the beauty of MPF analysis is that it is designed to preserve the validity of claims that might be unduly indefinite, not enabled, or even extent to ineligible subject matter.   Patentees often fall into the common trap of using of MPF limitations without providing adequate structure within the specification.  If no structure is disclosed in the specification for a means-plus-function (MPF) claim, the claim is deemed indefinite and therefore invalid. In re Donaldson Co., 16 F.3d 1189 (Fed. Cir. 1994).

The Federal Circuit has established a two-step framework for determining whether a claim limitation is subject to MPF construction under 35 U.S.C. 112(f). First, the court must determine if the limitation uses the term “means.” If so, a rebuttable presumption is triggered that 112(f) applies. Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015). Prior to Williamson, there was a strong presumption associated with use of the word “means.”  In particular, courts generally assumed that a claim term that did not use the word “means” was not subject to § 112(f) interpretation. Williamson altered this landscape by holding that the presumption can be quickly overcome, even if the word “means” is not present, if the claim term fails to recite sufficiently definite structure or else recites a function without reciting sufficient structure for performing that function.

In Williamson, the court noted that patentees had begun using various “nonce words” that were effectively non-limiting placeholders designed to avoid MPF interpretation.  Here, for instance, the claimed “alerting unit” is roughly equivalent to a means-for-issuing-an-alert.  The presumption against MPF can quickly be overcome in situations where the patentee uses a nonce word to designate the element if the limitation generally fails to recite sufficiently definite structure.

Looking particularly at claim the court first noted the rebuttable presumption against means-plus-function treatment since Claim 1 is directed to a “unit” and does not use the term “means.”  In rebutting the presumption, the court agreed with Judge Albright that in the context of the claims and specification, the term “unit” was defined only by the function it performs, rather than connoting any specific structure.  In its analysis, the court held that the language surrounding “alerting unit” in the claim consisted of purely functional language that provided no structural context. Terms like “configured to issue an alert” and “initiating a connection” were purely functional.  The court also looked to the specification to see how the “alerting unit”  phrase was used — finding that it was also described in the same purely functional terms as the claim language.  In the end, the appellate panel agreed with the district court that “unit” and “means” were used interchangeably in the patent, indicating “unit” was a generic placeholder rather than structural term.

The patentee WSOU had offered expert testimony on point, but the appellate court rejected the extrinsic evidence for its attempt to be a “gap filler.”

To the extent that WSOU argues that the ‘interpretation of what is disclosed in the specification must be made in the light of knowledge of one skilled in the art,’ it invites us to improperly use the knowledge of a skilled artisan as a gap-filler, rather than a lens for interpretation.  WSOU argues that a skilled artisan would ‘understand the structure involved with a mobile phone using GSM ….

However, those arguments are irrelevant as The indefiniteness inquiry is concerned with whether the bounds of the invention are sufficiently demarcated, not with whether one of ordinary skill in the art may find a way to practice the invention.

WSOU (internal citations and quotations removed).  This quote from the appellate panel rejects WSOU’s attempt to use expert testimony regarding PHOSITA to overcome the lack of structural disclosure in the specification. The court emphasizes that gaps in the specification cannot be filled by skilled artisan knowledge during the 112(f) analysis.

Having determined that claim 1’s “unit” was in MPF form, the court then moved to the next step — looking for the corresponding structure within the specification to perform the claimed function.  On appeal, the appellate panel again agreed with Judge Albright that no such structure had been disclosed.  The court examined the disclosed processor, communication engine, antenna, and communication protocols , but found no clear link between these components and the claimed function of “initiating a connection to another communication terminal over a network.” Rather, the specification disclosed these structures in a general sense without specifically tying them to the network connection function. Merely mentioning general components is insufficient to provide corresponding structure for a means-plus-function limitation. Because the patentee failed to disclose adequate structure for the “alerting unit” limitation under 112(f), Claim 1 was held invalid as indefinite.

For the ‘563 patent, the court determined that the “issuing means” limitation in Claim 16 was subject to 35 U.S.C. §112(f), which governs interpretation of means-plus-function claim limitations. The court identified two functions for this means-plus-function limitation: (1) initiating a network connection to another device, and (2) causing signaling means to locally signal the user. The court held that the specification failed to disclose sufficient structure corresponding to either of these functions, and therefore the claim was indefinite under §112(f). The court reached the same conclusion regarding the similar “alerting unit” limitation in Claim 1.

I quibble with the Federal Circuit’s doctrine on MPF indefiniteness. In particular, the court’s precedent creates an if-then approach: if no sufficient structure then automatically indefinite.  I would suggest an additional step asking whether the claim provides reasonably certain scope, recognizing that 112(f) was particularly designed to permit flexibility using narrowing of claims rather than invalidation.

The second portion of the appeal focused on U.S. Patent No. 8,238,681 that appears to include a pretty big typo within its claims:

the plurality of parts [including] a first part closest to a center, a third part farthest from the center, and a second part in between the first part and the second part.

‘681 patent, claim 1 (simplified).  You can see that the claim requires a “second part” located between the first and second part.  Nonsense.  It is pretty clear to me that the patentee intended (but did not claim) that the second part would be between the first and third parts.   Unfortunately for the patentee, this exact typo was also found within the specification, and the patent did not include a clear drawing showing the correct aspect.

The court emphasized that it cannot redraft claims to contradict their plain language, even to make them workable.

We have explained repeatedly and consistently, ‘courts may not redraft claims, whether to make them operable or to sustain their validity.’ Chef Am., Inc. v. Lamb-Weston, Inc., 358 F.3d 1371 (Fed. Cir. 2004). Even ‘a nonsensical result does not require the court to redraft the claims of the [patent at issue]. Rather, where as here, [when] claims are susceptible to only one reasonable interpretation and that interpretation results in a nonsensical construction of the claim as a whole, the claim must be invalidated.’ Id.

Slip OP.

The patents here were both originally owned by Nokia.  They were later transferred to WSOU, a patent assertion entity associated with Craig Etchegoyen, a former CEO of another patent assertion entity, Uniloc.

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Supreme Court Patent Law 2020: Long Conference Preview

Patent

by Dennis Crouch

While the country is still mourning the loss of Justice Ruth Bader Ginsburg and arguing over her replacement, the Supreme Court itself is set to begin its October 2020 term this week.  One of the first orders-of-business will be the Long Conference set for September 29, 2020. At that first conference of the term, the court is set to consider the pile of certiorari briefing completed over the summer.

There are a few key patent cases in the pile:

  • Constitutional challenge to Admin Patent Judges:
    • United States v. Arthrex, Inc., No. 19-1434;
    • Smith & Nephew, Inc. v. Arthrex, Inc., No. 19-1452;
    • Sanofi-Aventis Deutschland GmbH v. Mylan Pharmaceuticals Inc., No. 19-1451;
    • Arthrex, Inc. v. Smith & Nephew, Inc., No. 19-1458;
    • Polaris Innovations Limited v. Kingston Technology Company, Inc., No. 19-1459.
    • I believe that it is highly likely that the court will grant certiorari in Arthrex. 
  • Retroactive application of IPR to already applied-for patents: 
    • Arthrex, Inc. v. Smith & Nephew, Inc., No. 19-1204.
  • Divided Infringement and 271(g):
    • Willowood, LLC v. Syngenta Crop Protection, LLC, No. 19-1147.
  • Federal vs State Law for Patent Licensing:
    • Cheetah Omni LLC v. AT&T Services, Inc., No. 20-68.
  • Right to a Jury Trial on Specific Performance of FRAND license:
    • TCL Communication Technology Holdings Limited v. Telefonaktiebolaget LM Ericsson, No. 19-1269.
  • Patent Eligibility
    • As a whole: The Chamberlain Group, Inc. v. Techtronic Industries Co., No. 19-1299.
    • Software: Thomas v. Iancu, No. 19-1435.
    • Significantly more: Primbas v. Iancu, No. 19-1464.
    • Flash of Genius: Morsa v. Iancu, No. 20-32.
  • Due Process Issues Regarding Sua Sponte Judicial Order:
    • Ameranth, Inc., Petitioner v. Domino’s Pizza, LLC, No. 19-1351.
  • Appealing IPR Termination:
    • BioDelivery Sciences International, Inc. v. Aquestive Therapeutics, Inc., fka MonoSol RX, LLC, No. 19-1381.
  • Power of PTO To Exclude Patent Attorney:
    • Polidi v. Lee, No. 19-1430;
    • Piccone v. United States Patent and Trademark Office, No. 19-8844.
  • Obviousness – Nexus for Secondary Indicia:
    • SRAM, LLC v. FOX Factory, Inc., No. 20-158.

= = =

The court has not granted certiorari to any patent cases this term. However, Google LLC v. Oracle America, Inc., No. 18-956 is set for oral arguments on October 7, 2020.  The case focuses on copyright protection in functional aspects of software and thus may well impact patent law.  In December, the court will hear Facebook v. Duguid. Facebook is arguing that the statutory prohibition on certain debt-collection telephone calls is a violation of its free speech rights. A third case that I am watching is Van Buren v. US, which is set for oral arguments at the end of November.  In that case, the question asks “Whether a person who is authorized to access information on a computer for certain purposes violates Section 1030(a)(2) of the Computer Fraud and Abuse Act if he accesses the same information for an improper purpose.”  Here, Van Buren was a police officer who was running searches on the internal databases for a “friend.”

Supreme Court Roundup June 2020

Patent

by Dennis Crouch

The Supreme Court is wrapping up its 2019-2020 term within the next couple of weeks. I’m expecting a decision in the trademark case of USPTO v. Booking.com during this time. [updated].  A second IP case to be decided is Google LLC v. Oracle America, Inc. (copyrightability and fair-use for programming language function calls). However, the court postponed oral arguments until next term (October 2020).  In addition, the court’s actions suggest that it may dismiss the case on procedural right-to-jury-trial grounds.  In particular, the court asked for additional briefing on the standard-of-review for a jury determination regarding fair use.

Prior to the end of June, the court is likely to rule on a number of patent-focused certiorari petitions:

  • Retroactive application of IPR – Due Process + Takings claims. Collabo Innovations, Inc. v. Sony Corporation, No. 19-601; Celgene Corporation v. Peter, No. 19-1074; Enzo Life Sciences, Inc. v. Becton, Dickinson and Company, No. 19-1097; Arthrex, Inc. v. Smith & Nephew, Inc., No. 19-1204
  • Limits on Doctrine of Equivalents. Hospira, Inc. v. Eli Lilly and Company, No. 19-1058; Dr. Reddy’s Laboratories, Ltd. v. Eli Lilly and Company, No. 19-1061; CJ CheilJedang Corp. v. International Trade Commission, No. 19-1062.
  • Eligibility. The Chamberlain Group, Inc. v. Techtronic Industries Co., No. 19-1299.
  • Undermining Prior Final Judgments with IPR decisions. Chrimar Systems, Inc., v. Ale USA Inc., No. 19-1124.
  • Mootness of ITC case regarding expired patent. Comcast Corporation, v.  ITC, No. 19-1173.
  • Thryv follow on – likely to be dismissed. Emerson Electric Co. v. SIPCO, LLC, No. 19-966.

In addition, petition-stage briefing is ongoing in a handful of patent cases.

  • Right to Jury Trial to set ongoing Royalty Rate. TCL Communication Technology Holdings Limited, v. Telefonaktiebolaget LM Ericsson, No. 19-1269.
  • Standard for Prevailing Party in voluntary dismissal. B.E. Technology, L.L.C. v. Facebook, Inc., No. 19-1323.
  • 271(g) Elements of Infringement. Willowood, LLC, et al. v. Syngenta Crop Protection, LLC, No. 19-1147.

Supreme Court Postpones Oral Arguments

Patent

The Supreme Court has postponed oral arguments for its upcoming March session.  This includes two IP cases:

  • PTO v. Booking.com (Can .COM transform an otherwise generic term into a protectable trademark?)
  • Google v. Oracle (Is a software interface [an the JAVA API] protectable by copyright?)

The Federal Circuit’s next oral arguments are in April and so the court can delay any particular decision on the issue.  If you have a case before a district court judge or PTAB, check with your judges and clerks to understand timelines going forward.

Image

Supreme Court End of Term Updates

Patent

by Dennis Crouch

The Supreme Court decided only two patent cases this term.  Helsinn is somewhat important for many patentees and certainly the PTO; while Return Mail more narrowly focuses on the role of Federal Government agencies in challenging patents:

  • Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., 139 S.Ct. 628 (2019) (non-public sales are still “on sale” under the America Invents Act (AIA) rewriting of 35 U.S.C. 102).
  • Return Mail, Inc. v. United States Postal Service, et al., 139 S.Ct. 397 (2019) (IPR statute does not provide for petitions filed by the Federal Gov’t.).

Certiorari has been granted in only one additional patent case: Peter v. NantKwest. That case asks whether the USPTO is permitted by statute to recover attorney fees associated with § 145 civil actions.

An applicant dissatisfied with the decision of the [PTAB] . . . may . . . have remedy by civil action. . . . The court may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims. . . . All the expenses of the proceedings shall be paid by the applicant.

35 U.S.C. § 145. In this case Laura Peter, USPTO Deputy Director, is the named petitioner on behalf of the Government, standing in for Dir. Iancu who has a conflict of interest in the case. (Irell & Manella represents NantKwest, and Iancu was managing partner at Irell when the representation began.)

In many other countries, litigation losers commonly pay the attorney fees of the victor.  One argument against that approach is an access-to-justice problem — parties without much money will not be able to find representation if there is a good chance that they’ll have to pay the other-side’s attorney fees upon losing.  In its amicus brief supporting the Government, R Street (Charles Duan) argued that only rich pharmaceutical companies are bringing these cases. “There is thus little reason to believe that those additional expenses will greatly affect the strategic calculus of those patent applicants likely to make legitimate use of § 145.”

As R Street‘s brief outlines, § 145 are used rarely — usually for the most potentially valuable pharmaceutical patents – with top lawyers handling the case (such as Irell & Manella).  The real shift from the outcome may come from the USPTO — if it knows someone else is footing the bill, the USPTO may fight these cases harder.

Upcoming Soon: The Supreme Court has one final conference set this term (June 20) and is slated to rule on a number of pending petitions for certiorari:

  • InvestPic, LLC v. SAP America, Inc., No. 18-1199  (physicality requirement for eligibility);
  • Romag Fasteners, Inc. v. Fossil, Inc., et al., No. 18-1233 (profit disgorgement under the Lanham Act);
  • Ariosa Diagnostics, Inc. v. Illumina, Inc., No. 18-109 (prior art date for unclaimed disclosures in a provisional filing);
  • Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics America, Inc., fka Intersil Corporation, No. 18-600 (infringement associated with and “offer” made in the US to actually “sell” a product in a foreign country);
  • Dex Media, Inc. v. Click-To-Call Technologies, LP, et al., No. 18-916 (Is the 315(d) time-bar triggered by prior lawsuits that were dismissed without prejudice?); Atlanta Gas Light Company v. Bennett Regulator Guards, Inc., No. 18-999 (same); Superior Communications, Inc. v. Voltstar Technologies, Inc., No. 18-1027 (same). .

Rather than guessing at the court’s potential decisions as to whether or not to grant certiorari, I’ll just wait a few days on these to know the outcome.

We also have the beginnings of a heap of new cases for consideration next term:

  • HP Inc., fka Hewlett-Packard Company v. Steven E. Berkheimer, No. 18-415 (fact-law divide in eligibility);
  • Hikma Pharmaceuticals USA Inc., et al. v. Vanda Pharmaceuticals Inc., No. 18-817 (threshold of a natural phenomenon);
  • Google LLC v. Oracle America, Inc., No. 18-956 (copyright for software interfaces).
  • Acorda Therapeutics, Inc. v. Roxane Laboratories, Inc., et al., No. 18-1280 (obviousness and blocking patents)
  • Hyatt v. Iancu, No. 18-1285 (reopening prosecution after successful appeal; “Whether MPEP § 1207.04 violates patent applicants’ statutory right of appeal following a second rejection.”);
  • Senju Pharmaceutical Co., Ltd., et al. v. Akorn, Inc., No. 18-1418  (R.36 judgments; holistic approach to obviousness)
  • Glasswall Solutions Limited, et al. v. Clearswift Ltd., No. 18-1448 (eligibility on the pleadings; Berkheimer question);
  • Enplas Display Device Corporation v. Seoul Semiconductor Company, Ltd., No. 18-1530 (can foreign sales qualify as induced infringement of a U.S. patent — if defendant knew that “the components might be incorporated by third parties into infringing products that might be sold by other third parties in the United States.”)
  • Zimmer, Inc., et al. v. Stryker Corporation, et al., No. 18-1549 (more on treble damages — is negligence enough?)

This last set of cases won’t see any light until at least October 2019 when the Court returns from its summer break.

Congratulations to the AIPLA G.S. Rich Patent Moot Court finalists!

Patent

By Jason Rantanen

The regional round of the AIPLA Giles S. Rich Patent Moot Court competition took place last weekend.  I know how much work goes into these competitions–merits briefs on both sides plus preparation to argue both sides–so kudos to all competitors.  Particular congratulations go to the winners and runners-up, who will be competing at the Federal Courts Building in Washington D.C. on April 18-20.  The final round will be heard by Judges Prost, Reyna and Chen.

Spoiler alert: the names of the competitors and schools are listed on the next page.

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GUI Menu Structure Found Patent Eligible

Patent

by Dennis Crouch

In a split opinion, the Federal Circuit has affirmed Core Wireless win over LG Electronics [DECISION] – finding the asserted patent claimed eligible subject matter and refusing to disturb the district court’s judgment of no-anticipation and infringement. U.S. Patent Nos. 8,713,476; 8,434,020; and 6,415,164 (UK Priority Date of July 2000). The patents here are directed to user-interfaces — basically users are shown a menu of applications; Selecting on an application takes the user to an “application summary” that includes functions of the application and files (“data”) associated with each application that can be selected to launch the application and enable the file to be seen within the application.

LG Challenged Claim 8 of the ‘476 patent – arguing that was improperly directed to an abstract idea. As shown below, the claim stems from independent broad claim 1.

1. A computing device comprising a display screen, the computing device being configured to display on the screen a menu listing one or more applications, and additionally being configured to display on the screen an application summary that can be reached directly from the menu, wherein the application summary displays a limited list of data offered within the one or more applications, each of the data in the list being selectable to launch the respective application and enable the selected data to be seen within the respective application, and wherein the application summary is displayed while the one or more applications are in an un-launched state.

8. The computing device of claim 1 in which the summary further displays a limited list of functions offered in the one or more applications.

Because eligibility is deemed a question of law, it is decided by district court judges (rather than juries) and reviewed de novo on appeal. Here, the district court refused to find an abstract idea – characterizing the claim as directed to “displaying an application summary window while the application is in an unlaunched state.” In the alternative, the district court also held that key innovations of the patent would render the claims eligible under Alice Step 2. In particular, the district court noted the key innovation of “directly” accessing the application summary from the menu while the application is yet “unlaunched.”

On appeal, the Federal Circuit affirmed – finding that the invented approach here is an eligible improvement to a computer system rather than simply the use of computers as a tool.

The asserted claims in this case are directed to an improved user interface for computing devices, not to the abstract idea of an index, as argued by LG on appeal. Although the generic idea of summarizing information certainly existed prior to the invention, these claims are directed to a particular manner of summarizing and presenting information in electronic devices. . . . These limitations disclose a specific manner of displaying a limited set of information to the user, rather than using conventional user interface methods to display a generic index on a computer. Like the improved systems claimed in Enfish, Thales, Visual Memory, and Finjan, these claims recite a specific improvement over prior systems, resulting in an improved user interface for electronic devices.

Holding: Claims are not directed to an abstract idea and therefore are eligible under Alice Step 1.

All judges on the panel agreed with this holding. The disagreement between the majority (Moore & O’Malley) and Dissent-in-Part (Wallach) comes over the definition of the claim term “unlaunched state.” The majority construed the term as “not displayed” while the dissent argues that it should be construed as “not running.” The two definitions result in differing treatment of apps that are running in the background. The changed construction result would likely impact both the infringement and anticipation conclusions. For its part, the majority explained that the patent used the word “launch” in several instances to be synonymous with “displayed” – thus leading to its conclusion.

Summary Judgment on Anticipation

Patent

Semcon Tech v. Micron (Fed. Cir. 2016) (non-precedential opinion)

One narrative of the decision here could focus on the difference between the expert appellate court willing to dig into the language of the patent documents themselves and the generalist trial court ready to rely upon expert testimony explaining the underlying documents.  It is also a reminder that, for the Federal Circuit, the underlying patent and prior art documents represent the most important evidence available in a patent validity dispute.

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Summary judgment is a mechanism for short-cutting a lawsuit prior to trial.  The basic jurisprudential approach asks whether there are any genuine disputes of any material fact and whether the moving-party is entitled to judgment as a matter of law.  Fed. R. Civ. Pro. 56.  When considering the evidence produced, all justifiable inferences must be drawn in the nonmovant’s favor.

Here, the district court ruled on summary judgments that Semcon’s asserted wafer finishing method patent claims are invalid as anticipated by a prior U.S. patent.  (Holding that the claim of Semcon’s U.S. Patent No. 7,156,717 is as anticipated by U.S. Patent No. 6,010,538 (“Sun”)).   On appeal, the Federal Circuit has vacated that judgment – finding that the prior art is not as clear as the district court concluded.

Anticipation is an area ripe for summary judgment because the doctrinal question is based primarily upon objective and verifiable facts — has a single prior art reference been identified that teaches the claimed invention – including “each and every element as set forth in the claim.”

The actual dispute focuses on whether the prior art Sun describes the claimed step of relying upon both “in-situ process information” and “tracked information” to modify control parameters during the finish cycle.  For its part, the district court adopted Micron’s expert’s conclusions that Sun disclosed that claimed process. Semcon did not present competing expert testimony that seemed to seal-the-deal for the district court.

On appeal, however, the Federal Circuit dug-into the patent documents and found (as suggested by Semcon) that the portions of Sun cited by Micron’s expert did not actually support the conclusions drawn. “In fact, however, the cited portions of Sun do not appear to support Dr. Dornfeld’s characterization.”  The court then pointed to several portions of Sun that suggested that the “tracked information” was not used as a finish cycle control parameter.

Addressing the lack of competing-expert, the Federal Circuit wrote that “textual arguments” regarding the prior art reference as well as identifying inconsistencies in the opposing expert’s testimony were sufficient to create a dispute of material fact as to what was disclosed by Sun.

Federal Circuit Confirms: USITC has no Jurisdiction over Purely Electronic Products

Patent

ClearCorrect v. Align (Fed. Cir. 2016)

In its panel opinion, the Federal Circuit held that the USITC jurisdiction over the importation of “articles that infringe” does not extend to the “electronic transmission of digital data”. Rather, Section 337 of the Tariff Act is limited to “material things” as used in common parlance (i.e., beyond an “electron’s invariant mass” that may be associated with a digital transmission). See Dennis Crouch, Federal Circuit Bites Back against USITC Expansion into Electronic Importation, Patently-O (November 10, 2015).  That original panel included Chief Judge Prost who wrote the majority opinion along with Judge O’Malley who also issued a concurring opinion and Judge Newman in dissent.

Following that decision, both the ITC and the patentee (Align) petitioned for en banc rehearing with the following questions:

ITC: Must the term “articles” … be limited to physical products, such that section 337 can be evaded by a respondent that 3D prints products in the United States using imported datasets representing those products

Align: Whether the U.S. International Trade Commission has jurisdiction under 19 U.S.C. § 1337 over the importation or sale of digital articles.

In addition to the statutory language, the briefs particularly focus on two cases: Nat’l R.R. Passenger Corp. v. Boston & Me. Corp., 503 U.S. 407 (1992) (on statutory interpretation), and Suprema, Inc. v. ITC, 796 F.3d 1338 (Fed. Cir. 2015) (en banc) (ITC has power to stop infringing imports if those imports are going to be used to induce infringement of a patent method of use).

With an order issued today, however, the Court has denied the en banc petition. The vote appears to be 11-1.

Judge Newman dissented from the en banc denial:

The court now holds that the word “article” in Section 337 of the Tariff Act cannot include digital goods, although “article” is the general term used throughout judicial and agency rulings for goods in trade, including digital goods. Digital goods are included in the tariff laws; they are imported, bought, and sold; they are subject to the patent laws, and have been the subject of many infringement suits. Infringement does not depend on whether the digital goods are carried on a hard substrate, or electronically.

Section 337 does not depend on the mode of importation; it depends on whether the imported goods infringe a patent or copyright or trademark or design. The amici curiae point out the consequences of the court’s change of law, for infringing imports of books, motion pictures, and other products subject to transmission in digital form. The disruption that this ruling is already causing warrants en banc attention.

The dissent also includes an interesting footnote listing thirty definitions of the term “article” — suggesting that the definition is not so clear.

Chief Judge Prost also drafted an opinion joined by Judges O’Malley and Wallach to “address certain points newly raised by the dissent.”  The basic point is that it is Congress’s failure to “bridge the gap between the non-digital world and the digital world.” As such, the solution should come from Congress as well.

Addressing the thirty definitions, Chief Judge Prost argues that “only a handful” of the definitions support the dissent’s approach.

[Denial of the petition]

Federal Circuit Bites Back against USITC Expansion into Electronic Importation

Patent

By Dennis Crouch

In ClearCorrect v. ITC and Align Tech, the Federal Circuit reversed the ITC’s prior determination – holding instead that the Commission’s jurisdiction over the importation of “articles that infringe” does not extend to the “electronic transmission of digital data”. Rather, the court holds that the Section 337 of the Tariff Act is limited to “material things” as used in common parlance (i.e., beyond an “electron’s invariant mass” that may be associated with a digital transmission).

The opinion by the court was filed by Chief Judge Prost, although not strictly a majority opinion. Judge O’Malley joined in the holding that the ITC lacks jurisdiction over the case, but wrote a concurring opinion that differed as to issues of administrative law deference. Judge Newman wrote in dissent – arguing that the decision guts the future of Section 337 cases.

This is a 3D printer case involving teeth aligners. In this case, the accused infringer’s has a four-step process:

  1. Make a physical model of a US patient’s teeth;
  2. Use a 3D scanner to digitally recreate the patient’s initial tooth arrangement;
  3. Transmit the digital file to Pakistan where workers digitally determine a final tooth placement and generate the set of sequential aligners (digital files) to reach that result;
  4. Transmit the digital files of the aligners to the US; and
  5. Print the aligners out with a 3D printer and given to the patients.

Align alleged violation based upon a set of seven different patents, including U.S. Patent No. 6,217,325.

19 U.S.C. § 1337(a)(1)(B) provides the USITC with authority to take action against the the “importation … of articles that (i) infringe a valid and enforceable U.S. patent.” The only importation here was the set of digital 3d blueprints, but the USITC found that a digital article counts as an article and thus within the ambit of USITC authority.

The three opinions can roughly be characterized as follows:

Chief Judge Prost: Since Congress delegated authority to the USITC to resolve any ambiguity in Section 337, then the court must give deference to agency interpretations. However, there is no ambiguity about the definition of “articles” in that it should be interpreted to mean “material things” – and thus no reason to move to Chevron step two. Still, under a step-two analysis, the agency’s interpretation is unreasonable and not a permissible construction.

Judge O’Malley: This is an attempt by the USITC to regulate the Internet – an area over which it has no authority and thus need not be given deference.

Judge Newman: The ITC is designed to regulate unfair competition coming from foreign sources – that is what is going on here and should be within the agency’s authority.

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The case had potential major importance in the copyright realm. The ITC also has jurisdiction to act against importation of articles that infringe US copyrights. Allowing the ITC to take action against digital importers would create a heyday for copyright owners going after foreign streamers – especially because the USITC procedures are designed to handle the situation where the defendant is abroad.

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One thing to keep in mind is that the USITC’s jurisdiction is entirely duplicative of the federal district courts – it is simply an alternative (friendly) jurisdiction when the accused infringement involves the importation of articles. Here, the parallel lawsuit against ClearCorrect is still pending in the Southern District of Texas. That case has been stayed since 2012 pending the outcome of the USITC investigation.