In a recent decision, the Federal Circuit vacated a judgment of invalidity and remanded for a new trial, holding that the district court’s jury instruction on objective indicia of nonobviousness constituted prejudicial legal error. The case, Inline Plastics Corp. v. Lacerta Group, LLC, No. 2022-1954 (Fed. Cir. Mar. 27, 2024), involved patents relating to tamper-resistant and tamper-evident food containers.

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by Dennis Crouch

The intersection between factual inquiries and legal conclusions in patent law is a complex and ever-evolving area, this is especially true in obviousness doctrine. A recent Federal Circuit decision highlights the tricky analysis required in assessing obviousness and damages in patent cases. In Cyntec Co. v. Chilisin Electronics Corp., the appellate court examined whether the lower court’s directed verdict (JMOL) of nonobviousness improperly removed factual questions from the jury.  This case provides an important reminder of the care required in delineating the fact finding and legal determinations in patent trials.  As is common, I think both the District Court and the Federal Circuit got it wrong.

Note, the court’s decision includes an interesting analysis of damages, finding that the plaintiff’s damages expert should have been excluded. It also includes a useful claim construction decision on when to give a term its plain and ordinary meaning.

A molded choke is a device used in electronic devices to filter undesirable signals.  The device contains a coiled conducting wire encapsulated in a molded mixture of magnetic powder. The powder is heated to a sufficiently high temperature to allow it all to bond together.  The patentee, Cyntec, had experienced some difficulties in creating the devices — with the high heat causing various problems such as melting the conducting wire or its insulative layer.  The solution that they hit upon was using a mixture of magnetic powders with different hardness and particle sizes.  This permitted a lowering of the required molding temperature and thus avoided wire damage during molding.  See U.S. Patent Nos. 8,922,312 and 9,481,037.

Competitor Chilisin began selling its own molded chokes and Cyntec sued for infringement.  At trial, Chilisin presented invalidity arguments that the claims were obvious based on two prior art references – Shafer and Nakamura. However, the district court granted JMOL of nonobviousness in favor of Cyntec before the case went to the jury (i.e., directed verdict). The jury subsequently found infringement and awarded full lost profits damages based on Cyntec’s expert calculations.

Although obviousness is ultimately a question of law, it depends upon upon substantial factual finding.  The particular threshold of where factual findings end and legal conclusions begin is quite tricky in this area.  In KSR, the Supreme Court appeared quick to determine as a matter of law that it PHOSITA would have been motivated to combine the references in a way rendering the claims obvious.  In subsequent cases, however, the Federal Circuit took pains to tease out motivation to combine from the ultimate conclusion of obviousness.

“Before KSR, we had also consistently treated the question of motivation to combine prior art references as a question of fact… KSR did not change this rule ….” Wyers v. Master Lock Co., 616 F.3d 1231, 1238–39 (Fed. Cir. 2010) (as quoted in Apple Inc. v. Samsung Elecs. Co., Ltd., 839 F.3d 1034, 1051 (Fed. Cir. 2016) (en banc)).

But, the fact/law divide is a bit more complicated in Cyntec because it involves a Judgment as a Matter of Law (JMOL).  We typically have two distinct types of legal questions at the JMOL stage:

1. Regular questions of law, such as the meaning of a statute or the ultimate conclusion of a patent claim’s obviousness; and
2. Lopsided questions of fact, where the evidence so favors one-side that no reasonable jury could find otherwise.

At JMOL, the district court is empowered to make these two types of legal conclusions, but cannot otherwise invade the jury’s factfinding role.

Adding to the difficulty is the reality that determination of the Graham factors rarely lead directly to the obviousness/nonobvious determination.  In Graham, the Supreme Court indicated that courts should work through the following for step fact-finding process and then rely upon the results to make the ultimate legal conclusion of obviousness.

These factual questions include: “(1) the scope and content of the prior art, (2) differences between the prior art and the claims at issue, (3) the level of ordinary skill in the pertinent art, and (4) [if presented,] the presence of objective indicia of nonobviousness such as commercial success, long felt but unsolved needs, failure of others, and unexpected results.”

Cyntec Co. v. Chilisin Electronics Corp., No. 22-1873 (Fed. Cir. Oct. 16, 2023) (quoting Elbit Sys. of Am., LLC v. Thales Visionix, Inc., 881 F.3d 1354, 1357 (Fed. Cir. 2018)).   The point here is that even after the fact-finder has made all the factual findings, there is still quite a bit of work for a the law-decider to do.  That said, quite a bit of the work is occupied by the motivation-to-combine factual finding.

Here, the patentee presented prior art and testimony regarding a motivation to combine. The district court found the evidence insufficient and awarded JMOL for the patentee.  On appeal, the Federal Circuit vacated that decision and instead concluded that “Chilisin presented the jury with evidence that would have allowed it to reasonably find the asserted claims obvious in view of Shafer and Nakamura. . . . Taken together and drawing all reasonable inferences in Chilisin’s favor, this evidence is enough for a reasonable jury to have found that the asserted claims would have been obvious.”

I have an important nitpick with the appellate court’s decision that goes back to the complexity of the law-fact divide in obviousness analysis.  The court skipped an important step by simply concluding that a reasonable jury could have found the claims obvious. Recall that obviousness is a question of law, and at JMOL we are only concerned taking disputed facts away from the jury.  The appellate court should have instead explained something like the following: “that the defendant presented evidence sufficient to put the factual question of motivation-to-combine into dispute in a way that, if taken as true, would lead to a legal conclusion of obviousness.”

The distinction here is important, the Federal Circuit’s rule here makes it harder to award summary judgment of non-infringement because it places an additional layer of reasonableness on the ultimate legal conclusion of obviousness. But that is a question of law, and with questions of law we don’t account for reasonable fact finders but instead ask only whether the question was decided rightly or wrongly. This distinction is why legal determinations are reviewed de novo on appeal and factual findings are given deference. This analysis also reveals the dirty secret that, although the law does not permit reasonable deference into legal questions, reasonable minds regularly do disagree upon the conclusion of obviousness even after making all the underlying factual findings.

On remand, the district court must ensure that the jury is tasked only with resolving the factual disputes, while reserving the ultimate legal question for itself. Carefully delineating the fact finding and legal conclusions will be critical to applying the proper review on any subsequent appeal.

Regarding damages, the Federal Circuit found the district court abused its discretion in admitting Cyntec’s expert testimony on alleged lost profits. Cyntec’s expert used total revenue from customer SEC filings to estimate what percentage of products containing the accused chokes were imported into the U.S. However, the appellate court found his methodology “speculative” because the filings included revenue from products that did not contain accused chokes, without distinguishing between them. Citing precedent like Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348 (Fed. Cir. 2013), the Federal Circuit held the expert “assumed that (1) the sales revenue reported in the customers’ Form 10-K reflected sales of products with molded chokes; and (2) each third-party product shipped into the United States contained an infringing choke.” This “speculative” testimony should have been excluded under Daubert. The appellate panel thus vacated the lost profits award.  On remand, the damages calculation will need to be reevaluated without the flawed expert testimony, likely with a new trial focusing on obviousness and damages.

by Dennis Crouch

Steuben Food recently lost its infringement case against Shibuya Hoppmann with the district court holding (1) the doctrine of equivalents (DOE) cannot extend to cover the accused aseptic bottle filling technique and further (2) the reverse doctrine of equivalents shields the defendant against charges of literal infringement.  Steuben Foods, Inc. v. Shibuya Hoppmann Corp., No. 1:19-cv-02181-CFC, 2023 WL 2498810 (D. Del. Mar. 14, 2023) (U.S. Patent Nos. 6,209,591; 6,536,188; and 6,702,985) (Chief Judge Connolly). The case is now pending on appeal at the Federal Circuit with the successful defendant’s responsive brief due in mid-September.

• SteubenFoods Appeal Brief
• District Court Decision

There is fierce competition in the bottling industry, and Shibuya sold bottling lines to a major Steuben customer.  Steuben sued Shibuya on three patents and initially won with a jury awarding $38 million in infringement damages.  However, Chief Judge Connolly rejected the jury verdict by issuing a Judgement Notwithstanding the Verdict, holding that no reasonable jury could have found infringement.  The rules of civil procedure now identify JNOV as the perhaps more politically correct name of Judgment as a Matter of Law (JMOL).  The new name avoids the inconvenient truth that the process involves the rejection of a constitutionally protected jury decision.

Based upon what I’ve read — that admittedly does not yet include the appellee’s brief — I would side with Steuben Foods in this one.  Judge Connolly was too aggressive at rejecting the jury verdict of infringement; too aggressive at applying the vitiation doctrine to a single word within the claim; and too aggressive at applying the long dormant reverse doctrine of equivalents.

= = =

Judge Connolly’s JMOL decision turns on two controversial patent law doctrines – the doctrine of equivalents and its inverse, the reverse doctrine of equivalents.

Doctrine of Equivalents

The doctrine of equivalents allows a patentee to establish infringement, even when an accused product or process does not literally fall within the claims of the patent, if the accused product or process contains only insubstantial differences from the patent claims. The Supreme Court recognized the doctrine of equivalents in Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605 (1950), explaining that it operates to prevent copying that makes only minor, insubstantial changes to avoid the literal scope of the claims. The doctrine is justified on the basis that language has inherent limitations in capturing the true scope of an invention, so equivalents help protect the inventor and promote innovation. However, the doctrine is controversial because it expands patent scope beyond literal claim terms, reducing public notice and potentially ensnaring later-developed technologies in infringement. The Supreme Court placed key limitations on the doctrine in Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997), requiring equivalence to be assessed on an element-by-element basis and prohibiting vitiation of claim limitations.

Steuben’s ‘985 patent covers a sterilization machine and includes the following element: “wherein said atomized sterilant is intermittently added to said conduit.”  Claim 1 (emphasis added).   The problem though is that the accused device was shown to add the sterilant continuously. Although the jury found infringement by equivalents, the district court reasoned that the doctrine of equivalents could not apply in this type of binary situation.  That lead to the court’s conclusion that allowing equivalents for continuous operation would vitiate the intermittent operation limitation.   On appeal, Steuben contends the court ignored precedent against using a ‘binary choice’ approach to vitiation. See, Deere & Co. v. Bush Hog, LLC, 703 F.3d 1349, 1356–57 (Fed. Cir. 2012) (“Courts should be cautious not to shortcut this inquiry by identifying a ‘binary’ choice in which an element is either present or ‘not present.'”).   The patentee also argues that substantial evidence supported the jury’s equivalents verdict based on applying the proper function-way-result test.

This aspect of the dispute thus raises important questions about how narrowly the doctrine of equivalents should be applied. And, in addition, it challenges the power distribution between judge and jury in finding infringement.

Reverse Doctrine of Equivalents

A more surprising aspect of Judge Connolly’s decision is his application of the reverse doctrine of equivalents.  Reverse DOE allows an accused infringer to escape liability, even if its product or process literally satisfies every element of the patent claim, if the accused product or process is so substantially changed in principle that it performs the same or a similar function in a substantially different way. The doctrine originated in Supreme Court precedent such as Graver Tank and was designed to prevent unwarranted extension of patent scope over later-developed technologies functioning in new ways. However, the doctrine is controversial because it negates what would otherwise constitute infringement under the statute, conflicts with literal claim interpretation, and is seldom applied by courts today.

For the ‘591 patent, the lower court rejected the jury verdict of infringement based upon the reverse DOE — holding that the accused product operated “in a substantially different way” from Steuben’s invention as described in its specification.  Here, the claims required a “second sterile location.” Steuben accomplished this with a redesign of filling valves to avoid attracting contaminants and use of sterilant.  On the other hand, the accused product used a bellows surrounding the valve stem to prevent contamination.

The district court found the accused product’s approach to fit within the literal claim scope, but still non infringing because the approach was radically different from that described in Steuben’s specification.

In the case, Shibuya provided expert testimony of the key differences of operation by comparing the accused product against the disclosed embodiments.  During the trial, the patentee focused on the claim language and did not attempt to rebut the argument that the underlying approaches to create the sterile region was quite different.  (Steuben also apparently mischaracterized the patents disclosure). In its JMOL decision, the court concluded that the unrebutted evidence of significant difference was enough to entitle Shibuya to JMOL of noninfringement under the reverse doctrine of equivalents.  The court emphasized here that the critical issue is whether the accused device is so far changed in principle that it operates substantially differently from the claim, even if it literally infringes.

On appeal, Steuben argues the court fundamentally misapplied Reverse DOE analysis by comparing Shibuya’s device to patent specifications rather than the actual claims. It also contends the Reverse DOE improperly negates infringement, conflicting with the Patent Act.

The Federal Circuit now has the opportunity (and duty) to shape the law on these two important equivalents doctrines. On the doctrine of equivalents, the court can provide guidance on applying a legal test of vitiation versus the factually intensive function-way-result test.  In the lead up to the recent Amgen decision, many of us have had ongoing discussions about the relationship between disclosure doctrines (enablement/WD) and the doctrine of equivalents.  As one doctrine is locked-down, there is more pressure to expand the other.  With so much focus on the disclosure side, it may be time to ease up on the DOE limitations.

For the reverse doctrine of equivalents, the court can clarify if this much maligned doctrine still remains viable in today’s statutory framework.  And if so, the court should delineate the proper role of the reverse doctrine versus literal claim interpretation. As with DOE, I would argue that reverse DOE should be given to the jury to decide rather than JMOL.

The appeal was filed by Cook Alciati (Steuben’s former Chief IP Counsel, now in private practice at Gardella Grace). A team from Sterne Kessler, apparently led by appellate specialist JC Rozendaal represents the defendant-appellee.

by Dennis Crouch

Trinity Info Media, LLC v. Covalent, Inc., No. 2022-1308, — F.4th — (Fed. Cir. July 14, 2023).

Trinity Info Media sued Covalent for infringing two patents covering a process of connecting users based on polling question answers – US Patent Nos. 9,087,321 and 10,936,685. The patents describe a system where users answer polling questions and the system uses those answers to find a “likelihood of match” between users. Connections are suggested for high-likelihood matches. The system uses conventional computer components like processors, memory, servers, etc. The ‘685 patent adds limitations about performing operations on a handheld device, displaying results via swiping, and using a mobile app.

The district court granted Covalent’s motion to dismiss, finding the asserted claims ineligible under 35 U.S.C. 101. The Federal Circuit affirmed after analyzing the claims under the two-step Alice/Mayo framework:

Step 1 – Determine if the claims are directed to a patent ineligible concept like an abstract idea.

• The court found the claims are directed to the abstract idea of “matching based on questioning”, which involves collecting user information, analyzing it, and displaying results.
• This is a mental process that could be performed by humans without a computer. Using generic technical components does not change the character of the claims.

Step 2 – Determine if the claims recite an inventive concept, i.e. something significantly more than the abstract idea.

• The court found the claims do not contain an inventive concept. The additional elements like processors, servers, mobile devices, etc. are generic and conventional.
• They are used in a conventional way to apply the abstract idea, which is insufficient to qualify as significantly more.
• The alleged advance of real-time matching based on polling does not make the claims patent eligible. That merely reflects use of generic computers to speed up the process.

At oral arguments, the patentee’s attorney (Gregory Hillyer) argued that a better framing of the invention was the requiring of a “unique identifier to the answer so that that answer can find its place in a new and novel array of match servers, rather than a single match server that would have to later be searched.”  Unfortunately for the patentee these features were not actually required by the claims. Judge Cunningham pressed the patentee to identify specific non-conclusory allegations in the complaint about inventiveness. The patentee had difficulty citing anything substantial.

The patentee (Trinity) provided a number of arguments, but the court rejected each one in turn:

• Trinity argued the claims recite specific improvements to computer capabilities, like using “multiple match servers” and a “match aggregator.” However, the court found these were simply generic computer components used in a conventional way to implement the abstract idea.
• Trinity argued the claims recite a technical solution to a problem, like allowing “rapid real-time matching.” But the court found this merely uses computers to make the process faster, which is not enough for patent eligibility.
• Trinity argued humans cannot perform mental matching as fast as the claimed system. However, the court noted the claims do not require the alleged improvements in speed or capability. Rather, the focus of the claims themselves was on the abstract idea.
• Trinity argued the claims recite unconventional features like using a handheld device and swiping to review matches. However, the court found these limitations just apply the abstract idea using generic technology, and are not an inventive concept.  These were generic components by the time of the invention.
• Trinity relied on allegations that some limitations were not in the prior art. However, the court discounted these conclusory statements, noting that an abstract idea remains abstract even if some computer limitations are novel.

In the end, the appellate panel affirmed the lower court’s obviousness finding.

= = =

Patent eligibility can sometimes involve underlying factual questions, but that this was not one of those cases. The quoted Berkheimer to explain that ‘not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry.’  Here, the court also concluded that claim construction and discovery were not necessary precursors for the 101 analysis since the patentee failed to identify any proposed claim constructions or specific facts that would affect the 101 analysis.

The following is a really wonderful Guest Post from UC San Francisco Law School Professor Jeffrey Lefstin focusing on a recent ITC decision finding a claimed drill bit abstract because of its functional limitations. 

by Jeffrey Lefstin

Not too long after the Supreme Court decided Mayo v. Prometheus, I wrote an article suggesting, based on some of the history that followed Funk Brothers, that patents on ordinary industrial processes and compositions could become ineligible in Mayo’s wake. As the Federal Circuit has interpreted Mayo and Alice, some of that has come to pass. In the controversial case of American Axle v. Neapco, the Federal Circuit held claims to a process of manufacturing automobile driveshafts ineligible under § 101, because the claims were directed to ‘laws of nature’ and nothing more. And in Yu v. Apple, the Federal Circuit held claims directed to a digital camera ineligible as “abstract ideas.”

The latest development in that trend is the International Trade Commission’s decision in a section 337 investigation, In The Matter of Certain Polycrystalline Diamond Compacts and Articles Containing Same. [2022-10-26 [DI 783166].Commission Opinion] Affirming the Initial Determination, the ITC found that all of the asserted claims, directed to diamond composites that can be used in drill bits, were ineligible ‘abstract ideas’ under § 101.

The claims in the case were directed to polycrystalline diamond compacts (PDCs), which can be used as the cutting elements in tools such rotary drill bits. A PDC is composed of a diamond-containing layer (a “table”) bonded to a substrate. The diamond table is fabricated by mixing diamond grains with a metal-solvent catalyst, usually including cobalt. When the substrate and the diamond-catalyst mixture is subjected to heat and pressure, the diamond grains become bonded to each other and to the substrate.

The patents are based on the technique of fabricating the PDC at elevated pressures, at least 7.5 GPa. According to the patent specifications, PDCs fabricated under those conditions show improved diamond bonding and density, resulting in higher thermal stability and resistance to wear.

The asserted claims define the diamond table in terms of three kinds of properties: (i) structural properties, such as the size of the diamond grains; (ii) performance measures, such as the degree of thermal stability or wear resistance achieved in a compact; and (iii) other parameters, such as electrical conductivity or magnetic coercivity of the table, that are said to reflect the amount of remaining metal-solvent catalyst or the distance between the diamond grains in the table.[1]  A representative claim is from patent US10507565, with the claim limitations at issue in the case highlighted:

18. A polycrystalline diamond compact, comprising:

a polycrystalline diamond table, at least an unleached portion of the polycrystalline diamond table including:

a plurality of diamond grains directly bonded together via diamond-to-diamond bonding to define interstitial regions, the plurality of diamond grains exhibiting an average grain size of about 30 μm or less;

a catalyst occupying at least a portion of the interstitial regions;

wherein the unleached portion of the polycrystalline diamond table exhibits a coercivity of about 115 Oe to about 175 Oe;

wherein the unleached portion of the polycrystalline diamond table exhibits an average electrical conductivity of less than about 1200 S/m; and

wherein the unleached portion of the polycrystalline diamond table exhibits a thermal stability, as determined by distance cut, prior to failure in a vertical lathe test, of at least about 1300 m.

All the asserted claims were upheld against enablement challenges under § 112. However, the Initial Determination found, and the Commission affirmed, that all the asserted claims were directed to “abstract ideas” and thus not patent-eligible subject matter under § 101.

How could the ITC reach such a result? While the reasoning is not always easy to follow (the Initial Determination dismissed the electrical and magnetic properties recited by the claim as “gratuitous rather than inventive”), the crux of the Commission’s decision is its finding that the claims recite desired properties but not the way to achieve those properties:

The claims here cover a set of goals for the PDCs that the specifications posit may be derived from enhanced diamond-to-diamond bonding. The claims do not recite a way of achieving the claimed characteristics; they simply recite the desired range of values for each characteristic.

The Commission acknowledged that the specification may have taught the conditions and input materials needed to make PDCs with the recited properties – consistent with its finding that lack of enablement had not been shown. But those conditions were not recited by the claims. According to the Commission, under the Federal Circuit’s decision in American Axle v. Neapco, “unclaimed features of the manufacturing process ‘cannot function to remove [the claims] from the realm of ineligible subject matter.’” (quoting American Axle). The claims were therefore directed only to the result or goal of a diamond table with the desired properties – an abstract idea under § 101.

The Commission thus held that a composition of matter or manufacture claim, which defines subject matter in part by effect or result, is patent-eligible under § 101 only if it additionally recites the process by which the claimed material is made. Otherwise, the claim is only directed to the abstract idea of achieving that result.

That is a remarkable proposition, and would represent a drastic change in the law. For it has long been settled that composition or manufacture claims may be defined in part by function or result, so long as the claims meet the definiteness and disclosure requirements now embodied in § 112.

It is true that for a time after the Supreme Court’s condemnation of “conveniently functional language at the exact point of novelty” in General Electric v. Wabash Appliance, 304 U.S. 364 (1938), the Patent Office and the courts were hostile to the use of ‘functional’ limitations to define compositions. In In re Fullam, 161 F2d. 247 (CCPA 1947), the Court of Customs and Patent Appeals considered a claim to a method for polishing a baked resin finish, which recited the use of a novel abrasive powder – the powder being characterized in the claim only by the property of forming flocculates with the abraded material. The CCPA held that when a claim defines a material “not in terms of what it is, but of what it does,” the claim was ‘functional’ and therefore unpatentable under General Electric. This theory survived through In re Fisher, 307 F.2d 948 (CCPA 1962), where the CCPA affirmed the rejection of a claim to a hormone concentrate defined by its potency. Now framed as a question of indefiniteness under of § 112 under the 1952 Act, (now § 112(b)), the court found the claim invalid because it defined “what that concentrate will do rather than what it is.” The courts did not invalidate these claims because the boundaries of the claim were unclear, or because the claims were broader than the disclosure. Rather, any use of functional language to define a composition was sufficient to invalidate a claim.

But after casting doubt on the Fullam doctrine in In re Fuetterer, 319 F.2d 259 (CCPA 1963)[2], the CCPA settled the issue conclusively in favor of such claims in In re Swinehart, 439 F.2d 210 (CCPA 1971). Swinehart considered the following claim to an infrared-transparent crystal (useful, among other things, for the front window of heat-seeking missiles):

24. A new composition of matter, transparent to infra-red rays and resistant to thermal shock, the same being a solidified melt of two components present in proportion approximately eutectic, one of said components being BaF₂ and the other being CaF₂.

Notably, eutectic compositions of barium fluoride and calcium fluoride were known in the prior art. The desirable properties of infrared transparency and thermal resistance arose from the conditions for preparation described in the disclosure. The disclosure even stated: “The essential feature of the present invention is the growing of the instant bodies under controlled conditions.”[3] Thus exactly like the claims in Polycrystalline Diamond Compacts, the claim recited desired characteristics of the crystal, but did not state how those characteristics were achieved.

The Patent Office rejected the claim as “functional,” because not all eutectic mixtures of BaF₂ and CaF₂ would have the properties of infrared transparency and thermal resistance recited by the claim. Reversing the rejection (and explicitly overruling Fisher), the CCPA held that there was nothing intrinsically wrong in defining a composition “by what it does rather than by what it is.” The court explained that the only issues from using such a mode of definition were (1) possible lack of novelty, where the functional characteristics were inherent in the prior art; (2) possible indefiniteness under § 112, where the language was not sufficiently precise to delineate the subject matter embraced by the claim, and (3) possible insufficient disclosure under § 112, where the breadth of the claim raised questions such as scope of enablement.

Subsequent cases confirmed that claims could define compositions by results or effects, where the results depended on the unclaimed manufacturing process rather than being derived solely from the chemical or structural properties recited by the claim. For example, in In re Miller, 441 F.2d 689 (CCPA 1971), the claim at issue recited a powdered PFTE composition defined in part by desired results (such as tensile strength when sintered), and in part by ‘gratuitous’ properties (such as dielectric strength), where the recited properties arose from the process of grinding the powder. The inclusion of properties that derived from the preparation did not even raise any issue at the Patent Office, the issue in the case being whether the powder could be defined by properties manifested only when the powder was sintered in a mold[4]. Likewise, in In re Roberts, 470 F.2d 1399 (CCPA 1973) the court approved of a claim to “Corrugated polyethylene terephthalate film having a surface coefficient of friction of less than about 0.40 as determined by the Bell test,” where the claimed reduction in friction arose from production steps disclosed in the specification but absent from the claim.  According to the CCPA, “the absence in the claim of specific steps which would bring about the desired friction property is no defect. The claims define the limits of the claimed invention, and it is the function of the specification to detail how this invention is to be practiced.”

This line of authority is hardly obsolete. As recently as 2017, in BASF v. Johnson Matthey, 875 F.3d 1360 (Fed. Cir. 2017) the Federal Circuit relied on Swinehart to reverse a district court which had invalidated claims that defined a composition with functional language. Very much like the Commission in this case, the district court invalidated the claims for indefiniteness because they “recite a performance property the composition must display, rather than its actual composition.” The Federal Circuit reversed, holding that functional language was permissible so long as the claim satisfied the Nautilus standard of reasonable certainty.

But all that was before today’s regime of patent-eligibility, and before the Federal Circuit decided American Axle. When Professor Peter Menell and I filed our amicus brief urging the Supreme Court to grant certiorari in American Axle, one of the points we made was that, by making a claim’s alleged failure to describe how to carry out an invention a question of § 101, the Federal Circuit had effectively supplanted § 112. Whereas § 112 requires factual inquiries about what the disclosure teaches, American Axle teaches that under § 101 the only question is whether the “claim on its face” describes a way to reach a particular result.

At least in American Axle there might have been questions whether the claims met the requirements of § 112.[5]  So perhaps we could justify the outcome in American Axle as an I-know-it-when-I-see-it test for lack patentability under § 112, much as Alice has become an I-know-it-when-I-see-it test for lack of patentability § 103. Yet in Polycrystalline Diamond Compacts the Commission specifically found that lack of enablement had not been proven. The claims were nonetheless invalid under § 101 as directed to results rather than solutions.

While perhaps surprising, the Commission’s decision is a logical development of American Axle’s approach. To quote American Axle, “features not claimed are irrelevant to step 1 or step 2 of the Mayo/Alice analysis.” The CCPA’s articulation of the basic truth of patent law in Roberts – that the claims define the limits of the invention, and the specification details how the invention is to be practiced – is arguably no longer good law following American Axle.

Rather ironically, the Commission’s patent-eligibility analysis begins with this quote from Classen Immunotherapies:[6] “The statement of patent-eligible subject matter has been substantially unchanged since the first Patent Act in 1790.” But if the Commission is correct in its application of American Axle, the Supreme Court and the Federal Circuit have swept away decades of patent jurisprudence. No doubt the judges of the CCPA would have been surprised to learn that the claims in Fuetterer, Swinehart, Miller, Roberts, and similar cases I have not mentioned here, were all “abstract ideas,” because the claims recited functions depending on “features not claimed.”

And when courts wrestled with the enablement of biotechnology claims in cases like In re Fisher, 427 F.2d 833 (CCPA 1970), or Amgen v. Chugai, 927 F.2d 1200 (Fed. Cir. 1991), where the claims recited molecules defined by their biological activity, the judges could have avoided painstaking inquiry into the facts of enablement, because the claims failed to recite how to achieve the desired activities. And today the Supreme Court can save itself a great deal of time in in the pending enablement case of Amgen v. Sanofi, because the claims are clearly directed to the ‘abstract idea’ of antibodies that block the interaction of the PSCK9 and LDLR proteins, without identifying how those antibodies are achieved.

The Commission’s decision is currently on appeal. No doubt the Federal Circuit could resolve the case, if it is so inclined, with an ad hoc rule that claims to compositions of matter are not directed to abstract ideas – much as Vanda imposed an ad hoc rule that methods of treatment are not directed to laws of nature.[7] But without addressing the deeper doctrinal and historical errors of American Axle (and ultimately Mayo), the courts may find themselves endlessly plugging their fingers in the leaking holes of today’s patent-eligibility regime. At some point we  might come to think that the whole edifice is built upon a rotten foundation, and perhaps would be better swept away.

= = = = =

[1] Less remaining catalyst and shorter grain-grain distances are both advantageous.

[2] Fuetterer cited the 1952 Act’s new provision on functional claiming that now appears as § 112(f). Some, but not all, of the CCPA’s subsequent case law on compositions relied on this provision as well. Swinehart was not based on this provision, but the court took it as evidence that its approach was consistent with Congress’s intent. The CCPA extended the use of functional claiming to the radical group of a compound (as compared to an ingredient in a composition) in In re Barr, 444 F.2d 588 (CCPA 1971).

[3] U.S. Patent 3,766,080. Those techniques were described in the disclosure as “conventional crystal-growing techniques.”

[4] It could be so defined, according to the CCPA.

[5] In American Axle the district court denied the defendants’ indefiniteness challenge, and the defendants did not raise lack of enablement or written disclosure.

[6] 659 F.3d 1057, 1063 (Fed. Cir. 2011).

[7] But ominously, the Federal Circuit’s recent decision in Chromadex applies the Mayo/Alice two-step inquiry to a composition claim as an alternative analysis.

Provisur Technologies, Inc. v. Weber, Inc., Docket No. 5:19-cv-06021 (W.D. Mo. Feb 22, 2019)

A jury has sided with Provisur and issued a $10 million verdict against its  food-processing machinery competitor Weber Maschinenbau. This is about half what Provisur requested.

The patents cover various various high-speed slicers, conveyors, and packaging equipment.  I spent a summer working on the line of a bacon packing factory and know how critical it is to have machinery that is speedy and safe, and works well even with variable inputs and poorly trained handlers.

Following a nine-day trial, an eight-member jury found claims from three of the four asserted patents infringed.  The Judge in the case is Stephen Bough, a 2014 Obama appointee.  In cases like these, Judge Bough generally seats a six-member jury with two alternates. (Under FRCP 48, the jury needs to have at least six jurors in order to render a verdict in civil cases). 

The jury also found the infringement willful. The patentee will likely use that willfulness verdict to request punitive damages.   In post-verdict motions, the defendant will likely renew its motion for Judgment as a Matter of Law. A key question is raised in the pre-verdict JMOL motion was whether the patentee is entitled to rely upon an Entire Market Value Rule to calculate damages rather than an apportionment approach.  The patentee also indicated in its pre-trial brief that it planned to also seek injunctive damages.  That equitable issue is decided by a judge rather than jury.

One interesting aspect of the verdict is that the jury was authorized to to decide the case on either literal infringement or under the doctrine of equivalents (DOE).  The verdict form did not, however, require the jury to distinguish between the two. Thus, the verdict can be upheld on either ground. I have included the jury instructions on DOE below.

The patentee was represented by Willkie Farr & Gallagher on a team led by Craig Martin.  Sterne Kessler represented the defendants.  This appears to be one of several ongoing patent battles between the two parties in US court, the PTAB, and abroad.

by Dennis Crouch

The Supreme Court has strongly supported arbitration as an alternative dispute resolution mechanism.  The Federal Arbitration Act (FAA) codifies this “liberal federal policy favoring arbitration agreements.”  Quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).  Although the right to arbitrate patent cases is seemingly clear from the FAA, Congress went further in its 1982 PTO appropriations bill to expressly codify the enforcement of arbitration agreements for “any dispute relating to patent validity or infringement.”  35 U.S.C. 294.  Sometimes a party subject to arbitration will still file their dispute in court. At that point, the opposing side will move to stay or dismiss the case and compel arbitration.

The core question in MaxPower Semiconductor (Fed. Cir. Sept 8, 2021), is whether the arbitration agreement can be used to cut-short an inter partes review (IPR) proceeding.  Here, the Federal Circuit effectively sided with the PTO and the patent challenger and refused to compel arbitration. The majority opinion is by Judge Reyna and joined by Judge Chen. Judge O’Malley dissented — arguing that the court failed to live up to the statute:

The majority’s denial of a writ of mandamus in this case allows the Patent Trial and Appeal Board to add a new caveat to Congress’s clear instruction that agreements to arbitrate patent validity shall be “valid, irrevocable, and enforceable”—i.e., except during inter partes review.

O’Malley in Dissent.

Background: MaxPower worked for several years with Rohm Semiconductor to develop RFP power transistor technology. MaxPower obtained the patents and licensed those to ROHM with an ongoing running royalty.  The license included an arbitration agreement.   Money flowed for several years.  Rohm eventually developed a new silicon carbide transistor and privately suggested new product was not covered by the agreement.   At that point, MaxPower provided notice that it was planning to initiate arbitration in 30 days.  ROHM acted first — filing the IPR petition at issue here as well as a lawsuit in N.D. Cal. seeking a declaration of non-infringement of the same patents.  The N.D. Cal. Judge granted MaxPower’s petition to compel arbitration, and the appeal of that determination is separately pending before the Federal Circuit.

The PTAB instituted the IPR — holding that it was not bound by the Federal Arbitration Act or Section 294 of the Patent Act. According to the PTAB, those provisions are tied to civil litigation, not USPTO proceedings.  PTAB explained:

After careful consideration of this issue, we conclude that the arbitration clause is not a reason to decline institution. Even if Patent Owner’s recitation of the facts is true, and even if the question of whether patentability falls within the scope of the agreement to arbitrate is committed to the arbiter, we nevertheless do not find a statute, rule, or policy that would preclude the Office from acting on the Petition.

Institution Decision. MaxPower immediately appealed.

NonAppealable: The first problem with MaxPower’s appeal is the statutory rule that institution decisions are nonappealable.  35 U.S.C. § 314(d). The court also ruled that mandamus  was not appropriate here because it was being used as a “means of avoiding the statutory prohibition on appellate review of agency institution decisions.” In re Power Integrations, Inc., 899 F.3d 1316 (Fed. Cir. 2018). Another way to get to appeal is via the collateral order doctrine, but, according to the court, that doctrine also requires an issue of rights that “will be irretrievably lost in the absence of an immediate appeal.” Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214 (Fed. Cir. 2013).

The FAA itself also creates a right of appeal for refusing to stay any action subject to arbitration.  However, the right to stay under the FAA is limited to stays of proceedings in Federal Court. As such, that provision also does not apply.

In the end, the Federal Circuit found no authority to hear the appeal, and thus dismissed the appeal and denied the mandamus petition.  The court suggested that it might be able to do something once the IPR concludes and a right to appeal attaches. However, the court also noted that the questions here might all be wrapped-up in non-appealable initiation questions. “If MaxPower is truly not raising matters that are absolutely barred from appellate review under section 314(d) (an issue we need not decide here), then MaxPower can meaningfully raise its arbitration-related challenges after the Board’s final written decisions.”

In dissent, Judge O’Malley would have heard the case on mandamus.  The court’s failure to hear the case “cast[s] a shadow over all agreements to arbitrate patent validity, which, after today, apply only in district courts and not in inter partes review proceedings.”

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I have not seen the arbitration agreement in this case. But there is usually a big question about whether patent validity and/or infringement are covered by the agreement that is particularly focused on licensing.   The district court’s parallel decision staying its case to await the arbitration outcome is set for Oral arguments in October.  The Judge did not actually determine the question of arbitrability, but rather found that issue was for the arbitrator to resolve.

by Dennis Crouch

The Alice test officially includes two steps. But these are highly correlated steps. Thus, if a claim fails step one, it usually fails step two as well. In this case, the court appears to borrow heavily from typical step two analysis in order to make its step one conclusion:

Universal Secure Registry v. Apple and Visa (Fed. Cir. 2021)

The district court dismissed USR’s patent infringement complaint, holding of all four asserted patents were ineligible under the abstract idea test incorporated into 35 U.S.C. § 101.  On appeal, the Federal Circuit has affirmed. U.S. Patent Nos. 8,856,539; 8,577,813; 9,100,826; and 9,530,137.

The patents here are directed to technology for securing electronic payment transactions.  This is an area of technology that the Federal Circuit has previously addressed. Here, the court notes that cases “often turn[] on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself.” Slip Op. Note that this statement from the court has two specific requirements: (1) that the claims be drafted with specificity; and (2) that the element claimed by an “improvement to computer functionality.”  Generic claims are not enough; neither are specific claim limitations directed toward elements already well known in the art.

• Secured Mail Solutions LLC v. Universal Wilde, Inc., 873 F.3d 905  (Fed. Cir. 2017) (use of conventional generically claimed barcode to communicate information about the object being mailed was an abstract idea).
• Electronic Communication Technologies, LLC v. ShoppersChoice.com, LLC, 958 F.3d 1178 (Fed. Cir. 2020) (requirement of input, storage, and use of generically claimed authentication information was abstract).
• Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161 (Fed. Cir. 2019) (use of well known check verification method did not save the claims from being abstract).
• Prism Technologies LLC v. T-Mobile USA, 696 F. App’x 1014 (Fed. Cir.
  2017) (receiving and authenticating identity data to permit access was abstract since they were claimed generically rather than offering a “concrete, specific solution”).

Here, the claimed method enables a merchant transaction. The merchant is given a time-varying code instead of a credit card number.  That code is then set the credit card company servers for authorization, including any restrictions on transactions with the merchant.  The company then either approves or denies the transaction.  This approach allows for purchases without actually providing the merchant with the “secure information” such as the credit card or account number.

The district court identified the abstract idea here of “obtaining the secure verification of a user’s identity to enable a transaction.” On appeal, the Federal Circuit suggested that analysis wasn’t entirely correct, but did agree that the claims are directed to an abstract idea.

In our view, the claims “simply recite conventional actions in a generic way” (e.g., receiving a transaction request, verifying the identity of a customer and merchant, allowing a transaction) and “do not purport to improve any underlying technology.” Solutran. Accordingly, the claims are directed to an abstract idea under Alice step one.

[T]he asserted claims are directed to a method for verifying the identity of a user to facilitate an economic transaction, for which computers are merely used in a conventional way, rather than a technological improvement to computer functionality itself.

Slip Op.   The court found this case “closer to the demarcation line between what is abstract and non-abstract” than some other cases, but still on the wrong side of the line.

As you’ll see, the court’s conclusions in Alice Step One (conventional actions in a generic way) fully answer Alice Step Two as well.   The court particularly notes that time-varying codes were already well known in the field. Further, this case of using a third-party intermediary is also well known and an abstract idea itself.

Invalidity Affirmed.

Notes

• The court walked through several other related claims, including the use of a biometric sensor, but found them all abstract.
• The decision discussed here was precedential. The court also released four non-precedential USR v. Apple decisions. Apple v. USR, 20-1330.  The PTAB sided with the patentee in an IPR and found claims of US8856539 not proven invalid.  That decision was vacated based upon the invalidity finding.  See also, Visa and Apple v. USR, 20-1662 (Same result); Apple v. USR, 20-1222 (appeal rendered moot); Apple v. USR, 20-1223 (appeal rendered moot; vacate and remand for dismissal; holding that substitute claim was also ineligible).

by Dennis Crouch

In the USA, COVID vaccines have been widely distributed and are now available at no cost almost on-demand for anyone seeking vaccination.  Vaccines are not widely available in most other countries and global COVID cases are again at an all-time high.

And, people around the world don’t really trust that Pfizer, Moderna, and J&J are going to be serving them anytime soon.  That is where the TRIPS waiver comes into play.

TRIPS:  Countries around the world are asking for a waiver of some aspects of the international intellectual property (IP) agreement known as TRIPS as part of their response to the global COVID pandemic.  This IP Waiver would be a first step toward countries and companies around the world manufacturing, distributing, and importing already developed vaccines, such as those now being distributed in the USA by J&J, Pfizer, and Moderna. Without the IP waiver, a country could suffer trade penalties if they permitted production or importation in violation of rights.  The penalties are setup in a country-versus-country bases and do not allow for any private action by the individual rights holders. Thus,  the TRIPS dispute resolution process does not provide Pfizer standing to sue India for violating IP rights guaranteed under TRIPS; Rather Pfizer could only lobby to the U.S. Government to bring a case, which traditionally might have done.

The U.S. Government is reportedly going to support the waiver proposal, although there are current ongoing negotiations over its actual text and content.  Even without a WTO waiver, the US can also act unilaterally to announce that it would not bring any TRIPS cases associated with violations.  This is a major change of policy under President Biden and his new U.S. Trade Representative Katherine Tai.  In the past, the US has always been on the side of stronger IP rights and more enforcement.

Trade Secrets + Patents: In the short-run, the big difference is more about trade-secrets than patents.  In the longer run, patents may become equally important.

If we take India as an example, right now there are no patents that have been granted in India tied directly to the COVID response.   So, allowing India to waive its promise to enforce patents does not generate any short-term gains. Here, by short-term, I’m really talking about the next two years or so.  Hopefully by that time the pandemic will be gone.

Trade secrets are different, most of the “intellectual property” wrapped up in COVID vaccine manufacture is currently being held as trade secrets.  Obviously the companies manufacturing the product have the information. Many countries also have information that they received in the process of (1) funding the research and (2) determining whether to allow the vaccines to be distributed.  International espionage is also a major element here that will put the information in the hands of various  governmental agencies.

TRIPS require that countries protect trade secrets, and also keep secret the information provided as part of regulatory approval.

Article 39

1. In the course of ensuring effective protection against unfair competition … Members shall protect undisclosed information in accordance with paragraph 2 and data submitted to governments or governmental agencies in accordance with paragraph 3.

2. Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices (10) so long as such information: (a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

[TRIPS Text]

The original proposed WTO waiver would have waived this trade secret protection requirement — a really big deal.

Waiver of the requirement does not force the companies to actually conduct any technology transfer — to provide the information to others who want to manufacture.  BUT, it does open the door to governments sharing the information and also to a major WIKILEAKS style sharing of data and information.  I believe that a whistle-blowing is actually quite likely because so many scientists and business insiders are wanting to do everything they can to spread the vaccine, but don’t believe that it will be permitted by the CEOs and Shareholders.

The other thing that this does is substantially shift the negotiation positions.  This waiver signals to the current vaccine-makers to speed-up global access.

We’ll be looking for President Biden’s action on this as we move forward.  As I mentioned above, negotiations are ongoing and I expect a focus on timelines (when does the waiver end) and scope (exactly what is being waived).

by Dennis Crouch

In re Aspen Aerogels, Inc. (Fed. Cir. 2020) (non-precedential)

The basic question in this ex parte appeal is whether the asserted references teach the layering of aerogels as required by the insulation materials claim pending before the USPTO.  The pending APN 14/446,663 was filed in 2014, but claims a chain of priority stretching back to a 2005 provisional patent application. The basic idea here is that aerogel is a great insulator, but is fragile, so the claim requires fiber-reinforcement.  The claim particularly requires two plys of fiber-reinforced aerogel — and that the fibers in the plys are interlaced with one-another.

Claim 1: A composite comprising

[a] at least one first ply of fiber-reinforced aerogel material adjacent to [b] at least one second ply of fiber-containing material,

wherein fibers from the at least one first ply of fiber-reinforced aerogel material are interlaced with fibers from the at least one second ply of fiber-containing material.

The examiner rejected the claim as obvious and that was affirmed by the PTAB. The Federal Circuit has now affirmed.

• U.S. Patent App. No. 2002/0094426 (Stepanian) taught having the two layers of fiver-reinforced aerogel, but did not teach the interlacing of fibers.
• Japanese Patent No. 2000-080549 (Sano) teaches interlacing of fibers of layers using needle-felting.

Aspen’s argument on appeal is that Stepanian does not actually teach plys as claimed but rather two masses of undifferentiated aerogel.  On appeal here, Aerogel presented this as a question of law involving the definition of the term claim term “ply.”  The Federal Circuit here rejected that approach — holding instead that the real question is whether the prior art discloses the plys.  The difference between these two approaches is very important on appeal: Claim construction is reviewed de novo on appeal without deference to the PTO determination; Content of the prior art is reviewed for substantial evidence with major deference going to the PTO.

[W]e determine the issue to be a factual question of whether the prior art teaches an undifferentiated mass of aerogel or teaches layers of fiber-reinforced aerogel as the Board determined. We review this issue for substantial evidence.

Slip Op.  Stepanian (which I have previously discussed in PatentlyO) clearly shows layers, and particularly defines Fig 3 (below) as disclosing “a 3-layer laminate.”  But, the issue is that Stepanian stacks the fibers and then pours in the areogel over the layers of fibers.  The PTAB made the factual conclusion that Stepanian disclosed “plys” of fiber-aerogel, even with the pour-over approach, and the appellate panel found substantial evidence for that conclusion.

Whether layers of fibrous material are filled with aerogel and then stacked or stacked and then filled with aerogel makes no difference if the result is the same as the claimed composite here.

Slip Op.

Note here, that Aerogel is also the owner of the Stepanian patent application (and issued patent). The problem though is that the Stepanian application was published back in 2002, more than 1-year before the priority date of the application at issue here.

Rejection affirmed.

If there really is a claim-construction issue here, on remand the patentee may want to amend its claims to make the proper construction exceedingly clear and then rejoin the rodeo.

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If we go back to the heart of this matter: Aergoel appealed on claim construction, the Federal Circuit says “the real issue is not claim construction but rather the content of the prior art” (paraphrase).  The court then goes on to refuse to decide the claim construction issue and instead decide the case on the alternative grounds.

Truthfully, this seems wrong. The appellate court should have decided the issue raised by the appellant (claim construction) and ended the case there.  I read appellant’s brief who particularly stated that no factual question is being appealed: “There is no dispute here about any relevant fact.”

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Poongs Muthukumaran, chief counsel for Aspen argued for his employer; Kakoli Caprihan argued for the PTO.