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Laching-On to Inexcusable Behavior

Patent

Guest Post by Jordan Duenckel.  Jordan is a second-year law student at the University of Missouri, head of our IP student association, and a registered patent agent. 

The Federal Circuit released its opinion in Personalized Media Communications, LLC, Vs. Apple Inc., Docket No. 2021-2275 on January 20, 2023, in a dispute involving an alleged pattern of inappropriate conduct during patent prosecution. In a split decision, the Federal Circuit ruled that the district court did not abuse its discretion in declaring a patent unenforceable based on prosecution laches.

Apple FairPlay uses digital rights management (DRM) to limit user access. Specifically, FairPlay encrypts data and uses “decryption keys” to control decryption. As an additional added layer of security, Apple further encrypted these decryption keys and this further encryption is the basis for the patent infringement suit brought by Personalized Media Communications, LLC (PMC) based on PMC’s U.S. Patent No. 8,191, (the “’091 patent”). The jury reached a unanimous verdict and awarded $308 million to PMC for infringement of claims 13-16. Despite the favorable verdict on infringement, the district court eventually sided with Apple by holding the ‘091 patent unenforceable based on the equitable affirmative defense of prosecution laches. Prosecution laches requires proving two elements:

  1. The patentee’s delay in prosecution must be unreasonable and inexcusable under the totality of circumstances; and
  2. The accused infringer must have suffered prejudice attributable to the delay.

Hyatt v. Hirshfeld, 998 F.3d 1347, 1359–62 (Fed. Cir. 2021).

PMC’s applications were pending for 16 years before the claims were presented for examination.  During that process, PMC filed several thousands of claims.  PMC’s application was one of the few pre-GATT applications still pending at the USPTO, having been filed on the June 7, 1995, deadline.  The legal result is that the patent term extends 17 years from its 2012 issuance date (34 years from the filing date). But, the district court concluded that equity could not maintain the result because PMCs delays were unreasonable and inexcusable.

PMC raised a number of justifications on appeal, perhaps most interesting is that PMC’s prosecution strategy was in line with the “Consolidation Agreement” it made with the PTO. The agreement was part of the USPTO’s efforts to move out these old cases.  According to the procedure, where PMC was to designate “A” applications and “B” applications, with the PTO prioritizing “A” applications. Rejected claims would transfer to the corresponding “B” application and prosecution of “B” applications was stayed until the corresponding “A” application issued. This A to B process, in effect, allows PMC to delay the examination of applications and allows two chances for examination without paying a continuing examination fee.

On appeal, the majority, written by Judge Reyna and signed by Judge Chen, did not see this scheme as an excuse, but rather as further evidence of PMC’s inexcusable behavior in the prosecution process. In dissent, Judge Stark suggested that Apple had failed to show prejudice attributable to PMC’s delay.

Typically, an accused infringer can show prejudice based upon investment or use of “the claimed technology during the period of delay.” The majority concluded that Apple necessarily invested in FairPlay during the delay since it launched the product in 2003. The dissent focuses on the timeframe of the PMC’s conduct, finding that it was PMC’s pre-2000 conduct that was unreasonable while the post-2000 conduct involved more routine aspects of patent prosecution’s back-and-forth nature.   But, Apple did not prove that it was prejudiced by the pre-2000 conduct.

My thoughts: Prosecution laches is a remedy meant to address abuse of the patent system and necessarily must be flexible to meet ever-changing strategic conduct. PMC employed a business strategy deliberately aimed at creating a labyrinth of patent protection extending beyond the statutory twenty years, directly stating that the goal was patent coverage extending 30 to 50 years.  Further, PMC was unable to provide a legitimate purpose for the delays that aligns with the general goals of patent protection.

To me, the prejudice suffered by Apple is clear. At the time that Apple was developing FairPlay, they were unable to know the full scope of PMC’s patent protection. The chronological line drawing that the dissent favors ignores the practical effects of PMC’s ongoing deliberate business strategy.  Although the unreasonable acts may have taken place prior to 2000, the impact of those actions continued well beyond. The attempt to distinguish post-2000 activities as prejudicial or not in isolation avoids the totality of the circumstances that equitable remedies like prosecution laches are meant to address.

Rudy finally gets his Whale

Patent

Christopher Rudy filed his fishing hook patent application back in 1988 with a file-wrapper-continuation in 1989.  At the time he was already a patent attorney and so worked his own case.  But, the USPTO offered some resistance.  The BPAI/PTAB issued three different opinions on record, and the Federal Circuit also issued a 2020 decision holding that some of the claims were directed to the unpatentable abstract of “selecting a fishing hook based upon observed water conditions.”  In re Rudy, 956 F.3d 1379 (Fed. Cir. 2020). Back on remand, Rudy cancelled the offending claims and finally received his U.S. Patent No. 11,406,092.  As a pre-GATT patent, the term should last for 17-years from issuance.  That makes a pretty good run going forward: the patent will issue 51 years after its original filing date.  This is the first pre-GATT patent issued since 2020.  Over the past five years, the Office has issued about 25 (none to Gil Hyatt). A number of these were held in abeyance due to DOD Secrecy Orders. As far as I know, the only one being litigated is 9,674,560 owned by Personalized Media Communications.

= = =

Rudy’s basic discovery was that fishing-lure selection is not a one-size-fits-all situation.  He particularly noted that factors such as water-clarity and light intensity at fishing depth will impact lure color selection.  The patent includes a nice table:

The recently issued patent includes a number of apparatus and method claims.  My favorite is No. 16, which claims a surefire method for catching a fish.

16. A method to catch fish, comprising steps of

(1) observing clarity of water to be fished to determine whether the water is clear, stained or muddy,

(2) measuring light transmittance at a depth in the water where a fishing hook is to be placed, and then

(3) selecting a color of the fishing hook to be used by matching the observed water conditions ((1) and (2)) with a color [from the table above]

then attaching the selected hook to a fishing line,

then placing the attached, selected hook in the depth in the water where fishing is to take place,

and then catching the fish with the attached, selected hook,

wherein the fishing hook used is disintegrated from but is otherwise connectable to a fishing lure or other tackle and has a shaft portion, a bend portion connected to the shaft portion, and a barb or point at the terminus of the bend, and wherein the fishing hook used is made of a suitable material, which permits transmittance of light therethrough and is colored.

US-11406092-B1.  The nice thing about Rudy’s claim here is that you only owe a royalty if you actually catch a fish.

Despite “Winning” its Appeals, Sawstop still denied Type-C Patent Term Adjustment

Patent

by Dennis Crouch

Sawstop v. Vidal, — F.4th — (Fed. Cir. 2022)

This is a Patent Term Adjustment (PTA) case.  Back before 1995, patents were awarded a term of 17-years following issuance.  As part of an international negotiation and with some anti-submarine policy justifications, the US switched over to a 20-year term that starts counting days as of the application’s filing date.  The 20-year term from filing date was seen as roughly equivalent to 17-years from issuance since most patent applications take about three years to issue.  In the end, this kept overall patent term roughly the same. But, it also allowed for some major variability. Some patent applicants were concerned that delays by the USPTO due to backlogs or unreasonable examination practices might effectively cut into the patent term.  Congress heard those concerns and created the PTA system that adds extra days to the patent term when those delays exist. 35 U.S.C. § 154(b). Unfortunately, the PTA statute is not a model of clarity and has been the subject of numerous court battles over various quirky elements.

The provision at issue in Sawstop has to do with PTA added for PTAB appeals and district court challenges. Under the law, added term is triggered by the following:

(iii) appellate review by the [PTAB] or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability,

35 U.S.C. § 154(b)(1)(C)(iii).

I have written previously about Sawstop technology that covers a safety feature for power saws “that instantly stops the saw blade upon contact with flesh.”  The appeal here is a consolidated appeal regarding two Sawstop patents.  Sawstop is struggling because its patents are all expiring and competitors are hot-on-its-heels.

In the first case (‘476), the applicant had appealed an obviousness rejection by the examiner.  The PTAB rejected the examiner’s decision, but simultaneously issued a new ground of rejection on obviousness. Thus, the ultimate conclusion was that the rejection was affirmed, albeit for different reasons.  On remand, the claims eventually issued, but only after an RCE (which cut-off further PTA).  After the patent issued, the owner asked for PTA associated with the PTAB appeal, but the PTO refused as did the district court. 

In the appeal, the Federal Circuit has also sided against Sawstop.  The rule quoted above is triggered by “a decision in the review reversing an adverse determination of patentability.” On appeal, the Federal Circuit found no reversal by the PTAB — although it did “cast aside the examiner’s basis for rejecting claim 11,” the Board simultaneously established reasoning for rejecting that same claim.  The result was that the claim remained rejected.  The Federal Circuit here focused on the substantive outcome — the patentee’s appeal was not successful and therefore there was no reversal.

The Federal Circuit also addressed a second element of the test — that the “patent was issued under a decision in the [appellate] review.”  The court has interpreted that requirement as mandating that at least one claim considered by the PTAB have found its way into the issued patent without significant or substantive post-appeal amendments. Here, the patentee had amended the claims after the PTAB decision in order to achieve allowance.  Thus, no Type-C PTA.

The second case (‘796) is a bit more complicated, the applicant had appealed rejections of claims 1 and 2 for anticipation a non-statutory double patenting (provisional).  The Board issued a partial-reversal–holding that claim 1 was no good, but claim 2 was patentable. But Sawstop really wanted claim 1 and so filed a civil action with the DC District Court–and won that case.  The one caveat is that the civil action focused only on anticipation and did not address non-statutory double patenting.  Back at the Office, the PTAB maintained its double-patenting rejection and Sawstop was given a choice: (1) drop claim 1 or (2) file a terminal disclaimer.  Sawstop chose the latter, and cancelled claim 1.  But again, filed an RCE with several further amendments to other claims and the specification before eventual allowance.

The USPTO awarded PTA for the successful PTAB appeal, but refused any PTA for delay in getting the district court decision. On appeal, the Federal Circuit affirmed this analysis again on two grounds.  First, although the district court did reverse the anticipation claim, it did not decide that claim 1 was “patentable.”  As such, the court did not “revers[e] an adverse determination of patentability.”  Sawstop had argued that – at the time – the OTDP rejection was only provisional and thus should not count.  The Federal Circuit might have bought this argument if Sawstop also explained that it was somehow barred from including the issue in its Section 145 Civil Action, but Sawstop did not provide such an explanation.  The second reason for agreeing with the PTO is that Claim 1 (the Subject of the District Court civil action) never issued in the patent.  And, as discussed above, the court has interpreted the rule to only apply when the claim at issue in the ‘appeal’ ends up in the issued patent.  Thus, no Type-C PTA for this one either.

Throughout this process, the Federal Circuit repeatedly justified its ruling as a plain language interpretation of the rule.  I’ll note, however, that the court does not do so with the “appellate review” portion of the statute.  A Section 145 civil action is not an appellate review of the PTAB decision, but rather separate action.  See Kappos v. Hyatt, 566 U.S. 431 (2012). But, the court appears to have no trouble seeing it as an appeal in this context.

= = =

Judge Linn wrote the decision here joined by Judges Newman and Chen.  Sawstop was represented by Jared Newton and his team from Quinn Emanuel as well as David Fanning, SawStop’s inhouse counsel. Hugham Chan the E.D. Va. US Attorney’s Office argued for the Gov’t.  Chan & Newton both graduated from GWU Law in 2010 & 2011 respectively. Chan is a former clerk of Judge Chen; Newton is a former patent examiner.

Supreme Court – Looking Forward to 2022-2023

Patent

By Dennis Crouch

The Supreme Court has closed-out its 2021-2022 term without deciding or granting certiorari in any patent cases.  Overall, the court denied certiorari in 40+ patent cases, including the biggest case of American Axle.  I’ll post a review of those denied cases later this month. Meanwhile we can start a preview for the 2022-2023 term.

Eight patent cases are now pending before the Supreme Court. Several focus on the written description and enablement requirements of 35 USC 112(a).

The current most-likely big case is Amgen Inc., et al. v. Sanofi, No. 21-757.  Amgen asks fundamental questions of how the enablement doctrine should operate and whether enablement is a question-of-fact or a question-of-law. These are important issues fundamental to patentability that also touch on some of the same principles as  the eligibility cases.  The Court has requested an amicus filing from the Solicitor General.  Interactive Wearables, LLC v. Polar Electro Oy, No. 21-1281, is a patent eligibility case, but it asks a related question about the extent that principles of Section 112 are applicable to the eligibility analysis.  In Juno Therapeutics, Inc. v. Kite Pharma, Inc., No. 21-1566 focuses on “full scope” written description – arguing that the Federal Circuit’s application goes too far beyond the statutory text.  Biogen International GmbH, et al. v. Mylan Pharmaceuticals Inc., No. 21-1567, also focuses on the written description requirement – asking what level of disclosure is necessary for a claim limitation requiring a therapeutic treatment to be “effective.”

The one other case that I would suggest has a good chance of certiorari is Hyatt v. USPTO.  But, that case focuses on the summary judgment standard for APA cases and so would in reality have very little impact on the patent system.

The final three cases are all well written briefs, but I expect that they have a very low chance of being heard because of intervening events:

  1. Apple Inc. v. Qualcomm Incorporated, No. 21-1327 (appellate standing – same question as the already denied parallel Apple v Qualcomm petition);
  2. CustomPlay, LLC v. Amazon.com, Inc., No. 21-1527 (can the same PTAB judges both institute and decide IPR – I believe that Arthrex implicitly solved this issue, at least from a Constitutional perspective); and
  3. Worlds Inc. v. Activision Blizzard Inc., et al., No. 21-1554 (eligibility same question as the already denied petition in American Axle).

The court takes a summer break and then returns in the fall for the October 2022 term.

Supreme Court on Patent Law May 2022

Patent

by Dennis Crouch

  1. The Supreme Court has denied certiorari in the pending case of PersonalWeb Techs. v. Patreon.  The case questioned the unique patent-law preclusion doctrine known as the “Kessler doctrine.”  I previously argued that the court should hear the case and clarify the law. On the same day, the court also denied petitions in Universal Secure Registry LLC v. Apple Inc. (eligibility) and Cisco Systems, Inc. v. SRI International, Inc. (willfulness).
  2. In Olaf Sööt Design v. Daktronics, the patentee argues that unduly aggressive claim construction undermined its 7th Amendment jury trial right.  This case argues against 02Micro‘s requirement that any disputed term be construed by the court.  In a new filing, the US Solicitor General has recommended against certiorari — concluding that it is the Judge’s role to construe the claims.
  3. We are still waiting for a Gov’t brief in the pending eligibility case of American Axle & Manufacturing, Inc. v. Neapco Holdings LLC.  The court requested the CVSG brief on May 3, 2021–more than a year ago.  Pending follow-on cases include Ameranth, Inc. v. Olo, Inc., Spireon, Inc. v. Procon Analytics, LLC and Interactive Wearables, LLC v. Polar Electro Oy. 
  4. The parties are also awaiting the Gov’t CVSG brief in Apple Inc. v. Qualcomm Incorporated (licensee appellate standing) and Amgen Inc. v. Sanofi (written description requirement).
  5. Hyatt v. USPTO challenges the district court’s APA trial procedures as part of his effort to force the Patent Office to issue patents for applications that have been pending for decades.

Top six pending cases:

  1. Eligibility: American Axle & Manufacturing v. Neapco Holdings – pending petition for writ of certiorari awaiting CVSG amicus brief from Gov’t.
  2. Written Description: Amgen v. Sanofi – pending petition for writ of certiorari awaiting CVSG amicus brief from Gov’t.
  3. Appellate Standing: Apple . Qualcomm – pending petition for writ of certiorari awaiting CVSG amicus brief from Gov’t.
  4. Nexus Requirement for Secondary Considerations: Zaxcom, Inc. v. Lectrosonics – pending en banc petition before the Federal Circuit.
  5. Deference to Examiner on Definiteness: Nature Simulation Systems Inc. v. Autodesk, Inc. – pending en banc petition before the Federal Circuit.
  6. Level of Possession for WD negative claim limitations: Novartis Pharmaceuticals v. Accord Healthcare Inc. – pending en banc petition before the Federal Circuit.

101: Extending Uncertainty to All Fields

Patent

by Dennis Crouch

It appears that we have not yet seen the most invasive nature of contemporary patent eligibility doctrine.  Case in point: Yu v. Apple Inc. (Fed. Cir. June 11, 2021) [Yu vs Apple].

Yanbin Yu and Zhongxuan Zhang are the inventors and owners of U.S. Patent No. 6,611,289 (‘Digital cameras using multiple sensors with multiple lenses’).  The pair sued Apple and Samsung for patent infringement, but the district court dismissed the cases for failure-to-state-a-claim.  In particular, the court found the claims directed toward an abstract idea and thus invalid under 35 U.S.C. § 101.  On appeal, the Federal Circuit issued a 2-1 decision affirming with Judge Prost and Taranto in the majority and Judge Newman in dissent.

The asserted claims are directed to a digital camera having multiple analog image sensors with lenses mounted on the image sensors. The claims also include analog-to-digital circuitry to digitize images from each camera so that they can be stored in memory. The claims then require creation of a “resultant digital image” based upon images from the two different cameras.  Note, the patent application was filed back in 1999; issued in 2003; and has now expired.

On appeal, the Federal Circuit affirmed that the claims at issue are merely directed to the following abstract idea:

“claim 1 is directed to the abstract idea of taking two pictures (which may be at different exposures) and using one picture to enhance the other in some way.”

The problem, according to the majority, is that claims “merely invoke generic processes and machinery.” (Quoting Smart Sys.) In some ways, the patent’s specification also suggests an abstraction — especially the following line: “there is a great need for a generic solution that makes digital cameras capable of producing high resolution images without enormously incurring the cost of photo-sensitive chips with multimillion photocells.”  ‘289 Patent.  But, I would suggest reading the specification for an understanding that this is a technological solution.

The appellate panel suggests that the specification probably does include a patent eligible invention in the form of “a four-lens, four-image-sensor [including] a black-and-white sensor.”  But, the claims at issue do not require four sensors or the B/W sensor.

In dissent, Judge Newman explains:

This camera is a mechanical and electronic device of defined structure and mechanism; it is not an ‘abstract idea.’ . . . [C]laim 1 is for a digital camera having a designated structure and mechanism that perform specified functions; claim 1 is not for the general idea of enhancing camera images. The camera of the ’289 patent may or may not ultimately satisfy all the substantive requirements of patentability, for this is an active field of technology. However, that does not convert a mechanical/electronic device into an abstract idea.

Slip Op.  Newman’s dissent also walks into the bigger picture of Section 101 jurisprudence:

In the current state of Section 101 jurisprudence, inconsistency and unpredictability of adjudication have destabilized technologic development in important fields of commerce. Although today’s Section 101 uncertainties have arisen primarily in the biological and computer-implemented technologies, all fields are affected. The case before us enlarges this instability in all fields, for the court holds that the question of whether the components of a new device are well-known and conventional affects Section 101 eligibility, without reaching the patentability criteria of novelty and nonobviousness.

The digital camera described and claimed in the ’289 patent is a mechanical/electronic device that easily fits the standard subject matter eligibility criteria. Neither the panel majority nor the district court decided patentability under Section 102 or Section 103, having eliminated the claims under Section 101. The ’289 claims warrant review under the substantive criteria of patentability—a review that they have never received.

The fresh uncertainties engendered by the majority’s revision of Section 101 are contrary to the statute and the weight of precedent, and contrary to the public’s interest in a stable and effective patent incentive.

= = = = =

1. An improved digital camera comprising:

a first and a second image sensor closely positioned with respect to a common plane, said second image sensor sensitive to a full region of visible color spectrum;

two lenses, each being mounted in front of one of said two image sensors;

said first image sensor producing a first image and said second image sensor producing a second image;

an analog-to-digital converting circuitry coupled to said first and said second image sensor and digitizing said first and said second intensity images to produce correspondingly a first digital image and a second digital image;

an image memory, coupled to said analog-to-digital converting circuitry, for storing said first digital image and said second digital image; and

a digital image processor, coupled to said image memory and receiving said first digital image and said second digital image, producing a resultant digital image from said first digital image enhanced with said second digital image.

2. The improved digital camera as recited in claim 1, wherein said first image sensor sensitive to said full region of visible color spectrum.

4. The improved digital camera as recited in claim 1, wherein said analog-to-digital converting circuitry comprises two individual analog-to-digital converters, each integrated with one of said first and second image sensors so that said first and second digital images are digitized independently and in parallel to increase signal throughput rate.

 

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes, Patent

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Invention of a Slave and the Ongoing Movement For Equal Justice

Patent

by Dennis Crouch

The Black Lives Matter movement, ongoing protests, and statements of alliance have given me new hope that our society and its institutions are ready to take another step toward equal justice.

In 1857, the US Supreme Court decided Dred Scott v. Sandford, 60 U.S. (19 How.) 393 (1857) and affirmed what various state courts had previously decided — that under the law, free (non-enslaved) black and brown people were not United States Citizens.

[A]s long ago as 1822, the Court of Appeals of Kentucky decided that free negroes and mulattoes were not citizens within the meaning of the Constitution of the United States; and the correctness of this decision is recognized, and the same doctrine affirmed, in 1 Meigs’s Tenn. Reports, 331.

Dred Scott.  The following year, the US Patent Office with support of the US Attorney General took action to enforce the law in a memorandum entitled “Invention of a Slave.”  The memo begins with its clear statement: “A new and useful machine invented by a slave cannot be patented.” Under Dred Scott, a non-enslaved people of color also lacked the requisite citizenship.  Two recent articles walk through these events: Brian L. Frye, Invention of a Slave, 68 Syracuse L. Rev. 181, 194 (2018) (historical analysis); Kara W. Swanson, Race and Selective Legal Memory: Reflections on Invention of a Slave, 120 Columbia Law Review 1077 (2020) (reflection on historical and ongoing impact, inter alia).  The decision actually frustrated slave owners and during the civil war, the patent laws of the Confederate States did allow for patenting of inventions by enslaved peoples – although all ownership rights would flow to their owners.

In many ways, the courts fit its slavery cases within the doctrines of property law.  Enslaved people were identified as property.   A third new article in this vein is not intellectual property focused but walks through many ways that these old slavery cases remain good law today. Justin Simard, Citing Slavery, 72 Stan. L. Rev. 79 (2020).

Prof. Swanson reflected on her personal journey with Invention of a Slave — a journey that fits many of our own constructs:

As a former patent attorney turned legal scholar, I first encountered Invention of a Slave as an appropriately forgotten opinion. I saw no relevance to my former practice or to teaching patent law. I thought of it as a minor piece of patent lore, remaining firmly within my legal mindset of sorting precedents into “good” versus “bad” law. Nothing in my background as a white American, trained in science, law, and history in majority-white institutions, led me to see it differently.

Swanson.  Although not originally relevant to her, Swanson began to wonder why the the document remained relevant to the African American community. She explains – “Invention of a Slave might be unread by lawyers, but the African American community and its white allies were encouraged to take a look if they needed further proof to understand why so few African Americans had patented inventions before Reconstruction.”  Swanson.  Reconstruction era Constitutional Amendments and the Civil Rights Act of 1866 ended the the prohibition on patenting by brown and black Americans. Still, Professor Swanson’s essay walks through a small sample of ongoing roadblocks and hurdles for patentees, patent examiners, and lawyers.  Jim Crow of the patent system.

In my own state of Missouri, and at my home institution the University of Missouri School of Law, it took the US Supreme Court to order us to admit a qualified African American student, Lloyd Gaines. State of Missouri ex rel. Gaines v. Canada, 305 U.S. 337 (1938).  Even after that decision, the State determined that mixed race legal education would be so problematic that it opened a separate law school for non-white students. As for Lloyd Gaines, he disappeared in Chicago before starting law school. Here at the University of Missouri School of Law, we did not graduate an African American attorney until 1970.

Supreme Court 2019-2020: Introduction to the Term’s Patent Cases

Patent

by Dennis Crouch

The Supreme Court heard oral arguments this week in NantKwest (attorney fees for PTO in §145 actions) – and I provided my expectation that the Court will affirm the Federal Circuit’s no-attorney-fees holding. The Court has one other patent case on the merits calendar Thryv, Inc., fka Dex Media, Inc. v. Click-To-Call Technologies, LP,  No. 18-916 (appellate jurisdiction over challenge to PTO’s finding of no time-bar under §315(b)).  Click-to-Call is set for oral arguments December 9, 2019.

Petitions Denied: A number of petitions that were pending last week have now been denied by the court:

  1. Acorda Therapeutics, Inc. v. Roxane Laboratories, Inc., No. 18-1280 (obviousness and secondary indicia)
  2. Hyatt  v. Iancu, No. 18-1285 (“Whether MPEP § 1207.04 violates patent applicants’ statutory right of appeal following a second rejection.”)
  3. Glasswall Solutions Ltd. v. Clearswift Ltd., No. 18-1448 (eligibility on the pleadings; Berkheimer question)
  4. StrikeForce Tech., Inc. v. SecureAuth Corp., No. 19-103 (Berkheimer question)
  5. IBG LLC  v. Trading Technologies Int’l., Inc., No. 19-120 (definition of  “technological invention” for CBM)
  6. Zimmer, Inc. v. Stryker Corp., No. 18-1549 (is negligence enough for treble damages?)
  7. Xitronix Corp. v. KLA-Tencor Corp., No. 19-58 (Federal Circuit jurisdiction over Walker Process antitrust claims)
  8. Senju Pharma. Co., Ltd. v. Akorn, Inc., No. 18-1418 (propriety of R.36 judgments; obviousness)
  9. Imperium IP Holdings (Cayman), Ltd. v. Samsung Electronics Co., Ltd., No. 19-101 (reviewing jury verdict and 7th Amendment)
  10. Arunachalam v. International Business Machines Corp., No. 19-5033  (low quality)
  11. Huang v. Huawei Tech. Co., Ltd., No. 18-1275 (low quality)

Note here that a couple of cases asking Berkheimer style questions were denied — suggesting the likely outcome in Berkheimer.

Speaking of Section 101 — there are a number of pending petitions on the subject. We are particularly waiting for the Solicitor General to provide the Supreme Court with its input in Berkheimer and Vanda.  I had expected those to be filed by this week — they are not yet filed.

  1. HP Inc., fka Hewlett-Packard Company v. Steven E. Berkheimer, No. 18-415 (fact-law divide in eligibility) (waiting for views of Solicitor General)
  2. Hikma Pharmaceuticals USA Inc., et al. v. Vanda Pharmaceuticals Inc., No. 18-817 (threshold of a natural phenomenon)  (waiting for views of Solicitor General)
  3. Trading Technologies International, Inc. v. IBG LLC, No. 19-353 (patentability of an improved user interface)
  4. Garmin USA, Inc., et al. v. Cellspin Soft, Inc., No. 19-400 (Berkheimer questions)
  5. Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, No. 19-430 (did the Supreme Court mean to invalidate all diagnostic methods on eligibility grounds?)
  6. Power Analytics Corporation v. Operation Technology, Inc., No. 19-43 (Has the Federal Circuit correctly implemented the standards for patent eligibility)

Other pending petitions:

  1. Atlanta Gas Light Company v. Bennett Regulator Guards, Inc., No. 18-999 (same question as Click-to-Call); Superior Communications, Inc. v. Voltstar Technologies, Inc., No. 18-1027 (same question as Click-to-Call); Arris International Limited v. ChanBond, LLC, et al., No. 19-455 (same question as Click-to-Call)
  2. 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.”)
  3. Eli Lilly and Company v. Erfindergemeinschaft UroPep GbR, No. 18-1515 (functional single step claim and Halliburton (1946))
  4. Technology Properties Limited LLC v. Huawei Techs. Co., Ltd., No. 19-324 (“prosecution history disclaimer” and separation of powers)
  5. Regents of the University of Minnesota v. LSI Corporation, No. 19-337 (state sovereign immunity against IPR challenge)
  6. Medtronic, Inc. v. Mark A. Barry, No. 19-414 (when is a process-invention “ready for patenting” so that a public use or offer to sell would create a bar to patentability)
  7. Time Warner Cable, Inc., et al. v. Sprint Communications Company, L.P., No. 19-211 (damage apportionment; scope of written description)
  8. Brigham and Women’s Hospital, Inc v. Perrigo Company, No. 19-450 (setting aside jury verdicts)
  9. Neology, Inc. v. International Trade Commission, et al., No. 19-445 (due process — is it proper to invalidate a patent without first notifying the patentee of the “specific invalidity challenge posed” and allow for an opportunity to be heard)
  10. Straight Path IP Group, LLC v. Apple Inc., No. 19-253 (R.36 judgments on pure issues of law is a due process violation).
  11. Princeton Digital Image Corporation v. Adobe Inc., No. 18-1343 (impact of a consent judgment on appellate power)

A few petitions likely to be filed soon:

  • Intel Corporation v. Continental Circuits LLC (claim construction)
  • Cisco Systems, Inc. v. SRI International, Inc. (eligibility)
  • Kaneka Corporation v. Xiamen Kingdomway Group Company (Did this R.36 affirmance violate the patentee’s Constitutional right — 5th & 7th Amendments; and Article I, Section 8, Clause 8)

My Take after Oral Arguments: Supreme Court Likely to Affirm in Peter v. NantKwest

Patent

by Dennis Crouch

Peter v. NantKwest (Supreme Court 2019) [TRANSCRIPT]

The Supreme Court heard oral arguments on October 7, 2019 in this case involving the question of attorney fees in Section 145 civil actions.  I’ll agree with Mark Walsh who identified this as a “a dry, procedural patent case.”  But, I really enjoyed the oral arguments — Read some of the drama below.

Before getting too dramatic: I recognize that the result of this case is basically not going to have much of any impact on patent cases. So, perhaps one benefit is that the court is unlikely to ruin the patent system with its decision here.  Depending upon the outcome, Section 145 civil actions will be seen as relatively more/less expensive for the applicant. But, they are already very expensive for an applicant to pay its own expenses. My take is that the added PTO-attorney expense will be a relatively small extension of the already high-costs assuming that the PTO continues to be fairly thrifty in its defense of these cases.  On the PTO side, the agency has to pay its attorneys from collected fees somehow.  If it doesn’t get the fees from the 145 challenger, then it will collect them from the applicant pool in general (about $1.60 per applicant) as it has done for many years.

Conventional wisdom in patent cases is reversal. The Supreme Court does not take cases to offer congratulations to the lower court. And the absence of circuit splits means that there isn’t a right vs wrong appellate court.  My read of the oral argument though goes against this conventional wisdom — I’m betting on affirmance.  The Gov’t dropped its argument that the American Rule does not apply; and so the American Rule as applied in other areas has the potential of being undermined by a Gov’t win here.

(more…)

Supreme Court Long Conference – Patent Law

Patent

by Dennis Crouch

The Supreme Court is back in session and is holding its first conference – the Long Conference – on October 1, 2019.  The court is scheduled to consider whether to grant certiorari in a number of important patent cases:

  • Obviousness: Acorda Therapeutics, Inc. v. Roxane Laboratories, Inc., No. 18-1280 (When should the objective indicia of nonobviousness be discounted based upon alleged “blocking” by an existing prior patent).  This case is supported by five additional friend-of-the-court briefs
  • Obviousness: Senju Pharmaceutical Co., Ltd. v. Akorn, Inc., No. 18-1418 (Whether no-opinion judgments comply with 35 U.S.C. § 144; Whether objective evidence of non-obviousness must be considered before cancelling claims as obvious).
  • Prosecution Procedures: Hyatt v. Iancu, No. 18-1285 (Whether MPEP 1207.04 – allowing for reopening prosecution – violates patent applicants’ statutory right of appeal following a second rejection).
  • Eligibility: Glasswall Solutions Limited v. Clearswift Ltd., No. 18-1448 (role of factual assertions when patent eligibility is challenged in a R.12(b)(6) motion to dismiss for failure to state a claim) (Link to Berkheimer).
  • Eligibility: StrikeForce Technologies, Inc. v. SecureAuth Corporation, No. 19-103 (Facts in step two of Alice) (Link to Berkheimer).
  • Damages: Zimmer, Inc. v. Stryker Corporation, No. 18-1549 (is negligence enough for enhanced damages).
  • Litigation Procedure: Xitronix Corp. v. KLA-Tencor Corp., dba KLA-Tencor, Inc., No. 19-58; and No. 18-1170 (Does appellate jurisdiction over Walker Process claims lie in the regional circuits, or in the Federal Circuit?).
  • Litigation Procedure: Imperium IP Holdings (Cayman), Ltd. v. Samsung Electronics Co., Ltd., No. 19-101 (Overturning jury verdict and the Seventh Amendment).
  • Covered Business Method Review: IBG LLC v. Trading Technologies International, Inc., No. 19-120 (what is a “technological invention” under the CBM review program).

 

What happens when Patents Are Later Invalidated?

Patent

by Dennis Crouch

Prism Technologies LLC, v.  Sprint Spectrum L.P., dba Sprint PCS, SCT Docket No. 18-1397 (Supreme Court 2019)

The Supreme Court has received a new eligibility challenge from Prism Tech — although this one is in the form of a civil procedure question:

  1. Whether the Federal Circuit Court of Appeals may retroactively expand the scope of its appellate jurisdiction to invalidate patent claims under 35 U.S.C.
    § 101 when those claims were not raised in the petitioner’s appeal or necessary for its judgment?
  2. Whether a district court may disregard a mandate from the Federal Circuit for entry of judgment, and ignore this Court’s precedent, by retroactively applying
    the collateral estoppel doctrine based on a ruling in a subsequent action where there is no mutuality of claims or defenses?

Prism has parallel infringement lawsuits against Sprint and T-Mobile.

  • In the case against Sprint, the jury found infringement and awarded $30 million in damages.  Sprint did not challenge the patent’s validity at trial or on appeal — damages affirmed in a 2016 appellate decision.
  • In the case against T-Mobile, the jury sided with the defendant and found no-infringement.  Prism appealed, but ended up in a worse situation — with a 2017 holding from the Federal Circuit that the asserted claims are ineligible under 35 U.S.C. 101.

The basic question here is whether the late-stage invalidity in T-Mobile can be used to cancel Sprint’s adjudged liability.  So far, the courts have sided with Sprint, although it was important for Sprint’s case that it took pains to slow-walk its post-appeal activity (request for rehearing and petition for certiorari) so that the case still had some life by the time the T-Mobile decision was released.

June 23, 2017 – the Federal Circuit invalidated the patents in the T-Mobile decision. June 27, 2017 (two business days later) – Sprint filed a R.60(b) motion for Relief from Judgment based upon the Federal Circuit’s binding authority “that the patent claims underlying that judgment are invalid as unpatentable under 35 U.S.C. § 101.”  The district court complied and set-aside its prior verdict and the Federal Circuit affirmed — finding no abuse of discretion.

As part of the Sprint timeline, it is notable that the Federal Circuit issued its mandate in May 2017 (before the T-Mobile invalidity decision).  After the T-Mobile decision, Sprint unsuccessfully requested that the Federal Circuit recall the mandate.  However, the court did issue a statement that recall was “unnecessary” because the “mandate does not alter how the district court should decide the preclusive effect of the T-Mobile ruling, which did not exist in May 2017.”

Another important element here a big question about whether the T-Mobile invalidity applied to all of the claims at issue in Sprint (the Federal Circuit retrospectively said yes).

The new petition thus argues that “the Federal Circuit’s interpretation of the T-Mobile Invalidity Decision as covering the Sprint Only Claims is flawed [as a] retroactive expansion of appellate jurisdiction.”

Supreme Court will hear Section 145 Attorney Fees Case

Patent

by Dennis Crouch

The Supreme Court has granted writ of certiori in Iancu v. NantKwest Inc. on the question:

Whether the phrase “[a]ll the expenses of the proceedings” in 35 U.S.C. § 145 encompasses the personnel expenses the United States Patent and Trademark Office incurs when its employees, including attorneys, defend the agency in Section 145 litigation.

When an examiner refuses to allow an applied-for patent, the applicant can appeal to the USPTO’s internal administrative board (PTAB). If still unsuccessful, the applicant then has a choice of either (1) filing a civil action in federal court or (2) appealing directly to the Court of Appeals for the Federal Circuit. 35 U.S.C. § 145.

The provision authorizing the civil action ends with the statement:

All the expenses of the proceedings shall be paid by the applicant.

In prior cases, the Federal Circuit has held that “all the expenses” means that applicant must pay the expenses win-or-lose, including the USPTO’s taxable costs.  Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010) (en banc). In NantKwest, the USPTO asked also for its attorney fees as part of “all the expenses.” (Note, the USPTO doesn’t hire outside attorneys to handle these, but it calculated its in-house attorney time and requested $100,000+).

The original NantKwest panel sided with the USPTO — holding that  “expenses” include USPTO attorney fees.  However, a 7-4 split of the en banc court changed direction and held that “expenses” does not include attorney fees.  In its decision, the Federal Circuit focused on the traditional presumptive “American rule” on attorney fees (each party pays for its own attorney fees) and found that the “all the expenses” language was not sufficiently “specific and explicit” to overcome the presumptive rule.

Petition Stage Briefing:

In a separate fees case, the Court today issued an opinion in Rimini Street Inc. v. Oracle USA Inc., holding that that the copyright act’s allowance of “full costs” only extends to traditional “taxable costs” and does not include, for instance, expert witness, e-discovery, or jury consultant fees.

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Takings: A Costly Screen for IPRs.

Patent

by Dennis Crouch

In Oil States, the patentee lost its broad challenge to the AIA Post Issuance trial system. However the majority opinion penned by Justice Thomas hinted that other collateral attacks on the system could find more success.  Particularly, the court wrote that “our decision [finding that patents are public rights] should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.”

A Costly Screen: The takings clause is an interesting limit on government power. Rather than serving as an absolute limit, the clause creates a costly screen.  Although the government has power to take private property for public use, it is required to provide “just compensation” for every such taking.  “[N]or shall private property be taken for public use, without just compensation.” U.S. Const. 5th Amendment (1791).

If the government cancels my land ownership rights to instead create a public commons — the takings clause would require just compensation.  Imagine for a moment that the PTO’s cancellation of established patent rights is also categorized as a taking — the PTO would need to provide just compensation to the patentee.  The question now being raised in various cases — including the recent petition in Advanced Audio Devices, LLC v. HTC Corp.

One starting point: It is certainly a taking for the government to cancel patent rights in merely because it wants to use the invention or to give the public free access to the invention.  IPRs also involve cancelling patent rights.  However, in IPRs the patents are cancelled based upon a different justification — a non-patentability determination rather than merely a desire for unfettered public use of the invention.  The question though is whether this different justification will serve as a cognizable distinction.

The Advanced Audio petition adds the additional twist that its patents were filed pre-AIA.  Thus, the patentee asks the following question:

Whether inter partes review (“IPR”) of patents filed before enactment of the Leahy-Smith America Invents Act (“AIA”) violates the Takings Clause of the Fifth Amendment to the U.S. Constitution.

[Advanced Audio Devices SCOTUS Cert Petition (Final)].  Similar arguments are being raised in other cases, including the class action Christy v. USA.

Just Compensation for Cancelling My Patent

USPTO Announces Recipients of 2017 Patent Pro Bono Achievement Certificate

Patent

From USPTO: Alexandria, VA– The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) today announced the recipients of the 2017 Patent Pro Bono Achievement Certificate in recognition of individuals who help make the Patent Pro Bono Program available to financially under-resourced inventors and small businesses.

In 2017 more than 85 volunteer patent practitioners reported 50 or more hours of patent pro bono service to a regional patent pro bono program. To acknowledge their contributions, USPTO provided certificates and listed their names and employers on the Patent Pro Bono Program website.

“I want to congratulate the recipients for their dedication, time, and commitment they’ve demonstrated in an effort to help spur innovation on behalf of under-resourced inventors and small businesses,” said Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Andrei Iancu. “Their assistance is crucial not only to the success of our Patent Pro Bono Program, but the success of our nation toward inspiring innovation across the country, and ensures that everyone who has the desire is given the opportunity.”

The continued efforts of patent practitioners across the country have strengthened the success of the Patent Pro Bono Program since 2015. To date, more than 1,500 patent professionals have volunteered their availability, time, and resources to help make the Patent Pro Bono Program a success.

In 2018, USPTO will expand its recognition to include law firms and corporations in addition to individual patent practitioners. Those whose registered practitioners cumulatively contribute a minimum number of hours (based on firm size) to one or more participating regional patent pro bono programs may receive the 2018 Law Firm and Corporate Achievement Certificate.

2017 Winners Include: (more…)

NantKwest: Attorney Fee case Moving Toward Decision

Patent

by Dennis Crouch

In NantKwest v. Matal, the Federal Circuit will sit en banc to decide whether the cost-shifting provision found in 35 U.S.C. § 145 permits the USPTO to recover its attorney fees. I explained the setup in a prior post:

After being finally rejected by both the examiner and the PTAB, a patent applicant can then take its case to court. The Statute provides two options – either (1) a direct appeal to the Federal Circuit or (2) filing a civil action in district court to pursue a trial on the merits under 35 U.S.C. § 145.

An oddity of Section 145 civil action is the last line which states: “All the expenses of the proceedings shall be paid by the applicant.” In 2010, the en banc Federal Circuit ruled that the statute means what it says – expenses are to be paid by the applicant “regardless of the outcome.” Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010) (en banc). In NantKwest, the split panel ruled that the “expenses” include attorney fees.

In a sua sponte order, the Federal Circuit then ordered en banc review of the fee shifting rule – particularly whether the statutory “expenses” include attorney fees (especially in-house salaried attorney fees). Briefs have now been filed in the case and oral arguments are set for March 8, 2018 in the Federal Circuit’s Washington D.C. Courthouse at 717 Madison Place.

[Briefs Filed (Big PDF): 16-1794_Documents]

The US Government (USPTO) brief makes the basic argument that Congress intended for patent applicants to bear the expense of the optional district court proceedings, and attorney fees are a major component of that expense. The Gov’t further explains that the Federal Circuit majority approach has also been approved by the 4th Circuit with regard to the parallel Lanham Act provision. Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015). Although not express, the Gov’t approach suggests that “all expenses” need not even be limited to reasonable expenses.

In response, Nantkwest relies heavily on history – noting that prior to this case, “neither the PTO, nor Congress, nor the courts have ever interpreted § 145 to authorize any attorneys’ fees.” That history along with the presumption against fee shifting and the limited language of the statute should collectively prevent a fee award here.

  • Amicus from Federal Circuit Bar Association: The FCBA argues in support of NantKwest that expenses as used in the statute should not include attorney fees. Their prime example is that §145 does not say “attorney fees” while a parallel provision for infringement litigation, §285 does expressly say “attorney fees.” The longstanding practice of the USPTO has been to not ask for attorney fees – that approach should add considerable weight to whether the PTO’s interpretation is correct.
  • Amicus from AIPLA: “No reading of ‘all expenses of the proceedings’ can mean reimbursement of staff salaries.”
  • Amicus from IPO: “Attorneys’ fees are not expenses ‘of the proceeding'” as required by the statute.
  • Amicus from INTA: The American rule creates a strong presumption against attorney fee awards.

One of the basic debates here is how the general presumption against awarding attorney fees in US Courts should be applied.  The Government Lawyers makes the odd technical argument that the “American Rule” is a presumption is against awarding attorney fees to the prevailing party. Here, they argue, the presumption is not implicated since the statute awards fees win-or-lose.  That particular argument is wrong on many levels, but it does have the majority on its side as well as the 4th Circuit panel.

= = = = =

Patenting is a Pay for Service Process: In thinking through the case, one starting point is a recognition that the patent is a pay-for-service process.  Applicants pay for filing, for PTO searches, for PTO Examination, for Appeals, for Issuance, etc. Although it makes sense to spend some taxpayer money on encouraging scientific research and innovation, the pay-for-service model is much easier politically.  In that setup, it also seems reasonable that there would be a fee for filing and pursuing a civil action. With most fees today, the PTO is setting fees to reflect some average cost of providing service (with some additional policy preferences embedded into pricing).  However, the difficulty for the PTO here is that the mechanism for collecting fees under Section 145 looks just like fee shifting – which the courts historically disfavor.

Paying Attorney Fees on Appeal

Patent

Image result for natural born killersWhen the PTO refuses to issue a patent, the applicant can appeal directly to the Court of Appeals for the Federal Circuit or instead file a civil action under 35 U.S.C. 145.  The Section 145 action gives the applicant the opportunity to further develop facts, including live expert testimony and cross-examination.

An oddity of the statute is its statement that “all the expenses of the proceedings shall be paid by the applicant.”  In its 2010 Hyatt decision, the Federal Circuit ruled that the expenses are to be paid by the applicant “regardless of the outcome.”  In the new decision NantKwest v. Matal, the Federal Circuit has ruled that the provision includes attorney fees and thus allows the USPTO to recoup its expert witness fees, attorney fees and other expenses without any showing of exceptional case or even any merits.

[NantKwest v. USPTO]

Here, the majority opinion filed by Judge Prost and Joined by Judge Dyk found that the term “all expenses” was designed to “deter applicants” from choosing the civil action pathway. The dissent filed by Judge Stoll (her first in a patent case?) argues that the term “expenses” is not sufficient to overcome the traditional american rule regarding attorney fees.

The lucky-thing here is that USPTO attorneys are paid government salaries and so the attorney fees added up to only $78k before the district court granted summary judgment against NantKwest.

The patent application in this case is based upon a 2001 filing by Hans Klingemann directed to a method of treating cancer by administering natural killer cells.  Those Natural Born Killers will now be released on the public without the protections offered by the patent system.

Patentlyo Bits and Bytes by Anthony McCain

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