LKQ’s brief for today’s en banc rehearing begins with the following interesting statement: “As with utility patents, the U.S. Constitution and the Patent Act prohibit design patents on ordinary innovations.” It is the Constitutional question that is most interesting and calls forth the concurring opinion by Justice Douglass in the Great A&P Case.
The attempts through the years to get a broader, looser conception of patents than the Constitution contemplates have been persistent. The Patent Office, like most administrative agencies, has looked with favor on the opportunity which the exercise of discretion affords to expand its own jurisdiction. And so it has placed a host of gadgets under the armour of patents—gadgets that obviously have had no place in the constitutional scheme of advancing scientific knowledge. . . . The fact that a patent as flimsy and as spurious as this one has to be brought all the way to this Court to be declared invalid dramatically illustrates how far our patent system frequently departs from the constitutional standards which are supposed to govern.
Great A&P Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147, 156 (1950). Although case applied pre-1952 law, the reminder here is poignant. Justice Douglas goes on:
It is worth emphasis that every patent case involving validity presents a question which requires reference to a standard written into the Constitution. . . . The Congress does not have free reign, for example, to decide that patents should be easily or freely given. . . . Every patent is the grant of a privilege of exacting tolls from the public. The Framers plainly did not want those monopolies freely granted. The invention, to justify a patent, had to serve the ends of science—to push back the frontiers of chemistry, physics, and the like; to make a distinctive contribution to scientific knowledge. That is why through the years the opinions of the Court commonly have taken ‘inventive genius’ as the test. It is not enough that an article is new and useful. The Constitution never sanctioned the patenting of gadgets. Patents serve a higher end—the advancement of science.
The standard of patentability is a constitutional standard; and the question of validity of a patent is a question of law.
Id. Later, in Deere, the Supreme Court suggests found that the newly written Section 103 was properly seen as statutory codification of the court’s standard “which exists in the law and has existed for more than 100 years, but only by reason of decisions of the courts.” And, that standard is derived from the Court’s understanding of the U.S. Constitution’s requirement that the patent laws be designed to “promote the Progress of Science and useful Arts.”
The Congress in the exercise of the patent power may not overreach the restraints imposed by the stated constitutional purpose. Nor may it enlarge the patent monopoly without regard to the innovation, advancement or social benefit gained thereby. Moreover, Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available. Innovation, advancement, and things which add to the sum of useful knowledge are inherent requisites in a patent system which by constitutional command must ‘promote the Progress of * * * useful Arts.’ This is the standard expressed in the Constitution and it may not be ignored. And it is in this light that patent validity requires reference to a standard written into the Constitution.
Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 5–6 (1966).
Bringing this back to design patents and the LKQ case, the patent challenger here does not deeply engage with the constitutional question, but rather appears to use it as a constant interpretative reminder. GM’s brief does not mention the Constitution or its requirement to “promote the Progress.” Likewise, none of the Federal Circuit’s obviousness decisions from the past year discussed the doctrine in light of the Constitutional requirement.
On Monday, February 5, 2024, the Federal Circuit will sit together for the first time in years to hear an en banc patent case. In LKQ Corporation v. GM Global Technology Operations LLC, the court will consider whether to apply a more stringent obviousness test to design patents. In a 2010 article, I concluded that “the current design patent examination system operates as a de facto registration system” with very little obviousness analysis except in cases of clear copying. Although design patent examination has become more rigorous, obviousness rejections remain relatively rare in comparison to their utility patent brethren.
Oral arguments will include the 11 Federal Circuit judges (absent Judge Newman) along with Mark Lemley (arguing for the accused infringer and seeking a more rigorous obviousness test); Joe Herriges (arguing for the patentee GM largely seeking to preserve the status quo); and USPTO Acting Solicitor Farheena Rasheed (for amicus USPTO). The case particularly focuses on whether the Supreme Court’s flexible test for obviousness from KSR v. Teleflex also applies to design patents. In particular, the Federal Circuit’s Rosen-Durling test for design patent obviousness requires a primary reference as a starting point that is “basically the same” as the design being patented. Lemley would throw out this approach entirely. In its brief, the USPTO agrees that KSR requires more flexibility and that Rosen-Durling is “overly restrictive in several respects.” However, the USPTO suggests retaining the basic framework as a standard approach to obviousness, while permitting other approaches as necessitated by particular cases — allowing for both flexibility and the application of common sense.
A Federal Circuit panel recently released a pair of mandamus orders dealing with important civil procedure issues – one granting a petition to transfer venue under 28 USC 1404(a) , the other denying a petition challenging substitute service of process for a foreign defendant.
In the first case, In re Honeywell Int’l Inc., Honeywell was sued for patent infringement in the Western District of Texas. Lone Star SCM Systems, Ltd. v. Honeywell International Inc., Docket No. 6:21-cv-00843 (W.D. Tex., Filed Aug 12, 2021). Honeywell moved to transfer the case to the Western District of North Carolina under 28 U.S.C. § 1404(a), arguing that the bulk of the evidence and witnesses were located there — making that location much more convenient. The district court analyzed the private and public interest factors but denied transfer, mainly based on the plaintiff’s choice of forum and judicial economy. In particular, Judge Albright has two other cases filed by the same plaintiff pending for several years in his courtroom and he has developed substantial understanding of the patents at issue.
Honeywell petitioned the Federal Circuit for a writ of mandamus directing the district court to transfer the case. The appellate panel of Judges Dyk, Bryson, and Taranto concluded that keeping the case in the Western District of Texas amounted to a “clear abuse of discretion leading to a patently erroneous result.” Several factors favored transfer, while nothing significant tied the case to Texas. The court held that the “incremental gains” in judicial economy were insufficient to justify the inconvenience of litigating in an improper venue. The district court opinion is entirely under seal, and so we cannot know exactly how Judge Albright justified his decision not to transfer.
In contrast, in In re Aputure Imaging Industries Co., Ltd., the district court granted the plaintiff’s motion to serve the Chinese defendant Aputure by emailing the summons and complaint to Aputure’s attorney. Aputure petitioned for mandamus, arguing that the Hague Convention required the plaintiff to first attempt service in China.
The Federal Circuit denied Aputure’s petition. First, Aputure failed to show a post-judgment appeal would be inadequate. Second, Aputure did not establish a clear and undisputable right to relief. Mandamus is seen as an extraordinary relief, and both of these must be shown in order for an appellate court to take action. Ultimately, the appellate panel concluded that district court exercised reasonable discretion in permitting alternative service without requiring strict compliance with the Hague Convention.
The Federal Circuit recognized the district court’s broad discretion to authorize alternative means of serving foreign defendants under FRCP Rule 4(f)(3), which permits service by “other court-ordered means not prohibited by international agreement.”
If you had a stickler professor for civil procedure, you learned that service of process in the US is a really complicated mess of Constitutional principles, Federal Rules, State Laws, and common practices. FRCP Rule 4(f) sets out rules for serving “an Individual in a Foreign Country.” It would thus not directly apply to serving the company (Aputure) defendant in this case. R.4(h) provides the additional guidance that a company can be served “at a place not within any judicial district of the United States, in any manner prescribed by Rule 4(f) for serving an individual, except personal delivery under (f)(2)(C)(i).” So, while personal hand delivery abroad is an option for serving an individual under 4(f), that specific provision does not extend to foreign companies. But the other subsections of Rule 4(f) detailing options for foreign service by court order, internationally agreed means, etc. can be utilized for companies.
Here, the patentee Rotolight made multiple attempts to serve Aputure at addresses linked to Aputure’s own website and business listings. When those efforts failed, Rotolight sought court approval to email the complaint and summons to Aputure’s US attorney. The district court reasonably found this would effectively provide notice and an opportunity for Aputure to respond. Given Rotolight’s documented service attempts and the court’s finding that email service would be effective, the Federal Circuit concluded it was not prepared to say allowing substitute service was a clear abuse of discretion warranting the extraordinary remedy of mandamus relief. The order permitting alternative service was within the district court’s broad latitude under Rule 4. Since service is proper, the infringement action will continue to move forward in the Eastern District of Texas.
In SmartSky Networks, LLC v. Gogo Business Aviation, LLC, No. 2023-1058 (Fed. Cir. Jan. 31, 2024), the Federal Circuit has affirmed a lower court denial of a preliminary injunction sought by the patentee SmartSky against Gogo. SmartSky sued Gogo in 2022 for patent infringement, alleging that Gogo’s 5G wireless network infringed several of SmartSky’s patents related to in-flight internet wireless connectivity. See U.S. Patent Nos. 9,312,947, 11,223,417, 10,257,717, and 9,730,077. Along with its complaint, SmartSky moved to preliminarily enjoin Gogo from providing its in-flight network. SmartSky argued it had shown a likelihood of success on the merits and that it would suffer irreparable harm without an injunction, but the D.Del. district court Judge Gregory Williams disagreed. A grant or denial of preliminary injunctive relief can be immediately appealed, but the patentee’s appeal has also failed.
The preliminary injunction motion was associated with a new 5G network that Gogo had announced in 2019. That network is, according to Gogo, “still in a pre-launch phase.” Although customers are not yet actively using the service, the network itself is actually complete and the final step is including the chipsets within the planes. This aspect of the case was the most critical for the Federal Circuit who concluded that the current status of Gogo’s operation was not definite enough to create irreparable harm.
The new petition for certiorari filed by Liquidia raises some interesting questions about the ongoing race between inter partes review proceedings and district court litigation. Liquidia Techs v. United Therapeutics Corp., 23-804 (US), on petition for writ of certiorari from United Therapeutics Corp. v. Liquidia Techs., Inc., 74 F.4th 1360 (Fed. Cir. 2023).
UTC won its infringement suit against Liquidia with a holding that its patent covering treprostinil administration by inhalation were valid and infringed. (US10716793). While the appeal was pending, the PTAB sided against the patentee and found the claims unpatentable as obvious. In the appeal, however, the Federal Circuit refused to give credence to the PTAB decision – finding that litigation was still “pending” and “non-final.” The claims had not actually been cancelled yet – since the Director only issues the certificate confirming unpatentability after any appeal. Further, the Federal Circuit concluded that IPR decisions do not have issue-preclusive (collateral estoppel) effect until the decision is affirmed on appeal, or the parties waive their right to appeal. Citing XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018).
Liquidia’s petition argues that the PTAB’s final-written decision should be given preclusive effect in parallel litigation even if an appeal is pending, just like would be done for a district court opinion. (more…)
Ficep begins its petition for certiorari with a brilliant statement of how its patented steel manufacturing method has won numerous awards and complements for its innovative approach, been copied by competitors, and led to numerous successful sales. Despite these clear indicia of patentability, the Federal Circuit invalidated claims — affirming the lower court’s judgment on appeal.
That the invention was an important real-world manufacturing innovation was, as a factual matter, thoroughly established. The improvement was touted as enabling vastly more efficient and superior manufacture of components – not just by Petitioner’s experts, but also in the defendant’s advertising. There was industry recognition applauding the “innovation.” There was copying by competitors. There was successful litigation and licensing. And there was specific customer demand for the improvement to the manufacturing process. That is, every objective indicium of inventiveness that this Court has identified was present in the technological, traditionally patent-eligible, setting of manufacturing lines.
Ficep petition for certiorari. But, in the Federal Circuit’s view, facts are confined to the obviousness analysis, and Ficep’s patent is invalid because it is directed to an abstract idea. Ficep Corp. v. Peddinghaus Corp., No. 2022-1590, 2023 WL 5346043 (Fed. Cir. Aug. 21, 2023). The petition goes on to ask three questions:
Does a claim directed to patent-eligible subject matter (here, manufacturing) nevertheless become ineligible as “abstract” if the process is improved using automation? (and should an “abstract-idea” behind a claim to a patent-eligible process be identified and, if so, how and at what level of abstraction?)
What is the appropriate standard for determining whether a claim is “inventive,” conferring eligibility under Alice Step 2, including whether objective evidence of inventiveness and technological improvement is relevant?
Is either what a claim is “directed to” and whether that is abstract, or whether a claim is “inventive” as articulated in Alice step 2, only for a judge to decide as a legal matter or does it include fact issues and, if the latter, are they for a jury?
SCT No. 23-796. This case again highlights the need for clearer guidance from the Supreme Court on when a patent claim directed to an industrial process should be considered an abstract idea and therefore patent ineligible under 35 U.S.C. § 101.
For its part, the Federal Circuit applied the two-step test for patent eligibility established in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014). At step one, the court determines whether the patent is “directed to” a patent-ineligible concept like an abstract idea. If so, then at step two the court searches for an “inventive concept” beyond the ineligible concept.
Here, the Federal Circuit held Ficep’s patent claims to be directed to the abstract idea of “extracting and transferring information from a design file to a manufacturing machine.” The court characterized the focus of the claims as “automating a previously manual process” that a human operator used to perform. Further finding no inventive concept at step two, the Federal Circuit affirmed the district court’s ruling that the claims were patent ineligible under § 101.
In its cert petition, Ficep contends that the Federal Circuit misapplied Alice in a way that conflicts with precedent and casts doubt on patents for industrial innovations. Ficep argues that its claims are directed to an eligible manufacturing process under Diamond v. Diehr, 450 U.S. 175 (1981), which held that a rubber curing method did not become patent ineligible simply because one step used the Arrhenius equation to automate timing of when to open the presses. According to Ficep, the Federal Circuit improperly focused on one aspect of its claims—data extraction and transfer—rather than evaluating the claims as a whole, which require physical manufacture of components. Ficep also presented extensive evidence of its patented system’s superiority over prior manufacturing methods, which it contends demonstrates a technological advance under step two of Alice that the Federal Circuit wrongly dismissed.
Lets look at the claim at issue for just a moment. Claim 7 below claims an “apparatus for automatic manufacture of an object” and requires, among other things, “at least one manufacturing machine [that] manufactures the components” after receiving dimensions from a computing device. Although the court agreed that the claim requires hardware, the court noted that the actual advance here is simply automating the previously manual process of transferring information from a CAD design model to a manufacturing machine. The court found that, in a general sense, that automation process is an abstract idea. And, that the patent claims offer no specific technological improvement that would transform the ineligible idea into a patent eligible. But, the patentee here argues that the closest Supreme Court case on point is not Alice, but rather Diehr, which would favor eligibility.
7. An apparatus for automatic manufacture of an object, comprising:
a computing device adapted to create a design model of an object having multiple individual components, at least two of the individual components defining an intersection at which the two components are in contact with one another;
at least one programmable logic controller in communication with the computing device and with at least one manufacturing machine;
a receiver associated with the programmable logic controller for receiving the design model of the object;
a database unit adapted to store the design model received at the receiver;
a processor which is associated with the programmable logic controller and extracts from the design model a plurality of dimensions of components which define a plurality of components of the object;
wherein the processor identifies a plurality of intersection parameters which define the intersection of the two components;
wherein the processor extracts from the design model the intersection parameters;
a transmitter associated with the processor for transmitting the intersection and machining parameters and the component dimensions from the programmable logic controller to the at least one manufacturing machine; and
wherein the at least one manufacturing machine manufactures the components based at least in part on the transmitted component dimensions and on the transmitted intersection and manufacturing parameters.
In focusing on Diehr, the patentee here is raising a difficult issue that the the Supreme Court’s landmark 1980 decision is effectively dead, even though it has not been rejected or repudiated by the Supreme Court. Rather, it was favorably cited in the Supreme Court’s recent trio of Bilksi, Mayo, and Alice.
Zombie Precedent: Ficep contends that its claims are analogous to the patent-eligible claims in Diamond v. Diehr for a rubber curing method that used the Arrhenius equation to calculate when to automatically open the presses. Ficep argues that like Diehr, its claims as a whole are directed to an eligible manufacturing process—namely manufacturing steel building components—even if one aspect involves automation based on extracting data like intersection parameters. But, the lower courts are not applying Diehr because they see that case as in conflict with the more recent trio. In its petition, Ficep asks the Supreme Court to make a statement on this issue — either confirm or overrule Diehr.
On the inventiveness issue that I started with in this post, the patentee here asks for guidance on Step-2 of Alice/Mayo and for a recognition that technological advance is a fact question for a jury to decide alongside parallel questions in obviousness and anticipation analysis.
= = =
The patentee-petitioner is represented by Matthew Lowrie and his team from Foley & Lardner. Peddinghaus’s responsive brief is due Feb 23, 2024. Their attorneys have not filed an appearance, but I expect they will still be represented by Nathaniel Love and his Sidley Austin team that includes Stephanie Koh and Leif Peterson.
In a non-precedential 2023 decision, the Federal Circuit affirmed a decision by the Trademark Trial and Appeal Board (TTAB) refusing to register “Everybody vs Racism” as a trademark for apparel, tote bags, and services promoting racial justice advocacy. The court found substantial evidence supported the TTAB’s conclusion that the slogan fails to function as a source identifier for the applicant GO & Associates’ goods and services. Although the outcome here supports the informational matter doctrine barring registration, the court is clear that political slogans and other informational matter can be protected as trademarks so long as the applicant shows that they actually function as a trademark. (more…)
The Schedule A litigation phenomenon continues apace in the Northern District of Illinois, a court that has become, in the words of Judge Seeger, “an assembly line for TROs.” But Schedule A litigation is not confined to Chicago. It has spread, perhaps most notably to the Southern District of Florida and the Southern District of New York.
One recent decision out of New York merits closer attention. In this case, as in most Schedule A cases, the plaintiff was able to obtain an ex parte TRO that included an order instructing Amazon to freeze the defendants’ seller accounts. The order also required the plaintiff to post a bond of $20,000 “for the payment of any damages any person may be entitled to recover as a result of an improper or wrongful restraint ordered.”
The plaintiff sued 163 defendants, alleging that each was liable for infringing a utility patent directed towards “a rectangular-shaped buckle-and-belt mechanism” for “an outdoor exercise product.”
At the TRO stage, the plaintiff’s “infringement evidence chart” consisted of a series of screenshots (many of them low-resolution screenshots) of the accused products. Here’s an example of all of the evidence submitted in that chart with respect to one of the defendants:
As per usual in a Schedule A case, the defendants did not find out about the case until after their accounts were frozen. When the plaintiff moved to extend the TRO, multiple defendants appeared to object. Judge Rochon refused to extend the TRO and the plaintiff voluntarily dismissed the case.
Two of the defendants, Hyponix and NinjaSafe, moved for bond damages, sanctions, and fees. They argued that the plaintiff had filed to conduct a sufficient pre-suit investigation and had committed various acts of litigation misconduct. They further argued that they each suffered damages from being wrongfully enjoined.
Judge Rochon granted the defendants’ motions for bond damages but denied their motions for sanctions and fees. She agreed that the moving defendants had been wrongfully enjoined because “Hyponix has pointed to at least four elements of claim 1 of the ’673 patent that are not present in its product” and “Ninja Safe has also shown that its products may not infringe claim 1 and has raised questions of invalidity.” Accordingly, Judge Rochon granted each moving defendant bond damages, though less than they asked for: $3,682.28 for Hyponix and $14,641.51 for NinjaSafe.
But she refused to grant sanctions or fees, despite being “troubled by Plaintiff’s conduct in this case.” In particular, Judge Rochon noted the “‘clear discrepancies’ between the protected elements of the ’673 Patent and the products of many of the parties against which Plaintiff secured a TRO.” She also noted other instances of “possible misconduct,” including:
“Plaintiff represented that most of the 163 parties were difficult to find and contact. In practice, however, contact information for many of the parties was readily available. . . . Plaintiff does not indicate that it tried with any diligence to locate these parties before seeking a TRO.”
“The pace and prevalence of Plaintiff’s dismissals suggest to the Court that Plaintiff used Rule 41 as part of a broader strategy to freeze the accounts of its competitors, then withdraw its claim against any party that happened to object.”
“Plaintiff failed to provide Hyponix with documents necessary for its defense. . . . . Plaintiff claims, falsely, that Hyponix did not request these documents.”
(Emphasis added.) Despite all of this, Judge Rochon refused to sanction the plaintiff:
Despite these concerns, the Court does not lightly award sanctions and will not do so in this case. Plaintiff holds a valid patent for its Hanging Exercise Product, its claim was colorable against at least some of the parties, and it dismissed its lawsuit voluntarily at a very early stage in the litigation (presumably in light of the issues raised by the Court at the order to show cause hearing), before any of the defendants responded to the Amended Complaint. Defendants here were made whole for their losses under the bond. Although a close question, the Court exercises its discretion to deny Defendants’ request for sanctions under its inherent powers and 28 U.S.C. § 1927. . . . To the extent that Plaintiff and its counsel engage in similar misconduct in the future, however, the Court will not hesitate to impose sanctions.
As Professor Eric Goldman noted in this blog post, “it would not be lightly awarding sanction when a plaintiff has committed so many violations.” Two additional points stand out as well.
First, the fact that some of the infringement claims might be colorable does not change the fact that the plaintiff brought numerous claims that were not—including the claims brought against the moving defendants. If the plaintiff had sued Hyponix and NinjaSafe separately, would that have changed the court’s analysis? If so, why should the fact of mass joinder insulate the plaintiff from sanctions? Especially in light of the fact that it’s far from clear that any—let alone all—of the defendants were properly joined, as they sell different products and do not seem to be actually connected in any way. See 35 U.S.C. § 299. In any case, the fact remains that this plaintiff brought many claims that were not colorable and used the machinery of the federal judiciary to wrongfully enjoin competitors. That is what should matter in the sanctions calculus, not the fact that some of the other claims (against apparently unrelated defendants) might have potentially had merit.
Second, it is true that the plaintiff dismissed the case at what would be, in a regular case, “a very early stage in the litigation.” But in a Schedule A case, the TRO seems to be the whole game. The plaintiff gets a TRO with an asset freeze, then starts making settlement demands. At that point, the defendants generally either settle or default. It appears that these cases aren’t meant to proceed any further. And as the defendants’ submissions show, significant damage can be done in these cases, even in a short period of time. (One also wonders how much money the plaintiff may have been able to extract in settlements before dismissing the case.)
In the end, the decision to sanction and to award fees is left to the discretion of the judge. And while it is encouraging to see Judge Rochon recognize the damage caused by acts that have become common in Schedule A cases (e.g., using FRCP 41 to dismiss defendants who fight back), it is discouraging to see a result that will only serve to further disincentivize Schedule A defendants from fighting back.
Once a judge grants a TRO with an asset freeze, the deck is heavily stacked against the Schedule A defendants. Defendants have strong incentives to settle, even when the cases against them lack merit. In many cases, it’s just too expensive to fight back, especially when your assets have been frozen.
If judges were willing to sanction plaintiffs—or at least shift fees—when Schedule A defendants were wrongfully restrained, that would do a lot to help level the playing field and incentivize the plaintiffs to bring better claims.
Without fee shifting or sanctions, the cost of bringing a nonmeritorious claim in a Schedule A case is virtually zero, while the harms to defendants who are wrongfully restrained—even for a short time—can be devastating. As Judge Hunt has noted, “the extraordinary remedy of freezing all [the defendants’] assets without notice” can “potentially ruin[] a legitimate business.”
Plus, as Casey Hewitt noted on Mastodon, Schedule A “defendants have no choice but to litigate, have no option to meet and confer and avoid a lawsuit . . . They did not ignore demand letters or refuse to negotiate or discuss alleged infringement.” But once they find out that their assets have been frozen, they have to “hire expensive IP litigators or they will lose their businesses.” In these circumstances, it seems like fee shifting for wrongfully enjoined Schedule A defendants should be the norm, not the exception.
Yes, it’s true that a presumption in favor of fee shifting would be a departure from normal federal court practice. But courts routinely use their discretion to grant procedural departures to Schedule A plaintiffs—e.g., email service, ex parte asset freezes, mass joinder upon conclusory (and in many cases, dubious) allegations. Perhaps it is time for judges to start using their discretion to make routine departures for Schedule A defendants, too.
Additional observations:
This case is a good example of why patent litigation is a poor fit for the Schedule A litigation model. I’ve written here before about how design patent infringement is ill-suited to ex parte adjudication; so too is utility patent adjudication. If judges are going to keep allowing the Schedule A model in patent cases (and they don’t have to do so, in these cases or in any others), they should consider making it a regular practice to special masters to help analyze the infringement evidence at the TRO stage. And they should, at a minimum, require an individualized claim chart for each and every defendant.
It is far from clear that Judge Rochon actually had the power to freeze these defendants’ assets in the first place. As Judge Kendall noted in a recent order, 35 U.S.C. § 284 “does not provide for the equitable relief of accounting and profits,” which is seems to be the standard basis for asset freezes in other types of IP cases. Furthermore, as Judge Seeger has noted, “Schedule A plaintiffs typically don’t request and receive equitable monetary relief” at the end of their cases, even when equitable relief is available. Other judges might be well-advised to start questioning whether they should use their discretion to keep granting these types of asset freezes, even in cases where a remedy of equitable disgorgement is actually available.
The Federal Circuit has remanded the Xencor appeal — allowing USPTO leadership an opportunity to re-focus on the written description requirement for both Jepson claims and means-plus-function claims in the antibody art. I have several prior posts about the case:
Vanda Pharmaceuticals recently filed a petition for writ of certiorari, asking the Supreme Court to review a May 2023 decision by the Federal Circuit that invalidated claims from four Vanda patents covering methods of treating Non-24-Hour Sleep-Wake Disorder (“Non-24”) using the drug tasimelteon (Hetlioz). Vanda Pharmaceuticals Inc., v. Teva Pharmaceuticals USA, Inc., 23-768 (Supreme Court). The district court held that all the asserted claims were invalid as obvious, and the Court of Appeals for the Federal Circuit affirmed this decision. Vanda.cert.petition
The Federal Circuit has denied Cellect’s en banc petition on the interplay between obviousness-type-double-patenting and patent-term-adjustment. The situation here is creating some strategic challenges for patentees with large patent families. (more…)
I’m looking forward to participating in three really interesting upcoming events. Hope to see some of you there!
Feb 6 12noon EST – Debating Design Patent Obviousness – Streaming via Suffolk – Free Event (REGISTER HERE): The Federal Circuit has not held an en banc rehearing in a patent case since before COVID. The first one (and only one on the docket) is the important design patent obviousness case of LKQ v. GM, with oral arguments scheduled for February 5, 2024. In the case, the accused infringer LKQ argues that the standard for design patent obviousness is too lax and thus allows for protection of many obvious designs. The primary legal hook in the case is that the flexible standard of KSR v. Teleflex should apply in design patent cases. Oral arguments will include the 11 Federal Circuit judges (absent Judge Newman) along with Mark Lemley (for the accused infringer); Joe Herriges (for the patentee GM); and USPTO Acting Solicitor Farheena Rasheed (for amicus USPTO). On Feb 6 we’ll gather online to debate the case and its potential outcome and impact. I will be joining Suffolk professor Sarah Burstein along with Meredith Lowry (Wright Lindsey); Darrell Mottley (Banner + Howard University); and Laura Sheridan (Google).
Feb 16 – Utah IP Summit at the University of Utah (REGISTER HERE). This event has a great set of speakers from the judiciary (led by Judge Reyna) as well as academics and practicing attorneys. Thanks to Sarah Jelsema & Phil Harris and the Utah Bar for organizing what looks to be a set of really interesting topics. I’ll be skiing at Snowbasin on the 17th – see you there! ⛷️
March 7-8 – University of Missouri: AI and Government (REGISTRATION COMING SOON). Along with my patent work, I have also been delving deeply into AI law issues. As part of this I am helping organizing our upcoming conference here at Mizzou in Columbia Mo that is co-sponsored by MU Law, the Missouri Law Review, and also the MU Truman School of Government and Public Affairs. We’ll be focusing on broad themes of the use of AI in Government, the impact of AI on Democracy, Government Regulation of AI, and the Role of Education in Creating an AI Ready Public Sector.
In Roku, Inc. v. ITC, the Federal Circuit has affirmed determinations by the International Trade Commission (“ITC”) favoring the patent holder Universal Electronics, Inc. (“Universal”). The most interesting part of the case for me is the assignment issue – whether the patents had been properly assigned at the appropriate time. This can become in cases like this because Universal has created a large patent portfolio that all claim back to original priority documents from more than a decade ago. While most of patents are attributable to both joint-inventors, some are only attributable to one or the other. Here, though the Federal Circuit supported the simple approach of a “hereby assigns” transfer of rights that includes future continuations. The decision is lacking though because the court does not ground its decision in any particular contract or property tradition.
The Federal Circuit recently affirmed a ruling by the Patent Trial and Appeal Board (PTAB) in an inter partes review (IPR) filed by ZTE and joined by LG, finding claims of CyWee Group’s U.S. Patent No. 8,441,438 unpatentable as obvious. CyWee Group v. ZTE, No. 21-1855 (Fed. Cir. Jan. 18, 2024). The ’438 patent claims 3D motion-tracking technology for handheld devices like smartphones. The appeal included both IPR procedural issues and substantive patent law issues. In siding with the PTAB, the Federal Circuit rejected CyWee’s argument that the Board should not have allowed LG to oppose CyWee’s motion to amend its claims. The court also affirmed the Board’s finding that the proposed amended claims would have been obvious over the prior art. (more…)
I believe that today was the first time that I’ve seen the Federal Circuit issue a no-opinion affirmance in a case that included three amicus briefs along with briefs from three parties. The case, New Vision Gaming v. LNW Gaming, 20-1400 (Fed. Cir. 2024).
After initially granting a temporary reprieve, the Federal Circuit has now denied Apple’s stay pending appeal of the International Trade Commission’s limited exclusion order and cease-and-desist order (“the Remedial Orders”) against Apple Watch Series 9 and Ultra 2.
The baseline approach in American patent law is that any injunction issued by the district court will stay in effect through the duration of any appeal. However, district and appellate courts regularly stay the injunction if the defendant is able to satisfy a four-factor test that largely parallels the eBay standard:
whether the movant has made a strong showing of likelihood of success on the merits;
whether the movant will be irreparably harmed absent a stay;
whether issuance of the stay will substantially injure the other parties interested in the proceeding; and
where the public interest lies.
See Nken v. Holder, 556 U.S. 418 (2009). In its analysis, the Federal Circuit simply stated that it had reviewed the factors and, although it had the power to issue a stay, such action was not appropriate here.
Following the ITC’s exclusion order, Apple filed a request with the Exclusion Order Enforcement Branch of US Customs (EOE Branch) seeking a ruling that it could still import the Apple Watch having the Pulse-Ox feature disabled. Although the order itself is still secret, the Federal Circuit included a remark that the EOE Branch had concluded that “Apple’s redesigned products are not subject to the Remedial Orders.” A NYT article explains that:
People who buy a new watch in the United States will still see Apple’s Blood Oxygen app on the devices, the company said. But if they tap the app, it will say the feature is no longer available.
The image below comes from Apple Briefing from last week that attempted to keep information about the redesign confidential.
Presumably, Apple will have the capability of turning the functionality back-on via system update when either the patents expire or are found invalid.
So, bottom line here is that the Apple Watch stays on the market, but only if it disables the Pulse-Oximetry functionality. The decision here is also preliminary — Apple will still be arguing in the appellate briefing that it should have won at the ITC and that the exclusion order is improper. That briefing will take a few months and a decision might be 1 year away.
An important note here is that the ITC case only focuses on blocking importation and post-importation sales in the US. It does not award any money damages and it does not apply to sales of Apple Watch outside of the US. Masimo may separately seek infringement damages in parallel Federal Court litigation and has a related ongoing trade secrets lawsuit against Apple seeking almost $2 billion in damages.
A California Court of Appeals issued a product liability decision in early 2024 that raises interesting questions about the role of both carrots and sticks in innovation policy. Gilead Tenofovir Cases, No. A165558, 2024 WL 94462 (Cal. App. 1st Dist. Jan. 9, 2024) Read It Here. I first found the Gilead case while reading the Wall Street Journal with the board editorial decrying the decision for “invent[ing] a crazy new tort.” In particular, the appellate panel agreed that Gilead could be held liable for for delaying the development of an alternative HIV/AIDS drug (TAF) that it expected would be safer and equally effective compared to its existing drug (TDF) in order to maximize profits from TDF. Although the old drug TDF had been deemed safe by the FDA and was not itself defective, the plaintiffs allege that it was clearly much worse than the potential alternative that Gilead allegedly sidelined. In particular, patients taking TDF suffered bone and kidney damage. In its decision, the Court of Appeal held that a manufacturer’s duty of reasonable care under Cal. Civ. Code §1714 can extend beyond the mere duty not to market a defective product, permitting a negligence claim without alleging a product defect. The court relies on Mexicali Rose v. Superior Court 1 Cal.4th 617 (1992), which held that the presence of a natural substance causing injury doesn’t negate a restaurant’s duty of care in food preparation, allowing a negligence claim despite the lack of a product defect. The court also rejected policy considerations associated with FDA-approval and adequate warnings. However, the court did side with Gilead with regard to a fraudulent concealment claim, holding that Gilead owed plaintiffs no duty to disclose facts about the unapproved drug TAF, which was – at the time – unavailable to plaintiffs as a treatment alternative to TDF. The appeal assumed that the plaintiffs could prove the facts alleged above. On remand, there will likely to be a trial where this assumption will be put to the test.
The ruling in Gilead Tenofovir Cases opens the door to lawsuits punishing companies for not innovating fast enough – a sharp contrast to the patent system’s traditional approach to encouraging innovation through potential monopoly-like profits. This flips the normal “carrot”/”stick” innovation incentive model on its head. Patents traditionally encourage innovation by rewarding it through time-limited exclusive rights enabling high prices that “fuel . . . genius,” as President Lincoln put it. Product liability laws, conversely, attempt to deter harm by forcing manufacturers to pay for injuries caused by defective products – a “stick” incentivizing safety. By penalizing failure to innovate quickly enough with tort liability, Gilead extends this disencentive to innovation: introducing disincentives for not innovating.
As the Wall Street Journal editorial board contends, this duty could spawn lawsuits against virtually any industry for not constantly upgrading products. It also seems in tension with the prevailing legal test for defective design, which balances safety risks against factors like usefulness and cost, recognizing that perfect safety is unattainable. Still, the decision here is incremental. It is based upon California Law, and the Gilead opinion dismissed arguments that its ruling amounted to “absolute liability” or a mandate for “ever-better new products.” How these assurances square with the newly recognized duty is unclear. Perhaps tellingly, the court left open whether liability might be cut off earlier, like after clinical Phase III trials of the safer alternative drug. The court’s idea here is that liability should only attach if the better alternative is sufficiently known or foreseeable. Thus, the case here really is about shelving known improvements.
I wonder whether there are other negative innovation disincentives. We have all heard the mantra “innovate or die” – This “natural” competitive incentive can be distinguished from the Gilead’s that is artificially created as a public policy choice. It is the human condition — also exemplified in larger corporate institutions — to seek reward and avoid punishment. It makes sense then that incorporating sticks like liability fears could be a useful part of the innovation policy landscape. This is not to reflexively endorse the Gilead approach; its wider impacts seem quite unpredictable at this point. But the decision helps us challenge the one-sided assumptions that “carrots-only” frameworks like patents best spur invention and innovation. And, that some disincentives can fit within our current framework of laws.
Martin Luther King Jr. received the Nobel Peace Prize in 1964, and I re-read his speech today — especially the portion contrasting development of science and technology against development of the human spirit. The past 60 years have continued to reveal astonishing discoveries and invention. Yet King’s words and warnings continue to resonate because we have continued to neglect our internal realm.
Every man lives in two realms, the internal and the external. The internal is that realm of spiritual ends expressed in art, literature, morals, and religion. The external is that complex of devices, techniques, mechanisms, and instrumentalities by means of which we live.
King. In his speech, King did not decry advances in technology, but argued that the level of attention paid to material advances should be matched by attention to moral and spiritual humanism.
Modern man has brought the whole world to an awe-inspiring threshold of the future. He has reached new and astonishing peaks of scientific success. He has produced machines that think, and instruments that peer into the unfathomable ranges of interstellar space. He has built gigantic bridges to span the seas and gargantuan buildings to kiss the skies. His airplanes and spaceships have dwarfed distance, placed time in chains, and carved highways through the stratosphere. This is a dazzling picture of modern man’s scientific and technological progress.
Yet, in spite of these spectacular strides in science and technology, and still unlimited ones to come, something basic is missing. There is a sort of poverty of the spirit which stands in glaring contrast to our scientific and technological abundance. The richer we have become materially, the poorer we have become morally and spiritually. We have learned to fly the air like birds and swim the sea like fish, but we have not learned the simple art of living together as brothers.
The Leading pro-IP Senators, Thom Tillis (R-NC) and Chris Coons (D-DE) recently introduced a bill focusing on patents stemming from research paid-for by federal grants. The proposed legislation, titled the “Improving Efficiency to Increase Competition Act,” would require a government study on reporting requirements related to the landmark Bayh-Dole Act of 1980.
by Dennis Crouch