Preclusion; Customer Lawsuits; and the Kessler Doctrine

Patent

by Dennis Crouch

PersonalWeb Technologies, LLC v. Patreon, Inc., Docket No. 20-1394 (Supreme Court 2021).

This is a core civil procedure case pending before the Supreme Court.  Of course, procedure can and often does have a major impact on substantive rights.  The Supreme Court has now issued a Call for the Views of the Solicitor General (CVSG)–seeking the government’s input on whether to hear the case.  Although certiorari is certainly not guaranteed, CVSG is generally seen as a major step in that direction.

We know about issue preclusion and claim preclusion. This case is about a quirky intermediary known as the Kessler Doctrine. See, Kessler v. Eldred, 206 U.S. 285 (1907).

  • Claim Preclusion (res judicata) prevents a party from re-litigating a claim once a court has issued a final judgment on that claim.  Claim preclusion is powerful, in part, because it does not require the claim to be actually litigated (just be subject to the final judgment).  Further, claim preclusion bars both those claims that were brought as well as claims stemming from the same transaction or occurrence that could have been brought in the earlier lawsuit.  However, claim preclusion is quite narrow because it does not apply in the non-mutual setting.
  • Issue Preclusion (collateral estoppel) prevents a party from re-litigating an issue of fact or law that was already determined in a prior case.  Issue preclusion is powerful because it applies in non-mutual settings.  Issue preclusion can prevent a patentee from later arguing in a new lawsuit that its patent is valid after an earlier finding of invalidity, even if the new lawsuit is against a different party.  The major weakness of issue preclusion is that it requires that the issue have been actually decided in the prior lawsuit, with a full-and-fair opportunity to litigate, and be essential to the prior judgment (not just dicta). As an example, issue preclusion does not attach following a settlement.
  • Kessler Doctrine is particular to patent law and falls somewhere in-between issue and claim preclusion–allowing preclusion in instances where it would not be traditionally available.  In particular, the doctrine bars a patent infringement lawsuit suit against the customer of a seller who had previously prevailed against a patentee in an earlier patent infringement suit. Kessler v. Eldred, 206 U.S. 285 (1907).  In that situation claim preclusion would not apply because of non-mutuality; and issue preclusion might not apply if the issues being barred were not actually litigated in the first case.

One justification for the Kessler doctrine back in 1907 was that issue preclusion generally did not apply to unrelated parties.  However the 20th century saw a great expansion of issue preclusion that culminated with the Supreme Court’s 1971 decision in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971) (“the principle of mutuality of estoppel … is today out of place”).  However, rather than relegating Kessler to a prior time, the Federal Circuit has recently substantially expanded the doctrine even beyond its usual bounds.  That revival began with the 2014 decision in Brain Life, LLC v. Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014), but has subsequently been relied upon in a series of cases from the appellate court. SpeedTrack, Inc. v. Office Depot, Inc., 791 F.3d 1317, 1323-1329 (Fed. Cir. 2015), cert. denied, 577 U.S. 1063 (2016); SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1169-1170 (Fed. Cir. 2018); Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1301 (Fed. Cir. 2017), cert. dismissed, 139 S. Ct. 44 (2018);  Xiaohua Huang v. Huawei Techs. Co., 787 F. App’x 723, 724 (Fed. Cir. 2019); In re PersonalWeb Techs. LLC, 961 F.3d 1365 (Fed. Cir. 2020); ABS Glob., Inc. v. Cytonome/ST, LLC, 984 F.3d 1017, 1022 (Fed. Cir. 2021).

The Supreme Court has repeatedly declined (in other situations) to expand preclusion beyond its traditional bounds without congressional intervention. See Lucky Brand Dungarees v. Marcel Fashions Grp., Inc., 140 S. Ct. 1589, 1594-95 (2020) (rejecting “defense preclusion” as a cognizable doctrine).  Likewise, the court has rejected patent-specific procedural rules.  Those lines of cases all suggest a good likelihood that the court cabin-in the doctrine.

Preclusion cases always involve two lawsuits, and the question is whether something that happened in the first lawsuit precludes a party from taking some action in the section lawsuit.   Here, PersonalWeb sued Amazon for patent infringement back in 2011 based upon Amazon’s use of its S3 cloud storage services. However, after a narrow claim construction, PersonalWeb stipulated to dismissal of its case with prejudice.  In 2018, PersonalWeb sued a number of Amazon customers for post-2011 activities.  The courts dismissed the case — holding that the action was barred by the Kessler Doctrine.

PersonalWeb’s petition for certiorari begins with a preamble and then asks two questions:

This Court has repeatedly held that, absent guidance from Congress, courts should not create special procedural rules for patent cases or devise novel preclusion doctrines that stray beyond the traditional bounds of claim and issue preclusion. Nonetheless, over the past seven years, the Federal Circuit has created and then repeatedly expanded a special, patent-specific preclusion doctrine that it attributes to this Court’s 114-year-old decision in Kessler v. Eldred, 206 U.S. 285 (1907)—a case this Court has not cited for almost 70 years. The Federal Circuit now routinely applies its so-called “Kessler doctrine” to reject suits like this one that would survive under ordinary preclusion principles.

The questions presented are:

1. Whether the Federal Circuit correctly interpreted Kessler to create a freestanding preclusion doctrine that may apply even when claim and issue preclusion do not.

2. Whether the Federal Circuit properly extended its Kessler doctrine to cases where the prior judgment was a voluntary dismissal.

[Petition for Certiorari]

In its responsive briefing, Amazon and its customers have rewritten the questions in slightly different form, emphasizing their arguments.

In Kessler v. Eldred, 206 U.S. 285 (1907), this Court held that a patent-infringement judgment establishing the right of a manufacturer to make and sell a product includes “the right to have others secure in buying that article, and in its use and resale.” Rubber Tire Wheel Co. v. Goodyear Tire & Rubber Co., 232 U.S. 413, 418 (1914). Accordingly, “a judgment in [the manufacturer’s] favor bars suits against his customers.” Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 185 (1952). The questions presented are:

(1) whether the Federal Circuit properly interpreted Kessler as a bar on suits against customers for use of the same articles that were the subject of the prior judgment, rather than a mere application of non-mutual issue preclusion;

(2) whether Kessler should be overruled, despite stare decisis, when Congress has never revised the Patent Act to overrule Kessler, and when its rule is necessary to prevent the kind of vexatious litigation in which the district court found Petitioner to have engaged; and

(3) whether Kessler applies to judgments of voluntary dismissal with prejudice, which this Court has long held to have the same preclusive effect as an adjudication on the merits of a claim.

[Brief in opposition].

Next stop in this case is input from the Biden Administration via the Solicitor General.  That brief probably won’t be submitted until Spring 2022.

= = =

Note – Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 185 (1952) was decided prior to the Patent Act of 1952.

Timbs: Iconic Enough for Trademark Protection?

Patent

by Dennis Crouch

TBL Licensing, LLC v Hirshfeld, Docket No. 1:21-cv-00681 (E.D. Va. Jun 04,
2021)

I previously wrote about the TTAB decision denying TBL’s attempt to register the shape of its Timberland Boots as a protectable trade mark. Crouch, Iconic Timberland Boots–Trade Dress Worthy? Now, the company has filed a civil action in the Eastern District of Virginia seeking a court order that TBL is entitled to a registration. TBL provides its basic argument as follows:

The TTAB wrongly disregarded TBL’s potent evidence of secondary meaning, including extensive sales, advertising, and third-party recognition (with diverse examples of high-profile unsolicited media coverage and attention) that TBL amassed from over four decades of consistent and substantially exclusive use of the Timberland Boot Trade Dress. In so doing, the TTAB refused to register what has been deemed “one of the most recognizable shoes of all time.” The TTAB’s decision should thus be reversed and, because the Timberland Boot Trade Dress is not de jure functional, TBL’s application should be approved for publication. Alternatively, the case should be remanded for consideration of the issue of functionality.

TBL Complaint.

The TTAB gave little weight to the fact that the agency has issued registration certificates on many different shoe designs.  On the other hand, that same history-based argument will likely be more convincing to a district court judge.

There is no right to a jury trial in this type of case. To further save costs, the parties have agreed to waive a live trial completely and instead decide the case based upon the submitted record.

The parties have agreed to authorize the Court to adjudicate this matter on summary judgment and to resolve any disputes concerning material issues of fact on a submitted record.

This is apparently the same process used in other recent trademark civil actions. Booking.com B.V. v. Matal, 278 F. Supp. 3d 891, 900 (E.D. Va. 2017) (“The parties have ‘expressly agree[d] that if the Court determines after reviewing the briefs and evidence on summary judgment that any material issue of fact exists, the Court is authorized to resolve any such factual dispute.'”); Seacret Spa Intl. v. Lee, 1:15CV405(JCC/IDD), 2016 WL 880367, at *2 (E.D. Va. Mar. 8, 2016) (“The parties have agreed that . . . the Court may resolve those disputes on the basis of the record before it.”); Autodesk, Inc. v. Lee, 1:13-CV-1464 AJT/JFA, 2014 WL 5500799, at *1 (E.D. Va. Oct. 30, 2014) (parties “stipulated that the Court should resolve any material factual disputes without any further proceeding based on the summary judgment record.”).

I expect final briefing in February 2022 and a decision later in the spring.

= = =

Iconic Timberland Boots — Trade Dress Worthy?

Hyatt; Prosecution Laches; and more Civil Actions

Patent

by Dennis Crouch

In a June 2021 decision, the Federal Circuit supported the USPTO in its arguments that Gilbert Hyatt long-pending patent applications could be rendered moot based upon the doctrine of Prosecution Laches. Hyatt v. Hirshfeld, 998 F.3d 1347 (Fed. Cir. 2021).  Those cases are now on remand and the district court is setting up for trial on the question of whether the 20+ year delay in prosecution was due to Hyatt’s unreasonable behavior and whether the delay has resulted in prejudice.  The parties now are arguing about whether the court will allow a full presentation of new evidence or limit the trial only to Hyatt’s justifications of his actions.

Hyatt has now also filed additional Section 145 actions seeking a district court order that the USPTO issue his patents in two other pending applications.

  • Hyatt v. Hirshfeld, Docket No. 1:21-cv-01019 (E.D. Va. Sep 03, 2021), (Application No. 08/433,307).
  • Hyatt v. Hirshfeld, Docket No. 1:21-cv-01084 (E.D. Va. Sep 24, 2021), (Application No. 08/458,549).
  • Hyatt v. Hirshfeld, Docket No. 1:21-cv-00936 (E.D. Va. Aug 17, 2021),(Application No. 08/423,235).
  • Hyatt v. Hirshfeld, Docket No. 1:21-cv-00892 (E.D. Va. Aug 03, 2021), (Application No. 08/460,768).
  • Hyatt v. Hirshfeld, Docket No. 1:21-cv-00884 (E.D. Va. Jul 30, 2021), (Application No. 08/426,450).

Each of these cases involve a PTO refusal to issue the patent based upon prosecution laches.

Another E.D.Va. patent case recently filed against the USPTO is Daiichi Sankyo, Inc. et al v. United States Patent and Trademark Office et al, Docket No. 1:21-cv-00899 (E.D. Va. Aug 05, 2021).  Daiichi Sankyo is an Administrative Procedure Act (APA) case arguing that the PTO has adopted two AIA-trial-related rules rules that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).  Challenged rules:

  • NHK-Fintiv rule that allows the PTAB to deny institution based upon parallel patent infringement litigation.
  • Arthrex rule regarding PTO’s approach to director review.  The particular concern in the lawsuit is that the PTO does not provide for director review of institution denials.

DaiichiSankyoVUSPTO_complaint.

Is the path clear?

Patent

One question survey:

Guest Post by Prof. Trimble: The False Sense of Victory in Bypassing The Hague Convention on Service of Process

Patent

Guest Post by Professor Marketa Trimble, Samuel S. Lionel Professor of Intellectual Property Law, University of Nevada, Las Vegas William S. Boyd School of Law.  Professor Trimble specializes in international intellectual property law, and is the author of Global Patents: Limits of Transnational Enforcement (Oxford Univ. Press 2021) and co-author with Paul Goldstein of International Intellectual Property Law, Cases and Materials (Foundation Press 5th ed. 2019).

On September 10, 2021, the U.S. Court of Appeals for the Federal Circuit denied mandamus in In re OnePlus Tech. (Shenzhen) Co., confirming that the plaintiff may bypass Article 5 of the Hague Convention on the Service of Process and serve the Chinese defendant through alternative service to attorneys located in California who had represented the defendant in the past. Commentators heralded the decision as an important improvement in the enforcement of patent rights against foreign, and in particular Chinese, defendants (Law360). However, in many IP cases involving foreign defendants, this sense of victory might be premature.

What ultimately matters is whether a judgment resulting from a U.S. dispute is enforceable—either in the United States or abroad. If a foreign defendant has assets in the United States and a U.S. judgment can be enforced in the United States, bypassing The Hague Convention does not matter. But if a foreign defendant has no assets in the United States and a plaintiff must seek enforcement of a U.S. judgment abroad, bypassing the Convention—even if the end run is sanctioned by a U.S. court and is legal under U.S. law—might be for naught. Once a plaintiff requests recognition and enforcement of a U.S. judgment abroad, a foreign court may deny recognition and enforcement of the judgment if a defendant was not served in accordance with The Hague Convention. Avoiding recognition and enforcement abroad is not always possible; the August 2021 decision in Next Investments, LLC v. Bank of China shows that seizing a defendant’s foreign accounts by using the U.S. branches of Chinese banks might not work.

Countries entered into The Hague Convention to ensure that documents would be served on their citizens in a manner that comports with the countries’ sense of due process. The Convention (the full title is Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters) allows countries to permit easier and faster alternative means of service if they wish to do so, but China is one of the countries that filed a declaration opposing the use of such alternative means. Therefore, in China the only service that is compliant with the Convention is through the Convention’s Article 5 mechanism via the Central Authority.

The penalty for not using the Convention’s Article 5 mechanism can be high. Not surprisingly, countries that are parties to the Convention (currently, 79 countries) want to ensure that the Convention is being followed, and courts in these countries may therefore deny recognition and enforcement to a foreign judgment that stems from a proceeding in which a defendant (who is foreign to the court that issued the judgment) was not served in accordance with the Convention. Courts in some countries are willing to recognize and enforce a foreign judgment even if service was not compliant with the Convention if proof of actual service abroad exists from the original court proceeding. A defendant’s voluntary acceptance of alternative service might also satisfy a court’s expectations of due process, and apparently the Supreme Court of the People’s Republic of China has also made such a decision in a case when a Chinese court permitted an alternative means of service on a defendant outside of China.

The Hague Convention’s age of 56 years raises legitimate questions about its utility in today’s world. However, the likelihood that countries will replace it with an updated convention seems remote; the negotiations of the new Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (not yet in force) proved that an agreement by countries on conflict-of-laws issues in transnational disputes remains difficult, and the new Convention was achieved only when IP disputes were excluded from the scope of the Convention. With the anti-suit injunction war raging in SEP cases and Chinese courts being more assertive in transnational litigation, the U.S. IP bar’s view might finally evolve in favor of an international convention on transnational conflict-of-laws matters in IP disputes. Some models exist in academic projects that have developed principles and guidelines for such matters; the latest and most international of the projects resulted in the Kyoto Guidelines that the International Law Association adopted in December 2020.

Restoring the America Invents Act

Patent, ,

by Dennis Crouch

Sen. Leahy and Sen. Cornyn have introduced the “Restoring the America Invents Act” designed to further address problems caused by the USPTO’s issuance of “poor-quality patents.”

The proposal is basically a wish list of patent-killers seeking to cancel patent rights via inter partes review.

Key elements of the proposal:

  • Removal of Discretional Denials of Institution.  The proposal would substantially limit PTO Director’s discretion to deny institution.  The new provision would state that “a petition that meets the requirements of this chapter shall be instituted …”  The Director would maintain limited discretion to deny or alter institution based upon multiple proceedings involving the same patent or member of the same patent family pending before the Office.  The statute would create a rebuttable presumption of consolidation.
  • Expanding the Scope of Inter Partes Review.  Currently, IPR’s can only focus on patentability grounds “raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.”   The proposal would expand this to also include “admissions in the patent specification, drawings, or claims” and also “statutory or obviousness-type double patenting.”
  • More Powerful Stays. The new statute would list factors that a district court should consider when determining whether or not to grant a stay, all the changes would tend to promote stays of the litigation.  The provisional would also permit an immediate right to appeal the district court’s stay decision.
  • Codifying the Rules on Amending Claims: The patent owner will have the burden of proving the patentability of any amended claim, including Sections 101, 102, 103, and 112 before the PTAB who will act as an examiner in that regard.
  • Prior Dismissal of Without Prejudice: A lawsuit involving the patent that was dismissed without prejudice would no longer trigger 1-year deadline for filing an IPR petition.
  • Codify a procedure for Director Review under Arthrex.  Although the procedure requires the director to provide a “written opinion” setting forth any reasoning, it does not appear to require director review or reasons for denial of review.
  • Rejecting Return Mail.  The proposal would add “a governmental entity” to the people who can petition for IPR.  This would overturn the Supreme Court decision in Return Mail which held that the U.S. Gov’t was not a “person” for the purposes of this portion of the statute.
  • Extend timing of ending proceedings before the office until the conclusion of any appeal. 325(e)(1).
  • Expanded Estoppel against the Patent Owner: “The Office may not issue to a patent owner any claim that is not patentably distinct from a claim that was issued and was subsequently—(i) found to be unpatentable; or (ii) canceled in any proceeding before the Office, including under section 135, 251, 253, 301, 311, or 321.’”
  • Attempting to Eliminate Outside Influence on Panels from Within the USPTO: “EX PARTE COMMUNICATION.—An officer who has review authority, supervisory authority, or disciplinary authority with respect to an administrative patent judge of the Patent Trial and Appeal Board (or a delegate of such an officer), and who is not a member of a panel … shall refrain from ex parte communication with such a judge who is a member of that panel concerning any pending matter before that panel, except as allowed under the Code of Conduct for United States Judges.”
  • Standing to appeal: The new law would attempt to cobble-together additional injury by presuming injury in fact based upon the estoppel, etc.
  • No Standing then No Estoppel: The new law would open the door further to speculative filing of IPR petitions. In particular, the proposal would modify the law so that a party who lacks standing to appeal its loss before the PTAB would not later be estopped based upon the IPR outcome.

Preserve Access to Affordable Generics and Biosimilars Act

Patent

The House Judiciary Committee has voted in favor of H.R. 2891, the Preserve Access to Affordable Generics and Biosimilars Act.  The Bill was also referred to the House Energy & Commerce Committee and so may have a few more hurdles before it moves to the House Floor.

The key aspect of the proposal is to create a presumption of anticompetitive behavior anytime a generic ANDA/biosimilar filer “receives anything of value” while also agreeing to forgo any “research, development, manufacturing, marketing, or sales of the ANDA product or biosimilar biological product.”  The proposal appears to limit use of this presumption only to situations where the FTC brings an action, and not a private antitrust claim.

A parallel bill  proposed by Sen. Klobuchar is pending in the Senate.

Eligibility: Which Case Will the SCT Choose as its Vehicle?

Patent

ENCO Systems, Inc. v. DaVincia, LLC (Supreme Court 2021)

In March 2021 the Federal Circuit sided with the patent challenger DaVincia — affirming that ENCO’s patent claims were invalid as directed to an abstract idea. Now, ENCO has petitioned the Supreme Court with the following general question:

What is the appropriate standard for determining whether a patent claim is directed to a patent-ineligible concept when determining whether an invention is eligible for patenting under 35 U.S.C. § 101?

[Petition]

ENCO and DaVincia compete in the market for automated captioning of audio signals.  ENCO did not invent the general concept, but its patent brings together a number of important features make it workable and with a 2000 application priority filing date.

In some ways, this case reminds me of the Supreme Court’s Barbed-Wire decision in Washburn & Moen Mfg. Co. v. Beat ‘Em All Barbed-Wire Co., 143 U.S. 275 (1892) where the court explained:

The difference between the [prior art] Kelly fence and the Glidden fence [at issue] is not a radical one, but, slight as it may seem to be, it was apparently this which made the barbed–wire fence a practical and commercial success.

Id. The 1892 case focused on obviousness rather than abstraction.  And, barbed-wire was generally seen as a fundamental and transformative invention of American westward expansion. It allowed for ‘taming’ of the land and closing of the open range.

The invention here is directed to a method of automated captioning of an AV signal. The inventors did not invent this general idea, but the claims include a number of features that make it more workable.

  • Choosing how many lines of text to see at once;
  • automatically identifying voice and speech patterns;
  • training on new words and using that training to improve the captioning;
  • synchronizing the caption data with one or more cues in the AV signal;
  • etc.

Unlike Barbed-wire Glidden who did have a novel way of wrapping wire compared with the prior art, I don’t believe that any of ENCO’s individual elements have a point of novelty. Rather, the novelty of the invention involves putting them all together into a method that works.

In its decision, the Federal Circuit ruled that ENCO’s claims were directed to “simply the abstract idea of automating the AV captioning process.”  But, the claims did not provide any specific technological improvement: “The advance is only at the abstract level of computerization because claim 1 fails to set forth specific techniques for processing the data, instead reciting known computer techniques for automation of known processes.”

ENCO’s petition argues that “the Federal Circuit reached the wrong result” since the patent claims a “method of solving a technological problem using physical components executing defined steps to produce a tangible result.”

The petition also boldly makes a prediction: “The question is not whether the Court will review its eligibility test, but which case it will choose as its vehicle.”

 

Serial Filing of IPRs and as Reexamination

Patent

In re Vivint, Inc. (Fed. Cir. 2021)

Vivint sued Alarm.com for infringing its US Patent 6,717,513. Alarm.com responded with three different inter partes review (IPR) petitions.  Those three petitions were denied at the institution stage.  Two of the petitions were denied on the merits, the third petition was denied based upon the “abusive” IPR filing practices of Alarm.com (noting that there were 15 total IPRs filed involving ‘incremental petitioning’).

A year later Alarm.com petitioned for ex parte reexamination of the ‘513 patent.  Most of the reexamination petition was word-for-word identical to the IPR petitions, although there was one new reference added for two of the four patentability questions.  The PTO ordered the examination and eventually concluded that that the challenged claims were not patentable.

Inter Partes Review and Ex Parte Reexamination both involve an initial threshold stage where the patent office must decide whether the petition presents a sufficient case to move forward with the full review.  But, the standard for IPR is much higher than that of reexamination.  IPR’s are only initiated upon a finding of a “reasonable likelihood” that at least one claim will be cancelled while reexaminations require only a “substantial new question of patentability.”  Thus, it logically makes sense that a challenge might fail the IPR threshold, but still be sufficient to surpass the reexam requirement.

On appeal, the Federal Circuit offers an interesting opinion.  On the one hand, the court agreed that a substantial new question of patentability was presented in the reexam.  At the same time, the court found that the PTO abused its discretion in hearing the reexamination.

SNQP: Here, the decision was easy once the court ruled that the “new” portion focused on whether a particular issue had been previously decided on the merits.  Although the same questions had been presented in the IPR petitions, denial of an IPR doesn’t count as deciding the issue on the merits.

Discretion to Deny: The reexamination statute provides the PTO with discretionary authority to reject petitions based upon questions previously presented to the office.  35 U.S.C. § 325(d).  The most interesting part of the decision here is the ruling that sometimes discretionary denial becomes mandatory — when denial would be “an abuse of discretion or arbitrary and capricious.”

Here, the court looked to the dismissal of the last IPR petition based upon “Alarm.com’s abusive filing practices.”  Alarm.com should not then be allowed to take the same approach in yet another new incremental filing — even if the new petition was in reexamination form.

Our holding today is narrow. Section 325(d) applies to both IPR petitions and requests for ex parte reexamination. Thus, the Patent Office, when applying § 325(d), cannot deny institution of IPR based on abusive filing practices then grant a nearly identical reexamination request that is even more abusive. We see no difference between the IPR and ex parte reexamination processes that would justify such conduct and nothing short of termination of the  reexamination would be appropriate.

Slip Op.

Cancellation of Vivint’s claims is Vacated.

 

 

The proper standard for willful infringement: “deliberate or intentional infringement”

Patent

by Dennis Crouch

Today’s decision in SRI Int’l., Inc. v. Cisco Sys., Inc. (Fed. Cir. 2021) is an important Federal Circuit decision regarding enhanced damages for willful infringement.  It also adds further to the complexity of Federal Circuit doctrine on enhanced damages — despite the Supreme Court’s warning against an “unduly rigid” approach in Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016).

The basics here is that the jury originally sided with the patentee SRI over Cisco awarded $23 million in damages.  The jury also found the infringement willful. The district court then doubled the damage award in accordance with 35 U.S.C. § 284’s statement that “the court may increase the damages up to three times the amount found or assessed.”

That original decision was vacated by the Federal Circuit in a 2019 appeal.  The appellate panel included a few big statements.  The biggest of these was instructing the court to focus on whether the adjudged infringer’s “conduct rose to the level of wanton, malicious, and bad-faith behavior required for willful infringement.”  On remand, the district court took that statement as a mandate requiring “wanton, malicious, and bad-faith behavior” as a prerequisite to a willful infringement award.  That standard had not been met and so the district court refused to enhance damages.

On appeal the second time, the case returned to the same three-member panel (LOURIE, O’MALLEY, and STOLL) and the panel has written to “clarify that it was not our intent to create a heightened requirement for willful infringement.”  Rather, the court emphasized the actual standard that “willfulness requires a jury to find no more than deliberate or intentional infringement.”  Quoting Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367 (Fed. Cir. 2020).  Note that that seeming heightened requirements will still be relevant as a district court determines the amount of enhanced damages to award following a jury finding of willfulness.

Based upon the lower-standard for willfulness, the appellate panel reinstated the jury verdict of willfulness and also reinstated the district court’s award of double-damages.*

The appellate panel also affirmed the award of attorney fees as an “exceptional case” under Section 285.   In addition to the willfulness, the district court also found that Cisco’s litigation approach was unduly aggressive in a way that required excess work for both SRI and the Court.

There can be no doubt from even a cursory review of the record that Cisco pursued litigation about as aggressively as the court has seen in its judicial experience. While defending a client aggressively is understandable, if not laudable, in the case at bar, Cisco crossed the line in several regards.

Cisco’s litigation strategies . . . created a substantial amount of work for both SRI and the court, much of which work was needlessly  repetitive or irrelevant or frivolous. . . .

Examples included:

  • Maintaining 19 different invalidity theories until the eve of the trial, but ultimately only presenting two at trial;
  • Presenting weak non-infringement theories that were contrary to the prior claim construction;
  • Exhaustive summary judgment and sanctions efforts;
  • Over designating deposition testimony for trial; and
  • Pursuing every possible post-verdict defense.

In the end, there was no abuse of discretion to find this case exceptional and award attorney fees.

= = =

* Note that in the original appeal the appellate panel drew a hard line against enhancement of damages that accrued prior to Cisco’s knowledge/disregard of the patents at issue.  It turns out that issue was not even up on appeal in the original case. The court now writes that “[t]he parties informed this court for the first time in this appeal that the district court’s award of double damages in SRI I applied only to damages for infringing activity after notice was given to Cisco.”

 

 

In re: Juniper Networks

Patent

By Jason Rantanen

In re: Juniper Networks (Panel: Judges Lourie, Bryson, Taranto)

By my count, it’s been over a month and a half since the Federal Circuit issued a decision granting a petition for writ of mandamus arising from the Western District of Texas.  (That decision was In re: Hulu on August 2, 2021.)  That streak has come to an end, as today the court issued In re: Juniper Networks.

Like other petitions for a writ of mandamus arising from the Western District of Texas, Juniper Networks, Inc.’s petition concerned the denial of a request for transfer under 28 U.S.C. § 1404(a).  The case itself involves an assertion of patent infringement by WSOU Investments LLC (referred to as “Brazos”) against Juniper that was filed in the Western District of Texas.  Juniper, a Delaware corporation headquartered in Sunnyvale, California (for those who aren’t familiar with the area, that’s Silicon Valley), moved to transfer to the Northern District of California.  Judge Albright denied the motion, reasoning that under the four private interest and four public interest factors governing which district is more convenient, Juniper had not established that the Northern District of California was a clearly more convenient forum for this litigation.

The Federal Circuit reversed in a per curium opinion.  Under the law of the Fifth Circuit, “a motion to transfer venue pursuant to section 1404(a) should be granted if ‘the movant demonstrates that the transferee venue is clearly more convenient.'” Slip Op. at 6, quoting In re Radmax, Ltd., 720 F.3d 285 (5th Cir. 2013).  Here, Judge Albright committed legal errors that required the granting of the petition.

Starting at the top, “the relative convenience for and cost of attendance of witnesses between the two forums is ‘probably the single most important factor in transfer analysis.'”  Slip Op. at 7, quoting In re Genentech, Inc., 566 F.3d 1338, 1343 (Fed. Cir. 2009).  Here, the district court didn’t give it the appropriate weight, especially since there was a big imbalance in terms of witness convenience.  Instead, the district court cited its own prior decisions for giving little weight to the identified witnesses – which was a problem since those propositions had previously been directly rejected by the Federal Circuit.

The district court also erred in its application of the local interest factor.  Most of the events forming the basis for Brazos’s infringement claims occurred in the Northern District of California and none occurred in the Western District of Texas.  This was enough to give the tranferee court a local interest.  Contrary to the district court’s reasoning, Juniper’s lease of a small office in Austin by the defendant for something that had no connection with the accused products wasn’t sufficient to establish a local interest.  A company’s general presence in a district are not enough to establish a local interest comparable to the events that gave rise to the suit.  Nor was Brazos’s status as a Waco-based entity incorporated in Texas entitled to significant weight: “The office was established only a few months before the complaints against Juniper were filed, and the activities of the office are largely tied to bring lawsuits in that court.  Brazos has only two employees who work from Waco, one of whom is its in-house attorney responsible for litigation.  The principal officers of Brazos are located in California.”  Slip Op. at 10.  “We have noted in other mandamus cases that little or no weight should be accorded to a party’s ‘recent and ephemeral’ presence in the transferor forum, such as by establishing an office in order to claim a presence in the district for purposes of litigation.”  Id.

The Federal Circuit also concluded that the district court erred in its assessment of the sources of proof and need for compulsory service factors, but the most interesting to me was the the final error that the Federal Circuit identified: the district court’s conclusion that the court-congestion factor weighed against transfer based on Brazos’s assertion that the Texas forum had a faster median time to trial than the California forum.  But, the Federal Circuit pointed out, the district judge’s “faster time to trial” statistic was based on scheduled trial dates (my emphasis), i.e.: those set out in Judge Albright’s aggressive scheduling order.  In any event, the Federal Circuit concluded that the relative speed with which this case may be brought to trial was not of particular significance, as the “court congestion” factor is the “most speculative of the factors bearing on the transfer decision.” Slip Op. at 14.

Ultimately, the Federal Circuit concluded, this was essentially the same as the recent decisions in Samsung and Hulu, both of involved situations in which several of the most important factors strongly favored the transferee court and no factor favored retaining the case in the transferor court.

As an ending note, the Federal Circuit also denied a petition for a writ of mandamus arising from the Court of Appeals for Veterans Claims in In re: Fermin on the basis that “mandamus relief is not appropriate when a petition fails to seek relief through the normal appeal process.”  Here, the petitioner’s prior appeal to the Federal Circuit had been dismissed for lack of subject matter, the petitioner had filed a motion to reconsider at the Veterans’ Court (which the court denied), and had not appealed the Veterans’ Court’s denial of that motion.  “Because [the petitioner] here failed to seek review of the Veterans Court’s order by way of a timely filed direct appeal, we must deny his request for this extraordinary relief.”  Slip Op. at 2.

Missing Decisions and the Federal Circuit

Patent

By Jason Rantanen

Last week the Federal Circuit issued two interesting orders in appeals from the USPTO.   In the first, In re Zhu (Appeal No. 2021-1761), Sept. 13, 2021, the Federal Circuit vacated the decision of the PTAB and remanded the case to the PTO “for reconsideration of whether the claims are directed to an improvement in computer functionality, especially in light of this court’s recent case law.”  (internal quotations and brackets removed).  The context of this, according to Tiffany Hu, was the Federal Circuit’s 2020 Uniloc v. LG ruling together with the PTO’s own request for a remand “to permit further proceedings” – i.e: this was a patent eligible subject matter issue that the PTO decided to take another look at while the appeal was pending.

The second, In re Boloro (Appeal nos. 2019-2349, -2351, -2353), Sept. 16, 2021, was an order by the Federal Circuit remanding the case to allow Bolero to request Director rehearing of the final written decisions in light of the Supreme Court’s decision in United States v. Arthrex, Inc., 141 S.Ct. 1970 (2021).   The Federal Circuit had previously issued an order remanding the case for assignment to a different panel, its earlier remedy for the Constitutional appointments issue with patent judges.  As Andrew Karpan recently wrote, this order extends the effects of Arthrex to ex parte appeals.

On their own, neither of these orders are that notable.  They are nonprecedential orders that contain little more explanatory reasoning than a summary affirmance under Rule 36.  On the other hand, they were enough for Law360 authors to write about.

What’s more interesting is that neither was posted to the Federal Circuit’s website.  They’re only available in PACER.  This is not itself all that unusual.  Historically, dispositive orders like these would vanish into the ether – becoming what Merritt McAlister recently characterized as Missing Decisions.  They are never published in reporters, including the Federal Appendix, and aren’t in the major research databases.  Indeed, I didn’t find either of these decisions in Westlaw or Lexis when I searched yesterday afternoon.  Yet, they are judicial decisions, and in an age where lawyers, judges and scholars have come to think that all law (or at least, all appellate decisions) is easily accessible, they highlight that it’s not.

In a forthcoming essay response to Professor McAlister’s Missing Decisions, I examine the one federal appellate court that for technical reasons McAlister didn’t  include: the Federal Circuit.  What I find is that the Federal Circuit is quite good about putting its opinions and Rule 36 summary affirmances on its website.  But there are also a lot of missing decisions, which are concentrated in certain areas.  This is concerning if our frame of reference for judicial decisionmaking is defined by what’s readily available on court websites and commercial legal databases.

Here are my main findings:

  • Based on a comparison of docketed appeals filed between 2008 and 2018 to decisions posted to the Federal Circuit’s website, 45% of docketed appeals are decided in an opinion released on the court’s website, 17% are decided in a Rule 36 summary affirmance released on the court’s website, and the remaining 37% have neither an opinion nor Rule 36 available on the court’s website.
  • The number of documents released by the court on its website are about the same as the number of documents available in the big commercial legal databases (Westlaw, Lexis & Bloomberg).  This may be because, as McAlister describes, these sites tend to pull directly from the same pool that is posted to the court’s website or just collect directly from the court’s website.
  • Taking a closer look at appeals filed in 2015, of the 497 docketed appeals without a terminating document available on the court’s website (31% of the total), a large portion involved voluntary dismissals by the appellant (303) or the parties jointly or dismissal for failure to prosecute (72).  However, there were a moderate number of appeals dismissed for lack of appellate jurisdiction (31), transferred (23), and even decided by a merits order (16).  None of these were released on the court’s website and when I looked for some of them in Westlaw and Lexis, they weren’t there either.  All were designated as “nonprecedential.”

The bottom line is that when it comes to substantive merits decisions and decisions designated by the court as “precedential,” almost all of these appear to be on the court’s website.  But there’s a host of other nonprecedential decisions–many dealing with jurisdictional issues–that aren’t.  There are also decisions in petitions for writs of mandamus, which the court currently appears to mostly be releasing on its website although that hasn’t always been the case.

Given all this, my recommendation parallels that of McAlister: the Federal Circuit should release all dispositive orders on its website, not just decisions labeled as “opinions” or summary affirmances under Rule 36.  This would be consistent with both its practice of releasing Rule 36 summary affirmances (which contain less judicial reasoning than most of the dispositive orders that it doesn’t release) and the overall goal of judicial transparency about decisions.  And for those who think that having access through PACER alone is enough, Prof. McAlister and others have described in depth why that’s not the case.

There’s more in the essay itself, which also contains links to the data I used archived on the Harvard Dataverse.    Here’s a link to the preprint of the essay: Missing Decisions and the Federal Circuit.

Thanks to Dmitry Karshtedt for calling these two Law360 articles to my attention.  And here are copies of In re Zhu and In re Boloro that I pulled from PACER.

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Pride in Patent Ownership Act

Patent

by Dennis Crouch

A bipartisan pair of Senators have proposed the “Pride in Patent Ownership Act.”  The premise is that if you own a patent, you should be proud to own the patent — and actually record your ownership interest.  The bill pushes this pride by requiring patent owners to record their ownership with the kicker that those who fail to record lose their right to punitive damages for any infringement that occurs prior to recordation.

If a patentee fails to comply … no party may recover, for infringement of the applicable patent in any action, increased monetary damages under section 284 during the period beginning on the date that is 91 days after the effective date of the issuance, assignment, grant, or conveyance with respect to the patent, as applicable, and ending on the date on which that issuance, assignment, grant, or conveyance is properly requested to be recorded.

[Read the proposed legislation here].

The proposal also adds requirement anytime patent preparation, prosecution, or maintenance fees (including attorney fees) are paid by a “governmental entity, including a foreign governmental entity.”   The applicant needs to provide a statement “describing the amount and source of funding” provided by the governmental entity.  The provision would also retain the rule that an unrecorded interest is “void as against any subsequent purchaser or mortgagee” who purchases without notice of the prior conveyance.

The bill is co-sponsored by Senators Leahy (D) and Tillis (R) who are the chair and ranking member of the Senate Judiciary Committee’s Subcommittee on Intellectual Property.

Senator Tillis: “The public has a right to know who is a patent’s true owner. Patents provide a limited term monopoly against the public, and it’s in the public’s interest and benefit to know who owns that monopoly. I’m a strong supporter of patent rights, but those rights have to be balanced against the public’s interest. This commonsense bill will achieve that goal and I look forward to working towards its passage this Congress.”

Senator Leahy: “One of the fundamental underpinnings of the patent system is transparency. In exchange for the exclusive rights over an invention granted by a patent, the public has a right to know who owns the rights to particular inventions. We are working to ensure a fair innovation system for small businesses, non-profits, and independent entrepreneurs who have a right to know, without expensive litigation, who has the exclusive patent rights over a particular invention.”

The pair also proposed a second proposal that they call “Unleashing American Innovators Act.” The proposal focuses primarily on outreach mechanisms for new entrants into the patent space and would also require a new Southeast Regional Office — perhaps in Sen Tillis’s home city of Charlotte.

For those who don’t know. Sen. Tillis was a computer systems specialist who worked for Wang Labs., PWC, and IBM (although mostly in management).

Small Changes to Tech-Background Requirement to become a Patent Attorney

Patent

by Dennis Crouch

All of us who represent clients in patent cases before the USPTO share a common background.  We all have a background in science or technology and we have all passed the registration exam (and paid the accompanying fees).

The USPTO offers three ways to show sufficient background in science or technology:

  • Category A: A university degree in science or engineering;
  • Category B: Sufficient university coursework in science or engineering; or
  • Category C: Sufficient practical experience in science or engineering.

One problem: It seems that every year I have a law student who has a science or engineering degree that does not qualify in the list of appropriate Category A degrees (bioengineering; or a PhD in Chemistry). In addition, that student might not satisfy Category B either because of the stringent requirement of two in-sequence lab courses in either chemistry or physics.  At times, my students have taken concurrent science class while in law school to make sure they qualify; others have taken the requirement as a sign that patent law is not the right field for them.

One Solution: The USPTO has now finalized a set of rules that will help ease this process for my students, while still endeavoring to ensure that all patent attorneys and patent agents have a solid tech background.

[NEW RULES]

The basic changes:

  1. Expand the majors accepted under Category A.  The PTO took a small step here and basically only added majors that basically always qualify under the old Category B.  These new degrees: aerospace engineering, bioengineering, biological science, biophysics, electronics engineering, genetic engineering, genetics, marine engineering, materials engineering, materials science, neuroscience, ocean engineering, and textile engineering.
  2. Allow post-bachelor degrees (Masters or PhD) to count under Category A, so long as the coursework shows acceptable technical and scientific training.
  3. Modify the Core Science Requirement for Category B.4 to allow non-sequential lab courses in any combination of chemistry, physics, or biology.

These changes are taking effect immediately.

Patent Law at the Supreme Court September 2021

Patent,

by Dennis Crouch

So far, the Supreme Court has not granted certiorari in any patent cases for its 2021-2022 Term.  Still, there are a couple dozen cases pending that may offers some interest.  On September 27, 2021, the court is meeting privately for what is known as the “long conference” to decide the fate of the petitions for writ of certiorari that have piled-up over the summer.  There are also a host of additional petitions scheduled for a later conference or not yet scheduled.  Although the total number of petitions is down from last year, there is much more diversity since we have now largely moved past the appointments-clause issues.

Capacity to Sue: My favorite pending case is Tormasi v. Western Digital.  Tormasi is a convicted murderer and also a patentee seeking to enforce his disk-drive patent. The Federal Circuit held that Tormasi lacked the “capacity to sue” under Fed. R. Civ. Pro. 17(b).  That provision states that an individual’s capacity to sue is determined by “the law of the individual’s domicile.” Tormasi lives in New Jersey (state prison) and the administrative rule in N.J. bars a prisoner from conducting business activities without the Wardon’s approval.  The courts held that his enforcement action is an “unauthorized patent monetization business” and thus that he has no capacity to sue.  Tormasi argues that this conclusion violates his due process and other constitutionally protected rights.  There are other standing-related cases pending in the trademark context: Naked TM, LLC v. Australian Therapeutic Supplies Pty. Ltd. (standing to petition cancel a TM registration); See also Kaszuba v. Hirshfeld (pro se, standing of USPTO to intervene in TM appeal).

Eligibility: The Supreme Court has shown the most interest in hearing American Axle & Manufacturing, Inc. v. Neapco Holdings LLC by Calling for the Views of the Solicitor General (CVSG).  I expect for the SG to file a brief by the end of calendar year 2021.  And, there is a good chance that the SG brief will support the petition. At that point, there would still be time for the Court to grant certiorari and decide the case before the end of June 2022. American Axle asks two questions:

1. What is the appropriate standard for determining whether a patent claim is  directed to” a patent-ineligible concept under step 1 of the Court’s two-step framework for determining whether an invention is eligible for patenting under 35 U.S.C. § 101?

2. Is patent eligibility (at each step of the Court’s two-step framework) a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of art at the time of the patent?

There are Am.Axle follow-on cases asking the same questions: iLife Technologies, Inc., v. Nintendo of America, Inc.; VoIP-Pal.com, Inc. v. Apple, Inc. (also raising 112/101 coordination issue). See also Mohapatra v. Hirshfeld (pro se)

Preclusion: I am generally interested in the concept of preclusion. This typically comes in the forms of issue and claim preclusion. In patent law, we also have the “Kessler doctrine,” which sits between the two.  PersonalWeb Technologies, LLC v. Patreon, Inc. challenges the ongoing viability of Kessler, especially as expanded by the Federal Circuit in recent cases.  Kessler allows for non-mutual issue preclusion even in cases where the particular issue was not actually litigated or decided.

Process-by-Product Claim: In Biogen MA Inc., Petitioner v. EMD Serono, Inc., the Federal Circuit found the claimed treatment method anticipated by use of a naturally occurring protein. But, the claims required use of a “recombinant” protein — i.e., genetically modified.   Can Biogen distinguish the prior art by simply adding a “man made” limitation? “Whether courts may disregard the express claim term “recombinant” so as to render a method-of-treatment patent anticipated—and thus invalid—in light of prior-art treatments that used the naturally occurring human protein, where it is undisputed that the recombinant protein was not used in the prior art?”

Printed Publication: A core patent law question is what can qualify as a printed publication under 35 U.S.C. § 102(a).  Centripetal Networks, Inc. v. Cisco Systems, Inc., asks whether a user-manual counts for a machine that costs $25,000. (The Federal Circuit said “yes, it counts.”)

Writing Opinions: A few years ago, I wrote a paper arguing that the Patent Act requires the Federal Circuit to actually write opinions when judging appeals from the USPTO. Although dozens of briefs have subsequently argued this point, the Federal Circuit has refused to make any statement regarding its ongoing practice of no-opinion R.36 judgments.  Ultratec, Inc. v. CaptionCall, LLC asks the Supreme Court to weigh in on the question of whether the use of Federal Circuit Rule 36 to summarily affirm decisions from the PTAB “without opinion” violates 35 U.S.C. § 144.  A second case, Bobcar Media, LLC v. Aardvark Event Logistics, Inc., also argues that R.36 decisions are improper, although relies upon Constitutional principles rather than statutory guidance.

IPR Issues: Ultratec, Inc. v. CaptionCall, LLC (retroactive application of IPR to already issued patents). Mylan Laboratories Ltd., v. Janssen Pharmaceutica (appealing institution denials); Apple Inc. v. Optis Cellular Technology, LLC (appealing institution denials); Infineum USA L.P. v. Chevron Oronite Company LLC (post-arthrex timing issue)

Utility: Hu v. Hirshfeld, focuses on a heightened utility requirement that seems to appear when a patentee seeks rights covering an invention that pushes the bounds of traditional scientific principles.  Hu’s inventions, for instance, cover various ways to make use of quantum entanglement.  Hu argues that the court moved the standard from a preponderance of the evidence to something akin to “a statistical certainty.”

Indefiniteness: Rain Computing, Inc. v. Samsung Electronics America, Inc. focuses on the intersection of Sections 112(b)/112(f). The Federal Circuit uses an algorithmic approach: if a claim is interpreted under Section 112 and the specification fails to include corresponding structure, then the claim is invalid as indefinite.  Rain says ‘not so fast.’  The court is forgetting to ask the actual pertinent question: whether the scope is reasonably certain to a person of skill in the art.  The petition also argues that underlying issues of fact tending to show invalidity must be proven with clear and convincing evidence. Infinity Computer Products, Inc. v. Oki Data Americas, Inc. also raises an indefiniteness question — again arguing that the Federal Circuit took a shortcut in its analysis and refused to give deference to factual findings.

Most Common Design Patents 1842-2021

Patent,

by Dennis Crouch

This is a remake of a video I made a few weeks ago. This time, I was able to go back to the 1840s and show the most-common design patent titles from each era.  To make the chart, I used a 14 year rolling average.  Thus, for example, the top-10 list shown for 2000 is actually the top-10 based upon the period 1987-2000.  The bulk of the data also comes via OCR of images and so there are some artifacts (although I did read-through the first 1,000  design patents).  One example that shows up in the data are the “island” patents — that word was somewhat randomly picked-up.  Enjoy.

I am cleaning-up the data a bit more and then will make it publicly available.

Design Patent Term: 3½, 7, 14, and now 15 years?

Patent,

New design patents have a term of 15 years from patent issuance — that is a 1 year bump from the 14 year term familiar to many patent attorneys.  The straight 14-year term took hold in 1982.  In the years leading up to 1982, most design patents also had a 14 year term, but applicants had the option of instead obtaining a term of 7 years or 3½ years at a lower fee.  In 1980, all design patents had an application fee of $20, and the issuance fee was $10, $20, or $30, depending upon whether the applicant wanted 3½, 7, or 14 years of patent term.  In 1930, the prices were $10, $15, and $20.

The chart below is a bit hard to read, but it basically shows the percentage of design patents associated with each of the three potential patent terms. The basic result is that in the 1910s, folks were obtaining all three sizes at roughly equivalent rates; By 1940, the short 3½ year term had become most popular; Then, by the 1970s the overwhelming majority of applicants were paying the extra $10 for 14 years.

This is part of a larger project that I’m working through on design patents, and I’ll be able to fill-in the gaps of the chart at a later date.  I’m downloading the TIFF images for these patents; running through OCR  software and then parsing that text output.  It is a bit of a process, and I probably need a multithreaded approach. 

The original design patent Act of 1840 included a 7 year term. I believe it was the the 1861 Act that added the spread term, and included a respective cost of  $10, $15, and $30 with an optional seven additional years.

AIA 10 year Survey Results

Patent

by Dennis Crouch

The patent system has seen tremendous change over the past decade.  A large part of the transformation stemmed from the Leahy-Smith America Invents Act of 2011 that was enacted ten years ago in September 2011.  Earlier this week, I conducted a quick survey of Patently-O readers asking for their thoughts on the impact of the AIA, which has repeatedly been heralded as the largest change to the U.S. patent system since the Patent Act of 1952.  We have about 600 responses.

Most of the survey question used a modified Likert Scale and asked about the importance of various statutory changes found within the AIA.  In order to run some statistics, I transformed the qualitative scale into a linear quantitative scale ranging from 1 (not important) to 5 (very important).

It is not surprising that creation of the Inter Partes Review (IPR) system is seen as the largest change to the system. IPRs have been used to cancel the claims of thousands of patents as obvious — only a small percentage of those would have been found obvious by a jury.   Although almost everyone agreed that IPRs were most important, Patent Attorneys and Patent Agents differed somewhat on other issues, with agents seeing changes to Section 102 as relatively more important to other issues. This included eliminating the date of invention as relevant to patentability and narrowing the pre-filing grace period.  On the other hand, Patent Attorneys gave more weight to PGR proceedings. Patent Office employees were the only ones to say that the addition of satellite offices was important.

The survey included an open-ended response block asking “What else do you have to say about the impact of the AIA?” About 1/3 of responses included these additional thoughts.  My survey tool (Qualtrics) used semantic analysis on these responses and reports that the sentiment expressed was most often generally either “negative” or “very negative.”   (65% Negative or Very Negative; 25% Mixed; 10% Positive or Very Positive).

Some comments focused on the AIA coupled with Eligibility Decisions have “decimated the patent system”; “Devalued IP”; and “greatly reduced the value of U.S. patents” all “to the benefit of large enterprises.” ” A real mess.”

Folks also mentioned the prior user defense; false marking; reducing your own secret prior art; classification system; The new declaration/oath filings was quite costly for applicants.  I’ll publish a more thorough report in the coming days.

Op Ed: Reflections on the American Invents Act on its Tenth Year Anniversary

Patent,

by Hon. Michelle Lee. Lee was the Undersecretary of Commerce and Director of the United States Patent and Trademark Office (2015-2017).

The America Invents Act (AIA), which passed on September 16, 2011, brought about some of the most significant changes to our patent system in over 50 years. The Act included an assortment of reforms from a transition to first inventor to file in the United States, the establishment of processes for third party challenges to granted patents at the United States Patent and Trademark Office (USPTO), the creation of the first regional offices of the USPTO, providing inventors the option for accelerated patent examination, and more.

Many of the AIA reforms strengthened our patent system. For example, as a former Director of the USPTO, I cannot overstate the importance of the Agency’s ability to set its own fees and create an operating reserve. This enabled the USPTO to get through periods of government shutdown and to invest in longer-term initiatives such as much-needed information technology upgrades, hire more examiners to reduce the patent application backlog and provide additional training for examiners. The transition to a first inventor to file system was needed to harmonize the U.S. with the rest of the world. The establishment of the first regional offices of the USPTO made our intellectual property system more accessible to all, and of course, prioritized examination, allowing inventors to accelerate the examination of certain patents, makes business sense.

After passage by Congress, the attention turned to the USPTO, and its massive effort to implement the AIA. Then-USPTO Director David Kappos and his dedicated team at the Agency worked hard to implement the AIA in view of numerous proposed rules, soliciting input from stakeholders along the way. By 2013, the USPTO had completed substantially most of the initial AIA rulemaking, including for the post-patent grant review proceedings.

In 2015, I became Director of the USPTO, and the AIA changes had been in place for barely a few years. Leading the USPTO is a great honor that comes with a tremendous responsibility. As a result, I undertook as a priority to assess how these fledgling and complex reforms were going, and to make improvements where needed. Under my leadership, the USPTO continued to solicit feedback on the AIA reforms via numerous requests for comments to proposed rules and stakeholder engagements. This resulted in the implementation of multiple changes, including to the claim construction standard of soon-to-expire patents to be consistent with the (Phillips) standard used in district court litigation, submission of new testimonial evidence with a patent owner’s preliminary response, the addition of a Federal Rule of Civil Procedure 11-type certifications requiring a duty of candor in papers filed in AIA trials to prevent misuse of the proceedings, and more.

As anyone familiar with rulemaking knows, this process takes time, and that is the way it should be, as agency rules (like legislation) have significant and broad impact on all parts of our society. New rules (and laws) should be promulgated deliberately and with all due consideration of input from all stakeholders, driven by data, in compliance with the law, and with compromise to accommodate the often-times disparate and competing needs.

After the patent community had a reasonable period of time to adjust to and experience the many AIA reforms, we began hearing feedback about additional improvements needed to the AIA trials including, for example, in the areas of motions to amend, the claim construction standard and multiple petitions filed at or around the same time on a single patent. As expected for such complex policy and procedural matters, there was often little consensus on whether and what changes were needed. Given this, my team and I at the USPTO believed it important to gather data and broad stakeholder input on these and other issues raised. As a result of these efforts, we came up with a number of proposed changes and drafted proposed rules for comment. For instance, on the claim construction standard, we recognized the awkwardness and inconsistency of having the validity of patent claims construed under one standard in AIA trials, yet a different standard for patent infringement analysis in federal district court, especially when the petitioner in the USPTO proceeding was often the accused infringer in district court. To provide greater fairness and consistency, I thought it important to change the claim construction standard for all patents in AIA trials to the Phillips standard used in federal district courts.

Signing of the DTSA

Signing of the DTSA

By this time, it was the fall of 2016 with an election pending. As was customary, the then-current administration asked the USPTO to stop all significant rulemaking to allow the next administration the courtesy of defining and implementing its priorities. So, we had to pull the package of proposed reforms in the midst of being prepared for publication. While not published during my tenure, these proposals, studies and data put the Agency and my successor, former USPTO Director Andrei Iancu, in a better position to implement needed reforms more quickly. I was pleased to see one of the first reforms implemented in the next administration was changing the claim construction standard in AIA trials to that used in district court for all patents.

As I reflect on my tenure on this 10th anniversary of the AIA, the talented USPTO team and I accomplished much, including the establishment of regional offices to better support innovators (especially individual inventors and small businesses), achieving the passage of the Defend Trade Secrets Act of 2016, making initial improvements to the post-patent grant review proceedings while laying the foundation for more, numerous quality initiatives to ensure the issuance of stronger, more reliable patent rights, launching an open data initiative to provide access to the USPTO’s rich data, bringing artificial intelligence to the Agency to improve its operations, and spearheading the All-In-STEM initiative and other efforts to ensure our intellectual property system is more widely accessible to all.

Few people have had the privilege and responsibility of being the steward of this important Agency so critical to American innovation. As we await the nomination of a new USPTO Director, it is important to keep in mind the job of a USPTO Director is to keep a steady hand on the tiller and to make improvements thoughtfully and deliberately, with careful consideration of the law, stakeholder input and the data, recognizing that with complex policies and procedures and competing stakeholder interests, consensus is often difficult to achieve.

Former USPTO Directors Dickinson, Kappos, and Iancu, each of whom contributed to the enactment and/or implementation of the AIA, have all been dedicated leaders who did what they thought best when faced with the many challenges of their tenure. Just as I benefited from the foundations laid and works-in-progress achieved by my predecessors, the next Director will benefit from the cumulative efforts and learnings of all prior Directors. Our intellectual property system, like our innovations, is constantly evolving. Therefore, all stakeholders must constantly work together to achieve a balanced intellectual property system for the benefit of our inventors, economy and society. That is why I chose the dynamic and impactful practice of intellectual property law, and I wouldn’t have it any other way.

“The views expressed above are solely the author’s and do not represent the views of any organization with which Ms. Lee may be affiliated.”  Lee is vice president at Amazon Web Services and spent a decade at Google leading their patent team prior to her term as USPTO Director.

AIA – 10 Year Anniversary

Patent

Sept 16, 2021 is the 10 year anniversary of enactment of the Leahy-Smith America Invents Act of 2011.  I’ve got a quick anonymous survey below (5 minutes) on the impact.

* My general policy on anonymous comments and anonymous survey responses is that I endeavor to avoid any disclosure of personally identifiable information to third parties absent court order (which has never happened).

Link to Survey: https://missouri.qualtrics.com/jfe/form/SV_0qSs6aKqNZSZj2S

Or complete the survey below: