Patent Claims as Elements rather than Boundaries

Patent

By Jason Rantanen

I teach Introduction to Intellectual Property Law every spring semester, an experience that often causes me to reflect on some of the fundamental premises of intellectual property law in a way that advanced courses don’t necessarily always invite.  When you’re deep in the nuances of the effective date provision for post-AIA § 102, it’s easy to lose sight of some of the big questions.  This post is one of a few half-baked ideas from that return-to-basics reflection.

***

I grew up steeped in the world of property law.  My father’s law office was in rural New York, and his core practice involved representing farmers, villages, and small businesses on land transactions, estate planning, and probate matters.  Some of my first memories are of photocopying property abstracts: voluminous documents that contained the transaction history for a property, often going back a hundred years or more.  We’d copy these abstracts and then affix the new deed or mortgage associated with the transaction.  Later, I learned to type up property descriptions for deeds, writing out the metes and bounds of the land being transferred.  These descriptions  used points and lines to articulate the land for which the property rights applied.

For me, the language of patent claims as boundaries resonated early and easily.  After all, patent cases routinely refer to claims in boundary-like terms.  One example is the likening of claims to “metes and bounds,” as Judge Rich did in footnote 5 of In re Vamco Machine and Tool, Inc., 752 F.2d 1564, 1577 (Fed. Cir. 1985).

The function of claims is (a) to point out what the invention is in such a way as to distinguish it from what was previously known, i.e., from the prior art; and (b) to define the scope of protection afforded by the patent. In both of those aspects, claims are not technical descriptions of the disclosed inventions but are legal documents like the descriptions of lands by metes and bounds in a deed which define the area conveyed but do not describe the land.

Another example is this passage from Judge Michel’s opinion  in Halliburton Energy Services, Inc. v. M-I LLC, 514 F.3d 1244, 1249 (Fed. Cir. 2008):

Because claims delineate the patentee’s right to exclude, the patent statute requires that the scope of the claims be sufficiently definite to inform the public of the bounds of the protected invention, i.e., what subject matter is covered by the exclusive rights of the patent. Otherwise, competitors cannot avoid infringement, defeating the public notice function of patent claims.

Patent law scholarship, too, treats patent claims as if they are boundary-setting.  Books and articles refer to modern claiming practice as “peripheral claiming”– language that implies an area that is within and that which is without.  Even those scholars who have critiqued the idea of peripheral claiming nonetheless visualize patent claims as defining an area: signposts instead of fenceposts.  The idea is still that there is a zone set by the patent claim.

And yet, the more I’ve litigated, studied, and taught about patents, the more I’ve realized that conceptualizing patent claims as defining an area is fundamentally wrong.  Patent claims are not boundaries, and it’s confusing to those who are trying to grasp patent law when we talk about them that way.  There is no area that is “encompassed” within patent claims.  Patent claims don’t define a “boundary.”  And they are quite unlike the metes and bounds of a deed description.  Even if one could plot the components of a patent claim in some n-dimensional space, it would still not define a closed form.  Conceptualizing patent claims as if they define some “area” of technology isn’t how they actually work. One cannot draw a line from one claim element to another, except in the sense that claim elements can interrelate with one another–but that, too, is really just another element, albeit one that is implicit from the semantic structure of the claim rather than explicit in its words.

So how should patent claims be conceptualized, if not as establishing a boundary?  My first answer goes back to how litigants and courts often actually approach them: as discrete legal elements akin to the elements of any other legal claim.  The limitations in patent claims aren’t like the boundaries defined in a deed; instead, they are like the elements of a tort.  Each of these elements must be met in order for the claim to be infringed, invalidated, or adequately supported by the disclosure.

Consider, for example, patent law’s novelty requirement.  In order for a prior art reference to anticipate a patent claim, each and every element of the claim must be present in the prior art reference.  Or the analysis for infringement: for there to be infringement, each and every element of the claim must be present in the accused product or process, either literally or as an equivalent.  In both cases, patent claims are treated as if they are a series of elements–not as boundary lines that are crossed or not.  They are, in the words of Nolo’s Plain-English Law Dictionary, “the component parts of a legal claim.”

In the end, despite my initial attraction to the language of real property to describe patent claims, I’ve come to realize that this rhetorical device–enshrined in patent law judicial opinions and used in briefs and legal scholarship–is both misleading and wrong.  Patent claims are not boundaries, and we should stop referring to them that way.  Instead, they are elements in their legal sense: sets of individual legal requirements that must each be proven to achieve a particular legal status.

Perhaps this is so obvious that it doesn’t need to be said.  And yet, for those who are learning patent law for the first time, it is hardly obvious – particularly when the opinions that we read talk about patent claims in boundary-like terms.

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Thoughtful, non-repetitive comments welcome.  Comments that I think are crud or junk, in my subjective opinion, will be deleted without further notice or comment.

 

Applicants who are the Obligated Assignee

Patent

About 10% of the patent applicants file their patent application as an “obligated assignee” rather than the actual “assignee.”   Those 10% have apparently not yet received a assignment of rights from the human inventors but are still allowed to walk through the patenting process under 37 CFR 1.46, which allows patent applications to be filed “by an assignee, an obligated assignee, or a person who otherwise shows sufficient proprietary interest in the matter.”

I picked a obligated-assignee patent application at random to see how this is working in practice. U.S. Patent Application No. 15/705,170 was filed back in 2017 as a continuation of previously filed applications.  The application data sheet (ADS) includes a section where the patent applicant indicates its source of authority for filing the patent application, with the following options:

  • Assignee
  • Person to whom the inventor is obligated to assign
  • Legal representative under Section 117 (for death or incapacity of the inventor)
  • Joint inventor
  • Person who shows sufficient proprietary interest.

To be clear, when the provision speaks of a “person” in this context, it includes corporations, governments, and other legal persons that have the right and ability to own private property rights, such as a patent.

For the ‘170 patent, the ADS marked the ‘obligated to assign’ category and moved forward.  The application published in 2018 and issued as a patent in 2019. US Patent No. 10,514,582. The named applicant is View, Inc., and the patent includes four listed inventors.  The prosecution history includes a declaration filed by the inventors claiming to be the joint inventors. View had also used the patent application to secure a loan, and that security interest (and its released) was filed with the USPTO?

What I couldn’t find — any actual assignment document showing that the inventors actually assigned their rights. Nothing in the file wrapper and also nothing in the assignment database.  That appears to be a violation of the requirements of 37 CFR 1.46(b)(1).  Perhaps I’m missing something here from the docket. ( https://patentcenter.uspto.gov/#!/applications/15705170 ).

[Update] Commenters below have shown me what I was missing. MPEP 306 indicates a situation involving a continuation application (such as this one) “a prior assignment recorded against the original application is applied (effective) to the division or continuation application because the assignment recorded against the original application gives the assignee rights to the subject matter common to both applications.”   Here, an assignment was filed in the parent case, but it was not filed before-hand, and so I would question whether it counts as a “prior assignment” and whether 37 C.F.R. 1.46 creates an additional obligation to make sure the assignment is associated with the new case.

 

 

 

Continued growth in the number of inventors per patent.

Patent

by Dennis Crouch

I created the chart above using files from recently published US patent applications. The chart shows the average number of inventors per published application. I have been awaiting the 3.0 inventors-per-patent threshold for a while, and that has now been crossed.  The average (and median) patent application publication now lists three or more inventors.  In general, there are fewer patent applications then ever that list only one inventor. The number of 2-inventor applications has also fallen, but not as dramatically.

Averages can be shifted by extreme outliers. In our sample there are a small number of applications with a large number of listed inventors.  Example, Ericsson’s Pub. Nos. 20200028745 and 20170331670 that each list 133 inventors haling from Sweden, Finland, Germany, USA, China, and Korea.

International Patent Law at the Supreme Court

Patent

U.S. cases rarely delve into international patent law issues.  Rather, US courts have largely refused to allow parallel proceedings or filings in foreign jurisdictions to impact their decision-making at home.

IBSA Institut Biochimique, v. Teva Pharmaceuticals offers an interesting perspective on this.  The patent at issue was ISBA’s U.S. Patent No. 7,723,390 that claimed priority back to an Italian patent application (MI2001A1401).  The patent here is directed to a “soft gel capsule formulation containing the active ingredient levothyroxine sodium.”

In its decision, the Federal Circuit affirmed a lower-court ruling that the claims were indefinite.  In particular, the claims require that the gel capsule contain “a liquid or half-liquid.” But, nobody knew the meaning of the term “half-liquid.”  Although the term was used in the specification, it was not defined in the specification.  And, the patentee could find no textbook or scientific journal that used the term “half liquid.”

IBSA had argued that the term should be interpreted as “semi-liquid — having a thick consistency between solid and liquid.” To support that conclusion, the patentee pointed to the Italian Application, which used the term “semiliquido” in the exact same places where the ‘390 patent uses “half-liquid.”  A certified translation during the litigation translated the term “semiliquido” as “semi-liquid.”  The suggestion here is that PHOSITA would understand the claim term “half-liquid” to be synonymous with “semi-liquid.”

In its claim construction, the district court gave no weight to the italian priority filing or its certified translation — concluding instead that the change in terminology was intentional.  On appeal, the Federal Circuit affirmed that finding and also the indefiniteness conclusion.

Now IBSA has petitioned to the U.S. Supreme Court, raising the issues as follows:

Patents are unique: the rights they confer are strictly territorial in nature, yet there exists an agreed-upon framework among the vast majority of countries for efficiently securing patent rights. This mutual arrangement permits both U.S. and foreign inventors to seek patent protection first in their home country and then, if they choose, to seek similar rights abroad. In both cases, the inventor can claim “priority” to their domestic application, a critical step for warding off the potentially preclusive effects of “prior art” that can bar patenting.

This efficient system would suffer, if not disappear, without international agreements like the Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”), which establishes a baseline for intellectual property protections among its 140 signatory countries. Amongst other protections, the TRIPS Agreement demands that foreign inventors, and foreign priority applications, be treated like their domestic counterparts. This “national treatment” is a critical protection for U.S. inventors abroad, and for the many foreign inventors who seek to pursue their patent rights in the United States. But the courts below rejected these treaty obligations by choosing to give no weight to a foreign patent application, resulting in a finding of indefiniteness.

Question:Whether, pursuant to the United States’ obligations under the TRIPS Agreement, codified at 19 U.S.C. § 3511, a court construing the claims of a U.S. patent may give no weight to a foreign priority patent application, despite its submission to the U.S. Patent & Trademark Office during prosecution of the patent-in-question, because it is written in a foreign language and exhibits minor differences from the U.S. patent resulting from a translator’s judgment.

[Petition for Writ of Certiorari] [Federal Circuit’s 2020 Decision]

 

Egregious Delay and Blatant Disregard for Precedent

Patent

In re TracFone Wireless, Inc. (Fed. Cir. 2021)

On mandamus, the Federal Circuit has again found that Judge Albright clearly abused his discretion in failing to rule on TracFone’s motion to transfer its case out of the Western District of Texas and to a more convenient venue.

Although Judge Albright has promised rapid progression of patent infringement cases to trial, he has been sitting on transfer motions and leaving them undecided.  Here, the appellate panel repeated its prior statement that Judge Albright’s approach “amount[s] to egregious delay and blatant disregard for precedent.”

We order the district court to stay all proceedings until such time that it issues a ruling on the motion to transfer that provides a basis for its decision that is capable of meaningful appellate review.

The court went on to particularly order that Judge Albright issue an order within 30 days. The court also ordered “that all proceedings in the case are stayed until further notice.”  Presumably, this means that the this panel of Federal Circuit judges (REYNA, CHEN, and HUGHES) will maintain supervisory authority over the case throughout this process.

Precis Group filed the original lawsuit back in April 2020 and TracFone submitted its motion to dismiss/transfer in June 2020. Since that time, the case has proceeded without any ruling on the motions. In December, the court held a Markman hearing and issued a claim construction order. (Note here, it is only a 2-page order).  In any event, the case is well underway and Judge Albright understands many of the issues at stake in the litigation.  Of course, this experience through delay appears to be strategic on Judge Albright’s part because his familiarity with the case is a reason to deny a transfer of Venue.  The Federal Circuit panel looked to avoid rewarding Judge Albright for his “bad” behavior. Thus, the court explained that “any familiarity that [Judge Albright] has gained with the underlying litigation due to the progress of the case since the filing of the complaint is irrelevant when considering the transfer motion and should not color its decision.”

= = =

TracFone’s motion is both for lack of proper venue under 28 U.S.C. §1400(b) and inconvenient venue under 28 U.S.C. §1404(a).  Regarding proper venue, TracFone does not reside in TX — it is a Delaware corporation headquartered in Miami, Florida.  In addition, TracFone argues that it “does not have any place of business” in the W.D. Texas.  TracFone does sell its products throughout the district using, but it appears to no longer have a branded store.  Rather, its products are sold within other outlets such as 7-11, Dollar General and Joyeria y Discoteca Diana.  These “independently owned and operated stores” may have franchise rights that allow them to use TracFone’s trademarks and create contractual rights on behalf of the company, but the defendant argues those agreements do not result in TracFone having a “place of business” within the district.

Neapco Vents to Federal Circuit in IPR Loss

Patent

Neapco Drivelines v. American Axle & Manufacturing (Fed. Cir. 2021)

This is a sister case to the one pending before the U.S. Supreme Court regarding eligibility of the claims of American Axle’s U.S. Patent No. 7,774,911. That case is at the petitions stage and is awaiting responsive briefing from Neapco.  

In this case, American Axle challenged Neapco’s vented slip-joint coupling Patent No. 5,772,520 via Inter Partes Review.  The PTAB found claim 11 anticipated and its depdendent claim 12 obvious in light of the prior art — primarily Burton (U.S. Patent No. 5,655,968).  On appeal, the Federal Circuit has affirmed.

Neapco’s ‘520 patent was originally owned by Ford Motor Co.  Ford sold the patent as part of an overall sale of Ford’s driveshaft unit to Neapco back in 2008.  The patent expired back in 2016, but Neapco still sued American Axle in 2017 seeking back damages. That case is stayed pending outcome of the IPR.

= = =

The claims at issue here are directed to what appears to be a method of assembling the vented slip-joint for a vehicle driveshaft, although it is expressly claimed as a “method of venting a slip joint assembly.”  The slip-joint looks like a hydraulic shock-absorber and is designed to allow some axial compression of the driveshaft while still transmitting torque.  Neapco’s patent just has air inside the assembly (not hydraulic fluid), and the “venting” innovation here allows for compressed air to escape while keeping-out debris.

The key debate in this case is whether the prior art discloses (Burton) venting.  The prior art shaft – shown in figure 3 above – includes a “passage 130” that allows fluid communication from inside the slip assembly’s two operational main parts (stud yok and slip yok) to a third chamber within the assembly.

The patentee first argued that its claim should be interpreted as requiring venting to the outside (not internal venting).  On appeal, the Federal Circuit found that the claim language did not support such a construction, and rejected the patentee’s argument to give effect to an implicit requirement found in the preamble.

Neapco also argued that the function of its valve was pressure relief — something not provided by Burton.  ON appeal again, the court found that the claims did not require pressure relief, only a venting out of the main operational chambers.

Affirmed.

IPR Joinder Estoppel (Sometimes)

Patent

Uniloc 2017 v. Facebook (Fed. Cir. 2021)

The PTAB sided with Facebook in this inter partes review proceeding.  Finding most of the claims in Uniloc’s US8995433 unpatentably obvious.  On appeal, Uniloc raised two main issues:

  1. Procedure: Whether Facebook, as well as WhatsApp and LG, should have been estopped from bringing the IPR challenges under 35 USC § 315(e)(1).  Inherent to this question is whether the estoppel question is barred by the “no appeal” provision of Section 314(d).
  2. Substance: Whether the PTAB erred in its determination that the claimed instant-voice-messaging system would have been obvious as of the 2003 priority filing date.

Estoppel: Under Section 315(e)(1), a petitioner “may not request or maintain” an inter partes review proceeding as to any ground that petitioner “raised or reasonably could have raised” in a prior IPR that resulted in a final written decision as to the same patent claim.   Basically, this provision is designed to prohibit a patent-challenger from making multiple successive attempts to challenge a patent in an IPR.

The procedure of this case is a bit confusing.  BASICALLY, Apple filed for IPR that was subsequently joined by FB;  FB filed its own IPR that was subsequently joined by LG.  The Apple case concluded first (with a Final Written Decision siding with Uniloc). The question then is the extent that FB and LG are estopped maintaining the FB IPR.

After deciding the Apple IPR, the PTAB gave effect to § 315(e)(1) estoppel — holding that FB could no longer pursue its own IPR challenges as to claims challenged in the Apple IPR.   Although FB was knocked-out as a party as to most claims (all but Claim 7), the PTAB continued the FB IPR with LG as the remaining party.  On appeal, Uniloc argued that LG should not have been permitted to continue the case because of the way it joined-cause with FB in the joinder motion.  The appellate panel rejected that argument and affirmed LG was not a RPI to FB’s IPR petition or privy of Facebook. “[J]ust because LG expressed an interest in challenging the ’433 patent’s patentability, through its filing of its own IPR petition and joinder motion, does not by itself make LG an RPI to Facebook’s IPR.”  The court also affirmed that 315(e)(1) estoppel only applied to claims challenged in the Apple IPR — thus FB was not estopped from maintaining a challenge to claim 7.  “Section 315 explicitly limits the estoppel to the claims previously challenged.”

Right to Appeal: Before delving into those merits, the court first determined that the case was appropriate for an appeal despite the no-appeal provision of Section 314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”).   Here, the appellate panel found no problem with hearing the appeal because the estoppel question at issue was triggered after institution.

Considering the strong presumption of reviewability of agency action, we see no indication that § 314(d) precludes judicial review of the Board’s application of § 315(e)(1)’s estoppel provision in this case, in which the alleged estoppel-triggering event occurred after institution.

Slip Op. (citing Credit Acceptance where a cause for termination arose after institution).

= = = =

On the merits of obviousness, the court also affirmed — finding that the Facebook expert’s testimony provided substantial evidence to support the PTAB’s obviousness factual findings.

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes, Patent

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Make Sure your Patent Application is “DIRECTED TO” a Specific Technological Solution

Patent

Enco Systems, Inc. v. DaVincia, LLC (Fed. Cir. 2021) [ENCO]

Judge Stephen Limbaugh (E.D. Mo.) sided with the accused infringer DaVincia– holding that the claims of ENCO’s U.S. Patent No. 7,047,191 are invalid under 35 U.S.C. § 101 as directed to an abstract idea.  On appeal, the Federal Circuit has affirmed.

U.S. Patent No. 7,047,191 claims a method of providing captioning in an audio-visual signal using speech-to-text processing.  Claim 1 includes a number of limitations:

  • Selecting the number of lines of caption data to be displayed (I have an image below showing how my phone does this).
  • Determining the caption encoder system being used
  • Training the system to on new words;
  • Using AV cues to time the captioning so that it displays at the appropriate time.

On motion to dismiss, the district court found the claims directed to the abstract idea of “automated stenography implemented on a computer.”  The court looked particularly to the claim limitations and found them written at a “high-level of generality” and using “broad form functional terminology.”  With regard to Alice step two, the court found the claim limitations lacked any particular or concrete configuration that could serve to ground the abstract idea.

To know whether a patent claim is improperly “directed to” an abstract idea, the court have been looking to the claims and specification in a search for objective suggestions of what the inventor thinks is the advance provided by the invention. What does the patent document assert as the “focus of the claimed advance over the prior art.” Slip Op, quoting Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253 (Fed. Cir. 2016).   Here, the court looked to the claims and the specification and concluded that the focus “is simply the abstract idea of automating the AV-captioning process.”  In this process, the court is typically looking for a “technical solution to a technical problem,” although that is not always required.  Here, the court noted that, although the invention involves computers it is not directed toward “any specific improved computer techniques for performing those functions—functions intrinsic to the concept of AV captioning.”  Rather, the benefit from the invention is simply automation of work previously done by humans.

Although the abstract idea test is not a novelty test, the courts repeatedly fall back on novelty in their explanation.  Here, the court writes:

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.

Slip Op.  The court also found no help for the patentee under Alice step two. “The claims do not incorporate anything more beyond conventional computing hardware and software, which do not transform the subject matter into an eligible application of the abstract idea.”

In a recent “informative” opinion, the PTAB found speech-to-text patent claims eligible under Alice.  Ex parte Hannun, No. 2018-003323, 2019 WL 7407450 (P.T.A.B. Apr. 1, 2019).  On appeal the court gave no deference to the PTAB’s interpretation of eligibility doctrine and also distinguished the case — noting that Hannun recited a particular algorithm for measuring tailored parameters.

= = = = =

I love figure 1 below with the bulky video camera and boxy computer equipment. The patent claims priority back to a 2000 filing date — before Apple rounded all the corners.

What Patent reforms are on the minds of IP Owners?

Patent

The Intellectual Property Owners Association (IPO) is hoping to help push through some patent law reforms and recently published a letter to Congressional leaders on IP reform reiterates suggestions already given to the White House.

What are the proposals:

  1. Legislation on subject matter eligibility to re-expand the scope of eligibility and clarify the law.
  2. Protecting Trade Secrets abroad — the US should make a global push to raise the level of trade secret protection and enforcement.
  3. Legislation to expand venue to sue in Hatch-Waxman / BPCIA cases and also for declaratory judgment cases.
  4. Ongoing oversight from Congress to ensure that PTAB proceedings are fair to the patent holder.
  5. Ongoing efforts to ensure high quality patent examination resulting in clear patents of the proper scope.
  6. Reject movements for compulsory licensing of patent or trade secret rights, both in the US and globally.

Read more here: IPO-to-IP-Subcmte-Leaders_Key-IP-Issues

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Federal Circuit on TM Licensing: We’re going to Enforce the Terms

Patent

Authentic Apparel v. US (Fed. Cir. 2021)

Authentic makes branded apparel, and had a non-exclusive license from the US Army to make Army branded items. (Signed back in Aug 2010).  One line of clothing was going to feature The Rock (Duane Johnson) with Army-Style clothing. (Seriously though, tie those shoes).

The license included a requirement that any sale/distribution must first receive the Army’s “advance written approval” subject to the Army’s “sole and absolute discretion.”

The Army refused an expansion of The Rock line of clothing; rejected other proposal; and also allegedly delayed in approving other initiatives. Eventually Authentic sued the Army for Breach in the Court of Federal Claims (CFC).

On appeal, the Federal Circuit has affirmed the CFC’s summary judgment favoring the Army — holding that the “sole and absolute discretion” provision controls.  The license agreement also included specific “exculpatory clauses” that indicated no remedy would be available for the Army’s refusal to approve proposals:

[Authentic] shall not have any rights against [the Army] for damages or other remedies by reason of [the Army]’s failure or refusal to grant any approval [of product line or] advertising.

Slip Op. (quoting the agreement).  Authentic argued that the Army has an obligation of good faith and fair dealing in its contracting, and that complete enforcement of these covenants would contravene those principles.  On appeal, the Federal Circuit agreed that it would be improper for the Army to act in an arbitrary or bad-faith manner when denying approval. That said, count found the provisions otherwise enforceable:

At bottom, Authentic agreed to give the Army broad approval discretion. . . . Authentic agreed to bear the risk that the Army would exercise that discretion to Authentic’s detriment, at least so long as the government did not act arbitrarily or in bad faith, a matter which we discuss below. Authentic’s allegation that the detriment has indeed come to pass is simply not a reason to uproot the parties’ bargain.

Id.

Who is the source of goods: One reason that the Army did not approve various advertisements was that the Army did not want to be recognized as the source of the licensed goods. Authentic argued that source identification is the key function of trademark law and is implicit in its license to use the Army mark “for trademark purposes.”

On appeal, the Federal Circuit disagreed noting that the licensee is the source of goods, and identifying the Army as the source would be factually erroneous:

Authentic’s argument is based on rights that Authentic did not have, namely, an alleged “right to identify [the Army] as the source/sponsor of the licensed goods.” Under the law, because Authentic was itself the source of the licensed goods, Authentic could not have had the right to mislead consumers to believe that the Army was the “source.”

The court then went on to hold that a decorative use of a Mark can still count as a trademark-use for licensing purposes.

In view of the clear shift in the law toward allowing trademark licenses, we do not agree with Authentic that a “decorative” use of a trademark is necessarily divorced from the goodwill associated with the trademark such that it cannot be considered a licensed use “for trademark purposes.” We recognize, of course, that a purely decorative design may not qualify for trademark protection in the first place. . . . But, again, this appeal does not involve a challenge to the validity of the Army’s trademarks, but rather a question of what limitations the Army may place on the use by a licensee of trademarks that the Army already owns.

Id.

Discretionary Transfer out of Waco

Patent

SynKloud Technologies, LLC v. Adobe, Inc. (Supreme Court 2021)

This petition for writ of certiorari fits nicely into my Civil Procedure teaching calendar because we are now arriving at the topic of discretionary transfer under 28 U.S.C. § 1404.

SynKloud sued Adobe for patent infringement in Waco (W.D. Tex.).  Adobe requested a transfer of venue to its home venue of N.D. Cal., but Judge Albright denied that motion.  The Federal Circuit granted mandamus and ordered the case transferred.  The court wrote:

In short, retaining this case in the Western District of Texas is not convenient for the parties and witnesses. It is not in the interest of justice or proper administration. And the district court’s contrary determination amounted to a clear abuse of discretion. We therefore grant Adobe’s petition for a writ of mandamus to direct transfer.

Slip Op. In the process of its decision, the Federal Circuit effectively rejected all of the lower court’s factual findings regarding convenience and justice.  The petition to the Supreme Court focuses on extraordinary error standard of review of the discretionary transfer denial on mandamus and argues that the appellate panel went to the other extreme of reweighing the evidence “to choose its preferred interpretation.” Rather, the patentee argues that mandamus should have only been granted if the lower court’s findings failed rational basis review.

Question presented:

1. Whether the Federal Circuit wrongly overruled a district court judge’s discretionary 1404(a) transfer decision when rational basis exists for all of the transfer factors and the “extraordinary error” standard was not met when multiple factors favored plaintiff’s chosen venue including the completion of third-party discovery in the current forum, the court congestion factor and the only evidence supporting transfer was set forth in self-serving declarations from defendant.

SynKloud Petition for Certiorari. The petition presents two additional questions:

2. Whether the equities lie considerably against granting mandamus, United States v. Dern, 289 U.S. 352 (1933), Zabel v. Tabb, 430 F.2d 199 (5th Cir. 1970) and In re Telular Corp., 319 F. App’x 909 (Fed. Cir. 2009), when defendant operates in, hires employees and transacts business in transferor forum; and in contrast (i) plaintiff is not subject to personal jurisdiction or venue in the transferee forum, (ii) a declaratory judgment action of patent non-infringement could not have been brought against plaintiff in the transferee forum, and (iii) a small business such as plaintiff would be forced to incur significant delays and significantly greater costs and expenses in the transferee forum.

3. Whether the district court’s lack of explanation requires the Federal Circuit to remand the case back for an explanation instead of drastically ruling that there was a clear abuse of discretion leading to a patently erroneous result, see In re Archer Directional Drilling Servs., L.L.C., 630 F. App’x 327 (5th Cir. 2016) (citing In re Volkswagen of Am., Inc., 545 F.3d 304, 310-11 (5th Cir. 2008)).

Id.  As the Supreme Court petition proceeds, the N.D. Cal. case is also moving forward. In one of the questions SynKloud notes the personal jurisdiction problem which was not addressed by the Federal Circuit mandamus judgment.  When the case is transferred, SynKloud remains the plaintiff and thus cannot directly challenge personal jurisdiction — other than by simply dismissing its case and forfeiting its patent rights.

Folks who read this petition will recognize that it was not drafted by traditional Supreme Court council.  I expect that its style may reduce its odds of being granted certiorari.  However, it is also setting up a potential follow-on petition in Uniloc v. Apple that will be coming soon.

Is it Hyperbole if it Accurately Describes an Absurd Reality

Patent

Wow, lots of new amicus in the patent eligibility case of American Axle v. Neapco, including a joint filing from Sen. Thom Tillis, Hon. Paul Michel, and Hon. David Kappos. The trio argue that the current state of patent eligibility doctrine is “an unintelligible hash” causing significant systemic problems. [Tillis Brief]  Kappos addition to the brief is symbolically important. His name is memorialized in Bilski v. Kappos, the case that seemingly re-started us down this pathway.  The brief offers an interesting approach — it is filled with quotes from policymakers about the problems created by the shift in patent eligibility laws.  Many of the quotes appear hyperbolic, but it is hard to tell in this situation whether they are simply reflecting reality.

Professors Lefstin (Hastings) and Menell (Berkeley) add their own hyperbole noting that in this case, the Federal Circuit has stretched “Section 101 to absurd lengths.”  A common law professor trope is to talk through the absurdity that ensues when a given rule is taken to an extreme.  Here, the professors are noting instead that absurdity has arrived. [Lefstin Mennell Brief]

American Axle filed its petition for writ of ceritorari back in December 2020.  Neapco initially waived its right to respond. However, the Supreme Court requested a response that is now due March 31, 2021.  Meanwhile, ten friend-of-the-court briefs have been filed supporting certiorari:

If the court has interest in the case, I would expect a call for the views of the Solicitor General (CVSG) sometime in April. Of course, a prior SG already provided views in a recent patent eligibility case: “The Court’s recent Section 101 decisions have fostered substantial uncertainty.” – U.S. Solicitor General, Noel J. Francisco (2019).

$2 billion verdict in Judge Albright’s Courtroom

Patent

VLSI Technology LLC v. Intel Corp. (W.D. Tex. 2021)

The jury just returned in Judge Albright’s first patent trial of 2021. The result: $2.18 Billion Dollars to VLSI for Intel’s infringement.  The patents were previously owned NPX Semiconductors, who obtained them by buying up Freescale Semiconductor and SigmaTel.  NPX will apparently still receive a cut of the revenue – if the decision withstands both the JMOL motions and appeals. [Intel Jury Verdict]

U.S. Patent Nos. 7,523,373 and 7,725,759.

In Claim Construction: Module Means Means

Patent

by Dennis Crouch

Rain Computing, Inc. v. Samsung Electronics (Fed. Cir. 2021)

Rain and Samsung agree that this case comes down to claim construction.  And, as typical, the patentee is attempting to thread the needle with a construction that is broad enough to be infringed, but narrow and specific enough to avoid invalidation.  The district court construed one term narrowly — resulting in no infringement.  On appeal, the Federal Circuit focused on a separate term — and found its indefiniteness rendered the claim invalid.

Rain’s US Patent 9,805,349 covers a method for delivering apps via a computer network using a webstore and server authentication. The claim requires “a user identification module configured to control access of said one or more software application packages.”  If you have been following patent claim construction over the past decade: You know that the focus here will be whether this “module” limitation invokes 35 U.S.C. § 112 ¶ 6 as a means-plus-function term. And, if so, is it indefinite for failing to provide sufficient structural support in the specification.

Normally, patent claims are expected to spell out the actual structure of the invention — not just its function. However, § 112 ¶ 6 (now renamed § 112(f)) allows a patentee to avoid adding those specifics in combination claims by including an element “as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof.”  The statute goes on to include an important caveat, the element “shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”  The statute does not spell-out what happens when the specification lacks any corresponding structure — but the courts have filled the gap. A means-plus-function claim that lacks corresponding structural disclosure in the specification is deemed invalid as indefinite.

Means-plus-function claiming is fools gold — especially for anyone with a thin disclosure.  The claims appear broad, but are narrowly interpreted and regularly invalidated.  For years, patentees have moved away from using the term “MEANS” and replaced it with some other generalized word such as “MODULE” as used in this case.  By skirting the MPF trap, these newly styled claims were more broadly interpreted and rarely invalidated as indefinite.  However, that approach was collapsed by the case of Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015).  In Williamson, the Federal Circuit held that claim terms that “fails to recite sufficiently definite structure or else recites function without reciting sufficient structure for performing that function” will also be interpreted as a means-plus-function term.  Although the burden on invoking 112(f) is still on the patent-challenger, Williamson eliminated the heavy presumption that it doesn’t apply.

The further trick with Williamson: (a) If a particular term – such as “module” is structurally defined within the specification then it will typically not be interpreted as means-plus-function because it was particularly defined by the applicant.  (b) On the other hand, if the term is not structurally defined in the specification, then it will invoke 112(f) and also be found indefinite for lack of structural support.

Here, the court first noted that the word “MODULE” “is a well-known nonce word that can operate as a substitute for ‘means’.”  The Williamson case itself focused on the word module and found that it did not indicate any “structure.”  The court drew the same conclusion in Rain Computing— finding that the claimed “user identification module” has no commonly understood structure and the specification included no structural disclosure.

Here, the specification does not impart any structural significance to the term; in fact, it does not even mention a “user identification module.”

Slip Op.  So, we fall into the category (b) from above: Nonce word without structural support → therefore → Invoke 112(f) and invalidate. The court writes:

Nothing in the claim language or the written description provides an algorithm to achieve the “control access” function of the “user identification module.” When asked at oral argument to identify an algorithm in the written description, Rain could not do so. Without an algorithm to achieve the “control access” function, we hold the term “user identification module” lacks sufficient structure and renders the claims indefinite.

Slip Op. Thus, the claim is indefinite.  This rendered the separate non-infringement related claim construction moot.

During prosecution the patent examiner had expressly stated that the limitation “does not invoke 112, 6th paragraph, or 112(f).”  However, the examiner’s somewhat cryptic reasoning was that a 112(f) means limitation cannot exist within a method claim.  On appeal, the Federal Circuit noted the examiner’s error: “Applicants are free to invoke § 112 ¶ 6 for a claim term nested in a method claim.”

= = = =

Note: In Synchronoss Techs., Inc. v. Dropbox, Inc., 2019-2196, 2021 WL 520047 (Fed. Cir. Feb. 12, 2021), the Federal Circuit encountered a claim a quite similar limitation: “user identifier module.” In that case the court also found that the term invoked 112(f) but was indefinite from lack of structural support.

(Fed Cir Clerks – note that FN 1 in Rain Computing does not accurately reflect the language of the claims in Synchronoss).

= = = =

Above, I noted the draw of means-plus-function claim language for “thin disclosures.” In this case, the disclosure was actually quite extensive, but the patentee appears to have wanted to shift the scope of coverage away from the original focus of the invention disclosure.  This patent is one of nine US patent applications all within the same direct family and relying on the same original disclosure.

Court Affirms Damages on Very Wide Royalty Range Testimony

Patent

Bayer Healthcare LLC v. Baxalta Inc. (Fed. Cir. 2021)

A jury sided with the patentee Bayer — finding the patent infringed and not proven invalid.  The judge refused to allow the jury to decide willfulness, and instead found no willful infringement as a matter of law. Affirmed here on appeal.

The basic setup: Bayer’s U.S. Patent No. 9,364,520 covers a conjugate that includes a “functional Factor VIII polypeptide” having a particular amino acid sequence (“or an allelic variant thereof”).  Factor VIII is normally produced by the human liver and is important to blood coagulation.  Thus, Factor VIII is also a helpful treatment for hemophilia A.  The conjugate also includes polyethylene glycol (PEG) that is used as a preservative and has a particular binding site on the polypeptide (“the B-domain”).  The process of joining the two factors together is known as PEGylation.  The B-domain binding site limitation was important because prior researchers had found that non-specific conjugation changed the Factor VIII in a way that reduced or eliminated its functionality.

First the damages: After finding infringement, the Jury was asked to determine a royalty rate (17.18%); a royalty base ($872 million); and then do the math for the damages ($155 million).  The district court also added another $18 million for pre-verdict supplemental damages.  The verdict here is based upon Baxalta’s distribution of Adynovate, a PEGylated FVIII hemophilia treatment.

I have included a snippet from the verdict below.

At trial, Bayer’s damages expert, Dr. Addanki, testified that the royalty rate range should be 5.1% to 42.4%. On appeal, the defendant argued that this range was simply too wide and effectively required the jury to speculate — or just pick a number, any number (within the wide range).   On appeal, the Federal Circuit found no problem and that the evidence presented supported the verdict. “[W]e are aware of no precedent that requires an expert to provide a single proposed royalty rate.”  I wonder if next-time Dr. Addanki will push his luck and go for a 0-100% predicted range. I’m confident that it is accurate if not precise.

RANDOM: Construing the Claim Construction.  The district court construed the claimed polypeptide conjugation as “not random” based upon statements in the patent and the prosecution history.  On appeal, the defendant argued that the term random – although not found in the claims – should have been construed by the district court.

On appeal, the Federal Circuit found no error — explaining that claim construction need not “purge every shred of ambiguity.” quoting Acumed LLC v. Stryker Corp., 483 F.3d 800 (Fed. Cir. 2007).  Here, the defendant had asked for a particular narrow construction and the district court had refused — finding it too narrow.

= = = =

Talk about functional claim language: The claims expressly require that the conjugate be “functional.”  Still, the jury found the claims enabled. On appeal, the Federal Circuit affirmed — noting the substantial evidence presented by the patentee at trial.  Further, “the specification need not include a working example of every possible embodiment to enable the full scope of the claims.”

= = = =

The patentee had cross-appealed on willfulness. The patentee presented evidence that the defendant knew about the patent and knew that its drug used the same targeted PEGylation at the B-Domain as claimed.

On appeal though the Federal Circuit agreed with the district court that this evidence was not enough to make a case of willfulness. “Knowledge of the asserted patent and evidence of infringement is necessary, but not sufficient, for a finding of willfulness. Rather, willfulness requires deliberate or intentional infringement.”

So, in the end, the verdict stands at only $100 million+.

 

 

Parties Again Ask the Federal Circuit to Follow the Law and Issue an Opinion in PTO Appeals

Patent

In a recent article, Judge Hughes was quoted as saying that he does not personally look at petitions for rehearing that stem from R.36 no-opinion judgments by the Federal Circuit.

Hughes said if the panel affirmed without an opinion, he puts the petition down and waits to hear from his clerks if it’s worth considering. If the panel wrote a nonprecedential decision without a dissent, he may flip through the table of contents to make sure he’s not missing anything.

But the only en banc petitions Hughes said he reads seriously are the precedential decisions, particularly with dissents. “Those are the only ones that are going to be en-banc-worthy,” he said.

Perry Cooper, Full Court Patent Review Bids Often ‘Waste of Time,’ Judge Says.  In many ways, these no-opinion judgments are the shadow docket of the Federal Circuit without the usual full-court or expositive guardrails of ordinary appellate practice.

Before 1989, the Federal Circuit and its predecessor courts (going back 100+ years) wrote an opinion in each and every appeal of a patent case from the Patent Office.  Now, about half of the cases are decided without opinion.  Back in 2010, this represented fewer than 20 cases per year, many of which were pro se and ex parte.  By 2019, more than 120 R.36 no-opinion judgments were issued in PTO cases, most of these were in hotly litigated inter partes reviews. In their article, Paul Gugliuzza and Mark Lemley looked at one area of law – patent eligibility – and concluded that the court was subtly shifting the law through its R.36 practice. Gugliuzza and Lemley, Can a Court Change the Law by Saying Nothing?, 71 Vanderbilt Law Rev. 765 (2018).

In a number of cases, parties have petitioned the Supreme Court and Federal Circuit for a hearing on the issue — arguing as I did in my 2017 article that 35 U.S.C. 144 requires the court to issue an opinion when reviewing an appeal from the Patent Office. So far, no court has agreed to even hold such a hearing.

In WaterBlasting v. Iancu, the petitioner is taking this same approach (I previously wrote about the patentee’s en banc request here.)   In its new responsive briefing, the USPTO focused on general principles of appellate procedure that, by “longstanding tradition” permit the appellate courts to “establish their own procedures concerning when to issue opinions.”  While I agree with this general principle, the USPTO failed to consider or work through the competing longstanding tradition in the patent context noted above or the statutory history on point.

One thing that I like about the Gov’t brief is that it lists many of the unsuccessful petitions to the Supreme Court on this issue:

See, e.g., Fote v. Iancu, 140 S. Ct. 2765 (2020); Kaneka Corp. v. Xiamen Kingdomway Grp., 140 S. Ct. 2768 (2020); Specialty Fertilizer Products, LLC v. Shell Oil Co., 138 S. Ct. 2678 (2018); Shore v. Lee, 137 S. Ct. 2197 (2017); Concaten, Inc. v. AmeriTrak Fleet Solutions, LLC, 137 S. Ct. 1604 (2017); Cloud Satchel, LLC v. Barnes & Noble, Inc., 136 S. Ct. 1723 (2016); Hyundai Motor Am. v. Clear with Computers, LLC, 134 S. Ct. 619 (2013); Kastner v. Chet’s Shoes, Inc., 565 U.S. 1201 (2012); White v. Hitachi, Ltd., 565 U.S. 825 (2011); Max Rack, Inc. v. Hoist Fitness Sys., Inc., 564 U.S. 1057 (2011); Romala Stone, Inc. v. Home Depot U.S.A., Inc., 562 U.S. 1201 (2011); Wayne-Dalton Corp. v. Amarr Co., 558 U.S. 991 (2009); Tehrani v. Polar Electro, 556 U.S. 1236 (2009).

WaterBlasting PTO Brief.

= = = = =

Federal Circuit Continues to Remain Silent about its R.36 Opinions

Monday March 1: US v. Arthrex — Was the PTAB Unconstitutionally Appointed

Patent

by Dennis Crouch

United States v. Arthrex, Inc. (Supreme Court 2021)

  1. Whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office are principal officers who must be appointed by the President with the Senate’s advice and consent, or “inferior Officers” whose appointment Congress has permissibly vested in a department head.
  2. Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges.

On Monday, March 1, 2021, the Supreme Court will hear oral arguments in this important case focusing on administrative power of the USPTO Patent Trial & Appeal Board.  PTAB judges have cancelled thousands of issued patents — that judicial role (with little direct control guidance from the USPTO Director) suggests that the PTAB judges are “Officers of the United States” that must be appointed by the President.  Although PTAB decisions are not directly reviewable by the USPTO Director, the director has substantial authority in controlling panel selection, rules of practice, and job performance.  All those suggest that perhaps the judges are “inferior Officers” that may be appointed by a Head of Department – such as the Secretary of Commerce.  If the Principal Officer theory prevails, the potential result is that a substantial number of PTAB Decisions will be rendered void.

The Federal Circuit decision in the case was a bit quirky, to be mild. The appellate court agreed with the patentee that the judges were Principal Officers that should have been appointed by the President.  However, the court also purported to “save” the appointments by eliminating some of the statutory rights provided to the Judges under the APA via judicial fiat. That severing, according to the court, was sufficient to reduce the judges once again to Inferior officers.

None of the parties were satisfied with this result, and each petitioned for writ of certiorari.  The Supreme Court granted the writ (as to the two questions above) and consolidated the cases.

I contacted my Mizzou Colleague and Constitutional Law Scholar Prof. Tommy Bennett for his take on the case.  Bennett agrees that the parties have presented differing theories of authority and power.  If you focus only on decisional authority, then Arthrex has a case that these are Officers requiring presidential appointment.  However, the staffing and organizational authority lies with the PTO Director who can “appoint, assign, and re-assign any APJ for any reason [and] set the rules and procedures by which PTAB proceedings are conducted.”  Prof. Bennett explained to me: “Which of these two views of authority prevails will, I think, determine how the case turns out.”

I also contacted Mark Perry for some commentary. Perry is arguing on behalf of the patent challenger Smith & Nephew and provided the following statement.

The PTO Director is charged by statute with providing policy direction and management supervision to the Office, including the Board.  APJs can’t start work without his approval, they have to follow his procedural and substantive guidance while working, and he has a variety of means to review their work.  Moreover, only the Director confirms or cancels patent claims at the conclusion of IPR proceedings, and thus he bears political accountability for final decisions. APJs are inferior Officers under the Appointments Clause, just as their predecessors have been since the Patent Office was created in 1836.

I’ll note here that the 1952 Patent Act required that the PTAB Judges (formerly Chief Examiners) be “appointed by the President, by and with the advice and consent of the Senate.” 35 U.S.C. 3 (1952). This does not mean that it was required, but suggests a close case.  The requirement of presidential appointment ended in 1975 when the duty of appointments was pushed-down to the Secretary of Commerce.  Appointments were later pushed-down further to the USPTO Director until Prof. John Duffy suggested that approach was unconstitutional.

March 1 Oral arguments are set to be divided as follows:

  • 15 minutes for US Gov’t Intervenor
  • 15 minutes for the patent challenger Smith & Nephew
  • 30 minutes for the patentee Arthrex

Deputy Solicitor General Malcolm Stewart will represent the U.S. at oral arguments.  Stewart has been part of the case from the beginning. Although his bosses have changed, I don’t believe that the Gov’t position has substantively wavered.  Mark Perry of Gibson Dunn will argue on behalf of Smith & Nephew; and Jeff Lamkin of MoloLamkin for the patentee.

At the briefing stage, the US Gov’t presented an additional waiver challenge — arguing that the patentee had not preserved its right to appeal on the appointments challenge. SCOTUS declined to hear that issue in this case. However, the issue is central to a parallel appointments challenge in Carr v. Saul.  That case is looking at whether administrative law judges deciding cases under the Social Security Act should have been appointed by the President

Whether a claimant seeking disability benefits under the SSA forfeits an appointments-clause challenge to the appointment of an administrative law judge by failing to present that challenge during administrative proceedings.

Docket.  Carr v. Saul is set for oral arguments on March 3, 2021.  I expect opinions in the cases will be released together later this term.

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