by Dennis Crouch

The US Patent and Trademark Office (USPTO) issued a total of 312,100 utility patents in the calendar year 2023. This marks the fourth consecutive year of decline in the number of issued patents. The 2022 figures show a 3% decrease from the previous year and a 12% decrease from the record-high numbers seen in 2019, as depicted in the chart below.  One of the biggest changes from 2022 to 2023 is that non-US patent applicants dropped from 51% of the total down to 48%. In fact, numbers from US-applicants increased over the past year.   There was a roughly parallel shift when looking at the % of patents naming a US inventor — up from 47% in 2022 to 50% in 2023.

It’s important to recognize that patent issuance in any given year is largely based on innovations and applications filed 2-5 years prior or more. For example, the 2023 decline reflects a drop in underlying patent filings, R&D, and new invention volume primarily from 2018 to 2020, with most applications pending examination for years before grant. Similarly, the 2022 and prior year patent volumes correlate most directly with late 2010s economic, policy and innovation landscapes. So this data is more of a backwards-looking snapshot. The drivers behind 2023’s applicant mix shift likely originated a few years back as well — established in the midst of the COVID pandemic. Though issuing patents now, the underlying applicant behaviors and investment decisions providing this US boost trace back to the 2020-2022 period or earlier based on typical application lag. Any analysis of the grant mix changes must recognize this context, and account for influencers at the time of filing rather than issuance to best understand the shift.

Rather than an economic indicator, the grant numbers and details surrounding them are (I believe) more reflective of the operation of the USPTO and the faith innovative companies have in the patent system.

by Dennis Crouch

I’m excited to head out to Snowmass in early January for the IP-SKI conference! Although we have the Ozarks here in mid-Missouri, there is nothing like the Rocky Mountains.  This year I’ll also have the opportunity once again to connect with other intellectual property lawyers and talk shop while enjoying some long runs. (LINK)

In the meantime, I came across an interesting lawsuit that Aspen Skiing Company (ASC) recently filed against ski apparel company Perfect Moment. ASC owns and operates the four famous ski resorts that make up Aspen Snowmass – Snowmass along with Aspen Mountain, Aspen Highlands, and Buttermilk, with a history stretching back to 1947. According to the complaint, ASC is suing Perfect Moment for trademark infringement, false association, unfair competition, and other claims. [Aspen Complaint]

The basic scoop here is that Perfect Moment conducted photo shoots on ASC properties to promote its skiwear, intentionally trading on ASC’s fame and reputation. Back in March 2021, Perfect Moment posted social media photos showing influencers posing in Perfect Moment apparel, with recognizable buildings, ski lifts, and trails of the ASC resorts in the background. ASC asserts such posts falsely imply an endorsement or sponsorship relationship. After a cease & desist letter, Perfect Moment removed some but not all of the photos.  More recently, Perfect Moment began selling jackets and pants bearing an image of people relaxing in at the Aspen “beach club,” complete with the signature red-and-white striped tents and lounge chairs on the mountain. The complaint seeks injunctive relief, destruction of the allegedly infringing apparel, and disgorgement of Perfect Moment’s profits.

Truthfully, the case here is a bit shaky, but courts have been known to strongly protect trademark holder rights. I expect that PM will quickly cave to the legal pressure, although I would suggest first sending in the influencers to the Federal Courthouse for a quick shoot with their winter attorney apparel.

Ian Saffer and Kate Bohmann from Quarles & Brady filed the lawsuit on behalf of Aspen. It does not appear that PM has been served yet.

by Dennis Crouch

Thus far US copyright and patent tribunals have refused to award rights for AI generated works.  China has begun its move in the opposite direction with the recent decision granting rights to an artist who created an image using the popular generative AI system Stable Diffusion.  The case of Li v. Liu was decided by the recently Beijing Internet Court.  The court decides internet related cases using online tools. Although the court uses AI judges in some cases, this one was decided by humans.

[Read an English translation created by GWU Law Students Yuqian Wang and Jiaying Zhang supervised by Prof. Robert Brauneis: Li v Liu Beijing Internet Court 20231127 with English Translation. More AI related decisions are available at the GWU AI Litigation Database.]

The plaintiff, Li, used Stable Diffusion to generate a photorealistic image of an Asian woman. He shared the work on Xiaohongshu, a Chinese platform similar to Instagram. Later, the defendant Liu, a blogger, published the image in a blog post without Li’s permission, removing his username and platform watermark.

Li sued for copyright infringement. The Beijing Internet Court ultimately ruled in his favor, ordering Liu to apologize publicly, pay ¥500 ($72) in damages, and cover ¥50 ($7) in court fees.

Crucially, the court recognized Li as the legal rights-holder, having contributed the necessary “intellectual input” through choices of models, prompts, parameters, and final image selection. Judges emphasized that copyright law aims to encourage human creativity.

In this case, from the moment the Plaintiff conceived the disputed image to the moment the Plaintiff finally selected the disputed image, it can be seen that the Plaintiff has carried out a certain amount of intellectual input, such as designing the presentation of the character, selecting the prompts, arranging the order of the prompts, setting the relevant parameters, selecting which picture meets their expectations, and so on. . . . Currently, a new generation of generative AI technology is increasingly being used for creation. As long as AI-generated images reflect the original intellectual input of a person, they should be identified as a work and protected under copyright law.

This court ruling signals China’s interest in extending copyright law to better account for AI-generated content and also potentially places the country in the forefront of protecting AI creations.  Still, the Beijing Internet Court itself emphasized the approach of judging AI copyright issues based on the specific facts.

Of course, this is one regional lower court decision and is not generally a policy statement of the PRC.  The judges here particularly noted that the level of creative expression requires a case-by-case analysis.  In an email, Berkeley IP scholar Yuan Hao (郝元) points out, there is still debate within China on this issue. A similar case decided by a court in Shenzhen came to the opposite conclusion, finding AI-generated output eligible for copyright protection as the “intellectual fruits” of the AI developer rather than the AI user. According to Hao, cases like Li v. Liu feature “experimentalist practice” with different local courts exploring the issue before final guidance from the Supreme People’s Court.  Hao also disputes depictions of the case as a political move to strategically assist China’s AI industry. While acknowledging that some “political” IP cases may occur, she has not seen evidence of that here.  In my view, the low-value of the case (less than $100) also serves as an indication that this was not intended as a landmark decision setting national policy, but rather resolving a minor copyright dispute between two individuals.

by Dennis Crouch

The patent battle between Masimo and Apple over pulse oximetry technology in the Apple Watch took a new turn on December 27th. Despite the recent import ban imposed by the U.S. International Trade Commission (ITC), Apple was granted a temporary stay by the U.S. Court of Appeals for the Federal Circuit. For now, this emergency ruling blocks the government from enforcing the exclusion order on certain Apple Watch models through at least mid-January. However, the legal fight is far from over. For Masimo, this short-term win for Apple weakens its bargaining position as the two companies continue their protracted patent dispute in courts and before regulatory agencies.

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by Dennis Crouch

In a non-precedential decision, the Federal Circuit has affirmed a set of PTAB decisions canceling the claims of four patents owned by Carucel Investments L.P. (“Carucel”) — finding them invalid as obvious under 35 U.S.C. § 103. See Carucel Invs. L.P. v. Vidal, Nos. 2021-1731 (Fed. Cir. Dec. 26, 2023). The affected Carucel patents include U.S. Patent Nos. 7,221,904; 7,848,701; 7,979,023; and 8,718,543, with priority back to a 1996 application filing. All four patents relate to mobile communication systems involving base stations that can be mounted on moving vehicles. Carucel v. Vidal Opinion.

The original focus of the invention involved a closed-loop rail system running alongside a highway and that carried mobile base stations moving in the direction of the flow of traffic. That focus of the invention was quickly scrapped – likely as impractical.  But, the disclosure was seen as sufficient to also cover movable base stations with no rail limitation — allowing mobile base stations that might be on the cars and other vehicles themselves.

Multiple petitioners, including Mercedes-Benz, Volkswagen, and Unified Patents filed petitions seeking inter partes review (“IPR”).  Relying on KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007), the Patent Trial and Appeal Board (“PTAB”) instituted review and ultimately issued final written decisions concluding that the petitioners had proven by a preponderance of evidence that all challenged claims were unpatentable as obvious.

On appeal, Carucel disputed the PTAB’s claim constructions, obviousness determinations, and post-institution procedures under the Administrative Procedure Act (“APA”).  The Federal Circuit rejected Carucel’s arguments on all fronts.

Claim Construction: During inter partes review proceedings, the patentee is typically seeking a narrow construction of various terms in order to distinguish itself from the prior art. This has to be a careful argument — if the patentee goes too narrow then the accused infringers can also escape liability.

Here, the patent specification suggests that the mobile base stations are connected directly via cellular-network.  However, the claims themselves only use the terms “mobile device” and “mobile unit.” The court explained that neither the claim language nor the specifications justified restricting the scope to only cellular networks or requiring the mobile devices to directly register or communicate with the network.  In its analysis the court concluded first that the words “mobile device” refers to the capability of movement of a physical object and does not suggest the narrow construction requested.

On the obviousness determination, the Federal Circuit made the factual determination that a person of ordinary skill in the art would have been motivated to combine the teachings of the prior art with a reasonable expectation of success.  That determination quickly led to the legal conclusion that the claims were obvious.  On appeal, the Federal Circuit gives deference to PTAB fact finding under the substantial evidence standard. And here, the court found more than iota to support the conclusions — especially after deferring to the PTAB’s credibility findings favoring petitioner’s expert testimony.  At oral arguments, Brian Bear (Spencer Fane) argued that the Board had simply adopted the opposing expert testimony ipse dixit without providing critical analysis and, in particularly without explaining how the prior art combination overcame the “massive barrier” of incorporating the TDMA systems in some references alongside the CDMA systems in other references.   As with the PTAB decision, the Federal circuit decision does not provide a direct response or analysis regarding the TDMA/CDMA incompatibility issue.

Finally, the Federal circuit rejected Carucel’s argument that the PTAB’s denials of requests for Director Review violated the APA.  The denial orders themselves were unsigned, but still sufficiently identified the Commissioner Hirshfeld as the presiding officer.   In addition, the Director Review does not need to separately explain reasons for denial.  Although this is an agency action, the PTAB written decisions are “reviewable final decisions of the agency” despite intervening director denial.

Brian Bear of Spencer Fane argued the case for the patentee with Debra McComas of Haynes & Boone for appellees.  Michael Tyler from the PTO’s solicitor’s office also defended the opinions.  Judge Stark authored the unanimous opinion that was joined by Judges Dyk and Schall.

by Dennis Crouch

December 25th, marked the deadline for President Biden to reject the U.S. International Trade Commission’s (USITC) ruling banning imports of certain Apple Watch models. With no action from the White House, Apple now faces a federal government order to halt imports and sales of Apple Watch Series 9 and Ultra 2 devices because it incorporates light-based pulse oximetry technology covered by the claims of Masimo’s U.S. Patent Nos. 10,945,648 (claims 24 and 30) and 10,912,502 (claim 22).

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By: Paul Gugliuzza is a Professor of Law at Temple University Beasley School of Law, Jordana R. Goodman is an Assistant Professor of Law at Chicago-Kent College of Law and an innovator in residence at the Massachusetts Institute of Technology, and Rachel Rebouché is the Dean and the Peter J. Liacouras Professor of Law at Temple University Beasley School of Law. This post is part of a series by the Diversity Pilots Initiative, which advances inclusive innovation through rigorous research. The first blog in the series is here and resources from the first conference of the initiative are available here.

The ongoing reckonings with systemic racism and sexism in the United States might seem, on first glance, to have little to do with patent law. Yet scholarship on racial and gender inequality in the patent system is growing. Recent research has, for example, shown that women and people of color are underrepresented among patent-seeking inventors and among lawyers and agents at the PTO. In addition, scholars have explored racist and sexist norms baked into the content of patent law itself.

In a new article, we empirically examine racial and gender inequality in what is perhaps the highest-stakes area of patent law practice: appellate oral argument at the Federal Circuit.

Unlike many prior studies of inequality in the patent system, which look at race or gender in isolation, our article looks at race and gender in combination. The intersectional approach we deploy leads to several new insights that, we think, highlight the importance of getting beyond “single-axis categorizations of identity”—a point Kimberlé Crenshaw made when introducing the concept of intersectionality three decades ago.

The dataset we hand built and hand coded for our study includes information about the race and gender of over 2,500 attorneys who presented oral argument in a Federal Circuit patent case from 2010 through 2019—roughly 6,000 arguments in total. Our dataset is unique not only because it contains information about both race and gender but also because it includes information about case outcomes, which allows us to assess whether certain cohorts of attorneys win or lose more frequently at the Federal Circuit.

Perhaps unsurprisingly, we find that the bar arguing patent appeals at the Federal Circuit is overwhelmingly white, male, and white + male, as indicated on the three figures below, which break down, in a variety of ways, the gender and race of the lawyers who argued Federal Circuit patent cases during the decade covered by our study. (Note that the figures report the total number of arguments delivered by lawyers in each demographic category. Note also that the number of arguments we were able to code for the race of the arguing lawyer was slightly smaller than the number of arguments we were able to code for the gender of the arguing lawyer, so the total number of arguments reported on the figures differ slightly.)

Federal Circuit Patent Case Oral Arguments, 2010-2019

What is surprising, however, is that the racial and gender disparities illustrated above dwindle when we look only at arguments by lawyers appearing on behalf of the government, as shown on the three figures below, which limit our data only to arguments by government lawyers. (About 75% of those government arguments were by lawyers from the PTO Solicitor’s Office; the others came from a variety of agencies, including the ITC and various components of the DOJ.)

Federal Circuit Patent Case Oral Arguments, 2010-2019 – Government Lawyers Only

In fact, among lawyers appearing on behalf of the government, the proportion of arguments by women, people of color, and women of color exceeded the proportion of women, people of color, and women of color in the total population of practicing lawyers—that is, all lawyers, not just patent lawyers. Among private sector patent lawyers, by contrast, the proportion of arguments by women, people of color, and women of color was much lower than the proportion of women, people of color, and women of color in the total population of lawyers, as shown on the table below.

To restate those findings in a slightly different fashion: we find that, among lawyers arguing patent cases at the Federal Circuit, a government lawyer is 2.3 times more likely than a private-sector lawyer to be a person of color, over 5 times more likely to be a woman, and over 10 times more likely to be a woman of color.

Remarkably, the racial and gender disparities we find—particularly among Federal Circuit lawyers from the private sector—bear no relation to attorney performance. As we explain at length in our article, appellants in Federal Circuit patent cases win about a quarter of the time and appellees win about three-quarters of the time—with no significant differences based on race, gender, or the intersection of the two.

There is, however, one group of lawyers who do win more frequently than all others: a small group of 65 private-sector lawyers who argue patent cases at the Federal Circuit more than anyone else—on average, at least once a year. When seeking to overturn a judgment of a district court, the PTO, or the ITC in a patent case, those frequent Federal Circuit advocates succeed 41% of the time, as compared to a 24% win rate for the other private-sector lawyers in our dataset. That finding adds a patent-law angle to a growing literature documenting the remarkable influence a small group of specialist appellate litigators (mostly white and male, and almost all at the wealthiest, most prestigious law firms in the world) have had on the U.S. legal system.

We conclude our article with some ideas about how to make the patent system, and high-level law practice generally, more diverse and inclusive. In the main, we think our findings about the large proportion of women, people of color, and women of color arguing patent appeals for the government undercuts the oft-mentioned “pipeline” explanation for a lack of diversity in patent law—that is, the idea that women and people of color are absent because they lack scientific or technical backgrounds.

Not only is that explanation based on outmoded conceptions of what patent practice entails—especially patent litigation—our data suggest there are women, people of color, and women of color arguing patent cases at the highest level—they are just not getting many opportunities to do so in law firm practice. Indeed, though the number of government arguments in our dataset (567) is less than one-tenth the number of arguments by private-sector lawyers (5825), the government had a greater number of arguments presented by women of color (65) than the private sector did (60).

The inequalities we find among private-sector patent lawyers, and the lack of correlation between those inequalities and case outcomes, suggest that entry into the upper echelon of patent practice is about more than winning and losing in the courtroom. As a recent ABA report on “interrupting bias” suggests, to really make progress with race and gender equity, we must focus on the structural causes of disadvantage and exclusion. For instance, law firms can use concrete, objective metrics to track the effects of diversity efforts, to ensure promoting diversity is rewarded in performance reviews, and to ensure no demographic group is being treated differently in assignments, evaluation, and compensation.

In short, broadening the population of lawyers who make it to very top of appellate practice will require a more deliberate approach than “add diversity and stir”; it will require disrupting the rules and norms that exclude and undermine outsiders to the status quo.

Three main takeaways:

1. Racial and Gender Disparities in Patent Law Practice: The study highlights that the demographic of attorneys arguing patent appeals at the Federal Circuit is predominantly white and male. This disparity is evident when compared to the total population of practicing lawyers. However, an interesting contrast is observed in government lawyers, where the proportion of arguments by women, people of color, and women of color exceeds their proportion in the overall lawyer population.
2. No Difference Between Attorney Demographics and Case Outcomes: Despite the noted disparities in racial and gender representation, these factors do not correlate with the success rates in court. The data indicates that appellants in Federal Circuit patent cases win roughly a quarter of the time and appellees three-quarters of the time, irrespective of the attorney’s race, gender, or their intersection.
3. Need for Structural Changes to Enhance Diversity: The post concludes that the disparities in private-sector patent law practice and the absence of correlation with case outcomes point to a need for more than just increasing diversity. There is a call for addressing structural causes of disadvantage and exclusion in the legal profession. This includes implementing concrete measures in law firms to track and promote diversity, ensuring fair treatment in assignments, evaluations, and compensation, and disrupting norms that perpetuate the status quo, thereby broadening the population of lawyers in top appellate practice.

If you find this insight compelling and want to stay informed on the latest developments, sign up for the DPI research updates today!

Guest post by: Davidson Heath, Assistant Professor of Finance, Nathan Seegert, Associate Professor of Finance, and Jeffrey Yang. All authors are with the University of Utah David Eccles School of Business. This post is part of a series by the Diversity Pilots Initiative, which advances inclusive innovation through rigorous research. The first blog in the series is here and resources from the first conference of the initiative are available here.)

Diversity in innovation is essential. Varied perspectives, experiences, and skills foster creativity and problem-solving. Diverse teams are more likely to challenge assumptions, leading to novel solutions and breakthroughs. Variety in tastes and background can help identify and serve a wide range of user needs.

Open-source software (OSS) is often praised for its ability to foster innovation. Part of the rationale is that OSS allows for open collaboration, enabling continuous improvement and adaptation by a diverse community. For example, a vast garden of open-source large language models such as Meta’s Llama 2 are flourishing and are projected to surpass closed-source AI in the near future.

Figure 1. Capabilities of Machine Learning Models: Open vs. Closed-Source

The open-source collaborative model has accelerated innovation in many fields. Yet to date, we know little about how these teams form, and how their diversity impacts productivity. How does the diversity of OSS teams compare to the overall contributor pool? And what are the productivity outcomes for OSS teams that increase their diversity compared to those that do not?

In our new paper, entitled “Team Production and the Homophily Trap: Evidence from Open-Source Software,” we examine the dynamics of diversity and productivity in the OSS setting. The key novel concept that we introduce is homophily – the tendency of individuals to associate with others who are similar. This tendency, while natural, has important implications for the diversity and productivity of OSS teams. By analyzing over 40,000 teams developing OSS projects over a ten-year period, we uncover two facts – (1) teams tend to be less diverse than the available pool of contributors, primarily due to homophily and (2) teams that add diversity have higher productivity, suggesting that other teams are “stuck” in an inefficient, low-diversity state. Strikingly, this pattern has been getting worse, not better, over time; as the coder population has expanded, average team diversity has actually fallen.

Figure 2. Trends over Time in Open-Source Coder Population and Team Diversity

This pattern, which we term the “homophily trap”, is detrimental to development and innovation. For those leaders working on software projects or within engineering, scientific and innovative teams, our study highlights the importance of the following questions: How can organizations avoid the homophily trap?  What specific strategies can be employed to attract and retain diverse team members? What gains can organizations expect to see from diversifying their teams?

Our study helps to answer some of these questions. First, we show that team diversity has large positive returns to productivity. We find that teams that do escape the homophily trap by increasing their diversity are more likely to continue to be actively developed; have more development activity, conditional on continuing; and attract a larger and more diverse userbase. These effects are especially strong for teams that start at lower levels of diversity, underlining the substantial untapped potential in diversifying team composition.

Second, our study provides suggestions and strategies for enhancing team diversity and escaping the homophily trap. Importantly, initiatives to increase the diversity of the overall pool of contributors can actually backfire because a more diverse pool gives teams more similar peers to assort with. To combat this tendency, teams need policies that directly encourage diversity at the team level. Such policies can break the cycle of homophily-based selection into homogeneous groups. To attract and retain diverse team members, it is important to implement inclusive recruitment practices and establish an environment that values diverse perspectives. Finally, educate your engineers. By promoting awareness of the benefits of diversity, it may be possible to avoid the homophily trap.

For engineers, scientists, and inventors, we believe the insights from our study highlight the crucial role of team diversity in driving innovation and productivity. Teams might prefer similar peers for ease of coordination and communication and might prefer to recruit known quantities from their social networks, but these benefits are smaller than the gains to productivity from a more diverse team.   And importantly, interventions targeted at increasing diversity on teams can yield improvements in both team diversity and project outcomes. This perspective is particularly relevant for organizations in settings where collaboration and innovation are paramount.

Three main takeaways:

1. Diversity Drives Innovation: Diversity in teams fosters creativity and problem-solving. It is a positive input into innovative breakthroughs and addressing a wide range of user needs.
2. The Homophily Trap: Our study uncovers a “homophily trap” in open-source software teams, where teams are less diverse due to a preference for similarity, limiting their potential. Quasi-experimental estimates suggest an increase in team diversity results in a 2.4 percentage point increase in the likelihood that a project remains active in the subsequent year. An increase in team diversity also leads to significant increases in the size and diversity of the project’s userbase.
3. Strategies to Enhance Diversity: To mitigate the homophily trap, our study suggests promoting diverse team formation, targeting low-diversity teams in particular, and creating supportive environments for diverse talent.

 If you find this insight compelling and want to stay informed on the latest developments, sign up for the DPI research updates today!

by Dennis Crouch

Thaler v. Comptroller-General of Patents, Designs and Trade Marks, [2023] UKSC 49. 

In a December 20, 2023 decision, the UK Supreme Court has agreed with American courts that an inventive machine is not deserving of patent rights.  The underlying case will be familiar to many with Dr. Stephen Thaler of St. Louis seeking to patent a thermal-mug designed by an artificial intelligence machine that he created.  Thaler has argued that the AI (called DABUS) conceived of the particular invention in question and also identified its practical utility.  The UK Supreme court based its holding upon the text of the UK Patents Act of 1977 as it reached the same ultimate conclusion as the Federal Circuit in Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022), cert. denied, 143 S. Ct. 1783 (2023).

These Thaler cases showcase that under the current patent law regime, autonomous AI systems cannot qualify as inventors entitled to patent rights, irrespective of their creativity. For AI-generated inventions to become patentable, intervention by policymakers to amend inventorship laws would likely be necessary. However, the arguably bigger questions of immediate importance surround collaborative human-AI inventions where both human and machine contribute in creation of a new invention. Thaler expressly disclaimed any human input into DABUS’s inventions, but going forward mixed human-AI inventor teams seem inevitable. Neither the UK Supreme Court’s decision nor the parallel US rulings provide direct guidance on the requisite threshold quality or quantity of human participation in such collaborative inventions to satisfy legal inventorship requirements. Thus, for instance, an open issue remains whether token perfunctory human approval of an AI-devised invention would suffice, or if substantive intellectual contribution is needed. And for primarily AI-driven inventions, are minor tweaks by a human collaborator enough? Or must the human contributor objectively supply the novel concept? (more…)

by Dennis Crouch

In a recent nonprecedential decision, the Federal Circuit dismissed Ontel’s appeal seeking to overturn the PTAB’s IPR decision upholding the patentability of Dafni’s hair straightening brush patents. Ontel Products Corp. v. Guy A. Shaked Invs. Ltd., No. 2022-1938 (Fed. Cir. Dec. 19, 2023). The court held that Ontel lacked standing to appeal because “the dispute between Ontel and Dafni over this patent is moot.” Under the mootness doctrine, “a case becomes moot ‘when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome.’” ABS Global, Inc. v. Cytonome/ST, LLC, 984 F.3d 1017, 1020 (Fed. Cir. 2021). At the same time, the panel refused to vacate the PTAB decision upholding the ‘562 patent claims, holding that the case “became moot through actions that are closer to joint settlement than to unilateral action” by Dafni.

In my earlier post, I noted my hope that the Federal Circuit would reach the substantive issues that focused on the role of secondary considerations in obviousness determinations and whether Dafni had established the required nexus between the evidence of industry praise and acceptance and the claimed invention. The mootness conclusion precludes that analysis.

Dafni had originally sued Ontel for infringing several different patents. Ontel successfully petitioned for Inter Partes Review (IPR) of one, US9877562, and the district court agreed to stay litigation pending outcome of the IPR.  Rather than waiting for that outcome, Dafni, with cooperation from Ontel, entered a stipulated dismiss of the ‘562 infringement allegations. The basic idea was that by removing that patent out of the queue, the case asserting US9578943 could move forward.  Dafni eventually won the IPR with a PTAB final written decision holding that the claims had not been proven invalid.  Ontel appealed, but the Federal Circuit has now dismissed the appeal as moot.

In explaining why Ontel lacked a concrete stake in the appeal, the court emphasized that “Dafni’s prior ’562 patent-infringement claim against Ontel is no longer pending” and that Dafni’s “disclaimer of any right to challenge the district court’s order dismissing the claim of infringing that patent (including by seeking to reinstate the ’562 patent-infringement claim), precludes any new assertion of that patent against Ontel.” Further, Ontel provided no “evidence of planned or likely future conduct that could risk potential-infringement liability” and identified no “relevant contractual rights” affected by the PTAB decision.

The court rejected Ontel’s assertion that it had an interest in preventing Dafni from relying on the PTAB decision regarding the ’562 patent in separate litigation involving Dafni’s ’943 patent. As the court explained, issue preclusion does not apply to unappealable PTAB decisions, and “the potential for collateral consequences” of the PTAB’s conclusions is insufficient to supply standing. Quoting Best Medical International, Inc. v. Elekta Inc., 46 F.4th 1346, 1353 (Fed. Cir. 2022)

Having found the dispute over the ’562 patent moot, the court next considered the proper disposition—whether to simply dismiss the appeal or also vacate the PTAB decision under United States v. Munsingwear, Inc., 340 U.S. 36 (1950). As the Supreme Court has made clear, “[v]acatur is in order when mootness occurs through happenstance—circumstances [either] not attributable to the parties [or attributable to] the ‘unilateral action of the party who prevailed in the lower court.” Arizonans for Official English v. Arizona, 520 U.S. 43 (1997). However, “mootness by reason of settlement does not justify vacatur.” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18 (1994).

Here, the court found Dafni did not unilaterally cause mootness but rather the case “became moot through actions that are closer to joint settlement than to unilateral action.”  The court highlighted a joint stipulation dismissing the ’562 patent claims, Ontel’s opposition to reinstating those claims, and Dafni’s ultimate disclaimer of any right to challenge that dismissal order. Exercising its “equitable discretion,” the Federal Circuit declined to also vacate the PTAB decision upholding the ’562 patent claims.

by Dennis Crouch

An increasing number of foreign defendants are being sued for IP infringement in US courts.  These cases raise important procedural questions of district court personal jurisdiction over the foreign defendants. One ongoing debate involves proper service of process for foreign defendants under the Hague Service Convention.

Freedom Patents LLC v. TCL Electronics provides some interesting nuance.  The case was filed in E.D.Tex before Judge Mazzant with Freedom Patents suing TCL companies located in the China, Hong Kong, and Vietnam for infringing its antennae patents, including US8284686.

Several defendants challenged the propriety of service of process, and moved to dismiss under Federal Rule of Civil Procedure R. 12(b)(5) (“insufficient service of process”).  Judge Mazzant initially delayed any ruling on the motion, but after the TCL companies petitioned for mandamus, he eventually issued his split decision in the case — ultimately finding that the HK and Vietnamese defendants had been properly served, and providing a simple mechanism for serving the PRC China-based defendants (delivering the summons to their US attorneys). [Mazzat Order on Service of Foreign Defendants].

Texas law provides a mechanism for service of process of non-Texas-residents who engage in business in Texas, but without a regular place of business or a designated agent.  This substitute service process is that the Texas Secretary of State legally serves as the designated agent for foreign defendants conducting business within the state who have not already established a registered agent. Here, the plaintiff alleged that each of the defendants were conducting business in the state of Texas without any designated agent. This allowed the plaintiff to serve the Texas Secretary, he then forwarded a copy of the summons to each defendant.

Although all of the defendants received actual notice, they still complain that they were not formally served and therefore are not subject to the Court’s jurisdiction. TCL Vietnam argued that it does not engage in business in Texas, and therefore the Texas approach is improper. The Hong Kong and PRC defendants argued that the approach did not comport with the Hague Convention.

TCL Vietnam: Texas law defines ‘doing business’ within the state to include committing a tort in the state.  Here, the sale of infringing product in the state is patent infringement — a tort. Although TCL Vietnam is not necessarily the importer or seller within the US, prior Texas cases have have held that a foreign manufacturer  is doing business in the US by producing products with plans for them to be sold in the US, and then putting them into the stream of commerce in a way that sends them to the US.  Based upon this line of reasoning along with the patentees factual allegations, Judge Mazzant found that the patentee had shown enough to conclude TCL Vietnam was doing business in the US. And, therefore, that the service was proper.

The PRC and Hong Kong defendants raised a second issue — that the transmission of documents from the Texas Secretary of State to their offices in PRC and Hong Kong implicates the Hague Convention.

On this point, the patentee disagreed and argued that it served the defendants’ legally designated agent in the State of Texas, a domestic service. And therefore, that the Hague Convention has no applicability since it only addresses foreign service.

FRCP 4(h) governs service of process for corporations, including foreign corporations.  A foreign defendant being served within the US may be served by “following state law for serving a summons” as it would be done in state court in that district. See 4(h)(1)(A) referring to 4(e)(1).  The patentee argues that this is what is happening — that the foreign defendants are constructively in the state of Texas via their legally designated agent and therefore can be served in the manner permitted by Texas law.   On the other hand, a foreign defendant being served outside of the US can be served “by any internationally agreed means … reasonably calculated to give notice, such as those authorized by the Hague Convention.” R.4(f)(1). The rule for international service also gives district courts latitude in determining the means of service so long as “not prohibited by international agreement” so long as reasonably calculated to notify the defendants. R.4(f)(3).  The defendants point here though is that service of foreign defendants outside of the US requires consideration of international agreements, namely Hague.

After reviewing these issues, the district court sided with the defendants, concluding that “when a signatory to the Hague Convention is served through the Texas Secretary of State, the Hague Convention is implicated.”  Primarily here, the court concluded that due process considerations should be incorporated into the rule — and so it makes sense to ensure that the notice is reasonably calculated to reach the defendants.  Normally, a party is deemed served if their designated agent is properly served. Here, however, because we have involuntary agent created by law, due process requires an additional step – that the agent then forward the materials to the defendant in a way calculated to achieve notice.  Because this international forwarding is part of the service process, the rules of international service (i.e., Hague) are implicated.

At the next inquiry, the court looked to see whether the actions — mailing from the  Texas Secretary comport with Hague.  Now the actual Hague process is fairly slow and cumbersome. The plaintiffs instead successfully argued that the service should be deemed to pass muster so long as it is reasonably calculated to put the defendant on notice and is not contrary to any international agreement such as Hague.

• With regard to Hong Kong, the court concluded (contrary to defendants arguments) that Hong Kong continues to permit service by mail. “In their Motion, Defendants stated ‘service of process by mail is not allowed in . . . the Hong Kong SAR.’ This is false.”
• With regard to PRC, the court found that China has expressly objects to service by mail.

When incorporated into the Hague analysis, these contrary results allowed the court to find that service by mail from the secretary of State was proper in Hong Kong as well as Vietnam. On the other hand, the service by mail to PRC defendants was improper.

In the case, Plaintiffs requested alternative relief — allowing service of process through an alternative means.  Namely, the court noted that the PRC defendants had hired US counsel and that it would be proper to serve those defendants via their US attorneys. Although Hague does not proved for service to US Counsel, it also does not prohibit that approach that the court found would be reasonably calculated to provide notice.

The defendants have moved for reconsideration — arguing the order contains clear errors of law creating “manifest injustice”if allowed to stand.

First, the defendants contend that even if Hong Kong generally permits mail service, substituted service on the Hong Kong defendants through the Texas Secretary of State was improper because they do not engage in business in Texas as required by Texas law.  (Judge Mazzant seems to have skipped that initial issue for PRC/Hong Kong defendants).

Second, the defendants argue that alternative service on the China-based defendants through their U.S. counsel would violate principles of international comity.  The key Federal Circuit case on point is the non-precedential In re Oneplus Tech. Co., No. 2021-165, 2021 U.S. App. LEXIS 27282, at *9-10 (Fed. Cir. Sep. 10, 2021).  In Oneplus, the court explained that “even when other methods of obtaining service of process are technically allowed, principles of comity encourage the court to insist, as a matter of discretion, that a plaintiff attempt to follow foreign law in its efforts to secure service of process upon defendant.”  Id. The delay caused by proper Hague service is not sufficient justification.

by Dennis Crouch

In the pending appeal of In re Chestek, PLLC, No. 22-1843, a trademark applicant is opposing the USPTO requirement that all applicants must disclose their domicile address. This requirement, referred to as the “domicile address rule,” has been controversial since the USPTO adopted it in a 2019 rulemaking. For individuals, this rule requires an actual residential address.  See Requirement of U.S. Licensed Attorney for Foreign Trademark Applicants and Registrants, Final Rule, 84 Fed. Reg. 31498 (July 2, 2019).  The outcome could have significant implications for privacy and transparency in the trademark registration system.  For a variety of reasons, many people do not publicly disclose their place of residence. In the US, the most common reasons stem from domestic violence and stalking. Although the USPTO is attempting to offer a mechanism to protect domestic residence from public view, it also recently had a major data loss of that information — and effectively all domestic residence information is available in various sources online.  A decision favoring the petitioner would also be seen as bolstering the Administrative Procedure Act’s notice and comment requirements.

The best place to begin any analysis is probably with the statute. The key trademark statute followed by the USPTO is the 1946 Lanham Act.  Although the Act has been amended numerous times, since its original passage it has expressly required applicants to provide their domicile when applying for a federal trademark registration.  “The application shall include specification of the applicant’s domicile.” 15 U.S.C. § 1051(a)(2).  From the statutory standpoint, this is seemingly open and shut. But, for undisclosed reasons, the USPTO never enforced this statutory requirement by requiring the actual permanent place of residence rather than simply a mailing address.

USPTO apparently saw no need for rigorous enforcement until fraudulent foreign applications surged, raising concerns over phony addresses and shell entities.  As the agency was battling fraudulent trademark application filings, it concluded that the domicile disclosure could serve as an important tool — especially with regard to the “U.S. Counsel Rule” that requires foreign trademark applicants to designate a U.S.-licensed attorney as their representative. According to the agency, over 18,000 fraudulent trademark applications have been terminated and over 3,000 registrations sanctioned since 2019 for violations of the U.S. Counsel Rule. The USPTO maintains that scammers often provide fake U.S. mailing addresses, so verifying an applicant’s domicile is crucial to combat this fraud.

While the Lanham Act does not define “domicile,” the USPTO’s 2019 rulemaking defined it as the “permanent legal place of residence of a natural person or the principal place of business of a juristic entity.” 37 C.F.R. § 2.2(o).  Unlike traditional mailing addresses, these domicile addresses cannot be post office boxes. The USPTO states that because trademark counsel may change over a registration’s lifetime, having an applicant’s domicile helps confirm whether foreign applicants still must have U.S.-licensed representation.

The appellant in the case, Chestek PLLC, declined to provide its domicile address to the USPTO. Instead, Chestek provided a P.O. box mailing address in its trademark application. Citing privacy concerns, Chestek argued that the domicile address requirement was imposed improperly through the 2019 rulemaking.  I’ll note here that Chestek PLLC is the law firm owned by trademark attorney Pam Chestek.

Although the USPTO may have the statutory authority to demand domicile disclosure, Chestek argues that the agency must still work through the proper APA procedures before requiring the disclosure. And if followed correctly, the notice-and-comment process would have allowed likely led to critical public statements explaining why the disclosure rule is bad policy as well as suggestions for addressing the foreign-filing problems while mitigating the privacy issues.

In the briefing, Chestek noted that the original notice of proposed rulemaking did not say anything about domicile disclosure requirement or any notice that the proposed rule might require the disclosure.  This, according to Chestek, violated the Administrative Procedure Act’s (“APA”) notice-and-comment requirements. Chestek argues that the proposed rule disclaimed any new reporting requirements or any impact on domestic applicants. Chestek also argues that the final rule requiring domicile addresses is arbitrary and capricious because the USPTO provided no substantive explanation for the change between the proposed and final rules.

David Boundy filed an amicus brief arguing that the domicile address rule violates multiple federal laws governing agency rulemaking, not just the APA’s notice and comment requirements raised by Chestek. In his brief, Boundy explains that the Paperwork Reduction Act requires robust cost-benefit analysis before agencies can collect new information — an analysis skipped by the USPTO.  Boundy also alleges the USPTO evaded the Regulatory Flexibility Act’s mandate to analyze impacts of rules on small businesses. He notes most small trademark firms would be affected by the domicile requirement, yet the USPTO never considered resulting costs. Boundy ultimately contends such omissions reflect a consistent pattern of administrative law violations in recent PTO rulemakings.

In multiple recent rulemakings, the PTO has silently skipped steps, claimed exemptions from these laws for reasons that are transparently false, or claimed to be exempt for reasons having no basis in the written law. . . . [T]he domicile address rule is part of a pattern. The pattern includes errors of omission, errors of objectively false statements, and one rule where the PTO was blocked from going forward by regulation—so the PTO flew the same rule under the regulatory review radar as subregulatory “guidelines.” These statements are made to ex parte tribunals, and each has the effect of evading analysis and work that Congress required agencies to do in order to assure that the agency’s rules are in the public interest. Because the PTO’s actions in this case are part of a consistent overall pattern, the Court may fairly infer that the PTO intended to evade the law in this case.

Boundy Brief.

The Federal Circuit heard oral argument in the case in early December 2023, with Chestek’s attorney, Andrew Grossman, arguing that the domicile address requirement disproportionately affects victims of domestic violence and other at-risk individuals. He stated that the USPTO failed to consider alternatives like exempting applicants who already designated U.S. counsel.

The USPTO’s representative, Mary Beth Walker, countered that the final rule logically flowed from the proposed rule’s focus on using domicile to determine if foreign applicants had engaged U.S. counsel. “[I]t was obvious from the NPRM that to administer the requirement for foreign-domiciled filers to be represented by U.S. counsel, the USPTO would need and could require all filers to provide their domicile address. The changes to the final rule text merely clarified that fact.” Associate Solicitor Walker also contended that any applicant wanting to raise privacy concerns could have commented during the rulemaking process.

Federal judges generally take domicile privacy quite seriously because of the repeated historic threats.  In oral arguments the judges acknowledged the privacy risks.  In addition, the judges repeatedly questioned USPTO counsel about the lack of explicit justification for the requirement within the rulemaking and questioned the ‘logical outgrowth’ argument.  That said, the judges also seemed open to the PTO arguments that the domicile requirement was a simple procedural change necessary to implement the US Counsel Rule and that the requirement was “reasonably discernable” from the original notice.   So, bottom line is that it is difficult to predict the outcome of this particular case.

by Dennis Crouch

The Federal Circuit has granted a large number of mandamus petitions in order to move cases out of Judge Alan Albright’s W.D.Tex. courtroom based upon the inconvenience felt by large multinational defendants.  On December 14, 2023, the appellate court once again took the extraordinary step, this time on behalf of Samsung, of granting a petition for a writ of mandamus, ordering the infringement lawsuit to be transferred to the Northern District of California.  In re Samsung Elecs. Co., Ltd., No. 2023-146 (Fed. Cir. Dec. 14, 2023).

For convenience transfer motions under 28 U.S.C. 1404(a), the Federal Circuit follows the law of the particular regional circuit court of appeals. Because most of these cases stem from Texas, this means the Fifth Circuit who recently established further precedent the copyright case In re TikTok, Inc., 85 F.4th 352 (5th Cir. 2023).

The Fifth Circuit in In re TikTok granted TikTok’s petition for a writ of mandamus, directing the Western District of Texas to transfer a copyright infringement case brought against TikTok by a Chinese company to the Northern District of California. The court applied the test for mandamus review of improper venue decisions established in In Re Volkswagen, requiring the movant to show the transferee venue is “clearly more convenient.” After analyzing each of the eight court created private and public interest factors that govern transfer, the Fifth Circuit concluded that the district court’s denial of transfer amounted to a clear abuse of discretion leading to a patently erroneous result.

Specifically, in TikTok, the Fifth Circuit found the district court erred in weighing the witness convenience and ease of access to proof factors against transfer, since the key evidence and witnesses were predominately located in China and California. It also critiqued the district court’s reliance on post-motion case progress to deny transfer as an abuse of discretion, where the court itself was responsible for delay in deciding the transfer motion. Since multiple factors favored transfer and none favored the plaintiff’s chosen venue, the Fifth Circuit granted mandamus directing the Western District of Texas to transfer the case.

In Samsung, the Federal Circuit followed-in-suit and ordered Samsung’s case to be transferred.  One key factor in the case has to do with travel time from potential Korean witnesses, and the Federal Circuit concluded that the NDCA was much more convenient as a travel destination from Korea:

The Fifth Circuit recently rejected similar reasoning in In re TikTok . . . . Because most of the potential witnesses here are in Korea and NDCA, transfer would greatly reduce the time and inconvenience of travel. As in TikTok, the presence of some [party] employees in Eastern Texas . . . ‘cannot overcome the immense inconvenience that the majority of relevant witnesses would face if this case were to be tried in’ WDTX.

Samsung at 4.  The court here does not provide its factual basis for explaining why traveling from Korea to NDCal is immensely more inconvenient than Korea to Texas, and has previously rejected the use of travel distance as a key factor — especially in situations like patent cases that will typically involve an extended trial.

Judge Albright had also noted that party witnesses were willing to travel to Texas — even if located in Korea or California.  On Mandamus, the Federal Circuit that “[t]he Fifth Circuit recently rejected similar reasoning” in TikTok.

This decision continues a trend of the Federal Circuit relying on mandamus to repeatedly overturn Judge Albright’s refusal to transfer cases out of his WDTX courtroom. Both the outcome and the tone of In re Samsung signals that the Federal Circuit remains skeptical of plaintiff-preferred venues that lack meaningful connections to patent disputes.

by Dennis Crouch

Acadia Pharms v. MSN Pharms, 20-cv-00985-GBW (D.Del. December 13, 2023) [SG No OTDP]

I have been writing some about obviousness-type double patenting and thought I would continue the process with this important new decision from Judge Williams denying the generic competitor’s motion for summary judgment of invalidity based upon double patenting, and, in fact, granting the patentee’s summary judgment of no invalidity. The case involves an attempt by generics to begin marketing a generic version of Acadia’s Parkinson’s drug Nuplazid (pimavanserin).  This will be an interesting appeal to watch.

At the summary judgment stage, the parties filed competing summary judgment motions focusing on whether one patent being asserted (US7601740) should be held invalid based upon obviousness-type double patenting (OTDP).  This is a ‘patricide’ situation where the reference patent (US9566271) was both later filed and later issued.  Because of the standard 20-year patent term calculation, both would ordinarily expire on the same day. However, the because of patent term adjustment (and PTE), the earlier ‘740 patent actually expires years later.

In its decision, the court offered two alternative justifications for siding with the patentee, which I’ll discuss in reverse order:

No Patricide: First, the court held that the ‘271 patent does not qualify as a proper OTDP reference against the earlier-filed and earlier-issued ‘740 patent.  The court noted that it could not find any case that allowed a later-filed and later issued patent to invalidate an earlier one under OTDP.  “The Court has been unable to identify a case where, when challenged, a later-filed, later-issued, earlier-expiring patent was used as an OTDP reference to invalidate an earlier-filed, earlier-issued, later-expiring patent. Here, the claims in the challenged patent were earlier-filed and thus are entitled to their full term, including the PTA.”  The Federal Circuit just recently explained in its Cellect decision that “claims in the challenged patents are entitled to their full term, including the duly granted PTA, unless they are found to be later-filed obvious variations of earlier-filed, commonly-owned claims.” In re Cellect, No. 2022-1293, 2023 WL 5519761 , at *10 (Fed. Cir. Aug. 28, 2023).

While I identified this case as “patricide,” I see some problem with that statement because both patents claim priority back to the same original effective filing date and (I believe that) the claims in the reference patent were part of the originally filed application.  Thus, the two should probably be seen as simultaneously filed rather than sequentially, even though one was formally filed prior to the other.

The district court held that because the ‘740 patent was earlier-filed, the ‘271 patent could not serve as a proper OTDP reference against it. As the court concluded, “Because a patent must be later-filed to be available as an OTDP reference, the Court finds that the ‘271 patent does not qualify as a proper reference against the ‘740 patent.” Allowing the later-filed ‘271 patent to invalidate the ‘740 patent would contradict both precedent and the purpose of preventing unjustified patent term extensions.

I will also note here that there are a number of pre-GATT cases that do apply OTDP using later-filed applications as a reference, but that was a different time when patent term was measured from the issue date. The Federal Circuit finally signaled a shift in Gilead Scis., Inc. v. Natco Pharma Ltd., 753 F.3d 1208 (Fed. Cir. 2014), cert. denied, 135 S. Ct. 1530 (2015) and distinguished the issue-date focus of the classic Supreme Court case of Miller v. Eagle Mfg. Co., 151 U.S. 186 (1894).  See also, Daniel Kazhdan, Obviousness-Type Double Patenting: Why It Exists and When It Applies, 53 Akron L. Rev. 1017, 1038 (2019) (“Now, however, only the expiration date mattered.”).

Later cases have continued to compare filing dates as part of the OTDP analysis. However, this approach skips over Judge Chen’s key reasoning in Gilead that focused on the patent expiration date and whether that was being improperly extended.  Chen wrote “looking to patent issue dates had previously served as a reliable stand-in for the date that really mattered—patent expiration. . . . [T]hat tool does not necessarily work properly for patents to which the URAA applies, because there are now instances, like here, in which a patent that issues first does not expire first.”  Gilead.  The nuance here when applied to Acadia is that Judge Williams appears to have obtusely focused on the filing date while ignoring “the date that really mattered—patent expiration.”  In Gilead, the first issued patent had a longer patent term because it was later filed and thus was subject to OTDP comparison to a later-issued patent. But the key here for the court was not the filing date, but rather the expiration dates — that the patentee had two patents covering obvious variants expiring on different dates.  That is the same situation the court faced in Acadia, but Judge Williams was unwilling to move beyond the formalist filing date consideration.

Its a Divisional: Judge Williams offered a second, alternative reasoning for excluding the asserted reference patent from consideration — holding that the reference patent was protected by the safe harbor of Section 121.

In some cases, the USPTO will issue what is known as a “restriction requirement” forcing the patent applicant to divide up a particular application into separate parts. A common example may involve a patent application claiming a particular chemical compound and a method of making that compound.  The examiner will likely see those as two separate inventions and force them to be divided.  In that situation, the patent applicant might maintain the compound claims in the original application and then file a “divisional application” to protect the methods of manufacture.  Section 121 provides a safe harbor for this situation such that the two family-member patents/applications cannot serve as references against one another.

Section 121 is written as a fairly dense paragraph of text, but it appears to have a couple of important requirements for the safe-harbor to kick-in:

1. The divisional application must be “filed as a result of” the restriction
   requirement on another application; and
2. The divisional application must be “filed before the issuance of the patent on the other application.”

Based upon the peculiar facts of this case, MSN argued that neither of these requirements had been met.  Eventually, Judge Williams disagreed and found the divisional safe harbor serves as a second alternative justification for finding no double patenting.

Acadia filed its application that led to the ‘740 patent back in 2004 (this is the patent at issue in the case).  Three years later, the USPTO issued a restriction requirement and Acadia elected a subset of claims that eventually issued in October 2009. Unlike the continuation applications that we’ll talk through, the ‘740 was delayed at the USPTO and so issued with about 3 years of patent term adjustment beyond the ordinary 20 year term as part of the patent term guarantee offered by Congress.

Meanwhile, one year before the restriction requirement, Acadia had already filed a continuation from the ‘740’s application (not a divisional).  That continuation was pending and prosecution was moving forward with a restriction requirement. Rather taking the typical response and election in the continuation case, Acadia took a series of steps: (1) it cancelled the pending claims; (2) presented a new set of claims that corresponded to those reserved from the ‘740 restriction; and (3) told the examiner that it planned to change the case to a divisional. All this occurred in July 2009, a few months before the original application issued in October 2009.  It was not until 2010 that Acadia actually amended the specification to formally identify the application as a divisional six months after the ‘740 patent had already issued.  At that point, the patentee filed a series of continuations from the newly-designated divisional that eventually resulted in the ‘271 patent — the patent MSI argues properly serves as the reference for invalidating the earlier issued ‘740 patent.

With this history in mind, MSI argued that neither of the two statutory safe harbor requirements were met.

1. There was no application filed “as a result of a restriction requirement.”  Rather, the application that became a divisional was filed prior to the restriction requirement.
2. The application did not become a divisional until after the original application issued — impermissibly late.

The district court rejected these arguments as misconstruing the statutory requirements. In particular, it first held that amending an application to comport with the restriction requirement constitutes “filing as a result of” for the purposes of the Section 121 safe harbor. See Union Carbide Corp . v. Dow Chem. Co., 619 F. Supp. 1036 (D. Del. 1985).  Further, the court concluded the particular amendment changing the filing type to “divisional” was not the key requirement. Rather, the question is was simply whether the application ultimately complied with and reflected the restriction requirement, which the court found was satisfied here.  Here, it was enough that the patentee amended the claims to align with the restricted groups of inventions and informing the examiner of the intent to have the application be a divisional in compliance with the restriction requirement.

121 safe harbor. As the district court stated, “an amended application is one ‘filed as a result of such a requirement”‘ when the claims are amended to reflect the restricted groups of inventions. Since Acadia amended the ‘271 patent application to align with the restriction requirement, the timing of the original filing date was irrelevant.

MSN also argued that the ‘271 patent application did not effectively become a divisional application until after the ‘740 patent issued, which was impermissibly late. However, the district court found this would conflict with the Federal Circuit’s guidance that Section 121 is “not concerned with . . . how any such applications are filed” but rather just requires “consonance with the restriction requirement.” The district court determined when the divisional status was effectuated was not controlling for the safe harbor analysis. The key question was simply whether the application ultimately complied with and reflected the restriction requirement, which the court found was satisfied here.  With these nuances, the district court concluded that Acadia’s convoluted process satisfied the 121 requirements and thus that the safe harbor prevents the ‘271 patent from being used as a OTDP reference against the ‘740.

= = =

Of some interest in the case is that Acadia recently filed what it terms a “contingent terminal disclaimer” with the USPTO for the ‘740 patent.  The terminal disclaimer is contingent on the ‘740 patent claims being found invalid for obviousness-type double patenting over the reference ‘271 patent. In other words, by its terms the disclaimer only takes effect if a final court decision holds the ‘740 claims invalid for obviousness-type double patenting over the ‘271 patent and that decision is not appealed.  If that contingency were to occur, Acadia disclaims the terminal part of the ‘740 patent term that would extend beyond the expiration date of the full statutory term of the ‘271 patent (not including PTE).  As a second double contingency, the filing states that in a situation where the ‘740 is found to be double-patenting and also the contingent terminal disclaimer is found impermissible/void, then the disclaimer automatically converts to a non-contingent terminal disclaimer.  [51414_10759561_11-21-2023_DIST].  The USPTO generally does not permit contingent terminal disclaimers in order to overcome an OTDP rejection. Here, however, the patent has already issued and so the TD was simply put in the file wrapper. In my view it is unlikely to be effective.

by Dennis Crouch

This post gets into some weeds about obviousness type double patenting stemming from the Federal Circuit’s new decision in Institut Pasteur.  Although non-precedential, the decision signals that the doctrine remains strong (and strict). The decision cements that for OTDP analysis, any comparison of unexpected results or long-felt need must be made to the applicant’s own earlier patent claims, not the closest “prior art.”  The court also endorsed reliance on inherency to satisfy claim limitations not found in earlier claims.

I’ll note here en banc petition briefing continues in the OTDP/PTA case of In re: Cellect, LLC.  Cellect’s petition has been supported by 10 amicus briefs. The PTO responsive brief is due December 14, 2023.

The Federal Circuit recently affirmed a PTAB rejecting claims in a patent application filed by Institut Pasteur on the ground of obviousness-type double patenting. In re: Institut Pasteur, No. 2022-1896 (Fed. Cir. Dec. 13, 2023) (non-precedential). This case provides additional insight into the doctrine of obviousness-type double patenting and the ongoing high bar set by the Federal Circuit for overcoming such rejections.  Opinion by Judge Clevenger, joined by Judges Taranto and Stoll.

Obviousness-type double patenting is a judge-made doctrine designed to prevent applicants from extending patent rights first obtaining an earlier-expiring patent and then obtaining a later-expiring patent with claims that are obvious variants of those in the earlier patent. The policy goal is to prevent unjustified timewise extension of exclusive patent rights.  The doctrine was particularly relevant for patent applications filed prior to 1995 because patent term was calculated at 17 years after patent issuance. Today, patent term starts ticking as soon as the patent application — making it much more difficult to stagger patent rights in order to evergreen protection. (Note that one way to differentiate patent timing is through PTA — and that is being challenged in the Cellect case discussed above.) In addition, the doctrine is designed to protect potential defendants from unfairly facing multiple infringement lawsuits.

The Gap in 102 for Self-Harming Prior Art: Everyone knows that you cannot obtain a patent that merely claims an obvious variant of the prior art. 35 U.S.C. 103. Section 102 of the Patent Act defines prior art, and includes an important exception that is incredibly relevant to the OTDP situation. In particular, we know that the first-inventor-to-file provision found in 102(a)(2) spells out, as the name suggests, that a prior-filed patent application (once it becomes public) will serve as prior art against a later filed patent application. The important exception for OTDP purposes is that Congress limited the first-to-file provision of 102(a)(2) to applies only in cases where the two competing patent applications name different inventors and are owned by different entities. In other words, Congress carved out an exception such that your own earlier-filed patent application does not qualify as prior art that could invalidate your later-filed application under 102(a)(2), even after the earlier application publishes.  Although this analysis uses post-AIA statute, the limited protection for applicants against self-harming prior art also existed in the pre-AIA statute.

What we have here is a gap in the scope of prior art within the statute associated with the patentee’s own pre-filing activities. Courts have acknowledged that these filings by patent applicants are not prior art under the statute, but recognize policy concerns that justify limiting applicants’ rights anyway. Specifically, courts want to prevent applicants from unjustly extending patent protection with repetitive filings on obvious variants of their own inventions. Additionally, courts are concerned that separated patents (especially if ownership is separated) could put defendants at risk of facing multiple lawsuits asserting what is essentially the same invention.

The judge made solution then is to act in equity to bar an applicant from obtaining or enforcing to patents that are obvious variants to one another unless the patent applicant has filed what is known as a terminal disclaimer that disclaims any potential extra patent term in the later-issuing patent and that also promises to keep the two patents under the same ownership.  Applicants who fail to file such a disclaimer can find their applications refused by the PTO or found unenforceable by the courts.

Ordinarily, obviousness analysis compares a claim against prior disclosures.  OTDP is different.  In OTDP, the policy concern is focused on obtaining two patents whose claims are too close to one another.  Thus, the OTDP analysis compares the two sets of claims and asks whether one set is an obvious variant of the other.

In Institut Pasteur, the patent applicant filed a patent application in 2015 directed to methods of treating pain by administering opiorphin. The examiner rejected the pending claims as obvious over the claims of a different Pasteur patent directed to similar methods of pain treatment using the same peptides, and that had been filed the year before, in 2014.

Before the Board, Pasteur argued that OTDP should not apply — arguing that its 2015 applicant claimed claimed methods that were significantly different from those in the 2014 patent. In particular, the 2015 applicant required administration of the peptides for seven days without inducing drug dependence or tolerance, whereas the 2014 patent did not specify any particular duration of treatment or recite the lack of dependence/tolerance.  The PTAB rejected that distinction and instead affirmed the examiner’s rejection, finding that the 2014 patent embraced treatment of chronic pain, so it would have been obvious to administer the therapy for over seven days. The Board also found that avoiding dependence/tolerance would be an inherent result of carrying out the methods of Pasteur’s earlier 2014 patent.

On appeal, the Federal Circuit affirmed the Board’s decision strictly applying obviousness-type double patenting. The court reiterated that when unexpected results are used to rebut a prima facie case of obviousness, those results must be shown to be unexpected compared to the closest prior art (here, Pasteur’s 2014 patent).  In re Baxter Travenol Labs., 952 F.2d 388, 392 (Fed. Cir. 1991). Pasteur failed to make that comparison. The court also endorsed the Board’s use of inherency to fill in the missing claim limitation of dependence/tolerance as part of the obviousness analysis.  The trick here that the court played, is that this “closest prior art” precedent comes from ordinary obviousness cases, not OTDP cases.  See Baxter.   And, as you recall, Pasteur’s 2014 patent is not prior art. Here, the court made the leap that it should effectively be treated as prior art for all aspects of the OTDP obviousness analysis, including both evidence of unexpected results and secondary considerations of nonobviousness.

Regarding secondary considerations, the Federal Circuit affirmed the Board’s dismissal of Pasteur’s long-felt need evidence. Pasteur had argued there was a long-felt need for pain medication that avoids issues of drug tolerance and dependence. However, the court endorsed the Board’s finding that any such need was already satisfied by Pasteur’s 2014 patent claims. In other words, in obviousness-type double patenting, where reference claims satisfy a long-felt need, that need does not constitute objective evidence for a later patent’s claims of non-obviousness over the reference claims.

During oral arguments, Salvatore Arrigo argued on behalf of Institut Pasteur before the panel of Judges Taranto, Clevenger, and Stoll.  Arrigo emphasized that unexpected results are an “integral part” of determining obviousness under Graham v. John Deere. He argued that the unexpected lack of tolerance and dependence when administering the claimed peptide for 7 days should be considered in the prima facie obviousness analysis, before reaching a conclusion on obviousness:

You have to look at the unexpected results first to figure out if it’s obvious. If you don’t, it’s always an expected results are always going to be inherent 100 percent of the time because you’ve already reached obviousness before considering. It’s part of the obvious analysis to get there.

The judges questioned whether the proper comparison should be to morphine or to the closest prior art, the claims of the ‘871 patent. Mr. Arrigo maintained morphine was the appropriate comparison “because the prior art is just this giant genus and no one within that genus ever did anything that would have shown this unexpected result.”  In its decision, however, the Federal Circuit rejected this analysis — holding that for OTDP analysis, any unexpected results must be in comparison to the company’s other patent being analyzed.