Guest Post: DABUS Gains Traction: South Africa Becomes First Country to Recognize AI-Invented Patent

Guest Post by Meshandren Naidoo and Dr. Christian E. Mammen

A world first – South Africa recently made headlines by granting a patent for ‘a food container based on fractal geometry’ to a non-human inventor, namely an artificial intelligence (AI) machine called DABUS.

Over the past three years, the AI algorithm DABUS (short for Device for the Autonomous Bootstrapping of Unified Sentience) and its team of supporting humans, including Dr. Stephen Thaler and Prof. Ryan Abbott, have made headlines around the world as they sought patent protection for a fractal-inspired beverage container (shown below) that they contend was invented by DABUS.

Notably, their application has been denied by the United States Patent and Trademark Office (USPTO), the United Kingdom Intellectual Property Office (UKIPO), and the European Patent Office (EPO).  The grounds for rejection have included a mix of procedural formalities, formal legal requirements, and theoretical objections.  The procedural formalities and formal legal requirements, which have been equally important to the theoretical questions in these decisions, are sometimes overlooked in the popular media.  They include such issues as whether (and how) Dr. Thaler obtained authorization from DABUS to file the patent application, and whether the patent statutes include a requirement that inventors be human.  Each of these three jurisdictions found sufficient reasons in these formalities to reject DABUS’ patent applications.  In addition, the EPO focused on the broader question of legal personhood: namely, that a number of other rights and obligations are attendant upon being an inventor, and unlike humans, an AI lacks the legal personhood to discharge those obligations and exercise those rights.  The UK courts reasoned similarly, noting that an AI lacks the capacity to hold property, and therefore could not have authorized Dr. Thaler to act on its behalf.  The USPTO emphasized that under US law invention requires “conception” followed by reduction to practice, and reasoned that “conception” requires a theory of mind that is simply not established to be present in an AI.

Critics of those decisions have emphasized the role of patenting as a part of national industrial policy, and in particular the role of patent grants in encouraging innovation.  With increasingly capable AI algorithms, the argument provides, the ability to innovate is shifting from an exclusively human domain to one that includes the algorithms, and modern industrial policy needs to encourage and reward that shift.

These same factors appear to have come into play in the South African decision, though to a clearly different outcome.

The pitfalls of formal examination in South Africa

In July 2021, South Africa’s patent office, the Companies and Intellectual Property Commission (CIPC), granted the South African DABUS patent application, which was published in the South African Patent Journal. Unlike the USPTO, UKIPO and EPO, the CIPC does not conduct a more thorough interrogation of patent applications, known as substantive search and examination (SSE).  Instead, all that is required in a formal examination (also known as a registration-based system) is for the application forms and fees to be in order with the specification documents attached. If these affairs are in order, the patent will summarily be granted by the CIPC. This, along with the lack of information provided by the CIPC post-grant has led to criticism directed towards its non-examining nature. This limited review for compliance with the procedural formalities appears to have reached a different outcome than the USPTO, UKIPO and EPO, finding that Dr. Thaler is empowered to apply on behalf of DABUS. No further information has thus far been given by the CIPC relating to the grant. It should be noted however that the ongoing patent reform in South Africa provides for training and infrastructure upgrades to accommodate a shift towards implementing SSE.

Does substantive South African patent law preclude AI inventorship?

The South African Patent Act 57 of 1978 (Patent Act) does not define an ‘inventor’ hence it is arguable that the Patent Act could, or should, be interpreted to include AI. However, the Patent Act presents some challenges in doing so such as, inter alia, the requirement for the provision of names and addresses of inventors—the EPO cited a similar requirement in denying DABUS’ application. If the reasoning of the USPTO is followed, a further challenge to the DABUS patent in South Africa would be the ‘first and true inventor test’. Like the ‘conception’ test in American patent law – the object of the test is to determine the identity of the ‘devisor’ of the invention. With that said, it is open for the South African legal system to determine if the test, which was originally crystallised in South African law in 1902[1] (with not much development taking place between then and now) is a bar to AI inventorship. Whilst case law[2] which explains the test also refer to pronouns such as ‘he’ or ‘she’, South Africa could diverge from the USPTO and employ a more purposive approach to its interpretation (which is the Constitutionally recognised manner of interpretation) as opposed to a more textual one.[3] This statutory interpretation method would include broader considerations in the process such as (1) advantages posed by AI inventorship; (2) policy directives; (3) the fact that AI inventorship was unlikely to have been considered during the period when the test was originally developed and; (4) the object of the test is to determine the identity of the deviser of the invention in the event of disputes and the like – not to preclude other non-human entities from innovating.

Was granting the patent a mistake?

At first glance, it may appear that the DABUS patent was erroneously granted by the CIPC. Although there has been a shift towards digitization, the CIPC has struggled extensively in the past with infrastructure and administrative issues. But it may be premature to conclude that the granting was erroneous. The post-apartheid government foresaw the challenges associated with the exclusion of a large portion of citizens from economic participation, and central to the solution was science, technology, and innovation. This culminated in the White Paper on Science and Technology in 1996. Soon after, came many other strategic policies aimed at placing South Africa and its citizens in a stronger position. In 2019, the Presidential Commission on the Fourth Industrial Revolution and an updated White Paper on Science and technology was published – both of which highlighted the need for a technology-orientated approach to solving socio-economic issues.

Unfortunately, innovation (noted in the 2019 White Paper on Science, Technology, and Innovation) as measured in products produced and patent output from South African applicants in the country and in other jurisdictions via the Patent Cooperation Treaty (PCT) has remained ‘relatively flat’. Adding to this was policymakers’ concerns of ‘the brain drain’ – the emigration of skilled persons in search of better opportunities and environments.

In April 2021, a call for public comments on the proposed National Data and Cloud Policy in terms of the Electronic Communications Act 36 of 2005 highlighted three main points: (1) the South African Government aims to create an AI institute to assist with reformation; (2) the intention of this is to encourage investment in, and exploration of, AI as a means to achieve sustainable development goals and economic growth; and (3) AI is viewed as a solution to some of the capacity issues facing South Africa.

Thus, as a matter of national industrial policy, it is entirely possible that the grant of DABUS’ patent is fully consistent with the emphases on broad access, digital innovation, and support of science and technology generally.

An opportunity for South Africa?

Given that South Africa is currently undergoing major patent reform, South Africa’s policymakers may find that it would be prudent to capitalise on any presented advantages. Support for, and recognition of, AI inventorship could make South Africa an attractive option for investment and innovation and may also cause these systems to be viewed as a sustainable form of innovation. The path forward for South Africa is uncertain, but there are opportunities in recognising AI as an inventor that could aid in achieving the national policy goals. In doing so, South Africa may champion the Fourth Industrial Revolution and signal leadership to other countries. Indeed, in just the few days since the South African DABUS patent was granted, the Australian Federal Court appears to have followed suit, overturning a rejection of DABUS’ application by that country’s patent office and finding that recognizing AI inventorship would be “consistent with promoting innovation.”[4]

[1] Hay v African Gold Recovery Co 1902 TS 232 p 233.

[2] University of Southampton’s Applications [2006] RPC 567 (CA) paras 22–25.

[3] Bertie Van Zyl (Pty) Ltd v Minister for Safety and Security 2010 (2) SA 181 (CC) para 21.

[4] Josh Taylor, “I’m sorry Dave I’m afraid I invented that: Australian court finds AI systems can be recognised under patent law,” The Guardian (July 30, 2021) (

Mr Meshandren Naidoo is a Ph.D Fellow at the University of KwaZulu-Natal (South Africa) and member of the African Health and Research Flagship. His areas of interest are AI technology, intellectual property, business strategy, and bioethics.  His Ph.D involves looking at the challenges posed by AI technology to South African patent law and what the potential solutions may be.

Dr. Christian E. Mammen is an IP litigation partner with Womble Bond Dickinson in Palo Alto, CA.  He has practiced in San Francisco and Silicon Valley for over 20 years, and has held visiting faculty positions at a number of universities, including Oxford University, UC Berkeley Law School, and UC Hastings College of the Law.  He has written and spoken extensively on AI and patent law, including “AI and IP: Are Creativity and Inventorship Inherently Human Activities,” 14 FIU L. Rev. 275 (2020).

The authors confirmed  they did not receive compensation for this article and that they do not represent any clients that might be impacted by the article or the underlying decisions.  The views expressed by them in this article are solely their own.

The First Post-IPR Director Reviews are Denied

One of the topics to be discussed at tomorrow’s PPAC meeting is USPTO operations following the Supreme Court’s 2021 Arthrex decision.  In Arthrex, the Supreme Court created an additional layer of review by the PTO Director in Inter Partes Review (IPR) proceedings following a PTAB final written decision.  PTO Acting Director Drew Hirshfeld has considered the first two request for Director Review, and denied both requests. (IPR2020-00081 and IPR2020-00320).  It appears that the Director personally considered both cases rather than delegating the decision back to the PTAB or another Official.  Neither decision reach the merits but rather perfunctorily state:

It is ORDERED that the request for Director review is denied; and FURTHER ORDERED that the Patent Trial and Appeal Board’s Final Written Decision in this case is the final decision of the agency.

I expect that this approach will be the standard for almost all cases going forward.


Judge Albright will Keep the Google and Apple cases

In re Apple, 21-147 (Fed. Cir. August 4, 2021); In re Google, 21-144 (Fed. Cir. Aug 4, 2021)

Two mandamus cases regarding whether venue is proper in Judge Albright’s court in W.D. Texas.

Even though Apple has a $1 billion Austin Texas Campus and 8,000+ employees within the district, the company argued that litigating a patent case within the district would be truly inconvenient. In a prior decision, the Federal Circuit held that Apple’s extensive presence within the district should not be given much weight. In re Apple Inc., 979 F.3d 1332 (Fed. Cir. 2020). I would argue that decision was clearly wrong for convenient venue purposes.  The real answer here is that the plaintiff (Koss Corp) shopped for Judge Albright and the defendant is shopping for a different Judge (any other judge).  In a short opinion, the Federal Circuit has denied mandamus — finding that Apple did not show entitlement to the “extraordinary relief” of mandamus.

In Google, the court reiterated that “Google’s mere presence in the Western District of Texas insofar as it is not tethered to the events underlying the litigation is not entitled to weight in analyzing the local interest factor in this case.”  However, again the appellate court concluded that Google did not show that N.D.Cal. was clearly more convenient.

Timing of Interlocutory Appeal in Patent Cases

by Dennis Crouch

Mondis Tech. LTD v. LG Electronics (Fed. Cir. 2021)

This is an appellate procedure case focused on the timing of the notice of appeal.  The statute creates a hard 30-day deadline for filing a Notice of Appeal (NOA).  28 U.S.C. § 2107(a).  One difficulty though is that the statutory scheme muddies the water in terms of when to start counting.  The courts have previously figured out how it works for ordinary appeals — you get 30-days from the final judgment. But, there is a special statute that allows interlocutory appeals in patent infringement lawsuits that creates a right to appeal in cases that are “final except for an accounting.”  28 U.S.C. § 1292(c).  With that provision, it would seem that the notice of appeal should be filed within 30 days of the court action that triggers the final-except-for-an-accounting status. But, there is another level of complication that comes from the NOA tolling provision found in Fed. R. App. Proc. 4(a)(4).  Rule 4(a)(4) focuses on post-verdict situation where a party files several motions for Judgment as a Matter of Law (JMOL) or New Trial.  In that situation, the Rule states that “the time to file an appeal runs … from the entry of the order disposing of the last such remaining motion.”  Rule 4(a) then goes on to particularly state that the notice of appeal is due 30 days after the last JMOL/NewTrial motion is decided.

The holding here: The court read an exception into Rule 4(a) — finding that it does not apply to § 1292(c) interlocutory appeals. As such, the appeal here was untimely and therefore dismissed for lack of jurisdiction.

Lets back up: At the trial court, a jury with the patentee and concluded that LG was willfully infringing the Mondis/Hitachi U.S. Patent No. 7,475,180.  Post-verdict, the district court denied LG’s motions for JMOL on infringement and validity and then later granted a new trial on damages and willfulness.

Normally, a new trial delays appeal because the case is not yet final — and so no immediate appeal under the Final Judgment Rule. 28 U.S.C. § 1291.  The statute also provides for interlocutory appeal in this particular situation — patent infringement lawsuits that are “final except for an accounting.”  28 U.S.C. § 1292(c).  In Robert Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, (Fed. Cir. 2013), an en banc Federal Circuit held that “an ‘accounting’ in the context of § 1292(c)(2) includes the determination of damages.”

So, LG had a right to appeal once the renewed JMOL motions on liability were denied.  But, LG did not appeal until months later, after the new trial on damages was ordered.  As mentioned above, FRAP 4 typically tolls appeals until all post-verdict motions are decided. Here, the court held that the rule does not fully apply in the  1292(c) interlocutory appeal situation — but rather only tolls the timing of the interlocutory appeal until all liability-related motions are decided.

When only motions unrelated to the judgment being appealed remain, the judgment is final except for an accounting and the time to file an interlocutory appeal begins.

Because FRAP 4(a)(4) does not toll the interlocutory appeal period for outstanding motions unrelated to the interlocutory judgment, the damages motions that remained outstanding after the September Order did not toll the time frame for LG to file its notice of appeal on the liability portion of this case. . . .  Because LG did not file its notice of appeal  within thirty days of the issuance of the September Order, its notice of interlocutory appeal was untimely.

Slip Op.  The court notes that this interlocutory appeal process is optional.  LG will still be able to appeal all of the issues once the damages/willfulness trial is completed.

Upcoming USPTO Director?

A new president makes a lot of appointments.  Although the Patent Office Director is  an important position, it is still a fair way down the list in terms of urgency.  One reason–that most PTO management decisions are not highly political (especially in the R vs D sense).  Unlike for some agencies, President Biden has not vowed to reverse course on any particular USPTO policy. We also have a long tradition of career PTO employees stepping-up and capably leading the agency as Drew Hirshfeld is doing now.  But, it is time for a nomination, and I expect that we’ll see one within the next month or so.

Looking back, President Trump nominated Andrei Iancu toward the end of August; President Obama nominated his first Director David Kappos in June; and President Bush nominated his first Director James Rogan in September.

Meanwhile, the USPTO is holding its PPAC meeting on Thursday, Aug 5, 2021. You can find the agenda and webex link here:



Venue Games – What is Victoria’s Secret?

by Dennis Crouch

This decision shows how potential defendants can easily use their corporate structure to shelter a parent company from having to defend against patent infringement lawsuits.

Andra Group v. Victoria’s Secret Stores (Fed. Cir. Aug 3, 2021)

Andra sued Victoria’s Secret for infringing its US Pat. 8,078,498 covering a lingerie virtual showroom.  Actually, Andra sued L Brands Inc (LBI), the parent company, as well as Victoria Secret Stores LLC (Stores) which operates the physical retail stores; Victoria’s Secret Direct Brand Management, LLC (Direct), which manages the internet activities (including in-store direct online and returns from the stores); and Victoria’s Secret Stores Brand Management, Inc. (Brand)  which creates the apparel products.  At the time of the lawsuit*, these companies were all directly linked together in a tight corporate subsidiary structure under LBI.  Still, each defendant gets to raise the defense of improper venue.

Under the statute for patent litigation venue, venue is proper in a judicial district if either (1) the defendant is incorporated in the district or (2) the defendant infringes within the district and also has a “regular and established places of business” in the district.  28 U.S.C. 1400(b).  Here, none of the defendants are incorporated in E.D. Texas and only the VS Stores has a regular-and-established-place-of-business in the district.  As such, the district court dismissed the case against all of the non-stores defendants and, at that point, Andra also voluntarily dismissed its case against VS Stores.

On appeal, the Federal Circuit affirmed — particularly holding that the VS Stores do not serve as places of business for the non-store defendants.  The court concluded that Andra had not proven that LBI sufficiently controls VS Stores despite public filings by LBI that dictate various “store operations, hiring, and conduct” and that the stores are acknowledged representatives of Brand and Direct (returns go the roughte website …).  The court found that LBI’s public filings were statements about the various brands, but did not necessarily convey control over its wholly owned subsidiaries. The decision goes on, but basically serves as a total apologist for

* On August 3, 2021, LBI spun-off all of the Victoria Secret companies into a separate company VS&Co (VSCO) and LBI has changed its name to Bath & Body Works Inc. (BBWI).  Its totally unclear how this change would impact the lawsuit.  Also, this is confusing because of VSCO.

“Shall be the Property” is not an Assignment of Patent Rights

by Dennis Crouch

The Federal Circuit has decided an important employment agreement case.  Omni MedSci v. Apple (Fed. Cir. 2021).

Dr. Islam is a professor at Michigan (UM).  Back in 2012 though he took an unpaid leave-of-absence to start a LASER company. During that time he filed a number of patent applications that came from his time on-leave and that he assigned to Omni.  However, UM argued that it owned the patents based upon his employment agreement; that it had expended some ongoing funds; and that Islam had bounced ideas off of some of the faculty members.  This argument between Islam and UM was internal. UM did not file any paperwork with the PTO attempting to claim ownership and UM is not a party to the present litigation.

Omni later sued Apple for infringement, but the iPhone giant argued that Omni lacked standing since UM was the real patent owner.  The district court sided with Omni — finding that Omni had received rights from the inventor, and that Islam had not assigned his rights to UM.  On appeal, the Federal Circuit has affirmed.

The basic question is whether the Islam’s employment agreement with UM caused his inventorship rights to be automatically transferred in this situation.

Lets look at the contract. Here are the relevant clauses:

1) Patents … acquired as a result of or in connection with administration, research, or other educational activities conducted by members of the University staff and supported directly or indirectly (e.g., through the use of University resources or facilities) by funds administered  by the University regardless of the source of such funds, and all royalties or other revenues derived therefrom shall be the property of the University.

* * *

4) Patents, copyrights, and property rights in computer software resulting from activities which have received no support, direct or indirect, from the University shall be the property of the inventor, author, or creator thereof, free of any limitation which might otherwise arise by virtue of University

5) In cases which involve both University-supported activity and independent activity by a University staff member, patents, copyrights, or other property right in resulting work products shall be owned as agreed upon in writing and in advance of an exploitation thereof by the affected staff member and the Vice-Provost for Research in consultation with the Committee on Patents and Copyrights and with the approval of the University’s Office of the General Counsel. It is understood that such agreements shall continue to recognize the traditional faculty and staff prerogatives and property rights concerning intellectual work products.

Both the district court and appellate court agreed that the agreement was not a present assignment of future inventions. “It does not purport to effectuate the present transfer of a present or future right.” Rather, at most, the language “reflects a future agreement to assign.”

Judge Newman wrote in dissent and argued that “these patents are the property of the University.”

Although both the majority and dissent conclude that the issue is a matter of contract law, neither cite to the governing law of contracts for this case–the law of Michigan.

Another Transfer from TX to CA: Looking at the Particulars of the Case (But not Too Closely)

by Dennis Crouch

In re HULU, LLC (Fed. Cir. 2021)

Sito Mobile (SITO) sued Hulu  in the Western District of Texas (Waco), alleging infringement of seven of its patents. U.S. Patent Nos. 8,825,887; 9,026,673; 9,135,635; 9,135,636; 9,591,360; 10,009,637; and 10,171,846.  Both SITO and Hulu are Delaware companies with Hulu headquartered Santa Monica and SITO in New Jersey (although SITO is currently going through Chapter 11 reorganization bankruptcy).

Although venue was “proper,” Hulu argued that the case should be transferred to the Central District of California for convenience.  28 U.S.C. § 1404(a). Judge Albright refused, but the Federal Circuit has now granted Hulu’s petition for mandamus and ordered the case transferred.

(a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.

Section 1404(a) seems straight forward as providing a district court discretionary authority to transfer a case.  Still, the court must transfer the case once a party “clearly demonstrates” that transfer meets the statutory standard of being “for the convenience of parties and witnesses and in the interest of justice.”  The courts have developed substantial gloss on the statute, with a set of four public interest factors and four private interest factors used to answer the convenience question:

  • Private 1: Ease of access to sources of proof;
  • Private 2: Availability of compulsory process;
  • Private 3: Cost of attendance for willing witnesses;
  • Private 4: Any other practical issues “that make trial of a case easy, expeditious and inexpensive.”
  • Public 1: Administrative difficulties from court congestion;
  • Public 2: Local interest in having test decided at home;
  • Public 3: Familiarity of the forum with the law of the case;
  • Public 4: Avoidance of unnecessary conflicts of laws.

The district court found three factors weighed against transfer.  (1) compulsory process for witnesses; (2) cost for willing witnesses; and (3) administrative difficulties from court congestion.  On Mandamus, the Federal Circuit held that each of these factors actually weigh in favor of transfer.

Availability of compulsory process — 100 miles and state lines: Most witnesses in patent infringement trials are either under the control of the parties or are willing witnesses.  However, the rules also allow for compulsory process to force third party witnesses to testify even if unwilling.  The catch, “a subpoena may command a person to attend a trial . . . (A) within 100 miles of where the person resides, is employed, or regularly transacts business in person; or (B) within the state where the person resides, is employed, or regularly transacts business in person, if the person … (ii) is commanded to attend a trial and would not incur substantial expense.”  FRCP 45.

The 100 mile and state line rules mean that Judge Albright could not compel a  non-party witness to fly from Southern California to Texas in order to testify in court.  In this case, Hulu identified several content delivery networks (CDNs) as well as prior art witnesses all located in California that it would potentially call at trial.  The district court disregarded these witnesses as either (1) not likely to be called or (2) likely willing to attend.  On mandamus, the Federal Circuit found that Judge Albright’s statement that “prior art witnesses are generally unlikely to testify at trial” was “untethered to the facts of this case and therefore was an abuse of discretion.”  The appellate panel writes:

Hulu’s proposed prior art witnesses directly related to prior art that was specifically mentioned in the asserted patents themselves, heightening their potential relevance. The district court provided no analysis whatsoever to cast doubt that these particular prior art witnesses would play a role in an upcoming trial other than speculation that they would be “unlikely to testify at trial” because generally prior art witnesses do not do so. Such a bare and generalized analysis cannot be said to be providing “individualized, case-by-case consideration” of the relevant factors, as is required for the analysis of a § 1404(a) motion. Van Dusen v. Barrack, 376 U.S. 612 (1964). Furthermore, we have cautioned that “[r]equiring a defendant to show that the potential witness has more than relevant and material information at this point in the litigation or risk facing denial of transfer on that basis is unnecessary.” In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009). The district court abused its discretion in zeroing out the weight of these witnesses without any case-specific analysis.

Slip Op.  Regarding their willingness to testify. Here, the appellate panel found it sufficient that there were multiple third-party witnesses none of which had been shown to be willing to travel to Texas.

Willing Witnesses: Even though only one of the willing witnesses reside in W.D. Tex., the district court still found that W.D. Tex. was more convenient.  The appellate court disagreed here.  “[G]iven the overwhelming number of potential witnesses from Hulu in or near California compared to the two from SITO in Texas, we determine that this factor favors transfer.”

Court Congestion: Although W.D.Tex and C.D.Cal have about the same level of court congestion, Judge Albright weighed this favor strongly in favor of keeping the case in his courtroom. The difference is that Judge Albright in particularly aggressively pushes patent cases to trial.  On mandamus, the appellate panel held that it should not look at the particulars for this factor. After “disregarding the particular district court’s ability to push an aggressive trial date, this factor is neutral.”

Mandamus granted, and the district court is ordered to transfer the case to C.D.Cal.

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Three recent Utility Decisions at the PTAB

by Dennis Crouch

Utility Doctrine does not get much use in patent prosecution.  Still, examiners do reject claims on utility grounds. The following are three recent PTAB decisions that all reverse examiner utility rejections.  In Horne, focus is whether a partially-built tool has any utility; In Zauderer, the question is whether a theoretical rocket ship design has any credible utility; and in Grajcar the question focuses on whether data was provided to support a sex-selection method.

Ex parte Horne, APPEAL 2020-004000, 2021 WL 2788193 (2021)

Applicant claimed a saw blade blank without cutting teeth and the examiner rejected the claims as lacking utility since it was just a work-in-process. On appeal, the PTAB reversed — finding that creation of the blank is a useful step in the blade manufacture process. “Contrary to the Examiner’s suggestion, the utility requirement of § 101 does not require an invention to be a ‘final product’ made to sell to end users.”

Ex parte Zauderer, APPEAL 2020-003919, 2021 WL 2495190 (2021)

Zauderer’s application claims a method rocket launching using a linear Faraday magnetohydrodynamic (MHD) generator attached to an MHD linear accelerator. The examiner rejected the claim as lacking credible and specific utility. In particular, the examiner concluded that the claims were directed toward an “inherently unbelievable undertaking [based upon] implausible scientific principles.” On appeal, the PTAB reversed — finding that the invention sufficiently useful.  In particular, the examiner had failed to particularly address the credibility of the scientific principles relied upon in the application.  Although the invention has not been reduced to practice (and thus was purely theoretical), the PTAB found “no prohibition against claiming an invention based upon a scientific theory, as long as the invention is useful to the public as disclosed.”  The application has now been allowed and should issue shortly (assuming Zauderer pays the fee). [25570_13584574_07-23-2021_NOA]

Ex Parte Grajcar, APPEAL 2020-005035, 2021 WL 1499408 (2021)

Grajcar’s application claims a method of sex-selection of tilapia using 440-460 nm wavelength light (this is blue/violet).  The examiner rejected the inventio as lacking utility since the patentee provided no experimental data proving that it actually works.  On appeal, the PTAB reversed — finding that the specification did include a sample of 12 larvae treated with 450 nm light and resulted in 9 males, 1 intersex, and 2 female.  The particular claim is directed to “selecting sex”, which is seemingly more general than selecting males in particular.  In the appeal the PTAB interpreted the claim as selecting males, thus resolving the dispute.




Trademark on Product Design: Are these biscuit sticks functional

by Dennis Crouch

A potentially important product design trademark case is pending before the U.S. Supreme Court involving those chocolate covered bready-sticks. Ezaki Glico Kabushiki Kaisha v. Lotte International America Corp., Docket No. 20-1817 (Supreme Court 2021). 

Glico’s Pocky product has been sold since 1966 and are apparently popular. Lotte’s Pepero’s are a knock-off version. Glico sued for trademark infringement, asserting Glico’s trademark rights in the product design of chocolate-covered elongated rod biscuits. Glico registered this particular mark back in 1989. Reg. No. 1,527,208.

The lawsuit ended fairly quickly. The district court found that the design is functional and therefore not protectable by trademark.  On appeal, the 3rd Circuit affirmed.

If you have eaten one of these, then you know a bit about the shape functionality:

  1. Biscuit end can be handled without getting chocolate on your hands;
  2. Rod design allows for close-packing in a compact box suitable for sharing;
  3. Rod design allows for eating “one bite at a time … without opening your mouth

According to the third circuit, these aspects were utilitarian and therefore functional as a matter of law.

In its petition, Glico presents the following questions:

The Lanham Act protects trade dress from unlawful copying. Trade dress includes a product’s design, such as the red wax seal on a bottle of Maker’s Mark, the shape of the Chanel No. 5 perfume bottle, and the configuration of the Pepperidge Farm Milano cookie. To qualify for trade dress protection, a product’s design cannot be “functional,” among other requirements. At issue in this case is the test for “functionality” in trade dress law and the role of alternative product designs in creating a dispute of fact that prevents summary judgment. This petition presents two questions:

1. Whether trade dress is “functional” if it is “essential to the use or purpose of the article” or “affects the cost or quality of the article,” as this Court and nine circuit courts have held, or if it is merely “useful” and “nothing more,” as the Third Circuit held below.

2. Whether the presence of alternative designs serving the same use or purpose creates a question of fact with respect to functionality, where the product’s design does not affect cost or quality and is not claimed in a utility patent.

[Petition].  AIPLA, IPO, and INTA have all filed briefs supporting certiorari.  Their argument is that the Third Circuit used an unduly expansive definition of “functional” that is contrary to the precedent of the Supreme Court and every other circuit court of appeals.

The briefs include lots of pictures of chocolate covered cookies (biscuits).

= = = =

Glico also holds a patent titled “Stick-shaped snack and method for producing the same.”  U.S. Patent No. 8,778,428.  The US patent claims a particular method of making these tasty snacks as well as “A stick-shaped snack made by the [claimed] method.” (product-by-process claim) The district court found the patent relevant to showing functionality. On appeal though, the Third Circuit disagreed since the patent focused on a particular method of manufacture rather than novel features of the product itself.  There is also a Japanese Utility Model patent but did not feature in the litigation.

Patents and Drug Availability

by Dennis Crouch

Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA Inc., Docket No. 21-02024 (Fed. Cir. 2021) is up on appeal again.  The district court found Amarin’s asserted patent claims obvious and the Federal Circuit affirmed that holding in a R.36 affirmance without opinion.

Following the Federal Circuit’s decision, an ad-hoc group of doctors, patients, and Amarin stock holders (collectively known as EPA Drug Initiative II) moved to intervene in the lawsuit and asked the court to vacate its judgment based upon “multiple fatal statistical errors in analyzing and interpreting the prior art.”  The group argues that

The invalidation of Amarin’s patents could potentially cost hundreds of thousands of American lives, as Amarin has been deprived of  the incentive to promote Vascepa in the U.S., and Defendants can neither sell generic Vascepa to a large segment of the patient population, nor promote generic Vascepa, as those activities would violate Amarin’s other patents.

[EPADI Motino to Intervene] [EPADI Motino to Vacate].  The district court denied the motions and those issues are now on appeal before the PTAB.  I expect EPADI to lose its appeal, but it raises an ongoing interesting question about the role of patents in the availability and pricing of drugs and biologics.  The intervenors are calling for patent rights in order to better ensure that the drug is available.

One reason that I expect EPADI to lose is that it had requested permission to file an amicus brief in the original appeal as had the Biotechnology Innovation Organization (BIO). The Federal Circuit denied EPADI’s request but permitted BIO’s.

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One idea here goes back to the deals of Edmund Kitch with his prospect theory of patenting as a special form of the tragedy-of-the-commons. Edmund Kitch, “The Nature and Function of the Patent System,” Journal of Law and Economics, 1977, 20, pp. 265.

Supreme Court Called Again to Review IPR Appeal: This time on Discretionary Denials

by Dennis Crouch

The NHK-Fintiv Rule provides the PTAB with authority to deny institution of IPR proceedings when the challenged patent is already subject to pending parallel district court litigation.  The rule stems from two PTAB decisions that were later designated as precedential.

  • NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., IPR2018-00752, 2018 WL 4373643 (Patent Tr. & App. Bd. Sept. 12, 2018), designated precedential on May 7, 2019.
  • Apple Inc. v. Fintiv, Inc., IPR2020-00019, 2020 WL 2126495 (Patent Tr. & App. Bd. Mar. 20, 2020), designated precedential on May 5, 2020.

IPR proceedings have two major decision pointsInstitution: After IPR petition is filed, the PTO Director determines whether or not to institute the IPR. The statute provides the director with discretionary authority on whether or not to institute the IPR, but does create a threshold — requiring that the petition show at least “a reasonable likelihood that the petitioner would prevail.” 35 U.S.C. 314.  Also, the PTO Director has delegated their institution authority to the PTAB, and so a PTAB panel actually makes the decision.  Final Decision: If the IPR is instituted then the PTAB is charged with holding a trial and reaching a final decision “with respect to the patentability of any patent claim challenged.”  On the other hand, if institution is denied, the case is over and no appeal is permitted. “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. 314(d).  Note here that “nonappealable” has been generally interpreted as ordinarily not appealable. See Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) and Thryv, Inc. v. Click-To-Call
Technologies, LP, 140 S. Ct. 1367 (2020).

With NHK-Fintiv, PTAB panels are able to use their discretionary authority to deny institution in situations involving parallel litigation guided by a six-factor test that generally dance around the overarching question of whether “instituting a trial would be an inefficient use of Board resources.”

  1. Whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
  2. Proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;
  3. Investment in the parallel proceeding by the court and the parties;
  4. Overlap between issues raised in the petition and in the parallel proceeding;
  5. Whether the petitioner and the defendant in the parallel proceeding are the same party; and
  6. Other circumstances that impact the Board’s exercise of discretion, including the merits.

Apple v. Fintiv.  The test has been used dozens of cases to deny institution, and litigants and district court judges have figured out strategic techniques to push these factors in their favored direction.

In a new petition to the U.S. Supreme Court, Apple has asked asked for relief, arguing that NHK-Fintiv “undermines access to IPR, contrary to Congress’s express design.”  Apple v. Optis Cellular (Supreme Court 2021) (petition for writ of certiorari).  Apple argues that the rule permitting denial “exceeds the PTO’s authority … is arbitrary or capricious, or was adopted without required notice-and-comment rulemaking.”  Id.

After its IPR petition against an Optis Cellular patent was denied, Apple sought relief from the Federal Circuit who refused — holding that it had no power to  hear the case either on appeal or via mandamus. Apple Inc. v. Optis Cellular Tech., LLC, 2021-1043, 2020 WL 7753630, at *1 (Fed. Cir. Dec. 21, 2020) (non-precedential order).  The court more generally offered its reasoning in Cisco Systems Inc. v. Ramot at Tel Aviv University Ltd., 834 F. App’x 571 (Fed. Cir. 2020).

Meanwhile, the district court case against Apple proceeded in E.D. Tex. The jury found the Optis patent claims willfully infringed and not proven invalid and awarded $506 million in damages. Judge Gilstrap entered judgment for the damage award, but did not enhance the damages — finding in his view that the case lacked egregiousness.  I believe that the case is awaiting judgment on Apple’s outstanding motions for new trial and JMOL.

The Petition for Certiorari: The petition is interesting primarily from an appellate and administrative procedure front.  Here, the agency used a particular mechanism of rulemaking that appears to be done without notice + comment and that is not appealable. From that perspective it seems problematic.

Congratulations Judge O’Malley

by Dennis Crouch

In my mind, Judge O’Malley is still a newcomer to the Court of Appeals for the Federal Circuit, but the official records show that she joined back in 2010 as President Obama’s first nominee.  Prior to joining the Federal Circuit, Judge O’Malley had already been a Federal Judge (N.D. Ohio) for 16 years.  Her experience as a trial court judge has added significant depth and nuance to the appellate court over the past decade and in here 200+ opinions and orders.  Above all, she is  respected across the bar as a tough but impartial jurist.

I’m writing about Judge O’Malley because she has announced her plans to retire on March 11, 2022. These future-retirement announcements are designed to provide President Biden time to name a successor.  Barring other changes, this will be Biden’s second nominee following Judge Cunningham’s recent Senate confirmation.

Congratulations to Judge O’Malley on an amazing career!

Conception for Joint Inventors

by Dennis Crouch

Most patents involve two or more joint inventors who all claim to have contributed significantly to the invention.  Conception of the invention is typically seen as the critical legal determinant of invention and some courts have written that each joint inventor must have contributed substantially to the conception of the invention.*  Conception is typically referred to as a mental act. The MPEP, for example, includes a statement in all-caps that “CONCEPTION MUST BE DONE IN THE MIND OF THE INVENTOR.”  MPEP 2138.04(I).  The basic rule is that the inventor must have a “definite and permanent idea of the complete and operable invention.”

The mind-of-the-inventor doctrines have several problems, today I’m thinking about one relating to joint inventorship.  As far as I know, the definitional cases regarding conception refer to “the inventor” as if inventorship is a solo process.  But 75% of new patents list two or more inventors who are unlikely to have experienced joint or simultaneous conception.  It turns out though that simultaneous conception is not required. Rather, this is how it works.

  • Multiple human people provide significant contributions toward a complete invention;
  • At some point, one of the individuals puts on the pieces together in a manner sufficient to be called conception.
  • Although only one person conceived, all of the contributors receive credit for the conception as joint inventors, even if they never understood the full invention.

This setup played out in the Federal Circuit’s 2020 Dana-Farber decision, and the court confirmed that two Harvard researchers who contributed early on in the invention process deserved to be listed as co-inventors with Kyoto University’s Dr. Honjo even though it was Honjo who actually conceived of the invention. Dana-Farber Cancer Inst., Inc. v. Ono Pharm. Co., Ltd., 964 F.3d 1365 (Fed. Cir. 2020), cert. denied sub nom. Ono Pharm. Co., Ltd. v. Dana-Farber Cancer Inst., 20-1258, 2021 WL 2044661 (U.S. May 24, 2021)

In practice, the invention is defined and shaped by the patent prosecution process, and so my easy linear process above is often only something that can be seen retrospectively once we understand the actual scope of the claimed invention.

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* Above, I referred to conception as the key invention marker.  Of course, the law of invention states that the invention is not complete until the invention is reduced-to-practice (either actually or constructively).  Reduction-to-practice takes the idea and verifies that it actually works in practice.  I think that RTP gets short shrift in the patent system, but the law is clear that a joint inventor’s contribution may be at that post-conception stage.  As Judge Lourie explained in Pannu v. Iolab Corp.:

All that is required of a joint inventor is that he or she (1) contribute in some significant manner to the conception or reduction to practice of the invention, (2) make a contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention, and (3) do more than merely explain to the real inventors well-known concepts and/or the current state of the art. 

Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998).

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Painting above is a portion of The Immaculate Conception by Giovanni Battista Tiepolo (1696–1770).

Adequate Notice and the Administrative Procedures Act

by Dennis Crouch

Here, the CAFC has vacated a PTAB IPR decision based upon a sua sponte claim construction. The court found that the agency did not provide the notice and opportunity to respond required by the Administrative Procedures Act (APA). 

Qualcomm Inc. v. Intel Corp., Appeal No. 20-1589 (Fed. Cir. 2021)

Intel filed six different IPR petitions challenging Qualcomm’s US Patent No. 9,608,675.  The PTAB complied and cancelled the challenged claims as obvious.  On appeal here, the Federal Circuit has vacated and remanded — holding that the Board’s sua sponte claim construction in its final written decision was unfair to the patentee because it did “failed to provide Qualcomm adequate notice of and opportunity to respond.”

The invention here relates to mobile phone signal amplifiers, and particularly to  “power tracking” circuitry used to measure the the power amplification over multiple signals and carriers. (“a plurality of carrier aggregated transmit signals”, exemplary claim 1).

The patent makes clear that a key purpose of using multiple signals is to increase  a user’s transmission bandwidth, but exemplary claim 1 does not expressly require that result. Still, Intel asked the PTAB to construe the “plurality of carrier … signals” as having the purpose “to increase the bandwidth for a user.”  Although Qualcomm disputed portions of Intel’s proposed construction, it did not argue against that port. It simply was not at issue, most likely because the same patent claim had already been construed in a separate case before the ITC using that exact language.

During a post-briefing claim construction hearing, a PTAB judge asked Intel’s attorney for textual support in specification for the proposed “increase the bandwidth” construction.   At that point, the attorney responded that Intel would also “be comfortable” with removing the bandwidth portion as an element of the construction.  The judge later responded during the hearing that “we’ll think about whether [that limitation is] necessary.”  Qualcomm’s attorney did respond raise the issue during the hearing. And, prior to that time, the issue of increased bandwidth was not in dispute.  The following day, the Board issued its claim construction that followed Intel’s proposed approach, but without the “increase the bandwidth” requirement.

On appeal, the court found this process improper as a violation of the Administrative Procedures Act (APA) process requirements.

  • Parties to a hearing shall be informed of “the matters of fact and law asserted … and issued controverted.” 5 U.S.C § 554(a)-(b).
  • The agency must provide opportunity for “(1) the submission and consideration of facts [and] arguments” 5 U.S.C § 554(c).
  • “Parties are entitled to present their case . . . as may be required for a full and true disclosure of the facts.”  5 U.S.C § 555(d).

Collectively, these rules require that the patentee has notice of any grounds for cancelling its claims and also an opportunity to fully argue those grounds. The notice requirement does not require a formal summons served by a U.S. Marshall, but rather the Board must consider whether the parties should anticipate that the particular question is at issue.  In prior cases, the Federal Circuit found found when the PTAB “change[d] theories midstream or depart[ed] from a construction it previously adopted.”  Here, the situation was slightly different – an agreed upon claim construction.  Still, no one would anticipate that

Here, the patent owner agreed with the increased bandwidth requirement proposed by the petitioner. . . . it is . . . difficult to imagine either party anticipating that this agreed-upon matter of claim construction was a moving target. And, unlike with disputed terms, it is unreasonable to expect parties to brief or argue agreed-upon matters of claim construction. This is particularly true here given that a separate agency (the Commission) had already adopted the increased bandwidth requirement for the claim term. Accordingly, under the circumstances of this case, the Board needed to provide notice of and an adequate opportunity to respond to its construction.

Slip Op.

One Judge?: The opinion makes note that only one judge (of the three-member panel) asked a question regarding the claim construction and then the same judge also made a comment indicating that panel will “think about” whether the particular limitation is necessary.

“[O]ne judge asked Intel a single question about increasing bandwidth . . . Shortly thereafter, the same judge commented . . .  In sum, one judge asked one question about the increased bandwidth requirement, directed only at Intel, during the entire hearing. . . . The single question-answer exchange between one judge and Intel regarding the increased bandwidth requirement, followed by that judge’s offhand comment that the panel would “think about whether that’s necessary,” did not provide Qualcomm notice that the Board might depart from the increased bandwidth requirement.

Slip Op. I believe the appellate court is trying to imply that questions or comments from a single judge provides less notice than if two or even three of the judges had made comments on point.  I have not previously heard of this partial tribunal doctrine.

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So what. Errors generally must be meaningful in order to be appealable. Harmful errors vs harmless errors.  However, the Federal Circuit noted an ongoing open question as to whether an agency’s failure to comply with the APA requires harm.

Intel cites WesternGeco to assert Qualcomm’s APA challenge requires a showing of prejudice. We need not address whether WesternGeco requires such a showing because Qualcomm was prejudiced here.

In particular, Qualcomm had repeatedly argued that the prior art did not
“disclose the increased bandwidth requirement.”  “By removing that requirement [from the claims], the Board eliminated an element on which Intel bore the burden of proof.”

Vacated and Remanded.

Trade Secrets Pre Patenting

by Dennis Crouch

Although trade secrets are independently important, they are play a key temporal role in the patenting process.  The touchstone of invention is when the inventors have a full mental conception of the invention, including how to make and use the invention. But, there is typically a months-long process of moving from conception to a filed patent application.  During that time the invention is typically kept secret in order to avoid losing patent rights due to early disclosure.  And, even after the patent application is filed, applicants often keep the invention secret for as long as possible in order to maintain a competitive advantage in the marketplace.  Thus, the first public knowledge of an invention is quite often at the publication date 18-months after filing.

General rights of privacy allow a person to keep secret information without  intrusion by the government or by wrongful acts by third parties.  Trade secrecy rights are an extension of these general privacy and began as common law. These rights were further developed and codified in the various states, especially with the Uniform Law (UTSA) movement that gained traction in the 1980s and 1990s.  In 2016, the U.S. Government enacted the Defend Trade Secrets Act (DTSA) that created a federal cause of action.   Although there are some differences between the various jurisdiction, all jurisdictions agree that trade secret rights originate in the holder of information, so long as:

  1. the information is not generally known to the public;
  2. the information confers economic benefit to its holder because the information is not publicly known; and
  3. the information is subject to reasonable efforts to maintain its secrecy (by the holder).

Here is my question.  In the patent world, can we simply assume that innovation that that will become part of a patent application satisfies the economic benefit of secrecy requirement?  What is the best guide you have found for maintaining trade secret protections  for pre-patent innovations?


They Patented a Better SandBox — Obviousness IPRs

by Dennis Crouch

Today’s decision by the Federal Circuit includes an example of thinly sliced bologna, with the court rejecting a PTAB IPR decision because the precise obviousness argument regarding a functional limitation was not expressly stated.  The court also does another go-round with the PTAB failing to consider commercial success. 

Oren Tech v. Proppant Express (Fed. Cir. 2021)

Lots of petroleum is trapped by deep rock formations that are difficult to drill-out one-by-one. Hydraulic fracturing (fracking) gets access to those stores by using high-pressure injection of a slurry of water, chemical additives and proppant (such as sand or other granular).  The high-pressure water causes cracking of the rocks. Proppant residue is left behind and holds the cracks open — allowing the petro to flow out more easily.

Oren’s parent company US Silica competes with PropX for delivering proppant (sand) for fracking.  As part of this competition, Oren holds several patents related to storage of proppant and sued PropX for infringement. US Patent Nos. 9,403,626; 9,511,929; and 9,296,518.  PropX responded with petitions for IPR.  This case involves the ‘626 patent and the PTAB’s ruling cancelling all the challenged claims as obvious. On appeal, the Federal Circuit has rejected the PTAB decision for two reasons: (1) the PTAB decision strayed too far from the grounds of unpatentability found in the petition; and (2) the PTAB improperly disregarded the commercial success of Oren’s container.

The ‘626 patent is directed to a stackable storage container for sand.  Each container has a bottom hinged-hatch that allows sand to flow to the next lower container and eventually out through the bottom of the stack.

The closest identified prior publication was the now-abandoned U.S. Patent Publication No. 2008/0226434 (“Smith”, image below).  During prosecution its patent, Oren had already encountered a Smith rejection, and overcame that rejection by adding a functional claim limitation that the container is designed to support “volumes” of “at least 30,000 pounds.”  Smith expressly limited its double container payload to 52,500 pounds, or 26,250 pounds each.   The examiner accepted this limitation as sufficient to skirt the prior art. 

The IPR Grounds: The IPR petition reintroduced Smith and argued that Smith’s design could be reinforced (via Hendrick) to take advantage of the unused volume and that the the 30,000 pound limit was already met by engineering safety tolerance.  The Board did not buy the safety tolerance argument since that was not mentioned in the reference, but still found that the 30,000 pound limit would be inherently met through the proposed reinforcement.

The problem: Although the IPR petition raised Smith, it did not raise this exact argument — that the proposed reinforcement would inherently satisfy the 30,000 pound requirement.

[T]he Board erred by repurposing the theory of a motivation to modify Smith to increase its capacity as a basis for finding the 30,000 pound limitation met. PropX did not assert this theory of obviousness in its petition. Nor was the theory raised by the Board’s institution decision (or at any time before the final written decision). Therefore, relying on this theory in finding claims obvious was reversible error because the petitioner bears the burden of proving obviousness and Oren had no notice or opportunity to respond.

Slip Op.

Does not sit well: The Federal Circuit’s conclusion here does not sit well with me since both the petition and the institution decision indicate that the purpose of the reinforcement was “increasing the maximum payload of Smith’s containers”; PropX provided evidence that the reinforcement would increase the payload beyond 30,000 pounds; and it was through the claimed reinforcement that Oren itself met the functional 30,000 pound limitation. It does appear true, however, that neither the petition nor institution decisions particularly stated that the increased payload would meet the claim limitation itself.  This decision comes down to a choice of how thin to slice the bologna.

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“The Reason” versus “A Reason” for the Commercial Success: Oren’s “Sandbox” product has also been commercially successful (sold through another US Silica company) and Oren presented that evidence as objective evidence of nonobviousness.   In this case, the product is “commensurate in scope” with the  patented claims — thus creating a presumption of nexus between the claims and the commercial success.  However, the Board still gave the commercial success no weight because PropX provided evidence that the success was due to a convoyed leasing program that included certain trade secrets as well as a “special forklift,” “special mats,” and “special truck,” and not the claimed features of the box.

On appeal, the Federal Circuit vacated this portion of the decision — holding that there can be a number of contributors to commercial success, and the PTAB failed to specifically consider Oren’s evidence showing that its container design was “also an important contributor to the commercial success and praise of the system.”

Arguing Obviousness: Teaching Away versus an Alternative Approach

by Dennis Crouch

Obviousness is the central doctrine of patent law.  It is both the most common reason for rejection and often the most complicated issue because of both factual and legal complexities.  The new Chemours Co. decision provides an important addition to obviousness doctrine in two areas: (1) teaching away; and (2) commercial success.  The majority sided with the patentee and reversed the IPR Board’s single-reference obviousness determination.  The dissent argued that the opinion gives too much power to the teaching-away doctrine.

Chemours Company v. Daikin Industries (Fed. Cir. 2021)

Chemours is a 2015 spin-off from Du Pont. Its patents at issues here relate to a polymer having a high melt flow to allow high-speed extrusion to cover electrical wires.  U.S. Patent Nos. 7,122,609 and 8,076,431.  The claims require a standardized melt flow rate range: 30±3 g/10 min along with other physical properties.

Daikin petitioned for inter partes review, and the PTAB agreed that the claims were invalid as obvious based upon a single prior art reference, U.S. Patent No. 6,541,588 (“Kaulbach”).  Judge Dyk’s dissenting opinion in this case explains that “[t]he only material difference between [Chemours] claim 1 and Kaulbach is that Kaulbach discloses (in Sample A11) a melt flow rate of 24 g/10 min, slightly lower than 27 g/10 min, the lower bound of the 30 ± 3 g/10 min rate claimed in claim 1 of the ’609 patent.”  Actually, Kaulbach goes even further and expreslly discloses a melt flow rate of “15 g/10 min or greater” and includes the example of 24 g/10 min MFR.

On its face, Kaulbach discloses a flow rate that encompasses Chemours’ claimed rate — pretty good prima facie that this element was disclosed, but the Board hung its hat on the particular example and concluded that it would have been obvious to modify Kaulbach’s 24 example so that it fit Chemours’ 27 requirement.

The problem: Kaulbach also focused on having a narrow distribution of molecule sizes within its polymer, and those skilled in the art apparently did not know how to increasing flow rate from 24 to 27 while maintaining the narrow distribution. The Board resolved this tension in favor of an obviousness finding, but you can see from the patent that the inventors push against broad molecular weight approach:

[The prior art] mixtures have a very broad molecular weight distribution which according to conventional wisdom, results in an improved extrudability. . . . [However, our invention] has a very narrow molecular-weight distribution. i.e., a ratio of Mw to Mn of less than about 2.

Kaulbach prior art patent.

Teaching Away: On appeal, the Federal Circuit reversed the obviousness determination and held that the Board should have taken more care in considering Kaulbach’s teaching-away from broader molecular weight distribution:

[T]he Board appears to have ignored the express disclosure in Kaulbach that teaches away from the claimed invention and relied on teachings from other references that were not concerned with the particular problems Kaulbach sought to solve. In other words, the Board did not adequately grapple with why a skilled artisan would find it obvious to increase Kaulbach’s melt flow rate to the claimed range while retaining its critical “very narrow molecular-weight distribution.”

Slip Op.  You’ll note that the an inventor would not need to shift far from Kaulbach’s 24 g/10 min example flow rate to get within Chemours’ claimed rate that includes about 27 g/10 min.  But, to do so pushes against the fundamental inventive concept of Kaulbach of a narrow molecular distribution. The PTAB’s decision “does not explain why a POSA would be motivated to increase Kaulbach’s melt flow rate to the claimed range, when doing so would necessarily involve altering the inventive concept of a narrow molecular weight distribution polymer.” Slip Op.  An important caveat here is that Chemours’ patent does not actually claim any particular molecular weight distribution, but expert testimony apparently convinced the Board that a broad molecular distribution was required.

In its decision, the majority ties concludes that the teaching-away negates a motivation to modify the prior art reference.  One oddity of the decision is that the court also spends some time reciting precedent on pertinent prior art, but does not apply that doctrine in any meaningful way.

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The majority opinion was authored by Judge Reyna and joined by Judge Newman. Judge Dyk wrote in partial dissent.  According to Judge Dyk, the majority placed too much weight on the teaching-away doctrine.

In particular, Judge Dyk reads the the prior art patent as providing an alternative narrow molecular weight distribution while also acknowledging the conventional wisdom and feasibility of having a high distribution. “This is not a teaching away from the use of a higher molecular weight distribution polymer. . . . The majority’s approach impermissibly expands the teaching away doctrine such that it encompasses a reference’s mere preference for a particular alternative. ” Slip Op. Dissent.

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Secondary Indicia of Nonobviousness: During the IPR, Chemours  presented evidence of commercial success as objective indicia of nonobviousness.  Generally, the commercial success of an invention can be used as circumstantial evidence to prove that the invention is non-obvious.  The basic idea here is that an obvious valuable invention would already be in the market place.  Since there are a number of reasons why any particular product might be successful, patent law generally requires a showing of nexus between the claimed invention and the success — that the innovation (rather than marketing or non-claimed design elements) is responsible for the commercial success.

Here, the Board found the commercial success evidence lacking and thus gave it no weight in the obviousness analysis.  On appeal, the Federal Circuit found three ways that the Board’s decision failed to follow the law.

Nexus and Commercial Success: First, the Board found no nexus because commercial success could not be tied directly to inventive contribution of the Chemours patents.  Here, the Board’s decision was odd.  The Board essentially found that the Chemours patent had no inventive contribution (i.e., had no points of novelty) and therefore could have no nexus.  On appeal, the Federal Circuit rejected that analysis as contrary to law.

The Board found no nexus between the claimed invention and the alleged commercial success because Kaulbach disclosed all features except for the claimed melt flow rate. The Board then found that other prior art of record disclosed melt flow rates of 50 g/10 min.

Contrary to the Board’s decision, the separate disclosure of individual limitations, where the invention is a unique combination of three interdependent properties, does not negate a nexus. Concluding otherwise would mean that nexus could never exist where the claimed invention is a unique combination of known elements from the prior art.

Slip op.

Market Share vs Sales Numbers: The Board also held that market share evidence (rather than merely sales numbers) is required for a showing of commercial success. The Federal Circuit disagreed. “[M]arket share data, though potentially useful, is not required to show commercial success.”

Blocking Patents: Still on Commercial Success, the Board also rejected the commercial success argument after finding that Chemours patents at issue blocked market competition — so that any commercial success would be due to the patent’s existence rather than the innovation’s marketability.   On appeal, the Federal Circuit rejected this conclusion also as contrary to law, finding that the Board totally misapplied the blocking patent doctrine.

The Board erred by misapplying the “blocking patents” doctrine to the challenged patents themselves. A blocking patent is one that is in place before the claimed invention because “such a blocking patent may deter non-owners and non-licensees from investing the resources needed to make, develop, and market such a later, ‘blocked’ invention.’” However, the challenged patent, which covers the claimed invention at issue, cannot act as a blocking patent.

Slip Op. On this point, while I agree that Board’s decision did not follow traditional blocking patent doctrine its approach is interesting.

Right to Repair at the FTC

by Dennis Crouch

In a unanimous vote among the five commissioners, the Federal Trade Commission (FTC) will move forward with a new policy regarding the right-to-repair.  This decision was foreshadowed by a 2019 workshop and 2021 report to Congress.

The Commission is taking four steps:

  • Stepping up enforcement of the Magnuson-Moss Warranty Act prohibitions on tie-in sales, inter alia.
  • Scrutinizing repair restrictions to determine whether they violate US antitrust laws.
  • Scrutinizing repair restrictions to determine whether they constitute unfair competition or deceptive trade practices.
  • Coordinating with state law enforcement and policymakers to “advance the goal of open repair markets.”

Read the Policy Statement.  FTC commissioners are nominated by the President and serve for Seven year terms, and no more than three Commissioners (out of Five) can be from the same political party.  FTC Chair Lina Khan is a recent law school graduate (2017), although she had already focused on antitrust and platform monopoly issues (such as Amazon) for more than a decade at the New America Foundation. The remaining four were all nominated by President Trump, although two are Democrats and two Republicans.

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A big next question is the extent we can encourage manufacturers to produce repairable products. To what extent can easy-to-repair fit into the marketing strategy? And, can Patent Law do something with this regard?