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Prosecution Disclaimer: Should patent law have a Parole Evidence Rule for Claim Construction?

by Dennis Crouch

Technology Properties Limited LLC, v.  Huawei Technologies Co., Ltd. (Supreme Court. 2019)

Back in February, the Federal Circuit issued a R.36 affirmance — affirming the lower court’s claim construction and non-infringement finding.  Tech. Properties has now filed a statement of intent to petition for writ of certiorari, now with Ken Starr at the helm and focusing on prosecution disclaimer precedent from the 1880’s along with a constitutional argument.  The patentee writes:

This case presents important questions of constitutional and patent law. The law of prosecution disclaimer, as applied in this case and in other cases, has morphed in a manner inconsistent with the Patent Act. The Federal Circuit’s increasingly anti-textualist methodology also conflicts with this Court’s long-established precedent. The improper expansion of this judicially-created doctrine upsets the balance between the role of the Patent Office and the role of the judiciary, as established by Congress, and injects great uncertainty into the publicnotice function of patents. Congress delegated the examination and issuance of patents to the Patent Office and requires deference to the agency’s decision-making.

The expanded disclaimer doctrine calls into question the Patent Office’s authority to examine and issue patents, and the limited role of the judiciary in reviewing the Patent Office’s determinations. Encouraging litigants and courts to wade through the back-and-forth between the Patent Office and a patent applicant to rewrite the issued claims through imposition of additional limitations under the guise of “claim construction” runs afoul of Congress’s delegation.

The basic argument that the patentee is making here is that patent claims should be adjudged by their terms and buried statements within the prosecution history should not be allowed to enlarge or reduce the patent scope.  You might call this the patent law parole evidence rule:

A patent is a public franchise.  The public and the patentee are entitled to clarity on the boundaries of a patentee’s rights; the claims, which define the metes and bounds of the inventor’s rights, provide that clarity. Gratuitous statements in the file history do not; they are inherently less predictable—illustrated by this case and other recent cases.

That 1880’s case: Goodyear Dental Vulcanite Co. v. Davis, 102 U.S. 222 (1880).

Distribution of Working Draft to 250-Member Standard Setting Working Group – NOT a PUBLICATION

Samsung v. InfoBridge (Fed. Cir. 2019)

In the inter partes review (IPR), the Patent Trial & Appeal Board (PTAB) sided with the patentee Infobridge — concluding that the purported prior art was not sufficiently publicly accessible prior to the patent’s November 7, 2011 filing date (and therefore not prior art).  On appeal, the Federal Circuit has rejected that decision — holding that the PTAB “applied the wrong legal standard in assessing public accessibility.”

The reference at issue is “Working Draft 4 of the H.265 standard” (WD4) which was developed by an MPEG group known as the Joint Collaborative Team on Video Coding (“JCT-VC”).  The information included int he reference was discussed at a July 2011 meeting in Torino that included about 250 participants including both academics and corporate representatives. WD4 then written and uploaded to the JCT-VC website on October 4, 2011 as one of hundreds of documents listed on the Torino meeting sub-page. The documents are in no apparent order and when printed run 48 pages long. (The relevant page is listed below, can you find our reference of interest?).

 WD4 was also uploaded to an MPEG website on October 4, 2011, but required a password to access.  Also, the same day the WD4 lead author posted a link to the document to a listserve that included JCT-VC members and other interested individuals.

A publication must be either actually distributed or else made publicly accessible.  Courts ask “whether a person of ordinary skill in the art could, after exercising reasonable diligence, access a reference.”  If so, then it is a publication.

Level of Access: In its decision, the Board found no evidence to show that “WD4 was accessible to anyone other than members of JCT-VC” because the websites were too complicated and unorganized. Regarding the listserve, the Board found that the “other interested individuals” testimony to lack credibility and found it  “nothing more than conjecture and speculation.”  The board – in essence – found no evidence that the WD4 document “was generally disseminated to persons interested and ordinarily skilled in the art.” As such, the Board held that the reference should not be considered prior art as of its 2011 date.

Distribution within the Group: Samsung argued that the JCT-VC group should be considered analogous to an academic conference and that distribution within the group should count as publication.  “JCT-VC was composed of more than 250 members who were skilled artisans” in the relevant video coding art.  On appeal though the Federal Circuit rejected this argument — holding that publication requires distribution beyond the creators of the document.  ” [A] work is not publicly accessible if the only people who know how to find it are the ones who created it” — even if those people are a loose standard setting organization of 250 global experts.

Email Listserv Distribution: The patent challenger was able to gain traction with its listserv argument by showing public accessibility.

The Board departed from this well-established principle by repeatedly faulting Samsung for not proving that the WD4 reference was “generally” or “widely” disseminated. …[A] limited distribution can make a work publicly accessible under certain circumstances.  But the Board’s analysis stopped short of considering whether those circumstances were present here. The Board also faulted Samsung for failing to show that the email recipients “represented a significant portion of those interested and skilled in the art.” That was not Samsung’s burden. The Board’s decision to reject Samsung’s evidence because it did not establish that enough interested and ordinarily skilled artisans actually obtained the WD4 reference was therefore erroneous.

Rather than requiring Samsung to prove that persons of ordinary skill actually received the listserv email, the Board should have considered whether Samsung’s evidence established that an ordinarily skilled artisan could have accessed the WD4 reference, after exercising reasonable diligence, based on the listserv email. This might include examining whether a person of ordinary skill, exercising reasonable diligence, would have joined the listserv. It also might include considering the circumstances of the email itself, for example why the email was sent and whether it was covered by an expectation of confidentiality. Because the record is not clear on these factual questions, we decline to resolve them in the first instance on appeal. In particular, we are reluctant to assume that an email among potential collaborators should be treated the same as a public disclosure without clear findings by the Board. Accordingly, we vacate the Board’s finding that Mr. Bross’s email did not make the WD4 reference publicly accessible and remand so that the Board can consider this issue after applying the correct legal standard.

On remand, the PTAB will reconsider these issues — and likely find again that the listserv distribution was not sufficiently public.

Apportionment of Willfulness and Discretion to Reconsider Attorney Fees

by Dennis Crouch

SRI International, Inc. v. Cisco Systems, Inc. (Fed. Cir 2019)  (modified opinion on rehearing)

When the Federal Circuit released its eligibility decision in March 2019, I panned the opinion as a “results-oriented decision [that] unfortunately shades-facts and provides no clarity in its legal analysis of eligibility.”  On petition, the panel has modified its original opinion. Unfortunately, the court did not modify its eligibility analysis, but rather modified a portion of the remand on attorney fees.

At the conclusion of the trial, a jury awarded the patentee SRI $23 million in reasonable royalty damages associated with SRI’s network monitoring patents.  The jury also found that Cisco’s infringement was willful.

The jury awarded SRI a 3.5% reasonable royalty for a total of $23,660,000 in compensatory damages.  The jury also found by clear and convincing evidence that Cisco’s infringement was willful.  The judge then double the compensatory award and also awarded $8 million attorney fees as well as an ongoing compulsory license for any future infringement. (I believe the patents have now expired).

Willful Infringement: The patent act does not expressly identify willfulness as relevant to an infringement lawsuit. However, courts have ruled that willfulness is an underlying requirement for enhanced damages under 35 U.S.C. 284. “Enhanced damages under § 284 are predicated on a finding of willful infringement.”

On appeal here, the Federal Circuit ruled that enhanced damages willfulness should be further apportioned by time.  I.e., enhanced damages cannot be awarded for infringement that occurred prior to the infringer’s willful infringement. Here, the patentee proved infringement going back to 2000, but did not show that Cisco knew of the patent before May 2012 – thus no willfulness. On remand, the district court will need to reconsider the willfulness award to match the court’s temporal apportionment approach.

The court’s approach here is interesting — the jury found the infringement to be willful.  Rather than rejecting the jury verdict, the appellate panel “interpreted” the verdict as finding willfulness as of May 2012 (and finding no willfulness prior to 2012).  Then, the appellate court found error by the district court in enhancing damages for the entire term of infringement.

Attorney Fees: Ordinarily, each party must pay its own trial costs, including attorney fees. However, in patent cases the district court has discretion to award fees to the prevailing party in “exceptional cases.” Here, the district court found that Cisco’s litigation tactics were unduly aggressive:

Cisco pursued litigation about as aggressively as the court has seen in its judicial experience.  While defending a client aggressively is understandable, if not laudable, in the case at bar, Cisco crossed the line in several regards.

One example – was that Cisco maintained 19 invalidity theories until the eve of trial — then only presented two of them at trial along with defenses that were contrary to both the evidence and prior court rulings. The district court also noted that the willfulness finding by the jury contributed to the decision to award attorney fees.  Because the now-modified willful infringement judgment served as one basis for the enhanced damages, the appellate panel also vacated the enhanced damages for reconsideration on remand.

In its original opinion, the appellate panel had explained that there was sufficient evidence of bad behavior to justify a fee award even without willfulness — and thus had affirmed an award.  In the modified opinion, the court instead vacated the finding of exceptional case — likely because that decision is supposed to be within the discretion of the district court.

[Modified Opinion]

In its petition for rehearing, Cisco had also asked for reconsideration of the eligibility decision.  That portion of the petition was denied.  EFF had filed a petition in support of rehearing, arguing that “the claims here fall squarely within a category of abstract ideas that is now well-established: claims that involve collecting, analyzing, and displaying information without more.”

Network Monitoring and . . .

Relevant claim:

1. A computer-automated method of hierarchical event monitoring and analysis within an enterprise network comprising:

deploying a plurality of network monitors in the enterprise network;

detecting, by the network monitors, suspicious network activity based on analysis of network traffic data selected from the following categories:

  • network packet data transfer commands,
  • network packet data transfer errors,
  • network packet data volume,
  • network connection requests,
  • network connection denials,
  • error codes included in a network packet;

generating, by the monitors, reports of said suspicious activity; and

automatically receiving and integrating the reports of suspicious activity, by one or more hierarchical monitors.

Patently-O Software Law Bits & Bytes: Scholarly Papers by Grant Harrison

Overview: This post lists a variety of scholarly papers that have been written about the world of Software Law.


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US Utility Patents Granted per Year

by Dennis Crouch

We are about 3/4 of the way through fiscal year 2019 (ends September 30, 2019) and the USPTO is on-track to issue the most patents ever in a single year period — I’m forecasting 330,000 issued utility patents, which is up about 5% from the prior 1-year high in 2017.  This rise is consistent with more patentee-friendly attitude of Andrei Iancu who began his role as Trump’s USPTO director in 2018.


Fastest Patents of 2019

U.S. Patent No. 10,285,922 (110 days from earliest priority to issuance). The ‘922 Patent claims a “topical exfoliating formulation” that includes papain enzyme.   Case was subject to a petition to make special based upon the inventor’s age of 65+.  Applicant cited no references and the (primary) examiner only found two.

U.S. Patent No. 10,343,988 (111 days from earliest priority to issuance).  The ‘988  patent is directed to a new compound known as hydroxytyrosol thiodipropionic acid apparently useful for food preservation.

The patent claims priority to a Chinese application filed March 1, 2019.  The U.S. application was then filed March 20, 2019 and issued on June 19, 2019. Applicant cited no references and the (primary) examiner only found one.

U.S. Patent No. 10,336,689 (114 days from earliest priority to issuance). The ‘689 patent has a similar path to the ‘988 patent (and is owned by the same entity (Shaanxi University of S&T) and examined by the same primary examiner — but is directed to a totally different compound that exhibits “antitumor activities.”

U.S. Patent No. 10,302,471 (116 days from earliest priority to issuance). The ‘471 also stems from China, but does not rely on foreign priority.  The patent claims a device for observing “abyssal flow” and was subject to a “track one” petition.


Venue: “Regular and Established Place of Business” is a Questions of Law

Westech v. 3M (Fed. Cir. 2019)

Westech sued 3M for patent infringement in W.D.Washington. On motion from 3M, the district court then dismissed the case for improper venue under 28 U.S.C. 1400(b).  Under the statute, infringement cases can only be brought in a judicial district where the defendant either (1) resides (i.e., is incorporated) or (2) infringed the patent and has a regular and established place of business.  Here, the focus is on 3M’s sales activities with vendors, distributors, and sales professionals — and whether those activities constitute a “regular and established place of business.”  Two key precedential cases: In Cray, the Federal Circuit held that a “place of business” must be a “physical place in the district.”  In ZTE, the Federal Circuit held that it is the plaintiff’s burden of establishing proper venue (burden of persuasion).

Westech’s amended complaint states:

3M has one or more regular and established places of business in this judicial district. Furthermore, on information and belief, Defendants maintain contractual relationships with distributors of the infringing products who are located in this judicial district, Defendants have sales representatives located in this judicial district, Defendants represent that they sell products in this judicial district, and Defendants earn substantial sales revenue from sales of the infringing products in this judicial district.

Sufficient for venue? The district court saw these allegations as insufficient and the Federal Circuit has affirmed on appeal.  On point – The asserted facts do not lead to a conclusion that 3M has a physical place of business in the district, and the allegation that 3M has “regular and established places of business” is a legal conclusion not given any weight in the analysis. The court explains:

Simply stating that 3M has a regular and established place of business within the judicial district, without more, amounts to a mere legal conclusion that the court is not bound to accept as true. . . .

A presumption that facts pleaded in the complaint are true does not supplant a plaintiff’s burden to plead specific facts showing that the defendant has a regular and established place of business physically located in the judicial district.

Question of Law: The statements by the court here is a bit oblique, but it may be the first precedent expressly stating that whether the defendant “has a regular and established place of business” in the district is a question of law and not a question of fact.  In Cray, the court indicated that the analysis will be based upon underlying facts: “In deciding whether a defendant has a regular and established place of business in a district . . . each case depends on its own facts.”

Patently-O Bits and Bytes by Juvan Bonni

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Update from the Compendium of Federal Circuit Decisions

By Jason Rantanen

We recently launched an updated version of the Compendium of Federal Circuit Decisions that contains information on decisions posted to the Federal Circuit’s website for all origins, not just appeals arising from the USPTO and District Courts (although the richest data is still for appeals from those sources).  Data is current through June 28, 2019.

For those who aren’t familiar with the Compendium, it’s a database designed specifically to support quantitative empirical research about the Federal Circuit’s decisions.  We’ve coded an array of basic information about Federal Circuit decisions to make it as easy as possible for anyone to do their own empirical studies.  There’s data on document type to panel judges to authorship information and more.  We’re constantly working on adding new types of data, so if there’s something specific that you’d like empirical data on, just let me know.

Below are a few basic highlights through the first six months of 2019.  As always, the usual disclaimers when working with quantitative data about court decisions apply.  Large-scale quantitative overviews only provide one perspective into judicial decisions and are subject to various selective forces that are described in various sources including this one.

Decisions by Origin

As the below chart shows, the gap between decisions (which we define as opinions and Rule 36 summary affirmances) in appeals arising from the USPTO and the District Courts continues to widen.  Both are a little lower so far in 2019 than 2018.   Through the first six months of 2019, the number of decisions arising from the district courts is about 20 fewer than in 2018 (106 through June 30 in 2018 vs. 87 in 2019) and the number of decisions arising from the USPTO is about 10 fewer (132 in 2018 vs. 121 in 2019).

Keep in mind that the Federal Circuit’s output of decisions is dependent on appeals, and appeals form both sources have shown a slight decline from peaks in 2015 (docketed appeals from district courts) and 2016 (docketed appeals from the USPTO).   The next chart shows data from the Federal Circuit’s monthly reports (not the Compendium) about appeals docketed.  While the number of appeals arising from the USPTO will likely go up this year, the number of appeals arising from the district courts is likely to continue declining (consistent with a decline in the number of patent cases filed over the last few years).

I have a chart that shows how many appeals arise from the PTAB versus the TTAB, but it’s not very interesting because the vast majority of appeals every year come from the PTAB (these days, by an order of magnitude).  A bit more interesting is the below chart, which shows Federal Circuit decisions by dispute type in appeals arising from the USPTO.  Consistent with conventional wisdom, most of these involve appeals from inter partes review proceedings, although there was a bump in appeals from rejections of patent applications last year.

Not shown are a handful of miscellaneous types, such as two appeals from post-grant review proceedings in 2018.

Decision Type

Generally, the Federal Circuit tends to use Rule 36 affirmances more frequently in appeals arising from the PTAB than in appeals arising from the district courts.    Through the first six months of 2019, about half of the court’s decisions in appeals arising from the PTAB have been affirmed via Rule 36 summary affirmances.

The Federal Circuit’s opinions arising from the district courts tend to be designated precedential more often than decisions from the USPTO, although the raw numbers of precedential opinions are getting closer.

Outcomes of appeals from inter partes review proceedings

The below chart shows the outcomes of appeals from inter partes review proceedings.  Since 2016, the court’s affirmance rate of these decisions  has remained around 70% (affirmance-in-full) and 80% (including affirmances-in-part).  While selection effects are still important to consider here, keep in mind that these decisions represent a substantial portion of all completed inter partes review proceedings, so there’s less selection taking place between the USPTO’s determination and the Federal Circuit’s decision than in other forms of appeal. Edit: District court decisions likely have a similar high frequency of appeal characteristic; this is more of an observation relative to appeals generally.

We haven’t yet completed outcome-coding of all the decisions arising from the district courts, so comparative data isn’t available yet. (Soon, hopefully!)

Want the data analyzed in a different way?

You’re welcome to play around with the data on your own.  If you do use it for something that you publish, please include a citation to the Compendium.  There’s a convenient cite form on the landing page for the database.

Thanks to my research assistants for their work on the Compendium, especially John Miscevich, Joseph Bauer and Lucas Perlman.

Predictability and Criticality in the Written Description Analysis

by Dennis Crouch

In re Global IP Holdings (Fed. Cir. 2019)

In its reissue application, Global IP asked the PTO to broaden its carpeted-car-floor patent by changing the “thermoplastic” requirement to simply “plastic.”  The PTO rejected the reissue application on written description grounds — noting that the specification only discloses the use of thermoplastics and not parts “formed generally from plastic materials.”  According to the examiner, the broader scope constituted “new matter.”  The PTAB made clear that the, although “plastics” might be enabled and within the skill of someone in the art, the patent document does not show possession of that invention:

[R]egardless of the predictability of results of substituting alternatives, or the actual criticality of thermoplastics in the overall invention,[Global’s] Specification, as a whole, indicates to one skilled in the art that the inventors had possession only of the skins and core comprising specifically thermoplastic.

PTAB Decision.

On appeal, the Federal Circuit has vacated — can you spot the written description error?

In its opinion, the Federal Circuit explained that the level of written description required to show possession “varies depending on the nature and scope of the claims and on the complexity and predictability of the relevant technology.” Ariad.  Thus, the Board erred by stating that the predictability and criticality made no difference.

Contrary to the Board’s statement, the predictability of substituting generic plastics for thermoplastics … is relevant to the written description inquiry. . . . In addition to predictability, we have held that the criticality or importance of an unclaimed limitation to the invention can be relevant to the written description inquiry.

In other words, a variation predictable to PHOSITA is more likely to covered by the written description (as compared with an unpredictable variation). Likewise, variation of a non-critical component of the invention is more likely to be covered by the written description (as opposed to a component at the point of novelty).

= = = = =

Note here that in this case the Examiner/Board raised a standard written description challenge. On remand, they might achieve better results by focusing on the heightened written description standard for broadening reissues.

Heightened Written Description Standard for Reissue Patents


Athena Loses on Eligiblity – Although 12 Federal Circuit Judges Agree that Athena’s Claims Should be Eligible

by Dennis Crouch

Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)

In a 7-5 decision, the Federal Circuit has denied Athena’s petition for en banc rehearing on the question of eligibility of diagnostic patents. As discussed below, the en banc denial includes eight (8) separate opinions — all of which call for Supreme Court or Congressional intervention. Judge Moore explains:

This is not a case in which the judges of this court disagree over whether diagnostic claims, like those at issue in Athena, should be eligible for patent protection. They should. None of my colleagues defend the conclusion that claims to diagnostic kits and diagnostic techniques, like those at issue, should be ineligible. The only difference among us is whether the Supreme Court’s Mayo decision requires this outcome.

Athena and its co-petitioners Oxford University and the Max-Planck institute asked the Federal Circuit to address two particular questions:

  1. Whether this Court now recognizes a categorical bias against patent claims to methods of diagnosis, an impermissible expansion of the Supreme Court’s narrowly defined judicial exception to patent eligible subject matter under 35 U.S.C. § 101.
  2. Whether courts may now exclude claim elements that they deem “conventional” in determining whether the claim is “directed to” patent eligible subject matter, or does Supreme Court authority requiring that claims be assessed “as a whole” still apply in Section 101 analysis.

Athena’s claim at issue covers a method for diagnosing neurotransmission disorders by obtaining “bodily fluid” and running a set of lab tests to identify whether the fluid contains a “MuSK” complex.  I described the patent in a prior post:

Diagnosis: Ineligible

In its original decision, the Federal Circuit found the claim directed to an ineligible preexisting law of nature: “the correlation between the presence of naturally-occurring MuSK autoantibodies in bodily fluid and MuSK-related neurological diseases.” The court found the additional concrete steps in the claim were all “standard techniques in the art” and thus did not rise to a patentable inventive concept.

The en banc denial includes eight (8) separate opinions

  • Concurring opinion by Judge Lourie: Although we disagree with the Supreme Court, we are bound by its precedent. Thus, there is no need to revisit this case. (joined by Judges Reyna and Chen)
  • Concurring opinion by Judge Hughes:  “[T]his is not a problem that we can solve. As an inferior appellate court, we are bound by the Supreme Court. . . . I, for one, would welcome further explication of eligibility standards in the area of diagnostics patents.” (joined by Chief Judge Prost and Judge Taranto)
  • Concurring opinion by Judge Dyk: Section 101 is necessary — sometimes it is the only defense against overbroad patents that would stifle future discoveries.  However, the claims in this case are specific enough and have proven utility an provide the Supreme Court with a good vehicle “to refine the Mayo framework.” (Joined by Judge Hughes, and partially joined by Judge Chen)
  • Concurring opinion by Judge Chen: Under Diehr, the claims are patent eligible — but not under Mayo.
  • Dissenting opinion by Judge Moore: The claims in this
    case should be held eligible, and they are distinguishable
    from Mayo — especially when that case is read in light of Myriad(joined by Judges O’Malley, Wallach, and Stoll)
  • Dissenting opinion by Judge Newman: Medical diagnostics methods are critically important for society and the patent system should encourage their development.  Mayo does not create any anti-diagnosis rule. (joined by Judge Wallach)
  • Dissenting opinion by Judge Stoll:  Although the decision here is foreclosed by Mayo, the court should rehear the case because it is so important. (joined by Judge Wallach)
  • Dissenting opinion by Judge O’Malley: The Supreme Court is simply wrong in its statutory interpretation of 35 U.S.C. 101. 

The statements here by the judges have no direct impact on the law and are all 100% dicta.  That said, this collection of opinions is designed to send a powerful signal to both the Supreme Court and – perhaps more importantly to Congress – that all members of the “high patent court” see a major problem with the law as it stands now.

Of some interest – the judges were almost uniformly all careful to focus their attention on medical diagnosis inventions — suggesting a targeted solution that would not extend to business methods and other information-based inventions.

Good Luck Enforcing a Payment System Patent Claimed in Abstract Form

by Dennis Crouch

Innovation Sciences, LLC v., Inc. (Fed. Cir. 2019)

Eligibility: Of the three patents in suit, the district court found one ineligible under 35 U.S.C. § 101. U.S. Reissue Patent No. 46,140 (asserted claim 17).  The patent claims an use of a “payment server” in an online transaction to enhance transaction security, and the district found “securely processing a credit card transaction with a payment server” to be an unpatentable abstract idea. The key claim step includes the following limitation:

[R]eceiving credit card payment information at the payment server to buy items from a website … “wherein the credit card payment information is received after online communication of the buyer has been switched from the website listing the items to a website supported by the payment server, wherein the switching of the online communication of the buyer is after an indication from the buyer to buy the one or more of the items”

On appeal, the Federal Circuit affirmed the holding — finding that the claim “is directed to the abstract idea of securely processing a credit card transaction with a payment server.”  In reaching that conclusion, the court noted that the claim elements are written in “merely functional, result-oriented terms” — “an idea, having no particular concrete or tangible form.” (quoting Ultramercial).   Further, the recitation of “servers” limited the invention’s use to particular area of existing technology, but did not “render the claims any less
abstract.” (quoting Affinity Labs).

Regarding the wherein clause for switching from a regular server to a payment server, the court explained that the claim is merely directed to the abstract idea of switching — not any particular implementation or system improvement.

In Alice step two, the court explained “[t]here is no inventive concept in the claim’s use of a generic payment server ‘to perform well-understood, routine, and conventional activities commonly used in industry.'”

= = = = =

In the lawsuit, Innovation Services also asserted two other patents with claims that the Federal Circuit explained “are not a model of clarity and stray from the embodiments described in the specification.”

Still, with that framework, the court chose to give the claims their express meaning — broad enough to allow for infringement.  On remand though the court suggests review of the written description and enablement requirements. (“We do not express an opinion as to whether they satisfy the
requirements of § 112.”)


When do the “Principles of Equity” allow for Profit Disgorgment?

Romag Fasteners, Inc. v. Fossil, Inc., et al., No. 18-1233 (Supreme Court 2019).

The Supreme Court has granted writ of certiorari in the trademark case of Romag Fasteners involving profit disgorgement under 15
U.S.C. § 1117(a).

The statute appears to provide profit disgorgment (i.e., awarding the defendant’s profits) as a regular remedy for trademark infringement although “subject to the principles of equity.” In its decision, the Federal Circuit (following 2nd Circuit law) held that profit disgorgment must be associated with a more-egregious activity – such as willful infringement – before being awarded.  Here, the jury found no willful infringement and so that foreclosed the award of the defendant’s profits.  We are now set-up for the Supreme Court to decide the following question presented:

Whether, under section 35 of the Lanham Act, 15 U.S.C. § 1117(a), willful infringement is a prerequisite for an award of an infringer’s profits for a violation of section 43(a), id. § 1125(a).

Question presented in petition.  The adjudged infringer Fossil provided its alternative question as follows:

Whether the Court should address the standard for an accounting of a defendant’s profits even though (a) regardless of the different formulations of “principles of equity” invoked by lower courts, their application in the overwhelming majority of cases results in an accounting being ordered when the infringement was willful and denied when it was not; and (b) the trial court’s findings in this case bar petitioner from recovering respondents’ profits under either standard applied by the courts of appeals.

The relevant statute itself reads as follows:

When a violation of any right of the registrant of a mark registered in the [PTO], a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.

My reading of the statute itself suggests that non-willful infringement can support an award of defendant’s profits, so long as that award is in accord with “the principles of equity.”  And, those principles are not fully defined for this particular question. There is also a question of timing — principles of equity as of when? Are these 18th; 19th; 20th; or 21st century equity principles?

In the patent world, profit disgorgment is permitted as a remedy for design patent infringement.  That remedy is not expressly limited to willful infringement or limited by the principles of equity.  However, the remedy does require on-its-face an “imitation,” which in my mind should be read to require some amount of copying.

Duty to Submit Supplemental Evidence

Polygroup Limited MCO v. Willis Electric Co., LTD (Fed. Cir. 2019)

In a rare split decision, the PTAB upheld the patentability of Polygroup’s U.S. Patent No. 8,974,072 (2-1 decision).  On appeal, however, the Federal Circuit has vacated that decision with an oddly written double-negative conclusion: “substantial evidence does not support the Board’s finding that Polygroup failed to establish a rationale to combine the prior art.”

This case is part of ongoing litigation between these makers of pre-lit artificial trees. The appeal here was already pending when the Federal Circuit decided a separate set of IPR appeals – holding that the PTAB had been unduly narrow in its claim construction on the claim term “tree portion” and had also failed to address a single-reference obviousness argument.  [prior decision] The patent at issue here is a child of that at issue in the prior case. On appeal here, those same issues were raised and – in a conclusory statement – the appellate panel found them resolved for the child as a matter of collateral estoppel (issue preclusion):

[B]ecause we have already decided [these issues] in Polygroup’s favor in a previous appeal concerning U.S. Patent No. 8,454,186, a parent of the ’072 patent, [these arguments have] been resolved against Willis as a matter of collateral estoppel.

The court here does not explain its view of whether claim construction associated with a parent patent always decides the issue for a child patent.  In the case, we apparently had a lack of good briefing.  Apparently neither party provided supplemental authority to this panel regarding the intervening decision, and the court provided a little chastising footnote:

Although Polygroup notified us that it anticipated an earlier decision … would control the “tree portion” construction issue in this appeal, see Appellant’s Br. 1, we expected more. Pertinent and significant authority came to the parties’ attention after the briefing in this appeal concluded, yet both parties failed to notify the Panel about this occurrence. Rule 28(j) contemplates the submission of such supplemental authority. Fed. R. App. P. 28(j).

To be clear, 28(j) does not require supplemental submissions, but only states that “a party may promptly advise” the court of “pertinent and significant authorities” identified after briefing or oral arguments. At oral arguments, the Judges went further to state that the failure to submit supplemental authority “is no small matter; its your duty to ensure to ensure to the best you can, that the court doesn’t go down blind alleys.” “Both [counsel] had an obligation to advise us of these cases.”  The court’s upset here is a bit odd since the parties had designated these cases as related and one of the judges (Judge Dyk) was on both sets of panels.

Regarding the actual underlying obviousness decision: The big question was whether someone of skill in the art would alter “snap-fitting” electrical connectors with the claimed tapered compression-fitted electrical connectors. In its decision, the Board found that these were not known alternatives.  On appeal, the Federal Circuit vacated that conclusion — finding that the board made several errors in its reasoning that were not supported by substantial evidence. On that portion, I’ll just say that it appears to be a poorly written decision.

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Patently-O Software Law Bits & Bytes: Do Not Track Act of 2019 by Grant Harrison

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Overview: Do Not Track Act of 2019 is, in its simplest form, a way to regulate data collected by big tech companies. The bill would require the FTC to create a program that, upon request by the user, sends a “Do Not Track Signal” to websites and online applications. The Do Not Track Act of 2019 is an adaptation of its formers, with the new add on of regulating this for all of the internet activity, not just web browsers. The bill would require the FTC to create a program that, upon request by the user, sends a “Do Not Track Signal” to websites and online applications

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Eligibility: Pleadings are Enough, but they must Tie the Claims to an Inventive Concept

Cellspin Soft v. Fitbit, Moov, Nike, Fossil, etc. (Fed. Cir 2019)

The district court dismissed Cellspin’s infringement lawsuit on the pleadings — finding the asserted claims unenforceable as a matter of law under 35 U.S.C. § 101 (ineligible abstract idea).  On appeal, the Federal Circuit has vacated — holding instead that the early-stage dismissal was inappropriate because the patentee’s amended complaint included “specific factual allegations” that, when accepted as true, showed a plausible inventive concept sufficient to satisfy Alice Step 2.

The court explains here that under Aatrix, “plausible and specific factual allegations that aspects of the claims are inventive” are sufficient to overcome a pleadings-stage motion to dismiss.  “[T]he specification need not expressly list all the reasons why this claimed structure is unconventional” so long as the arguably inventive elements are “recited by the claims.”

Here, the claims recite a sensor with Bluetooth.  The claims recite a “two-step, two-device structure requiring a connection before data is transmitted.” And, the complaint identified this structure as a concrete and inventive application that goes beyond the abstract idea of “acquiring, transferring, and publishing data and multimedia content on one or more websites.”  The appellate panel found that “[t]he district court erred by not accepting those allegations as true.”

On remand, the case will move to summary judgment stage — moving beyond the mere allegations and looking at the evidence produced by both parties.  The burdens of proof and presentation at summary judgment may be confusing.  Eligibility is a question of law that does not necessarily require any evidentiary conclusions by the court.  However, we would expect that the patentee here will present some amount of evidence (probably expert testimony coupled with documentation) potentially sufficient to support a prima facie case of inventive concept under Alice Step 2.

The term inventive concept sounds very patent-like, but the law remains confused about more precise qualities of the term.  A patent claim directed to an abstract idea (or law of nature) can still be patented so long as it also recites an “inventive concept.”  Inventive Concept:

  • Something more than the application of an abstract idea using “well-understood, routine, and conventional activities previously known to the industry.”
  • Enough to “transform an abstract idea into a patent-eligible invention.”
  • More than simply “using conventional and well-understood techniques.”

Here, the court held that the patent itself must include the concept (and it must be particularly claimed) but need not explain in the specification that it represents the inventive concept. What is not clear is how directly inventive concept relates to other patentability concepts such as novelty, obviousness, and utility.

Guest Post by Prof. Farley: SCOTUS’s Second Take on Trademark Registration as Speech

By Professor Christine Haight Farley, American University Washington College of Law.  Here, Professor Farley offers her take on Iancu v. Brunetti.  You can read Dennis’s write-up here.

The Supreme Court has now struck down as unconstitutional a second trademark registration bar. The court ruled yesterday in Iancu v. Brunetti that the government may no longer deny trademark registration to marks that are “scandalous” or “immoral.” In 2017, the court struck down a provision that denied trademark registration to marks that are “disparaging” in Matal v. Tam. Both registration bars appear in Section 2(a) of the Lanham Act.

Many commentators had seen the cases as so similar that they wondered why the court had even granted certiorari. Perhaps as a result, the case provoked less interest from amicus brief authors. The conventional wisdom was that the court’s opinion in Tam left no room to uphold this provision.

In Tam, the court ruled that denying trademark registration to marks that disparage constitutes viewpoint discrimination because the government was sorting out “ideas that offend.” The court reconfirmed that viewpoint discrimination is presumptively unconstitutional. In his concurrence, Justice Kennedy described viewpoint discrimination as “a form of speech suppression so potent that it must be subject to rigorous constitutional scrutiny.”

For the Brunetti majority, this was a simple case. Indeed, Justice Kagan, who wrote the majority opinion joined by Thomas, Ginsburg, Alito, Gorsuch, and Kavanaugh, dispensed with the case in ten and a half tight pages even as she devoted a full page to examples of marks that were refused registration (comparing them to similar marks that were approved for registration). The opinion is short and sweet: this is the same case as Tam.

According to the majority, the provision at issue “disfavors ideas” and as such is substantively indistinguishable from the provision in Tam. Here, “the Lanham Act allows registration of marks when their messages accord with, but not when their messages defy, society’s sense of decency or propriety.”

The final page or so of the majority opinion is devoted to explaining why the statute cannot be saved by the “limiting principle” offered by the government. This is the part of the opinion about which there is dissent.

The majority rejects the government’s proposal to limit application of this provision to “vulgar” marks–“lewd,” “sexually explicit or profane” marks. Although such a construction would avoid any viewpoint discrimination, the majority holds that the “immoral or scandalous” bar “stretches far beyond the Government’s proposed construction.” The majority concludes that such a construction would amount to the court rewriting the statute because the plain meaning of the statutory language is broader and ensnares marks that offend because of the ideas they express, not just by their mode of expressing ideas.

Here, in the majority opinion’s only footnote, the majority rebuffs the dissenters characterizing their approach as “statutory surgery.” The majority disagrees that the statute is in any way ambiguous and therefore subject to reinterpretation.

Chief Justice Roberts, Justice Breyer, and Justice Sotomayor each filed separate opinions. Although each concurred that the registration bar on mark that are “immoral” amounts to unconstitutional viewpoint discrimination, each would have limited the court’s constitutional sword to strike down only this provision. Each accepted the government’s limiting principle as an appropriate means to avoid a finding that an act of Congress is unconstitutional.

Justice Breyer began his opinion by citing the court’s precedent that, where fairly possible, the court should endeavor to find a statute constitutional. Interestingly, in Tam the court did not, as the majority put it, “pause to consider whether the disparagement clause might admit some permissible applications (say, to certain libelous speech) before striking it down.”

It is in this space, that I believe the Brunetti decision offers a new and interesting perspective on the court’s approach to the First Amendment. In Brunetti, four Justices expressed a view that scandalous modes of expression should be barred trademark registration. In addition to the three dissenters, Justice Alito, the author of the majority opinion in Tam, stated in his concurring opinion that the court’s opinion would not “prevent Congress from adopting a [] statute that precludes the registration of marks containing vulgar terms that play no real part in the expression of ideas.” He went on to note that the mark in question in this case—FUCT–“is not needed to express any idea and, in fact, as commonly used today, generally signifies nothing except emotion and a severely limited vocabulary.”

Justice Alito’s lack of solicitude toward a portion of the marks targeted by the scandalous provision was echoed by Justices Roberts, Breyer, and Sotomayor. Chief Justice Roberts flatly states that “refusing registration to obscene, vulgar, or profane marks does not offend the First Amendment.” Justice Breyer goes so far as to suggest that “an applicant who seeks to register a mark should not expect complete freedom to say what she wishes, but should instead expect linguistic regulation.”

These sympathetic sentiments toward the government’s interest in regulating vulgarity is in sharp contrast to Tam, in which no Justice expressed any support for the government’s regulation of racial epithets. In Tam, the majority stated that “trademarks often have an expressive content” and Kennedy stated that “marks make up part of the expression of everyday life.” In Brunetti, in the context of vulgar marks, no Justice made mention of “expressive marks” beyond the majority’s conclusion that the provision targets ideas that offend.

In Brunetti, it would also appear that some Justices have retreated from the idea that a registration refusal is a burden on speech. I’ve already mentioned Justice Breyer’s suggestion that applicants ought to expect linguistic regulation. Perhaps the most striking rebuttal of registration as speech comes in this passage in Chief Justice Roberts’ opinion:

“Whether such marks can be registered does not affect the extent to which their owners may use them in commerce to identify goods. No speech is being restricted; no one is being punished. The owners of such marks are merely denied certain additional benefits associated with federal trademark registration. The Government, meanwhile, has an interest in not associating itself with trademarks whose content is obscene, vulgar, or profane. The First Amendment protects the freedom of speech; it does not require the Government to give aid and comfort to those using obscene, vulgar, and profane modes of expression.”

Such statements will likely surprise anyone who has read the Tam decision—unless that person attended the oral arguments in Brunetti. Although, as I have suggested, commentators expected the Brunetti case to closely follow Tam, the dialogue in oral arguments were a good clue that at least some members of the court were seeing something different in the Brunetti case. Whereas in Tam, the court appeared to be overwhelming concerned with the free speech rights of Simon Tam who was presented a civil rights activist, in Brunetti, it seems suddenly to have dawned on the court that at issue was the obligation of the government to register a white supremist’s application for the N-word.

This new unease comes through most clearly in the opening lines of Justice Sotomayor’s opinion:

“The Court’s decision today will beget unfortunate results. With the Lanham Act’s scandalous-marks provision, 15 U. S. C. §1052(a), struck down as unconstitutional viewpoint discrimination, the Government will have no statutory basis to refuse (and thus no choice but to begin) registering marks containing the most vulgar, profane, or obscene words and images imaginable.”

In his opinion, Justice Breyer remarks, “Just think about how you might react if you saw someone wearing a t-shirt or using a product emblazoned with an odious racial epithet.” Yes, Justice Breyer, many of us were thinking about exactly that in the Tam case as it caused the Redskins to recover their mark. Undoubtedly, Justice Breyer has seen a few of these t-shirts around DC.

Just three cases have caused a recent interest in these trademark registration provisions: first the Redskins case (Blackhorse v. PFI), then Tam, and finally Brunetti. Previously, the constitutionality of these provisions was settled by the Court of Customs and Patent Appeals, the predecessor to the Court of Appeals for the Federal Circuit, in In re McGinley. On the constitutional issue alone, these three cases have produced seventeen opinions. Even still, many important questions have been explicitly sidestepped such as to what extent, if any, the commercial speech doctrine plays, whether viewpoint neutral content discriminatory registration bars pass muster, or whether trademark registration may be considered as a government program or subsidy. In light of what has transpired, perhaps the McGinley court’s approach has some virtues. In McGinley, the court circumvented the constitutional issue by finding that the government’s refusal to register a mark does not affect the right to use it: “No conduct is proscribed, and no tangible form of expression is suppressed. Consequently, appellant’s First Amendment rights would not be abridged by the refusal to register his mark.” Moreover, as Justice Sotomayor noted in a footnote, the McGinley court bifurcated “scandalous” from “immoral” in precisely the manner that the dissenters suggest would save that bar from being struck down as unconstitutional.

In the end, the implications of this case are narrow. As to First Amendment jurisprudence, we perhaps glean a few more clues as to how to determine what constitutes a viewpoint. Beyond that, we learn that at least four members of the court would support regulating vulgar expression. As to trademark law, it would appear that no further statutory or doctrinal vulnerabilities emerge from this decision that had not been portended by Tam. This decision, however, does pave a path forward for amending the Lanham Act to add a bar to the registration of marks that are “scandalous in their mode of expression,” or are “vulgar, lewd, sexually explicit, or profane.”