Patenting an Artificial Replica of a Natural Phenomenon

by Dennis Crouch

A natural phenomenon is not patent eligible — neither is a man-made items that is identical to a naturally occurring.  The image below sure looks like a natural stone pattern, but is actually an image of an artificial quartz stone slab patented in U.S. Design Patent No. D825,787 that issued in August 2018.

The inventor – Yihua Su – holds several other design patents — all covering the “ornamental design for an artificial quartz stone slab, as shown and described.”

I’ll note here that the patent owner Herostone markets this particular surface under the name “Calacatta Venatina” — a slight variation on the popular italian marble known as Calacatta Venatino.

As per usual standard operating procedures, the USPTO issued the design patent in a first-action-allowance without rejection and without citing must of relevance.

Federal Circuit and Sealed Opinions

by Dennis Crouch

The Federal Circuit has been releasing a substantial number of sealed opinions that stem out of confidential briefs.  The Court’s usual operating procedure is to issue the opinion in a sealed form along with an order to show-cause as to what aspects of the opinion (if any) need to remain under seal.

The court’s approach appears to comport well with the requirements under the Defend Trade Secrets Act of 2016 (DTSA). In particular, 18 U.S.C. 1835(b) reads:

(b) Rights Of Trade Secret Owners.—The court may not authorize or direct the disclosure of any information the owner asserts to be a trade secret unless the court allows the owner the opportunity to file a submission under seal that describes the interest of the owner in keeping the information confidential. . . .

In a 2016 essay, I explained that the statute appears designed to “prevents a court from disclosing a trade-secret in its opinion without first providing the trade-secret owner with the opportunity to brief the issue of disclosure.”

I’ll note here that the “rights” defined by Section 1835(b) appear purely procedural — the trade secret owner gets a chance to explain its position in an under-seal filing.  It does not actually prevent the court from subsequently disclosing the alleged trade secret.

Rights of Trade Secret Owners in Federal Cases

Supreme Court 2018 — Pending Cases for September Conference

by Dennis Crouch

The Supreme Court now starting its Fall 2018 term with its first Conference set for September 24, 2018.  At that initial Conference, the Court is set to consider certiorari in for a rich set of pending patent cases.  The following is a rundown of some of the more interesting:

  • Smartflash LLC v. Samsung Electronics America, Inc. et al., No. 18-189 (Three good questions):
  1. Whether Administrative Patent Judges of the [PTAB] are principal Officers of the United States who must be appointed by the President with the advice and consent of the Senate under the Appointments Clause.
  2. Whether retroactive application of CBM Review to patents on inventions disclosed before passage of the [AIA] violates the Due Process Clause of the Fifth Amendment.
  3. Whether undisputed evidence that a patented invention is not unduly preemptive, presented to technically proficient judges of the Board, is relevant to the question whether the invention is patent-eligible under 35 U.S.C. § 101.
  • B/E Aerospace, Inc. v. C&D Zodiac, Inc., No. 17-1252 (are the objective indicia of non-obviousness analyzed only after a prima facie case of obviousness is established).
  • Nichia Corporation, et al. v. Everlight Electronics Co., Ltd., et al., No. 17-1707 (Although obviousness is a question of law, should deference be given to a jury’s verdict on the ultimate legal question?).
  • Regeneron Pharmaceuticals, Inc. v. Merus N.V., No. 17-1616 (litigation misconduct and inequitable conduct).
  • Bombardier Recreational Products Inc., et al. v. Arctic Cat Inc., No. 17-1645 (does the “should have known” standard for willful infringement under Seagate meet the “intentional or knowing” requirement set forth in Halo v. Pulse).
  • RPX Corporation v. ChanBond LLC, No. 17-1686 (appellate standing for IPR petitioner).
  • Integrated Technological Systems, Inc. v. First Internet Bank of Indiana, No. 17-1590 (“Does 35 U.S.C. § 282 allow for challenges to a patent’s validity based on patent eligibility under 35 U.S.C. § 101?”).
  • Allergan Sales, LLC v. Sandoz, Inc., et al., No. 18-21 (whether the court may “ignore a factual stipulation” resulting in a non-infringement finding).
  • Jang v. Boston Scientific Corporation, et al., No. 17-1332 (does “ensnarement” apply as a defense to patent infringement).
  • Queen’s University at Kingston, Petitioner v. Samsung Electronics Co., Ltd., et al., No. 18-190 (does the presumption that prior art is enabled improperly invert the statutory burden).
  • Leon Stambler v. Mastercard International Inc., No. 17-1140 (Whether the Federal Circuit’s issuance of Rule 36 judgments without opinions for the disposition of appeals from the Patent and Trademark Office violates 35 U.S.C. § 144’s requirement that the Federal Circuit “shall issue” its “mandate and opinion” for such appeals.).
  • Promega Corporation v. Life Technologies Corporation, et al., No. 17-1669 (timing of a new trial motion — does the 28-day rule of R.50(d) apply).
  • Paul Andrew Leitner-Wise v. LWRC International, LLC, et al., No. 18-52 (does an inventor have any residual patent rights after assigning the patent).
  • Droplets, Inc. v. Iancu, No. 17-1384 (Chenery doctrine: can an appellate court substitute its own views of the law in siding with an agency decision?).
  • American Technical Ceramics Corp. v. Presidio Components, Inc., No. 17-1497 (Indefiniteness: Can a court rely only on the ex post facto application of the scientific method to hold that the “clear notice” requirement of § 112 ¶ 2 has been satisfied?).
  • New World International, Inc., et al. v. Ford Global Technologies, LLC, et al., No. 18-264 (when is a suit dismissed on personal jurisdiction grounds barred from refiling?).

From the USPTO: PTAB Standard Operating Procedures

The PTAB has substantially revised its Standard Operating Procedures (“SOPs”) regarding paneling of matters before the PTAB (SOP1) and precedential and informative decisions (SOP2). The revisions focus upon increasing transparency, predictability, and reliability across the USPTO. They update the procedures based upon feedback received from stakeholders, courts, legislators, and our 6 years of experience with AIA trial proceedings.

Revised SOP1 explains the procedures for panel assignment and for informing parties regarding panel changes. It also explains the process for designating panels with more than three judges, and notes that such panels should be rare and will only occur with the approval of the Director.

Revised SOP2 creates a Precedential Opinion Panel (POP), typically comprising the Director, the Commissioner for Patents, and the Chief Judge of the PTAB. The POP will serve two primary functions: 1) it may be convened to rehear matters in pending trials and appeals, for example on issues of exceptional importance; and 2) it may assist the Director in determining whether a decision previously issued by the PTAB should be designated as precedential or informative. It is expected that the POP and the procedures described in revised SOP2 will, in most cases, replace the prior practice of expanded paneling under SOP1, with a process that is more transparent and predictable. It is also expected that revised SOP2 will result in more decisions being designated as precedential.

Revised SOP2 includes, among other things:

  • Creation of the POP, typically comprising the Director, the Commissioner for Patents, and the Chief Judge of the PTAB;
  • Identification of the circumstances when POP members may delegate their authority, and to whom;
  • Provision of notice to the parties when POP review takes place, as well as the identification of the POP members in a particular case;
  • Explanation of the standards, procedures, and timing for requesting POP review in a pending case on rehearing; and
  • Revised procedures for designating a decision previously issued by the PTAB as precedential or informative.

For more details about revised SOP1 and SOP2, please see the full text available on the USPTO website.

Federal Circuit revives the Entire Market Value Rule for Calculating Damages (Although it is Still Disfavored)

by Dennis Crouch

In this past summer’s Power Integrations v. Fairchild decision (Power Integrations I), the Federal Circuit held that the entire market value rule cannot be used to calculate infringement damages unless the patentee proves that the unpatented features in the accused product did not influence consumer demand.  The patentee had not met that burden and so the $140 million verdict was vacated and remanded.  Power Integrations, Inc. v. Fairchild Semiconductor Intl., Inc., 894 F.3d 1258 (Fed. Cir. June 3, 2018) (altered on rehearing)

On petition, the original panel has  revised its opinion — but maintained its judgment vacating the damage award.  Power Integrations II.

In the revised opinion, the court pulled back from the level of proof required. In particular, under the old language, the court required proof that the non-patented features were not relevant to and did not influence the consumer purchasing decision. The new formulation requires the patentee seeking EMVR damages show that the non-patented features “did not cause consumers to purchase the product.” The relevant blackline edits are in the following paragraph:

Where the accused infringer presents evidence that its accused product has other valuable features beyond the patented feature, the patent holder must establish that these features are not relevant to consumer choice do not cause consumers to purchase the product. . . . When the product contains other valuable features, the patentee must prove that those other features did not influence purchasing decisions do not cause consumers to purchase the product.

The result here is a revival of the EMVR as a way to calculate patent damages, although it will still be disfavored.

In the original opinion the panel had also provided an example situation where it “may be appropriate” to apply the entire market value rule — notably where the non-patented features of an accused product are “simply generic and/or conventional and hence of little distinguishing character.”  In the revised opinion, the court added a tiny-bit more explanation with the example “such as the color of a particular product.”



Standing to Appeal: When does a petitioner have Standing to Appeal?

by Dennis Crouch

My prior post on DuPont v. Synvina focused on the obviousness of a claimed range in the context of inter partes review (IPR) proceedings.  The decision also raises a question of standing — whether the patent challenger DuPont had standing to appeal the IPR decision favoring the patentee Synvina.

E.I. DuPont de Nemours v. Synvina C.V. (Fed. Cir. 2018)

The patent act provides a couple of limits on who may file a petition to institute an IPR. The petitioner must be “a person” and may not be either the patent owner nor a person (or privy) who was sued for infringing the patent more than 1-year before the petition filing date.* Notably absent – the IPR statute does not require the petitioner to have any reason for challenging the patent or any actual dispute with the patentee.

Courts are different – a lawsuit cannot be filed by just any person.  Rather, the plaintiff must have “standing” — a an actual case or controversy that the lawsuit can resolve.  Standing is required at every stage of court litigation. This creates a bit of a difficulty for IPR proceedings: Although no standing is required for a patent challenger to pursue an IPR proceeding — standing is required once the case goes to the Federal Circuit on appeal.  In this situation, the patentee always has standing — their patent is under risk of being cancelled.  However, the patent challenger needs to show that it has an actual stake in the outcome of the decision — even though the Patent Act appears to provide a right-of appeal to any “party dissatisfied” with the IPR outcome.

In a 2016 decision in Spokeo, the Supreme Court explained that standing requires that a plaintiff must have:

(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.

Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016).  When a harm has already occurred, the injury-in-fact is easy to find. However, in pre-injury declaratory situations — the injury requirement may be met by a potential injury “of sufficient immediacy and realty.” ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345 (Fed. Cir. 2011).  In Consumer Watchdog, however, the Federal Circuit noted in dicta that the immediacy requirement “may be relaxed” in situations like this “where Congress has accorded a procedural right to a litigant, such as the right to appeal an administrative decision.”  Consumer Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258 (Fed. Cir. 2014).

Here, DuPont – the patent challenger – has (apparently) never been accused of infringing the Synvina patent; does not believe that it presently infringes the patent; and is not paying any royalties based upon the patent’s validity.  However, the Federal Circuit identified a controversy based upon the fact that DuPont’s factory has the capability of infringing:

Such a controversy exists here because DuPont currently operates a plant capable of infringing the ’921

I’ll note here that the court appears to have written this as a broad statement that could apply in many untold situations, including declaratory judgment actions.  However, later courts may cabin-in the holding to the specific facts of this case.

If you remember my prior post, the patent at issue covers a method of making a “green” plastic-precursor known as FDME from plant sugars (fructose).  In reaching its decision, the court walked through several bits of evidence that all come together to show that the DuPont plant has the capability use the claimed invention in its factory:

According to DuPont’s declarations, the process conducted at its plant uses the same reactants to generate the same products using the same solvent and same catalysts as the ’921 patent. Likewise, the temperature and PO2 ranges used at the plant overlap with those claimed in the ’921 patent. At the very least, this indicates that DuPont “is engaged or will likely engage in an activity that would give rise to a possible infringement suit.”  Quoting JTEKT

In its decision, the Federal Circuit also noted two additional facts that it saw as supporting standing:

  1. At the Board Synvina argued that DuPont had copied elements of Synvina’s invention and put them in a DuPont application (the board found this not compelling).
  2. Synvina has refused to grant DuPont a covenant not to sue.

Together, these “further confirm that DuPont’s risk of liability is not conjectural or hypothetical.”

With the standing requirement met, the Federal Circuit was able to hear DuPont’s argument and agreed that the claims are obvious.

Burden Shifting at the PTAB and the Obviousness of Ranges


#tarriffed: IP at Core of Enhanced Chinese Tariff — WTO Action Pending in the Background

by Dennis Crouch

The White House is following through with its promise of adding a 10% tariff to $200 billion in goods imported into the US from China — set to begin on September 24, 2018.  On January 1, 2018, the tariffs are set to be raised to 25% on January 1, 2019. This is in addition to the 25% tariff applied earlier this summer on $50 billion in imports.  The President also issued statement that “if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”

Note – the tariffs are calculated based upon a valuation of the goods at the point of entry into the US.  The Trade Agreements Act of 1979 provides six different ways methods of customs valuations in ranked order: (A) transaction value; (B) transaction value of identical merchandise;  (C) transaction value of similar merchandise; (D) deductive value; (E) computed value; and (F) reasonable value. 19 U.S.C. 1401a.

Earlier in 2018, the United States Trade Representative (USTR) released its Section 301 Report concluding that China is engaged in unfair policies and practices relating to United States technology and intellectual property. The report highlighted:

  • “China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.
  • China deprives U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations.
  • China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer.
  • China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially valuable business information.”

According to the USTR release, the new tariffs follow because “China has been unwilling to change its policies involving the unfair acquisition of U.S. technology and intellectual property.”

Trade Act of 1974 authorizes the USTR to take action to address these conclusions — via tariffs and exclusion orders.

In addition to US unilateral action, the WTO Dispute Settlement System is designed to help countries resolve this exact type of dispute the US and China have filed competing complaints that are now in process.  The key underlying dispute is DS542 filed by the US against China for “Certain Measures Concerning the Protection of Intellectual Property Rights” in violation of Articles 3, 28.1(a) and (b) and 28.2 of the TRIPS Agreement.  In the complaint (“request for consultations”) document, the USTR explained the basis for WTO action:

China denies foreign patent holders the ability to enforce their patent rights against a Chinese joint-venture party after a technology transfer contract ends. China also imposes mandatory adverse contract terms that discriminate against and are less favorable for imported foreign technology. Therefore, China deprives foreign intellectual property rights holders of the ability to protect their intellectual property rights in China as well as freely negotiate market-based terms in licensing and other technology-related contracts.






Burden Shifting at the PTAB and the Obviousness of Ranges

2,5-Furandicarboxylic acid.pngby Dennis Crouch

The new DuPont v. Synvina decision is important for its specific application obviousness of claim ranges.  It also creates some amount of tension with prior cases — particularly Dynamic Drinkware and Magnum Oil – regarding burden shifting within Inter Partes Review proceedings.

E.I. DuPont de Nemours v. Synvina C.V. (Fed. Cir. 2018)

In its Inter Partes Review (IPR) final decision, the Board sided with the patentee — finding that DuPont hadn’t proven Synvina’s challenged chem-prep patent obvious. (Claims 1-5 and 7-9 of U.S. Patent 8,865,921.)  On appeal, the Federal Circuit has reversed — um actually, the claims are obvious.

Claim 1 is directed to a method of preparing FDCA — an organic compound known since 1876.  FDCA can be made from plant-sugars and then used to make plastic and other polymers.

The claim requires only one step — “contacting a feed . . . in the presence of an oxidation catalyst . . .  at a temperature between 140° C. and 200° C. [and] at an oxygen partial pressure of 1 to 10 bar.”   The claim particularly defines the “feed” (“a compound selected from the group consisting of [HMF], an ester of [HMF], [5MF], . . .  and a mixture of two or more of these compounds with an oxygen-containing gas” as well as the catalyst (“both Co and Mn, and further a source of bromine”) and indicates that the claimed contacting takes place in the presence of “acetic acid or acetic acid and water mixture”.

One-step methods were already known for preparing FDCA, but disclosed different temperature, pressures, solvents, and catalysts.  The closest identified prior art references are listed below as comparisons to the aforementioned claim 1.

In a number of prior cases, even pre-KSR, the Federal Circuit has found a “prima facie case of obviousness” when ranges within the prior art overlap with that of the claimed invention.

A prima facie case of obviousness typically exists when the ranges of a claimed composition overlap the ranges disclosed in the prior art.

In re Peterson, 315 F.3d 1325 (Fed. Cir. 2003).  That prima facie case may be overcome by evidence from the patentee — by providing evidence of unexpected results, for example.  Here, however, the PTAB did not apply this burden-shifting approach — rather, the Board cited Dynamic Drinkware and Magnum Oil as prohibiting this old-style burden-shifting framework in the IPR context.

On appeal, the Federal Circuit holds here that the traditional obviousness burden-shifting associated with ranges applies to IPR proceedings.  To be clear, the patentee never has the burden of proving non-obviousness.  But, once a prima facie case of obviousness is established, the claims will be cancelled unless the patentee provides evidence to support its position.  The court explains:

While a patentee technically has no “burden” to do anything to defend the validity of its patent other than hold the patent challenger to its own burden of persuasion, that burden of persuasion is necessarily satisfied when there is no evidentiary reason to question the prior art’s disclosure of a claimed range. Magnum Oil is not to the contrary.

Having articulated the standard, the court then looked at evidence presented — finding that “[t]he ranges disclosed in the prior art overlapped with those of claim 1.”  In particular, the court pieced together the cited references above to show overlap — when taken as a whole.  That overlap created a prima facie case of obviousness — and the patentee was unable to present evidence to unseat that initial conclusion. “At bottom, this case involves a strong case of obviousness based on very close prior art and weak evidence of nonobviousness.”


by Dennis Crouch

S. 3416 An Act to amend the Leahy-Smith America Invents Act to extend the period during which the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office may set or adjust certain fees.

Mr. Grassley (for himself, Mrs. Feinstein, Mr. Coons, and Mr. Hatch) recently introduced the USPTO FEES Act – Funds for Efficient and Effective Services Act.  The primary clause in the provision would extend the USPTO feemaking authority for an additional eight years.

Section 10(i)(2) of the Leahy-Smith America Invents Act (35 U.S.C. 41 note) is amended by striking “the 7-year period beginning on the date of the enactment of this Act” and inserting “the 8-year period beginning on the date of enactment of the USPTO FEES Act”.

The current law provides for a sunsetting of USPTO Fee Setting authority:

AIA Sec. 10(i)(2) SUNSET.—The authority of the Director to set or adjust any fee under subsection (a) shall terminate upon the expiration of the 7-year period beginning on the date of the enactment of this Act.

The AIA was enacted on September 16, 2011 — thus, the 7-year period ended on September 16, 2018. Under under this now historic provision, the USPTO was essentially given discretionary authority to set its own fees with the caveat that the fees be set in “only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents.” AIA Section 10(a)(2).

Prior to 2011, changes in fees or the fee structure required a specific Act of Congress.

The USPTO is currently receiving comment associated with a proposal to shift some of its fees. However, the Office does not have authority to restructure those fees without first hearing from Congress and the President.

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Guest Professor: Arguing the Scandalous Clause

Prof. Ned Snow (SC) has published several articles on the interplay between free speech and intellectual property rights. His most recent article is titled Denying Trademark for Scandalous Speech. I asked him to provide some comments on the Brunetti FUCT case. – DC

by Prof. Ned Snow

The arguments against the scandalous clause are several.  Trademark law, it is argued, should concern itself with consumer efficiencies and commercial goodwill—not the psychological protection of children or the majoritarian morality.  Consumers choose whether they will view a mark; so by trademarking a scandalous image, no one is forcing anything on anyone.  Besides, it’s inevitable that children will hear and see much worse in schools and on the internet.  Furthermore, given the diverse moral views in society, a moral-based criterion seems very subjective to enforce.  Trademark eligibility, it is argued, should not reflect the moral code of the PTO, a judge, or anyone else for that matter.  It should reflect laissez-faire ideals: if there is demand, let the market supply it.  So go the arguments.

But these arguments are misplaced.  The focal point of Brunetti is not about whether the scandalous clause seems unwarranted or foolish.  That the clause apparently does not reflect good policy is irrelevant to the discussion at hand.  Why?  Because this is a case about separation of powers—not about policy arguments for or against the scandalous clause.  This is a case about whether courts have power to strike down an act of Congress.  As seemingly unwise as congressional acts may be, the Constitution provides Congress a large measure of discretion before a court must step in and strip away the majority’s will.  This simple, bedrock principle often gets lost in the debate.  The debate quickly moves to the merits of whether the scandalous clause makes good sense in trademark law.  As interesting as that question may be, it is not the focus here.  The question here is whether Congress has exceeded its broad discretionary authority.

Viewed through this framework, the issue takes on a new light.  The presumption is that Congress always acts within its discretionary authority to pass a law.  But of course Congress shall make no law abridging the freedom of speech.  And when does “abridging” occur?   Case law indicates that when Congress is imparting a benefit rather than imposing a penalty, the argument that an abridgment has occurred becomes much weaker.  When Congress is giving a property right rather than taking one away, the Court has interpreted the Constitution as providing Congress much more leeway to make laws that affect speech content.  Enter the limited-public-forum doctrine.  The trademark system amounts to Congress distributing a resource in order to facilitate private speech that promotes commercial transactions.  This description nicely fits the meaning of a limited public forum.  Accordingly, insofar as Congress’s choice of how to determine trademark eligibility is at least reasonable in light of trademark’s purpose, and insofar as Congress does not favor a particular viewpoint, Congress is not abridging speech.  In that situation, courts lack power to invoke the First Amendment as a basis to condemn Congress’s choice.

The issue, then, boils down to whether the scandalous clause is viewpoint neutral, and whether its restriction is at least reasonable in view of trademark’s general purpose of promoting commercial transactions.  Viewpoint neutrality turns on the meaning of scandalous.  If scandalous means anything offensively immoral (which is what the “immoral clause” means), or alternatively, if scandalous means an actual scandal (e.g., no trademarking content about Russian election meddling (?)), then the clause would be viewpoint discriminatory.  Under those meanings, the clause would enable government to restrict speech based on offense caused by a speaker’s view of what is right and wrong, or based on offense caused by a speaker’s view on a public matter.  Matal v. Tam teaches that a restriction based on offense caused by a speaker’s view (i.e., disparaging content) is viewpoint discriminatory.  On the other hand, if scandalous means offensively pornographic or vulgar—which represents the overwhelming majority of content that the PTO currently rejects for registration under that clause—the clause appears viewpoint neutral.  Under that meaning, the clause would not be targeting content based on offensiveness of any viewpoint, but rather based on offensiveness of the content’s public visibility and effects.  That a person is offended by an image of sex used as a trademark—publicly visible for anyone to see—does not imply that the person is offended at the idea of sex.  This distinction is important in assessing viewpoint neutrality.  On this point I direct readers to my article, Denying Trademark for Scandalous Speech, 51 U.C. Davis 2331 (2018), for further discussion.

As for the question of reasonableness, the bar is not high.  The reason for Congress’s enacting the scandalous clause need not compel the conclusion that the clause makes good sense as a matter of policy.  It need not demonstrate the wisdom of its enactment.  Rather, the reason must merely show that Congress was attempting to pass a law that supported the general purpose of trademark law—promoting commercial transactions.  Congress can meet that burden.  First, children represent a significant segment of the commercial marketplace.  Pornographic and vulgar content pose psychological harms to children, so discouraging such content promotes children’s well being in the commercial marketplace.  Second, a significant segment of the commercial marketplace finds the public visibility of pornographic or vulgar content to be objectionable.  Arguably, then, scandalous marks inhibit full market participation.  Third, pornographic marks may cause consumers to make decisions based on imperfect information.  Social science suggests that pornography leads to addictive behaviors in some consumers, harming marriages and family relationships.  Consumers often fail to account for such negative effects, thereby inaccurately valuing the utility that they will receive from the pornographic marks or their associated products.  Thus, the restriction on scandalous content appears reasonable in light of trademark’s general purpose of promoting commercial transactions.

As already stated, these reasons do not necessarily imply that Congress should have enacted the scandalous clause.  Indeed, the clause may be criticized for various reasons.  The clause certainly calls for subjectivity in its enforcement—as much subjectivity as enforcing the distinction between descriptive and suggestive marks; assessing the presence of secondary meaning; or determining that a mark has become generic.  The clause certainly does not represent a laissez-faire approach—much like the regulation of public television and airwaves (restricting pornographic and vulgar content), or the very trademark system itself (creating an artificial monopoly).  The clause certainly does not further source identification—just like the clauses that prevent registration of government flags or insignia, portrayals of deceased presidents, portrayals of living individuals, and surnames.  The clause may even result in market inefficiency—although not as much inefficiency as results from trademark’s dilution rights.  All these problems with the scandalous clause may be lamented and bemoaned, but they do not suggest that Congress has abused its discretion by abridging the freedom of speech.  These problems are relevant to a much different discussion—a discussion about whether we—through Congress—should change this law.  They do not inform the discussion about whether the Constitution gives courts power to reject our will.

The Federal Circuit Strides Forward with No-Opinion-Judgments

by Dennis Crouch

Capella Photonics, Inc., v. Cisco Systems, Inc., SCT Docket No. 18-304 (Supreme Court 2018) (on petition for writ of certiorari)

Capella Photonics has asserted its patents covering wavelength-separating technology using array of “fiber collimators” in at least ten separate infringement lawsuits, including a still pending action against Cisco filed in 2014.  After being sued, Cisco reached-out to the USPTO seeking an inter partes review of two patents.  RE42,678 and RE42368.  The USPTO complied and issued final decisions finding the claims obvious. The PTAB’s decision particularly found the use of collimators to be obvious based upon the use of prior art circulators.  On appeal, Capella argued that the Board had erred as a matter of law in both its claim construction and obviousness conclusions (issues to be reviewed de novo on appeal).

For its part, the Federal Circuit heard oral arguments in the case on February 8, 2018 and allowed one business day to pass before issuing its judgment on February 12, 2018: AFFIRMED WITHOUT OPINION R. 36.  [Appendix of Decisions in the Case]

The Federal Circuit has repeatedly vacated District Court and PTAB decisions when the lower tribunal failed to explain the basis for its decision.  Unfortunately, the Federal Circuit continues to rampantly use its self-directed power to issue judgments without any opinion or explanation — even when the review is de novo and thus requires an affirmative statement from the court.  In a 2017 article, I argued that the Patent Act speaks to this issue — and requires that the Federal Circuit provide an opinion in cases on appeal from the USPTO.

The United States Court of Appeals for the Federal Circuit shall review the decision from which an appeal is taken on the record before the Patent and Trademark Office. Upon its determination the court shall issue to the Director its mandate and opinion.

35 U.S. Code § 144 – Decision on appeal.  There are many situations where Congress and the various states have similarly required tribunals to provide their opinion rather than simply the mandate or judgment.  Prior to 1989, the Federal Circuit always wrote opinions as did its predecessor court, the CCPA.  In 1989, however, the Federal Circuit adopted its Local Rule 36 that permitted no-opinion-judgments.  I have found no evidence (anecdotal or otherwise), that the court considered the text of Section 144 when implementing its local rule.

Now to the Supreme Court, Capella has asked the Supreme Court to review the issue -with the following question presented:

Whether the Federal Circuit’s practice of routinely issuing judgments without opinions in appeals from the Patent Trial and Appeal Board violates 35 U.S.C. § 144, which provides that the Federal Circuit “shall issue . . . its mandate and opinion” in such appeals.

Petition for Writ of Certiorari. I explain in the article, that the issue was rather low-level up until 2013 and the explosion of inter partes review (IPR) proceedings and resulting appeals to the Federal Circuit.  Because those cases typically involve complex obviousness analysis (as in the case at hand), the shortcut route has been for the court to issue R.36 Judgments Without Opinion in these IPR appeals. The result has been hundreds of R. 36 Judgments of PATO appeals over the past few years.

Although a number of parties have raised the issue with the Federal Circuit, the court has not yet addressed the issue directly (other than by continuing to issue no-opinion-judgments).  I will note that the same question is also presented in the pending petition in Leon Stambler v. Mastercard International, Inc., SCT Docket No. 17-1140.

Rob Sterne’s team at Sterne Kessler is representing the patentee-petitioner. Sarah Guske (Baker Botts) represented Cisco in the appeal.

Conflicting Canons of Claim Construction

Blackbird Tech LLC v. ELB Electronics, Inc. (Fed. Cir. 2018)

In a short order, the Federal Circuit has denied ELB’s petition for en banc rehearing in this case — the petition had raised particular issues regarding the proper methodology for construing patent claims.

  1. Construing claim terms in the context of the specification and preamble; and
  2. Construing claim terms in a way that provides a scope commensurate with the disclosure.

In the original Federal Circuit opinion from July 2018 the Federal Circuit vacated a lower court judgment of non-infringement after finding that the District Court had improperly read a limitation from a disclosed embodiment into the claim.

Blackbird Tech’s US patent at issue (7,086,747) is directed to an LED light fixture designed to retro-fit to the space of old tubular fluorescent light fixture having a ballast cover.  The claims particularly require a “housing having an attachment surface.”

Although not required expressly by the claims, the district court concluded that the attachment surface must include a fastener to connect the attachment surface to the ballast cover — since that was the only way shown by the patent.  On appeal, however, the Federal Circuit rejected that construction:

We do not agree that this fastener limitation should be imported into the claim.

There is no suggestion in the specification or prosecution history that this fastener is important in any way that would merit reading it into claim 12. In fact, in describing the embodiment in Figure 5, the specification explains that the fastening can be achieved by “many different types of fastening mechanisms” including “an adhesive strip” (think tape), “a magnet, clips, screws, etc.”  It never refers to this run-of-the-mill fastener as the “present invention” or “an essential element” or uses any other language that would cause the ordinarily skilled artisan to believe that this fastening mechanism is an important component of the invention or that it is critical to the invention for any reason.

In the original panel decision, Judge Moore penned the majority decision and was joined by Chief Judge Prost.  Judge Reyna filed a dissent — concluding that the “attachment surface” limitation is an element of the claimed retrofit function of the invention and should be attachable to something in the old housing. Judge Reyna writes: “The plain language of claim 12, read in the context of the specification, implicitly requires that the attachment surface be secured to the ballast cover to achieve the retrofit function.”

The basic debate here stems from the reality that the canons of construction conflict with one another.   The unfortunate result though is the old-fallback that claims mean what the Federal Circuit says they mean.

[BBT En Banc Denial][Original Panel][En Banc Petition]

House Considering Bill that… Needs Thought (Updated).

A link to the bill is here, and I understand committee mark up was yesterday.  The text is:

‘‘No court of the United States (and no district court of the Virgin Islands, Guam, or the Northern Mariana Islands) shall issue an order that purports to restrain the enforcement against a non-party of any statute, regulation, order, or similar authority, unless the non-party is represented by a party acting in a representative capacity pursuant to the Federal Rules of Civil Procedure.’’

I am trying to envision the problems this creates for patents, and happen to be writing a book on Remedies right now.

A fellow professor who supports the bill noted that my original headline had it backwards.  Let me see if I can put it in context and understand it:

A court, if this is enacted, cannot restrain enforcement of a statute against a non-party.  So, a court could not issue an injunction that did not allow a patent owner to enjoin non-parties, because a statute allows injunctions. (I think I have the double negative right.)  So, I *think* it helps patent injunctions?  What about in contributory or inducement cases?

Houston: 34th Annual Fall Institute on IP Law

I’m looking forward to the upcoming 34th Annual Fall Institute on IP Law hosted by the University of Houston Law Center ( and HIPLA ( in Galveston on Sept 27, 2018.  I am keynote speaker – with what I think is a fun topic: 

The Life-Changing Magic of Tidying Up [our Patent System and your Patent Portfolio], with apologies to Marie Kondo.”  

I’ll post my materials after the talk.

The committee has put together a great program with 30+ speakers.  Most are patent focused, but I’m particularly looking forward to Robert Cote’s talk on Funding IP and Seth Jaffe’s discussion of CyberSecurity.  See you in Galveston!

Action on Trademark Relief: Presumption of Harm

IPO, AIPLA, and INTA have joined together to lobby Congress — pushing toward a statutory “fix” that would establish a (rebuttable) presumption of irreparable harm based upon a finding of a likelihood of confusion or a likelihood of dilution.  The result then would essentially be that an injunction would generally follow from a finding of a TM violation in the marketplace. To overcome that presumption, an infringer would need to present evidence that the adjudged violation does not cause irreparable harm to the mark holder.

From the letter:

We, the undersigned associations representing trademark owners and the trademark bar, urge the House Judiciary Committee to take up legislation to amend the Lanham Act to reestablish a consistent principle that would make injunctive remedies available in appropriate cases involving trademark counterfeiting, infringement, dilution, false advertising and cybersquatting. This would clarify and make consistent how the Lanham Act is enforced across the country in order to best protect the interests of American consumers and businesses.

Trademarks are source identifiers that inform and protect consumers. The Lanham Act serves dual purposes. The statute protects consumers from the confusion and deception caused by acts of trademark counterfeiting, infringement, dilution, false advertising and cybersquatting. At the same time, the law protects businesses from the damage to their goodwill and reputation that is caused by such acts. Recent
developments in the law of Lanham Act remedies, however, have resulted in inconsistency across judicial circuits that threatens to undermine Congressional objectives in protecting both consumers and businesses from those harms.

Injury in most Lanham Act violations is typically not readily or immediately quantifiable. Injunctive relief (which requires the claimant to meet a four-part test, including a showing of irreparable harm) most often is the only effective remedy to prevent harm to consumers and protect the trademark owner’s reputation. For this reason, historically, U.S. federal courts, when considering a claim under the Lanham Act, almost uniformly applied a rebuttable presumption of irreparable harm upon a finding of liability or, in the context of a preliminary injunction, when liability was found to be probable. A rebuttable presumption of irreparable harm is an important avenue to adequate relief, given the difficulty of quantifying this type of injury.

Yet, in the past decade, a number of federal courts have reversed course and discarded this long-standing rebuttable presumption of irreparable harm even when liability is found. These courts have based their decisions on a Supreme Court opinion involving patent infringement and the U.S. Patent Act — which never addressed injunctive relief under the Lanham Act. Other federal district and circuit courts have declined to extend the patent decision to trademark cases. The differing views of the circuits on this issue have created uncertainty for Lanham Act claimants and an incentive for forum shopping, and the U.S. Supreme Court has declined to grant certiorari to resolve the conflict in the lower courts and clarify the law in this regard.

. . . We hope the[Judiciary] Committee will consider such legislation at the earliest opportunity.


A good source for further reading on this is Anne Gilson LaLonde & Jerome Gilson, Adios! to the Irreparable Harm Presumption in Trademark Law, 107 TRADEMARK REP. 913 (2017) (Not surprisingly, Gilson comes out strongly favoring the old way of doing things).  On the other side, find Rebecca Tushnet, What’s the Harm of Trademark Infringement?, 49 AKRON L. REV. 627 (2016). Prof. Tushnet writes:

[T]hose of us who are concerned that the overall level of liability [in TM Law] is too high can take comfort from what has happened since eBay: when applied to trademark, the rule against any presumption in favor of injunctive relief triggered a reexamination of expansive harm theories in particular by focusing courts on the issue of irreparable harm, which has allowed them to make a good start on the problem. Similar reexamination of harm theories was part of the antitrust revolution that substantially changed the shape of antitrust law, offering a possible model for a truly consequential reconfiguration of the law.




More Abstract Ideas for the PTO’s Hopper


Today the Federal Circuit issued three parallel decisions all stemming from the patent case brought by Asghari-Kamrani. The first two decisions affirm the E.D.Va. judgment-on-the-pleadings.  In those cases, the district court held that the patentee (Asghari-Kamrani) failed to state a plausible claim for relief within her complaint. In particular, the court found that all the asserted claims were invalid for lack of eligibility. On appeal, the Federal Circuit AFFIRMED in a R.36 Judgment Without Opinion. [Link].

The third decision is an order of dismissal of a parallel appeal from the PTAB (CBM Review). The PTAB had found all of the claims unpatentable as obvious or anticipated.  On appeal, though the Federal Circuit dismissed the appeals as moot — and vacated the USPTO decisions.

These appeals [from the PTAB] (Nos. 2018-1040 and 2018-1041) are dismissed as moot, and the decisions of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board are vacated in view of our affirmance of the U.S. District Court for the Eastern District of Virginia’s judgment of patent ineligibility in Asghari-Kamrani v. United Services Automobile Ass’n, Appeal Nos. 2016-2415, 2017-2101, and 2017-2191, and the parties’ agreement at oral argument that affirmance of the district court’s ineligibility decision has the effect of invalidating all claims of U.S. Patent No. 8,266,432.

I need to think through this further, but for some reason, the automatic vacatur of the PTAB decisions does not sit well with me.

= = = = =

Asghari-Kamrani’s claims are directed to a system for authenticating a user — using a first central computer to general a temporary dynamic code and a second central computer to validate the code when submitted.

25. An apparatus for authenticating a user during an electronic transaction with an external-entity, the apparatus comprising:

a first central-entity computer adapted to: generate a dynamic code for the user in response to a request during the electronic transaction, wherein the dynamic code is valid for a predefined time and becomes invalid after being used; and  provide said dynamic code to the user during the electronic transaction; [and]

a second central-entity computer adapted to validate a digital identity in response to an authentication request from the external-entity, which authentication request includes a user specific information and the dynamic code as the digital identity which dynamic code was received by the user during the electronic transaction and was provided to the external entity by the user during the electronic transaction, and to authenticate the user if the digital identity is valid and to provide a result of the authentication of the user to the external entity during the electronic transaction.

The district court noted that the computers wouldn’t be necessary to run this invention (except for the fact that the claims expressly require a computer). In explaining the abstractness of the claims, the district court explained:

The claims are directed to the abstract idea of using a third party and a random, time-sensitive code to confirm the identity of a participant to a transaction. This formulation is admittedly verbose. It is verbose because the patent claims combine two abstract ideas: the use of a third party intermediary to confirm the identity of a participant to a transaction and the use of a temporary code to confirm the identity of a participant to a transaction. It is an obvious combination, and nothing about the combination removes the patent claims from the realm of the abstract.

As to Alice/Mayo step two – the addition of computers do not somehow turn this abstract idea into a patent eligible invention.

Nine No-Nos of Patent Licensing (1970)

I’m thinking about the USDOJ’s “Nine No-Nos” of Patent Licensing. These were the subject of an important set of remarks in 1970 by then Bruce Wilson (USDOJ) on antitrust considerations for patent and know-how license agreements.  At the time, the DOJ considered these all per-se antitrust violations.  US Antitrust Law has really relaxed since then, and for the most part these are no longer per-se violations.  That said, they still represent cautionary signs of potential antitrust trouble — especially if coupled with actual market power.

The nine no-nos:

  1. Tying: Don’t require the purchase of unpatented materials as a condition of a patent license;
  2. Assign-Back: Don’t require the licensee to assign-back subsequently developed patents;
  3. Resale Restrictions; Don’t restrict the right of a product purchaser to re-sell the product;
  4. Using Non-Patented Products: Don’t restrict the licensee’s ability to deal in products outside the scope of the patent;
  5. Exclusive Licenses: Take care with exclusive licenses — especially if in a horizontal market relationship.
  6. Package Deals: Don’t require mandatory package licenses;
  7. Relationship with Payments: Royalty provisions should be reasonably related to the licensee’s sales;
  8. Licensee’s Use of Product: Don’t restrict a licensee’s use of a product made by a patented process; and
  9. Minimum Resale Price: Don’t include minimum resale price provisions for the licensed products.

Bill Coston (Venable) has a nice review of the nine and explains how they are relevant today (as of 2013) (The Patent-Antitrust Interface: Are There Any No-No’s Today?).  Coston also presents his “Four Frowned Upons”:

But the antitrust laws still do have considerable relevance to current patent law practices. There are at least  “Four Frowned-Upons”:

  1. Generic and branded pharmaceutical patent settlements where the branded pays the generic a “reverse payment” to stay off the market for some period of time.
  2. Dedication of standard essential patents (“SEPs”) to a standard-setting organization and then failing to honor a commitment to offer fair, reasonable and non-discriminatory (“FRAND”) licensing terms and, instead, seeking injunctive relief.
  3. Creation of a patent pool by horizontal competitors that includes some patents which are not essential to a standard, accompanied by an agreement not to license the non-essential and competitive alternative product patents outside of the pool license.
  4. Resale price maintenance agreements in patent licensing.

Upcoming: What are the antitrust Frowned-Upons for Patent Prosecution:?

Acorda Therapeutics: Other Patents Covering Invention Precludes Reliance on Secondary Indicia of NonObviousness

by Dennis Crouch

Acorda Therapeutics v. Roxane Labs (Fed. Cir. 2018)

In a 50+ page majority opinion, the Federal Circuit has affirmed a district court obviousness judgment.  Judge Taranto penned the majority opinion and was joined by Judge Dyk. Judge Newman wrote in dissent — arguing in 20+ additional pages that the majority improperly discounted the objective indicia of non-obviousness. On news of the invalidity decision, Acorda’s stock price dropped 25%.

Acorda’s branded drug Ampyra is the only approved pill proven to “help improve walking [speed] in adults with multiple sclerosis (MS).”  The patents don’t cover the 4-AP drug itself — 4-AP was already publicly known — but cover particular apparently important tweaks in administration and dosage. (U.S. Patent No. 8,007,826; No. 8,663,685; No. 8,354,437; and No. 8,440,703).  Acorda also exclusively licensed an earlier patent (the Elan patent) that broadly covered use of 4-AP to treat MS (but without the tweaks).

Secondary Indicia of Non Obviousness: Sometimes the best way to measure the extent of a contribution is by its impact.  In patent law, we certainly look to the technical specifications and consider technical differences between a claimed invention and the prior art.  However, the Supreme Court has also pointed towards an effects test — known as objective indicia of nonobviousness or secondary-factors.  When an invention is a commercial success — that suggests that it probably wasn’t obvious (otherwise it probably would have already been invented by somebody else looking to make money). When an invention arises only after a “long-felt but unmet need”,  we think it probably wasn’t obvious (otherwise the need would probably have been met earlier).  When an invention is made after others have failed to reach the same goal, we think it probably wasn’t obvious (otherwise the earlier attempts probably would have been successful). When an invention is copied by others, it’s success probably wasn’t obvious (otherwise the copier would have developed it first).

In general, these secondary indicia must be linked to the innovation.  Thus commercial success will be discounted if due to marketing wizards rather than the invention itself.  The big deal with this decision is that the court focused on a new way to discount the proven secondary indicia.

Remember that broad Elan patent exclusively licensed by Acorda.  The majority explains that Acorda’s commercial success and the long-felt need for advances were due to the roadblock set-up by that patent. “The risk of infringement liability for marketing in the US would have provided and independent incentive [for third parties] not to develop the invention of the Acorda patents, even if those inventions were obvious.” (internal quotations eliminated; this holding, the appellate court finds was supported by the trial record).  Although the Elan patent was a US patent — and thus did not block research (FDA Research Exemption) nor did it block international sales, the majority explained that those caveats are “not shown to be weighty.” Several Amici filed briefs in support of the patentee — however, the Federal Circuit found that the friendly arguments failed for lack of proffered evidence.

Writing in dissent, Judge Newman went to the heart of  matter:

The district court observed that the objective indicia, viz. commercial success, long-felt but unmet need, failure of others, and copying, could change the result, yet discounted its weight on the theory that the patentee had a “blocking” patent.

The consequences of this new legal theory are large, as the amici curiae advise. Had the court’s approach to the law of obviousness been in effect when Acorda took up the study of 4-aminopyridine after decades of failures by others, it is questionable whether this new treatment for multiple sclerosis would have been discovered and pursued. The loser is the afflicted public.

Thus, Judge Newman would have reversed the lower court obviousness decision and reinstated the patent validity.

No doubt, the patentee will petition for writ of certiorari.  The 50+ pages of majority opinion appear designed as a mechanism for showing that the case is being decided upon complex facts — a situation less favor for Supreme Court review.  In particular, the holding does not create a per-se approach but rather simply affirms that that challenger provided evidence that was not overcome by the patentee.

I want to think through how this cuts — most new patents are directed to products or methods that are already covered by one or more prior patents.