Dewberry Group: Structuring the Firm to Avoid Trademark Liability

by Dennis Crouch

The U.S. Supreme Court has granted certiorari in Dewberry Group, Inc. v. Dewberry Engineers Inc., a trademark damages case focused on how corporate separateness principles apply to disgorgement remedies under the Lanham Act, 15 U.S.C. § 1117(a). The Fourth Circuit’s decision affirmed a $43 million disgorgement award against petitioner Dewberry Group (DG) for trademark infringement, an amount that included profits earned by DG’s “legally separate” corporate affiliates. Apparently, the affiliates were “single-purpose entities,” also privately owned by John Dewberry, whose sole function was to own commercial properties serviced by DG.

Pierce the Veil: In its literal sense, a veil is a delicate fabric that separates the visible from the concealed, a barrier that can be easily lifted or parted. However, the phrase has a history of extending beyond the material world, with a veil often serving as a boundary between the physical and spiritual realms in our universe. Many of us go through life, only occasionally glimpsing beyond this veil into the hidden spiritual dimensions that, according to story tellers, lie alongside our own. In the corporate world, the veil of corporate personhood serves to shield the owners from personal liability, creating a legal fiction that separates the actions of the company from those of its shareholders. This veil of protection is not impenetrable, however, and can be pierced by the courts in cases of serious misconduct or wrongdoing, exposing the owners to personal responsibility. Although the truth of owner identity may already be known, piercing the corporate veil removes the protection against responsibility  by attempting to holding accountable those who would misuse its protections. But, the legal doctrine of corporate separateness is quite strong and I might venture that it is easier to pierce the veil of our spiritual realms than the corporate analogue. (more…)

Sitting By Designation, Judge Albright Pens First Federal Circuit Opinion Vacating PTAB Decision for Failing to Consider Petitioner’s Reply Brief Claim Construction Arguments

by Dennis Crouch

The Federal Circuit’s 2023 decision in Axonics, Inc. v. Medtronic, Inc. marked an important change in inter partes review procedure, ensuring petitioners have an opportunity to respond patentee’s newly proposed arguments, with the hope of discouraging patent owners from holding-back (“sandbagging”) at the institution stage.  Case-in-point is the Federal Circuit’s recent Apple v. Omni MedSci decision authored by Judge Alan D. Albright sitting by designation.

(more…)

Does Justice Thomas Hate Invention or Just the Hubris of Inventors?

by Dennis Crouch

The Supreme Court recently decided Moore v. United States, — U.S. — (June 20, 2024), a case focusing on the constitutionality of the Mandatory Repatriation Tax (MRT). While the majority opinion, authored by Justice Kavanaugh, upheld the MRT, Justice Thomas published a strong dissent relying upon an invention metaphor in a decidedly negative light, something that he has done in several other recent opinions. For Thomas, judicial invention is a synonym to judicial activism and antithetical to his approach that looks primarily to historic preservation, especially when interpreting the U.S. Constitution.

In Moore, the majority held that the MRT, which attributes the realized and undistributed income of an American-controlled foreign corporation to the entity’s American shareholders and then taxes those shareholders, “falls squarely within Congress’s constitutional authority to tax.” The Court reached this holding by relying on its “longstanding precedents” that allow Congress to attribute the undistributed income of an entity to the entity’s shareholders or partners for tax purposes.

Justice Thomas, joined by Justice Gorsuch, dissented. He argued that the Sixteenth Amendment requires realization for income to be taxed without apportionment.  His main complaint against the majority opinion is that it “invent[ed]” a new attribution doctrine to reach its conclusion.

Justice Thomas’ negative invocation of “invention” in Moore is part of a broader trend in his recent opinions. Just a week before Moore, in FDA v. Alliance for Hippocratic Medicine, 602 U.S. — (June 13, 2024), Justice Thomas refused to “invent a new doctrine of doctor standing,” concluding that “there would be no principled way to cabin such a sweeping doctrinal change to doctors or other healthcare providers.”  Similarly, in a recent concurring opinion, Justice Thomas argued that “Federal courts have the power to grant only the equitable relief ‘traditionally accorded by courts of equity,’ not the flexible power to invent whatever new remedies may seem useful at the time.” Alexander v. S.C. State Conf. of the NAACP, 144 S. Ct. 1221 (2024) (Thomas, J., concurring).  And in his dissent in US v. Rahimi, 602 U.S. — (June 21, 2024), Justice Thomas complained that “At argument, the Government invented yet another position.”

Justice Thomas is not alone in his negative view of judicial invention. In a recent dissent, Justice Gorsuch lamented that “Despite [a] settled rule, the Court today doubles down on a new tort of its own recent invention.” Chiaverini v. City of Napoleon, Ohio, 602 U.S. — (June 20, 2024) (Gorsuch, J., dissenting).

This antipathy to judicial invention truthfully in line with the stated approach of all judges today. Claiming judicial restraint, “calling balls and strikes,” avoiding judicial activism. In Moore, for instance, the majority opinion also tied its holding to history.  Although what caught my attention in the case is that the majority opinion does also reference invention — applauding the taxpayers’ attorneys for being inventive, even if ultimately unpersuasive on a particular point. The Court wrote, “Moores’ effort to thread that needle, although inventive, is unavailing.”  The concept of invention also appeared in Justice Barrett’s concurring opinion in Moore, but in a different context. She wrote, “A patent is an inventor’s property, and royalties are the income she receives from licensing it. A capital fund is a banker’s property, and interest is the income she receives from lending it.” Here, Justice Barrett was distinguishing between a “seed” (property) and its “fruit” (income), not commenting on judicial invention.

Showing that it is not only the conservative Justices, in a recent majority opinion, Justice Jackson also used the term “invention” pejoratively, arguing that “the dissent invents new arguments to arrive at its favored outcome.” Office of U.S. Tr. v. John Q. Hammons Fall 2006, LLC, 602 U.S. — (U.S. June 14, 2024). Justice Jackson noted that the dissent’s purported inventiveness was two-fold problematic: (1) it went beyond the arguments of the parties, and (2) it went beyond controlling precedent.

I have been delving into mythology recent as part of an academic project, and Justice Thomas’ approach calls to mind the many ancient myths that warn against hubris that often leads to folly. To escape from the labyrinth, the great inventor Daedalus created wings for himself and his son Icarus using feathers and wax. Daedalus warned Icarus not to fly too close to the sun, as the heat would melt the wax. But, Icarus could not listen: The wax melted and Icarus plummeted into the sea and drowned. Thomas views “judicial invention” as a dangerous flight too close to the sun – risking the integrity of the legal system that has stood for so many years.  But, this analysis is a bit too quick because the myth does not condemn invention itself, but rather reckless and unrestrained use of it. Daedalus, after all, successfully used his invention to escape, demonstrating that innovation, when applied with restraint, can be beneficial. In the context of jurisprudence, this suggests to me that there might be a middle ground for judicial invention – one that provides due respect to established precedents and historic traditions while allowing for thoughtful adaptation to new societal challenges. Just as Daedalus found the right balance in his flight, perhaps there’s a path for judicial reasoning that innovates responsibly.

You might think that Justice Thomas believes that invention is best left to those seeking patents, not those wearing judicial robes. But, Justice Thomas is also no friend to patents or patent owners.  Rather, he is author of key opinions that  have greatly weakened patent rights over the past two decades, including eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006); Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208 (2014); and Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 584 U.S. 325 (2018).   Hate is a strong word, but perhaps the answer is that Justice Thomas does not favor invention.

Patentees Out of Luck Again: CAFed Sides with DraftKings that Remote Gambling Patent Ineligible

by Dennis Crouch

The Federal Circuit has affirmed a D.N.J. court’s dismissal of patentee Beteiro’s infringement complaints against DraftKings, et al., agreeing that the asserted claims are directed to patent ineligible subject matter under 35 U.S.C. § 101. Beteiro, LLC v. DraftKings Inc., No. 2022-2275 (Fed. Cir. June 21, 2024). The patents at issue were directed to methods of facilitating remote gambling activity using devises equipped with GPS.  (more…)

Double Trouble: IPO asks for Supreme Court review of PTA/ODP Cellect dispute

by Dennis Crouch

A second amicus brief has been filed – this one from the Intellectual Property Owners Association (IPO) – encouraging the Supreme Court to grant certiorari in Cellect, LLC v. Vidal, No. 23-1231. The case concerns the interplay between the Patent Term Adjustment (PTA) statute, 35 U.S.C. § 154(b), and the judicially-created doctrine of obviousness-type double patenting (ODP). (more…)

Trade Secret Misappropriation Preliminary Injunction Reversed

By Dennis Crouch

The Federal Circuit has reversed a preliminary injunction order in a trade secret misappropriation case, finding that the district court abused its discretion by failing to properly evaluate the likelihood of success on the merits and the balance of harms. Insulet Corp. v. EOFlow, Co., No. 2024-1137 (Fed. Cir. June 17, 2024). The appellate court held that the district court’s analysis was deficient in several key respects, including not addressing the statute of limitations defense, defining trade secrets too broadly, and not sufficiently assessing irreparable harm and the public interest.

This classic trade secret case involves former employees left to join a competitor.  As free humans, they are permitted to take their skill and wisdom to the new jobs, but are forbidden from misappropriating trade secret knowledge.  That line drawing is particularly difficult, and one reason why many employers moved toward contractual non-compete agreements. The case is also complicated because the defendant here admit to reverse engineering that apparently lead to some substantial similarities between the products.

The decision highlights a high bar for obtaining a preliminary injunction, even in trade secret cases involving competitors where we previously may have assumed irreparable harm.  The Federal Circuit here explained that lower courts are required to individually evaluate each of the four injunction factors – likelihood of success on the merits, irreparable harm, balance of hardships, and public interest. Conclusory assertions of competitive harm are insufficient to show irreparable injury.  For trade secret claims in particular, the alleged trade secrets must be defined with specificity. But, this proof is often difficult at the preliminary injunction stage of a case when the particular knowledge used by the defendant has not been fully discovered.

The Federal Circuit has been seen as largely supporting strong trade secrecy rights. However, this decision may put a damper on forum shopping attempts. (more…)

Democracy on Trial: Chestek and the Future of USPTO Accountability

by Dennis Crouch

The pending petition for certiorari in Chestek v. Vidal focuses on the extend that the APA requires the USPTO to follow notice-and-comment requirements when promulgating regulations under 35 U.S.C. § 2(b)(2). In its decision below, the Federal Circuit held that the USPTO is exempt from these requirements because the types of rules it is authorized to issue under Section 2(b)(2) are procedural in nature, and the APA excuses “rules of agency … procedure” from the requirements.  There are two ways that the Federal Circuit potentially erred:

  1. The TM applicant home-address requirement being challenged here is not the type of procedural rule exempted under the APA; and
  2. Even if it is procedural, the particular requirements of the Patent Act’s section 2(b)(2) requires following the notice and comment requirements.

The Federal Circuit agreed that 35 U.S.C. § 2(b)(2) requires USPTO regulations to be “made in accordance with” the APA — but disagreed that this requires notice-and-comment for all new regulations. The court concluded that the APA inherently includes an exception for procedural requirements and so the USPTO was not required to follow notice-and-comment rulemaking when promulgating the trademark applicant home-address rule, because the court deemed it to be a procedural rather than substantive rule exempt from those APA requirements.

Five amicus briefs were recently filed in support of the petitioner, arguing that Supreme Court review is warranted to correct the Federal Circuit’s erroneous decision, arguing that the Federal Circuit’s interpretation of Section 2(b)(2) is flawed and undermines important principles of administrative law. (more…)

Federal Circuit Affirms Patent Rejection for Lack of Enablement in In re Pen

by Dennis Crouch

The Federal Circuit (CAFC) recently affirmed a USPTO enablement rejection — holding that the patentee did not enable the “full scope” of the claimed invention.  In re Pen, 23-2282 (Fed. Cir. 2024) (non-precedential).  As an aside, the listed inventor’s legal name is “The Pen;” first and last name respectively, with no middle initial.  Based upon Pen’s address, he is related to “The People’s Email Network.”  In the case, Pen represented himself pro se.

Pen’s patent claimed “polycyclic metallole heteroatom rich conductive long chain polymers” comprised of certain repeating units. The idea here is to create a conductive polymer for use in new battery technology.  Key limitations in the claims at issue here are that the metallole heteroatom is nitrogen, there are more than eight repeating units (n>8), and a substituent R can be any substituent.

In affirming the PTO’s refusal, the Federal Circuit found that substantial evidence supported the Board’s factual findings on the Wands factors and found no legal error in its enablement analysis.

As the Supreme Court did in Amgen, the Federal Circuit focused on the breadth of the claims compared to the teachings of the specification and the along with the state of the prior art. The court noted that the claims allow R to be any substituent and also permitted any number of repeating units n to be over 8.

The state of the prior art also weighed against enablement, as the closest prior art polymers only had n=8 repeating units. The court rejected the appellant’s argument that this reasoning was illogical because it would require the invention to already exist in the prior art. Rather, the proper analysis looks at the gap between the scope of the claims and what the prior art already enables.  That gap must be filled by the specification.

Additionally, the court found that the field of conductive metallole polymers is unpredictable, further weighing against enablement. While the appellant argued that a skilled artisan could polymerize the monomers and carry out the claimed reactions based on the specification, the court emphasized that this does not necessarily enable the full scope of n values and R substituents covered by the claims.

Regarding the amount of guidance and examples in the specification, as well as the quantity of experimentation required, the court agreed with the Board that the specification did not provide sufficient guidance to enable the full claim scope without undue experimentation. Even if the specification enables some n values and R substituents, that is inadequate when the claims have open-ended ranges tat are much broader.

Throughout its opinion, the Federal Circuit stressed the breadth of the claims compared to the more limited disclosure. “The specification must enable the full scope of the invention as defined by the claims. . . . In short, the more you claim, the more you must explain.”  Citing Amgen Inc. v. Sanofi, 143 S. Ct. 1243 (2023).

The appellant made several arguments that the Federal Circuit rejected. First, the appellant argued that the choice of R substituent does not affect the conductivity or synthesis of the polymer.  The idea here is that comprising-style claims are always extremely broad in areas of less importance, and that reality should not spoil the validity of those patents.   Instead of fully engaging, the court noted this argument was made for the first time on appeal and was therefore forfeited.

Second, the appellant challenged the Board’s reliance on references not cited by the Examiner when discussing the closest prior art. The court disagreed that this constituted a new ground of rejection, finding the Board merely further explained the Examiner’s reasoning and the underlying legal standards.

Finally, the appellant argued that the Examiner’s analysis on some of the Wands factors was conclusory and irrelevant included boilerplate language, and that the Board had improperly relied upon that analysis. While the court agreed some of the Examiner’s language was “less than exemplary,” it found no reversible error in the Board’s ultimate conclusions on the Wands factors.

This case again includes strong language surrounding the enablement requirement.  However, the case arises in the “unpredictable arts” of chemistry that appears continue to be a key feature of enablement rejections that stick.

Trump Too Small: Supreme Court Upholds Lanham Act’s Restriction on Registering Marks With Living Individual’s Names Without Consent

by Dennis Crouch

In an important trademark law and free speech decision, the Supreme Court held in Vidal v. Elster, 602 U.S. ___ (2024), that the Lanham Act’s “names clause” barring registration of a mark that “[c]onsists of or comprises a name . . . identifying a particular living individual except by his written consent”, 15 U.S.C. § 1052(c), does not violate the First Amendment. Writing for the Court, Justice Thomas distinguished this case from the Court’s prior decisions in Matal v. Tam, 582 U.S. 218 (2017) (disparaging marks) and Iancu v. Brunetti, 588 U.S. 388 (2019) (scandalous marks), which struck down other Lanham Act restrictions as unconstitutional viewpoint discrimination. Although content-based, the Court concluded that the names clause is viewpoint-neutral and consistent with the longstanding history and tradition of trademark law.

In the case, Steve Elster sought to register the trademark “TRUMP TOO SMALL” for use on t-shirts and other tchotchkes, referencing a comment made during a 2016 presidential primary debate. The USPTO refused the registration based on the Lanham Act’s “names clause,” which prohibits trademarks that consist of or comprise a name identifying a particular living individual without their consent.  Elster did not dispute that TRUMP referenced Donald Trump who was not directly involved in the case.

The Thomas opinion consists of Parts I-IV. However, part III was joined only by Justices Alito and Gorsuch, and so is not part of the majority opinion.  Chief Justice Roberts and Justice Kavanaugh joined I, II, and IV, and Justice Barrett joined Parts I, II-A, and II-B.  A key distinction among the justices is the role of history – with Justice Thomas indicating in Part III that history is dispositive. Justice Kavanaugh filed a concurring opinion, joined by Chief Justice Roberts, agreeing with upholding the names clause but suggesting a viewpoint-neutral provision could be constitutional even without such historical support. Justice Barrett filed an opinion concurring in part, joined by Justice Kagan, arguing the names clause is constitutional because it reasonably serves trademark’s source-identifying function, not based on history and tradition alone (Justices Sotomayor and Jackson joined parts of Justice Barrett’s opinion.)  Justice Sotomayor also filed an opinion concurring only in the judgment.

Lets look at the majority opinion: The Court first held the names clause is viewpoint-neutral because it applies regardless of the message conveyed and does not target particular views. This contrasts with the disparagement clause in Tam and immoral/scandalous bar in Brunetti, which the Court found impermissibly discriminated based on viewpoint.  However, the Court acknowledged the names clause is content-based since it turns on whether the mark contains a person’s name.

In my view, this aspect of the decision is in error — the use of an individual’s name (such as Trump) is at least as viewpoint based as the immoral/scandalous marks in Brunetti.  This is especially true if you recognize that an individual’s name is permitted to be registered – with permission.  But the problem here is that the court had found the restriction viewpoint based, it would have been hard pressed to find the names-restriction constitutional, which is the correct outcome.

Of course, even content-based speech restrictions are typically presumptively unconstitutional. Here though the court declined to apply strict scrutiny to this content-based. The court emphasized that trademark law has been content-based since the Founding without raising First Amendment concerns, reflecting the inherently source-identifying function of trademarks.

The Court traced the history of trademark law from English common law through the first American trademark statutes to the Lanham Act, showing restrictions have always been based on a mark’s content.  This history, in the Court’s view, establishes that content-based trademark rules have long coexisted with the First Amendment, so heightened scrutiny is unwarranted.

Turning to the names clause specifically, the Court found it has “deep roots in our legal tradition”, with restrictions on trademarking names “grounded in the notion that a person has ownership over his own name.”  See, Brown Chemical Co. v. Meyer, 139 U.S. 540, 542 (1891).  The Court also found no evidence the common law  or speech rights allowed using another living person’s name as a trademark without consent.  It explained this rule reflects trademark’s goals of identifying a product’s source and safeguarding the markholder’s goodwill and reputation.  A person “has no First Amendment right to piggyback off the goodwill another entity has built in its name.” San Francisco Arts & Athletics, Inc. v. U.S. Olympic Comm., 483 U.S. 522 (1987)).  Based on this history and tradition, the Court concluded the names clause comports with the First Amendment.  Although the limitations found in Brunetti and Tam were also longstanding, those are distinguishable by the court because they were deemed viewpoint based rather than viewpoint neutral.

In his concurring opinion, Justice Kavanaugh, joined by Chief Justice Roberts, agreed the names clause is constitutional based on the historical evidence, but suggested a viewpoint-neutral provision could satisfy the First Amendment even without such history.

Justice Barrett, in an opinion concurring in part joined by Justice Kagan, argued the focus on history was misplaced and the Court should have evaluated the names clause under a generally applicable First Amendment framework.  She contended content-based trademark rules are constitutional if they reasonably relate to trademark’s source-identifying purpose and preventing consumer confusion.  In her view, the names clause is constitutional under that standard because it helps ensure marks identify source and safeguards markholder goodwill. Justices Sotomayor and Jackson joined this portion of Justice Barrett’s opinion.

In a separate concurring opinion, Justice Sotomayor maintained the Court should have resolved the case based on its precedents rather than an ill-defined history-and-tradition test.  Drawing on cases involving limited public forums and government subsidies (where, IMO, speech rights are more tenuous), she argued viewpoint-neutral trademark criteria are constitutional if reasonable in light of trademark’s purpose.  The names clause satisfies that standard, in her view, because it facilitates source identification and prevents consumer confusion.

Elster provides important guidance on the constitutionality of content-based trademark registration restrictions, and also provides an indication that the Court is unlikely to further dismantle trademark law based upon free-speech grounds. The decision suggests provisions that have long been part of U.S. trademark law are likely valid, even if content-based, so long as they are viewpoint-neutral. However, the splintered reasoning leaves uncertainty about the proper framework for evaluating provisions without such historical pedigree.

Pending En Banc Petitions at the Federal Circuit

by Dennis Crouch

The Federal Circuit recently decided the en banc design patent case of LKQ v. GM, but the court has not issued an en banc decision in a utility patent case since 2018.  There are currently four interesting petitions pending before the court.

Brumfield – Consistency and Proving International Damages: The Federal Circuit panel affirmed the district court’s grant of summary judgment that the asserted claims of the two asserted patents are invalid under 35 U.S.C. § 101. Brumfield v. IBG LLC, No. 2022-1630 (Fed. Cir. Mar. 27, 2024).  Although the Federal Circuit had previously held that the claimed invention was “technological,” the court here concluded that it was not bound by that prior non-precedential decision. In the petition for rehearing, Brumfield argues the improperly disregarded the Federal Circuit’s prior finding that the patents claim technological improvements.  The contention here is that “the interest of consistency would be ‘ill served'” by allowing different panels to make contradictory findings about the same patent claims.” See, Burke, Inc. v. Bruno Indep. Living Aids, Inc., 183 F.3d 1334 (Fed. Cir. 1999). Id.

The panel also affirmed the district court’s exclusion of Brumfield’s damages expert’s testimony on obtaining foreign damages based on IBG’s domestic making of the accused product. The panel held that although the Supreme Court’s WesternGeco  decision permits awarding damages based on foreign conduct in cases involving domestic infringement, the expert had failed to establish the required causal relationship between the domestic infringement and the foreign conduct. In the rehearing petition, Brumfield argues the improperly decided this fact-intensive causation issue sua sponte, depriving Brumfield of the opportunity to present evidence on an issue that IBG never disputed below or on appeal. [Note: I was involved in litigating patents from this patent family when owned by the predecessor-in-interest. I am no longer involved the litigation. DC]

Edwards Lifesciences – Expanded 271(e)(1) Safe Harbor: In Edwards Lifesciences Corp. v. Meril Life Sciences Pvt., a split Federal Circuit panel affirmed the district court’s summary judgment that Meril’s importation of its transcatheter heart valve fell within the safe harbor provision of 35 U.S.C. § 271(e)(1) and thus, did not infringe Edwards’ patent. No. 2022-1877 (Fed. Cir. Mar. 25, 2024). The majority held that the safe harbor applied because Meril’s importation was “reasonably related to submitting information to the FDA,” even though there was evidence of other commercial uses. The dissent argued that the majority perpetuated the court’s failure to give meaning to the word “solely” in the statute, which cabins the safe harbor to uses solely related to the federal regulatory process. Section 271(e)(1) states that it “shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention … solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.”

Edwards has now petitioned for en banc rehearing, arguing that the panel decision vastly expands § 271(e)(1)’s safe harbor by reading the term “solely” out of the statute, in contravention of the provision’s plain text, history, and purpose. According to Edwards, any non-regulatory use is disqualifying under the correct reading of “solely.” Edwards contends the panel was bound by circuit precedent incorrectly holding that once a defendant identifies any use reasonably related to FDA approval, the safe harbor applies regardless of other non-regulatory uses. (citing AbTox, Inc. v. Exitron Corp., 122 F.3d 1019 (Fed. Cir. 1997)).

Edwards argues this precedent flouts the statutory text and history showing Congress struck a “careful balance” in § 271(e)(1) to allow infringement only for the singular purpose of seeking regulatory approval. By judicially rewriting this compromise to protect non-regulatory and commercial conduct, Edwards claims the Federal Circuit has distorted the market for patented products, undermined the patent bargain, and created a powerful statutory immunity ripe for abuse.

Salix Pharms – Improper Appellate Obviousness Fact Finding: The Federal Circuit recently affirmed the district court’s judgment that several claims of Salix’s patents covering methods of treating irritable bowel syndrome with diarrhea (IBS-D) using rifaximin were invalid as obvious. Salix Pharms., Ltd. v. Norwich Pharms. Inc., 2022-2153 (Fed. Cir. Apr. 11, 2024). Salix has petitioned for rehearing en banc, arguing that the panel majority improperly found facts in the first instance rather than reviewing and analyzing the district court’s fact-finding as required by precedent. See Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709 (1986); Atl. Thermoplastics Co. v. Faytex Corp., 5 F.3d 1477 (Fed. Cir. 1993).

The petition contends that after correctly determining the district court erred in its obviousness analysis by misapplying the prior-art range precedent, the CAFC panel majority should have reversed or remanded for further fact-finding by the district court. Instead, Salix argues, the majority improperly made its own findings on key disputed factual issues never resolved by the district court, such as whether skilled artisans would have viewed small intestinal bacterial overgrowth (SIBO) as a cause of IBS-D or as a separate disorder. The majority relied on prior art references and made factual findings that the district court never made to conclude there was a reasonable expectation of success in using the claimed rifaximin dosage to treat IBS-D.

Additionally, Salix asserts the panel majority applied the wrong standard in determining that the district court’s erroneous reliance on a non-prior art reference (the “RFIB 2001 Press Release”) was harmless error. Rather than considering whether that reference induced the district court to make findings it otherwise would not have made, the majority simply concluded other evidence “established” the relevant fact. But as Judge Cunningham noted in dissent in the original panel decision, the district court heavily relied on the press release to discount evidence of skepticism in the art. The press release factored significantly into the court’s analysis.

Luv N’ Care – Scope of Unclean Hands Defense: The Federal Circuit affirmed the district court’s application of the unclean hands doctrine to bar Eazy-PZ’s patent and trade dress claims against Luv N’ Care due to Eazy-PZ’s litigation misconduct. Luv N’ Care, Ltd. v. Laurain, 2022-1905 (Fed. Cir. Apr. 12, 2024). In its petition for rehearing, Eazy-PZ argues that the panel majority departed from Supreme Court and Federal Circuit precedent requiring that unclean hands be based on misconduct having an “immediate and necessary relation to the equity that he seeks.” Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240 (1933); see also Gilead Scis., Inc. v. Merck & Co., 888 F.3d 1231 (Fed. Cir. 2018).

The district court concluded that the patentee Eazy-PZ had engaged in litigation misconduct—all of which was associated with the asserted utility patent. However, the resulting unclean hands penalty was to dismiss the entire case, including the design patent and trade dress claims. The petition argues this was an improper extension without analyzing how the alleged misconduct related to or provided Eazy-PZ an unfair advantage regarding those claims. The petition asserts that withholding information relevant to utility claim construction could not have advantaged the design and trade dress claims. Eazy-PZ argues this expansive application of unclean hands, untethered to the specific relief sought, vitiates the Supreme Court’s “immediate and necessary” relation requirement.

Regarding the ‘903 utility patent itself, Eazy-PZ argues the panel affirmed based on factual findings the district court never made about how any false or evasive testimony impacted Luv N’ Care, violating the rule that appellate courts cannot make factual findings in the first instance.

Design Patent Examination Updates

Ten years ago – 2014 – the Supreme Court decided Alice Corp v. CLS Bank, holding that – yes indeed – the expansive language of Mayo v. Prometheus (2012) applies equally to software and technology patents.   A few weeks later, the USPTO began a dramatic transformation – pulling back notices of allowance and issuing thousands of supplemental office actions. The Federal Circuit’s May 2024 en banc decision in LKQ v. GM is perhaps as dramatic a change for the design patent arena as Alice was for utility patents.  The old Rosen-Durling test made it almost impossible to reject a design patent as obvious except for extreme cases involving either direct copying or extremely broad claims.  The key difficulty was that precedent required the obviousness inquiry to begin with a single prior art reference that is “basically the same” as the claimed design – a roughly 1-to-1 relationship.  Further, any secondary references had to be ‘so related’ to the primary reference that features in one would suggest application of those features to the other.” In LKQ, the court found those requirements “improperly rigid” under principles of KSR which require a flexible obviousness inquiry.  The overall effect is to make it easier to find a design patent obvious.

Immediate Reaction: The decision was released May 21, 2024, and Dir. Vidal released examination guidance to the design corps the next day.  The guidance indicated that additional training will be coming soon -“in the short term.”  However, it does not appear that Dir. Vidal has, thus far, asked examiners to take a second look at the applications waiting allowance.  Design patents continue to issue at a steady rate of about 1,000 per week, with most of those issuing today having received their notice-of-allowances back in Jan/Feb 2024.

Examination Outcomes:  Interestingly, I could not find any design patent obviousness rejections coming out of the USPTO since May 22, 2024.*  For the same period in 2023, I found a much larger number of cases with obviousness rejections. What I take from this is that it appears that there will likely be an examination slowdown as the USPTO develops its new examination process — understanding what obviousness search and rejection looks like under the new approach.

Note, one difficulty with studying design patent examination is that design applications are generally not published prior to issuance — and abandoned cases are never published.  One caveat to this general rule is that design applications claiming priority to Hague Convention filings are open to the public.  For my study here, I looked only at those Hague filings.

PTAB: So far we also have no PTAB decisions interpreting LKQ.

Veterans’ Benefits at the Supreme Court: The Battle Over Benefit-of-the-Doubt

by Dennis Crouch

In April 2024, the Supreme Court granted certiorari in the consolidated cases of Bufkin v. McDonough and Thornton v. McDonough, two veterans’ benefits cases on appeal from the Court of Appeals for the Federal Circuit. The cases involve the “benefit-of-the-doubt” rule, a longstanding principle that is codified in veterans law that requires the VA to resolve close or unclear issues in a veteran’s favor when adjudicating benefits claims. [SCT Docket]

Both Bufkin and Thornton are veterans who were denied disability benefits by the VA. (more…)

Supreme Court Update: June 2024

The US Supreme Court’s October 2023 term will come to a close later this month.  The patent side has not seen much action in terms of new cases. 27 IP-related petitions for writ of certiorari have been filed during this time. Of those 23 have been denied. Four recently filed petitions are still pending. In each of the remaining cases, respondent has indicated that it will be filing a brief.

  • Cellect, LLC v. Vidal (23-1231): Whether a patent procured in good faith can be invalidated for obviousness-type double patenting when the improper term extension is due to Patent Term Adjustment.  NYIPLA amicus in support; USPTO responsive brief due: July 22, 2024.
  • Chestek PLLC v. Vidal (23-1217): Whether the USPTO is exempt from notice-and-comment requirements when exercising its rulemaking power under 35 U.S.C. § 2(b)(2). USPTO responsive brief due: July 15, 2024.
  • Eolas Technologies Inc. v. Amazon.com, Inc. (23-1184): Patent eligibility issues. Responsive brief due: July 31, 2024.
  • Surti v. Fleet Engineers, Inc. (23-1142): Pro se patent owner focused on DoE as well as tortious interference. Responsive brief due: July 22, 2024.

I’ve listed these in what I see as the most to least likely grant.  Cellect is of particular interest as debates over double patenting continue. Based upon the timing of the briefs, a certiorari decision won’t come until the Fall.

Father’s Day Gear Guide

Father’s Day is Coming Up! Here is the List for 2024:

  1. TheraGun: I use mine almost every day before working out to help with sore muscles and some tendonitis.
  2. Free Fly SPF Hoodie: Super comfortable and looks great along with sun blocking for my northern European skin.
  3. iRobot Roomba: This is great because I feel like I’m cleaning just by pushing start.
  4. Cheap Earbuds: I purchased expensive earbuds one time, but ended up losing one of them.  So, these days I just go for the cheaper ones.  My $20 JLab Go Air True have lasted about 18 months now.
  5. Cooking Thermometer: This is what I need. I’ve been cooking more meat lately but kind of winging-it in terms of the cooking level.  These range from $10 to $110.

 

Mishandled Disclosures: A Greek Tragedy in IP Law

by Dennis Crouch

Neuropublic S.A., a Greek technology company, has filed a federal lawsuit against the law firm Ladas & Parry LLP, with several claims stemming from the firm’s alleged mishandling of Neuropublic’s confidential invention disclosure — sending it out to a third party (“PatentManiac”) for a preliminary novelty search which then (again allegedly) further leaked the disclosure. Although the case does not involve submission to AI algorithms, some of the questions here are similar to those many  IP attorneys are considering when onboarding new AI tools. (more…)

Patently-O Bits and Bytes

USPTO Patent News:

  • Patent number 12 million issued on Tuesday, June 4, 2024, to Pacific Biosciences of California.  The patent covers particular labeled nucleotide analogs that include an avidin protein for use in analyzing enzymatic reactions and molecular recognition events, such as single-molecule real-time nucleic acid sequencing. From the file history, it looks like David Roise was the lead attorney on the case.
  • Derris Banks has been appointed as the Regional Director of the USPTO’s Elijah J. McCoy Midwest Regional Office (Detroit), where he will oversee outreach efforts while serving inventors and entrepreneurs in the Midwest region.  Banks has been at the USPTO since joining as an examiner in 1994, rising to various leadership positions.  Damian Porcari, who led the office for five solid years, retired in 2023.
  • Several comment periods are still open at Regulations.Gov. Yesterday the period for comments closed on upcoming USPTO fee increases. At least 30 comments were submitted, including those from the AIPLA who “objects to the major policy shift wherein front-end fees are being added not only to recover aggregate costs, but change applicant behavior and implement significant policy changes, including large fee increases for claiming benefits of earlier effective filing dates, filing of Requests for Continued Examinations (“RCEs”), terminal disclaimer submissions, and for filing of large Information Disclosure Statements (“IDSs”).”  [This sentence was almost certainly written by a patent attorney.]

Recent Job Postings on Patently-O Jobs:

  • Van Pelt, Yi & James LLP is seeking local or remote patent engineers to prepare, file, and prosecute patent applications in the fields of computer science and electrical engineering. [Link]
  • Withrow + Terranova, PLLC is looking for an Associate Patent Attorney to work in Apex, NC (open to hybrid and remote arrangements) for patent application preparation and prosecution, client counseling, opinion work, and other related IP matters. [Link]
  • Epstein Becker & Green is seeking an intellectual property associate with at least three years of experience in patent prosecution within the life sciences industry to join their Columbus, Nashville, Pittsburgh, Portland, or Princeton office. [Link]
  • Viering, Jentschura & Partner mbB is seeking a U.S. patent attorney in either their Dresden or Munich office to draft and prosecute patent applications in the United States for various companies. [Link]
  • Dority & Manning is looking for an EE/CS Patent Attorney or Agent to draft and prosecute patent applications in their Raleigh-Durham, NC or Greenville, SC office. [Link]
  • Suiter Swantz IP has an immediate opening for a Patent Attorney or Patent Agent with 2-5 years of experience in their Omaha, NE office (remote considered). [Link]
  • Harrity & Harrity, LLP is seeking a patent professional to draft patent applications for leading global technology companies in software, computer, and electrical technology areas. The position is 100% remote. [Link]
  • The Marbury Law Group is seeking a highly motivated individual to join their Life Sciences team as a Pharma Associate in their Reston, VA, Boston, MA office or remote. [Link]
  • Ballard Spahr LLP is seeking an Electrical/Computer Engineering Patent Prosecution Associate with 2-4 years of experience to work in their Atlanta, Denver, Minneapolis or Phoenix office. [Link]
  • Ballard Spahr LLP is seeking a patent agent with 5+ years of patent prosecution experience to assist in prosecution, IP diligence, IP-transfer commercial transactions, and strategic IP business counseling in their Atlanta, New York, or Philadelphia office. [Link]
  • McNeill Baur is seeking experienced attorneys and agents with advanced degrees in Chemistry and at least 3 years of relevant experience in patent prosecution and/or patent counseling or patent litigation to work remotely. [Link]

Guest Post: Diversity Pilots Initiative Comment on Proposed Changes to PTAB Practice

Guest post by Ashton Woods, a JD candidate and member of the Juelsgaard Intellectual Property and Innovation Clinic at Stanford Law School. This post is part of a series by the Diversity Pilots Initiative, which advances inclusive innovation through rigorous research. DPI will be hosting its second conference at Emory University Law School in Atlanta on Friday, September 20, 2024. Indicate your interest by signing up here.

On February 21, the USPTO issued a Notice of Proposed Rulemaking for Expanding Opportunities to Appear Before the Patent Trial and Appeal Board (PTAB), and DPI filed one of seven comments on the proposal. DPI’s full comment can be found here.

Currently, parties appearing before the PTAB who are represented by counsel must designate lead and backup counsel. Lead counsel must be a USPTO-registered practitioner, meaning that they have technical training and have passed the registration exam (commonly known as the “patent bar” exam). Backup counsel may be non-registered if they are recognized pro hac vice. Under the Proposed Rule, counsel can switch roles, with a non-registered practitioner acting as lead counsel and a registered practitioner acting as backup counsel. Additionally, parties who can show good cause, including financial hardship, can waive the backup counsel requirement, though the party’s sole counsel must still be a registered practitioner. Finally, the Proposed Rule streamlines the pro hac vice recognition process for non-registered practitioners, though they still must be accompanied by a registered practitioner in the lead or backup role.

As explained in more detail in the full comment, DPI views the Proposed Rule as a modest step toward reducing the accessibility gap for potential patentees, patent practitioners, and patent challengers. The goal of the Proposed Rule is laudable, and it may provide a solid foundation for future efforts to diversify the Patent Bar and the patent system more broadly—if it can effectively expand the pool of eligible practitioners in proceedings before the PTAB, the Proposed Rule may support wider USPTO efforts to increase the participation of underrepresented communities in the innovation ecosystem.

Still, the Proposed Rule does not address all of the structural barriers within the patent system that continue to burden diversification efforts at the USPTO. Existing barriers, such as the technical training requirement and the patent bar exam, substantially narrow the class of patent practitioners. This is particularly troublesome considering that federal courts do not subject litigators to these standards—they impose no registration requirement or backup counsel requirement. Currently, there is no rigorous evidence to support these restrictions as necessary, rather than overly burdensome, in promoting competent, or even fantastic, representation before the PTAB.

DPI urges the USPTO to collect the empirical evidence necessary to ensure that USPTO initiatives are well-suited to promoting the goals of the Proposed Rule and the USPTO more broadly. The comment sets out exemplary data collection methods and key data points on PTAB filings and proceedings for the USPTO’s consideration. The comment urges the USPTO to affirmatively collect this data to rigorously assess the impact of the Proposed Rule, and other diversity initiatives, on inclusivity and accessibility at the USPTO.

DPI’s full comment on the USPTO’s Notice of Proposed Rulemaking for Expanding Opportunities to Appear Before the Patent Trial and Appeal Board can be found here. To stay informed about related work, sign up for DPI research updates by emailing diversitypilots@gmail.com.

 

LKQ v. GM: Join us on June 4 at Noon (ET)

Talk about LKQ: I’m looking forward to joining Prof Sarah Burstein and others on Tuesday June 4 for an online panel discussion on the potential aftermath of the Federal Circuit’s major en banc design patent obviousness decision in LKQ v. GM.

In February 2024 we met along with Meredith Lowry (Wright Lindsey Jennings); Darrell Mottley (Howard University); and Laura Sheridan (Google) to give a preview of the case and we’re meeting again now to talk through where the pieces are falling.

Free event via Suffolk University Law School, but you need to registerNoon Eastern Time, June 4, 2024.

Goodbye Rosen references, hello Jennings references?

Guest Post by Sarah Burstein, Professor of Law at Suffolk University Law School

LKQ Corp. v. GM Global Tech., 21-2348 (Fed. Cir. 2024) (en banc).

In its decision in LKQ v. GM, the en banc Federal Circuit may have raised as many questions as it answered. For now, I’d like to focus on one:  What counts as a proper primary reference under LKQ?

While the Federal Circuit overruled the Rosen requirement that a primary reference look “basically the same” as the claimed design, the court did not overrule the requirement that there be a primary reference.

According to the Federal Circuit “In applying Graham factor one, the scope and content of the prior art, a primary reference must be identified.” And, as required by Rosen, that primary reference must still be “something in existence,” not “something that might be brought into existence by selecting individual features from prior art and combining them, particularly where combining them would require modification of every individual feature.” But for this last point, the Federal Circuit doesn’t cite Rosen. Instead, it cites the decision that Rosen cited for that point, In re Jennings, 182 F.2d 207, 208 (CCPA 1950).

So what does Jennings tell us about references and § 103? Not much. Here is the entirety of the CCPA’s discussion of the issue:

In the instant case individual features seem to have been selected from different of the reference patents and compared with features shown in appellant’s drawings. In other words, it seems to have been held that by selecting features taken from five different patents, that is, none feature from one patent, another from another, etc., a device might be considered which would so closely resemble the drawings of appellant that his design would not be patentable over such possible construction.

We feel constrained to disagree with the concurring conclusions reached by the tribunals of the Patent Office.

In considering patentability of a proposed design the appearance of the design must be viewed as a whole, as shown by the drawing, or drawings, and compared with something in existence—not with something that might be brought into existence by selecting individual features from prior art and combining them, particularly where combining them would require modification of every individual feature, as would be required here.

182 F.2d 207 at 208. The Jennings court lists the cited references but does not say—let alone show—which “features seem to have been selected” from each or how they were “compared with features shown in appellant’s drawings.” Nonetheless, the CCPA did helpfully emphasize that, in analyzing whether a design is obvious, the design must be considered as a whole.

Going back to LKQ, the en banc Federal Circuit further tells us that “[t]he primary reference will likely be the closest prior art, i.e., the prior art design that is most visually similar to the claimed design” and that “[t]he primary reference will typically be in the same field of endeavor as the claimed ornamental design’s article of manufacture, but it need not be, so long as it is analogous art.”

So what to make of all of this?

First, and perhaps most importantly, the Federal Circuit’s decision in LKQ is a clear repudiation of the Frankenart approach to design patent obviousness. A challenger (or an examiner) can’t just slice and dice a design claim into “limitations,” find those in the prior art, and then stitch them together into an invalidating reference. That’s a good thing.

Second, we know that a proper primary reference no longer has to look “basically the same” as a claimed design, as that phrase was applied by the Federal Circuit. (For a few examples of the extremely high degree of visual similarity required by the Federal Circuit prior to LKQ, see here and here.)

Nonetheless, the court’s citation to and reaffirmation of the Jennings rule suggests that, even after LKQ, a primary reference must still have at least some quantum of overall visual similarity. If no reference looks at least somewhat similar to the claimed design, then are we not simply “selecting individual features from prior art and combining them” to invalidate the design?

So what about Whitman Saddle? The LKQ court tells us that it doesn’t matter that Whitman Saddle predated the enactment of § 103 and spoke about “invention,” not obviousness. They tell us, without any citation or explanation, that “[t]he reasoning of Whitman Saddle carries over to the modern § 103 standard of obviousness.” (I suspect that Judge Rich would have disagreed.) Perhaps some patent challengers will attempt to argue that, following LKQ, “half is enough”—i.e., that if half of the claimed design can be found in a piece of prior art, that constitutes a proper primary reference. I don’t think that’s right. Whitman Saddle was a case with unusual facts and, in its discussion, the Supreme Court expressly relied on the existence of a “mix and match” custom in the field of saddle design. In that case, the Supreme Court tells us, the issue wasn’t that the different parts of the claimed saddle design could be found in the prior art and hypothetically could have combined but rather because, the Supreme Court tells us, it was “customary” to do so. Without that custom, then the reference combining in Whitman Saddle would seem to be nothing more than the Frankenart approach rejected in Jennings—and now in LKQ. In cases without evidence of a similar type of custom, Whitman Saddle may have limited precedential value.

Third, the LKQ court left open the possibility that the primary reference could be both the “most visually similar to the claimed design” but not the type of reference that could anticipate the claimed design under § 102. That’s because the primary reference need not disclose a design for the same type of article, as required for anticipation. It merely needs to be “analogous art.” Thus, the Federal Circuit has indicated that, for designs, the universe of § 103 prior art is broader than the universe of § 102 prior art. That’s the opposite of how it works in utility patents. That’s not a problem, though. Or even a bad thing. (Indeed, I’ve argued that this is how it should be.) But it’s still notable.

One more point: The LKQ court justified its retention of a primary reference requirement as being necessary to avoid “hindsight.” That may be true in some sense. But, as I’ve written before, requiring a primary reference does more than that—it focuses the inquiry, quite properly and as required by Jennings, on the design as a whole. It recognizes that design patents are fundamentally different than utility patents. They protect fundamentally different innovations (visual designs) in a fundamentally different way (central claiming using images). The Frankenart approach rejected by Jennings—and now by the en banc Federal Circuit in LKQ—essentially asks whether it would have been technically possible to combine preexisting design elements. It tells us nothing about whether it would have been visually obvious to do so. Exactly how this new primary reference requirement will develop remains to be seen. But the Federal Circuit’s renewed and reemphasized focus on the fact that a design must be emphasized as a whole is extremely important and a point not to be missed.

* * *

For more on the history of § 103, design patents, and some thoughts about what types of modifications to a primary reference would be obvious (from a design perspective), see this article.