Issues: (1) Whether copyright protection extends to a software interface; and (2) whether, as the jury found, the petitioner’s use of a software interface in the context of creating a new computer program constitutes fair use.
by Dennis Crouch
KPN v. Gemalto M2M (Fed. Cir. 2019)
Judge Stark (D.Del) sided with the defendants in this case — finding KPN’s patent claims ineligible under 35 U.S.C. 101. U.S. Patent No. 6,212,662. On appeal, the Federal Circuit has reversed — holding that the claims are not directed toward an abstract idea:
Rather than being merely directed to the abstract idea of data manipulation, these claims are directed to an improved check data generating device that enables a data transmission error detection system to detect a specific type of error that prior art systems could not.
KPN is a large Dutch telecom. The claims here are directed to a “device” to create “check data” (checksum or hash) for error checking digital signals as they pass through the lines.
The basic approach here is to create a checksum before transmitting the data and then recreate the checksum at the other end — if the two match then we know the data was (probably) not corrupted.
The invention here is directed improving chance that the data was “probably not corrupted” by somewhat randomly mixing-up the original data before calculating the checksum. That approach helps catch systematic errors undetected by a less nuanced checksum algorithm. The claims use a “varying device” to do the mixing-up that changes bit-positions relative one another and requires that the mixing be varied “in time.” Although the claims do not spell-out the meaning of “in time” – I assume that we’re talking about something like a pseudo-random number generator function that uses the current time as its repeatable initiating point.
Note here, all that the claims require are two devices working in tandem to (1) mix-up (vary) the incoming data in a way that changes over time; and (2) generate check data.
The district court dismissed the case – finding that the claims were directed toward the abstract idea of “reordering data and generating additional data.” The court noted that the specification might have disclosed an eligible invention, but that the claims were drafted at too abstract a level.
On appeal, the Federal Circuit reversed — focusing on the court’s regular distinction between inventions that improve computer capabilities vs those that invoke computers as tools.
An improved result, without more stated in the claim, is not enough to confer eligibility to an otherwise abstract idea. . . . To be patent-eligible, the claims must recite a specific means or method that solves a problem in an existing technological process.
Here, the court concluded that requiring mixing-up of data that varied in-time “recites a specific implementation of varying the way check data is generated that improves the ability of prior art error detection systems to detect systematic errors.”
[T]he claimed invention is … directed to a non-abstract improvement because it employs a new way of generating check data that enables the detection of persistent systematic errors in data transmissions that prior art systems were previously not equipped to detect.
The defendant also argued that the claims were ineligible because the result was simply data — the claims did not require any particular use. “According to Appellees, without this last step tying the claims to a ‘concrete application,’ the claims are doomed to abstraction.” The Federal Circuit rejected that argument — holding that the claims are directed toward an improved tool — a checksum creator. The claims need not “recite how that tool is applied in the overall system.”
Rather, to determine whether the claims here are non-abstract, the more relevant inquiry is “whether the claims in th[is] patent[ ] focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke processes and machinery.” Quoting McRO; Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016) (finding claims to be directed to a patent-ineligible abstract idea because “the focus of the claims [wa]s not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools”).
= = = =
One element of the decision that I see as important is that the court focused on what the patentee claimed to be their improvement within the patent document:
The claims sufficiently capture the inventors’ asserted technical contribution to the prior art by reciting how the solution specifically improves the function of prior art error detection systems.
Note that in this case, the specification identifies the prior art approach and its deficiencies and then explains how the invention is an improvement over the prior art. That approach had fallen out of favor in U.S. patent practice appears to be what saved-the-day for the patentee in this case.
= = = = =
Dependent Claim 2 is at issue:
1. A device for producing error checking based on original data provided in blocks with each block having plural bits in a particular ordered sequence, comprising:
a generating device configured to generate check data; and
a varying device configured to vary original data prior to supplying said original data to the generating device as varied data;
wherein said varying device includes a permutating device configured to perform a permutation of bit position relative to said particular ordered sequence for at least some of the bits in each of said blocks making up said original data without reordering any blocks of original data.
2. The device according to claim 1, wherein the varying device is further configured to modify the permutation in time.
I was thinking some today about the pending Federal Circuit inequitable conduct case in Conversant Wireless Licensing v. Apple Inc., Docket No. 19-02039 (Fed. Cir. 2019). That case involves acts by the prior owner of Coversant’s patent — Nokia. During standard setting discussions for an old GPRS communication standard, Nokia apparently delayed disclosure of its related patents for several years. Although the patents were eventually disclosed, the district court found that the Nokia’s actions were problematic enough to hold the patent unenforceable.
I have not written as much about inequitable conduct since the Federal Circuit swept the issue away in, Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). Perhaps parties are now too busy with IPR proceedings.
Chart below shows the number of Federal Circuit decisions using the term “inequitable conduct” each year.
My prior chart in 2009 showed a totally different trend (also less precise markers).
Columbia Sportswear v. Seirus Innovative Accessories (Fed. Cir. 2019)
It is a bit chilly here in Missouri and so I wore my Seirus gloves that I purchased after the last-time I wrote about this case.
Note here that my gloves are the cheap liners, the lawsuit focuses more on the expensive gloves and clothing that have the heat-reflective material on the inner liner. My gloves also show a different pattern than the original accused HeatWave product.
In the case, Columbia asserted both a design patent (US.D657093) and a utility patent (US.8453270) and the case resulted in a partial victory for Columbia — Jury award of $3 million in damages for design patent infringement but a determined that the asserted utility patent were invalid.
The ‘093 design patent is directed to a “heat reflective material” as shown in the drawing above. Columbia won its design patent case on summary judgment and then a jury awarded $3 million in damages. On appeal, the Federal Circuit has vacated the summary judgment — holding that the district court improperly decided disputed issues of material fact reserved for a jury.
Design patent infringement is a question of fact. . . . The “ordinary observer” test is the sole test for determining whether a design patent has been infringed. Egyptian Goddess (Fed. Cir. 2008) (en banc). The test originates from the Supreme Court’s Gorham decision, which provides that “if, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.” Gorham Co. v. White, 81 U.S. 511, 528 (1871)). . . . The ordinary observer is considered to be familiar with prior art designs, and “[w]hen the differences between the claimed and accused designs are viewed in light of the prior art, the attention of the hypothetical ordinary observer may be drawn to those aspects of the claimed design that differ from the prior art.” Crocs (Fed. Cir. 2010).
Seirus’ key argument here is that the location of its logo, coupled with differences in line thicknesses and uniformity raise questions of fact sufficient to get the case to the jury — so that a reasonable juror could find no infringement. The district court disagreed with that argument — finding that “even the most discerning customer would be hard pressed to notice the differences between Seirus’s HeatWave design and Columbia’s patented design.”
On appeal, the Federal Circuit has sided with the adjudged infringer holding that the logo should be considered as part of the non-infringement analysis. In L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1125 (Fed.Cir.1993), the Federal Circuit wrote that “[d]esign patent infringement … does not … allow of avoidance of infringement by labelling.” That decision led the district court here to come to the conclusion that it is “well-settled that a defendant cannot avoid infringement by merely affixing its logo to an otherwise infringing design.”
On appeal, the Federal Circuit instead distinguished L.A. Gear.
In evaluating infringement there, we explained [In L.A. Gear] that design infringement is not avoided “by labelling.” A would-be infringer should not escape liability for design patent infringement if a design is copied but labeled with its name. But L.A. Gear does not prohibit the fact finder from considering an ornamental logo, its placement, and its appearance as one among other potential differences between
a patented design and an accused one. Indeed, the fact finder is tasked with determining whether an ordinary observer would find the “effect of the whole design substantially the same.”
Regarding wave thickness, the district court held that thickness was not claimed in the patent. Obviously wrong because everything in the drawing is claimed.
[T]he claim of the ’093 patent is drawn to the “ornamental design of a heat reflective material as shown and described,” and Columbia’s design has uniform line thickness in every figure in the patent.
Slip Op. Note here that the district court cited to several decisions holding finding that design patents were not limited to “any particular size” and thus, for instance could simultaneously cover both a motorcycle for humans and one for Ralph the Mouse.
Those precedents didn’t fit here because we’re not talking about the overall sizing but rather relative sizing and uniformity.
Finally, the district court also noted several other differences between the patent and the accused product, but found them each minor. On appeal, the Federal Circuit found the approach improperly piecemeal and did not properly consider overall visual impression.
[T]he district court’s piecemeal approach, considering only if design elements independently affect the overall visual impression that the designs are similar, is at odds with our case law requiring the factfinder to analyze the design as a whole. See Amini Innovation Corp. v. Anthony Cal., Inc., 439 F.3d 1365, 1372 (Fed. Cir. 2006). An ordinary observer is deceived by an infringing design as a result of “similarities in the overall design, not of similarities in ornamental features considered in isolation.” Id.
Slip Op. Thus, the case is remanded and will now likely go to a jury trial.
In the appeal, the defendant also argued that profit disgorgement under 25 U.S.C. § 289 should be determined by a judge rather than a jury. The Federal Circuit noted that to be an important question, but did not reach it on appeal after having already vacated the infringement findings.
Note here that the ornamental design is directed to a heat reflective material -getting close to a design in the abstract. See Curver Luxembourg, SARL v. Home Expressions Inc. (Fed. Cir. 2019).
Utility patent — the jury found asserted utility patent claims invalid as both anticipated and obvious. On appeal, Columbia argued that the obviousness evidence lacked “competent expert testimony” that the Federal Circuit has previously required in complex cases to explain the prior art to a jury. On appeal, the court ruled that the invention here was simple enough so that expert explanations were not required:
[W]e are not persuaded that the legal determination of obviousness in this case requires such evidence. The technology here—coated materials for cold weather and outdoor products—is “easily understandable without the need for expert explanatory testimony.” Quoting Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324 (Fed. Cir. 2009) and Centricut, LLC v. Esab Grp., Inc., 390 F.3d 1361 (Fed. Cir. 2004)). . . . There is no discussion of thermodynamics or the mechanism that yields the claimed material’s heat retentive properties in the patent. Thus, given the patent and references’ general, easily understood language, this is not a case that requires expert explanation.
Venue: The venue setup for this case was interesting. It was originally filed in Oregon and then was transferred to California following T.C. Heartland. Since the case was already far-along in the litigation process (post summary judgment), Judge Hernandez who handled the case in Oregon also got himself temporarily assigned to the case in California and ran the trial from there. On appeal, Columbia argued that the transfer was improper because Seirus had waived its venue argument. However, the Federal Circuit found no problem — holding that the district court did not abuse its discretion in excusing Seirus’s waiver of its venue defense.
By Sarah Burstein, Professor of Law at the University of Oklahoma College of Law
Like the majority and the dissent in the panel decision, the petition does not directly address the main difficulty raised by this case—namely, how should we apply the design patent “primary reference” test for multi-article designs?
According to Gamon Plus, its two patents claim “designs of displays developed by Appellee Gamon Plus specifically for the display of Campbell Soup cans in stores.” Here are the illustrations Gamon Plus included in its petition for rehearing:
However these claims are interpreted (a matter of much dispute in this case), they are each clearly directed to what we might call a “multi-article” design. Each design defines parts of the shapes of separate articles—a dispenser and a can.
The problem is that the design patent “primary reference” requirement was created in the context of—and implicitly assumes—a single-article design. The lesson in Durling and Rosen was that you can’t create a Franken-article to serve as a primary reference. If the patent (or application) claims a design for a table, you can’t splice parts of different tables together to form a single, hypothetical table. You have to find a table that actually exists (or a sufficient description thereof) in the prior art.
But what happens when the design extends over separate articles? Gamon Plus (and Judge Newman, in dissent) seem to argue that there must be a single reference that explicitly discloses both articles being used together in the same way. That can’t possibly be right—especially on the facts of this case.
Gamon Plus conceptualizes its design as a “display” with a label and a can with “specific dimensions” is placed “at a specified relative location spaced below the [dispenser] label.” But Gamon Plus didn’t invent that can shape. To the contrary, as quoted above, Gamon Plus says the dispenser was designed specifically for Campbell’s Soup cans.
The only shape that Gamon Plus invented was the shape of the dispenser. That shape may be defined by and adapted to the shape of the can. And it may be meant to display that can in a particular position. But a patentee should not be able to effectively immunize a design for one article from § 103 scrutiny merely by claiming the “design” is really the use of that article with some other (unoriginal) article.
Whether inherency is the best way to get at these issues is another question. Perhaps, when it comes to multi-article designs, the primary reference test should be applied on an article-by-article basis. Or maybe § 171 should be interpreted to exclude multi-article designs. But in any case, it would be nice to see the Federal Circuit confront these issues directly.
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Side note: As someone who’s studied design patent nonobviousness for a long time, the thing I found most surprising thing about this decision was that the majority thought Linz looked similar enough to be a primary reference—hypothetical can or no hypothetical can. In recent cases, it’s been hard to see much blue sky between “basically the same” (the primary reference standard) and “the same” (the anticipation standard), at least as the former is applied by the Federal Circuit. For more on some of these cases, and design patent nonobviousness more generally, see this article and this post. If Campbell signals a shift away from that overly strict application of the test, that would be a welcome development.
From the PTO:
Join us for a seminar on filing DOCX, which is structured text. The DOCX Information Sessions will start Wednesday, November 13 from 2-3 p.m. ET. We will discuss DOCX as an efficient way to file a patent application electronically. You’ll learn what the DOCX format is, how you can use it to file nonprovisional utility applications, and the benefits it provides to you and your patent applications.
The webinar is free and open to all. Please register for available dates and times.
More information is available on the event page of the USPTO website
by Dennis Crouch
In re Copeland-Smith (Fed. Cir. 2019)
David Copeland-Smith is a leading soccer coach and has been training players for years using his registered trademark BEAST MODE SOCCER. [beastmodesoccer.com] .
The mark was registered early-on for “coaching services.” However, Copeland-Smith also wanted a registration covering t-shirts and soccer balls. (The amended application disclaimed rights to SOCCER except as part of BEAST MODE SOCCER.)
The problem for Copeland-Smith is that other folks have their own registered Beast-Mode marks. This include’s former NFL’r Marshawn Lynch’s BEAST MODE apparel line. [beastmodeonline.com].
In this situation, the PTO asks whether the applicant’s mark is likely to cause confusion with another registered mark. § 2(d) of the Lanham Act (15 U.S.C. § 1052(d)). The du Pont factors serve as the guide in this likelihood of confusion analysis. Here, the focus was on factors 1 and 6:
1. The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression.
6. The number and nature of similar marks in use on similar goods.
Factor 1 – similarity of the mark — Copeland-Smith argued that BEAST MODE SOCCER has substantial dissimilarity from the shorter BEAST MODE. On appeal, the Federal Circuit agreed with the TTAB that the word SOCCER shouldn’t be given much weight because it is a generic/descriptive term and that BEAST MODE is the most memorable and impactful portion of the mark. The court also affirmed the potential overlapping markets because Lynch’s mark is not tied to “football themed” apparel, but rather “encompass trade channels through which soccer clothing is also sold.” Note here that analysis of these factors is a question of fact, and so the Board’s conclusions were given substantial deference on appeal.
Factor 6 – number and nature of similar marks — Copeland argues that Lynch’s mark is weak because “Beast Mode” is a well known American slang referring to using “high effort or energy in exercise or sport.” (Citing the UrbanDictionary). (I’ll note that several UrbanDictionary definitions refer directly to Lynch. E.g., “beastmoed: to go crazy like marshawn lynch does.”) (I’ll also note the following definition “Patent: To take an existing commodity and claim ownership over its production rights.”)
On appeal, the Federal Circuit again agreed with the TTAB’s factual conclusion that Factor 6 favored denial-of-registration. The court noted that Copeland-Smith produced a “large quantity of evidence”, but that the evidence lacked “quality.”
The Board closely inspected the evidence and determined that, despite the volume of evidence submitted, much of it was of limited probative value on the question of the weakness of Lynch’s BEAST MODE mark for t-shirts and other clothing.
Denial affirmed – no registered mark for BEAST MODE SOCCER on clothing or soccer balls.
Chestnut Hill Sound Inc. v. Apple Inc. (Supreme Court 2019)
In an appeal from an inter partes review decision of unpatentability, a losing Patent Owner-Appellant is more than three times as likely to receive a one-word summary affirmation than a losing Petitioner-Appellant. The Federal Circuit issues these one-word summary affirmations under Federal Circuit Rule 36.
This Court has already requested briefing on a related question regarding Federal Circuit Rule 36(e) in Straight Path IP Group, LLC v. Apple Inc., et al., Sup. Ct. No 19-253.
The Questions Presented below address disparities of outcomes for Patent Owners versus Petitioners, but they may be considered companion issues.
1. Can a court ever choose to write reasoned opinions for one class of losing appellants and not another under the Due Process and Equal Protection Clauses; and if so, how disparate can the issuance rates of reasoned opinions, versus summary affirmations, be for different classes of appellants?
2. Is the Public entitled to reasoned opinions when the absence of those opinions diminishes the Public’s right of access to the courts and ultimately results in the erosion of the Rule of Law?
[Note, the Federal Circuit issued eight judgments on appeals today: Six R36 affirmances without opinion; and two non-precedential opinions.]
From the Petition:
by Dennis Crouch
Collabo Innovations, Inc. v. Sony Corporation (Supreme Court 2019)
Everyone will admit that a lot has changed in patent law since Collabo’s U.S. Patent 5,952,714 issued in September 1999. Although ex parte reexamination was available, the American Inventors Protection Act (AIPA) authorizing inter partes reexamination was not enacted until November 1999. However, inter partes reexamination only applied to patents issued from applications filed after November 1999. Pub. L. 106–113 Then, in 2011, Congress created inter partes review — and this time made it retroactive.
After Collabo sued Sony for infringement, Sony responded with petitions for inter partes review. The PTO instituted review and found the claims unpatentable by a preponderance of the evidence and the Federal Circuit affirmed. With regard to Collabo’s due process and takings claim, the court found itself bound by a parallel decision in Celgene Corp. v. Peter, 931 F.3d 1342 (Fed. Cir. 2019). Celgene is pending petition for en banc rehearing on the question:
Whether retroactive application of inter partes review (“IPR”), to patent claims issued before the America Invents Act (“AIA”), constitutes an unconstitutional taking?
[Celgene Petition Rehearing]. I’ll note here a fact difference between these cases is that Collabo’s patents were never subject to Inter Partes Reexamination while Celgene’s patents were.
In its new petition, Collabo asks the following two questions:
1. Does the retroactive application of inter partes review to a patent that issued before the passage of the AIA violate the Takings Clause of the Fifth Amendment?
2. Does the retroactive application of inter partes review to a patent that issued before the passage of the AIA violate the Due Process Clause of the Fifth Amendment?
In Oil States (2018), the Supreme Court upheld AIA Review proceedings — finding that the process did not violate requirements of either Article III or Seventh Amendment. However, the Supreme Court expressly left-open the potential for future challenges on grounds of takings and due process:
We emphasize the narrowness of our holding. We address the constitutionality of inter partes review only. . . . [W]e address only the precise constitutional challenges that Oil States raised here. Oil States does not challenge the retroactive application of inter partes review, even though that procedure was not in place when its patent issued. Nor has Oil States raised a due process challenge. Finally, our decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.
The basic setup here is that the AIA makes it easier to invalidate patents with its lower presumption; lower standard of proof; and (until recently) broader interpretation of patent scope. It is also true, in my opinion, that no one has a constitutional right to assert an invalid patent. The deeper question then is whether AIA review is merely a procedural change to more efficiently get to the validity question, or does it unduly undermine the ‘vested rights’ of patent holders.
Recent Headlines in the IP World:
Commentary and Journal Articles:
New Job Postings on Patently-O:
The chart above shows that the trend is continuing — more inventors per patent application. The rising series are applications with 3 or more listed inventors and the declining series are those applications with only 1 listed inventor. The percentage of applications with 2 listed inventors is remaining fairly constant over the past 15 years. I’ll do a follow-up showing that more-inventors correlates with higher allowance rate. The series stops in Spring 2018 because of the 18-month publication delay of new applications.
by Dennis Crouch
Telefonaktiebolaget LM Ericsson v. TCL Corp. (Fed. Cir. 2019)
The PTAB sided with TCL — finding the challenged claims of Ericsson’s US Patent 6,029,052 unpatentable as obvious. Only claim 18 is on appeal, which claims a method for filtering an inbound signal, including “band-pass filtering” (12); then amplifying the signal (34); then mixing (40) the signal with “inphase and quadrature oscillator signals” that were derived from a frequency-divided first oscillator signal (36) (resulting in two separate signals); then low-pass filtering both signals (42).
A key focus of the appeal is the question of whether the purported prior art – a German magazine article – was publicly available prior to Ericsson’s critical date (here 1-year before filing date of July 1, 1997).
The cover of the magazine lists a date of May/June 1996. However, Ericsson argued that the listed date on a magazine is not enough to prove that it was actually published by that time — especially here where a one-month delay discrepancy in publication would mean that the document was not prior art. Ericsson found the article in the UCLA library — and provided evidence that it had not been received at UCLA until October 1996 — after the critical date.
TCL then provided a first letter from a German librarian who indicated that their library received access on June 19, 1996 (just before the critical date). However, on challenge from Ericsson, the letter was withdrawn as inadmissible because the librarian refused to provide a sworn statement or to be deposed in the US.
Subsequently, TCL found Doris Michel — the “only individual TCL found who has personal knowledge of the record-keeping procedures used in 1996, was willing to sign a sworn declaration, and is willing to travel to the U.S. to be deposed.” Michel indicated in a sworn statement that the article was “inventoried by the Library on June 18, 1996” and, if standard procedures were followed, would have been “accessible for use to the public after a processing time of 1-2 days.”
The PTAB allowed the Michel evidence and testimony and held that the article was publicly accessible (albeit in Germany) prior to the critical date. And, as such was prior art.
Admissibility: On appeal, the patentee argued that the evidence should have been excluded by the PTAB because it was not timely. In particular, PTAB rules require petitioner to provide sufficient evidence at the petition stage, not well into the trial phase. Under PTO Regs, supplemental information can only be submitted if it “reasonably could not have been obtained earlier.” In this case, however, TCL did not even start looking for the librarian until after Ericsson filed its objections.
The motion to submit supplemental information must show why the supplemental information reasonably could not have been obtained earlier, and that consideration of the supplemental information would be in the interests-of-justice.
37 C.F.R. 42.123. In this case, the Federal Circuit affirmed the PTAB decision allowing the evidence — finding that the PTAB did not abuse its discretion in determining that “consideration of the supplemental information would be in the interests of justice” — especially because Ericsson was given sufficient opportunity to respond to the evidence and to provide any contrary evidence.
Note that the Federal Circuit did not directly address the requirement of showing that the evidence could not have been obtained earlier.
As to the merits, Ericsson argued that public shelving is insufficient to show public accessibility. Although the article/magazine were apparently not meaningfully indexed, the magazine had been published for the past thirty years. As such, “[t]his case is unlike cases in which a single dissertation or thesis was housed in a library.”
Note here, that the appellate panel again does not provide a full analysis of its reasoning here. Since the article/magazine was not meaningfully indexed, what were the additional features to let the court know that it was sufficiently publicly accessible? What would have connected the dots here would be (1) some showing that the publication was well known to persons interested in the subject matter; (2) that the publication was known to be in the library in-question (perhaps proven by showing that the library had a subscription for several years); and (3) that the article in question is one that would be expected to find in the magazine.
Debbie McComas (Haynes & Boone) handled the appeal for Ericsson while Julie Goldemberg (Morgan, Lewis & Bockius) represented TCL.
by Dennis Crouch
Allen v. Cooper (Supreme Court 2019)
In this copyright case, the Supreme Court is wrestling with the question of sovereign immunity. Does the 11th Amendment shelter States (North Carolina in this case) from copyright infringement lawsuits. The plaintiff — Frederick Allen — documented the 1998 salvage of the Pirate Blackbeard’s ship Queen Anne’s Revenge that sank near the North Carolina coast in 1718. North Carolina wanted to use Allen’s copyrighted material, but didn’t want to pay. The state legislature stepped in with “Blackbeard’s Law” — designating all photos, videos, and other documentary materials of shipwrecks to be public records. Allen then sued N.C. for infringement (Cooper is N.C. Governor).
In the background is the Copyright Remedy Clarification Act (CRCA) of 1990 that expressly abrogates state immunity in the area of copyright law:
Any State … shall not be immune, under the Eleventh Amendment [or] any other doctrine of sovereign immunity, from suit in Federal Court … for a violation of any of the exclusive rights of a copyright owner….
17 USC 511(a). The basic question in the case is whether CRCA is unconstitutional:
Whether Congress validly abrogated state sovereign immunity via the CRCA in providing remedies for authors of original expression whose federal copyrights are infringed by states.
In some ways this case can be seen as a follow-on to Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999). In that patent case, a 5-4 Supreme Court held that Congress had improperly authorized patent infringement lawsuits against States. The area of law has seen further development since 1999, including an important bankruptcy-related decision in Central Virginia Community College v. Katz, 546 U.S. 356 (2006).
= = =
The Supreme Court held oral arguments in the case on November 5, 2019.
Allen’s basic argument is that state immunity is inconsistent with constitutional power of “securing … exclusive rights.” Further, the 14th Amendment is seen as providing additional power to Congress to ensure that each state provides due process and equal protection. However, the Supreme Court requires actual constitutional violations before Congress can legislate in this area. [Oral Argument Transcript]
Arguing on behalf of the copyright holder, Derek Shaffer explains:
MR. SHAFFER: Exclusive against whom, Your Honors? Exclusive against all comers, exclusive against the world, including the government and including states.
The key problem with N.C.’s argument is that it goes against the Court’s reasoning in Florida Prepaid.
JUSTICE GINSBURG: All — all that is — would be highly persuasive if we didn’t have the patent decision, the Florida Prepaid decision. It is the very same clause. It’s the very same secure. It’s the very same exclusivity.
MR. SHAFFER: Correct, Justice Ginsburg. But the Court was not examining the text. The Court was not examining the clause. . . . That wasn’t before the Court. It wasn’t even raised before the Court.
JUSTICE KAGAN: If you are right, we would then have to go back to Florida Prepaid, right, and topple that rule?
MR. SHAFFER: It would be certainly open to folks in patent cases to make that argument, Justice Kagan.
JUSTICE ALITO: So, basically, you’re asking us to overrule Florida Prepaid?
MR. SHAFFER: I’m asking this Court to follow Katz, Justice Alito, where I think Florida Prepaid was [already] overruled. [See Central Virginia Community College v. Katz, 546 U.S. 356 (2006) (Does the Bankruptcy Clause of the U.S. Constitution (Article I Section 8), waive the states’ sovereign immunity?)]
Arguing on behalf of N.C., RYAN PARK added his thoughts:
JUSTICE ALITO: Mr. Park, can I take you back to the interesting suggestion that perhaps Congress could have justified what it did in this act by saying that we predict that a high percentage of copyright infringements are intentional and, therefore, violate due process. If we were to accept that, is there any reason why the same reasoning would not apply in patent litigation?
MR. PARK: No, I don’t believe there is any — any distinction there. [DC: note, this is wrong since patent law does not have a copying requirement.]
Due Process and Takings are not expressly raised in this case are interesting. Even without CRCA, a copyright holder may be able to bring a Federal Due Process or Takings case against a state who infringes the copyright. A major difference here is that copyright damage and injunction statutes go far beyond what is required for a due process violation or taking. Mr. Park explained for the State how the copyright-owner friendly damage regime is one reason to protect sovereign immunity (and taxpayer money).
MR. PARK: My friend has failed to identify any historical evidence that anyone at the founding remotely contemplated that the intellectual property clause would allow for damages lawsuits against states. . . . Congress could not commandeer state legislatures and force them to pass copyright protective laws, nor could they, under separation of powers principles, vest judicial review of copyright claims in the Senate Judiciary Committee. And, likewise, state sovereign immunity limits Congress’s authority to expose state treasuries to the Copyright Act’s exorbitant financial remedies. . . . And liability under the Act is expansive. It’s vastly greater than anything required by the Due Process Clause. It includes statutory damages of up to $150,000 per infringement, even if the plaintiff cannot prove she suffered any actual harm. . . .
JUSTICE BREYER: [For N.C. to win] we’ve got to decide how copyright, copying, and the due process clause fit together, which, to my knowledge, this Court hasn’t really gone into. And it sounds like a pretty good mare’s nest.
From the copyright holder’s perspective, the damage award is inherent to the copyright clause:
MR. SHAFFER: Clearly the framers’ contemplation is these are exclusive rights that anyone who may infringe has to pay for.
JUSTICE SOTOMAYOR: — the latter part you’re assuming. It says securing the copyright, but it doesn’t say making sure that the copyright owners are paid.
MR. SHAFFER: To promote progress. To promote progress, Justice Sotomayor. It is a preamble that is not echoed anywhere else in Article I.
JUSTICE SOTOMAYOR: Some would say that injunctive relief promotes progress.
MR. SHAFFER: James Madison’s conception reflected in the text of what the monopoly would achieve is that the authors and inventors would get paid for their inventions. They would get paid for their creations. And as the Court, as I indicated, back in 1888 recognized, it is antithetical to that to say that government of any kind, certainly the federal government, can infringe those exclusive rights that — that Congress is to be securing.
Justices Kavanaugh and Breyer finally focused on potential realistic outcomes of the case — rampant state infringement?
JUSTICE KAVANAUGH: Justice Breyer’s point is that it could be rampant, states ripping off copyright holders. And how can that be squared with the exclusive right, if states can do this, which presumably a ruling in [N.C’s] favor will do nothing but encourage them to do?
I’m looking for a decision in the case in early 2020.
by Dennis Crouch
In Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, the Federal Circuit reaffirmed its general ruling that newly invented diagnostic methods will generally be seen as directed toward unpatentable natural laws absent some new machinery for performing the method. Athena’s patented method is a three-step process for identifying MuSK antibodies in body fluid (such as blood): Mixing labelled MuSK with the body fluid; immunoprecipitating any antibody/MuSK complex from the fluid; and monitoring for the label in the left-over precipitate. The test is important because the existence of MuSK helps diagnose a particular form of Myasthenia gravis (MG).
In its decision, the Federal Circuit found that the core discovery here is the relationship between MuSK antibodies in the body and MG. That relationship though is a natural law. The court then looked to the particular steps in the method and found no inventive concept. Even though the claims required specific chemical reactions, the specification also made clear that development of the particular steps would be within reach of one skilled in the art — once they understand that MuSK is important. The Federal Circuit decision was penned by Judge Lourie and joined by Judge Stoll. Judge Newman wrote in dissent. A 7-5 court then denied Athena’s petition for en banc rehearing — writing effectively that its hands were tied by Mayo & Alice. The Athena denial is interesting because it includes eight opinions (seven substantive) that generally lament the current situation.
Athena then filed a petition asking the Supreme Court to take-up the case on the following question:
Whether a new and specific method of diagnosing a medical condition is patent-eligible subject matter,where the method detects a molecule never previously linked to the condition using novel man-made molecules and a series of specific chemical steps never previously performed.
[Petition]. Now, 11 amici briefs have filed in support of review. Each of the briefs have lots to say, but I have included below one thought from each that I see as an important contribution:
These are very interesting and important briefs. Yes, they show support, but they also include useful legal analysis.
Mayo’s responsive brief is due on November 22, 2019 with any amici in support of the current-state-of-affairs due shortly thereafter.
by Dennis Crouch
Chrimar Systems v. ALE (Alcatel-Lucent) (Fed. Cir. 2019)(en banc petition)
This case raises important Federal Courts questions that have had a major impact on patent law. Chrimar has petitioned for en banc rehearing and five amici briefs have been filed in support — all focusing on “the rules of finality that attach to an Article III judgment, when a later PTAB decision conflicts with that judgment.”
The current Federal Circuit rule stems from a 2013 decision captioned Fresenius:
A PTAB unpatentability decision takes precedence over prior court rulings and retroactively precludes those decisions so long as any issue of liability/damages remains pending in the court case, even if validity questions were waived or finally decided in the court case.
[This is my restatement of the holdings] See XY, LLC v. Trans Ova Genetics, 890 F.3d 1282 (Fed. Cir. 2018).
The en banc petition explains that the Federal Circuit’s preclusion rule is out of line with “every other circuit” and the Restatement (Second) of Judgments.
The difficulty for the Federal Circuit in this case is the 1922 Supreme Court case of John Simmons Co. v. Grier Bros. Co., 258 U.S. 82 (1922) that the briefs do a good job of explaining away (as does Prof. Paul Gugliuzza in his article (In)Valid Patents). “It is a stretch to claim, as the Federal Circuit has, that Simmons is controlling in modern cases involving inconsistent validity decisions by a court and the PTO.”
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Looking particularly at Chrimar’s case. In 2016, a jury sided with Chrimar against ALE — finding the patent infringed and not invalid. In a 2018 appeal, the Federal Circuit affirmed the damages award but modified the claim construction of one of the infringed claims (one of many). Chrimar I. On remand, the district court dismissed the challenged claim after Chrimar provided ALE with a covenant not to sue on that claim. ALE then appealed again — arguing that the disclaimer was insufficient because it did not expressly cover ALE’s customers. In response, Chrimar expressly expanded its disclaimer to make clear that it was a complete disclaimer of the claims (not just for ALE).
Meanwhile, in 2018 the same claims at issue were all found unpatentable by the PTAB in an IPR brought by a separate party. Chrimar appealed that PTAB case that was affirmed without opinion (R.36 Judgment). Chrimar II. Relying on that R.36 Judgment, the Federal Circuit then vacated the jury verdict and district court damage award. Chrimar III. It is this final vacatur – Chrimar III – that is the subject of the en banc petition. Chrimar argues that the Federal Circuit was wrong to use the PTAB decision to collaterally and retroactively undermine the already final determination of the district court.
by Dennis Crouch
In re Fought (Fed. Cir. 2019)
This is a nice short USPTO claim construction case. Heartland RV (Thor Indus.) filed its patent application back in 2012 claiming a movable-wall-structure for a travel trailer. In the example given in the patent, the wall might divide the back “garage portion” of the trailer from the front “living quarters.” The wall can then be adjusted according to the size of your ride.
Two pending claims:
1. A travel trailer having a first and second compartment therein separated by a wall assembly which is movable so as to alter the relative dimensions of the first and second compartments without altering the exterior appearance of the travel trailer.
2. A travel trailer having a front wall, rear wall, and two side walls with a first and a second compartment therein, those compartments being separated by a wall assembly, the wall assembly having a forward wall and at least one side member, the side member being located adjacent to and movable in parallel with respect to a side wall of the trailer, and the wall assembly being moved along the longitudinal length of the trailer by drive means positioned between the side member and the side wall.
The examiner rejected issued initial and final rejections in 2014 and 2015 respectively. The PTAB then sided with the examiner in its 2018 decision — holding that the claims were anticipated by two old prior art references. Claim 1 by U.S. Patent No. 4,049,311 (Dietrich); and Claim 2 by U.S. Patent No. 2,752,864 (McDougal).
The problem, is that neither prior art reference is directed to a “travel trailer” but rather to more conventional shipping compartments as shown below.
Although the are directed to a modified “travel trailer,” the PTAB gave no weight to that preamble term — finding that the broadest reasonable interpretation of the claims left that term as a mere non-limiting intended use.
On appeal, the Federal Circuit has reversed and remanded — holding that the preamble term is limiting because it serves as an antecedent basis for terms found in the claims. The Federal Circuit also noted that a “travel trailer” is known in the industry as a particular type of towable RV — not simply an intended use of a trailer.
Probably the single most-popular class of towable RV is the Travel Trailer. Spanning 13 to 35 feet long, travel trailers are designed to be towed by cars, vans, and pickup trucks with only the addition of a frame or bumper mounted hitch. Single axles are common, but dual and even triple axles may be found on larger units to carry the load.
Quote from Woodall’s RV Buyer’s Guide.
On remand, the Board will now have to decide whether to move forward with an obviousness rejection sua sponte or send the case back to the examiner for review.
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The court noted two other claim construction tidbits:
PHOSITA: Claims are construed from the frame of reference of a person of ordinary skill in the art. As per its usual approach, the Board did not articulare the level of skill in the art that should be applied in this case. On appeal, the Federal Circuit found no error with that approach. “Unless the patentee places the level of ordinary skill in the art in dispute and explains with particularity how the dispute would alter the outcome, neither the Board nor the examiner need articulate the level of ordinary skill in the art.”
PREAMBLE: Note the claim above is not written in the traditional form: [Preamble] comprising [Body]. Here, the applicant argued that the claim does not include a preamble at all because there is no transition phrase. On appeal, the Federal Circuit quickly rejected that suggestion. “Though this claim does not use the typical claim language (comprising) which denotes the transition between the preamble and the body, the word “having” performs the same role here.”
by Dennis Crouch
In ChargePoint, the Federal Circuit discussed the 19th Century patent case of Wyeth v. Stone, 30 F. Cas. 723 (C.C.D. Mass. 1840) (Justice Story).
The case involved a patented ice-cutting invention created by Nat Wyeth who was known to have invented “practically every implement and device used in the ice business.” The disputed patent in the case issued in 1829 and is now identified as No. X5,405. The drawings appear to be lost to history, probably in the 1836 Patent Office Fire. By 1840, Joseph Story had been on the Supreme Court for almost 30 years. At that time, however, the Justices “rode circuit” to hear local cases such as this one.
According to Justice Story, the patent document describes a new and useful invention whose closest relative may be a carpenter’s plough. Story walks through some of the differences that he found sufficient to distinguish the two. However, the patent itself asserts a much broader claim.
‘It is claimed, as new, to cut ice of a uniform size, by means of an apparatus worked by any other power than human.’
As Justice Story explains, that claim is for “exclusive title to the art of cutting ice by means of any power, other than human power.” Such a broad claim — abstracted from “any particular method or machinery” — is not patentable but rather is an unpatentable “art or principle in the abstract.”
No man can have a right to cut ice by all means or methods, or by all or any sort of apparatus, although he is not the inventor of any or all of such means, methods, or apparatus. A claim broader than the actual invention of the patentee is, for that very reason, upon the principles of the common law, utterly void, and the patent is a nullity.
Notice the explanation that Justice Story used here — no one can have a claim this broad – to all means or methods — unless the person invented “any or all of such means, methods, or apparatus.” Thus, although the courts have cited Wyeth on eligibility grounds, the case might be better seen as a source for written description doctrine.
In addition to the abstract principle claim, the patent document further claims the “particular method of the application of the principle” described in the specification. Applying the latin maxim “ut res magis valeat, quam pereat,” Justice Story interpreted the patent to more narrowly cover the machines described (the cutter and saw). “Although inartificial”, the specification could be “reasonably interpreted” so in a court of equity (although not upon the principles of common law).
The Federal Circuit has written about Wyeth in a number of cases — focusing upon the “results oriented” claims that end up encompassing an abstract principle. Interval Licensing LLC v. AOL, Inc., 896 F.3d 1335 (Fed. Cir. 2018); ChargePoint, Inc. v. SemaConnect, Inc., 920 F.3d 759 (Fed. Cir. 2019).
Customedia Tech v. Dish Network (Fed. Cir. 2019)
Customedia … submits a notice of supplemental authority identifying this court’s recent decision in Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-2140 (Fed. Cir. Oct. 31, 2019). That decision vacated and remanded for the matter to be decided by a new panel of Administrative Patent Judges (“APJs”) at the Patent Trial and Appeal Board after this court concluded that the APJs’ appointments violated the Appointments Clause. Customedia’s letters seek to assert the same challenge here, which the court construes as a motion to vacate the Board decisions here and remand in accordance with Arthrex.
We conclude that Customedia has forfeited its Appointments Clause challenges. . . . Customedia did not raise any semblance of an Appointments Clause challenge in its opening briefs or raise this challenge in a motion filed prior to its opening briefs. Consequently, we must treat that argument as forfeited in these appeals.
Last Thursday, in Arthrex v. Smith & Nephew (Fed. Cir. 2019), a panel of the Federal Circuit held that the administrative patent judges (APJs) at the PTAB are “principal officers” who must, under the Appointments Clause of the Constitution, be appointed by the President and confirmed by the Senate. In contrast, the current patent statute provides for APJs to be appointed by the Secretary of Commerce in consultation with the PTO Director. The panel further determined that it could remedy the constitutional defect by severing APJ removal protections, thereby rendering them inferior officers who can be appointed by “Heads of Departments” like the Commerce Secretary.
As this post details, the panel did a careful job of addressing one of the most knotty constitutional issues raised by PTAB adjudication. But precisely because the issue is knotty, the panel’s decision is unlikely to represent the last step in the road. Indeed, the USPTO has already indicated that it may seek en banc review.
All parties agreed, as did the panel (citing Professor John Duffy’s prominent 2007 Patently-O paper), that APJs are officers within the meaning of the Appointments Clause. The only question was whether APJs are principal or inferior officers.
The panel’s conclusion regarding principal officer status rested on Justice Scalia’s 1997 opinion for the Court in Edmond v. United States. In that case, the Court held that inferior officers must be “directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate.”
According to the panel, PTAB judges lack adequate direction and supervision for two reasons: first, “presidentially appointed officers” cannot “review, vacate, or correct decisions by the APJs”; and, second, these presidentially appointed officers (specifically the Secretary of Commerce and Director) have only “limited removal power.” Although severing APJ removal protections would not give the Director review power over individual decisions, it would, according to the panel, be sufficient to demote APJs to inferior status.
The road ahead will likely be tumultuous. At the Supreme Court, administrative law has long been a battlefield between various flavors of formalist and functionalist reasoning about how agencies fit into the executive branch and interact with the legislative and judicial branches. Indeed, in taking its relatively formal approach to the distinction between principal and superior officer, the Edmond Court had to distinguish the considerably less formalist opinion in Morrison v. Olson, written only 9 years earlier. In Morrison, Justice Scalia had written a stinging dissent, castigating the majority for relying on multiple indicia of inferiority, including limited responsibility, and for not recognizing that “inferior” necessarily means subordinate. Nine years later, Justice Scalia was able to secure 8 votes for his position. (Justice Souter concurred only in part.)
The Arthrex decision also comes during a period of even greater-than-usual Supreme Court turmoil over administrative adjudication. Most relevant for present purposes, the Court has already decided a steady stream of constitutional and nonconstitutional cases involving the PTAB. In the most prominent of these cases, Oil States Energy Services v. Greene’s Energy Group, an ideologically diverse coalition of seven Justices ultimately concluded that administrative adjudication of granted patents survived constitutional scrutiny. But Justice Gorsuch, joined by Chief Justice Roberts, dissented in strong terms, warning against the perils of adjudication by judges who don’t enjoy Article III protections.
Of course, as the Arthrex opinion illustrates, under more formal versions of Appointments Clause jurisprudence, decisions made by actors who are not subject to significant direction and control by a presidentially appointed official may themselves be unconstitutional. The Supreme Court’s 2018 decision in Lucia v. SEC makes it clear that the Court’s more formalist Justices, including Justices Gorsuch and Roberts, continue to take the Appointments Clause very seriously. In that decision, all of the Justices who tend to embrace formalism, joined by Justice Kagan, held that as a constitutional matter the administrative law judges of the SEC were officers (albeit inferior officers) who had to be appointed by the politically accountable Commission.
As commentators have discussed, the juxtaposition of Oil States and Lucia in the 2018 term illuminates potential constitutional tensions in administrative adjudication. Some formalist academics who are particularly concerned about the tension have suggested simply removing large swaths of adjudication from the administrative state and placing it instead in Article III.
Conventional administrative law has taken a different, but still relatively formal, approach. Conventionally, whether the judge is an administrative law judge (ALJ) (a specific type of judge who enjoys very strong protections against removal) or some other type of administrative judge, she has some level of decisional independence and protection against firing. However, the judge’s decisions are subject to a right of review by a politically appointed agency head.
What about the patent statute? The statute gives the Director overall responsibility for USPTO “policy direction and management supervision” as well as power to promulgate regulations by which the PTAB is bound. As for specific PTAB decisions, it provides for “rehearing” of such decisions.
Consistent with the academic literature (for example, this article I coauthored) suggesting that the rehearing mechanism be used to distill from the hundreds of PTAB opinions issued each year certain precedential opinions that bind the agency, the Director has set up an elaborate “Precedential Opinion Panel” (POP) process to rehear PTAB cases that raise important issues. The POP is selected by the Director and by default consists of the Director, the Commissioner for Patents, and the Chief Judge.
The Arthrex panel did note the Director’s general supervisory powers over the PTAB, his regulatory authority, the rehearing provision, and the POP procedure. It emphasized, however, that neither the statute nor the POP procedure explicitly provide for a right of rehearing over specific cases by the Director only. Presumably, any functional ability the Director might have to persuade the Commissioner for Patents and the Chief Judge is insufficient.
If the Supreme Court were to take the case, what it might decide is anyone’s guess. The cleanest path forward is therefore surgical Congressional intervention that gives the Director an explicit, unilateral right of review. This approach would cure any perceived constitutional infirmity without subjecting APJs to at-will firing. If subordination is the key to inferior status, then both formalists and functionalists might agree that, for adjudication, subordination through transparent and reasoned review of the adjudicator works better than subordination through firing.
The chart below shows patent application status for published utility patent applications as of Oct 27, 2019 grouped by patent application filing date.
From the chart – About 95% of patent applications filed Nov 2014 (5 years ago) have been disposed-of (either issued or abandoned). Those 5% remaining are likely to be associated with an appeal or multiple RCE filings.