In a 2-1 decision, the Federal Circuit has denied Monolithic’s petition for writ of mandamus seeking to escape from Judge Albright W.D. Tex. courtroom for improper venue. Since MPS is a Delaware Corp., the only way venue is proper in W.D. Tex. is if it “has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). The company has employees, and various sales-channels within the district, but argues that it lacks a “regular and established place of business.” As an alternative to its improper venue argument, MPS also argued that venue is inconvenient under 28 U.S.C. § 1404(a) and that the case should instead be transferred to N.D. Cal.
Judge Albright denied the motions to dismiss/transfer — holding that the “regular and established place of business” prong of the 1400(b) test was satisfied by three key findings:
MPS employed local engineers and sales managers in WDTX to serve local customers;
MPS stored property in WDTX (in the homes of its employees) and that equipment was used to service MPS’s WDTX customers, and
MPS continually maintain a physical presence within WDTX, including by advertising for replacement employees should any of MPS’s existing WDTX employees leave the company or move to a new location.
In considering these issues, the district court relied upon prior Federal Circuit’s cases such as Cray and Cordis and evaluated the factors established there for non-retail and informal “places of business.”
On mandamus, the majority refused to grant the petition — finding that the distric court’s ruling “does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.” To be clear, the appellate panel did not endorse Judge Albright’s decision, but simply found that it was not appropriate for mandamus. Rather, MPS should wait until the lawsuit concludes and, if MPS it can still appeal on improper venue. Regarding inconvenient venue, the court found no clear abuse of discretion in refusing transfer.
The majority opinion was issued per curiam by Judges Chen and Stark. Judge Lourie wrote in dissent and argued that the outcome is clear — “Monolithic’s four employees in the Western District do not constitute Monolithic’s ‘regular and established place of business.'” Judge Lourie raised the particular concern that changing work environments (i.e., work-from-home) will potentially open up venue in unexpected ways:
The district court’s erroneous ruling threatens to bring confusion to the law relating to where a patent infringement suit can properly be brought based on the location of employee homes and to erode the clear statutory requirement of a regular and established place of business. Given the increased prevalence of remote work, I think immediate review by way of mandamus would be important to maintain uniformity of the court’s clear precedent.
Slip Op. Lourie Dissent. The majority agreed that the shift to remote work is an important consideration, just not important enough to overcome the strong presumption against hearing a mandamus action:
The dissent may well be correct that the issue of imputing employee homes to a defendant for purposes of venue will become an issue of greater concern given the shift to remote work. But, in our view, at present, the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.
Slip Op. Majority.
The court does not delve into the new W.D.Tex. rules that randomly assign Waco patent cases to a handful of judges (not just Judge Albright). I expect that we will see a sharp diminution in venue mandamus decisions as the court waits to see whether the new approach changes outcomes.
= = =
Notes – The underlying case alleges infringement of several patents relating to electric power modules. U.S. Patent Nos. 6,936,999, 6,949,916, 7,000,125, 7,049,798, 7,080,265, and 7,456,617. The primary accused product is a power management bus (MPM3695) used on integrated circuits
Cooperative Entertainment, Inc. v. Kollective Tech, Inc., — F.4th — (Fed. Cir. 2022)
This pro-patentee eligibility decision offers some ideas for patentees seeking to help ensure that their patents survive eligibility challenges. The district court dismissed the case for lack of eligibility. On appeal, the Federal Circuit has reversed.
We know that eligibility is a question of law, but the doctrine at times requires examination of underlying questions of fact. Berkheimer v. HP, Inc., 881 F.3d 1360 (Fed. Cir. 2018) (J.Moore). That distinction is important at the motion to dismiss stage.
An accused infringer’s motion to dismiss is only appropriate when “there are no plausible factual disputes after drawing all reasonable inferences from the intrinsic and Rule 12 record in favor of the” patentee. Slip Op. Here, that “intrinsic record” is the patent document and the “Rule 12 record” is the complaint. In its amended complaint, the patentee alleged two “inventive concepts.” These include (1) a dynamic peer-to-peer network designed to “consume the same content within a predetermined time” and are controlled by a a content distribution network; and (2) the use of trace routs in content segmentation. The complaint particularly notes that those novel features were discussed by the examiner in the reasons for allowance. In addition, the patent application itself treats these features as important improvements to content distribution systems.
To be clear, I don’t know whether or not these features count as “inventive concepts” under Alice. But, all that is required at the pleading stage of a case are allegations that make the patentee’s claim plausible. And the allegations here seem to to at least meet that low standard. The appellate decision finds some importance in the fact that the intrinsic evidence recognizes the inventive concept as inventive.
The specification explains how claim 1’s dynamic P2P network structure is different from and improves upon the prior art.
The patent repeatedly explains that the “prior art fails …” and that the feature “does not exist in the prior art.” The specification also notes how the invention solves a network capacity problem. Although the opinion focuses on these features, it does not explain how important it is for the patent documents to expressly call out their innovative features. Bottom line here though is that these allegations (as supported by the intrinsic record) establish a plausible showing that the patent covers an patent eligible inventive concept under Alice Step 2.
The district court had sided with the accused infringer and dismissed the case on eligibility grounds. The district court first concluded that the claims were directed to the abstract idea of peer-to-peer communication via computer network. And that the alleged inventive concepts were “merely” implementing that generic idea using conventional technology. On appeal, that dismissal was reversed. But, the appellate panel refused to pass judgment on the district court’s Alice Step 1 opinion. This leaves the eligibility fight still alive at the district court.
We do not decide today that the claims are patent eligible under § 101. We hold only that there are plausible factual allegations that the claims include inventive concepts, and that is enough to preclude dismissal.
Slip Op. On remand, the parties will need to present evidence (likely to a jury) on whether the patent is directed toward an inventive concept. In addition, the district court will be asked to reconsider its Alice Step 1 determination.
= = = =
The decision is authored by Chief Judge Moore and joined by Judges Lourie and Stark. Meredith Martin Addy (AddyHart) argued for the patentee; Michael Dowler (Park Vaughan) for the defendant-appellee.
Judge Albright granted Google’s motion to transfer venue under 28 U.S.C. 1404(a) from the Western District of Texas to the Northern District of California in an opinion in Motion Offense LLC v. Google, LLC (here). Transfer is governed by regional circuit law, and so here, the law of the Fifth Circuit. What is interesting is the judge noting that the only reason transfer was granted is that the Federal Circuit had reached conclusions different from the Fifth Circuit on what Fifth Circuit law was.
First, one factor in determining whether the transferee venue is more convenient is whether process will be needed to compel testimony and so, if a witness is more than 100 miles from the courthouse, the witness is beyond subpoena power. Thus, if transfer makes it easier to compel more witnesses to testify, that indicates the transferee forum is more convenient. Judge Albright noted that under Fifth Circuit precedent, the party seeking to transfer has the burden to show there are witnesses and they are unwilling and so transfer will aid in compelling testimony; but unpublished Federal Circuit cases “applying” Fifth Circuit law, say the opposite: unless there is a showing a witness is willing to testify, the court presumes they are not.
Second, the location of documents and volume of them in the transferee district indicates the transferee district is more convenient. Under Fifth Circuit precedent, the party seeking to transfer has the burden to show the presence of documents, not just that it’s likely they exist, but under the Federal Circuit’s approach, there is a presumption the accused infringer has more relevant documents.
Third, the Fifth Circuit uses a 100 mile rule to determine convenience of the parties and witnesses for trial: the more such people within 100 miles of the transferee courthouse, the more likely it is more convenient. But, the Federal Circuit instructed not to follow this approach, according to Judge Albright.
The opinion is interesting for a variety of reasons, and I haven’t done my independent look at the cases to see if the opinion fairly characterizes the difference between the Fifth Circuit’s precedent and what the Federal Circuit says is the Fifth Circuit’s precedent, but, plainly, unpublished decisions by the Federal Circuit about Fifth Circuit law can not bind a district court in the Fifth Circuit when it is bound to follow regional circuit law, just as those opinions cannot bind a panel of the Federal Circuit.
It is time to pick-up our consideration of Supreme Court patent cases for the 2022-2023 term. A quick recap: Despite dozens of interesting and important cases, the Supreme Court denied all petitions for writ of certiorari for the 2021-2022 term. The most anticipated case last year was the 101 eligibility petition regarding automobile drive shaft manufacturing process. American Axle (cert denied). Bottom line, no patent cases were decided by the Court in the 2021-2022 term and none were granted certiorari for the new term starting this week.
The court’s first order of business comes on September 28, 2022 when it meets for the “long conference” to consider a fairly large pile of petitions that have piled-up over summer break. Of the 17 pending patent-focused petitions, 13 are set to be decided at the long conference. I have subjectively ordered the cases with the most important or most likely cases toward the top. Leading the pack are three cases focusing on “Full Scope” Enablement & Written Description. Topics:
Enablement / Written Description (All three are biotech / pharma): 3 Cases;
Infringement (FDA Labeling): 1 Case;
Anticipation (On Sale Bar): 1 Case;
Double Patenting (Still the law?): 1 Case;
Procedure / Standing: 6 Cases;
Eligibility (AmAxle Redux): 3 Cases; and
Randomness (don’t bother with these): 2 Cases
1. Full Scope Written Description in Juno Therapeutics, Inc. v. Kite Pharma, Inc., No. 21-1566
According to the Federal Circuit, US patent law contains separate and distinct written description and enablement requirements. This case focuses on the required “written description of the invention” and challenges the court’s requirement that the specification demonstrate possession of “the full scope of the claimed invention” including unknown variations that fall within the claim scope.
Juno’s patent covers the highly successful and valuable CAR-T gene therapy. The claims require a “binding element” to bind T-cells to cancer cells. The specification does not provide much of any disclosure regarding how these binding cells actually work but instead states that binding elements are “known” and “routine” and cites to a decade-old article on the topic. The idea here is that the patentee did enough to enable someone to make and use the invention–isn’t that enough? But, the Federal Circuit concluded that the specification should have done more to disclose those binding elements, including all “known and unknown” elements covered by the claims.
Juno argues that the Federal Circuit’s test “is simply impossible to meet” for biotech inventions and is not part of the law envisioned by Congress. The argument on virtual impossibility is a centerpiece of several enablement/written description cases pending. Although the focus here is biotech, the same arguments are brewing with regard to AI-assisted inventions. In its responsive brief, Kite reiterates that “as precedent has held for over 50 years—§ 112’s requirement of a “written description” is distinct from the requirement to “enable any person skilled in the art to make and use the” invention.” That 50-year reference makes me chuckle because that is roughly the same period that Roe v. Wade was good law before being overturned by the Court last term.
The Federal Circuit’s decision in Juno was also a big deal because it overturned the jury verdict–holding that no reasonable jury could have found written description support. But, it is tough to get the Supreme Court to hear a review on detailed factual findings.
Chief Judge Moore issued the decision in the case that was joined by Judges Prost and O’Malley. The petition was filed by noted Jones Day attorney Greg Castanias along with former SG Noel Francisco and BMS (Juno) deputy GC Henry Hadad. Joshua Rosenkranz (Orrick) is running the show for the respondent Kite Pharma. The petition has been supported by five amicus briefs, the most of any pending case.
2. Written Description for an Effective Treatment in Biogen International GmbH v. Mylan Pharmaceuticals Inc., No. 21-1567
If the Supreme Court grants certiorari in Juno, there is a good chance that it would also hear the parallel written description case of Biogen v. Mylan. Biogen’s patent claims is directed toward a drug treatment for multiple sclerosis. The treatment has one easy step: administer “a therapeutically effective amount [of] about 480 mg” of DMF per day along with an excipient for treatment of multiple sclerosis. The Federal Circuit found the claim lacked written description support — especially for a showing that 480 mg is an “effective” treatment. The specification expressly states that “an effective dose … can be from … about 480 mg to about 720 mg per day.” But, the court found that singular prophetic “passing reference” “at the end of one range among a series of ranges” was insufficient to actually the notion that the patentee possessed an “effective treatment” at the 480 mg dosage. Effectiveness is often relegated to the utility doctrine, but here it is an express claim limitation.
In some ways Biogen and Juno are both outliers–albeit at opposite ends of the spectrum. In Juno, the patentee is seeking a broad genus claim based upon a somewhat narrower disclosure while in Biogen, the patentee is seeking a quite narrow claim based upon a much more general disclosure. It is a forest-tree situation. If you describe several trees, can you claim possession of the forest? Likewise, if you describe the forest, can you claim possession of individual trees? Note also that there are similarities with the pending enablement petition in Amgen v. Sanofi as well as with the likely upcoming petition in Novartis Pharm. Corp. v. Accord Healthcare, Inc., 38 F.4th 1013 (Fed. Cir. 2022) (written description). The overlap between written description and enablement is inextricable. It is usually true that the arguments that prove or disprove written description have the same impact on enablement. But here in these cases the defendants and courts continue to reiterate the potential differences.
The decision was authored by Judge Reyna and joined by Judge Hughes. Judge O’Malley wrote in dissent. The court then denied en banc rehearing despite a dissenting opinion from Judge Lourie joined by Chief Judge Moore and Judge Newman. Supreme Court expert Seth Waxman is handling the petition along with his team from Wilmer. Nathan Kelley (Perkins) is representing Mylan. Kelley is the former USPTO Solicitor and PTAB Chief Judge.
3. Full Scope Enablement in Amgen Inc. v. Sanofi, No. 21-757
Amgen also fits well as a companion case to Juno v. Kite. The difference is that Amgen asks about enablement rather than written description. Still, the focus is the same–does enabling “the invention” require enabling all potential embodiments (even those not yet comprehended by the patentee). As in Juno, the genus claim here is also functionally claimed, a feature that appears to make it more susceptible to invalidation under both WD and Enablement doctrines. I would have previously put this case even higher in the ranking, but the Gov’t recently filed an amicus brief in the case suggesting that the Court deny certiorari.
Jeff Lamkin (MoloLamkin) is representing the patentee Amgen in the petition. George Hicks (Kirkland) is counsel of record on the other side. The Gov’t CVSG brief was filed by folks at the DOJ SG’s. USPTO officials did not join. Although the internal politics are always unclear, this often means that the USPTO does not fully agree with the Gov’t position.
4. Skinny Label Infringement in Teva Pharmaceuticals USA, Inc. v. GlaxoSmithKline LLC, No. 22-37
This case delves deeply into the patent-FDA overlap and involves an increasingly common situation “skinny label” situation. The setup involves an unpatented drug with multiple clinical uses, only some of which are patented. What this means is that a generic producer should be permitted to market the drug for the unpatented uses, but excluded from marketing the drug for the patented uses. One problem here is that the healthcare payers are going to recognize that the drugs are interchangeable and very quickly start buying the generic version even for the unauthorized patented use. One way to think about this case is the level of responsibility that the generic manufacturer has to make sure that its drug is not used in an infringing way. At what point do sales-with-knowledge equate with inducement?
The particular question presented focuses on FDA-approved labels that carve-out patented uses. In the process, the FDA starts with the branded drug’s label and asks the brand manufacturer to identify which parts of the labeled uses are infringing. Those labelled uses are then deleted from the label. Teva and the FDA followed that exact process in this case. But, the courts found that the “skinny label” still encouraged infringement — part of the problem was that the infringing and non-infringing uses were so similar to one another. Petitioner here is seeking a safe-harbor, asking: “If a generic drug’s FDA-approved label carves out all of the language that the brand manufacturer has identified as covering its patented uses, can the generic manufacturer be held liable on a theory that its label still intentionally encourages infringement of those carved-out uses?”
Chief Judge Moore wrote the opinion in this case joined by Judge Newman. Judge Prost wrote in dissent. After an initial outcry, the panel issued a new opinion that toned-things down a bit and suggested that labelling will usually not be infringing, but that this was somehow an exceptional case. Subsequently the full court denied en banc rehearing, with Chief Judge Moore re-justifying her position while Judges Prost, Dyk, and Reyna all dissented. The jury had originally sided with GSK — finding infringement. However, the district court rejected the verdict and instead granted Teva’s motion for judgment as a matter of no infringement. Judge Stark who is now a member of the Federal Circuit was the district court judge in the case.
Willy Jay (Goodwin) is handling the petition; Juanita Brooks (Fish) is in opposition.
5. Post IPR Estoppel in Apple Inc. v. Caltech, No. 22-203 (Briefing ongoing)
This important case raises a question of statutory interpretation regarding post-IPR estoppel: Does IPR estoppel 35 U.S.C. § 315(e)(2) extend to all grounds that reasonably could have been raised in the IPR petition filed, even though the text of the statute applies estoppel only to grounds that “reasonably could have [been] raised during that inter partes review.” Apple would like to challenge the validity of Caltech’s patents, was barred by the District Court based upon Apple’s unsuccessful IPR against the same patent.
Bill Lee (Wilmer) is counsel of record for petitioner. Briefing is ongoing in the case.
6. Judicial Recusal in Centripetal Networks, Inc. v. Cisco Systems, Inc., No. 22-246 (Briefing ongoing)
Although a patent case, the focus here is about the judicial code. Cisco lost a $2 billion verdict, but was able to get the decision vacated on appeal because the Judge’s wife owned $5,000 in Cisco stock. The judge had placed it in a blind trust, but the appellate court found that was insufficient since the statute requires “divestment” under the statute. The petition asks whether this strict statutory interpretation is correct; and whether any impropriety can be excused as harmless error.
Former Solicitor Paul Clement is handling the petition.
7. Summary Judgment standard in Hyatt v. USPTO, No. 21-1526
My favorite part of this litigation is the mock-up created by folks at the USPTO of Gil Hyatt applying the “Submarine Prosecution Chokehold.” Although the image was a ‘just a joke,’ Hyatt is not joking about what it represents. In particular, Hyatt argues that the USPTO created a secret policy to block issuance of his patents, regardless of the merits of his particular claims. Hyatt filed an APA lawsuit seeking an order forcing the PTO to actually examine his patent applications. But, the district court issued a sua sponte summary judgment — finding that the office was already diligently working. Oddly though, the court did not apply the summary judgment standard provided by R.56 but instead drew inferences against Hyatt. The petition asks simply: “Whether the ordinary summary judgment standard of Rule 56 applies to review of agency action.” Hyatt also argues that the district court applied too-high a standard with regard to setting aside past agency actions.
Famed professor of constitutional law Erwin Chemerinsky (Berkeley) filed the petition. The U.S. Gov’t waived its right to file a responsive brief.
8. Double Patenting and SawStop Holding LLC v. USPTO, No. 22-11
The petition here focuses on the non-statutory judicially created doctrine of obviousness type double patenting. It asks: “Is the judicially created doctrine of nonstatutory double patenting ultra vires?”
A good percentage of patents (about 10% or so) are tied to another patent via terminal disclaimer. In general, the patent office requires a terminal disclaimer in situations where a patentee is seeking to obtain a second (or subsequent) patent covering an obvious variation of an already obtained patent. Otherwise, the second patent will be rejected on grounds of obviousness-type double patenting. When I previously wrote about the case, I compared it to the Supreme Court’s abortion decision in Dobbs. In that case, the court explained that a right to abortion “is nowhere mentioned in the Constitution.” Similarly, obviousness type double patenting has no grounding in the Patent Act. Dobbs also rejected the 50 year old precedent of Roe v. Wade (1972). The fact that a precedent is old does not convert that precedent to a sacred text. One difference here is that OTDP has a somewhat older provenance than did Roe.
The need for terminal disclaimers was greatly reduced following the 1995-GATT patent term transformation. For the most part, all family members expire on about the same date. The big difference happens with patent-term-adjustment that can sometimes make a really big difference — especially if the patentee has successfully appealed. The SawStop situation represents an interesting case-study for anyone thinking about the ongoing importance of OTDP and Terminal Disclaimers.
David Fanning is inhouse counsel for SawStop and filed the petition. The USPTO (through the SG) waived its right to file in opposition.
9. Eligibility in Worlds Inc. v. Activision Blizzard Inc., No. 21-1554
Worlds was an early developer of 3-D virtual chatrooms and its US7,181,690 has a 1995 priority filing date. This particular patent has two steps to be performed on the client device being operated by a first user:
(a) Receive position information about some user-avatars
(b) Using that position information, determine which avatars to display to the first user
The courts found the claims directed to the abstract idea of “filtering.” The petition asks (1) what is the standard being “directed to” an abstract idea; (2) who bears the burden of coming forth with evidence on Alice Step 2. In particular, does a party seeking to invalidate a claim need to provide evidence of what was well-known, routine, and conventional? The petition here is really a follow-on to American Axle. That was denied certiorari at the end of the 2021-2022 term.
Wayne Helge (Davidson Berquist) is counsel of record for Worlds. Sonal Mehta (Wilmer) represents Activision, but only filed a statement waiving her client’s right to respond.
10. Mandamus Jurisdiction in CPC Patent Technologies PTY Ltd. v. Apple Inc., No. 22-38
This petition fascinated me for a couple of days as I tried to think through the scope of mandamus jurisdiction. We know that the Federal Circuit hears patent appeals, but the petition argues that the same court does not necessarily hear mandamus actions filed in patent cases. Rather, according to the petition, the Federal Circuit’s jurisdiction should depend upon whether the mandamus action itself arises under the patent laws. Here, the mandamus focused on transfer for inconvenient venue under Section 1404(a). Everyone agrees that issue is not patent law specific.
George Summerfield (K&L Gates) is handling the petition. Apple did not file a response.
11. Eligibility in Interactive Wearables, LLC v. Polar Electro Oy, No. 21-1281
This case has similar features to Worlds v. Activision and was also filed in prior to the denial of American Axle. The petition explains that the patents claim “electronics hardware device comprising a content player/remote-control combination having numerous concretely-recited components that undisputedly qualifies as a ‘machine’ or ‘manufacture’ under the statutory language of 35 U.S.C. § 101.”
12. Junker v. Medical Components, Inc., No. 22-26
Junker’s petition raises an issue that has repeatedly come before the court — the on sale bar. Here, the purported “offer to sell” was made by “a third party who had no right to sell the invention and with no involvement by the patentee?” Junker asks whether that counts as an offer?
13. Licensee Standing in Apple Inc. v. Qualcomm Incorporated, No. 21-1327
This petition raises the identical issue that Apple raised in a 21-746. That case was denied certiorari earlier in 2022 and is very likely to be denied here as well. The question presented: “Whether a licensee has Article III standing to challenge the validity of a patent covered by a license agreement that covers multiple patents.” Qualcomm restated the question as follows: “Whether a licensee that offers no evidence linking a patent’s invalidation to any concrete consequence for the licensee nevertheless has Article III standing to challenge the validity of the licensed patent.”
Mark Fleming (Wilmer) represents Apple and Jonathan Franklin (Norton Rose) represents Qualcomm.
14. Eligibility and Hardware in Tropp v. Travel Sentry, No. 22-22
This eligibility petition attempts to distinguish Alice on grounds of computer-technology vs real hardware with the following question presented: “Whether the claims at issue in Tropp’s patents reciting physical rather than computer-processing steps are patent-eligible under 35 U.S.C. § 101.” One issue with the petition is that the problematic claims don’t really claim the physical hardware (a padlock with a master key), but rather a process of giving the extra key to TSA. In some ways, I see this as a lower-quality version of American Axle.
15. PTO Acting Ultra Vires in CustomPlay, LLC v. Amazon.com, Inc., No. 21-1527
Anyone working with inter partes reviews (IPRs) knows that the PTAB first decides whether to institute the IPR and, after instituting, will hold the trial and issue a final written decision. One oddity though is that the statute actually calls for the USPTO Director to decide the institution question with the PTAB only stepping in once the IPR is instituted. The current procedure exists because the PTO Director has delegated her institution authority to the PTAB. In its petition, CustomPlay asks the court to rule that this delegation is improper – a violation of “the statutory text and legislative intent.” In addition, the petition asks a constitutional due process question: “Whether the PTO’s administration of IPR proceedings violates a patent owner’s constitutional right to due process by having the same decisionmaker, the PTAB, render both the institution decision and the final decision.”
16. Filler v. United States, No. 22-53
Filler had an interesting claim, but made a major error by dividing his patent rights between two entities in such a way that neither had enforcement power. Filler argues that the U.S. Gov’t used his patented invention without paying and sued in the Court of Federal Claims. The petition here asks about whether his Fifth Amendment takings claim was properly barred by the Assignment of Claims Act.
Filler is the inventor and is also an attorney (and MD and PhD) filed the petition himself.
17. Arunachalam v. Kronos Incorporated, No. 22-133
Lakshmi Arunachalam has filed a number of patent related petitions over the past several years. This one asks a number of questions including “Whether Trustees of Dartmouth College v. Woodward, 17 U.S. 518 (1819) was properly decided.”
Today’s decision in Cap Export, LLC v. Zinus, Inc., 21-2159 (Fed. Cir. 2022) (non-precedential) offers some insight into the difficulty of proving an anticipation case with something other than a prior patent or printed publication. Cap Export particularly focuses on a prior sale. The problem is that the item sold way-back-when typically no longer exists in its original form. And, although you might have product manuals, those documents themselves are not on-sale prior art. They may still be admissible to help show what the prior art looked like, but only as a proxy for the real thing.
Zinus’ U.S. Patent No. 8,931,123 covers a bed-in-a-box system. All the parts for the bed frame fit neatly within the headboard. A zipper on the backside allows the purchaser to unpack them at home for assembly. Zinus did not invent this general concept, but rather offered an improvement with various limitations regarding how the parts are packaged and then connect together on assembly. The particular claim limitation at issue requires a connector on a longitudinal bar (running down the center of the bed); that is configured to attach to a connector on the footboard. This connection is shown in the image from the patent below.
The sales activity in the case is slightly quirky. Zinus’ agent purchased “Mersin” beds from Woody Furniture. As it was shipping those beds, the folks at Woody created an “inspection report” that included a number of photographs of the bed, including a photograph of how the longitudinal bar connects with the footboard, and a photo of the instructions being sent.
If the instructions were prior art, they would clearly be anticipating. But the on sale bar does not relate to sales of instructions, but rather sales of the embodiment itself. Zinus presented two arguments as to why the instructions differ from the product sent. First, the instructions indicate that they are for a different “Fusion” bed rather than the “Mersin” bed. Second, the actual photo of the product from the inspection report appears to potentially show a different connection mechanism. I have included the photo below, and you cannot really tell how the longitudinal board is connecting with the base. Zinus expert suggest that it might be a hole/slot in the base (a non-infringing alternative) rather than each party having their own ‘connectors.’
Zinus provided declarations of potential witness testimony in support of the hole/slot theory, and Cap Export responded with accusations that those were “inadmissible sham declarations.” R.56 permits a district court to end a case on summary judgment prior to trial, but only in situations where the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). At times, courts will rephrase the standard as stating: summary judgment is appropriate if “no reasonable jury” could decide the case otherwise. The fact-law divide is relevant to this issue as well — juries decide the facts; why judges ordinarily decide the law. And on this point, the Federal Circuit has repeatedly held that anticipation is a question of fact. After considering the evidence presented, the district court sided with the accused infringer on summary judgment. On appeal though, the Federal Circuit has vacated that determination–finding ongoing factual disputes.
Looking at the particular dispute, the appellate court found plenty of genuine disputes: “whether the Fusion bed and Mersin bed are the same structurally, whether the Fusion instructions describe the structure of the as-sold Mersin bed, and what exactly the ambiguous photo of the Mersin bed depicts. Accordingly, summary judgment was improperly granted.”
The court went on to particularly find that the district court had erred by making factual inferences in the movant’s favor. In particular, the district court had concluded that the Fusion/Mersin beds were the same and ignored the contrary declarations from Zinus. “Taking the record as whole, some evidence supports a conclusion that the Fusion assembly instructions apply to the Mersin bed and some detracts from that conclusion.”
The court also found the issues here material since the challenger’s anticipation case relies upon the Fusion instruction manual to provide that the Mersin bed anticipates.
Should a jury agree with non-movant Zinus and find that the Fusion assembly instructions do not apply to the Mersin bed, Cap Export would be left with the photograph of the Mersin bed as the only evidence with which to prove that the on-sale Mersin bed anticipates the ’123 patent claims. But what exactly that photograph shows is also a disputed factual question for the jury to consider.
= = =
Anyone practicing in this area knows that the Federal Circuit has lots of quirks regarding the fact/law divide. Any given issue might be a question of fact; a question of law; a mixed question of fact and law; a question of law based upon underlying conclusions of fact; etc. The particular fact/law framework will then determine judicial role on issues like summary judgment as well as the standard of review on appeal.
As I mentioned above, anticipation is a question of fact. Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316 (Fed. Cir. 2001). But, whether a patent is invalid under the on-sale bar is a question of law based on underlying fact findings. Meds. Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016). In some ways, these two sentences seem in tension.
= = =
The decision here is authored by Judge Stoll and joined by Judges Dyk and Taranto. Matthew Wolf led the winning team from Arnold & Porter representing Zinus. David Beitchman (Beitchman & Zekian) for Cap Export.
The Solicitor General’s new brief in Amgen v. Sanofi shrugs off the case–identifying petitioner’s arguments as meritless:
Petitioners contend that the court of appeals erred by treating enablement as a question of law and by examining the full scope of the claims in assessing whether they are fully enabled. Those arguments lack merit and further review is not warranted.
The petition argued that genus claims–especially those functionally claimed–are being asked to comply with a heightened enablement standard. The Gov’t agreed that at times it may be difficult to enable an entire genus, but not because of any heightened standard. Rather, “broad claims naturally require more extensive enablement” since the patent’s disclosure “must be commensurate with the scope of its claims. . . . When, as here, a patent claims an entire genus based on its function, the patent must enable that entire genus.” The brief cites to Consolidated Electric Light Co. v. McKeesport Light Co., 159 U.S. 465 (1895) and Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245 (1928) as representative. In those cases, the Supreme Court used to enforce patents whose scope encompassed, but far exceeded, the examples given in the specification. Of course, the Brief’s bold statements fail to contend with the reality that enabling the “entire genus” will effectively curtail genus claims, and the resulting policy shifts. I expect that a Supreme Court decision in the the case would not go as far as suggested by the Gov’t Brief, but the middle ground might not be enough to flip the result here.
The Gov’t Brief also explains enablement as a mixed question of fact and law. Although the jury sided with the patentee, the district court judge rejected the verdict on JMOL — holding that the claims lacked enablement. That JMOL determination was affirmed on appeal. The Government brief does not delve deeply into the issues raised but simply states:
Petitioners complain about the formulation the court of appeals used in articulating the standard of review, but they do not identify any practical implications flowing from that disagreement.
Usually, the SG brief is the most important amicus brief at predicting certiorari. However, that might no longer be true for today’s 6-3 conservative majority hearing remarks from a liberal administration.
Novartis Pharms Corp. v. Accord Healthcare, Inc. (Fed. Cir. 2022)
Without any fanfare or dissent, the Federal Circuit has denied the Novartis en banc petition. The court used a questionable procedure flip its own prior decision by replacing Judge O’Malley with a more defendant-friendly Judge Hughes for the rehearing.
The merits decision appears to further tighten-up on the written description requirement — especially with regard to ‘negative’ claim limitations. The basic holding is that the written description must either expressly or inherently disclose the invention. Novartis Pharm. Corp. v. Accord Healthcare, Inc., 38 F.4th 1013 (Fed. Cir. 2022) (rehearing majority decision). Here, ‘inherently’ is a term of art in patent law and has much stricter definition than its cousin ‘impliedly.’ Inherency in patent law indicates unstated certainty.
The patent at issue in Novartis claims a drug treatment method. Sometimes in drug treatment, you start a patient off with a high ‘loading dose’ to get the blood-levels up to an operational state. The patent application does not discuss a loading dose one way or the other. During prosecution, the patentee added a no-loading-dose negative limitation: “a daily dosage of 0.5 mg, absent an immediately preceding loading dose regimen.”
Someone skilled in the art might read the specification as implying that no loading dose was necessary. But, that same person would have to admit that the specification could be interpreted in alternative ways–and that the absence of a loading dose was not necessarily inherent in the disclosures. Since the majority required inherency, the claim lacked written description support.
The USPTO’s fiscal year ends at the end of September, so this chart is slightly preemptive. But, it shows that patent grants have fallen again this year by about 5.5% from 2021 and 11% below the all-time high in FY2020. The drop shown here is likely reflective of the pull-back experienced in the first year of COVID. I have not yet done a breakdown of the relative numbers on original filings vs continuations and US vs foreign. – Crouch
The chart above shows the number of disclaimed/dedicated patents per year going back to 1995. Every year it has been a relatively small number, and for each instance there is usually some strategic reason for the disclaimer. As you can see, FY2022 is figuratively off the charts–almost triple any year since 2005. I have not yet figured out whether the change here reflects some important change in practice or just a statistical anomaly. Can someone help me understand what is going on here?
The PTAB is the busiest patent court in the country. The Board cancels lots of patent claims, but also regularly sides with patentees in the Final Written Decision (at least as to some claims). Post-IPR estoppel attaches to the cleared-claims and prevents the petitioner (or privies) from later challenging the validity of those claims on grounds actually raised in the IPR as well grounds the petitioner “reasonably could have raised during the inter partes review.” 35 U.S.C. 315(e). In its 2022 Caltech decision, the Federal Circuit overturned its prior Shaw precedent and found that the estoppel broadly applies to all claims challenged in an IPR and all grounds “which reasonably could have been asserted” against the petitioned claims. California Inst. of Tech. v. Broadcom Ltd., 25 F.4th 976, 991 (Fed. Cir. 2022) (“Caltech”).
More recently, the court was faced with unique partial-institution circumstances in Click-to-Call Techs. LP v. Ingenio, Inc., 45 F.4th 1363 (Fed. Cir. 2022), and again the court concluded that broad estoppel is appropriate. The court particularly concluded that estoppel applies even to non-instituted claims. In a new petition for en banc rehearing, the accused infringer asks the following question:
Whether 35 U.S.C. § 315(e)’s IPR estoppel provision applies only to claims addressed in the final written decision, as consistent with the holdings in Shaw, and Intuitive Surgical, and whether that interpretation remains correct after SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).
You’ll recognize Click-to-Call from the 2020 Supreme Court decision finding institution decisions ordinarily not judicially reviewable. Thryv, Inc. v. Click-to-Call Technologies, LP, 140 S. Ct. 1367 (2020) (Thryv is a DBA name of Ingenio).
The unique circumstances mentioned above are that the PTAB only partially-instituted the IPR. In particular, the USPTO granted institution of most of the challenged claims of Click-to-Call’s US5818836 based upon the “Dezonno” reference, but denied institution with-regard-to claim 27 and also refused to conduct an IPR relying upon the Freeman reference (the only ground raised in the IPR for challenging claim 27). All of the instituted claims were eventually found unpatentable and cancelled in the IPR–but that left claim 27 still standing. Partial institution was eventually ruled improper by the Supreme Court in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018). Since the IPR appeal was still pending, post-SAS remand would have been available to re-institute and pick-up claim 27, but neither party asked the PTAB to take-up that task. The patent challenger had already won on all-but-one claim before the PTAB, and re-institution might have required a new trial on all of the challenged claims. The patentee likely saw the PTAB as an unfriendly forum and had no interest in filing a motion to the effect of “yes, may I have another lump please.” Note that Ingenio contests this procedual idea — arguing that dismissal order by the Supreme Court ended the case without remand.
Although I identified this as a “unique circumstance,” partial institution was a regular practice for several years prior to SAS and so there are hundreds of patents in a similar position. Point being, this issue is goes beyond the parties here and will have a larger impact, if only transitionary post-SAS.
Once the IPR concluded, district court litigation restarted, focusing on claim 27. The district court sided with defendant Ingenio on summary judgment. In particular, the court found claim 27 was invalid based upon Dezonno, the same prior art reference used by the PTAB to cancel all the other claims. Click-to-call argued estoppel, but that argument was rejected. On appeal, the Federal Circuit reversed, holding that “the district court erred in not applying IPR estoppel under 35 U.S.C. § 315(e)(2) to claim 27 based on Dezonno.”
Ingenio has argued that estoppel applies only to invalidity challenges to claims that were subject to the IPR final written decision. The statute is not crystal clear on this point–even more so now that we recognize that partial institution was improper. This is a case where ask about the correct statutory interpretation in a situation where we now know that the agency acted improperly.
But, lets look at the statute. 315(e) estoppel applies on a claim-by-claim basis as follows:
The petitioner in an inter partes review of a claim in a patent … that results in a final written decision … may not assert [in patent litigation] that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
Id. I have been struggling through this statute. In my reading, the most straightforward construction sides with the Federal Circuit in this situation. It requires that estopped claims be part of the IPR and that the IPR result in a final written decision, but does not require that all of the estopped claims be adjudged in the final written decision.
The en banc petition also suggests that the court may want to reconsider its decision in Caltech. In particular, the three-judge Caltech panel finding broad estoppel overturned the prior Federal Circuit panel decision in Shaw. Ordinary rules of appellate precedent prohibit one panel from overturning the decision of a prior panel. But, the Caltech judges found that the Supreme Court’s intervening decision in SAS so abrogated the reasoning of Shaw as to open the door for panel action. The petition argues that was improper:
The Caltech panel incorrectly relied on SAS to overturn Shaw. SAS did not itself overturn Shaw, and in fact analyzed a different statute entirely (35 U.S.C. § 318(a) vs. § 315(e)(2)). Nonetheless, the Panel held that, because Shaw’s reasoning rested on the assumption that partial institutions were permissible, SAS’s elimination of partial institutions required Shaw to be overruled. But that is incorrect. Shaw was not limited to the particular facts of its case, but instead held that the plain language of § 315(e )(2) prohibits IPR estoppel from attaching to grounds that were not part of the IPR, which began at institution. SAS did not undermine or challenge the validity of Shaw as a textual construction of § 315(e)(2).
Petition. If you recall, the Caltech decision is also still pending on petition for writ of certiorari before the Supreme Court. Thus, this case may provide an opportunity for the Federal Circuit to preemptively speak to the high court.
"Whether an artificial intelligence can be an inventor for purposes of patent law, which implicates the most fundamental aspects of patent law, namely, the nature of inventorship and therefore whether AI discoveries can be patented."
If you are thinking about this from the corporate level, check out my new book chapter: Dennis Crouch, Legal Fictions and the Corporation as an Inventive Artificial Intelligence, Forthcoming in Research Handbooks on Intellectual Property and Artificial Intelligence (R. Abbott, ed). A draft version is available online here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4081569 .
The new en banc petition in Thaler v. Vidal offers potential for future development on the law of invention and inventorship.
by Dennis Crouch
Hi, my name is Dennis, I am a natural person, a human being, an individual. But, I also think of myself as a collective–trillions of cells and other biologic matter, only some of which expresses “my” DNA; a host of personalities all housed within a thick skull.
In my view, it is unquestionable that AI regularly contribute to inventive concepts so substantially as to be named joint-inventors alongside their human counterparts, if it were permitted. Many of us are hung-up on the notion that inventorship requires “conception in the mind”–a feat perhaps beyond any computer today. But conception is not a requirement for joint inventorship. Cases like Dana-Farber v. Ono help us understand how it might work. In Dana-Farber case, some of the joint inventors (our AI equivalents) provided data and analysis, but then the actual “conception” was done by a third party after receiving the data inputs. Even though only one of the inventors actually “conceived,” the Federal Circuit held that all three should be listed as inventors because each made substantial contributions that led to the conception. Dana-Farber Cancer Inst., Inc. v. Ono Pharm. Co., Ltd., 964 F.3d 1365 (Fed. Cir. 2020). See Toshiko Takenaka, Unravelling Inventorship, 21 Chi.-Kent J. Intell. Prop. 71 (2022).
The key legal justification for excluding AI is the traditional human-only rule of inventorship. Although the Patent Act does not expressly declare “inventors-must-be-humans” or “no-robots,” since 2011 it has stated that inventors are “individuals.”
(f) The term “inventor” means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.
(g) The terms “joint inventor” and “coinventor” mean any 1 of the individuals who invented or discovered the subject matter of a joint invention.
35 U.S.C. § 100(f)/(g) (2011). Earlier this summer, the Federal Circuit sided against Dr. Stephen Thaler on this issue. Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022). Thaler has been attempting to seek patent protection for two inventions created by DABUS, his AI computer. Id. In the case, the USPTO admitted (for the purposes of the litigation) that DABUS had conceived of an invention. Thus, the only question on appeal was whether the USPTO acted appropriately in denying patent protection solely based upon the fact that the purported inventor is non-human. Id.
The court sided with USPTO’s no-patent stance. It held that US Patent Laws require listing of an inventor, and that inventor must be a “natural person” — i.e., human being. Although the court cited several statutory justifications for its decision, the key factor came from the definitions found in 35 U.S.C. § 100 that identify inventors as “individuals.” The court concluded that the term “individual” is best interpreted as limited to a human being. Thaler, 43 F.4th at 1211. One quirk of this ruling is that this ‘individual’ definition was added quite recently as part of the 2011 America Invents Act and nothing in the legislative history indicates an intent to use the term to exclude AI from inventorship rolls.
Through his attorney (Professor Ryan Abbott), Thaler has now petitioned the Federal Circuit for en banc rehearing on the following question:
Whether an artificial intelligence can be an inventor for purposes of patent law, which implicates the most fundamental aspects of patent law, namely, the nature of inventorship and therefore whether AI discoveries can be patented.
The panel selectively quoted from dictionaries for its conclusion that individuals are always human. The better definition of individual is a “distinct, indivisible entity”–a definition that would include an AI-inventor. I might ask, if an AI is not an individual, does that mean it is a collective?
The panel unduly disregard of the Patent Act’s promise of patent rights regardless of “the manner in which the invention was made” and without limiting eligibility scope only to areas contemplated by Congress. See 35 U.S.C. 103 (“Patentability shall not be negated by the manner in which the invention was made”); 35 U.S.C. 101 (“Whoever invents or discovers any new and useful process …”); Diamond v. Chakrabarty, 447 U. S. 303 (1980) (that the patent system allows for “inventions in areas not contemplated by Congress.”).
In the face of evolving technology that redefines the potential of inventorship, the panel failed to interpret the statute “in light of [the] basic purpose” of the Patent Act. Quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975).
Id. In some ways, Judge Stark’s opinion reads like a district court applying the law handed-down rather than an appellate court with a larger role of considering meaning and importance of ongoing precedent. Perhaps this makes sense, Thaler was the first precedential opinion authored by Judge Stark’s since joining the Court of Appeals earlier in 2022. Judge Stark was previously a district court judge in Delaware for more than a decade.
I have always seen the final sentence of Section 103 as an important declaration of patent law policy that goes beyond simply obviousness doctrine. “Patentability shall not be negated by the manner in which the invention was made.” One particular bit of the Federal Circuit decision that gets in my craw is the court’s statement limiting that provision as only applicable in the obviousness context. In my view, the statement should be applicable in the Thaler analysis as well as in other contexts, such as patent eligibility. I’m planning a subsequent post that will focus more on this issue.
If my calculations are correct, any Amicus Brief in support of Thaler (or Support of Neither Party) would need to be filed by Oct 3 (absent extension).
The absence of a dissent in the original opinion makes the odds of overturning the panel decision quite low–Thaler would need seven of the remaining nine active judges (assuming that none of the original three change their minds). But, Thaler may still appreciate an outcome where one or two judges offer some additional commentary that would then serve as fodder for the upcoming petition for writ of certiorari.
In re Google, 22-1611 (Fed. Cir. 2022) (non-precedential order)
In Arthrex, the Supreme Court rewrote the Patent Act, charging the USPTO Director with authority to review final written decisions stemming from inter partes and post grant review proceedings (IPR/PGR). One open question is the Director’s role in mill run patent applications that have been rejected by the Board. There are two particular actions that Directors have taken in recent decades:
Create a stacked rehearing panel that overturns the prior PTAB panel decision. This approach is typically taken when the Director wants to make a precedential statement on some matter of law or procedure.
If the party appeals, admit to the Federal Circuit that the PTAB erred and seek remand to reconsider the PTAB panel decision. This second path is the approach taken here for Google.
Google’s pending Application No 15/487,516 claims video processing method using adaptive composite intra-prediction. In its decision, the Board construed three key claim limitations as “conditional limitations.” The Board generally gives no patentable weight to conditional method steps in the anticipation/obviousness analysis. See Ex Parte Schulhauser, 2016 WL 6277792 (PTAB Apr. 28, 2016) (precedential). Google filed its notice of appeal to the Federal Circuit and must have had some discussions with the Solicitors office because the agency filed its request for remand even before Google filed an opening brief.
I have included the claim below, but the basic setup is that the claim includes the following stylized step:
A method comprising …
in response to a determination that a first block is available, generate a pixel value …
The basic question here is whether this claim limitation requires any action. The PTAB read it as merely conditional — effectively replacing it with the following:
A method comprising …
if the system determines that a first block is available, then generate a pixel value …
The Board explained its position that the claims did not recite a step of “determining” that the first block exists and so it is not required by the claims.
[W]e understand the phrase “in response to a determination that” a condition exists to be equivalent to a recitation of “if” that condition exists because claim 1 does not affirmatively recite a step of determining that the first prediction pixel is available prior to reciting the step that is performed in response to—i.e., when or if—such a condition exists.
PTAB Appeal 2020-005221. The PTAB then applied Schulhauser to conclude that “the Examiner need not present evidence of the anticipation of any of the disputed conditional method steps, because they are not required to be performed under the broadest reasonable interpretation of the method steps recited in representative independent claim 1.” Google sought reconsideration, but the Board stuck to its original decision.
Now before the Federal Circuit, the Director has concluded that the Board erred. Through the SG, the Director submitted an interesting reason for its determination–that a close reading of the specification shows that the first determination step is present in “every embodiment.” Thus, according to the Director, the PTAB’s reading of the claims as conditional limitations “would be inconsistent with the specification.”
Upon review, and under the specific facts of this case, the Director acknowledges that the Board erred in designating L1 and L2 as conditional limitations governed by Schulhauser because such a reading would be inconsistent with the specification, which teaches that for every embodiment a first prediction pixel is available and a determination of whether a second prediction pixel is available is made.
Dir Motion to Dismiss. This statement from the Director appears somewhat contrary to the usual approach of Broadest Reasonable Interpretation (BRI) which avoids importing limitations into the claims simply because they are present in each disclosed embodiment.
Google did not object to the dismissal and the Federal Circuit has ordered a remand.
One important caveat to this case — the application itself appears to still be unpublished. Thus, the information that I’m reporting comes only from public documents filed with the Federal Circuit. I don’t have the application itself or any of the briefs filed with the PTAB. I do have the challenged claim:
A method comprising:
generating, by a processor in response to instructions stored on a non-transitory computer readable medium, a decoded current block by decoding an encoded current block, wherein decoding the encoded current block includes adaptive composite intra-prediction, and wherein adaptive composite intra prediction includes:
in response to a determination that a first prediction pixel from a first block immediately adjacent to a first edge of the encoded current block is available for predicting a current pixel of the encoded current block:
determining whether a second prediction pixel from a second block immediately adjacent to a second edge of the encoded current block is available for predicting the current pixel, wherein the second edge is opposite the first edge; and
in response to a determination that the second prediction pixel is available, generating a prediction value for the current pixel based on at least one of the first prediction pixel or the second prediction pixel;
generating a reconstructed pixel corresponding to the current pixel based on the prediction value; and
including the reconstructed pixel in the decoded current block; and
Schulhauser involved a heart-monitoring method claim with the following conditional step:
triggering an alarm state if the electrocardiac signal data is not within the threshold electrocardiac criteria;
Ex parte Schulhauser, APPEAL 2013-007847, 2016 WL 6277792 (Patent Tr. & App. Bd. Apr. 28, 2016) (precedential). The panel concluded that step in conditional form can be ignored for anticipation purposes. The Board relied particularly on the Federal Circuit’s non-precedential decision in Cyber settle, Inc. v. Nat’l Arbitration Forum, Inc., 243 Fed. Appx. 603, 607 (Fed. Cir. 2007) where the court explained that: “If the condition for performing a contingent step is not satisfied, the performance recited by the step need not be carried out in order for the claimed method to be performed.” Id. Schulhauser distinguished this method-claim from system claims that include the same conditional functionality since the system “still requires structure for performing the function should the condition occur.” Id. The MPEP now reflects this same approach:
The broadest reasonable interpretation of a method (or process) claim having contingent limitations requires only those steps that must be performed and does not include steps that are not required to be performed because the condition(s) precedent are not met. For example, assume a method claim requires step A if a first condition happens and step B if a second condition happens. If the claimed invention may be practiced without either the first or second condition happening, then neither step A or B is required by the broadest reasonable interpretation of the claim. If the claimed invention requires the first condition to occur, then the broadest reasonable interpretation of the claim requires step A. If the claimed invention requires both the first and second conditions to occur, then the broadest reasonable interpretation of the claim requires both steps A and B.
MPEP 2111.04 (II). The Board has relied upon Schulhauser in hundreds of decisions. However, there appears to be some ongoing debate within the PTAB about the scope of the case, with a number of cases having dissents on this point. See., e.g., Ex Parte Botman, APPEAL 2021-004052, 2022 WL 4093710 (Patent Tr. & App. Bd. Sept. 2, 2022); Ex Parte Gopalan, APPEAL 2017-007009, 2018 WL 2386111 (Patent Tr. & App. Bd. May 21, 2018); Ex Parte Erhart, APPEAL 2019-004505, 2021 WL 195811 (Patent Tr. & App. Bd. Jan. 8, 2021).
In the appeal, Google was represented by Jonathan Tietz and Andy Dufresne (Perkins). The per curiam order was issued by Judges Lourie, Chen, and Stark.
Back in June, I wrote about the Federal Circuit’s wild decision in Centripetal Networks, Inc. v. Cisco Sys., Inc., 38 F.4th 1025 (Fed. Cir. 2022). Dennis Crouch, Judicial Recusal Order Saves Cisco $2.75 Billion, Patently-O (June 23, 2022). The patentee has now petitioned the Supreme Court on a the question of whether the statute demands judicial recusal:
Whether placing stock in a blind trust satisfies 28 U.S.C. §455(f) and, if not, whether placing trivial amounts of stock in a blind trust, in lieu of selling it outright, constitutes harmless error under Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847 (1988).
Back in 2018, Centripetal sued Cisco, alleging infringement the claims of eleven cybersecurity related patents. Some of the claims were cancelled in IPRs, but others made it through the gauntlet. After staying the case for a year, the district court Judge Henry C. Morgan picked up the case again in September 2019 and began moving forward with claims from five patents no longer subject to IPR proceedings. Both parties waived their right to a jury trial and and the district court held a 22-day bench trial over a six-week period and a subsequent damages evidentiary hearing. In his verdict, the district court generally sided with the patentee–finding claims from four of the five patents to be valid and infringed. The judge awarded a 10% royalty on infringing products–totaling $755 million in damages. In addition, the court found that Cisco’s infringement was willful and enhanced the damage by 2.5x–upping the award to $1.9 billion for back damages. The court also required a running royalty that likely takes the damages up to above $3 billion by now. This is apparently the largest patent-damage award in U.S. history.
On appeal, the Federal Circuit did not concern itself with the merits of the patent case. Rather, the Federal Circuit vacated the trial determinations upon finding that the Judge Morgan should have recused himself from the entire case. To be clear, there was no indication that Judge Morgan was biased nor was there any legitimate claim questioning his impartiality–the problem is that Judge’s wife held $5k in Cisco stock.
The general rule for judicial recusal was codified by Congress in 28 U.S.C. § 455(a):
[A Judge] shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.
Id. This standards-based statute is followed by a series of express rules, including the following on ownership:
He shall also disqualify himself in the following circumstances: . . . He knows that he, individually or as a fiduciary, or his spouse … has a financial interest … in a party to the proceeding.
28 U.S.C. § 455(b). The statute also provides an avenue for curing this situation under § 455(f). In particular, the statute states that “disqualification is not required” in a situation where the judge has devoted “substantial judicial time” so long as the judge (or their family member) “divests himself or herself of the interest that provides the grounds for the disqualification.” 28 U.S.C. § 455(f). The big question in this case is (1) whether Judge Morgan properly “divest[ed] himself” and, (2) if not, was it a “harmless error.”
The bench trial ended in June 2020. On August 11, Judge Morgan was in the process of writing writing-up has decision when he became aware that his spouse owned 100 shares of Cisco stock (valued at $4,687.99). He recognized at that point that he should get her to sell the shares immediately, but there was a big problem. Judge Morgan was just about to issue a multi-billion-dollar judgment against Cisco that would likely cause the stock to drop. He had already decided most of the issues and written 130 pages of the eventual 167 page opinion. It would look really bad if he sold the stock with that insider knowledge and, according to Judge Morgan “undermine the purpose of section 455.” So, Judge Morgan instead placed the stock into a blind trust, with instructions for the trustee using his own decision-making to eventually sell of the Cisco stock. Judge Morgan was supposed to be notified once the assets had been sold-off. And, apparently the trust still held Cisco stock at the time he issued his final judgment.
Placing stock in a trust did shift the ownership: A trust is legally owned by the trustee rather than his spouse. However, § 455(b)/(f) are not tied to ownership, but rather a “financial interest.” And, it appears that the spouse was still the beneficiary of the trust.
On appeal, the Federal Circuit held that the statute required divestiture, and transferring title and control to a trustee was insufficient. Rather, the stock needs to be either sold or donated — that “is the only cure envisioned under § 455(f).” Centripetal Networks, Inc. v. Cisco Sys., Inc., 38 F.4th 1025 (Fed. Cir. 2022).
Pause for a note on impartiality: A person’s ownership of Cisco stock would tend to make them want the stock price to go up. When Judge Morgan raised the issue, Centripetal announced that it had no problem with the Judge’s ownership; But Cisco complained. Why did Cisco complain–because it had lost its pretrial motions and it strongly suspected that the case was going to be decided in Centripetal’s favor. I.e., its reason for complaint had nothing to do with partiality or bias, but only as a technical rule to allow it to escape from judgment and seek a new, potentially more favorable judge.
Is it Harmless Error: Despite this situation where the actual judgment goes against the apparent bias potential, the Federal Circuit rejected the argument of “harmless error.” In a number of prior cases, the courts have held that “mandatory recusal does not require mandatory vacatur.” In other words, the fact that a judge was supposed to have recused himself under the rule does not automatically require an appellate court to vacate that judgment. The basic harmless error test outlined by the Supreme Court in Liljeberg asks three questions:
What is the risk of injustice to the parties in the particular case?
What is the risk that denial of relief here will result in injustice in other cases?
What is the risk that denial of relief here will undermine the public’s confidence in the judicial process?
In reviewing these elements, the Federal Circuit found them to all favor vacatur in this situation. To be clear though, the Federal Circuit’s section explaining risk of injustice to the parties reads like six pages of total BS. The only line that sticks out as interesting is the court’s speculation that in a case like this “there is a substantial risk that [the Judge] might bend over backwards to rule against that party to try to prove that there is no bias.” Id.
In its petition for writ of certiorari, Centripetal argues that the Federal Circuit “fundamentally misconstrued and misapplied both §455(f) and harmless-error doctrine” with the result of inflicting harsh consequences against the patentee. Particular concerns:
The court focused on the word “divest” in § 455(f) and giving it a powerful meaning while “ignoring the specific context addressed” by the statute. The court here suggests that what Judge Morgan should-have-done is sell-off the stock and create the exact appearance of impropriety that the statute endeavors to avoid. “That is plainly not what Congress intended by expressly providing an option for judges to avoid recusal when minor financial interests are discovered after substantial judicial resources have been invested in a case.”
Regarding harmless error, we can recognize that both parties agreed that the judge was not biased or partial nor did he operate with any malice or indifference. Centripetal conjects that the Federal Circuit’s “zero-tolerance posture” was “motivated by recent public scrutiny of judicial stock ownership” rather than the specifics of this case.
[Petition]. Before the Federal Circuit, Cisco had argued that the statute demands vacatur of all judicial decisions starting from the August 11 date when Judge Morgan learned of his disqualifying financial interest. “Any other outcome would send the undesirable message that this Court does not take the disqualification statute seriously and would undermine public confidence in the judiciary.”
= = =
The Federal Circuit’s decision was authored by Judge Dyk and joined by Judges Taranto and Cunningham. Former US Solicitor General and Scalia Clerk Paul Clement is representing the patentee in the petition. Paul Andre (Kramer Levin) handled both the trial and the appeal is also on the petition. Bill Lee (Wilmer) represented Cisco before the district court and the Federal Circuit and is likely to handle the Supreme Court briefing if a brief is requested by the Court.
This is a Patent Term Adjustment (PTA) case. Back before 1995, patents were awarded a term of 17-years following issuance. As part of an international negotiation and with some anti-submarine policy justifications, the US switched over to a 20-year term that starts counting days as of the application’s filing date. The 20-year term from filing date was seen as roughly equivalent to 17-years from issuance since most patent applications take about three years to issue. In the end, this kept overall patent term roughly the same. But, it also allowed for some major variability. Some patent applicants were concerned that delays by the USPTO due to backlogs or unreasonable examination practices might effectively cut into the patent term. Congress heard those concerns and created the PTA system that adds extra days to the patent term when those delays exist. 35 U.S.C. § 154(b). Unfortunately, the PTA statute is not a model of clarity and has been the subject of numerous court battles over various quirky elements.
The provision at issue in Sawstop has to do with PTA added for PTAB appeals and district court challenges. Under the law, added term is triggered by the following:
(iii) appellate review by the [PTAB] or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability,
35 U.S.C. § 154(b)(1)(C)(iii).
I have written previously about Sawstop technology that covers a safety feature for power saws “that instantly stops the saw blade upon contact with flesh.” The appeal here is a consolidated appeal regarding two Sawstop patents. Sawstop is struggling because its patents are all expiring and competitors are hot-on-its-heels.
In the first case (‘476), the applicant had appealed an obviousness rejection by the examiner. The PTAB rejected the examiner’s decision, but simultaneously issued a new ground of rejection on obviousness. Thus, the ultimate conclusion was that the rejection was affirmed, albeit for different reasons. On remand, the claims eventually issued, but only after an RCE (which cut-off further PTA). After the patent issued, the owner asked for PTA associated with the PTAB appeal, but the PTO refused as did the district court.
In the appeal, the Federal Circuit has also sided against Sawstop. The rule quoted above is triggered by “a decision in the review reversing an adverse determination of patentability.” On appeal, the Federal Circuit found no reversal by the PTAB — although it did “cast aside the examiner’s basis for rejecting claim 11,” the Board simultaneously established reasoning for rejecting that same claim. The result was that the claim remained rejected. The Federal Circuit here focused on the substantive outcome — the patentee’s appeal was not successful and therefore there was no reversal.
The Federal Circuit also addressed a second element of the test — that the “patent was issued under a decision in the [appellate] review.” The court has interpreted that requirement as mandating that at least one claim considered by the PTAB have found its way into the issued patent without significant or substantive post-appeal amendments. Here, the patentee had amended the claims after the PTAB decision in order to achieve allowance. Thus, no Type-C PTA.
The second case (‘796) is a bit more complicated, the applicant had appealed rejections of claims 1 and 2 for anticipation a non-statutory double patenting (provisional). The Board issued a partial-reversal–holding that claim 1 was no good, but claim 2 was patentable. But Sawstop really wanted claim 1 and so filed a civil action with the DC District Court–and won that case. The one caveat is that the civil action focused only on anticipation and did not address non-statutory double patenting. Back at the Office, the PTAB maintained its double-patenting rejection and Sawstop was given a choice: (1) drop claim 1 or (2) file a terminal disclaimer. Sawstop chose the latter, and cancelled claim 1. But again, filed an RCE with several further amendments to other claims and the specification before eventual allowance.
The USPTO awarded PTA for the successful PTAB appeal, but refused any PTA for delay in getting the district court decision. On appeal, the Federal Circuit affirmed this analysis again on two grounds. First, although the district court did reverse the anticipation claim, it did not decide that claim 1 was “patentable.” As such, the court did not “revers[e] an adverse determination of patentability.” Sawstop had argued that – at the time – the OTDP rejection was only provisional and thus should not count. The Federal Circuit might have bought this argument if Sawstop also explained that it was somehow barred from including the issue in its Section 145 Civil Action, but Sawstop did not provide such an explanation. The second reason for agreeing with the PTO is that Claim 1 (the Subject of the District Court civil action) never issued in the patent. And, as discussed above, the court has interpreted the rule to only apply when the claim at issue in the ‘appeal’ ends up in the issued patent. Thus, no Type-C PTA for this one either.
Throughout this process, the Federal Circuit repeatedly justified its ruling as a plain language interpretation of the rule. I’ll note, however, that the court does not do so with the “appellate review” portion of the statute. A Section 145 civil action is not an appellate review of the PTAB decision, but rather separate action. See Kappos v. Hyatt, 566 U.S. 431 (2012). But, the court appears to have no trouble seeing it as an appeal in this context.
= = =
Judge Linn wrote the decision here joined by Judges Newman and Chen. Sawstop was represented by Jared Newton and his team from Quinn Emanuel as well as David Fanning, SawStop’s inhouse counsel. Hugham Chan the E.D. Va. US Attorney’s Office argued for the Gov’t. Chan & Newton both graduated from GWU Law in 2010 & 2011 respectively. Chan is a former clerk of Judge Chen; Newton is a former patent examiner.
In its petition for en banc rehearing Innovation Sciences raises some great old cases. En banc petition from Innovation Scis., LLC v. Amazon.com, Inc., 842 Fed. Appx. 555 (Fed. Cir. 2021)(unpublished). In particular, the petition argues that the Federal Circuit’s decision in the case is contrary to both:
Washburn & Moen Mfg. Co. v. Beat ‘Em All Barbed-Wire Co., 143 U.S. 275 (1892) (aka, The Barbed Wire Patent Cases); and
Juicy Whip, Inc. v. Orange Bang, Inc., 292 F.3d 728 (Fed. Cir. 2002) (Note, this is Juicy Whip II. in Juicy Whip I, the court rejected a contention that the invention lacked utility because of its stated intent of deceiving the public. Juicy Whip, Inc. v. Orange Bang, Inc., 185 F.3d 364 (Fed.Cir.1999)).
Both of these cases relate to the type of evidence available to invalidate issued patents.
In The Barbed Wire Cases, the patent challengers had introduced oral testimony from 24 eye-witnesses who each testified that they saw a prior art fence on display a county fair in 1858, and including at least one person of skill in the art (a blacksmith). But, the Supreme Court found the evidence lacking. The court noted the “unsatisfactory character” of oral testimony “arising from the forgetfulness of witnesses, their liability to mistakes, their proneness to recollect things” in a biased way.
The very fact, which courts as well as the public have not failed to recognize, that almost every important patent, from the cotton gin of Whitney to the one under consideration, has been attacked by the testimony of witnesses who imagined they had made similar discoveries long before the patentee had claimed to have invented his device, has tended to throw a certain amount of discredit upon all that class of evidence, and to demand that it be subjected to the closest scrutiny. Thus, the Court showed serious distaste for all oral testimony proffered to invalidate a patent–regardless of the interest of the witnesses.
Id. The court confirmed this ruling in Eibel Process Co. v. Minnesota & Ontario Paper Co., 261 U.S. 45 (1923), writing that:
[T]here is not a single written record, letter, or specification of prior date to Eibel’s application that discloses any such discovery by any one, or the use of the pitch of the wire to aid the speed of the mechine. The oral evidence on this point falls far short of being enough to overcome the presumption of novelty from the granting of the patent. The temptation to remember in such cases and the ease with which honest witnesses can convince themselves after many years of having had a conception at the basis of a valuable patent, are well known in this branch of law, and have properly led to a rule that evidence to prove prior discovery must be clear and satisfactory.
The beverage dispenser case, Juicy Whip, follows along this same line, but also focuses on the use of non-prior art as evidence. In particular, the accused infringer had “recreated” what it claimed was a prior art beverage dispenser and provided oral testimony. The appellate court rejected the demonstration as “no more reliable than any of the other oral testimony.” Id. A patent cannot be invalidated based upon “oral testimony accompanied by an admittedly non-anticipatory visual aid.” Id. Juicy Whip was decided by the typical pro-patentee Judge Linn and joined by Judge Lourie. Judge Mayer wrote in dissent that the oral testimony coupled with the model should be sufficient.
The new petition relating to these issues is Innovation Scis., LLC v. Amazon.com, Inc., 842 Fed. Appx. 555 (Fed. Cir. 2021)(unpublished). The case involves some sort of wireless communications technology useful in home automation. The closest prior art was a home automation software called HAL2000 created by Tim Shriver back in the early 2000s. But, the patents don’t just cover software. Rather, they are directed to various software-hardware combinations and methods of use of those combinations.
In order to show the use of HAL2000 met all the limitations, Amazon had Shriver implement the old code on some old hardware. Then, Amazon’s expert witness tested the new creation that we might call HAL2019 to show that the prior art met all the claim limitations. After hearing those results, the jury sided with the defense and found the claims invalid as anticipated. On appeal, the Federal Circuit affirmed. Although it was a non-precedential opinion, the court was somewhat careful to explain that the recreation was appropriate in this case because “substantial evidence supports a finding that the HAL system on which Dr. Johnson based his opinion was representative of prior-art HAL systems.” Innovation Scis. 842 Fed. Appx. 555.
The petition explains the hardware and configuration for prior art HAL systems were each uniquely installed by customers and that the particular recreated HAL system was designed in 2019 using the asserted claims as a roadmap rather than actually recreating something known to exist. And, according to petitioner, this recreated system “was the only prior art relied upon at trial.” (with one minor exception). Although nobody testified that the 2019 system as created actually existed before the critical date, folks did testify that the 2019 system “could have” existed. Based upon these recitations of the evidence, the petition then asks two questions:
Whether it is proper to treat a system built in 2019 for purposes of the litigation that included certain prior art components (i.e., the 2019 HAL System) as an anticipatory reference in the absence of proof that 2019 system actually existed prior to the 2006 critical date; and
Whether the suggestion that a prior art system could have existed before the critical date can meet the clear and convincing evidence standard required to prove invalidity.
I see the issues here as fabulously interesting and important. The practical problem for the petitioner though stems from the law that appears willing to allow recreations of the prior art so long as sufficient documentary evidence supports a conclusion that the recreation is representative of the prior art. And, in this case, the challenger provided a variety of evidence to prove that point, including product manuals, articles, and even a video of the system being demonstrated on Oprah. Despite citing these great cases, in the end, the Plaintiff is really arguing that those bits of evidence are insufficient. And, re-arguing the facts is almost always a losing proposition for rehearing.
= = =
Chief Judge Moore authored the Federal Circuit opinion joined by Judges Prost and Hughes. Donald Jackson and his team at Davidson Berquist represented the patentee at trial, on appeal, and in this petition for rehearing. Amazon relied on David Hadden and his team from Fenwick throughout the case. The Federal Circuit’s appellate procedure bars any opposing response unless requested by the court.
Hologic v. Minerva, 19-2054 (Fed. Cir. 2022) (en banc petition)
The Supreme Court’s 2021 decision retained assignor estoppel as a cognizable patent law doctrine that can bar a former patent owner from later challenging the patent’s validity. Although the doctrine was retained, the Court also concluded that the Federal Circuit had applied the doctrine “too expansively.” Like other estoppels, assignor estoppel is equitable in nature and so courts should consider any “unfairness in its assertion” and particularly only apply the doctrine when the assignor has made either “explicit nor implicit representations in conflict with an invalidity defense.” Minerva Surgical, Inc. v. Hologic, Inc., 210 L. Ed. 2d 689 (June 29, 2021).
The basic setup here is that back in the 1990s the inventor (Csaba Truckai) filed his patent application for an endometrial ablation tool that operates as a “moisture transport system.” The embodiments in the application all use a “moisture permeable” applicator head. The application also the disclosed prior art moisture impermeable approach, disparaged that approach that led to a “problem of steam and liquid buildup at the ablation site.” The patent document is clearly directed toward the permeable portion as a key aspect of the invention. But, one claim in the original application (Claim 31) was directed to other aspects of the invention and did not expressly require use of the permeable member. And, although Truckai argued that the specification’s description should limit the claim scope to inherently include the permeability clause, the Federal Circuit disagreed and instead concluded that “nothing in the intrinsic record supports limiting claim 31” to require a moisture permeable material. Truckai also prosecuted claim 31 for some time – overcome an anticipation rejection. Eventually though the claim was dropped by the patentee following a restriction requirement.
The Truckai application was filed in 1998 and that same year Truckai signed an assignment of rights to start-up company Novacept. Later Novacept was purchased for $300m by Hologic. In this process, Truckai filed another assignment in 2004 warranting it had “no present knowledge from which it could reasonably conclude” that the assigned IP rights were invalid or unenforceable.” By that time though, claim 31 had been withdrawn following a restriction requirement.
Now at his next startup (Minerva), Truckai conceived of another device. The new device relied upon a moisture impermeable head. Truckai apparently showed the device to Hologic as part of a potential sales agreement. Rather than buying, Hologic filed a continuation of that 1998 application with new scope expanded out to cover Truckai’s new impermeable membrane.
Once the patent issued, Hologic sued Minerva for patent infringement. Minerva argued that the new claims were invalid for lack of enablement and written description — that the expanded claim scope improperly covered moisture impermeable heads that were not disclosed in the original specification; Hologic argues that Minerva’s invalidity challenge is barred by assignor estoppel.
The Federal Circuit initially sided with the patentee, but that judgment was vacated by the Supreme Court. On remand, the Federal Circuit considered the case history and the Supreme Court guidance, and eventually maintained with its original conclusion barring the invalidity defenses under the doctrine of assignor estoppel. After construing that original Claim 31, the court concluded that it was broad enough to encompass both permeable and impermeable devices; and therefore that Truckai’s actions at least an implicit representation that he was transferring patent rights covering impermeable devices. Ergo, assignor estoppel prohibits him from now claiming that such expansive claims are invalid.
The new petition for rehearing argues that the Federal Circuit got this all-wrong by applying the principles of claim construction as it did.
The difference between a primary focus on the inventor/assignor’s representations (as the Supreme Court directed) and the mechanics of claim construction (as the Panel purported to apply) is more than semantic.
With claim construction, we know that the use of “comprising” creates an open-ended scope. Thus, the absence of the permeable clause in claim 31 allows or claim scope that includes impermeable heads. But, this quirk of claim construction is different from concluding that Truckai had made affirmative statements that his invention covers impermeable heads. The defendant argues, “silence is not a representation.” Of course, the Supreme Court made clear that the representations can be “implicit.”
In the lawsuit, Truckai wants to argue that the claims covering impermeable heads are invalid for failure of disclosure. Assignor estoppel will apply if Truckai made some representation that his assigned patent rights cover impermeable heads. In its petition, Truckai argues that the court should take special precaution in judging claims submitted in a patent application that never-issued. Because those original applied-for claims are “inchoate rights of indefinite scope,” the court should take extra measures to read meaning from the specification:
But if the task is to determine what the inventor represented in a never-issued claim, then the fact that the specification declares moisture trapped at the ablation site as the problem the invention solves represents that the device could not work if it included moisture impermeable material. An inventor did not represent that his invention is something his own description of the invention makes clear would not work.
The general rule for en banc petitions is that no response need be filed unless requested by the Court. However, I expect that such a request will be forthcoming on this interesting issue.
The level of estoppel was a sticking point a decade ago in the lead-up to the America Invents Act (AIA). Patentee’s were concerned with repeat harassment by accused infringers; Accused infringers were concerned that IPRs would be ineffective and that they would then lose their right to challenge the patent in court. We now know that IPRs are very effective, but sometimes patent challengers would still like a second bite. That is the situation in the pending petition for certiorari in Apple Inc. v. California Institute of Technology, 22-203 (U.S.). Apple lost its IPRs against CalTech and now wants to bring additional invalidity challenges in court that it could have raised in its IPR petitions.
In the 2011 AIA legislation, Congress created two forms of petitioner estoppel, each of which attach only if the IPR petition is granted and the PTAB reaches a Final Written Decision, and only with respect the claims actually adjudged in the IPR final written decision.
315(e)(1) Estoppel of Further Proceedings Before the USPTO: The petitioner [or privy/RPI] may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
315(e)(2) Estoppel of Invalidity Arguments in Court: The petitioner [or privy/RPI] may not assert either … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
35 U.S.C. 315(e). As you can see, both provisions create estoppel barring a petitioner from later raising “any ground that the petitioner raised or reasonably could have raised during that inter partes review.” The question in
Apple v. CalTech: CalTech sued Apple and Broadcom for infringing its patents covering wireless communication chip logic. Apple responded with several IPR petitions. The petitions were granted initiating the IPR, but the USPTO eventually sided with patentee in its final written description. Apple is thus prohibited from re-challenging the validity of the already challenged claims “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”
Back in district court, Apple attempted to raise additional invalidity challenges, but the district court barred those defenses. The district court concluded that Apple could reasonably could have included those as grounds in its IPR petition and thus barred under 315(e)(2). CalTech eventually won a $1 billion jury verdict. On appeal, the Federal Circuit vacated the verdict on other grounds, but affirmed on the issue of estoppel. The Federal Circuit particularly held that estoppel extends to “all grounds not stated in the petition but which reasonably could have been asserted against the claims included in the [IPR] petition.” California Inst. of Tech. v. Broadcom Ltd., 25 F.4th 976 (Fed. Cir. 2022), overruling Shaw Industries Group, Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016).
Apple’s new petition to the Supreme Court identifies what it sees as a fundamental flaw in the Federal Circuit’s textual analysis. The Federal Circuit concluded that Apple was estopped from later raising grounds that it reasonably could have raised in the inter partes review petition. But, the statute as written creates a slightly different test — asking what “reasonably could have raised during that inter partes review.” The following is Apple’s question presented to the Supreme Court:
Whether the Federal Circuit erroneously extended IPR estoppel under 35 U.S.C. § 315(e)(2) to all grounds that reasonably could have been raised in the petition filed before an inter partes review is instituted, even though the text of the statute applies estoppel only to grounds that “reasonably could have [been] raised during that inter partes review.”
Apple question presented.
The IPR process begins with an IPR petition. 35 U.S.C. § 311. The statute charges the USPTO Director the role of instituting the IPR, although that duty had been delegated tot he PTAB. 35 U.S.C. § 314. After institution, the PTAB conducts a trial and issues its final written description. Apple’s basic argument is that the statute’s use of “during” excludes potential actions that could have taken place prior to institution. To wit, Apple recognizes that it reasonably could have made additional arguments in its IPR filings, but those took place prior to the IPR; And, once the IPR petition is granted, the challenger no longer has any opportunity to raise any other grounds to challenge the patents. In this scenario, the statute is practically limited to cover only grounds actually raised. Apple explains:
When “an inter partes review of a claim in a patent … results in a final written decision,” a petitioner is estopped from asserting in district court litigation only “any ground that the petitioner raised or reasonably could have raised during that inter partes review.” 35 U.S.C. § 315(e)(2) (emphasis added). By expanding statutory estoppel to cover any ground that could have been raised in a petition before an inter partes review even begins, the Federal Circuit effectively rewrote the statute. This Court’s review is urgently needed to restore Section 315(e) to its proper scope.
Apple’s petition relies heavily on the work of Cleveland-Marshall Prof. Christa Laser and her 2018 Florida Law Review article. Christa Laser, The Scope of IPR Estoppel: A Statutory, Historical, and Normative Analysis, 70 Fla. L. Rev. 1127 (2018). Laser suggested that the Supreme Court reinterpret the statute and “should hold that IPR estoppel applies narrowly only to grounds actually raised and instituted.” Id. Baltimore Prof. Greg Dolin penned a responsive article concluding that Laser’s approach is too narrow. Gregory Dolin, Estopping Patent Harassment: A Response to Christa J. Laser, 70 Fla. L. Rev. F. 136 (2019). From my view, Dolin and the Federal Circuit have the better view on this one over Apple and Laser. We’ll see this fall whether the Supreme Court agrees.