November 2013

Independent Justification for Appellate Standing over Administrative Patent Challenges – Part II

By Dennis Crouch

Earlier this week, I suggested that the Federal Circuit should independently be considering whether parties involved in administrative patent challenges (such as an inter partes review) have standing to appeal as required by Article III of the US Constitution. Now, the court has taken the first step and demanded that the public interest group Consumer Watchdog justify its standing to appeal in the inter partes review case against WARF's stem cell patent.

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Consumer Watchdog v. Wisconsin Alumni Research Foundation (WARF) (Fed. Cir. 2013)

Back in 2006 Dan Ravicher filed an inter partes reexamination request of WARF's U.S. Patent No. 7,029,913 on behalf of Consumer Watchdog (then known as the Foundation for Taxpayer and Consumer Rights). The patent contains only three claims and broadly directed toward human embryonic stem cells being grown in vitro. After WARF amended its claims, added one new claim, and worked through several rounds of prosecution and rejection, the Board finally agreed that the claims are patentable.

Now Consumer Watchdog has appealed, arguing that "an in vitro culture of human embryonic stem cells is [not] patent eligible under 35 U.S.C. § 101" and also that the claims are invalid based upon prior art known at the time of filing. Of course, one problem with the § 101 argument is that § 101 is not a cognizable ground for deciding an inter partes reexamination. The challenger here argues that subject matter eligibility is a fundamental and threshold issue that the court can and should address, and "[d]oing so is especially appropriate here given recent developments in the law of patent eligible subject matter."

Standing on Appeal: One issue that neither party raised was whether Consumer Watchdog has standing to appeal. In an essay earlier this week, I noted that this is generally an issue that is ripe for consideration at the Federal Circuit. Although the statute allows for appeals of adverse PTO decisions to the Federal Circuit, the US Constitution separately limits the court's power to hear cases where there is no "case or controversy" between the parties. Although I do not know for sure, it appears that Consumer Watchdog does not have any anything at stake in the case in terms of being directly (or even indirectly) impacted by the outcome of the lawsuit.

In an order issued today, the Federal Circuit ordered that the parties brief this particular issue – "whether Consumer Watchdog has standing to pursue this appeal." Briefs are due by November 25, 2013. Although I don't know, Consumer Watchdog may be able to argue that it has standing based upon the actual facts on the ground. Alternatively, it is possible that a party with standing (such as a stem-cell-researcher being blocked by the patent) may be able to join the case at the 11th hour. Another possibility is that Consumer Watchdog may be able to argue that a patent challenge at the PTO is essentially a public service action akin to a qui tam action. Under this last theory, would really be the general public or government that has standing to challenge a 'bad' patent and Consumer Watchdog is merely acting on behalf of us all.

More here on the case from Antoinette Konski:

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In recent weeks several non-practicing "patent killers" have filed inter partes review requests including RPX and Unified Patents. It will be interesting to see whether they file amicus briefs here.

A First IPR Decision on the Merits

Garmin v. Cuozzo Speed Tech, IPR2012-00001 (PTAB 2013)  Download Final decision-59

In its first full merits decision in an inter partes review case, the Patent Trial and Appeal Board (PTAB) has sided fully with the petitioner Garmin and ordered the three challenged claims cancelled. As you may discern from the docket number, this case was also the first IPR case filed on September 16, 2012 (the first day that such filings were allowed). The patent at issue is No. 6,778,074 and a parallel infringement lawsuit between Garmin & Cuozzo is pending in New Jersey District Court. Although the district court did not stay that case, Magistrate Judge Dickson has slowed the process to avoid making substantive decisions until the PTAB decision. In particular, the claim construction arguments have been delayed.

The patent itself is directed toward a speed-limit indicator tied to a GPS system that provides a signal to the driver when the care is moving faster than the speed-limit. Couzzo has accused several device makers (such as Garmin) as well as automobile manufacturers (such as Chrysler) of infringing the patent.

Garmin's IPR request actually challenged 17 claims of the '074 patent, but the PTAB only instituted the review for claims 10, 14, and 17 as such, it likely that Cuozzo will continue to pursue the litigation with a focus on the remaining claims. Those three claims were all found obvious by the PTAB. Based upon my quick read of the claims, independent claim 10 was the broadest in the patent and its elimination may give Garmin the opportunity to avoid infringement by pushing for a narrow construction of the remaining claims.

Four Reference Rejection: Patent attorneys regularly see obviousness rejections that hinge on the combination of four references.  However, the conventional wisdom is that those complex factual arguments are much less likely to fly in disctrict court litigation.  Here, the PTAB took on the challenge and found the patent obvious based upon four prior art references.  The take-away here is that the PTAB is ready and willing to handle complex invalidity arguments that might not work at the district court level. 


Claim Construction: One interesting aspect of the case is the way that the pending parallel litigation is clearly in the forefront of each decision by the parties. One limitation found in each claim of the patent is that a speedometer be "integrally attached" to a speeding-indicator. Couzzo that the proper construction of that term would require that the speedometer and speeding-indicator both be part of the same single component (i.e., shown on the same screen). On that point, the Board sided with Garmin – finding instead that the broadest reasonable interpretation of the claim scope required two separate components. In addition to making the claim more subject to prior art, the seeming result is also that a single Garmin device GPS cannot infringe unless somehow integrated with and integrally attached to a separate vehicle speedometer. Moving forward it will be interesting to see what level of respect the district court gives the PTO decision. I suspect that it will be given a great deal of respect.

Unable to Prove Early Conception  or Diligence: Two of the important prior art references used by the board presumptively qualify as 102(e) prior art in that the references are published US patent applications that were filed prior to Couzzo's application. Under the old first-to-invent rules, the law allows Couzzo prove a prior invention date. Here, Couzzo's proof failed because (1) his conception evidence was based solely on inventor testimony which is never sufficient without corroboration; and (2) his evidence of submission to the "Invention Submission Corporation" was insufficient because the date of submission was not corroborated by any testimony. Thus, the PTAB found that the earliest provable date of conception was December 2000 when the ISC patent attorney sent a letter to Couzzo referencing Couzzo's invention disclosure. Because Couzzo had not yet reduced his invention to practice as of that December 2000 date, the law also requires that he act with "reasonable diligence." Here, Couzzo received a search report from the patent attorney in January 2001; did not respond until March 2001; and did not explain why it took two months to provide comments or his daily progress on the matter. Then, later in March 2001 he received a new favorable patentability report from the patent attorney who stated he would begin work once Couzzo paid a $3,500 fee. However, he did not pay that fee until August 2001. Couzzo stated that he did not have the money at the time, but did not provide any daily progress reports showing what he was doing to get the money. The PTAB found that each of these gaps showed failure of diligence. As such, his attempt to antedate the references was rejected. The unfortunate problem here is that it looks like it was the complexity and tricks of the system that failed Couzzo and that, had he been blessed with more cash-on-hand and more sophisticated patent counsel then he would have avoided these key prior art references either by filing the patent application earlier or by ensuring documentation of conception and diligence. Soon after Couzzo's case was filed, the USPTO went after the Invention Submission Corporation as a scam. My understanding is that InventHelp is the successor-in-interest to ISC.


Should you Transform Your Pre-AIA Application to an AIA Application?

By Dennis Crouch

In the lead-up to March 16, 2013 the patent office received an influx of tens-of-thousands of patent application filings. That date is important because new applications filed on or after March 16, 2013 are examined under the first-to-file rules of the America Invents Act (AIA). At first glance, that influx suggests that applicants overwhelmingly prefer the prior first-to-invent rules. That suggestion makes sense since the AIA generally expands the scope of prior art available to adjudge patentability. However, the reality is that early filing might me more properly seen as a hedge against the potential that the new rules are too harsh on patentees. As I discuss below, the AIA offers an easy mechanism for any pre-AIA patent application to be transformed into an AIA patent application and it turns out that there are several major reasons why a patentee might prefer its patents to be adjudged under the AIA rules.

Transforming to an AIA Patent: The basic rule is that the first-to-file rules of the AIA apply to any application with at least one claim whose priority date is on or after March 16, 2013. The mechanism then is to file a follow-on application, such as a continuation-in-part (CIP) application, that adds some new matter and a new claim. The result of that filing then is that the entire application and resulting patent will be judged under the AIA first-to-file rules. To be clear, the CIP transforms the entire application to an AIA application – even claims that are identical to those that were in the original pre-AIA application and that were fully supported by that original pre-AIA application. Although I use a CIP as an example here, any new filing that properly adds new matter and that results in a related new claim will qualify.

The procedure is easy – the larger question is why a patent applicant would prefer an AIA patent to a pre-AIA patent. Some reasons:

  • AIA patents are (likely) not subject to being invalidated based upon pre-filing secret sales; secret offers to sell; or secret uses.
  • AIA patents have expanded the scope of the Create Act so that would-be anticipating prior art is also negated. The basic idea is that non-public prior filings by a research partner will not negate patentability.
  • AIA patents that stem from a foreign-filing count as prior art as of their priority filing date. This change effectively overrules the Hilmer doctrine and essentially makes AIA patents (and their associated published applications) much more powerful as a form of prior art.
  • At the same time, claims that were fully supported by the original priority filing will still get that priority date even when being adjudged under the new law.

Depending upon your particular factual situation, these reasons may justify a transformation of a pre-AIA application to an AIA application. Directly on point, this opportunity suggests that attorneys revisit pending pre-AIA cases that involved some pre-filing commercial activity to nail down whether any pre-filing sales activity took place. This issue is especially important when you consider cases like Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc., 726 F.3d 1370 (Fed. Cir. 2013). In that case the Federal Circuit found the patent-in-suit invalid based upon an offer from a foreign supplier to produce the product on behalf of the patentee. That is the sort of secret on-sale activity that will not serve as prior art for AIA patents. If that pre-filing on-sale activity was kept confidential then a transformation to an AIA application may make sense.

The transformation to an AIA application should probably be seen as a hedge rather than transformation because it does not require abandonment of the pre-AIA application. Thus, the same original priority filing that was filed before March 16, 2013 could result in a family of patents, some of which are adjudged under the pre-AIA rules and others that are adjudged under the AIA rules. The basic business question then for these pending pre-AIA questions is not whether the potential AIA patent is more likely to be valid than a pre-AIA patent. Rather, the hedging question is whether the addition of an AIA patent covering parallel subject matter adds enough value to be worth the costs.

There are a number of caveats to this procedure. Here are three. First, as I mentioned above, the transformation process requires the addition of new matter and a new claim that includes some of that new matter. I would expect some equitable risk for patent applicants in situations where it is clear that the new matter was only added as a formality in order to use this procedure. Defendants could potentially raise inequitable conduct or laches defenses based upon a patentee's claiming that some new matter was patentable when the only true purpose of the new matter was for the old claims to be interpreted under the new rule. In a similar vein, this approach raises double-patenting questions and it is somewhat unclear how double patenting issues will be resolved under the AIA. Finally, it is important to make clear that these transitional applications will not avoid 102(g) prior art based upon the transitional provisions found in the AIA.

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Note, I had been thinking some about this issue but my post here was triggered by a recent presentation by Bryan Diner from Finnegan who, in turn, recognized Tom Irving and his related Jedi Master Mixer strategy.

Independent Justification for Appellate Standing over Inter Partes Reviews

By Dennis Crouch

The recent Supreme Court decision in Already v. Nike revolves around the question of when a trademark-challenger has declaratory judgment standing to challenge a mark's validity. That particular case revolved around the impact of a covenant-not-to-sue. However, at oral arguments, Justice Kennedy turned his attention to administrative challenges before the TTAB (the trademark-equivalent of the PTAB) and asked whether a challenger who loses an opposition through that administrative body would have standing to ask the Federal Circuit to review the decision. Now, the statute is clear that any party to an opposition has a right to appeal to the Federal Circuit. 15 U.S.C. §1071. Justice Kennedy's question, however, focused on whether the case and controversy requirements of the constitution allows an Article III court to hear the case absent a stronger showing of conflict between the parties. Nike's counsel (Tom Goldstein) surprisingly answered (seemingly against his interest in this case) that Article III standing for the appellate court would not be satisfied simply by virtue of being involved with the trademark opposition.

JUSTICE KENNEDY: Is the standing burden any less after there is a — an administrative adjudication and you go to court for judicial review?

MR. GOLDSTEIN: … We've looked at the cases. We think that it's a point in their favor, Justice Kennedy, that while you can go to the TTAB, they wouldn't be able to appeal to an Article III court. I think that's a point in their favor.

The point here is that, (1) an administrative agency (such as the PTO) can be empowered (under the Constitution) to decide cases between two parties without any showing of injury or standing by the petitioner. However, (2) if that administrative decision is appealed to an Article III court (such as the Federal Circuit), case must satisfy the ripe controversy requirements of the Constitution. At the Already oral arguments, the attorney for the US Government (Ms. Anders) attempted to cut-through some of this by arguing that, in some circumstances an adverse decision from the PTO would create the injury-in-fact that is sufficient to establish Article III standing for appeal. See Megan La Belle, Summary of Oral Argument in Already, LLC d/b/a Yums v. Nike, Inc. (November 8, 2012).

Although not an intellectual property case, the D.C. Circuit very recently decided a somewhat parallel issue in the case of Americans for Safe Access v. DEA, 706 F.3d 438 (D.C. Cir. 2013). The appellants in that case include Safe Access, is a marijuana legalization advocacy group, and several individuals who petitioned the US Drug Enforcement Administration (DEA) to reschedule marijuana as a Schedule III, IV, or V drug rather than a Schedule I drug. In the subsequent appeal to the D.C. Circuit, the DEA argued that the appellants had no Article III standing. Although the D.C. Circuit found standing, it agreed with the DEA that Article III standing continues to be a requirement and that participating an administrative hearing is not sufficient to create standing. Here, standing was based upon the fact that one of the appellants (Michael Krawitz) was a disabled veteran eligible for medical care through the Department of Veterans Affairs but was denied marijuana treatment and instead had to purchase his own through the Oregon Medical Marijuana Program.

Similarly, in Sierra Club v. EPA, 292 F.3d 895, 899 (D.C. Cir. 2002), the D.C. Circuit wrote:

An administrative agency is not subject to Article III of the Constitution of the United States [and] so the petitioner would have had no need to establish its standing to participate in the proceedings before the agency. When the petitioner later seeks judicial review, the constitutional requirement that it have standing kicks in, and that requirement is the same, of course, as it would be if such review were conduct in the first instance by the district court.

The point here is simply, that standing is a requirement at the appellate level and an adversarial administrative process itself does not necessarily create standing.

Post-Grant and Inter Partes Review: All of this is relevant to the USPTO's new administrative review procedures that allow third-parties to initiate an administrative patentability review without any showing of standing or interest in the outcome of the review. Under the statute, the third-party requester also has a right to appeal an adverse PTO decision directly to the Court of Appeals for the Federal Circuit.

Manufacturing Appellate Standing through Administrative Review: Although the statute provides for a right-to-appeal, the balance of the law (as exemplified above) requires that the parties will also need to satisfy the Constitutional standing requirement. One basic legal question then will focus on whether the government's suggestion in Already is correct – that a case and controversy can be manufactured by the administrative review itself. Of course, following Already, a covenant-not-to-sue given by the patentee to the review requestor would eliminate any possibility of injury-in-fact. And, if the requestor is a public-interest organization (such as PubPat) such a covenant would be essentially cost-free for the patentee.

Manufacturing Declaratory Judgment Standing through Administrative Review: An important twist on this then is that – if the administrative review serves as a bootstrapping mechanism for generating Article III standing for challenging patentability on appeal, then it should also serve to generate Article III standing for challenging patent validity in a district court declaratory judgment action.

Now, the reality is that this issue will only arise in limited circumstances because the high-cost of post-grant reviews serves as a major filter to post grant and inter partes review filings. We can expect that it will be primarily parties with genuine controversies that request the reviews and only a much smaller percentage will be folks without a genuine controversy. 

Thanks to James Dabney, Megan Labelle, Michael Burstein, and Erin Hawley for helping me to think through this issue. Of course, as you might expect, these folks don't entirely agree with my perspective.

Guest Post – PAEs under the Microscope: An Empirical Investigation of Patent Holders as Litigants

Guest Post by Christopher A. Cotropia, Professor of Law and Austin Owen Research Fellow, University of Richmond School of Law; Jay P. Kesan, Professor and H. Ross & Helen Workman Research Scholar, University of Illinois College of Law; and David L. Schwartz, Associate Professor and co-Director of the Center for Empirical Studies of Intellectual Property at Chicago-Kent College of Law

 Today, a certain type of patent litigant—the non-practicing entity (“NPE”), also known as a patent assertion entity (“PAE”), patent monetization entity (“PME”), or simply patent troll—is the target of much public debate, if not venom. Indeed, President Obama himself got involved in this debate, with his Council of Economic Advisers preparing a report this summer entitled “Patent Assertion and U.S. Innovation.” The Executive Summary of the President’s report sounds the following alarm about PAE suits:

Suits brought by PAEs have tripled in just the last two years, rising from 29 percent of all infringement suits to 62 percent of all infringement suits.

This asserted explosion in PAE-initiated litigation has fed into a wider perception that PAEs are out of control and need reining in by Congress.  But is the factual assertion by the President’s report an accurate characterization of total PAE litigation activity? 

We address this important issue in our new article, Patent Assertion Entities (PAEs) Under the Microscope: An Empirical Investigation of Patent Holders as Litigants. To investigate PAE litigation, we personally hand-coded all 7,500+ patent holder litigants in 2010 and 2012. In our coding, we finely classified the nature of the litigants, going beyond the simple PAE / non-PAE label.  Specifically, we coded each patent holder as one of the following:  (1) a University; (2) an Individual Inventor/Family Trust; (3) a large Patent Aggregator (e.g., Acacia); (4) a Failed Operating Company or Failed Start-up; (5) a Patent Holding Company that appears unaffiliated with the original inventor or owner; (6) an Operating Company; (7) an IP Holding Company affiliated with an operating company; or (8) a Technology Development Company (e.g., Walker Digital).[1]

Based on our data, and contrary to the assertions in the President’s report, we do not find an explosion in PAE litigation between 2010 and 2012.  In particular, the President’s report considered only the raw number of lawsuits filed in 2010 and 2012. By limiting its analysis to numbers of cases filed, rather than the underlying parties involved, the President’s report was incomplete and led to an erroneous conclusion.

To understand the reason for this error in the President’s report, one must consider an important change to patent litigation made by the America Invents Act (AIA). The AIA, adopted in 2011, changed the joinder rules relating to patent litigation by prohibiting patent holders from including multiple, unrelated defendants in a single lawsuit based on commonly-asserted patent(s). Instead, after the AIA, patent holders must file separate lawsuits against each unrelated defendant. Thus, rather than focusing on the raw number of lawsuits as the President’s report did, a more appropriate inquiry should focus on the total number of patent litigants, both patent holders and accused infringers, in order to gauge more accurately the actual number of patent disputes between parties. Using this approach, we found almost no difference between 2010 and 2012 in the number of litigants in patent cases. In other words, the “explosion” of PAE litigation between 2010 and 2012 is simply a mirage.

First, in terms of raw number of patent lawsuits, our study reveals that the number of lawsuits did increase between 2010 and 2012, with a substantial increase in the raw number filed by non-operating companies (by which we mean the sum of all categories except operating companies).  Our first finding therefore is similar to the President’s report.  For example, while what we coded as “Patent Holding Companies” (“PHCs”) suits comprised 16% (400) of cases filed in 2010, they comprised 38% (1,959) in 2012, and this is in comparison to “Operating Companies” suits comprising 69% (1,750) of cases in 2010 to 45% (2362) of cases in 2012.  The bar chart below reports these findings along with those for all of the categories we coded: Figure 1

However, when we evaluated the number of litigants, rather than just the number of cases, the picture changed substantially. We considered separately both the number of unique patentees alleging infringement in 2010 and 2012 and the total number of alleged infringers in those years. For both, we found little difference between 2010 and 2012.  Our second finding therefore directly contradicts the statement in the President’s report that there was an explosion of PAE lawsuits in that time period.

Specifically, concerning the number of unique patentees starting litigation, the total number barely changed between the studied years, increasing from 1,610 unique patentees in 2010 to only 1,696 in 2012.  Further, the distribution among types of patentees stayed almost the same, with the unique number of PHC patentees slightly increasing from 13% (214) of all patentees in 2010 to 16% (266) in 2012, while Operating Company patentees dropped slightly, from 72% (1,156) of all patentees in 2010 to 69% (1,165) in 2012. The graph below reports all of the unique patentee numbers for the various categories.

Figure 2

And the number of infringement defendants (perhaps the best measure of the impact of patent litigation) corresponding to each category of patent holder also did not vary much from 2010 to 2012.  In particular, the overall litigation exposure from Operating Company suits compared to other types of patentee suits remained almost constant.  The number of defendants in Operating Company suits slightly dropped from 49% (5,708) of the total number of defendants in 2010 to 48% (5,611) in 2012.  And while the number of alleged infringers for other categories changed, the changes were slight.  For example, the number of defendants in PHCs suits rose from 27% (3,179) of all defendants in 2010 to 32% (3,698) in 2012 while the number in Individual/Family Trust dropped from 11% (1,320) in 2010 to 8% (927) in 2012.  The complete comparison of total number of parties excluding the patentee in 2010 versus 2012 is set forth in the graph below.

Figure 3

From this data, the only real change between 2010 and 2012, the increase in the raw number of lawsuits, is most likely driven almost entirely by a procedural rule change relating to joinder passed with the 2011 patent reform. These results call certain findings in the President’s report into serious question.

Information about lawsuit filings, obviously, cannot answer all questions about PAEs. There are other serious questions relating to PAEs that demand an empirical answer. For instance:

  • Ÿ What is the volume of patent demand letters? How many of those assert frivolous claims?
  • Ÿ Of the litigated cases, how many of the PAE (and non-PAE) cases are frivolous?

We do not know the answers to these questions (yet), and further rigorous empirical research is needed.

To aid the effort in understanding the patent litigation landscape, we have decided to release the underlying data—our specific classifications of the litigants in all patent lawsuits filed in both 2010 and 2012—to the public. We believe that releasing this data to the public, which unpacks the definition of PAE, provides better illumination to policy makers, researchers, and others interested in the patent litigation system.  This data is available to everyone to examine and evaluate at

The full paper is available for download here. It provides a detailed analysis of the distribution of the 2010 and 2012 patent cases, including information based upon technology and litigant type.

We welcome any comments and suggestions on the article or the dataset.

[1] A more detailed description of the categories can be found on pages 13-14 of our draft article.

Substantial Evidence Rule Kills PTAB Appeals

by Dennis Crouch

In re Haase (Fed. Cir. 2013)

In a nonprecedential decision, the Federal Circuit has affirmed a PTO rejection of Richard Haase's pending water purification patent application No. 10/413,849. Although representing himself pro se in this case, Haase is no amateur patent sleuth. Rather, Hass has filed more than fifty patents applications related to water purification. See, for example, Patent Nos. 8,268,269, 8,161,748, and 8,123,944. Mr. Haase is also a graduate of the University of Missouri (ChemE + Mathematics + Economics). His company, ClearValue has filed several infringement lawsuits – most recently winning a multi-million dollar jury verdict that was then overturned on appeal. Haase also has a malpractice action pending against his former attorneys. Haase v. Abraham, Watkins, Nichols, Sorrels, Agosto & Friend, LLP, 404 S.W.3d 75 (Tex. App. 2013).

The patent here is directed toward a method of clarifying waste water, using chemical coagulants to remove solid contaminants.

In the end, this case follows the typical path of appeals from the PTAB to the Federal Circuit. Under the rules of administrative law, factual determinations by the PTAB are affirmed when supported by 'substantial evidence.' Under that rule, the PTAB factual determination will be affirmed so long as supported by "more than a mere scintilla" of evidence. In general, this is an easy threshold for the USPTO to meet. So, to be clear, the appellate court will affirm a factual determination even when that determination is likely wrong so long as some amount of evidence support the determination. We've all heard the adage that 'reasonable minds can differ.' I think of the substantial evidence rule as a relaxed version that 'somewhat reasonable minds can differ.' Or, in other words, the PTO's factual determinations will be affirmed if somewhat reasonable.

What is a factual determination: It is important to pause for a moment to recognize that a factual determination is quite different from mere evidence. Rather, a factual determination is generally an abstraction based upon the evidence presented.

Here, the PTAB read the evidence (a prior art reference) and made a factual determination that the evidence disclosed the elements of Haase's claims. On appeal, the Federal Circuit looked at that factual determination and found it at least somewhat reasonable (i.e. supported by substantial evidence).



By Jason Rantanen

Lee Petherbridge and I recently completed a draft of our empirical study of Federal Circuit doctrinal uniformity, a topic that ties in nicely with the recent debate over the Federal Circuit's exclusive jurisdiction over in patent cases. The piece is called Disuniformity and is available here.

The central finding of our study is a remarkable downward trend in decisional agreement between Federal Circuit judges over the past several years. Figure 1 from the study shows the degree to which all panel members agreed in precedential opinions in appeals arising from the district courts, presented as a 30-unit lagged average. 

Figure 1
While it is clearly the case that the rate at which these Federal Circuit opinions are unanimous exhibits some variation, the trend line suggests an over 20% drop in the rate at which panels were unanimous in precedential opinions between the end of 2004 and September 2013.

In the full article, available here, we dig deeper into what we think might be going on and offer some suggestions about what this growing trend of doctrinal disuniformity might mean for the debate over the court's exclusive jurisdiction in patent cases.

The article is still in the drafting stage, so any comments and critiques are welcome!

Here's the full abstract:

The Federal Circuit is a response to a failure in judicial administration that produced a fractured, unworkable patent law; one that Congress concluded ill-served entrepreneurship and innovation. The purpose of the response – vesting exclusive jurisdiction for patent appeals in the Federal Circuit – was to permit that court to develop patent law in the direction of greater clarity and uniformity. Both at the time of the Federal Circuit’s creation and more recently, scholars, judges, and practitioners have waged great debates over whether patent law uniformity furthers the ultimate goals of entrepreneurship and innovation. These debates have rested on a largely untested empirical proposition: that the Federal Circuit’s patent law jurisprudence embodies a move towards doctrinal uniformity. This paper reports an empirical study that examines patent law uniformity through the measure of open decisional disagreement between Federal Circuit judges. Its central empirical observation is a remarkable increase in decisional disagreement – indicative of a decline in doctrinal uniformity – among Federal Circuit judges over the past several years. The paper raises and discusses several possible explanations for its surprising observations, including, inter alia, the Supreme Court and personnel changes at the Federal Circuit. It also considers what the observations and explanations might contribute to a current debate over the merits of Congress’s decision to unify patent jurisdiction in the Federal Circuit.

The Landscape of Proposed Patent Law Amendments – A Comparative Look

Guest Post by Professor Jorge L. Contreras

As Dennis Crouch has recently reported here, a plethora of bills has been introduced in Congress this term to address various perceived problems with the patent system and patent litigation in the U.S. The amendments proposed in these bills, and in related administrative and executive proposals, generally seek to address three types of issues: (1) patent enforcement by so-called patent assertion entities (PAEs), (2) unclear or broad claim scope in software and business methods patents, and (3) commitments that patent holders make in the context of standards-essential patents, including FRAND (fair, reasonable and non-discriminatory) licensing commitments.

On November 8, American University Washington College of Law will be hosting a forum to discuss the range of pending legislative and administrative proposals designed to address these issues. In particular, we hope to gain a better understanding of how these proposals could affect current litigation and business practices, whether they will achieve their intended purposes or create unintended effects, who stands to benefit and lose from them, and what the chances are that such changes will be enacted in today's political environment.

In connection with this event, we have produced a non-partisan briefing paper describing each of the proposals made this term in the context of these three areas. Below is a chart that summarizes these proposals, indicating the general area(s) in which each seeks to make modifications to existing law (a detailed discussion of each can be found in the briefing paper):

Summary of Proposed Patent Law Amendments (2013)



Software and Business Methods


Innovation Act (H.R. 3309 – Goodlatte)

Real Party in Interest









Customer Suits


Attorneys' Fees


Patent Litigation Integrity Act (S. 1612 – Hatch)

Attorneys' Fees


SHIELD Act (H.R. 845 – DeFazio/Chaffetz)

Attorneys' Fees


Patent Quality Improvement Act (S. 866 – Schumer)




STOP Act (H.R. 2766 – Issa/Chu)




End Anonymous Patents Act (H.R. 2024 – Deutch)

Real Party in Interest


Patent Abuse Reduction Act (S. 1013 – Cornyn)

Real Party in Interest




Attorneys' Fees



Patent Litigation and Innovation Act (H.R. 2639 – Jeffries)

Real Party in Interest


Customer Suits






White House Fact Sheet (June 4, 2013)

Real Party in Interest


ITC Standards

Demand Letter Disclosure

Functional Claiming


Attorneys' Fees


Customer Suits


ITC Standards



Real Party in Interest: Proposals would require entities asserting patents to disclose ultimate parent companies and other related entities (responding to the common complaint that PAEs often "hide" behind shell companies so that the beneficial owners of patents are not known).

Discovery: Limitations on discovery in patent suits.

Joinder: Permits parties having an interest in patents to be joined into infringement suits.

Customer Suits: Limitations on patent infringement suits against end users of off-the-shelf products alleged to be infringing.

Pleading: Attempts to make pleading in patent infringement suits more specific.

Attorneys' Fees: Proposals to require the losing party to pay the prevailing party's fees in patent litigation.

Sanctions: Proposed sanctions for bringing "abusive" patent litigation.

Demand Letter Disclosure: Proposals to have patent demand letters filed publicly.

ITC Standards: Potential modification of ITC standards for issuing exclusion orders in patent cases, generally to be more consistent with the Supreme Court's ruling in e*Bay v. MercExchange (2006).

CBM: Modifications to the PTO's Transitional Program for Covered Business Method Patents.

Studies: Proposed research studies of particular topics.

Functional Claiming: Attempts to address broad "functional" claiming practice in software and business method patents.

Bankruptcy: Extension of bankruptcy law protections for patent licensees to patents that have been transferred to a third party.


Bits & Bytes from Jonathan Hummel


#1. Paradigm: Intellectual Property as an Asset?

Our friends over at IPKat posted a great article about how the private sector might view intellectual property. The author compares a business centric definition of “asset” to intellectual property and explains why there are “five problems” with calling IP an “asset.”

Some of the “problems” discussed are: “intention” (acquisition v. creation) recognition in accounting books; “valuation” citing the fluctuation in price of the Kodak portfolio; “markets” public/private, primary/secondary, and “identification” whereas registered patents are easily identifiable, trade secrets and some other forms of IP are not so discreetly identifiable.

            -read the article here.

#2. Intellectual Ventures Faces Novel Attack on Business Model

Symantec and Trend Micro are fighting back against Intellectual Ventures. IV is asking for a combined $310 million from the companies for licensing a patent that cost IV $750,000 seven years ago. Symantec and Trend Micro are advancing a novel attack that basically says they shouldn’t have to pay such a large amount of money for a patent bought so “cheaply.” The two companies are asking a federal judge to bar IV from seeking such large licensing fees on the grounds that a patent acquired for so little couldn't possibly be worth so much.

            -read the Reuters article here.

#3. Public Citizen Blog: What’s this Anonymous Firm Hiding?

Scott Michelman at Public Citizen posts about the Company Doe Case. In the fall of 2011, a company calling itself “Company Doe” sued the CPSC to keep a report about one of its products out of the database, and it also sought to litigate its case under seal and without revealing its name. Public Citizen, along with Consumer Federation of America and Consumers Union (the publisher of Consumer Reports), objected to the seal. The consumer groups have appealed the sealing and pseudonymity rulings to the U.S. Court of Appeals for Fourth Circuit.

The case, Company Doe v. Public Citizen, is a first of its kind in several respects. First, it appears to be the first time a federal court has sealed the record in a civil case because of concern about a company’s reputation. Second, it appears to be the first time a court has allowed a company plaintiff to proceed under a fictitious name to protect its reputation.


#4. As Twitter Trots IPO, IBM Claims Infringement

Ingrid Lunden at TechCrunch reports: Twitter recently amended it’s S-1 filing and changed the share price from $17-20 up to $23-25. This increase comes in the midst of Twitter’s investor tour in anticipation of it’s IPO. Last week, I mentioned Twitter’s Puny Patent Portfolio and how that might be seen as a weakness. A spokesman said, “Many companies in these industries, including many of our competitors, have substantially larger patent and intellectual property portfolios than we do, which could make us a target for litigation…”

  • The specific patents in question are:
    • U.S. Patent No. 6,957,224: Efficient retrieval of uniform resource locators;
    • U.S. Patent No. 7,072,849: Method for presenting advertising in an interactive service; and
    • U.S. Patent No. 7,099,862: Programmatic discovery of common contacts.


#5. SpicyIP Leads the Way in the Push for Transparency in Indian Patent Law

Shamnad Basheer, Professor at India’s National University of Juridical Sciences writes for a the newly redesigned site SpicyIP. The website pushes for transparency in Indian IP law.

New this week, a quote from the debut: “The week saw the official unveiling of the new SpicyIP. SpicyIP 2.0 is now a website purely dedicated to covering the latest developments in the Indian intellectual property arena and all things relevant. Apart from the revamped look, we have a host of new features such as IP Polls, IP Petitions, IP Jobs and IP Events.”



Noise Cancellation for your Windows

While noise canceling technology has been around for a years now, it seems new applications are always cropping up. Sonos has a new gadget in development that might make your house quieter than ever. Check out the product here.



Lance Whitney at C|Net reports that Apple has been granted a patent covering technology that monitors your location and then performs automation tasks. It is U.S. Patent No. 8,577,392.



Fordham Law School’s IP Summit: Post AIA – Strategies in Litigation and Patent Prosecution

  • November 18th and 19th, 2013 – New York, NY
  • Keynote Address: Hon. Paul R. Michel, Chief Judge (ret.), U.S. Court of Appeals for the Federal Circuit
  • Approved for 12 hours CLE
  • Website for the event here.


Suffolk University IP conference: Design Patents: Modernizing an Old Property Interest

  • November 22, 2013 – Boston, MA
  • Highlights include:

o      Attorneys involved in Apple & Samsung saga
o      Jong K. Choi of Samsung will moderate
o      Attorneys from the U.S. Patent & Trademark Office will provide an insider’s view of how design patents are handled.
o      Two nationally known experts in design protection, Christopher V. Carani and Perry Saidman, will discuss design protection legal issues.
o      Finally, the special damage provisions for Design Patents will be analyzed by a leading expert on patent damages.


Whittier Law School IP Symposium

  • The Global Medicine Challenge: The Fine Line Between Incentivizing Innovation and Protecting Human Rights
    • The Keynote Speaker will be James Love, director of Knowledge Ecology International, and NGO dealing with issues involving Intellectual Property.
    • This event has been approved for 5.5 hours of CLE
    • View the Program Flyer here.


Essay Contest

Cyberweek Ethical Dilemma Essay Contest 2013

In conjunction with 2013 ABA Mediation Week, the Ethical Dilemma for Cyberweek 2013 concerns a mediation that is conducted online.  Students, let the ABA Section of Dispute Resolution’s Ethics Committee know your thoughts.  The contest is limited to Students 18 years of age or older.  Each participant is asked to submit an online analysis of the mediator’s performance, in 750 words or less, to Cyberweek Ethical Dilemma during Cyberweek, November 4 to November 8, 2013.  Each submission will be read by two members of the Ethics Committee, scored, and the winning submission will receive $100.00 and will be published in an upcoming issue of the Section’s Just Resolutions eNewsletter.  Read the full contest rules. Each participant will receive a certificate of participation upon submission of their analysis. Read the full hypothetical



Patent Associate/Agent (Electrical) – Law Firm – Alexandria, Va.

  • The Alexandria office of Buchanan Ingersoll & Rooney PC has an immediate opening for an Electrical patent associate or agent with a minimum of 2 years of patent experience and a degree in Electrical Engineering or Computer Science.

Patent Attorney or Agent – Law Firm – Flexible Location

  • Guntin & Gust is seeking highly skilled and productive Patent Attorneys or Patent Agents. As part of our team you will be working with a diverse group of clients ranging from sophisticated mid-sized corporations to Fortune 100 companies.
  • We work in the areas of electrical engineering, telecommunications, medical products, RF products, gaming products, nanotechnologies, and other fields.

Summary of Oral Argument in Medtronic v. Boston Scientific by Prof. La Belle

Guest Post by Megan M. La Belle, Assistant Professor at Catholic University of America, Columbus School of Law

Yesterday, the Supreme Court heard oral argument in Medtronic v. Boston Scientific, the first patent case of the term.  The issue before the Court is whether the burden of proof in a declaratory judgment action should be on the patent owner to prove infringement or on the accused infringer to prove noninfringement.  Ordinarily, the patent owner bears the burden of proving infringement, and the declaratory posture of a suit does not shift that burden.  In Medtronic, however, the Federal Circuit created an exception for “MedImmune-type” cases since the patent owner cannot counterclaim for infringement.  “Because the declaratory judgment plaintiff is the only party seeking the aid of the court,” the Federal Circuit reasoned, it should bear the burden of proving noninfringement.

Seth Waxman, on behalf of Medtronic, started his argument with the non-controversial proposition that patent law places the burden of proving infringement on the patent owner.  Mr. Waxman went on to argue that the burden should not shift when the infringement question is raised in a declaratory judgment action –  including MedImmune-type suits – because the Declaratory Judgment Act is merely a procedural device that does not alter substantive rights.  For the most part, the justices appeared to agree with Mr. Waxman.  However, a few questions were raised by Chief Justice Roberts, Justice Kagan, and Justice Kennedy about the fairness of allowing an accused infringer to enter into a license and then turn around and sue the patent owner for declaratory relief.  In the Chief Justice’s words: “The idea is you’re moving along with the license, everybody’s happy.  All of a sudden you jump into court.  Why shouldn’t you have the burden as the party who seeks to disturb the status quo?”

Both Mr. Waxman and Curtis Gannon, arguing on behalf of the government as amicus curiae, addressed these questions of potential unfairness to the patent owner.  They asserted that shifting the burden of proof was not the appropriate way to address the problem.  Mr. Waxman suggested, instead, that patent owners could take certain steps to protect themselves, for instance by including specific contractual provisions in the license that contemplate a declaratory judgment action by the licensee.  Mr. Waxman proposed a number of possible license provisions, including one that would increase the royalty rate if the accused infringer brings a declaratory judgment action, or a provision that makes the filing of a declaratory judgment action a breach of the license agreement.  Mr. Gannon agreed with Mr. Waxman, and made one additional point.  He said this problem of potential unfairness to the patent owner – assuming it is a problem – should be addressed by estoppel, not by shifting the burden of proof:

But even if there were some concern about the licensee turning around and challenging the agreement that it had previously made, it seems like the problem there is either that they should be estopped by what they already said in the agreement or Lear [v. Adkins] needs to be extended to keep them from being estopped in that way.  But shifting the burden of proof seems like an odd way to get at solving whatever the quandary there might be.       

The looming question since MedImmune is whether Lear allows patent owners to “license around” this problem as suggested, or whether such provisions undermine Lear’s policy of encouraging patent challenges.  Unfortunately, Medtronic is unlikely to answer that question, so licensing parties will to continue to wonder if these types of provisions are in fact valid and enforceable.

            Arguing on behalf of the patent owner, Mirowski Family Ventures, Arthur Neustadt defended the Federal Circuit’s decision in Medtronic.  Mr. Neustadt contended that the Federal Circuit correctly applied the “default rule,” which allocates the burden of proof to the party seeking relief.  Because Medtronic was the only party seeking relief in this case, Mr. Neustadt reasoned, it should bear the burden of proving noninfringement.  Justice Scalia began the questioning by stating that this default rule generally doesn’t apply to declaratory judgment actions.  So, Justice Scalia asked, “[w]hat’s different here?”  Mr. Neustadt responded that this case is different because the patent owner could not assert a counterclaim for infringement due to the license.  Justice Scalia was not persuaded by that argument because, as he explained, defendants in declaratory judgment actions often cannot counterclaim:

The whole purpose of the declaratory judgment statute is to enable you to sue before the other side has a cause of action against you.  That’s the whole purpose of it.  So – so why should the fact that the other side doesn’t have a counterclaim change anything?  That’s usually the situation.

Following up on this line of questioning, Justice Ginsburg asked whether Mr. Neustadt was saying that the burden of proof should shift in every declaratory judgment action where only one party is seeking relief.  Mr. Neustadt confirmed that that was his position; in his view, the burden shifting rule established in Medtronic should not be limited to patent cases.  This question of how far the Medtronic rule might extend is also explored in an essay I recently published.

            Throughout his argument, Mr. Neustadt made the point that this isn’t a dispute about infringement, it’s a dispute about claim coverage under the license agreement.  In other words, because there’s a license in place, Medtronic cannot be infringing the patent.  The justices seemed to think this was a distinction without a difference, however.  At one point Justice Breyer said: “[Y]ou want to call that a claim coverage.  I would call it no infringement.  Call it what you wish.”  Later in the argument, Justice Kagan disagreed with Mr. Neustadt’s characterization more directly: “You keep on saying it’s a question of claim coverage, but the question of claim coverage, all that is, is part of an infringement analysis.”  

            One issue the Court did not ask many questions about at oral argument was subject matter jurisdiction.  While subject matter jurisdiction was not raised by the parties, an amicus brief filed by Tessera Technologies argued that the case does not arise under the patent laws because it’s really a contractual royalty dispute, not a dispute about patent infringement.  Tessera relied heavily on the Supreme Court’s recent decision in Gunn v. Minton, which concerned the question of jurisdiction over patent malpractice actions.  Yet, at yesterday’s argument, the only question raised on the topic was by Justice Ginsburg who asked the government for its views on subject matter jurisdiction.    Mr. Gannon stated that the government believes this case arises under the patent laws.  He explained that, in declaratory judgment actions, subject matter jurisdiction is determined by considering what claims would be asserted in the hypothetical coercive action brought against Medtronic.  In other words, if Medtronic were to stop paying royalties and breach its license agreement, the patent owner would sue not only for breach of contract, but for patent infringement as well.   Although the Court did not devote much time to subject matter jurisdiction, the issue was discussed at some length at a post-argument discussion hosted yesterday afternoon by the American University Washington College of Law.  It will be interesting to see to what extent the Court addresses this jurisdictional question in its final decision.

A copy of the full transcript is available here.

The Court is expected to issue its decision before the end of June 2014. 


Exhausting Method Claims

By Dennis Crouch

LifeScan v. Shasta Tech (Fed. Cir. 2013)

The doctrine of patent exhaustion is something of a mess following the Supreme Court case of Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008). Here, the Federal Circuit relies on Quanta to find that a patented method of using a blood-glucose meter and test strips was exhausted (and therefore unenforceable) when the meters being used were received as gifts from the patentee. The case is an interesting and important read for patent strategists. Although the patentee lost here, the case implies several strategies that future patentees can use to avoid a similar outcome.

LifeScan’s business model is interesting. It essentially gives-away its OneTouch blood-glucose meters but then makes money by selling the disposable test strips required to perform the test. The company’s patent covers the combined use of the meter and the strips to measure glucose levels. U.S. Patent No. 7,250,105. Shasta sells knock-off versions of the lifeScan strips designed to be used in LifeScan OneTouch meters. LifeScan tried, but it was unable to obtain a patent on the strips themselves because of extensive prior art in the area.

Although Shasta does not actually perform the patented method, it does sell a product particularly designed to perform that method and also encourages its customers to perform the method. Thus, in 2011, LifeScan sued Shasta for inducing infringement and contributory infringement under 35 U.S.C. § 271(b) and (c). LifeScan also requested a preliminary injunction that was granted by N.D. California District Court Judge Edward Davila. The law of appellate procedure allows for immediate appeal of preliminary injunction decisions, leading to the present decision.

On appeal, the Federal Circuit reversed the preliminary injunction – finding that Shasta’s use of the patented method was excused under the principles of patent exhaustion.

A patent offers exclusive rights to control the sale of goods covered by the patent. However, long ago, courts determined that a patent right should not confer power to control the entire downstream marketplace for goods. The non-statutory patent exhaustion doctrine achieves this goal by finding patent rights are exhausted or used-up vis-à-vis a particular patented good once the patentee authorizes its original sale or release into the marketplace. This concept is codified in copyright law under 17 U.S.C. § 109 that states “the owner of a particular copy … lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.”

Exhausting a patented method: In at least two different cases, the Supreme Court has applied the exhaustion doctrine to method-of-use claims. United States v. Univis Lens Co., 316 U.S. 241 (1942) and Quanta. Method claims are an odd-fit to the doctrine since the underlying product being sold will not necessarily be used to perform the method and may have been purchased for some other purpose. In Univis, the court wrote that the sale of an article that “embodies essential features” of a patented invention exhausted the patent-holder’s rights in that particular article. Then, in Quanta, the court particularly stated that “method patents [are] exhausted by the sale of an item that embodied the method” and confirmed the “embodies essential features” test from Univis. In particular, the Quanta court noted an important factor for determining “substantial embodiment” of the patent is whether additional “inventive” steps are required and the scope of reasonable noninfringing uses. In Quanta, additional physical hardware was required to make Intel’s chipsets into a workable system, but the court held that the chipsets exhausted LG’s patent covering a method of using the system since the “additional step necessary to practice the patent[s was] the application of common processes or the addition of standard parts.”

Here, the appellate panel found that LifeScan’s meter substantially embodies the essential features of the method-of-use patent. It turns out that this is seemingly a quite easy case because there are no “reasonable and intended” non-infringing uses of the meter. Using a clever argument, LifeScan proposed that the method-of-use claim included inventive features separate and apart from the meter’s function. However, the appellate panel rejected that argument based upon its reading of the patent and prior art – finding that the inventive “key” to the patent was the meter’s inherent comparing function. Here, the majority appeared comfortable following Supreme Court principles in this area that suggest deconstructing the patented claim into its points of novelty or inventiveness.

From a policy perspective, the court wrote that this is also the right decision:

Rejecting a claim of exhaustion in this case would be particularly problematic because LifeScan would be permitted to eliminate competition in the sale of the strips even though the strips do not embody the claimed invention and are themselves not patentable.

Killing a business model: LifeScan finally argued that exhaustion should not apply because it gives-away its meters for free and thus receives no “reward” for its patent. As a matter of first-impression for the Federal Circuit, the court held that “in the case of an authorized and unconditional transfer of title, the absence of consideration is no barrier to the application of patent exhaustion principles.” For this result, the court looked back to 17th century English Common Law principles regarding restraints on the alienation of chattels as part of a whole-interest transfer– finding that such restraints were (and are) typically barred regardless of whether the transfer was by gift or by sale. See also UMG Recordings, Inc. v. Augusto, 628 F.3d 1175 (9th Cir. 2011)(copyright).

The majority was penned by Judge Dyk who was joined by Judge Prost.

Writing in Dissent, Judge Reyna argued that essential features of the patented method were embodied by the test strips and that, as a result, sale of the meter cannot exhaust the patented method.

= = = = =

Linking Exhaustion and Inducement: A commonly stated patent law linking principle is “That which infringes if later, anticipates if earlier.” Peters v. Active Manufacturing Co., 129 U.S. 530 (1889). Emerging from this case and Quanta appears to be another parallel – this time linking infringement and exhaustion. The principle could generally be stated that a patentees transfer actions exhaust a patent if those same actions, when done by another, would constitute infringement. Emerging from Quanta and LifeScan is the recognition that the principle applies even when the underlying claim is inducement and contributory infringement.

Federal Circuit to PTO: Apply KSRs Broad Basic Mandate

Randall MFG v. Rea (Fed. Cir. 2013) (Inter Partes Reexamination No. 95/000,326)

FG Products owns U.S. patent No. 7,214,017 that is directed to a moveable bulkhead for partitioning cargo space in a shipping container. Back in 2007, Randall requested inter partes reexamination of the '017 patent. The reexamination examiner found the claims as obvious based upon a combination of three prior art references. However, in a 2012 decision, the USPTO's Board reversed – finding that someone of skill in the art "would not reasonably have appreciated" that the prior art could be combined in the manner suggested. Now on appeal, the Federal Circuit has vacated the Board Decision – finding that the Board's approach failed because it narrowly focused on the four cited prior art references while ignoring other factual evidence presented. In essence, the Federal Circuit is demanding that the flexible analysis of KSR be applied by the USPTO.

In KSR, the Supreme Court criticized a rigid approach to determining obviousness based on the disclosures of individual prior-art references, with little recourse to the knowledge, creativity, and common sense that an ordinarily skilled artisan would have brought to bear when considering combinations or modifications. Rejecting a blinkered focus on individual documents, the Court required an analysis that reads the prior art in context, taking account of "demands known to the design community," "the background knowledge possessed by a person having ordinary skill in the art," and "the inferences and creative steps that a person of ordinary skill in the art would employ." KSR. . . .

The Board's analysis in this case ran afoul of that basic mandate. By narrowly focusing on the four prior-art references cited by the Examiner and ignoring the additional record evidence Randall cited to demonstrate the knowledge and perspective of one of ordinary skill in the art, the Board failed to account for critical background information that could easily explain why an ordinarily skilled artisan would have been motivated to combine or modify the cited references to arrive at the claimed inventions. As KSR established, the knowledge of such an artisan is part of the store of public knowledge that must be consulted when considering whether a claimed invention would have been obvious. . . .

The Board's failure to consider that evidence—its failure to consider the knowledge of one of skill in the art appropriately—was plainly prejudicial. Once it is established that a prevalent, perhaps even predominant, method of stowing a bulkhead panel was to raise it to the ceiling, it is hard to see why one of skill in the art would not have thought to modify Aquino to include this feature—doing so would allow the designer to achieve the other advantages of the Aquino assembly while using a stowage strategy that was very familiar in the industry. Moreover, although FG claims that, as depicted, the panels of Aquino may have been impeded by the rails from being raised all the way to the ceiling, there is no dispute that it would have been well within the capabilities of an ordinary bulkhead designer to adjust the geometry ( e.g., drop the hinge axis down a few inches) so that the panels could be freely raised to the ceiling. There are no apparent functional concerns that would have discouraged a bulkhead designer of ordinary skill from attempting the combination.

Particularly when viewed in the context of the background references Randall provided, the evidence strongly supports the notion that the bulkhead design FG claimed was nothing more than the "combination of familiar elements according to known methods,"" 'each performing the same function it had been known to perform,' " "yield[ing] predictable results." KSR (quoting Sakraida v. Ag Pro, Inc., 425 U.S. 273, (1976)). In addition, neither FG nor the Board points to any objective indicia of non-obviousness. On this record, the Board's finding of lack of motivation to combine is infected by prejudicial error. We accordingly vacate the Board's reversal of the Examiner's rejection.

Based upon Judge Taranto's writing here, it is unclear why he chose to vacate the Board holding rather than reverse as the Supreme Court did in KSR. Joining Judge Taranto on the panel were Judges Dyk and Rader.

In the context of the hallmark obviousness case of Graham v. John Deere, 383 U.S. 1 (1966), this case should probably be seen as placing focus on "the level of ordinary skill in the pertinent art" and a mechanism for evidencing the type of creativity

One interesting issue that I'll write on more later is that the Federal Circuit did not address the issue of standing – i.e., whether there is a sufficiently ripe case-or-controversy between the parties to comply with that Constitutional requirement.