March 2016

Federal Circuit Confirms: USITC has no Jurisdiction over Purely Electronic Products

Patent

ClearCorrect v. Align (Fed. Cir. 2016)

In its panel opinion, the Federal Circuit held that the USITC jurisdiction over the importation of “articles that infringe” does not extend to the “electronic transmission of digital data”. Rather, Section 337 of the Tariff Act is limited to “material things” as used in common parlance (i.e., beyond an “electron’s invariant mass” that may be associated with a digital transmission). See Dennis Crouch, Federal Circuit Bites Back against USITC Expansion into Electronic Importation, Patently-O (November 10, 2015).  That original panel included Chief Judge Prost who wrote the majority opinion along with Judge O’Malley who also issued a concurring opinion and Judge Newman in dissent.

Following that decision, both the ITC and the patentee (Align) petitioned for en banc rehearing with the following questions:

ITC: Must the term “articles” … be limited to physical products, such that section 337 can be evaded by a respondent that 3D prints products in the United States using imported datasets representing those products

Align: Whether the U.S. International Trade Commission has jurisdiction under 19 U.S.C. § 1337 over the importation or sale of digital articles.

In addition to the statutory language, the briefs particularly focus on two cases: Nat’l R.R. Passenger Corp. v. Boston & Me. Corp., 503 U.S. 407 (1992) (on statutory interpretation), and Suprema, Inc. v. ITC, 796 F.3d 1338 (Fed. Cir. 2015) (en banc) (ITC has power to stop infringing imports if those imports are going to be used to induce infringement of a patent method of use).

With an order issued today, however, the Court has denied the en banc petition. The vote appears to be 11-1.

Judge Newman dissented from the en banc denial:

The court now holds that the word “article” in Section 337 of the Tariff Act cannot include digital goods, although “article” is the general term used throughout judicial and agency rulings for goods in trade, including digital goods. Digital goods are included in the tariff laws; they are imported, bought, and sold; they are subject to the patent laws, and have been the subject of many infringement suits. Infringement does not depend on whether the digital goods are carried on a hard substrate, or electronically.

Section 337 does not depend on the mode of importation; it depends on whether the imported goods infringe a patent or copyright or trademark or design. The amici curiae point out the consequences of the court’s change of law, for infringing imports of books, motion pictures, and other products subject to transmission in digital form. The disruption that this ruling is already causing warrants en banc attention.

The dissent also includes an interesting footnote listing thirty definitions of the term “article” — suggesting that the definition is not so clear.

Chief Judge Prost also drafted an opinion joined by Judges O’Malley and Wallach to “address certain points newly raised by the dissent.”  The basic point is that it is Congress’s failure to “bridge the gap between the non-digital world and the digital world.” As such, the solution should come from Congress as well.

Addressing the thirty definitions, Chief Judge Prost argues that “only a handful” of the definitions support the dissent’s approach.

[Denial of the petition]

Cuozzo v. Lee: The Problem of Standing

Patent, , , ,

The AIA-Trial claim construction issue is important and many of us would like to see the Supreme Court address it in Cuozzo. However, there is one legal matter that has been an elephant-in-the-room since the Cuozzo appeals began several years ago: Standing.

As a general matter, parties do not have standing to raise issues on appeal that have no impact on the underlying dispute.  Likewise, a court has no jurisdiction over issues when the parties have no standing. An important feature of standing is that it is generally non-waivable.  Rather, a court must dismiss a case when one or more parties lack standing — even if (as here) neither party raise the issue.

The standard theory of claim construction is that the USPTO’s “Broadest Reasonable Construction” is broader than the standard Phillips construction used by courts in infringement litigation.  The theory behind this change in standard is that it allows the PTO to serve a gatekeeping role to better in sure that issued patents are valid patents. The particular oddity of the underlying case is that Cuozzo is asking for the Phillips standard to be applied in order to receive a broader claim construction of the term “Integrally Attached.”   Here, on its way to finding the disputed claims obvious, the PTAB construed the term in a way that excluded a described embodiment of the invention and Cuozzo has argued that the proper construction includes that embodiment.  To be clear here, a more broadly construed claim would encompass more prior art and thus are more likely to be invalid as obvious.  Although not strictly impossible, it would indeed be a rare case where the narrower claim is obvious while the broader is nonobvious.  [edited this] Point here is that if Cuozzo gets what it wants from this question on appeal (a broader claim scope), it is no closer to overturning the decision that the claim is obvious – in fact, Cuozzo will be further from that goal.

Although only spending a few pages on the issue, the newly filed Public Knowledge amicus brief roughly outlines case:

[I]n this case, Cuozzo’s patent received a narrow interpretation, and Cuozzo seeks to have the patent read to encompass more subject matter, not less. In other words, Cuozzo is asking for a narrower claim construction standard in order to obtain a broader claim construction. . . . This backwards fact pattern is not just puzzling; it potentially means that Cuozzo has no standing to raise the question, such that this Court lacks jurisdiction over the case.”

[Read the Brief: CuozzoPKAmicus.]

Cuozzo is not run by idiots. Rather, Cuozzo appears to be taking a broader strategy — it wants the term broadly construed in this case so that it will help the enforcement of parallel claims in other cases.  PK explains again:

Why, then, does Cuozzo pursue this case? It cannot be to alter the outcome of the inter partes review, as the district court standard will leave Cuozzo’s patent claims equally invalid—a broader reading of a claim cannot be valid when a narrower one is invalid for obviousness. Instead, the record reveals that Cuozzo seeks a broader claim construction in order to facilitate its infringement arguments in unrelated litigation—a manipulative attempt to commandeer inter partes review to ends
external to the proceeding.

Apart from PK’s snide “manipulative” remark, I am on-board with this analysis.

At this point, it may make the most sense for the Supreme Court to dismiss the claim construction issue as improvidently granted but retain question two regarding the appeal of institution decisions.

 

 

PTO Brief – Looking for Supreme Support for its AIA Trial Regime

Patent, , ,

Oral arguments in Cuozzo v. Lee are set for April 25, 2016 addressing two particular questions:

  1. Whether the PTO may require that, during an inter partes review, the claims in a patent will be given the “broadest reasonable construction” consistent with the patent’s specification [as opposed to the standard construction for issued patents].
  2. Whether a party may seek to overturn the PTO’s final decision in an inter partes review based on an alleged error in the PTO’s threshold decision to institute the review, which Congress provided “shall be final and nonappealable,” 35 U.S.C. 314(d).

The briefs are available now on ScotusBlog.

The U.S. Government has also filed its responsive merits brief.  The brief appears to be a joint effort of the Solicitor General (DOJ) and the USPTO and does a solid job of justifying its positions:

On BRI:

  1. Historical: The PTO has “long applied the broadest reasonable-construction standard in all agency proceedings in which patent claims may still be amended.”
  2. Statutory: Here, although claim amendments have allowed in only exceedingly rare cases, the IPR statute does suggest that amendments are possible.  (Of course, once the motion to amend is denied, then claims cannot ‘still be amended.’
  3. Deference: The USPTO was given rulemaking authority in this area (AIA procedures) and the BRI standard is a exercise of that delegated authority.  (It is unclear what happens if the court would find this ‘substantive’ rather than ‘procedural’ and what level of deference should apply in either case).

On Appeal of Decision to Institute:

  1. Statutory: “The statute bars all judicial review, not just interlocutory appeals, of the PTO’s decision whether to institute an inter partes review.”  Rather, judicial review is limited to the Agency’s final decision on patentability.
  2. Policy: The no-review approach fits the AIA-Trial purpose of being “an efficient non-judicial alternative for testing the patentability of issued claims.”

The PTO is looking for a strong decision in this case to effectively shut-down the myriad challenges it is currently facing.

 

Federal Circuit: No Opinion Serves as the Basis for Our Opinion

Patent, , , , , ,

By Dennis Crouch

Chicago Board of Options Exchange v. International Securities Exchange (Fed. Cir. March 25, 2016)[1] and International Securities Exchange v. Chicago Board of Options Exchange (Fed. Cir. March 25, 2016) (Appeal No. 2015-1743)[2]

These appeals involve three CBOE patents directed to automated trading exchange systems. All three patents (all claims) were challenged in covered business method reviews and found by the PTAB to be ineligible under Section 101 (abstract ideas).  In addition, two of the same patents (a subset of claims) were challenged in inter partes review proceedings, but in those cases the PTAB sided with the patentee and found the ISE had failed to prove invalidity (either obvious or anticipated).

The CBOE appealed the 101 invalidations, and ISE separately appealed the inter partes review denials.  In an odd set of judgments, the Federal Circuit affirmed the PTAB 101 rejections in a Rule 36 Judgment (no opinion issued).  At the same time, the Federal Circuit also dismissed the IPR appeal as moot. However, in this second case the court did issue an opinion to explain the mootness following from the original no-opinion judgment. The court writes:

In this appeal, International Securities Exchange, LLC (“ISE”) challenges the determination of the Patent Trial and Appeal Board (the “Board”) in inter partes review proceedings involving U.S. Patent Nos. 7,356,498 (“the ’498 patent”) (IPR2014-00097) and 7,980,457 (“the ’457 patent”) (IPR2014-00098). The Board found that ISE failed to show by a preponderance of the evidence that the challenged claims of the ’498 and ’457 patents are unpatentable as either anticipated, obvious, or both, under 35 U.S.C. § 102(e) and 35 U.S.C. § 103(a). In light of our decision in Chicago Bd. Options Exch., Inc. v. Int’l Secs. Exch., Case Nos. 2015-1728, -1729, and -1730, issued contemporaneously herewith, affirming the Board’s conclusion that both patents address unpatentable subject matter under 35 U.S.C. § 101, we find this companion case moot. We dismiss the appeal and vacate the Board’s decisions.

The Federal Circuit’s use of R.36 No Judgement opinions is on the rise even while wringing its hands over the USPTO’s failure to explain its judgments to institute AIA trials.[3]

= = = = = =

[1] Appeal Nos. 2015-1728, 2015-1729, and 2015-1730. These cases are on appeal from three Covered Business Method Post Grant Review Proceedings. CBM2013-00049 (Pat. No. 7,356,498), CBM2013-00050 (Pat. No. 7,980,457), and CBM2013-00051 (Pat. No. 8,266,044).

[2] Appeal Nos. 2015-1743 and 2015-1744.  These cases are on appeal from two inter partes review proceedings. IPR2014-00097, IPR2014-00098.

[3] See, Dennis Crouch, Federal Circuit: Our Muscles are Not Working, Patently-O (March 23, 2016)

AIA Challenges Pile On, but the Federal Circuit Deflects

Patent, ,

By Dennis Crouch

As I write about this case, I should first note Trading Technologies (TT) is a former client of mine while I was in practice at the MBHB firm (2001-2007).  I was the person who actually signed the complaint against CQG noted below.  TT gave me permission to write on the case, but did not review this post.

TT makes and sells software systems used by stock-market-exchange traders.  TT’s U.S. Patent No. 6,766,304 covers a graphical user interface (GUI) tool that served as the launching point for the company’s software and its design helps traders trade more quickly and more accurately – features demanded by folks in this hyper-industry.  The speed and accuracy improvements come from changes in how the software displays market price changes and how it responds to various user actions (usually ‘clicks’). The patent has been asserted against a number of competitors and has been repeatedly been found valid (or not invalid) on various grounds, including patent eligibility. That seemingly ended with the PTAB decision to grant a petition for Covered Business Method (CBM/PGR) Review of the ‘304 patent. (CBM2015-00161).

TT filed an emergency mandamus action asking the Federal Circuit to reject the institution decision as overstepping the limits on CBM review proceedings.  In response, the court provided a one paragraph denial:

Trading Technologies now seeks a writ of mandamus directing the Board to vacate its institution decision and terminate proceedings. Having considered the papers, we deny the petition without prejudice to Trading Technologies raising its arguments on appeal after the Board issues its final written decision. See Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1323 (Fed. Cir. 2015) (holding that this court has authority to address whether patent is a covered business method patent on appeal after issuance of final written decision).

Although it is not entirely clear, the point here appears to be that the Federal Circuit claims no authority to address whether a patent is a covered business method patent until a final written decision is issued.  This decision here by Judge Moore should likely be linked to the recently decided Shaw Industries case as well.

Under the statute, “the term ‘covered business method patent’ means a patent that claims a method or corresponding apparatus for “performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”  AIA Section 18. TT has argued that its GUI tool is neither a “data processing method” or “other operation” as designated by the statute – and that a district court had previously held that the patent claims a specific technological GUI tool. See Trading Techs. Int’l v. CQG, Inc., No. 05-cv- 4811, 2015 WL 774655 (N.D. Ill. Feb. 24, 2015).

Mag Aerospace v. B/E Aerospace: Assignor Estoppel

Patent

By Jason Rantanen

Mag Aerospace Industries, Inc. v. B/E Aerospace, Inc. (Fed. Cir. 2016)  Download Opinion
Panel: Prost (author), Mayer, Reyna

This case involves an advanced patent–but ancient property–law concept: assignor estoppel.  The basic idea is that when an inventor or patent owner assigns a patent to another party, the original owner cannot challenge the validity of that patent.  In Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988), the Federal Circuit explained the rationale for the doctrine: “Courts that have expressed the estoppel doctrine in terms of unfairness and injustice have reasoned that an assignor should not be permitted to sell something and later to assert that what was sold is worthless, all to the detriment of the assignee.” 

Here, the accused infringer (B/E) was not itself a former owner of the patents-in-suit, but had hired the original inventor after that inventor had assigned the patents to a third party (who subsequently assigned them to plaintiff Mag Aerospace).  Thus, the question for determining whether assignor estoppel applied to bar B/E from challenging the validity of the patents was whether B/E should be placed in the same shoes as the inventor–a question that boils down to the issue of privity. “Privity, like the doctrine of assignor estoppel itself, is  determined upon a balance of the equities.” Slip Op. at 10, quoting Shamrock Techs., Inc. v. Med. Sterilization, Inc., 903 F.2d 789, 793 (Fed. Cir. 1990).  In determining whether B/E was in privity with the inventor, the district court considered an array of factors from Shamrock:

  1. the assignor’s leadership role at the new employer;
  2. the assignor’s ownership stake in the defendant company;
  3. whether the defendant company changed course from manufacturing
    non-infringing goods to infringing activity after the inventor was hired;
  4. the assignor’s role in the infringing activities;
  5. whether the inventor was hired to start the infringing operations;
  6. whether the decision to manufacture the infringing product was made partly by the inventor;
  7. whether the defendant company began manufacturing the accused product shortly after  hiring the assignor; and
  8. whether the inventor was in charge of the infringing operation.

On review, the Federal Circuit concluded that the district court did not abuse its discretion in concluding that assign estoppel applied.  In reaching this conclusion, the court rejected B/E’s argument that it hired the employee specifically to avoid infringement.  Instead, the court focused on the fact that B/E used his knowledge “to conduct the activities that are now alleged to be infringing.”  The court thus focused the inquiry on the initiation the acts themselves as opposed to some sort of intent to infringe the patent.

Although it lost on the issue of assignor estoppel, and thus could not challenge the validity of the patents-in-suit, B/E nonetheless prevailed as the Federal Circuit also affirmed the district court’s grant of summary judgment of noninfringement.

Federal Circuit: Our Muscles Are Not Working :{}

Patent, , , ,

by Dennis Crouch

Shaw Industries v Automated Creel Systems[1] involves several interesting issues involving inter partes review proceedings.

One Year Filing Bar: The first involves the one-year deadline for inter partes review petitions following the service of a complaint to the future-petitioner.[2]  “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

Here, the patentee ACS had filed an infringement lawsuit and served Shaw more than one year before the IPR filing.  However, the parties voluntarily dismissed the lawsuit without prejudice in a joint filing.  In considering the issue, the Board determined that the voluntary dismissal “nullifie[d] the effect of the alleged service of the complaint on Petitioner.” As such, the Board was free to institute the inter partes review proceeding.

On appeal the Federal Circuit followed its prior ruling Achates[3] that the appellate court lacks jurisdiction to the Board’s decision on whether the time-bar of Section 315 applies.  The panel[4] did not support the PTO’s decision and noted that the Supreme Court’s decision in Cuozzo[5] “may affect this court’s holding regarding the reviewability of the decision to institute in Achates.”

As an aside, a petition for writ of certiorari had been filed in Achates, that case, however, has settled. We’ll see if ACS takes the case up here.

The Non-Doctrine of Redundancy: The second issue involves the PTAB’s non-doctrine of redundancy.  Shaw filed two IPR petitions and in each petition the Board implemented the IPR on one ground for each claim, but declined to implement IPR on the additional grounds because they were ‘redundant’ without further explanation of that redundancy. The redundant arguments included anticipation grounds found redundant to obviousness grounds. Oddly, the PTO has stated repeatedly in the case that “there is no redundancy doctrine.”

In the appeal, the Federal Circuit again stated that it has no authority to review the Board’s decision to institute an IPR.

In the case, Judge Reyna joined the court’s opinion but also penned a judgment “concurring specially” to reflect his “deep[] concern[] about the broader impact that the Redundancy Doctrine may have on the integrity of the patent system.”  Here, the doctrine’s existence is expressly denied by those applying it. The PTO argues that it need not explain what’s happening because “the Director has complete discretion to deny institution . . . and [does] not even have to state in our institution decisions why were choosing not to go forward.”[6] Judge Reyna responds:

The PTO’s claim to unchecked discretionary authority is unprecedented. It bases this claim on the statute that makes institution or denial of inter partes review “final and nonappealable.” See 35 U.S.C. § 314(a), (d). Regardless of appealability, administrative discretion is not and never can be “complete” because it is always bounded by the requirement that an agency act within the law and not violate constitutional safeguards. See 35 U.S.C. § 2(b)(2) (PTO “may establish regulations, not inconsistent with law”). There is good reason for this. “Expert discretion is the lifeblood of the administrative process, but unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167 (1962) (internal quotation marks omitted).

Indeed, regardless of whether the Board’s institution decisions can be appealed, the Board cannot create a black box decisionmaking process. Conclusory statements are antithetical to the requirements of the Administrative Procedures Act (“APA”), which the PTO and its Board are subject to. 35 U.S.C. § 2(b)(2)(B); see also Dickinson v. Zurko, 527 U.S. 150, 154 (1999). The APA requires “reasoned decisionmaking” for both agency rulemaking and adjudications because it “promotes sound results, and unreasoned decisionmaking the opposite.” Allentown Mack Sales & Serv., Inc. v. N.L.R.B., 522 U.S. 359, 374– 75 (1998) (citation omitted). The APA requires that Board decisions evince both its authority to render the decision and a reasoned basis for rendering that decision. Id. at 372 (“Not only must an agency’s decreed result be within the scope of its lawful authority, but the process by which it reaches that result must be logical and rational.”). The problem here is not that the Board’s reasoning is illogical or irrational; the problem is that there is no reasoning at all.

Judge Reyna pushes further by highlighting the impact of the PTO’s non-decision on the eventual estoppel issues. The PTO suggested in the case that estoppel would not attach to the non-instituted redundant grounds since they were not instituted, but that argument makes little sense to me.[7]   And, as Judge Reyna points out, “[w]hether estoppel applies, however, is not for the Board or the PTO to decide. . . . These tribunals should not have to parse cryptic statements or search out uncited [and denied] doctrines to make this determination.”

= = = = =

Notes

[1] Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., Appeal No. 2015-1116 (Fed. Cir. March 23, 2016), on appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. IPR2013-00132, IPR2013-00584 challenging validity of U.S. Patent No. 7,806,360.

[2] 35 U.S.C. §  315(b).

[3] Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015).

[4] Opinion authored by Judge Moore and joined by Judges Reyna and Wallach.

[5] Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 890 (2016).

[6] Quoting PTO brief and oral arguments.

[7] The PTO’s argument does have some logical merit. The statute creates estoppel for arguments “raised or reasonably could have [been] raised during that inter partes review.”  Although the denied arguments were actually raised, there were raised during the institution proceeding and not the actual review.  And, since the PTO denied institution on those grounds, the party was then prohibited from raising those grounds during the review itself.

Lexmark: Can Patent Rights Overwhelm Traditional Notions of Title?

Patent

Impression Products, Inc. v. Lexmark Int’l, Inc. (Supreme Court 2016)

I see the dispute between Impression and Lexmark as more of a property law issue than one focusing on patent law.  Of course, the Federal Circuit sees it differently.  In its en banc opinion, the Federal Circuit reaffirmed (1) that a seller can use its patent rights to block both downstream resale and downstream reuse of a product (here used printer ink cartridges) and (2) that sales of a product abroad presumptively do not exhaust the US patent rights associated with that product, even when the US patent holder expressly authorizes those foreign sales.  Both of these holdings turn on the fact that the goods in question are covered by patent rights.  For unpatented goods, these covenants and restrictions generally do not bind subsequent bona fide purchasers.

Impression raises the following questions in its newly filed petition for writ of certiorari:

1. Whether a “conditional sale” that transfers title to the patented item while specifying post-sale restrictions on the article’s use or resale avoids application of the patent exhaustion doctrine and therefore permits the enforcement of such post-sale restrictions through the patent law’s infringement remedy.
2. Whether, in light of this Court’s holding in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1363 (2013), that the common law doctrine barring restraints on alienation that is the basis of exhaustion doctrine “makes no geographical distinctions,” a sale of a patented article—authorized by the U.S. patentee—that takes place outside of the United States exhausts the U.S. patent rights in that article.

I see the Federal Circuit’s decision as dangerous in the way that it undercuts the notion of ownership and transfer-of-title.  Restrictions on use and resale of goods have traditionally been unenforceable against downstream owners as a mechanism for facilitating a robust market economy.

Documents

Sequenom: A great discovery should be worth something!

Patent

Sequenom v. Ariosa (on petition for writ of certiorari 2016)

Sequenom’s petition for writ of certiorari argues that the Federal Circuit and the lower courts have “dangerously overextended Mayo” and its bar to patent eligibility and that clarification is needed from the U.S. Supreme Court.   The science at issue is fascinating and stems from the problem of running dangerous fetal DNA tests.  The discovery here was that fetal DNA can be found floating around the blood of the pregnant mother and that the fetal DNA can be selectively amplified by focusing on the paternally inherited portion of its DNA (rather than the maternally inherited).  Sequenom’s patent claims two simple steps: (1) amplifying paternally inherited DNA from a plasma sample taken from a pregnant female and then (2) detecting the presence of the DNA.  Of course, the technology for these two steps was already known in the art at the time of the invention, and these two steps were (and are) the fundamental steps generally used to detect particular DNA molecules.  The Federal Circuit found these claims unpatentable under Mayo v. Prometheus because they effectively claim the unpatentable natural phenomenon: the existence of paternally-inherited cell-free fetal DNA (cffDNA) in the maternal bloodstream.

The petition for writ of certiorari asks the patent eligibility, but does so in a way that attempts to also lead the court to the answer:

Whether a novel method is patent-eligible where: (1) a researcher is the first to discover a natural phenomenon; (2) that unique knowledge motivates him to apply a new combination of known techniques to that discovery; and (3) he thereby achieves a previously impossible result without preempting other uses of the discovery?

The brief here does a good job of attempting to set-up some dividing lines for the Court – if it wishes to draw them.  The petition will have strong support from industry as well as many in academia.  However, it is unclear whether a ‘win’ here for the patentee would translate to support those seeking to patent software inventions.

[SequenomCertPetition]

Patentlyo Bits and Bytes by Anthony McCain

Patent

Get a Job doing Patent Law                  

Supreme Court Grants Cert on Design Patent Damages

Patent,

By Jason Rantanen

This morning, the Supreme Court granted certiorari on the design patent remedies question in Samsung Electronics Co. v. Apple Inc.  It did not grant certiorari on the functionality/ornamentality question raised in Samsung’s petition.

The question presented is:

2. Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?

Prior PatentlyO discussion available here.  Tom Cotter also has an extensive discussion of this case on his Comparative Patent Remedies blog.

This case is particularly interesting to me, as this afternoon I’m giving a talk at the Washington & Lee School of Law on a current work in progress on the Takings Clause and changes to substantive patent law.  I’ll be touching on the design patent remedies issue as an area of potential tension–regardless of how this decision turns out, it will be an imporant subject to keep an eye on!

Shining a Light on Obviousness

Patent,

In re Cree (Fed. Cir. 2016)[1]

In a straightforward decision, the Federal Circuit has affirmed the PTAB’s decision that Cree’s claimed down-shifted LED invention would have been obvious in light of a combination of three prior art patents.[2]  The basic problem with LED lighting is that it is easy and cheap (these days) to get blue light, but harder to produce light across the spectrum – especially reds.  Cree’s patented approach used a blue LED that is wrapped in a “down-converting luminophoric medium.”  The basic idea is that the blue light energy is absorbed by the medium and then released as white light.  These Fluorescent and phosphorescent materials were already known and commercially available.

The Federal Circuit decision affirming the Board is a demonstration of flexibility of the contemporary obviousness doctrine.  With each of Cree’s attempts to poke holes in the Board’s decision, the Federal Circuit offers an annealing response that make Cree’s arguments seem weak.

Particular holdings:

  1. The PTAB did not err by adopting the patent examiner’s findings rather than writing its own. “There is no force to that argument. It is commonplace in administrative law for a reviewing body within an agency to adopt a fact-finding body’s findings.”
  2. The PTAB’s statements of items “known” in the art did not require a single prior art reference disclosing that knowing. “In context, it is clear that the Board was not using the word ‘known’ to mean ‘disclosed in a single reference.’ Instead, the Board’s statement that down-conversion was a known approach for creating white light from an LED is best understood to mean that persons of skill in the art were aware that down-conversion could be used to make white light out of blue light, regardless of the source of the light.”
  3. A rational, non-hindsight reason for combining the references comes from the references themselves since the later reference offered a brighter LED that could be combined with the earlier to produce higher quality light. “The availability of the high-powered Nakamura LED thus provided the motivation to combine Stevenson’s use of LEDs to create primary colors with Pinnow’s use of a short-wavelength light source to create white light. . . . [Cree’s] accompanying ‘impermissible hindsight’ is essentially a repackaging of the argument that there was insufficient evidence of a motivation to combine the references.”
  4. Cree’s secondary considerations were insufficient to outweigh strong evidence of obviousness. “[S]elfserving statements from researchers about their own work do not have [much] reliability.” Regarding licensing, “Cree … provided press releases evidencing that it … entered into licensing transactions, but [did] not shown that the licenses were based on the merits of the ’175 patent.”  Further, commercial success of a product only operates as a secondary consideration of nonobviousness if coupled with a nexus between that success and the claimed features of the patent.

= = = = = =

[1] This case is on appeal from the Patent Trial & Appeal Board’s ruling in ex parte reexamination No. 90/010,940.

[2] The referenced prior art includes U.S. Patent No. 3,691,482 (“Pinnow”), U.S. Patent No. 3,819,974 (“Stevenson”), and U.S. Patent No. 5,578,839 (“Nakamura”).

Venue and Personal Jurisdiction Updates

Patent,

The world continues to spin as we await a decision in the TC Holdings mandamus venue action.

  • A group of Senators have introduced the VENUE Act (Venue Equity and Non-Uniformity Elimination Act of 2016). (S.2733).  The Bill would basically limit the venues where patent infringement claims can be brought.  EFF says: Pass the Venue Act
  • In Acorda Therapeutics v. Mylan Pharma (Fed. Cir. 2016), the Federal Circuit found that, by filing an ANDA with the FDA, a Generic manfacturer opens itself to nationwide personal jurisdiction for patent infringement. [Patently-O Discussion]
  • Sitting by designation in a district court case, Federal Circuit Judge Bryson has rejected a defendant’s contention that VE Holdings had been overruled by the 2011 amendments to the patent venue statute. Script Security Solutions, L.L.C. v. Amazon.com, LLC, No. 2:15-CV-1030-WCB, 2016 WL 1055827,  (E.D. Tex. Mar. 17, 2016) (Thanks to Robert Matthews for this update).

ANDA filing creates Nationwide Personal Jurisdiction

Patent, ,

Acorda Therapeutics v. Mylan Pharma (Fed. Cir. 2016)

In this personal jurisdiction case, the Federal Circuit has affirmed the Delaware Court’s ruling that the court has specific jurisdiction over Mylan in two parallel cases.  In a super-broad holding, the court here finds that when a generic company files a new drug application (ANDA) with the FDA, that the filing opens the door to personal jurisdiction in any state where the Generic Company will market the drug if approved. This effectively means that the generic company could be sued in any state in the Union.

In Federal Courts, personal jurisdiction usually looks to underlying state law and asks whether the defendant would be “subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.”  Fed. R. Civ. P. 4(k)(1)(A). Delaware’s long-arm statute allows for personal jurisdiction so long as it does not violate the Constitutional due process protections.  On that issue, however, the Federal Circuit has repeatedly held that personal jurisdiction in patent cases is a patent-specific question that must be determined under Federal Circuit law rather than following the law of the regional circuit court of appeal. See Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1292 (Fed. Cir. 2012); Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995).

The facts here involve Mylan seeking FDA approval to market its generic drugs that will eventually be sold in Delaware (as well as every other state in the Union).  In considering that action, the court found it sufficient for personal jurisdiction for cases steming from the ANDA approval application. The court writes:

Mylan’s ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs. Delaware is undisputedly a State where Mylan will engage in that marketing if the ANDAs are approved. And the marketing in Delaware that Mylan plans is suit-related: the suits over patent validity and coverage will directly affect when the ANDA can be approved to allow Mylan’s Delaware marketing and when such marketing can lawfully take place.

The majority opinion in this case was penned by Judge Taranto and joined by Judge Newman.

Judge O’Malley wrote a concurring opinion arguing that the case would have been more easily (and less dramatically) decided on general jurisdiction grounds since Mylan was registered to operate in Delaware and had provided local agent for service of process in the State.

I tend to agree with O’Malley in this case — especially with the conclusion that the Majority opinion is likely overreaching.  The holding that Mylan is amenable to suit in Delaware is not problematic to me, but this case obviously opens the door to these pharma cases in the E.D. of Texas.

= = = = =

I’ll note that the parties here hired some of the top Supreme Court lawyers in the country for this case. To name a few, Ted Olson represented Acorda; Paul Clement represented Mylan; Kannon Shanmugam for AZ; Andy Pincus and Carter Phillips both filed amicus briefs.  This means that they are planning to take the case up to the Supreme Court if allowed.

Pending Supreme Court Patent Cases 2016 (March 17 Update)

Patent, , , , , , , , , , ,

by Dennis Crouch

President Obama has announced his nomination of Merrick Garland to become the next Supreme Court Justice. Garland is Chief Judge of the D.C. Circuit Court of Appeals and would bring tremendous intellectual firepower to the Court and is clearly more moderate many potential nominees. All indications indicate that President Obama is correct in his appraisal of Garland as “widely recognized not only as one of America’s sharpest legal minds, but someone who brings to his work a spirit of decency, modesty, integrity, even-handedness and excellence.”  That said, there is little chance that Garland will be confirmed except perhaps after the election (assuming that a Democratic contender wins).

Samsung’s design patent case is looking like a strong contender for grant of certiorari. The court will again consider the case this week.  We continue to await the views of the solicitor general in Life Tech v. Promega (whether an entity can “induce itself” under 271(f)(1)) (CVSG requested in October 2015).

The key new petition this fortnight is Versata v. SAP.  Versata raises four questions stemming from the USPTO’s covered business method (CBM) review of its “hierarchical pricing engine” patents.

  1. Whether the phrase “covered business method patent”—and “financial product or service”—encompasses any patent claim that is “incidental to” or “complementary to a financial activity and relates to monetary matters.”
  2. Whether the Federal Circuit’s standard for identifying patents falling within the “technological inventions” exception departs from statutory text by looking to whether the patent is valid, as opposed to whether it is “technological.”
  3. Whether a software-related invention that improves the performance of computer operations is patent eligible subject matter.
  4. Whether, as this Court will decide in Cuozzo Speed Technologies, LLC v. Lee, No. 15-446, the Patent Trial and Appeal Board should give claim terms their broadest reasonable construction in post-grant adjudicatory proceedings, or should instead give them their best construction.

Jeff Lamkin and his MoloLamkin team filed the brief.  [Versata Cert Petition].  SAP is on the hook for a $300+ million verdict if Versata is able to win this appeal.

The second new case is Tas v. Beach (written description requirement for new drug treatments).  Tas is a Turkish researcher representing himself pro se in the interference case against Johns Hopkins.  Interesting issues, but the case has no chance.  No cases have been dismissed or denied.

I pulled up MPHJ’s response to Vermont’s petition (filed by Bryan Farney). The opening paragraph spells out the case:

This “groundbreaking” case, as Petitioner describes it, has been going on, unjustifiably and unconstitutionally, for nearly three years now – all because Petitioner has refused to admit or accept that its state law claims against MPHJ are preempted by federal law, barred by the First Amendment “right to petition” clause, and that Congress has decided that federal preemption questions involving the patent laws must be decided by the federal court system.
 The big list:

1. Petitions Granted:

2. Petitions Granted with immediate Vacatur and Remand (GVR)

3. Petitions for Writ of Certiorari Pending:

  • Infringement by Joint Enterprise: Limelight Networks, Inc. v. Akamai Technologies, Inc., et al., No. 15-993 (can a defendant be held liable for the collective performance of method steps by multiple independent parties?)
  • Post Grant Admin: Versata v. SAP, No. 15-1145 (scope of CBM review)
  • Post Grant Admin: Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers; two amici now filed in support).
  • Post Grant Admin: Click-to-Call Tech, LP v. Oracale Corp., No. 15-1014 (Same questions as Cuozzo and now-dismissed Achates v. Apple)
  • Post Grant Admin: GEA Process Engineering, Inc. v. Steuben Foods, Inc., No. 15-1075 (Flip-side of Cuozzo: Can there be no appeal when the PTAB exceeds its authority by terminating an instituted IPR proceeding?)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998
  • Laches: SCA Hygiene Products Aktiebolag, et al. v. First Quality Baby Products, LLC, et al., No. 15-927 (three amici filed in support)
  • Biologics Notice of Commercial Marketing: Sandoz Inc. v. Amgen Inc., et al., No. 15-1039 (Does the notice requirement of the BPCIA create an effective six-month exclusivity post-FDA approval?)
  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
  • Design Patents: Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations – similar issues as Samsung v. Apple). []
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
  • Preclusion or Jurisdiction: BriarTek IP, Inc. v. DeLorme Publishing Company, Inc., et al., No. 15-1025 (Preclusive impact of ITC consent judgment).
  • Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Eligibility Challenges: Hemopet v. Hill’s Pet Nutrition, Inc., No. 15-1062 (natural phenom case of tailoring a diet to a pet’s genomic characteristics)
  • Eligibility Challenges: Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
  • Damages: WesternGeco LLC v. ION Geophysical Corporation, No. 15-1085 (consequential lost-profit damages for infringement under Section 271(f))
  • Jury Role: Parkervision, Inc. v. Qualcomm Incorporated, No. 15-1092 (“Whether and under what circumstances an inconsistency in expert testimony permits a court to set aside a jury verdict and grant the losing party judgment as a matter of law.”)
  • Written Description: Tas v. Beach, No. 15-1089 (written description requirement for new drug treatments).
  • Low Quality Brief: Morales v. Square, No. 15-896 (eligibility under Alice)

4. Petitions for Writ of Certiorari Denied or Dismissed:

  • ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Media Rights Technologies, Inc. v. Capital One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial)
  • Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
  • STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Achates Reference Publishing, Inc. v. Apple Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB) [Note – This case was dismissed after being settled by the parties]
  • Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567
  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381
  • Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
  • Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
  • Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
  • Kenneth Butler, Sr. v. Balkamp Inc., et al., No. 15-273
  • Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
  • Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
  • Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
  • Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
  • Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
  • I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
  • Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
  • Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
  • L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
  • NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
  • Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
  • MobileMedia Ideas LLC v. Apple Inc., No. 15-206
  • SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine)
  • Rodney K. Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602
  • Lakshmi Arunachalam v. JPMorgan Chase & Co., No. 15-691

5. Prior versions of this report:

En Banc: Does a Confidential Manufacturing Supply Contract Trigger the On Sale Bar?

Patent,

by Dennis Crouch

More to come on this case, but I wanted to provide readers with the filed briefs below.

The Medicines Co. v. Hospira (Fed. Cir. 2016) (en banc)

Briefing is now complete in the en banc challenge to the ‘no-supplier-exception’ to the on-sale bar.  The en banc question here focuses on when a manufacturing supply contract crosses-the-threshold into impermissible “on sale” activity and raises the on-sale bar of 35 U.S.C. § 102(b) (pre-AIA). Although the patents at issue in this case involve pre-AIA law, the same “on sale” language is found in the revised statute. If the post-AIA statute is interpreted so that sales still include ‘secret sales’ then the decision here will continue to be of substantial importance. (Note that the U.S. Government argues that pre-AIA precedent is wrong and that secret sales should not trigger the on sale bar even pre-AIA).

The following questions are presented for the en banc panel:

1. Do the circumstances presented here constitute a commercial sale under the on-sale bar of 35 U.S.C. § 102(b)?

(a) Was there a sale for the purposes of § 102(b) despite the absence of a transfer of title?

(b) Was the sale commercial in nature for the purposes of § 102(b) or an experimental use?

2. Should this court overrule or revise the principle in Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001), that there is no “supplier exception” to the on-sale bar of 35 U.S.C. § 102(b)?

The parties here include MedCo (the Patentee) who (prior to filing the patent application) hired Ben Venue Mfg. to actually produce ‘validation batches’ of its bivalirudin drug. Hospira is challenging the patent and is seeking approval to market a generic version.

The original panel found that the sale constituted an invalidating on-sale bar. Of interest here, the “sale” was Ben Venue’s “sale of services” to manufacture the patented product-by-process rather than sales of the product themselves.  The original panel found no principled distinction between these concepts – thus applying the on sale bar.  Because the ‘sales’ at issue were associated with MedCo’s ‘validation batches,’ the patentee has also now argued experimental use.

Party Briefs:

Friend of the Court Briefs: 

  • US Amicus Brief (secret sales and secret offers should not be seen to trigger the on sale bar).
  • AIPLA Amicus Brief (transfer of title is not required for an on sale bar trigger)
  • BIO Amicus Brief (the original panel’s interpretation is bad policy)
  • Gilead Amicus Brief (only “arm’s length sales between two entities” qualify for the on sale bar; here that does not apply when an inventor controls (through contract) the activities of the manufacturer).
  • HIPLA Amicus Brief (experimental use continues to be an exception to the patent negating effect of on sale activity)
  • IPO Amicus Brief (Contract manufacturing is not a ‘sale’)
  • Miller Patti Pershern Amicus Brief (for AIA patents, this ‘flaw’ in the system has been corrected because only prefiling public sales activity triggers the patent prohibition)
  • Prof Morris Amicus Brief (focus should be on whether the inventor made a sale, here the inventor was the buyer and there is no “on buy” bar; on sale activity should not be termed ‘prior art.’)
  • PRMA Amicus Brief (Parties should be permitted to outsource manufacturing prior to filing for patent protection).

Delayed Justice: Can the USPTO Stall Implementation of Federal Circuit Decisions?

Patent,

In re Simon Shiao Tam (on petition for a writ of mandamus) (Fed. Cir. 2016) [TAM_Petition_for_Mandamus_14_Mar_16]

In December 2015, the Federal Circuit ruled in Tam’s favor – holding that the Lanham Act’s prohibition against registering disparaging marks violated Tam’s free speech rights under the First Amendment.  The seeming result was that Tam would be permitted to register THE SLANTS as the mark representing his musical act.

According to Tam’s pi-day filed mandamus action, however, the USPTO Director has indicated that she will not comply with the Court’s until all potential appeals have been exhausted or expired. As such, the USPTO continues to refuse to publish the mark in the Official Gazette.  According to the petition, the following statement came from the USPTO Solicitor’s Office:

Consistent with USPTO practice following a Federal Circuit decision in an appeal of a Board decision, there will be no “further proceedings” at the Board regarding [the Tam Application] until the last of the following occurs: 1) the period to petition for a writ of certiorari (including any extensions) in In re Tam expires without a petition being filed; (2) a petition for certiorari is denied; or (3) certiorari is granted and the U.S. Supreme Court issues a decision

Of course, the USPTO is bound by law – and that law has been set by the Federal Circuit.  In this case there has been a change of the law and an express order of a “remand [of] this case to the Board for further proceedings.”  The ordinary rule is that the parties must follow the law of the case as decided even if appealing unless a stay is ordered.  The Lanham Act is not particularly helpful in this regard other than expressly indicating that, the Federal Circuit Mandate and Opinion “shall govern the further proceedings in the case.”

In all likelihood the Federal Circuit would grant a stay to the USPTO if so requested. However, I suspect that the Department of Justice would not allow that particular request — instead demanding that the USPTO has the power to delay application of Federal Circuit decisions until appeals are exhausted.  This would be an effective 90-day stay in all cases.  If the Federal Circuit orders briefing in the case, it will be interesting to hear the USPTO argue its inherent right to stay Federal Circuit orders.

Under the rules, the USPTO has already missed its 45 day timeline to request rehearing  has 45-days from the  February 12, 2016 Mandate to request rehearing en banc. The 90-days timeline for filing a petition for writ of certiorari with the Supreme Court is still pending.  Ron Coleman and his team at Archer Greiner are representing Tam in the case.

= = = = = =

Mandamus action also requires a substantial harm caused by the delay.  Here, I would balance the harm associated with wrongfully awarding the trademark rights as well.

Battle over Secret Sales and Secret Commercialization under the AIA

Patent, , , ,

by Dennis Crouch

Helsinn v. Dr. Reddy’s and Teva (D.N.J. 2016)

The America Invents Act of 2011 (AIA) amended the definitions of prior art under 35 U.S.C. § 102 – up for grabs in this case is whether the changes included a narrowing of the ‘on-sale bar.’  Prior to the AIA, the ‘on sale’ bar blocked patenting of inventions that had been “on sale in this country.”  Although not specific in the statute, courts interpreted the on-sale bar to include secret sales or offers-to-sell.  These typically include closed-door business-to-business and custom sales rather than retail sales.[1]  The AIA amended the statute in a number of ways – most pertinent here is addition of the ‘otherwise available to the public’ clause to Section 102(a)(1).[2]  The provision now reads:

Novelty; Prior Art.—A person shall be entitled to a patent unless—(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

The question in this case is how to interpret the statutory phrase “on sale, or otherwise available to the public.”  The otherwise available to the public language suggests that the ‘on sale’ activity is also available to the public.  That reading, however, conflicts with the history of the on sale bar.  Which construction is correct?

The district court in Helsinn sided with the USPTO’s interpretation of the statute – that the AIA modified the definition of on-sale so that it now only includes publicly available sales activity.  This allowed the patentee in the case to avoid an invalidity finding based upon its own prior sales of the patented drug. On appeal, Teva offers its set of arguments to retain the old-meaning:

  1. In ordinary usage, an item is “on sale” whether sold privately or publicly.
  2. Courts have treated “on sale” as a term of art for almost two centuries for sound policy reasons grounded in the Constitution.
  3. Congress did not change the settled meaning of “on sale” by adding the phrase “otherwise available to the public.”
  4. The district court’s reading of “on sale” would render meaningless the crucial word “public” in [102(b)(1)(B)].
  5. A Committee Report and floor statements of two senators cannot accomplish what they failed to accomplish in the statute itself.
  6. The PTO’s interpretation is not entitled to deference.

[TevaSecretSaleBrief]

Professors Mark Lemley (Stanford) and Robert Merges (Berkeley) along with 39 other law professors have filed a brief in support of Teva’s arguments here – arguing that the new interpretation “would radically rewrite the law of prior art.”

The key legal question in the case is simple: did Congress mean to sweep away scores of established cases under the 1952 Act even though it reenacted language unchanged since 1870, merely because it added the phrase “or otherwise available to the public” to the list of prior art categories in the new AIA section 102? We think not. We have three primary reasons. First, the district court’s reading is inconsistent with the language and structure of the AIA. Second, it is inconsistent with Congressional intent in readopting the “on sale” and “public use” language in section 102. Finally, it would sweep away scores of cases decided over two centuries and radically rewrite a host of patent doctrines.

[TevaProfAmicusBrief] Moving forward, Helsinn’s responsive brief will be due April 21.

Of course, the issues here have been substantially debated already with commentators coming out on both sides of the debate:

= = = = =

AIA expanded the scope of prior art in a number of ways. This is one area, however, where it potentially shrunk the body of potential prior art.  Innovative entities with a robust business involving private-transactions and those who rely upon third-party manufacturers are the most likely to benefit by a changed-law.

An important policy question (that could also influence is the construction) is whether eliminating secret sales as prior art would actually allow an innovator secretly commercialize its patent for years and then subsequently obtaining patent rights.

= = = = = =

 

[1] The Federal Circuit has also include a manufacture-supply agreement. (E.g., a supplier seeking for to manufacture and supply your custom inventory).  This issue is currently being reconsidered by the Federal Circuit in the en banc case of Medicines Co. v. Hospira.

[2] The statute also eliminating the ‘in this country’ limitation for on-sale prior art and limited the one-year grace period associated with the on sale bar.

Federal Circuit: Canada Not Best Forum for Enforcing US Intellectual Property Rights

Patent

DesignFurnitureHalo Creative & Design v. Comptoir Des Indes Inc (Fed. Cir. 2016)

Halo (a Hong Kong based company) sued Comptoir (a Canadian company) in N.D. Illinois Federal Court for infringing its intellectual property rights associated with its furniture designs. The IP rights here include design patents, copyrights (pending registration) and non-registered trademark rights.

Judge Leinenweber dismissed the case on forum-non-conveniens grounds — finding that Chicago is not a convenient forum for a Canadian defendant company.   Rather, the District Court suggested that the Federal Court of Canada would be a better forum – and that no rights would seemingly be lost. According to the district court, “the United States has recognized the potential of applying the copyright laws of other nations and perhaps Canada could do likewise.”  (The district court did not particularly address Canadian patent, trademark or other state law allegations). This decision was clearly offensive to the Federal Circuit who quickly reversed and remanded.

28 U.S.C. § 1404(a) is a partial codification of the forum non conveniens doctrine and controls transfers between federal courts.  However, the doctrine retains its common law roots when addressing foreign transfer issues. Law students still read Piper Aircraft, 454 U.S. 235 (1981) and thoroughly discuss the rare cases where U.S. courts dismiss cases to instead be adjudged by foreign tribunals.  In those cases, the same forum non conveniens issues arise – ease access to proof; availability of compulsory process of unwilling witnesses; cost savings for the parties; local (immovable) evidence (such as the site of an accident); court congestion; local interest in enforcement; potential conflict of laws, etc.  In Piper, the Supreme Court noted that, although the alternate foreign forum must be ‘adequate’ it need not offer identical rights. However, even under the more liberal Piper rules, the alternate forum must still permit litigation in the same subject matter of the dispute.

In reversing, the Federal Circuit found no evidence that the Canadian court would be willing to enforce Halo’s copyrights against infringement in the US.

It cannot be assumed that a foreign court would adjudicate an intellectual property dispute where the alleged infringement occurred elsewhere [i.e., in the US], and the case otherwise has little or no connection to the chosen forum. The copyright and patent laws of the United States certainly reflect such territoriality. United States copyright law, for example, generally admits of no remedy for extraterritorial infringement unless a predicate act of infringement was first committed within the United States.

The court also noted that, despite the alleged infringer’s HQ, there was no evidence of record showing infringement in Canada.

In walking through this, the Federal Circuit did not foreclose the idea of a foreign transfer in IP cases but found that the movant failed to prove its case here:

It is particularly important that a forum non conveniens movant demonstrate the adequacy of an alternative forum when the dispute implicates the enforcement of intellectual property rights. . . .

 

 

On remand, the district court will again take-up the case and consider these IP claims.

= = = = =

I agree with the court’s decision here. However, it would have been a much more interesting case if there were allegations of both US and Canadian copyright infringement.  In that scenario it would more likely make sense to consolidate the cases.  Perhaps future revisions of the TPP will include availability of trans-border IP enforcement processes.