A new amicus brief supports RPost petition for writ of certiorari – arguing that lack-of-eligibility is not a proper defense to patentability. The brief has an interesting quote from P.J. Federico (co-author of the 1952 Patent Act) suggesting (by omission) that eligibility is not a litigation defense.
I’ll add a different quote from the same work where Federico explains that the old statutory provision was split into two sections: 101 (subject matter) and 102 (conditions of patentability):
One of the basic and most important sections of the old statute was R.S. 4886, which specified the subject matter for which a patent could be obtained and recited conditions for patentability. In the new code, this section has been divided into two sections, section 101 relating to the subject matter for which a patent may be obtained, and section 102 which defines statutory novelty and states other conditions for patentability.
The distinction here is important because Section 282 makes “conditions of patentability” defenses.
I will note that Federico’s commentary might not be the best source of evidence. The same passage as that quoted indicates that “lack of invention” remains a defense under the new law. Elsewhere, Federico indicates that “the requirements for patentability of an invention are stated in sections 101, 102 and 103” and that utility, under 101 is a “condition.”
USPTO’s chief information officer – John B. Owens – has left the agency to join the government contractor CGI Federal. Owens departure coincides with the governmental shift where the Department of Commerce is increasingly taking-over the “enterprise services” within the USPTO as part of the “shared services initiative.” As part of this plan, USPTO user fees are being directed to the commerce department to handle IT and information services activities. Several members of congress have questioned this approach. And, an interesting feature of the 2018 Republican House Proposed Budget is shrink the Department of Commerce – currently “rife with waste, abuse, and duplication,” and “Establish the U.S. Patent and Trademark Office as an independent agency.”
SNF Holding Co. v. BASF Corp. (Federal Circuit 2017)
Important petition for en banc rehearing filed by the Duffy-Dabney team (Hughes Hubbard) with three questions presented:
Whether 35 U.S.C. § 144 requires this Court to issue an opinion when exercising original jurisdiction under 35 U.S.C. §§ 141–144.
Whether 35 U.S.C. § 316 authorizes the USPTO to change an instituted ground of inter partes review (“IPR”), post-institution, in a manner that conflicts with the ground as stated in the petition on which IPR was instituted.
Whether a patentee, in an instituted IPR, can impeach its own admissions in the specification of a challenged patent.
Read the petition: 2017-11-16 Petition. The case revolves around BASF’s US Patent No. 5,633,329. The PTAB instituted review, but ultimately affirmed patentability of the claims – although with a changed claim construction in the final decision.
BASF’s catalytic conversion system patent claims includes the functional limitations that the system is “effective for catalyzing”/”effective to catalyze” NH3 oxidation.
In the infringement litigation, the district court sided with the accused infringer – holding that the functional language was unduly indefinite – rendering the claim invalid under 35 U.S.C. 112 as interpreted by Nautilus. On appeal, the Federal Circuit has reversed — finding that the record lacks “evidence that would support” the indefiniteness finding.
The Patent Act (section 112) requires “one or more claims particularly pointing out and distinctly claiming” the invention. This provision serves as the basis for doctrine of (in)definiteness. In Nautilus (2014), the Supreme Court held that the claims as drafted must define the scope of the invention (from the perspective of PHOSITA) with “reasonable certainty.” Reasonable certainty is a traditional high evidentiary burden used in several areas of practice — including lost-profit calculations — and is thought to be parallel with the “clear and convincing” evidence standard (i.e., just below “beyond a reasonable doubt.”). Despite the seeming high standard placed on patentees by Nautilus, the Federal Circuit has continued to give patentees the benefit of the doubt in indefiniteness cases (with the one exception being 112(f) cases). This case is no exception.
Effective To: The claims here are not limited to particular materials or level of effectiveness, but rather only those that fit within the broad “effective to catalyze” language. The district court identified this as problematic:
Each claim fails to limit the “material composition A” … to any specific materials. Rather than explicitly defining the material compositions, the claims utilize functional language, specifically “effective,” to purportedly define them. In other words, the claims recite a performance property the composition must display, rather than its actual composition. Moreover, none of the claims recite a minimum level of function needed to meet this “effective” limitation nor a particular measurement method to determine whether a composition is “effective” enough to fall within the claims.
[FN: The court additionally notes that “a practically limitless number of materials” exist that would “catalyze SCR of NOx, even within the normal operating conditions of an exhaust after treatment system,” indicating that the claims, as written, fail to sufficiently identify the material compositions.]
Without such information, a person of ordinary skill in the art could not determine which materials are within the “material composition A” or “material composition B” limitation, and which are not.
On appeal, the Federal Circuit rejected the lower court’s analysis – first repeating again that functional claim limitations are perfectly legitimate. According to the appellate court, the basic problem with the district court’s analysis was that it identified the broad claims but then failed to actually consider whether the claims provide “reasonable certainty” to PHOSITA as to the claim scope.
What is needed is a context-specific inquiry into whether particular functional language actually provides the required reasonable certainty. . . . [T]he inference of indefiniteness simply from the scope finding is legally incorrect: “breadth is not indefiniteness.” (Quoting SKB v. Apotex (Fed. Cir. 2005)).
After rejecting the district court’s analysis, the appellate panel went-on to hold that – as a matter of law – the claim is definite. Drawing its own conclusions as to what PHOSITA would think of these claims.
At the point of Novelty: An interesting bit of the opinion harkens back to the Supreme Court’s 1946 Halliburton decision – holding that functional claim language is particularly problematic when done at the point of novelty. Here, the court does not cite Halliburton but does note that the “asserted advance over the prior art” is the particular layered arrangement of the device, not “the choices of materials to perform each of the required catalytic processes.” Rather, those materials were expected to be ones already well known in the industry.
Here, of course, the Federal Circuit is not suggesting that Halliburton is good law, but the court does implicitly conclude that there are important distinctions in the indefiniteness analysis when considering terms directed to well-known versus novel features.
Presidio Components v. American Technical Ceramics (Fed. Cir. 2017)
Intervening Rights: When issued claims are substantially amended — whether during reissue, reexamination, or AIA-Trial — an accused defendant will have “intervening rights.” In particular, the defendant will not pay back-damages for any infringement prior to completion of the post-issuance action. Section 252 explains that the question is whether the amended claim is “substantially identical” to the original.
Here, the patentee added limitations to its capacitor claims in a way that changed the claim scope — and thus entitled the defendant to “absolute intervening rights.”
The patentee argued that it had no intent to change the claim patent scope. On appeal, however, the patentee ruled that intent is not relevant. Rather, the inquiry is simply whether the scope of original claims is identical to the scope of the amended claims (based upon a “normal” Phillips claim construction analysis.) Under that approach, the court found a difference in scope and thus intervening rights kicked-in.
Presidio argues that the scope of its claims did not change during reexamination because its stated goal in amending the claims was to adopt the district court’s construction in Presidio I.
Equitable Interlude: Note here that the focus is on the statutory intervening rights. The Federal Circuit has also adopted a second-level equitable intervening rights. Following SCA Hygiene, I expect that there is a good chance that this doctrine may be eliminated.
Lost Profits: Like definiteness, lost profit award also requires “reasonable certainty.” In the lost profit context, the rule is applied in a more-standard approach. Namely, reasonable certainty is traditionally thought of as a standard of evidentiary proof needed for factual conclusions. This makes sense in the fact-heavy damages context but not so much in the indefiniteness arena that is very often seen as wholly a question of law.
Here, the appellate court held that lost profits due to the infringement were not proven because the district court did not consider whether a non-infringing alternative would have been an acceptable/available substitute to the patentee’s product. A new trial is necessary now to calculate the reasonable royalty damages that will presumably be less than the $2 million lost profit verdict overturned on appeal.
Obtain commitments to ratify or accede to international treaties reflecting best practices in intellectual property protection and enforcement.
Provide a framework for effective cooperation between Parties on matters related to the adequate and effective protection and enforcement of intellectual property rights.
Promote transparency and efficiency in the procedures and systems that establish protection of intellectual property rights, including making more relevant information available online.
Seek provisions governing intellectual property rights that reflect a standard of protection similar to that found in U.S. law, including, but not limited to protections related to trademarks, patents, copyright and related rights (including, as appropriate, exceptions and limitations), undisclosed test or other data, and trade secrets.
Provide strong protection and enforcement for new and emerging technologies and new methods of transmitting and distributing products embodying intellectual property, including in a manner that facilitates legitimate digital trade, including, but not limited to, technological protection measures.
Ensure standards of protection and enforcement that keep pace with technological developments, and in particular ensure that rights holders have the legal and technological means to control the use of their works through the Internet and other global communication media, and to prevent the unauthorized use of their works.
Prevent or eliminate government involvement in the violation of intellectual property rights, including cyber theft and piracy.
Secure fair, equitable, and nondiscriminatory market access opportunities for United States persons that rely upon intellectual property protection.
Prevent or eliminate discrimination with respect to matters affecting the availability, acquisition, scope, maintenance, use, and enforcement of intellectual property rights.
Respect the Declaration on the TRIPS Agreement and Public Health, adopted by the World Trade Organization at the Fourth Ministerial Conference at Doha, Qatar on November 14, 2001, and to ensure that trade agreements foster innovation and promote access to medicines.
Prevent the undermining of market access for U.S. products through the improper use of a country’s system for protecting or recognizing geographical indications, including such systems that fail to ensure transparency and procedural fairness, or adequately protecting generic terms for common use.
Provide the means for adequate and effective enforcement of intellectual property rights, including by requiring accessible, expeditious, and effective civil, administrative, and criminal enforcement mechanisms. Such mechanisms include, but are not limited to, strong protections against counterfeit and pirated goods.
It would, perhaps, be desirable if all cases of this sort [i.e., patent cases] could be referred to a commission of intelligent experts and practical men to report their opinion thereon, with their reasons, for the final action of the court. … Neither courts nor ordinary juries are perfectly adapted to the investigation of mechanical and scientific questions. .
Columbia Sportswear v. Serius Innovative (S.D.Cal. 2017)
I previously wrote about Columbia Sportswear design patent verdict and damages award against Serius. The patent – D657,093 – covers a wavy-pattern as part of a heat reflective material. Post trial, the court has now issued an emergency Temporary Restraining Order (TRO) enjoining Serious from initiating a reexamination of the design patent — finding that the reexamination could improperly “avoid the jury’s verdict in this case.”
The key fact: We already have a jury verdict of infringement and, according to the court (and patentee’s motion for TRO), during the lawsuit, the defendant stipulated to the patent’s validity.
On irreparable harm (and element of TRO), the court writes:
Allowing Seirus to collaterally attack the Design Patent at this very late juncture in litigation would undoubtedly cause Columbia undue hardship. A reexamination of the Design Patent could potentially result in its invalidation, which would moot Columbia’s fully-litigated infringement claims.
Finally, the court finds, that the public interest is served by restraining order – since “The public interest is served by enforcing the parties’ stipulation and protecting the validity of the Court’s judgment.”
The TRO was issued the same-day as requested and, although Seirus was apparently same-day notice notice, it did not have the opportunity to respond.
A few notes here: First, I expect that most TRO’s include legal and factual errors that stem from the fact that they are issued in an emergency, usually in an ex parte fashion. The court typically relies upon the statements of counsel requesting TRO — perhaps in a way that should raise additional duties to the court.
Stipulation of Validity?: Normally judges rule that patents are “not proven invalid” rather than actually holding them “valid.” Here, however, the TRO motion refers the judge to the prior “stipulated judgment of validity” and the judge consequently held that Seirus will not be harmed by “complying with its own stipulation of validity.”
Looking back at the docket appears to tell a different story. As I suspected, the prior judgment states that the patent “has not been proved invalid.” However, the jointly-agreed-upon document is titled “JUDGMENT OF VALIDITY OF U.S. PATENT NO. D657,093.” So, the document has some ambiguity, but the distinction here is potentially critical: A not-able-to-prove-invalidity would seemingly not prohibit a reexamination filing since the varying standards of proof logically allow for a patent to be cancelled during reexamination even if it could not have been invalidated in court. Of course, under a slight extension of MedImmune and Lear, it might not even make a difference. (Note here, that MedImmune and Lear both permitted a licensee to challenge).
Here, the patentee argued to the court that the “consent judgment … precludes [Seirus] from initiating a reexamination proceeding on the D’093 Patent.” Unfortunately, the patentee does not cite any authority toward its conclusion other than Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362 (Fed. Cir. 2001), but that decision does not reach the reexamination question here and was pre-MedImmune.
The key case I would cite here is In re Baxter Intern., Inc., 678 F.3d 1357 (Fed. Cir. 2012). In that split decision, the Federal Circuit found no problem with an adjudged infringer taking same prior from the district court case (that lost there) and re-using it in a reexamination (and cancelling the claims).
Finally (for this post), the court appears to have inadequately considered the equities and the public interest associated with cancelling an improperly issued patent. As the Supreme Court wrote in MedImmune: “the equities of the licensor do not weigh very heavily when they are balanced against the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.”
I’m confident that Seirus will challenge the TRO, which (I believe) is subject to immediate appeal to the Federal Circuit under 28 U.S.C. § 1292(a)(1).
Update: I noted above my belief that the TRO decision (enjoining the defendant from filing a reexam petition) was immediately appealable based upon 28 U.S.C. § 1292(a)(1)’s statement that orders “granting, continuing, modifying, refusing or dissolving injunctions” create direct appellate jurisdiction. A friend emailed me the non-precedential decision in Hallmark Cards, Inc. v. Grp. One Ltd., 110 F. App’x 99, 100 (Fed. Cir. 2004), holding otherwise. One way to read Hallmark is that a TRO is not appealable if the district court is planning to quickly hold a preliminary injunction hearing – as is the case here.
The following guest post comes from Business Prof. Ian McCarthy and is based upon his is based on the research article: CGIP: Managing consumer-generated intellectual property. Although I don’t like the label of “Emotional Property” the concepts presented here make sense. – DC
by Ian McCarthy
Traditionally, firms have produced goods and services, and consumers have consumed or used them. However, consumers are not only using and consuming, but also increasingly creating products, services and related intellectual property when they adapt and modify the proprietary offerings of companies. Consider for example the legendary hacker George Hotz, who unlocked the original iPhone and hacked Sony’s PlayStation 3. He gave these innovations away free to the public. Consumers also create and publish a vast amount of informational content. Consider all the images uploaded to Facebook, the book reviews posted on Amazon and the videos on YouTube: all of this is consumer generated content ends up belonging to the companies. Regardless of whether consumers are changing physical products or generating information content, these creative acts produce “consumer-generated intellectual property” (CGIP)—intellectual property produced by consumers rather than only by companies.
CGIP has components that appeal to companies and consumers, but are also a source of potential conflict. From the perspective of the company, the focus is on controlling the CGIP and appropriating value from it. While on the consumer’s side it is about the credit and emotion associated with creativity.
These differences highlight that CGIP involves not just intellectual property, but also emotional property.
As intellectual property is the legal rights to creations of the mind, emotional property is the emotional investment in or attachment to creations of the heart and mind. More specifically emotional property is defined as the product of the affection, fervor and energy that consumers devote to the creative act, and the attachment and pride they have with their creation.
Emotional property is an important but overlooked feature of innovation management. As it governs how consumers react to companies seeking to exploit their creations and CGIP, here is a framework of eight strategies, the 8 Cs (cultivate, coordinate, cooperate, capture, code condemn, crush and copy Cs) to help managers deal with CGIP. The 8 Cs are based on whether companies are positively or negatively disposed to CGIP, and whether the strategic action is directed primarily at the consumer or at the company. Figure 1 shows how the eight strategies (or 8 Cs) for CGIP vary in terms of these two dimensions.
Figure 2: The Emotional Property-Intellectual Property (EPIP) Matrix.
The Emotional Property-Intellectual Property (EPIP) matrix (Figure 2) plots the 8 Cs and shows why companies would adopt a certain strategy. This on the extent to which the company perceives the consumer to have either high or low emotional property vested in the innovation, and the extent to which the firm has the potential to control the intellectual property.
The 8 Cs available to companies all fit neatly into the EPIP matrix, but here I illustrate just two of the Cs here. Where the firm’s potential control of- and the consumer’s emotional attachment to the IP are both low, the firm can either “condone” or “condemn” an infringement. A nice example of the condone strategy is Sony’s decision to ignore a breach of its copyright in the case of the now famous JK Wedding Dance video. Jill and Kevin used a song by Sony artist Chris Brown as background music to the entrance of the bridal party and put the video on YouTube where it got millions of hits. Sony’s decision was driven not only by the fact that the video was just good harmless fun, but also because the artist had recently gotten really bad press and was in bad need of an image resuscitation. Where both the firm’s potential control of- and the consumer’s emotional attachment to the IP are high, a firm can implement a cooperate strategy. The website Quirky invites consumers to submit new product ideas to its site for consideration. If an idea is favorably received it is then developed into a prototype and in many cases eventually turned into a commercial product. In exchange for Quirky funding this development process, the inventor assigns all IP to Quirky. Quirky gains and controls the IP, but the consumer also gets credit and remuneration, which compensates their high emotional stake.
A new decision from the 5th Circuit includes an interesting analysis of federal preemption. Namely, the appellate panel found that Texas law of unfair competition by misappropriation improperly extends to offer patent and copyright protections.
The Texas common law tort of “unfair competition by misappropriation” is essentially an anti-free-riding law with three elements:
(i) the creation of plaintiff’s product through extensive time, labor, skill and money,
(ii) the defendant’s use of that product in competition with the plaintiff, thereby gaining a special advantage in that competition (i.e., a “free ride”) because defendant is burdened with little or none of the expense incurred by the plaintiff, and
Here, the plaintiff’s claim is that Orthoflex improperly made use of ThermoTek’s manuals and billing information as well as the design of its physical products. However, rather than suing on copyright and patent respectively, ThermoTek sued on state-law misappropriation. The jury awarded more than a million dollars to the plaintiff. However, the district court judge nullified the jury verdict and instead held that the entire claim was preempted by federal IP laws. On appeal, the 5th Circuit has affirmed.
Both Copyright and Patent laws have been interpreted to preempting substantially overlapping state protection regimes. Here, copyright is more straightforward because the Copyright Act of 1978 expressly preempts state copyright-like laws, including common law, and including state provisions that protect works that are otherwise excluded under Section 102(b). Note here, that this is the third time that the court has held that Texas’s unfair-competition-by-misappropriation is improperly equivalent to copyright law. See Ultraflo and Alcatel.
The court notes that inclusion of an “improper means” requirement into the misappropriation law would likely rescue it from preclusion on the copyright side.
On the patent side, the court cited to Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989) statements that state laws that offer “substantially similar” protections are preempted by federal patent law and thus not enforceable.
As with copyright law, the appellate panel here suggested that torts that require “deceit” or “improper means” will be acceptable, but laws that focus simply on protecting the investment in product development and marketing will be preempted.
The latter laws, however, would likely obstruct Congress’s goals by “offer[ing] patent-like protection to intellectual creations which would otherwise remain unprotected as a matter of federal law.” Quoting Bonito Boats.
Here, the court noted that the Texas law is particularly problematic because it offers protection in perpetuity without the safeguards of the patent system. The court also particularly rejected the notion that instructing the jury that “reverse engineering is not actionable” does not save the law. Rather, to avoid preemption a proper jury instruction must expressly include an additional element such as fraud or dishonesty.
I believe that this is the correct decision. My one major caveat begins with the difference between copyright law’s express statutory preemption of state law and the mere implicit preemption offered by the patent laws. Couple that with the major historical difference from Bonito Boats — that this type of misappropriation claim likely predates patent law doctrine whereas Bonito Boats involved a newly developed Florida statute. Seems to me that we need to add an additional analysis to consider the extent that patent law is designed to snuff-out these preexisting common law claims 150 years after the fact.
On writ of mandamus, the Federal Circuit has sided with accused-infringer Micron – holding that TC Heartland was a sufficient change in the controlling law of venue to overcome the fact venue-challenge had been previously waived in the case. My sense is that this is quite poor analysis opinion, but the outcome will likely stick — allowing venue transfer many more cases.
Over the past three decades, the Federal Circuit had repeatedly interpreted the Federal venue statutes to allow infringement lawsuits to be filed in any court with personal jurisdiction over the accused infringer. In its 2017 TC Heartland decision, the Supreme Court changed course — holding that for business-defendants in patent cases venue is only proper in districts where (1) the defendant is incorporated or (2) the defendant infringes the patent and has a regular and established place of business. Except for nationwide retailers, this significantly limits the locations where venue is proper. And, remember, the focus here is “proper venue” – if venue is not proper then the case must be dismissed or transferred.
Waiver: The immediate focus following TC Heartland has been the several hundred already pending infringement lawsuits where venue is likely improper. The difficulty for those defendants is improper venue is subject to waiver — and the rules particularly indicate that a motion for improper venue is waived unless presented during the pleadings. FRCP 12(h)(1). Here, Micron is facing an infringement lawsuit in Massachusetts (Harvard v. Micron) but did not move for dismissal for improper venue as required by the rules. Once TC Heartland was decided, the defendant then asked the court to consider the issue.
No Waiver: However, R. 12(g) indicates that waiver occurs when the defense is “available to the party but omitted.” In the mandamus action here, the court ruled that the change in law is so significant that the defense was not truly available until after the Supreme Court’s decision.
The Rule 12 waiver question presented here is whether the venue defense was “available” to Micron in August 2016. We conclude as a matter of law that it was not. The venue objection was not available until the Supreme Court decided TC Heartland because, before then, it would have been improper, given controlling precedent, for the district court to dismiss or to transfer for lack of venue. . . .
This is a common-sense interpretation of Rule 12(g)(2). Where controlling law precluded the district court, at the time of the motion, from adopting a defense or objection and on that basis granting the motion, it is natural to say, in this context, that the defense or objection was not “available” to the movant.
Although the court is absolutely correct that its approach is the common-sense approach since we have been operating under the old rule for decades. However, the major analytical problem with the court’s decision here is its notion that its misinterpretation of Supreme Court law is somehow “controlling” law. Rather the Supreme Court decided the identical issue in Fourco (1957) and then in TC Heartland (2017) held the minor amendments made to the guiding statutes did not alter the holding of Fourco. In other words, the “controlling law” this entire time has been the Supreme Court precedent. Supreme Court writes:
The issue in this case is whether [the amendment to the statutes] supplants the definition announced in Fourco and allows a plaintiff to bring a patent infringement lawsuit against a corporation in any district in which the corporation is subject to personal jurisdiction. We conclude that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco.
Regardless of this technicality, the rule appears now that district courts should be considering and granting improper venue decisions moving forward.
In what appears to be dicta, the court did place important limitations on the improper venue challenges – noting that a motion that is not sufficiently timely (i.e., too close to trial) might be denied on that grounds.
The district court sided with the patentee – Prism Tech’s – finding the user-authentication claims eligible under section 101. Important for the petition here, the district court relied upon substantial expert testimony as well as other documentary evidence in concluding that the claims were enforceable.
Ordinarily, a district court’s factual findings are reviewed with deference on appeal — even when those factual findings are subsidiary to an ultimate question of law. See, Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015) (In claim construction, appellate court must give deference to a district court’s subsidiary factual findings); Mintz v. Dietz & Watson, Inc., 679 F.3d 1372 (Fed. Cir. 2012) (a district court factual findings underlying an obviousness determination are given deference on appeal); Alfred E. Mann Found. for Sci.Research v. Cochlear Corp., 841 F.3d 1334, 1341 (Fed. Cir. 2016) (a district court’s factual findings underlying an regarding indefiniteness finding must be given deference on appeal).
On appeal here, however, the Federal Circuit rejected the lower court’s determinations without giving any deference to the underlying factual determinations — instead the appellate court here reviewed all eligibility issues de novo, including subsidiary findings of fact. Note here, that this is the same approach taken by the Federal Circuit in claim construction prior to being reversed by the Supreme Court in Teva.
An element of the Supreme Court’s Teva decisions stems from R. 52(a)(6) of the Federal Rules of Civil Procedure which appears quite clear:
Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court’s opportunity to judge the witnesses’ credibility.
Of course, even in Teva, the Supreme Court did not truly follow R.52 — holding there that seemingly factual determinations based upon intrinsic evidence (such as prosecution history statements) rather then extrinsic evidence need not be given deference.
Prism has now petitioned the Supreme Court for review with the following simple question:
Whether a district court’s factual findings in support of its holding that claims are directed to patent eligible subject matter may be reviewed de novo, as the Federal Circuit requires (and as the panel did in this case), or only for clear error, as Rule 52(a) and corollary Supreme Court precedent require.
The petition also tells the interesting story regarding Prism’s parallel $30 million jury verdict against Sprint. Sprint did not challenge the patents on eligibility grounds and ended up losing in a decision confirmed on appeal by the Federal Circuit. However, after the Federal Circuit decided the T-Mobile case, the district court flipped its decision ruling on a post-appeal motion that Sprint should be granted relief from judgment under Fed. R. Civ. P. 60(b). According to the petition, a major problem with that decision is that the court applied it (without independent analysis) to prevent enforcement of claims not-at-issue in the T-Mobile case.
The major problem with Prism’s case is the patents themselves and the high level of generality used by the claims. Asserted claim 1 of U.S. Patent No. 8,127,345 is a method for controlling access to protected resources over an IP network. The network setup includes an authentication server; an access server; and a client computer. The method then has several steps:
Request: The client computer sends an access-request to the access server along with identity data about the client computer.
Authentication: The access server then forwards the identity data to an authentication server; and the authentication server authenticates the identity (and stores the identity data in the authentication server)
Authorization: The authentication server then authorizes the client computer to receive at least some of the requested resources
Permission: The authentication server then permits access to the resources.
The Federal Circuit found that these steps “are directed to the abstract idea of ‘providing restricted access to resources,'” and that the claim does not include any further concrete innovations that would transform it to a patent eligible claim. On that ultimate question, I don’t see the Supreme Court ruling any differently.
= = = = =
Claim 1 is reproduced below.
1. A method for controlling access, by at least one authentication server, to protected computer resources provided via an Internet Protocol network, the method comprising:
receiving, at the at least one authentication server from at least one access server, identity data associated with at least one client computer device, the identity data forwarded to the at least one access server from the at least one client computer device with a request from the at least one client computer device for the protected computer resources;
authenticating, by the at least one authentication server, the identity data received from the at least one access server, the identity data being stored in the at least one authentication server;
authorizing, by the at least one authentication server, the at least one client computer device to receive at least a portion of the protected computer resources requested by the at least one client computer device, based on data associated with the requested protected computer resources stored in at least one database associated with the at least one authentication server; and
permitting access, by the at least one authentication server, to the at least the portion of the protected computer resources upon successfully authenticating the identity data and upon successfully authorizing the at least one client computer device.
Recognicorp v. Nintendo (Supreme Court 2017) [RecogPetition]
The new Supreme Court petition for writ of certiorari asks the following questions:
In Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), the Court set forth a two-step test for determining whether computer-implemented inventions claim patentable subject matter under 35 U.S.C. § 101. First, a court must determine whether the claims at issue are “directed to” an abstract idea. Second, if the claims are “directed to” an abstract idea, the court must then determine whether the claims recite inventive concepts — elements which ensure that the patent amounts to significantly more than a patent upon the abstract idea itself.
The questions presented are:
1. Whether computer-implemented inventions that provide specific improvements to existing technological processes for encoding or decoding data are patent-eligible under the first step of the Alice test, even if those inventions involve or make use of abstract ideas.
2. Whether the use of new mathematical algorithms to improve existing technological processes by reducing bandwidth and memory usage can constitute “inventive concepts” under the second step of the Alice test.
The patent at issue here is U.S. Patent No. 8,005,303 that is generally directed toward a mechanism for creating a composite image. In the brief, the patentee explains that the method allows the use of “composite facial image codes” to represent a face.
Claim 1. A method for creating a composite image, comprising:
displaying facial feature images on a first area of a first display …, wherein the facial feature images are associated with facial feature element codes;
selecting a facial feature image from the first area … via a user interface …
wherein the first device incorporates the selected facial feature image into a composite image …, wherein the composite image is associated with a composite facial image code … wherein the composite facial image code is derived by performing at least one multiplication operation on a facial code using one or more code factors as input parameters …; and
reproducing the composite image on a second display based on the composite facial image code.
After reading through this claim, I’ll give this petition approximately 0% of winning.
Eric Sutton is a senior patent counsel at Oracle and an adjunct professor at Chicago-Kent College of Law. Any views or opinions expressed by him in this article are solely his own and do not necessarily represent those of Oracle Corporation, its subsidiaries or affiliates.
As known to most patent practitioners,[i] a parent provisional does not lock in a priority date for a child non-provisional unless the parent provisional provides a written description and enablement of an invention that is claimed in the child non-provisional. This assessment is conducted on a claim-by-claim basis[ii] to see if the parent provisional adequately supports and enables the precise subject matter of each child non-provisional claim for which priority is desired. If none of the claims in the child non-provisional are fully supported and enabled by the parent provisional, then the priority date for all of the claims is the later filing date of the non-provisional. In this scenario, the provisional has no clear value.
Under our first-inventor-to-file system, references that are published or patent applications that are filed between an applicant’s parent provisional filing and the applicant’s child non-provisional filing open the door for prior art to the claims of the child non-provisional filing, if those claims are not fully supported and enabled by the parent provisional.
Patent applicants, especially for software-related technologies, often file provisionals just before product releases, presentations at conferences, or publications of white papers or marketing materials. In-house patent portfolio managers frequently reassure business leaders that the technologies are protected by the provisionals, and outside patent counsel often similarly reassure in-house patent portfolio managers. However, due to time and budget pressures that often impact provisionals, relying on a provisional for priority may be significantly riskier than relying on a non-provisional.
Consider the hypothetical example below:
In the example, suppose your company files many provisionals and, on average, files many non-provisionals — each about ten months after its corresponding provisional. You file the provisionals ahead of product releases, and your competitor follows up with very similar product releases within a few months. The competitor’s product releases and several publications about the underlying technology occur during the ten-month span between provisional and non-provisional filings. Any aspects of these publications that were not completely derived from your product would serve as potentially invalidating prior art to your non-provisional filings unless your provisional filings satisfy the written description and enablement requirements with respect to your non-provisional claims. This scenario could happen over and over again, and negative effects from this scenario could even be baked into your provisional and non-provisional filing strategies in a fast-paced product development environment.
In a big data analysis of provisional application quality, focused on comparing provisional application content to non-provisional claims using Innography®, LexisNexis® PatentAdvisor®, and self-developed software, I found that many patent attorneys seemingly do rely rather extensively on their provisionals.[iii]On average, applicants rely extensively on their provisionals by allowing an average of ten months of risk for intervening prior art by filing the first-filed child non-provisional ten months after the corresponding provisional. Whether or not that intervening prior art actually shows up is beyond their control, particularly if they have already let the cat out of the bag by sharing their technology with others.
How can we know, with high probability for a large set of provisionals, whether those provisionals provide support for their child non-provisional claims? While there are many approaches available, some are more or less time-consuming, more or less subjective, more or less scalable, and more or less reproducible. I chose to analyze a large chunk of application pairs[iv] to see whether word stems present in the non-provisional claims[v] were also present in the corresponding parent provisionals.[vi] I then further excluded word stems that often appear in patent claims to produce even more interesting results that focus in on the less common word stems that theoretically would be more troubling if missing from the provisionals. The results are objective for what they show, i.e., that provisionals are, on average, missing several word stems from the broadest independent claims of the non-provisionals.
The study does not conclude missing word stems or even missing uncommon word stems necessarily mean that there is no support or enablement in the provisional. On the contrary, the conclusion of this study depends on your personal experience and judgment. Suppose you know nothing about a large set of provisionals in your portfolio other than how many unique word stems and, more specifically, how many uncommon unique word stems from the broadest child non-provisional claims were missing from the provisionals.
My guess is that most people would be very comfortable if all of the word stems or uncommon word stems were present in the provisional (0% miss rate) even though it is still possible they have not supported or enabled the claims in particular scenarios. On the other hand, I think most people would be very uncomfortable if all of the word stems or uncommon word stems were absent from the provisional (100% miss rate) even though it is still possible that they have supported or enabled the claims. Different people will have different comfort levels between 0% and 100% depending on their own experiences and understanding, but at higher percentages one would likely begin to bet against priority rather than for it.
The study evaluated 1905 pairs of parent provisionals and non-provisionals, filed between March 2012 and July 2013.[vii] In the sample, there were 16,739 unique word stems in the first claims of the 1905 non-provisionals. For the parent provisional / child non-provisional pairs, an average of 7.0 unique word stems from claim 1 were missing from the parent provisionals out of an average of 49.8 unique word stems per claim, for a 13.3% unique word-stem miss rate. As mentioned above, applicants waited an average of 10 months between filing the first-filed non-provisional from the provisionals, which means applicants relied on these provisionals by taking on unnecessary risk, despite the significant average miss rates.
The chart below shows percentages of cases at different levels of word stem miss rates.
As shown, about 19.3% of cases were missing 25% or more of the unique word stems, a point that is likely beyond the comfort level of most patent practitioners. That said, 21.5% of cases had a 0% miss rate, indicating that a large group of patent practitioners is avoiding the written description and enablement risk that comes with varied language.
After a careful analysis of stems at different thresholds, it turned out that the top 3% of stems (516 stems) occurred 30 or more times in the sample and included stems that, for the most part, would likely not be considered relevant to a written description analysis, whether or not a synonym was present in the provisional. The choice of a cutoff level was subjective, but the cutoff itself was objectively applied in the sense that all terms above the cutoff were removed from the study and all terms below the cutoff remained in the study. The rationale used for the subjective cutoff level was to pick a level that was just beyond any level including the most common terms occurring in computer-related claims. Although the sample of cases was not limited to computer-related cases, computer-related terms excluded as being part of the top 3% were, for example:
Using the list above as a proxy for familiar common terms was helpful in picking a cutoff point even though a significant portion of the sample did not involve computer-related innovation. Stems beyond the top 3% boundary remained in the study. These less common stems occurred 29 or fewer times in the sample of 1905 claims.
Should the miss rates go up or down after removing the common stems? My hypothesis was that miss rates would go down because terminology such as “compris” (excluded as within the top 3%) might often be added by attorneys down the road as claims are solidified. At a minimum, more cases would have a 0% miss rate when fewer stems are searched. Others predicted that the miss rates would go up for other buckets because common terminology is usually present in the provisional, at least as boilerplate. Therefore, removing the common terminology would reveal the true incompatibility between provisionals and non-provisional claims.
I was not willing to tolerate the same miss rates as I did in the analysis for all stems. Because we are focusing on only the stems that occur relatively infrequently (in 29 or fewer out of 1905 claims), it is significantly more likely (though not certain) that these stems would reflect content that could be relevant to written description or enablement issues.
Others were right to think the results would get worse. Removing the top 3% of stems reduced the average number of unique stems per claim by 27 stems (45.8%) to 22.8 stems. Out of those 22.8 uncommon unique stems remaining, on average, provisionals were missing 5.3 for an average miss rate of 17.7%, up by 4.4%. Personally, I was shocked at this result and felt uncomfortable on behalf of the patent bar.
The chart below shows percentages of cases at different levels of uncommon word stem miss rates.
As shown, about 26.7% of cases were missing 25% or more of the unique word stems. The 26.7% uncommon stems mark is up from the 19.3% mark for all stems, reflecting a delta of 7.4%. If having 25% or more uncommon stems missing is beyond the comfort level of most patent practitioners, then practitioners should be uncomfortable with at least 26.7% of the provisionals being filed. I was equally as shocked to see that 9.8% (up by 5.5%) of cases were missing 50% or more of the uncommon stems. The largest cluster was 24.1% (up by 2.6%) having a miss rate of 0%, although there were a few miss rates even at 100%.
Due to the skewed distribution with miss rates falling at both ends of the spectrum, statistical metrics such as standard deviation did not provide much insight into the dataset beyond the charts shown. Nevertheless:
a miss rate of 21% (30% of the sample) was greater than one standard deviation away from the peak of 0%,
a miss rate of 34% (19% of the sample) was 1.645 times the standard deviation away from the peak (considered significantly different than the peak of 0% for a right-tailed distribution, p = .05, if the peak miss rate of 0% is considered to be the target). Note this analysis incorrectly treats the 100% miss rates as deviating from the target, when at least these cases clearly have a different target. This unnecessarily inflates the miss rate required to qualify as significantly different.
a miss rate of 42% (14% of the sample) was greater than two standard deviations away from the peak.
U.S. ISSUES
It turns out that, in the U.S., the patent office does not even check for provisional application priority unless there is intervening prior art. That said, priority issues do come up in courts where litigants are equipped with discovery and additional resources.[viii] Based on the results of this study, it seems that there is some low hanging fruit where the patent office could object to a priority claim that is extremely unlikely to be accurate and, after patent office review, turns out to be inaccurate regardless of whether the patent office has found intervening prior art.
INTERNATIONAL ISSUES
Although I am not qualified to opine on the laws of specific other countries, I do know that many other countries generally have a stricter view on specification support for the purposes of preserving priority. According to Heather McCann, a European Patent Attorney at EIP: “Having a mismatch in the literal terminology of the U.S. provisional and a child PCT application or a child European direct national filing could significantly reduce the possibility of obtaining patent protection and successfully defending a validity challenge, post-grant, if the contents of the U.S. provisional application were published (even by the applicant) prior to the child PCT or child direct national filing.”[ix]
Unfortunately for U.S. applicants, unless they are keen on priority issues, non-U.S. patent offices might be able to reject cases from U.S. applicants more frequently based on a difference between common U.S. practice and foreign written description and enablement laws.
INEQUITABLE CONDUCT
Because inequitable conduct involves intent, which is fact-specific, this article does not delve any deeper into this potential issue. That said, it would be interesting to hear an argument and supporting explanation against such a finding if the applicant incorrectly claimed priority even though 100% of the uncommon word stems were missing from the provisional.
GENERAL CONCLUSIONS
The study is an objective report of terminology disagreement between provisionals and non-provisionals. Individual attorneys will vary on how much terminology disagreement they find comfortable in light of their understanding of 35 U.S.C. 112(a).
With 27% of the provisionals missing a quarter or more of the broadest non-provisional claim’s uncommon unique word stems, there is much room for the patent bar to either improve provisional application quality or avoid inaccurate priority claims. Perhaps this could also be accomplished by prioritizing the conversion to a non-provisional or filing incremental provisionals as more details become available, rather than waiting 10 months for the conversion.
[i] For more information on the written description and enablement requirements, particularly as they apply to software-related innovation, see Sutton, E. Software Patents: A Practical Perspective (ver. 2.2, Sept. 2017), available on Amazon at http://a.co/9xcPNr9 (a software patents textbook in support of a law course offered at Chicago-Kent College of Law).
[ii] Los Angeles Biomedical Research Institute at Harbor-UCLA Medical Center v. Eli Lilly and Company, 849 F.3d 1049 (Fed. Cir. 2017) (inadequate written description in provisional); Phigenix, Inc. v. Genentech Inc., 238 F.Supp.3d 1177 (N.D. Cal. 2017) (inadequate written description in provisional); See Storer v. Clark, 860 F.3d 1340 (Fed. Cir. 2017) (provisional not enabling); Dynamic Drinkware, LLC v. National Graphics, Inc., 800 F.3d 1375 (Fed. Cir. 2015) (“priority claims are not examined by the PTO as a matter of course, and consequently are not entitled to a presumption of adequate written description support in the provisional application,” and “[a] provisional application’s effectiveness as prior art depends on its written description support for the claims of the issued patent . . . .”).
[iii] N=1905, down from an original sample of 2341 after excluding: (a) unparseable provisionals, (b) clearly incomplete claims (for example, a method claim ending at the colon), and (c) later-filed provisionals that paired with the same first-filed non-provisional; provisionals filed Mar. 2012 to July 2013 across all companies, spanning the AIA transition; raw provisional pdfs available from PAIR, provided by Innography® in Jan. 2017; filing dates provided by Innography® directly and through use of their excellent patent portfolio analytics tool; sample spread over TC 1600, 1700, 2100, 2400, 2600, 2800, 3600, and 3700.
[iv] N=1905, same sample as above, comparing claim 1 of the non-provisional to the entire contents of the provisional application pdf, drawings included, based on Official Character Recognition (OCR) performed in batch by Adobe® Acrobat® 9 Standard, version 9.0.0. Provisionals were paired up with their first-filed non-provisionals based on data provided by Innography®. The claims of the non-provisionals were downloaded from Innography®.
[v] The first claims of the first-filed non-provisionals were stemmed using a popular word stemming library to result in unique word stems.
[vi] The text of the corresponding provisionals, as a result of the Adobe® Acrobat® 9 Standard OCR (see above), was searched for any text that would match the unique word stems. Spacing issues and formatting issues were corrected before performing the comparison.
[vii] The provisionals involved were filed between March 2012 and July 2013, bridging the AIA transition. If attorneys changed practice from pre-AIA to post-AIA, those changes were not sufficiently detectable in this sample. Although I personally believe that attorneys have not changed practice post-AIA; to fully test that hypothesis, I would need a sample significantly earlier than the AIA and a separate sample significantly later than the AIA. These samples simply were not available to me when I started the study.
[viii] Los Angeles Biomedical Research Institute at Harbor-UCLA Medical Center v. Eli Lilly and Company, 849 F.3d 1049 (Fed. Cir. 2017) (inadequate written description in provisional); Phigenix, Inc. v. Genentech Inc., 238 F.Supp.3d 1177 (N.D. Cal. 2017) (inadequate written description in provisional); See Storer v. Clark, 860 F.3d 1340 (Fed. Cir. 2017) (provisional not enabling); Dynamic Drinkware, LLC v. National Graphics, Inc., 800 F.3d 1375 (Fed. Cir. 2015) (“priority claims are not examined by the PTO as a matter of course, and consequently are not entitled to a presumption of adequate written description support in the provisional application,” and “[a] provisional application’s effectiveness as prior art depends on its written description support for the claims of the issued patent . . . .”).
[ix] See, for example, European decision T 1983/14 “Purchase of mobile top-up/JANUARY PATENTS LTD.” (Nov. 23, 2015) (“The case law of the Boards of Appeal requires that the subject matter be directly and unambiguously derivable by the skilled person from the disclosure as a whole. The expressions ‘invoiced together’ and ‘charged for together’ . . . disclosed no more than that transactions could take place on the same machine[, not] multiple products being invoiced as one transaction.”); European decision T 2061/13 (June 20, 2017) (“subject-matter of claim 1 is . . . not directly and unambiguously derivable by the skilled person . . . such that . . . claim 1 does not have a right to priority from P1.”).
Patentees often blame the USPTO for low patent quality. Examiners though often reflect upon the principle “garbage-in, garbage out.”
As part of its patent quality initiative, the USPTO is considering the patent document could be improved to better facilitate examination and ultimately improve patent quality at issuance.
The chart below comes from an internal USPTO survey of patent-examiners – asking them what attributes of a patent application are “most necessary” for quality (and efficient) examination. For each of those attributes, the survey asked about the frequency that they are found in patent applications (click to enlarge) (PDF with Explanations):
Note – the survey was conducted by Martin Rater – USPTO’s Office of Patent Quality Assurance chief of statistics.
Not surprising, the largest gaps are found in the area of claims written in a form that is so broad so that it is no longer relatable to the inventive concept. The chart here focuses on “top needs.” Examiners also noted elements they don’t see as necessary – perhaps most notably a “Glossary of terms provided (separate section in the specification).”
Tough case for Livermore Software. The PTAB just rejected its claims as abstract ideas. Claim 1 is a bit long but is listed below as a method for joining mis-matched portions of an object’s surface (NURBS patches) so that a whole object model is prepped for finite element analysis (FEA). The problem for the patentee is that it presents a step-by-step algorithm with such precision that the Examiner (and PTAB) saw it as claiming a mathematical algorithm.
Ex parte Hartmann, Apn. 14/051,559 (Nov. 2, 2017) [PTAB Decision: Livermore101]
The PTAB writes:
We agree with the Examiner that claims 1, 7, and 13 are directed to the abstract idea of manipulating data through mathematical relationships, which is similar to the computing formula discussed in Parker v. Flook, 437 U.S. 584 (1978), and the Arrhenius formula in Diamond v. Diehr, 450 U.S. 175 (1981). . . . [All of the claimed steps] are abstract mathematical concepts and algorithms that could be performed in the human mind, or by a human using a pen and paper, without need of any computer or other machine.
Moving to Step-Two of Alice, the PTAB wrote:
We find that the additional limitations … do not add significantly more to the abstract idea. … Particularly, claims 1, 7, and 13 recite well-understood, routine, and conventional elements (i.e., computer system having an application module, memory, processor, and computer readable storage medium) that enable the creation of a computerized model using a “generic computer structure that serves to perform generic computer functions that are well-understood, routine, and conventional.”
Interesting aspect of the decision here is the notion that the spline adjustment could be done by a human with pen and paper. The historical approach to do this well required the use of a spline tool (shown above).
In its decision the PTAB suggests (but does not hold directly) that the claims may be eligible if they had expressly (rather than implicitly) recited “a CAD model, a computer aided engineering (CAE) model, or a mechanical engineering design analysis for a product (e.g., car, airplane).” One way to think about the claim below is as a step for enabling model conversion (an abstract idea) but not the actual full conversion process (a concrete application rather than an abstract idea).
Rejected Claim 1 below:
1. A method of joining imperfectly-matching Non-Uniform Rational Basis Splines (NURBS) patches to form a computerized model suitable for finite element analysis (FEA), said method comprising:
receiving, in a computer system having an application module installed thereon, definitions of a first NURBS patch and a second NURBS patch, the first and second NURBS patches to be joined together along a physical boundary defined in a first curve with a first set of control points, associated weights and a corresponding first plurality of knot-vector values in the first NURBS patch and defined in a second curve with a second set of control points, associated weights and a corresponding second plurality of knot-vector values in the second NURBS patch, wherein the first set of control points and said first plurality of knot-vector values are different from the second set of control points and said second plurality of knot-vector values;
normalizing said first plurality of knot-vector values such that the first curve’s parametric length equals the first curve’s physical length in the first NURBS patch;
normalizing said second plurality of knot-vector values such that the second curve’s parametric length equals the second curve’s physical length in the second NURBS patch;
determining a common curve as an overlapped section of the first and the second curves to represent the physical boundary;
adjusting the first and the second curves such that first and second projection points correspond to starting and end locations of the common curve, respectively;
designating one of the first and second curves having less number of control points along the common curve as a master curve, the other as a slave curve; and
determining a set of linear constraint equations for numerically connecting the first and second NURBS patches along the physical boundary by computing dependencies of the slave curve’s control points to the master curve’s control points,
whereby the first and second NURBS patches together with the set of linear constraint equations for the control points along the physical boundary enable a computerized model created therefrom suitable for finite element analysis.
Pedram Sameni at Patexia has an interesting new post titled Eighty Percent of IPR Filings are for Defensive Purposes. As the title suggests, their study of the 6,580 IPR challenges filed 2012-2017, 80% challenge patents that were already being asserted in district court.
![136px-Spline_(PSF)[1]](https://cdn.patentlyo.com/media/2017/11/136px-Spline_PSF1.png)
