February 2018

Electronic Medical Records: Not Eligible

Ex parte Naeymi-Rad (PTAB 2018)

Intelligent Medical Objects, Inc. (IMO) has an interesting business of capturing, standardizing, and simplifying medical documentation used in 3,500 hospitals and by 450,000 doctors.  This process is critical for both treatment and payment — all in an environment where mistakes can lead to death and bankruptcy.  In the U.S., companies have spent billions of dollars on designing electronic medical record systems — yet major problems remain.

IMO’s CEO Frank Naeymi-Rad along with 11 others are listed as inventors of the company’s pending Application No. 13/622,934 – recently rejected on eligibility grounds.  The claims are directed to a software system for “implementing a controlled vocabulary” within a longitudinal medical record.   The examiner finally rejected all 14 claims for on eligibility grounds (withdrawing the obviousness rejection) — concluding that the claims are directed to the abstract idea of “providing healthcare by generating and processing medical records.”

On appeal, the PTAB sided with the examiner – holding that – at a high level of abstraction, the claims “can be characterized as collecting, storing, and organizing … and transmitting information.”   Although the examiner acknowledges that the claims are novel and non-obvious, the PTAB still found no inventive concept.

Although the second step in the Mayo/Alice framework is termed as a search for an “inventive concept,” the analysis is not an evaluation of novelty or non-obviousness.

On this point, the PTAB quoted Diamond v. Diehr:

The ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the Section 101 categories of possibly patentable subject matter.

Rather than focusing on novelty as the “inventive concept” language suggests, the PTAB indicated its second step goal is a search for something “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself” quoting Alice/Mayo.  One approach that works for patentees is to show that their invention is an improvement of computer functionality.  Here, however, the PTAB ruled that the claims simply use computer technology — “generic components … employed in a conventional manner.”

IMO argued (through its attorney Richard Beem) that the addition of patient-by-patient controlled vocabulary was a key feature that allowed the longitudinal medical records possible because it allowed for relational storage — reducing memory and increasing speed.  I expect an appeal to the Federal Circuit on these (and other) points.

I list claim 1 below:

1. A method of implementing a controlled vocabulary in a longitudinal electronic medical record, comprising:

generating a first instance of a plurality of data objects during a first encounter, said plurality of data objects comprising data elements further comprising a first instance identifier and temporal identifiers;

linking a data object in said first instance to a summarization reference with a pointer, where the plurality of data objects and the summarization reference are related as part of a directed graph data structure;

creating an additional instance of a plurality of data objects during a later encounter, said additional instance of a plurality of data objects comprising data elements further comprising an additional instance identifier and temporal identifier;

providing continuity for said plurality of data objects of said first instance over time[, wherein said providing step comprises tracking a relationship between said data object of said first instance and a data object of said additional instance];

capturing said controlled vocabulary using a computer by forming a list of medical terms and list of associated descriptions;

creating a list of codes internal to said controlled vocabulary[, wherein said controlled vocabulary maps to at least one of a reference terminology or an administrative terminology];

storing said codes, said medical terms, and said descriptions using a computer in a format suitable for use in the longitudinal electronic medical record; and

tagging elements within a domain within the longitudinal medical record with said controlled vocabulary[.]

Disputed Claim Construction Should Not Ordinarily Be Decided on 12(b)(6) Motion

Nalco v. Chem-Mod (Fed. Cir. 2018)

The district court dismissed Nalco’s patent infringement complaint with prejudice on a R. 12(b)(6) motion for failure to state a claim upon which relief can be granted. On appeal, the Federal Circuit has reversed – finding that the patentee had properly stated a claim of direct infringement, infringement under the doctrine of equivalents, indirect infringement, and willful infringement.

Nalco’s asserted U.S. Patent No. 6,808,692 covers a method of removing most of the elemental mercury from the smoke emitted by a coal plant (before it is released into the atmosphere).  Although Nalco’s approach is no better than prior methods, it is cheaper and thus more likely to be adopted.  The claimed method requires injection of a halide precursor that is then converted to a halide (by the heat of the furnace) which then binds to mercury in a form that can be easily filtered from the flue gas.

In U.S. Federal Court, a lawsuit begins with the filing of a complaint that must include sufficient allegations of fact that make the claim for relief plausible.  A complaint with factual deficiencies is can then be dismissed. Usually, a court will dismiss the case without prejudice (allowing it to be refiled with more complete factual assertions) or even informally suggest the plaintiff file an amended complaint.  Here, the Nalco has filed five different complaints (original plus four amended).  The first and third amended complaints were dismissed without prejudice.  Finally, at the fourth complaint the court dismissed with prejudice — leading to the appeal here.

In the complaints, Nalco explained in detail its theory of infringement. For its part, the district court appears to have conducted an informal claim construction that led to its ruling of no possible infringement.  The basic problem is that the patent suggests (but does not expressly claim) that a mixing of the halide precursor with other materials occurs within the flue, while the accused system pre-mixes prior to injection into the flue.

Thus, this is a case where direct infringement will likely be resolvable as a question of law following claim construction.  Here, however, the Federal Circuit rejected the lower court’s informal claim construction as premature at the pleading stage:

As Nalco explained, these disputes between the parties hinge on where “flue gas” may be located  within the power plant and what limitations are appropriate on where “injecting” may occur. It is not appropriate to resolve these disputes, or to determine whether the method claimed in the ’692 patent should be confined to the preferred embodiment, on a Rule 12(b)(6) motion, without the benefit of claim construction. The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits. (internal quotes removed)

What does this mean – although claim construction is an issue of law, the court here holds that claim construction is not the type of legal question that should normally be resolved on the pleadings without the due consideration given in the Markman process.


Walking through the complaint, the appellate panel also found improper dismissal of the patentee’s claims of infringement under the doctrine of equivalents, indirect infringement, and willful infringement.

US v. Microsoft: Searching a Server Abroad and Domestic Warrants

By Dennis Crouch

In United States v. Microsoft, the Supreme Court is asked to determine the scope of US extraterritorial police powers. Back in 2013, the Federal Government served a warrant on Microsoft seeking email records of one of its clients who was a suspected drug trafficker. Microsoft refused to comply because the emails were stored in Ireland. Although related to the Fourth Amendment, the question presented to the court centers on the scope of the Stored Communications Act – and whether warrants issued under 18 U.S.C. § 2703 can compel a US entity to retrieve and deliver materials stored abroad. Microsoft argues that the FBI should go through Irish protocol to get the information stored in Ireland. The case could have some obviously big impact on corporate disclosures abroad.

We might talk about liberty and freedom, but Microsoft’s position here is that a key way for US Citizens to maintain secrecy is to use foreign servers. Of course, few folks know the location of the clouds where their information is stored. Here, it was simply favorable tax law and a love for green that led to Microsoft’s Irish servers. A more apt question might be whether Microsoft must take action in Ireland or can the retrieval be entirely controlled from the US.

An opinion should be out by mid-June.

BETR: Innovation in Media and Entertainment Law

Mizzou’s Center for Intellectual Property and Entrepreneurship along with our Business, Entrepreneurship & Tax Law Review (BETR) is hosting its Spring Symposium this Thursday, March 1st from 9:30am until 2:00pm. Speakers include Professors Lyrissa Lidsky, Mary LaFrance, Jasmine Abdel-Khalik, Amy Sanders, Rachel Jones, and Brett Johnson. Newsy CEO Jim Spenser is the keynote. I’ll be moderating a panel on Entertainment Law. – Dennis


US v. Lundgren: When Recycling is a Crime

US v. Lundgren (11th Circuit 2018)

A pending case against recycler Eric Lundgren has now moved to the 11th Circuit Court of Appeals. Lundgren pled guilty to criminal copyright infringement and was sentenced to 15 months incarceration.  The basics are that he manufactured over 28,000 discs containing Dell/Microsoft Restore Discs and shipped them from China to the U.S.  Lundgren argued that the discs should be seen as publicly available since they don’t work without an access code and his actual plan involved using legitimate access codes that he had obtained from purchasers.  Microsoft apparently pushed the Miami FBI to pursue Lundgren for counterfeiting and last year he pled guilty to both Criminal Copyright Infringement and Conspiracy to Traffic in Counterfeit Goods.

  • 17 U.S.C. § 506(a)(1)(A) (“Any person who willfully infringes a copyright shall be punished … if the infringement was committed (A) for purposes of commercial advantage or private financial gain”).
  • 18 U.S.C. § 2320(a)(1) (“Whoever intentionally— (1) traffics in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services”).

The conspiracy to traffic in counterfeit goods is, I imagine, what really drove the charges — the problem with the discs was not only that they were Microsoft Restore discs, but that he had printed on them the Dell and Microsoft logos.  Of course, one trick with Conspiracy is that it is a future-crime – an agreement to commit a crime at some time in the future.

Because he pled guilty, Lundgren is not appealing his conviction, but rather is focusing on the 15-month prison sentence.  Basically, the sentence fits with the sentencing guidelines for the $700,000 in harm that the judge found ($25 per disc).  Lundgren argues on appeal that this calculation is incredibly off-the-mark since the discs were (at the time) given away for free by the companies.

Mark Rifkin and Randall Newman of Wolf Haldenstein (NY) are lead attorneys on the case.

PTAB: Tribal immunity does not apply to inter partes review proceedings.

Mylan and Teva v. St. Regis Mohawk Tribe (PTAB 2018)

In a long 42 page opinion, a PTAB panel has denied St. Regis Mohawk Tribe’s motion to dismiss the pending inter partes review (IPR) proceedings against its patents.  Here, the panel holds plainly that “Tribal immunity does not apply to inter partes review proceedings.”  Although the PTAB identified state sovereign immunity as a different question, the ruling here certainly suggests that

The case will be appealed to the Federal Circuit — I expect the court will be willing to hear a mandamus action, but we may have to wait until a final decision of validity — something that the equitable owner Allergan has been working hard to avoid.  The sovereign immunity question is the type of threshold question decided at the IPR petition stage.  Under the statute, PTO petition decisions are not subject to appeal. However, the issues here appear to fall squarely within the exceptions noted by the Supreme Court in Cuozzo.

Allergan owned several patents that it granted to the Mohawk Tribe back in 2017.  Although the patents are quite valuable, Allergan actually paid the Mohawk Tribe to take the patents.  The scheme allowed Allergan to still exclusively control use of the underlying inventions and potentially benefit from the Sovereign Immunity given to Indian Nations within the United States.

In reviewing whether sovereign immunity applies here, the PTAB held the following:

  • There is no statutory basis for the application of Tribal Immunity in IPR proceedings.
  • There is no controlling precedent requiring the application of Tribal Immunity in IPR proceedings. (Decisions by other Federal Agencies is not controlling precedent.)
  • Granting of sovereign immunity to the States in the IPR context does not require granting of sovereign immunity to the Indian Nations.
  • Congress granted the PTO with broad IPR authority over “any patent.”
  • In IPR actions, the jurisdiction is in rem – over the patent – rather than in personam – over the patent owner.  This means that IPRs are less offensive of any immunities.
  • IPR actions are not the “type of suit” to which tribal immunity applies at common law since petitioners are not seeking anything from the tribe (only cancellation of its valuable property rights).

The collection of these legal determinations served as the PTAB’s foundation for its final decision of no immunity.

The PTAB then went on to look at the particular situation in this case – where the Mohawk Tribe is the assignee, but Allergan holds all effective rights.  After reviewing the details of the transfer, the PTAB ruled in the end that it could treat Allergan as the “patent owner.” See Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1250 (Fed. Cir. 2000) (a “party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights.”).

I would see this case as quite different if the Mohawk Tribe had actually bought the patents or obtained them through some positive-value venture.  Here, the approach is blatant rent seeking and I am glad that the PTAB was able to work its way through.

PatCon 8 Conference in San Diego Next Week

By Jason Rantanen

Next week is PatCon, the largest annual gathering of patent law, economics, and business professors. This year’s conference takes place at University of San Diego on Friday & Saturday, March 2-3, and features Joe Matal, Carter Phillips, Patent Pilot Program judges, PTO economists, prominent local attorneys, and over 50 academics (providing up to 12.5 hours of CLE credit). I’ll be there, talking about the Compendium of Federal Circuit Decisions, one of my ongoing works in progress. More information on PatCon can be found here.

Patent Agent Privilege in Texas

In an important new decision, the Texas Supreme Court has recognized “patent-agent privilege” as a form of attorney-client privilege.  The court writes:

[B]ecause patent agents are authorized to practice law before the USPTO, they fall within [Texas Rules of Evidence] Rule 503’s definition of “lawyer,” and, as such, their clients may invoke the lawyer-client privilege to protect communications that fall within the privilege’s scope.

In re Silver (Texas 2018) [160682]


In the case, the trial court had concluded that a party’s communications with a patent agent were only privileged to the extent that the patent agent was acting under an attorney’s direction.  The court here reverses that judgment — no supervision is necessary.   The court does offer a major caveat — that communications outside of the patent agent’s authorized practice area might not be protected:

The client’s communications with a registered patent agent regarding matters outside the agent’s authorized practice area might not be protected because these communications are not necessarily made to facilitate the rendition of professional legal services.

In announcing a potential line, the court did not actually draw the line as to when a communication strays too far.Image result for texas memes

Ulbricht v. U.S.: Privacy Interest in your Home Router Traffic

by Dennis Crouch

Important petition for writ of certiorari outside of patent law, but still well within the technology law sphere: Ulbricht v. U.S., Supreme Court Docket No. 17-950, questions presented:

  1. Whether the warrantless seizure of an individual’s Internet traffic information without probable cause violates the Fourth Amendment.
  2. Whether the Sixth Amendment permits judges to find the facts necessary to support an otherwise unreasonable sentence.

Ulbricht is known as the Dread Pirate Roberts, Frosty, Altoid, and creator of the Silk Road dark web marketplace.  Here, Ulbricht challenges his conviction and sentencing for drug trafficking, money laundering, and hacking — arguing that the evidence used to convict was illegally obtained in violation of his constitutional rights.

Without warrant, the government tracked Ulbricht’s communications to a particular IP address and then began skimming data from all communications passing through his home wireless router (located in his living room).  This allowed the government to identify the source and destination of all messages, including all of Ulbricht’s devices that he used for communications (including his laptop whose seizure became the sting target). Under the Electronic Communications Privacy Act (ECPA), the government needs a court order, but does not need to show probably cause as required by the Fourth Amendment.  The government did obtain such an order prior to beginning its router-skimming operation.  The petition here argues however that the US Constitution requires more.

In its decision, the Second Circuit relied upon the analogy to old-school-telephones and held that the collected internet traffic was “akin to data captured by traditional telephonic pen registers and trap and trace devices.” As such, no warrant was needed.

= = = = =

Two important telecom cases are pending before the court this term –

  • Carpenter v. United States (Whether the warrantless seizure and search of historical cellphone records revealing the location and movements of a cellphone user over the course of 127 days is permitted by the Fourth Amendment).
  • United States v. Microsoft (Whether a US provider of email services must comply with a probable-cause-based warrant by making disclosure of electronic communications within that provider’s control, but that are stored abroad in a foreign country) (Argument set for Feb 27).

Patent Eligibility: Handling Disputed Issues of Material Fact

Following the Federal Circuit’s decisions in Berkheimer, AATRIX, and ATS, the role of evidence and factual conclusions in the eligibility analysis is in a somewhat confused state. That setup makes Cleveland Clinic’s recent petition for writ of certiorari quite timely.

Cleveland Clinic Foundation v. True Health Diagnostics LLC, Supreme Court Docket No. 17-997 (2018) questions presented:

In this case, the patents were fully examined by the PTO and found to be novel and not obvious, including for one of the patents, confirmation after two ex parte reexaminations. The PTO further found that the prior art taught away from the claimed inventions. Notwithstanding …, the district court declared [the patents] invalid at the pleading stage. It gave the patents a cursory review, and refused to construe any claim terms. It took 55 separate claims – each claiming a distinct invention with many different limitations – and analyzed them as if all of the claimed inventions were a single method with two simplistic steps. The court did not permit evidentiary submissions or development of the record, and while the district court purported to take judicial notice of the prosecution history, it ignored the PTO record in its analysis. The Federal Circuit affirmed the lower court, invalidating valuable patent rights in a new and nonobvious diagnostic method using known techniques to detect an element in blood, but where the inventors had discovered that adapting known techniques for an entirely new purpose yielded medically-relevant data not known in the prior art and, in fact, taught away from by the prior art.

The questions presented are:

1. Whether the court below erred in holding, contrary to Mayo, that a method involving natural phenomena is ineligible for patent protection if it claims known techniques that have been adapted for a new use and purpose not previously known in the art.

2. Whether Mayo authorizes a district court to invalidate valuable patent rights on the pleadings when there are disputed questions of fact, a disputed question of claim construction or scope, and/or an undeveloped evidentiary record, notwithstanding the presumption of patent validity and settled procedural and Seventh Amendment safeguards that ordinarily prevent the resolution of such disputed questions on the pleadings.

The petition was filed in January and was supported by an Amicus brief filed by Raymond Mercado.  In the wake of Berkheimer and AATRIX the petitioner then filed a supplemental brief setting up the conflict between Judges Moore and Stoll on the one hand and Judge Reyna on the other (Judge Reyna was also author of the Cleveland Clinic decision).

The defendant in this case, True Health Diagnostics, has waived its right to respond to the petition. If the Supreme Court has any interest in the case, the most likely next step would be to ask True Health for responsive briefing — likely followed by a request for the views of the Solicitor General.

Eligibility: A Factual Dispute Requires Alleged Facts

The recent non-precedential opinion of Automated Tracking Solutions v. Coca Cola provides something of a backstop to AATRIX and Berkheimer.   The ATS panel includes Judges Moore and Stoll – the two leading judges pushing for more formality in considering factual conclusions underlying an eligibility decision.  In ATS, however, the panel affirmed a district court judgment on the pleadings that the asserted patent lacks eligibility.  The panel restated its prior conclusions that “patent eligibility under § 101 is a question of law that may contain underlying issues of fact.” However, in this case the court found no material facts in dispute.

The four asserted ATS patents are all directed to “inventory control” processes using RFID technology. U.S. Patent Nos. 7,551,089; 7,834,766; 8,842,013; and 8,896,449.  RFID chips include a transponder that is then identified by a reader that receives a signal via an antenna.  

Claim 1 of the ‘766 patent is listed below:

1. A system for locating, identifying and/or tracking of an object, the system comprising:

a first transponder associated with the object;

a reader that is configured to receive first transponder data via a radio frequency (RF) signal from the first transponder;

an antenna in communication with the reader and having a first coverage area;

a processor coupled to the reader, wherein the processor is configured to receive the first transponder data from the reader and to generate detection information based on the received first transponder data, the detection information comprising first sighting and last sighting of the first transponder in the first coverage area; and

a storage device that is configured to store the detection information.

In reviewing this claim, the District Court followed the Alice/Mayo two step framework asking first, whether the claim is directed toward an ineligible abstract idea and if so, whether the claim also includes an inventive step that goes beyond the ineligible aspects to transform the whole into an eligible invention. On appeal here, the Federal Circuit has affirmed. The results:

Step 1: The claim is directed to the process of collecting data, analyzing the data, and determining results based upon the analysis.  As stated, that process is an abstract idea.

Step 2: Recognizing that RFID technology was known at the time, the claim adds no inventive step beyond the abstract idea.

The patentee attempted to establish a disputed factual question – whether the RFID technology as used in the claims was “routine and conventional” at the time.  In Berkheimer, the Federal Circuit determined that issue to be a question of fact.  Here, however, the patentee had failed to make plausible factual allegations in its complaint sufficient to create a dispute here.  “The complaint alleges nothing to support ATS’s contention that RFID was a developing technology Nor does the complaint allege that any o the hardware components in the representative claims–either alone or in combination as a system–are anything but well understood, routine, and conventional.”  Rather, the specification of the patent states that RFID systems are known and can be quite simple. 

Dismissal affirmed.  

= = = =

As an aside, I’ll ask why this case was released as non-precedential while the two parallel 101 cases mentioned above were deemed precedential. Professors Lemley and Gugliuzza (BU) have accused the court (members of the court) of attempting to shift the rule by hiding precedent. Can a Court Change the Law by Saying Nothing?

= = = =

And, you have to love the drawings in the patents. You’ll notice the typical corporate shelf in figure 4 above that includes typical documents and files along with weapons, money, and narcotics.

Science Fiction Law — Still Reeling: Minority Report, Sixteen Years Later

Michigan Law Professor Nicholson Price is teaching an interesting seminar this semester merging science fiction and legal analysis.  We agreed that his students should write blog posts and that I would publish the most worthy on Patently-O.  The first post comes from Lauren Kimmel and is focused on stopping future crimes. – DC

Guest Post by Lauren Kimmel

Steven Spielberg’s Minority Report (starring Tom Cruise) was released over a decade and a half ago; and yet, in many ways, the film has withstood the test of that time. The film takes place in Washington, D.C., in the year 2054—nearly a hundred years after American writer Philip K. Dick published his original short story with the same name and general storyline. In the film, the District’s Precrime Division use futuristic and fatalistic visions of three “precogs” to detect and apprehend would-be, “heat-of-passion” murderers before they are able to carry out their respective homicides.

Sixteen years later, Minority Report offers some interesting insight about where we are in the narrative of our own law and society. For example, the science fiction of the film bears remarkable, if not alarming, similarity to the technology behind predictive policing, a term used to encompass a range of real-world precrime detection systems currently in use around the country and even across the globe. The National Institute of Justice defines predictive policing as “taking data from disparate sources, analyzing them and then using the results to anticipate, prevent and respond more effectively to future crime.” We do not know exactly what predictive policing looks like from the inside out—but these precrime detection systems likely combine crime-mapping software, statistical data, police reports, and complex algorithms to help police better anticipate the next steps of would-be criminals.

On the one hand, predictive policing presents clear benefits to the communities who make use of it; it may be helpful, for example, in halting everything from drug deals to domestic terrorist activity to mass shootings, to violent or gang-related crimes. But predictive policing also raises serious questions about our own “progress” toward a science-based society. Is science-based progress always a good thing? And, even if it is not, is this our path, for better or worse?

Predictive policing helps us write a story about when and where crime will happen, as well as who will commit it. But in the context of our imperfect society, we must ask, Is this story the right one? Importantly, the “black box” of predictive policing technology obscures from public scrutiny its process for arriving at certain crime predictions, sparking key constitutional and public policy concerns. Where does the data come from? What factors are entered into the algorithms? Are certain factors weighted more than others? Does the technology behind predictive policing change over time to incorporate new patterns and findings—and if so, how? Does it learn (a la artificial intelligence technology), or does human instruction (and, along with it, human error) play a role? Do those developers return to the black box of algorithms to clarify when a crime “occurred” but no one was ever charged (i.e., arrests vs. convictions)?

And most importantly, what is the purpose that we, as a society, want predictive policing to serve—and does the technology ultimately serve this purpose? What’s more, even though computers are not biased, the statistics feeding it might be; moreover, predictive policing is only as good as the officers and analyzers who handle the data. Even if human error, at least in the sense of data input, is not a primary concern, context may be just as important as the data itself. A lack of understanding of the context could (and likely does) exacerbate existing racial and socioeconomic tensions. For example, if police are already patrolling a poorer, primarily black neighborhood and, as a natural result, detecting more crime there than the more affluent and perhaps primarily white neighborhoods they are not monitoring (but where crime may nevertheless be occurring), the crime maps compiled using these statistics may be skewed to reflect a measured bias against the former group. Or, if poorer communities are more likely to see theft—because many individuals lack and cannot afford basic necessities—the data may similarly imply that these communities are simply more “crime-prone” than others—when there is really more to the discussion.

One last consideration and concern is the fact that these predictive policing technologies are developed and carried out by private companies, such as PredPol, HunchLab, and Upturn. We should be asking whether it is a good or bad idea to privatize these services, and trust them with developing and interpreting predictive policing technology. Consider the following quote from Rashad Robinson, Executive Director of Color of Change: “Sending corporate power and corporate interest into the criminal justice system will end in bad results. It will end in profits over people and profits over safety and justice and none of us can afford that.”  Especially when we consider what this process has done to our prison systems, it may be worth thinking twice about privatizing other aspects of the criminal justice system.

More on Prosecution Disclaimer

By Dennis Crouch

Arendi v. Google (Fed. Cir. 2018)

In its petition for inter partes review (IPR), Google argued the obviousness of all 79 claims of Arendi’s of U.S. Patent No. 6,323,853. The PTAB granted the petition (acting on behalf of the PTO Director) and issued a final decision cancelling the claims. In its decision, the PTAB followed a common district court practice of issuing alternative reasons for its judgment – holding that (1) its preferred broad claim construction rendered the claims invalid; but (2) the claims would still be invalid under a more narrow construction. On appeal, the Federal Circuit disagreed with the broad construction, but agreed with the alternative reasoning – thus affirming the obviousness holding.

One Click Substitutes: Arendi’s patent claims a process for substituting information (such as a name or address) in a document based upon a single user command. Basically, following user activation, the program will look for a first bit of information within the document – such as a name in a <NAME> field. A database is then used to lookup related information to fill other fields in the document, such as an <ADDRESS> field. The program might also update the original <NAME> field fit the formal version found in the db.

Prosecution Disclaimer: During prosecution, the claims were particularly amended to require operation “upon a single entry of the execute command by means of the input device.” In order to over come prior art, the patentee distinguished the TSO prior art reference based upon the fact that TSO required a user to select a text string while Arendi’s amended claims did “not require the user to select a text string [but] functions automatically upon a single click.” The examiner included that distinguishing point in the reasons for allowance.

During the IPR, however, the PTAB found that (1) the claims to not expressly exclude typing-in a text string; and (2) the statements by the patentee during prosecution were not sufficient to rise to a prosecution disclaimer that would narrow the claim scope; and (3) the examiner’s reasons for allowance are essentially immaterial because prosecution disclaimer is based upon applicant statements, not examiner statements.

On appeal, the Federal Circuit found “clear and unmistakable” surrender of subject matter – the requirement for prosecution disclaimer under cases such as Middleton, Inc. v. 3M, 311 F.3d 1384 (Fed. Cir. 2002); Omega Eng’g, Inc. v. Raytek Corp., 334 F.3d 1314 (Fed. Cir. 2003), Innova/Pure Water, Inc. v. Safari Water Filtration System, Inc., 381 F.3d 1111 (Fed. Cir. 2004); and Sorensen v. Int’l Trade Comm’n, 427 F.3d 1375, 1379 (Fed. Cir. 2005).

Not so easy in My View: I do not see this case as quite so easy as the Federal Circuit made-out. In particular, the patent applicant never stated or argued (on record) that its invention excluded the manual selection of text, but rather stated that “the present invention does not require the user to select a text.”  Ordinarily, an argument that a claim does not “require” a particular action is seen as a far-cry and treated quite differently from a statement that a claim “does not cover” or “disclaims coverage over” that action.  The “comprising” transition language used by the claim further builds upon this argument that no disclaimer took place.

In any event, the holding is that the scope was disclaimed and thus the first portion of the PTAB decision was rejected.

As mentioned above, the PTAB offered its decision in the alternative – and the Federal Circuit agreed with the second reason.  The claims are obvious under the second analysis since a prior art reference (Goodhand) performs “essentially the same textual analysis” and does not require the user text selection.

In sum, the PTAB found that Goodhand shows all of claim 1’s limitations, when giving effect to the prosecution disclaimer and limiting the scope of the “single entry” command. This finding is supported by substantial evidence. On the PTAB’s findings, the alternative conclusion of unpatentability on the ground of obviousness in view of Goodhand is sustained.

Claim Cancellation Affirmed


Isolating and Measuring a Natural Phenomenon

by Dennis Crouch

Ex Parte Simons, APPEAL 2016-002684 (Patent Tr. & App. Bd. Jan. 31, 2018) (Decision on Rehearing)

In this case pending before the USPTO, Australian company Haplomic Technologies is seeking to patent a method of mapping whether methylated DNA bases are cis or trans.

16. A method for improving methylation mapping, comprising,

substantially isolating a DNA molecule from the biological sample, wherein the DNA molecule is an individual metaphase chromosome or a chromatid, or a fragment obtained therefrom;

analyzing the DNA molecule to determine the presence or absence of one or more methylated bases in the DNA molecule and

determining whether any two methylated bases are present in cis on the DNA molecule.

In its original decision, the PTAB affirmed an examiner rejection – finding the claim ineligible as directed toward a natural phenomenon.  However, the patentee requested a rehearing – arguing that the PTAB had failed to properly identify the natural phenomenon being claimed.  On reharing though, the PTAB reaffirmed the decision of no patentable subject matter.

In its analysis, the Board first noted that the claims are not directed toward any transformation of the isolated DNA, but rather simply detecting its parts.  We know from prior cases that isolated DNA remains a product of nature (Myriad) and that detecting DNA sequence is also a phenomenon of nature (Ariosa).  Similarly here, the PTAB ruled:

because the DNA is methylated in its cis or trans configuration prior to isolation, and because Appellant’s claims are directed merely to determining the configuration that exists prior to such isolation, Appellant’s claims are directed to a naturally-occurring phenomenon, i.e., a “phenomenon of nature,” and, therefore, to a judicially-created exception to Section 101.

Looking to step two of the Alice/Mayo analysis, the court found that the claims were written so broadly as to preempt the entire area — and did not including any saving inventive concept application.  “In short, Appellant’s claims are directed to determining, by any means, including means well known in the art, the naturally-occurring cis or transposition of methylated sites on a sequence of isolated DNA.”

Part of the applicant’s argument here was essentially that it combined two different ineligible concepts (isolating the DNA and cis testing) to somehow leave the invention patent eligible. The PTAB though rejected that argument.

It will be interesting to see whether the patentee pushes this case to a District Court or the Federal Circuit for review. Although those options are fun, the more likely outcome is that the patentee will narrow the claims and try again. Mark Nuell at Roberts Mlotkowski argued the case for the applicant.


Some Laws Regarding Laws of Nature

United States Declaration of Independence

When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

= = =

Institutes of Justinian 2.1.1

By the law of nature these things are common to mankind—the air, running water, the sea and consequently the shores of the sea.

= = =

Georgia Code § 5-5-41.

[DNA testing permitted if . . .]  (F) The testing requested employs a scientific method that has reached a scientific state of verifiable certainty such that the procedure rests upon the laws of nature; and

= = =

La. Stat. Ann. § 15:422 (now repealed)

Judicial cognizance is taken of the following matters: . . . The laws of nature

(Note, in general, courts still take judicial notice of laws of nature).




Apology to Judge Reyna

I want to pause here for a moment to make an apology to Federal Circuit Judge Reyna regarding what could easily be perceived as poor taste humor.  I continue to have the highest respect for the Judge and hope that it was not taken in offense.

Last week when I wrote about the AATRIX Software case, I included an image of Mexican actor Alfonso Bedoya from the 1948 neo-western “The Treasure of the Sierra Madre” along with a modification of the “stinkin’ badges” quote.  The quote was used again in the Mel Brooks classic Blazing Saddles.

At the time when I wrote about AATRIX, I had no conscious thought of Judge Reyna’s Latino cultural heritage. (Judge Reyna dissented-in-part in the AATRIX decision).  A few hours later I deleted the image after considering that it did not reflect well on either myself, Patently-O, or the patent law community.  However, even at that time I did not consciously recognize the potential link to Judge Reyna.  It was only later that I recognized with some horror how it would be interpreted.

Perhaps no offense was taken. Either way though, I do apologize.

– Dennis Crouch


Patents and Antitrust: Trump DOJ Sees Little Connection

Image result for Makan Antitrust Great AgainFor the first time ever, the head of the Antitrust Division for the Department of Justice is a patent attorney – Makan Delrahim – who is known to be “Makan Antitrust Great Again

In a recent speech, Delrahim explained his general position – that patent holders rarely create antitrust concerns.  Rather, it is equally likely that the problem lies with companies implementing new technologies without first obtaining a license from the relevant patent holders.  He explained that the DOJ’s historic approach has been a “one-sided focus on the hold-up issue” in ways that create a “serious threat to the innovative process.”

In response to Delrahim’s approach, a group of technology implementer companies (also known as downstream innovators) and law professors wrote to Delrahim arguing that “patent hold-up is real, well documented, and harming US industry and consumers” — especially in the area of Standards Essential Patents (SEP) — and in ways that the antitrust laws should help fix.

Sweeping in now to buffer Delrahim’s position are a group of libertarian scholars and others (including David Kappos and Judge Michel) who have offered their competing letter.  Their position is largely that the drastic remedies associated with antitrust laws should only be used based upon strong evidence of problems being caused in the market.  Here, they argue that no evidence has shown that violations of FRAND commitments actually cause market harm.

Prof. Jorge Contreras has written on these issues in several Patently-O posts. Contreras did not sign either letter.

Guest Post by Prof. Jorge Contreras: TCL v. Ericsson: The First Major U.S. Top-Down FRAND Royalty Decision

Unwired Planet v. Huawei: An English Perspective on FRAND Royalties

Guest Post on Using the Antitrust Laws to Police Patent Privateering

Good Things Come in Threes? DOJ, FTC and EC Officials Wax Eloquent About FRAND


PTAB Appeals, Standing, and the PTO’s Voice as Intervenor

Guest Post by Matthew J. Dowd and Jonathan Stroud

Professor Saurabh Vishnubhakat’s recent well-reasoned post and longer article add much to the discussion about standing to appeal from the PTAB. Standing has recently garnered significant interest from the Federal Circuit. Building on existing scholarship, we have written a concise synopsis of standing law as applied to PTAB appeals, forthcoming in Catholic University of America Law Review.

Drawing from it, we offer a counterpoint to Professor Vishnubhakat’s view, as expressed in his post, of intervenor standing—with his permission (and we thank Prof. Crouch for the opportunity). Professor Vishnubhakat’s thesis asserts, in part, that while 35 U.S.C. § 143 grants the PTO “the right to intervene in an appeal,” separate and independent constitutional standing requirements should prevent it from doing so when an appellee fails to appear. He finds that the PTO’s “ability to intervene often will rest on its ability to show Article III standing” and that the PTO “as intervenor may be able avoid having to show its own standing—but only if (1) the agency has entered the case on the side of a party that does establish standing, and so long as (2) the agency does not seek relief that is different from what that friendly party seeks.” The PTO, he concludes, should not be able to intervene where a party does not appear.

In our view, as a matter of standing alone, the PTO can participate as an intervenor in virtually all AIA appeals from the PTAB—and many reasons are consonant with the principles on which Professor Vishnubhakat bases his reasoning. We make no judgment here on the merits of the positions the PTO solicitor has or will adopt, or the frequency of intervention. While there is a valid debate about the policy choices and the frequency with which the PTO has intervened, that debate is distinct from the legal question of whether the PTO has, or must have, standing as an intervenor beyond their express statutory grant. Professor Vishnubhakat reasons correctly; he just goes a bridge too far.

First, while no court has definitively held that each party to an appeal must establish independent Article III standing where appellants have standing, most courts and opinions suggest that if the party invoking the court’s jurisdiction establishes Article III standing, the inquiry is resolved. For instance, in Camreta v. Greene, 131 S. Ct. 2020 (2011), the Supreme Court found that any opposing party necessarily has an “ongoing interest in the dispute,” so that the case by nature features “that concrete adverseness which sharpens the presentation of issues.”

In ASCARCO Inc. v Kadish, 490 U.S. 605 (1989), the Supreme Court held that while the state-court plaintiffs-respondents lacked Federal Article III standing, the Court had jurisdiction, because the petitioners seeking review had suffered “a specific injury stemming from the [adverse] state-court decree.” Importantly, the Court took no issue with the respondents’ participation in the appeal; they found simply that “the parties remain adverse,” as the plaintiffs-respondents were defending the state court’s judgment, and an appeal would resolve a “genuine case or controversy.”

And the following year in Department of Labor v. Triplett, 494 U.S. 715 (1990),
the Department of Labor and the Committee on Legal Ethics appealed the claims of a third-party attorney below. The majority held that both appealing parties had standing. The government’s “Committee on Legal Ethics” had “the classic interest of a government prosecuting agency arguing the validity of a law upon which its prosecution is based.” There was “no question” the third-party defendant-respondent Triplett had standing, the court reasoned, given his claim that his clients were being deprived of due process. Justice Marshall, concurring, explained that where “respondent has not invoked the authority of any federal court, then, federal standing principles are simply inapplicable to him.” He went on: “Under this Court’s clear pronouncement in ASARCO, the only relevant question for us here is whether one of the petitioners has standing to seek review by this Court of the state court’s judgment.”

Those are a few in an extensive line of cases supporting the view that the party having to show standing is the one seeking to invoke the court’s jurisdiction. For instance, in Rumsfeld v. FAIR, Inc., 547 U.S. 47 (2006), the Supreme Court held that “the presence of one party with standing is sufficient to satisfy Article III’s case-or-controversy requirement.” At a minimum, any fulsome analysis of intervenor standing must consider this precedent.

Second, Town of Chester v. Laroe Estates, Inc., 137 S. Ct. 1645 (2017)—the Court’s most recent opinion on intervenor standing—comports with prior precedent and runs against the need for intervenors to establish standing independent from the parties to the matter, or to establish the standing of an underlying party whose position they support. In Town of Chester, the Court squarely held that “an intervenor must meet the requirements of Article III if the intervenor wishes to pursue relief not requested by a plaintiff.” The Court cited cases specifying that it is the “plaintiff” who needs to show standing, maintaining consistency with the cases discussed above. To read in a requirement that intervenors must establish standing for their positions—or for the parties they side with—even where they pursue the same relief requested by a party would impermissibly broaden the holding.

The Court further explained that, in multi-plaintiff cases, “[a]t least one plaintiff must have standing to seek each form of relief requested in the complaint.” That statement implicitly accepts that not every party needs to prove Article III standing if multiple parties are seeking the same relief and one party has standing. And it does not follow that at least one defendant must have standing to participate on appeal. The Court has deliberately distinguished between a plaintiff’s standing requirement versus a defendant’s.

Arizonans for Official English v. Arizona, 520 U.S. 43 (1997), is not to the contrary, as the good professor suggests. There, the Court held that standing “must be met by persons seeking appellate review, just as it must be met by persons appearing in courts of first instance.” The person seeking appellate review—and thus invoking the court’s jurisdiction—is the appellant, similar to the plaintiff below.

A third consideration—one noted in Professor Vishnubhakat’s post—further supports the PTO’s role as intervenor, and supports the bulk of, but not all of, his conclusions. He is right that, in cases where the PTO will be asking for relief different from one party with standing, the PTO may then have to demonstrate standing, consistent with Town of Chester. This would be true regardless of—and separate from—whether the underlying party has standing.

This matters little given the Chenery doctrine, which bars courts from accepting an agency’s post hoc rationalization as support for the agency’s decision. Chenery essentially precludes the PTO from asking the Federal Circuit for relief that is any broader than what the PTAB held or what the appellee might argue on appeal. In PTAB appeals, rarely will the PTO be seeking a different scope of relief than what the PTAB did or what an appellee will be seeking—usually affirmance. And if the intervening PTO does expand its argument beyond the scope of the original decision, then its argument is simply barred from doing so by Chenery, and the court need not concern itself with a standing analysis.

Fourth, as a practical matter, even if the PTO had to demonstrate standing, the PTO has a statutory right to participate in the appeal as an amicus. The PTO could advance the same arguments as amicus as if it were intervenor, rendering this debate somewhat academic. And the Federal Circuit, if it were so inclined, could grant the PTO leave to file a brief longer than the standard amicus brief, or any additional briefing it might seek. This point does not affect the Article III standing analysis directly, but it speaks to any practical effect of denying the PTO its statutory right to participate as intervenor. If the Federal Circuit is confronted with the choice of having only one side argued, as opposed to having both sides argued, we would suggest most judges, as a practical matter, would prefer to have the competing arguments for consideration, instead of a docket of one-sided, limited, or partially argued cases. The standing issue aside, the patent system and the public good are best served by arguments fully vetted by the adversarial process.

As a final point, we acknowledge the distinct policy concerns created by frequent intervention on one side of the “v.” Getting beyond the standing issue—which we don’t see as much of a hurdle for PTO participation in PTAB appeals—more significant questions arise about if, when, and how often the PTO intervenes. Indeed, George Washington University Law School Professor Dmitry Karshtedt has persuasively called for further exploration of whether the PTO solicitor must or should defend the Board’s decision. Dmitry Karshtedt, Acceptance Instead of Denial: Pro-Applicant Positions at the PTO, 23 B.U. J. Sci. & Tech. L. 319 (2017). This issue is the third question raised sua sponte in Knowles Electronics LLC v. Matal, currently pending at the Federal Circuit. Professor Karshtedt concludes that the PTO solicitor may disagree with the Board where it is plainly inconsistent with the public good. Although we take no position here, we recommend his paper and agree that it’s a debate well-worth having.

We leave these debates for another day, simply noting that a rough internal count reveals: As of September 2016, out of 179 cases decided, the PTO had intervened 98 times (~54% of decided cases); by September 2017, that percentage had fallen dramatically, to 144 out of the 408 then-decided (~35%). Overall, the PTO has said it has intervened in fewer than 25% of all appeals, and that number continues to fall. There may be several reasons for the decline, such as fewer fundamental legal issues as the AIA matures, or a change in PTO policy after thinking its frequent intervention may have irked some judges. Regardless of the precise reasons for the decline and the other policy concerns raised in Knowles, the question of the PTO’s standing to intervene is a distinct legal question. And we think precedent strongly supports the PTO’s ability to intervene in most, if not all, appeals from the PTAB.

Stambler v. Mastercard: Petition to SCOTUS

Two questions presented on Leon Stambler’s petition for writ of certiorari:

1. Whether covered business method review, an adversarial process used by the Patent and Trademark Office to analyze the validity of existing patents, violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

2. Whether the Federal Circuit’s issuance of Rule 36 judgments without opinions for the disposition of appeals from the Patent and Trademark Office violates 35 U.S.C. § 144’s requirement that the Federal Circuit “shall issue” its “mandate and opinion” for such appeals.

The petition explains:

The first question is substantially similar to that presented in Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, No. 16-712 (June 12, 2017), which has been argued and is awaiting decision by the Court. The second question is identical to that presented by the Petition for writ of certiorari in Celgard, LLC v. Matal (No. 16-1526) (question #2, petition pending).

The case relates to Stambler’s U.S. Patent No. 5,793,302 (authentication system and method). The patent has been asserted in dozens of cases and upheld in several court decisions prior to the PTAB finding it invalid.


Eligibility Analysis and its Underlying Facts: A Roadmap for Surviving Dismissal on the Pleadings

by Dennis Crouch

Aatrix Software, Inc. v. Green Shades Software, Inc., 2017-1452, 2018 WL 843288 (Fed. Cir. Feb. 14, 2018)

Following upon its February 8 decision in Berkheimer, the Federal Circuit has again sided with the Patentee on eligibility grounds – holding here that the lower court’s judgment on the pleadings failed to consider disputed issues of material fact.  Prior to this pair of cases, it was unclear whether eligibility analysis involved factual questions.  Although pair of cases indicate a precedential sea-change, both opinions were written by Judge Moore and joined by Judge Taranto (Berkheimer was also joined by Judge Stoll).  Here, Judge Reyna dissented, writing:

I respectfully disagree with the majority’s broad statements on the role of factual evidence in a § 101 inquiry. Our precedent is clear that the § 101 inquiry is a legal question. In a manner contrary to that standard, the majority opinion attempts to shoehorn a significant factual component into the Alice § 101 analysis.

Reyna in dissent.

The divide among the court is now quite clear — what is needed is an en banc consideration of the issues.  Failing that, we will continue to muddle and err.

Going back to the majority opinion, the court explained the setup:

  • Plaintiff filed complaint alleging patent infringement;
  • Defendant motioned for dismissal on the pleadings — asking the court to declare the asserted patent ineligible as a matter of law;
  • Plaintiff filed a motion to amend its complaint to add specific allegations of fact directed to step-two of the Alice/Mayo inquiry — attempting to setup a material factual dispute that could not be resolved on the pleadings;
  • District Court found the patent claims ineligible; refused to allow the amended complaint; according to the court the amendment would not have made any difference – would not have manufactured a factual dispute – since eligibility is a pure question of law.
  • On appeal here, the Federal Circuit has vacated the judgment — holding that the complaint raises factual disputes that must be resolved prior to ruling on the eligibility issue.

The majority writes here:

[The Federal Circuit has previously] held that patent eligibility can be determined at the Rule 12(b)(6) stage. This is true only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law.

. . .

The district court granted this Rule 12(b)(6) motion without claim construction. We have some doubt about the propriety of doing so
in this case, but need not reach that issue because it did err when it denied leave to amend without claim construction and in the face of factual allegations, spelled out in the proposed second amended complaint, that, if accepted as true, establish that the claimed combination contains inventive components and improves the workings of the computer.

Moore majority opinion.

Following the majority opinion, some plaintiffs will now look to the patentee’s proposed proposed amended complaint as one roadmap establishing a factual dispute sufficient for a patentee to overcome a motion on the pleadings.  In particular, the complaint alleges a novel data importation scheme that is database independent and that “eliminat[es] the need for hand typing in the values.”  Further, the complaint alleges that the result is “increased the efficiencies of computers processing tax forms” and “saved storage space” on the computers.

Although not proven, Judge Moore suggests that – if proven – these allegations would leave the asserted claims patent eligible since they are “directed to an improvement in the computer technology itself and not directed to generic components performing conventional activities.”  Judge Moore then goes on to explain that these allegations are factual allegations rather than conclusory legal allegations and must be given due process according to the rules of our legal system.  The majority opinion also claims the following:

Whether the claim elements or the claimed combination are well-understood, routine, conventional is a question of fact. And in this case, that question cannot be answered adversely to the patentee based on the sources properly considered on a motion to dismiss, such as the complaint, the patent, and materials subject to judicial notice.

This quote sets-up the potential en banc case: To what extent does eligibility involved factual disputes; to what extent should extrinsic evidence be available to prove those facts?  For patent litigators, these questions look strikingly similar to the decades old dispute over the proper approach to patent claim construction.  It is easy to see eligibility following in the same line of reasoning seen in Teva and Phillips that allows for full judicial but opens the door to potential (but often not required) factual findings regarding extrinsic evidence.

Last note here — The claims at issue are claims 1, 2, and 22 of U.S. Patent No. 7,171,615 (“’615 patent”) and claims 1, 13, and 17 of U.S. Patent No.
8,984,393.  These patents cover really simple tax prep forms that I expect the Supreme Court would eat for lunch.