May 2018

Factual Underpinnings of Eligibility: Federal Circuit Denies Rehearing in Berkheimer / Aatrix

By Dennis Crouch

In Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018), Judge Moore explained that, although “patent eligibility is ultimately a question of law,” it may require an analysis of “underlying factual questions.” In particular, the court in that case ruled that “[w]hether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.”  In its petition for en banc rehearing, HP asked two questions: (1) whether eligibility has factual underpinnings; and (2) the role of the “well-understood” conclusion in the eligibility analysis:

  1. Is the threshold inquiry of patent eligibility under 35 U.S.C. § 101 a
    question of law without underlying factual issues that might prevent summary
  2. Is the appropriate inquiry under Alice’s step 2 whether the claims
    transform an abstract idea into a patent-eligible application, or merely
    “whether the invention describes well-understood, routine, and conventional

Similarly, in the parallel en banc request following Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018), the patent challenger asked the following question:

  1. Is the threshold inquiry of patent-eligibility under 35 U.S.C. § 101 a question
    of law without underlying factual issues based on complaint allegations pled to
    avoid dismissal under Fed. R. Civ. P. 12(b)(6)?

Now, the Federal Circuit has denied both petitions with opinions by Judges Moore, Lourie, and Reyna.  The exact vote was not released, but at least 7 judges voted to deny.

Judge Moore:

Berkheimer and Aatrix stand for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time is a question of fact.

Judge Lourie:

I believe the law needs clarification by higher authority, perhaps by Congress, to work its way out of what so many in the innovation field consider are § 101 problems.

Judge Reyna:

The court’s vote to deny en banc review of Aatrix and Berkheimer is a declaration that nothing has changed in our precedent on patent subject matter eligibility under 35 U.S.C § 101. We are encouraged to move along; there’s nothing to see here. I disagree. I believe that, at minimum, the two cases present questions of exceptional importance that this court should address and not avoid. [Citing Patently-O’s description of the impact of these decisions]

Clearly Judge Reyna is correct in this aspect of his analysis even if I disagree with his ultimate conclusion that eligibility is purely a question of law.

I would look for Supreme Court petitions in both cases framed along the lines of: pro-patentee Federal Circuit judges seeking to undermine consistent Supreme Court precedent most recently restated in Alice and Mayo.


Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Copyrighting Software: Case Likely Heading to Supreme Court

by Dennis Crouch

Google v. Oracle (Fed. Cir. 2018)

Google has now filed an en banc rehearing petition in its dispute with Oracle over copyrightability of the naming system for an application programming interface — namely Oracle’s Java API that Google copied.  [Oracle Am. v. Google LLC Rehearing Petition]

The basic issue here stems from Google’s program interface for Android App development.  Rather than creating its own set of functions and methods, Google decided to mimic the method-calls of Java.  At the time, Google’s third-party app marketplace was lagging far behind Apple’s, and the Java-API mimic was seen as a strategy to facilitate more rapid development of apps since the programming language was already so popular.  I previously explained:

As an example, Google used the Java method header “java.lang.Math.max(a,b).”  When called, the “max” function returns the greater of the two inputs.  In Android’s API, Google copied a set of 37 different Java “packages” (such as Math) that each contain many classes and method calls (such as “max()”).  Overall, Google copied the header structure for more than six-thousand methods.

Although Java was available for licensing, Google refused. Although Java’s originator Sun Microsystems was known for its lack of IP enforcement, that all changed when Oracle acquired the company.

In the most recent iteration of the case, the jury found that Google’s use was a “fair use” and thus not an infringement.  On appeal, however, the Federal Circuit reversed — finding the API the proper subject of copyright protection and not subject to a fair use defense in this case.  As Jason Rantanan wrote: “the court’s analysis all but says (expressly so!) that fair use can never apply.”

In its petition, Google raises both the underlying copyright challenge and the fair use question. Questions:

  1. Whether application programming interface (“API”) declarations—which are designed to invoke pre-written functions and methods of software—are systems or methods of operation and thus not entitled to copyright protection.
  2. Whether use of API declarations, but not implementing code, in a new and different context is protected by the fair-use doctrine.

The petition walks through a handful of copyright cases – explaining its position that the Federal Circuit’s position is “contrary to.”

  • Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994) (on fair use, the transformation question is whether the work as a whole has been transformed — not just a focus on the copied portions);
  • Harper & Row Publishers v. Nation Enters., 471 U.S. 539 (1985) (fair use is a mixed question of fact and law – not simply a question of law);
  • Sony Computer Entm’t v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000) (functional requirements for comparability are not protected by copyright; protection is also limited by fair use);
  • Lotus Dev. Corp. v. Borland Int’l, 49 F.3d 807 (1st Cir. 1995), aff’d by an equally divided court, 516 U.S. 233 (1996) (menu hierarchy not entitled to copyright protection);
  • Sega Enters. v. Accolade, 977 F.2d 1510 (9th Cir. 1992) (See Sony).

The issues here are fundamental and I expect are likely to rise up to the Supreme Court.

Petition: Is the government a person and can it infringe?

by Dennis Crouch

The America Invents Act (AIA) allows for a “person” to file a covered business method review (CBM) to challenge an issued patent.  See AIA Section 18 (because they it is a temporary program, the CBM provisions have not been codified in the United States Code).  In Return Mail v. USPS, Docket No. No. 17-1594 (Supreme Court 2018), the CBM petitioner was the U.S. Postal Service – i.e., the U.S. government, and the question on petition is whether the government counts as a “person” under the statute:

1. Whether the government is a “person” who may petition to institute review proceedings under the AIA.

(Petition for Writ of Certiorari).

A major portion of the argument here is that the statute generally treats the U.S. government differently — giving it sovereign immunity but for a limited remedy for government use under 28 U.S.C. 1498(a).  The argument here is that – if the Government isn’t subject to be treated as a person under the infringement statute section 271(a) (“whoever without authority . . .”), then it also shouldn’t receive the benefit of being treated as a person under the AIA Trial regime.

The second question presented in the petition focuses on the infringement charges limitation for CBM petitions.  Unlike IPR and PGR petitions, CBM petitions my only be filed if petitioners — the “person” (or its privy) — “has been sued for infringement of the [challenged] patent or has been charged with infringement under that patent.”  On this point, the petition explains that the government is immune from suit for patent infringement — and the section 1498 action is an eminent domain takings claim. As such, the 1498 action does not count as an “infringement” charge sufficient to permit CBM review. Thus, the second question:

2. Whether a section 1498(a) action for the eminent domain taking of a patent license by the government is a suit for “infringement” under the AIA.

The setup here is fairly limited because it is only focused on governmental use, but it is the type of questions likely to receive interest from the Supreme Court.  In its decision in the case, the Federal Circuit ruled (over a dissent) that a Section 1498 action counts as an infringement lawsuit for the purposes of the AIA and that the U.S. Government counts as a “person” under the statute — writing that “The AIA does not appear to use the term ‘person’ to exclude the government in other provisions.”



Is Ineligibility a Statutory Defense to Patent Infringement

Will Justice Gorsuch bite at the new petition in Integrated Tech. Sys. v. First Internet Bank of Ind., Supreme Court Docket No. 17-1590 (2018)?   Petitioner relies heavily on Patently-O writings from Prof. Hricik and myself for its argument that the lack of patent eligibility is not a statutory defense under 35 U.S.C. § 282. [Ed note – I will eventually get his name correct.]

The petition asks the following questions:

  1. Does 35 U.S.C. § 282 allow for challenges to a patent’s validity based on patent eligibility under 35 U.S.C. § 101?
  2. In addition, and in close alignment with the first question, is it proper to find patents invalid under 35 U.S.C. § 101 after full examination before the U.S. Patent and Trademark Office in response to 12(b)(6) challenges when they are presumed valid under 35 U.S.C. § 282?
  3. Is it proper to grant a Rule 12(b)(6) motion to dismiss when the record contains unrebutted factual evidence that the invention is patent-eligible under § 101?

[Case Docket]

The patents here cover systems and methods for person-to-person fund transfers — something like paypal but without any need for a funded account.  United States Patent Nos. 7,912,786 (“the ‘786 patent”), 8,131,643 (“the ‘643 patent”), 8,321,347 (“the ‘643 patent”), and 8,620,809 (“the ‘809 patent”).

Claim 11 of the ‘809 patent reads as follows:

11. A method for automatically transferring funds, comprising:

providing a computer configured to provide a person to person funds transfer system; providing for the computer system to be accessible to a communication medium device that is controlled by a sender, said computer system being accessed by the communication medium device to receive information data related to a debit account of the sender and information data related to a receiving debit accessible escrow account;

receiving account information data and transfer authorization data by the computer system; processing the data in automated modes by the computer system;

transferring funds from the debit account of the sender to the receiving debit-accessible escrow account without requiring a pre-established relationship between the debit account of the sender and the receiving debit-accessible escrow account; and

repeating the above steps by the computer system, thus effecting additional transfers between different sending debit accounts and different receiving debit-accessible escrow accounts to cause fund transfers from the different sending debit accounts to the different receiving debit-accessible escrow accounts.

Sorting Cases: Applying Collateral Estoppel Mid-Stream

by Dennis Crouch

XY, LLC v. Trans Ova Genetics, L.C. (Fed. Cir. 2018).

The split decision here reveals an important dispute between Federal Circuit judges over the impact of AIA trials on pending litigation.  In this case, XY’s six patents in suit relate to the sorting of semen by gender (used for farm animal breeding).  My discussion below focuses on only one of the patents that was first enforced by the district court but later cancelled by a PTAB action.

Background: After their patent license deal went bust, XY sued Trans Ova for infringement and a jury found that the patents were not invalid and also willfully infringed. (The district court also decided contract and antitrust issues).  Following final judgment from the district court siding with the patentee, the Patent Trial and Appeal Board (PTAB) issued its final judgment finding two of the aforementioned infringed claims to be unpatentable. Claims 1 and 3 of U.S. Patent No. 7,195,920.  That PTAB decision was affirmed today without opinion by the same 3-judge panel of Judges Chen, Dyk, and Newman.

On appeal, one question for the court was the impact of the PTAB and Federal Circuit decision invalidating the patent.  The court found it moot — holding that the parallel Federal Circuit invalidation must be given immediate issue preclusive effect. The court writes:

Collateral Estoppel: As a threshold matter, we need not address Trans Ova’s invalidity arguments as to the Freezing Patent claims in view of our affirmance today in a separate appeal invalidating these same claims, which collaterally estops XY from asserting the patent in any further proceedings. . . .

That affirmance renders final a judgment on the invalidity of the Freezing Patent, and has an immediate issue preclusive effect on any pending or co-pending actions involving the patent. . . .

We do not find, as the Dissent states, that “in the event of conflict the administrative agency’s decision ‘moots’ the district court’s decision.” Dissent at 6. Rather, we find that an affirmance of an invalidity finding, whether from a district court or the Board, has a collateral estoppel effect on all pending or co-pending actions. This court has long applied the Supreme Court’s holding in Blonder-Tongue to apply collateral estoppel in mooting pending district court findings of no invalidity based on intervening final decisions of patent invalidity.

Final Decision vs Affirmance of Final Decision: Note here that the final paragraph is somewhat confusing because it appears to state two separate principles – (1) that affirmance of an invalidity finding [by the Federal Circuit] creates collateral estoppel on the issue of validity and also (2) that a final decision of patent invalidity moots pending district court findings of no invalidity.  This begs the question of what would be the proper result if this case had been decided after the IPR decision cancelling the claims but before deciding the outcome of this appeal.  When the court recognizes the potential issue – I expect that in most situations it would coordinate the appeals.

Preserving the Issue for Appeal: In this case, the defendant appealed its invalidity loss — one question is whether the that appeal was necessary to overturn the infringement verdict.  In dicta, the court suggests here that the justification for the decision is that “a defendant should not have to continue defending a suit for infringement of an adjudged invalid patent.”  (Internal quotes of excluded).  For this point, however, the court relied only upon statements from prior non-precedential Federal Circuit decisions. See U.S. Ethernet Innovations, LLC v. Tex. Instruments Inc., 645 F. App’x 1026, 1028–30 (Fed. Cir. 2016) and Translogic Tech., Inc. v. Hitachi, Ltd., 250 F. App’x 988 (Fed. Cir. 2007).

The majority opinion was written by Judge Chen and joined by Judge Dyk.

Writing in partial dissent, Judge Newman argues that collateral estoppel should not apply in this situation.  The dissent explains that collateral estoppel is not automatic, is confused by the various legal standards at play here, should be handled with caution when asserted by a non-mutual party (the defendant here was not part of the IPR), should be applied with caution when operating between an administrative agency and the courts, and certainly should not be decided sua sponte – without request from either party, briefing, or arguments on the subject. “Collateral estoppel is not subject to automatic imposition without affording any opportunity for party discussion.”

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Hyatt v. USPTO: Mandamus Action Requesting an Impartial Administrative Review

Gilbert P. Hyatt v. USPTO and Iancu (E.D. Va. 2018) (Hyatt – Mandamus Action Complaint)

Hyatt has filed a new mandamus action against the USPTO as the next step in the 40+ year battle over his microcomputer patent applications. Hyatt has over 300 patents applications pending before the USPTO.

According to the complaint, “Most of Mr. Hyatt’s applications have been pending for over 20 years, with about a dozen pending for over 35 years and three applications pending for over 40 years.”  The complaint details:

[In the 1990’s then Commissioner Bruce] Lehman and other PTO officials falsely branded Mr. Hyatt a ‘submariner’ and unlawfully decided that the PTO would never issue him another patent. . . . Having made that decision, the PTO proceeded to carry it out. It acted almost immediately to withdraw from issuance four patents either issued or in the final stages of being issued to Mr. Hyatt—actions in which the PTO has acknowledged the unusual participation of Commissioner Lehman and other senior PTO officials. It applied unlawful secret procedures (since acknowledged  by the PTO) to block the issuance of applications that examiners found patentable. Internal PTO documents reveal that these unlawful procedures prevented issuance of at least several patents to Mr. Hyatt. It put more than 80 of Mr. Hyatt’s pending administrative appeals on ice for up to a decade before terminating them by reopening prosecution and restarting the examination process from scratch. It secretly used what PTO officials called “Shadow Art Units,” “Phantom Art Units,” and “parking lots” to stow Mr. Hyatt’s applications and take them off the books. And it delayed actions across the board, with a degree of creativity that bespeaks the PTO’s enmity for Mr. Hyatt: issuing suspensions amounting to over a millennium of aggregate delay; secretly assigning his applications to management personnel who do not examine applications; dismissing his petitions imploring the agency to act on the false basis that his applications were already being expedited; leaving approximately 100 of Mr. Hyatt’s applications for a single examiner to process in his personal time, without pay; and manipulating its reporting systems to hide its failure to act on Mr. Hyatt’s applications. All the while, PTO officials spread the word high and low throughout the agency that Mr. Hyatt was a “submariner” and that he would never get another patent, poisoning the well against him.

More recently, the PTO created the “Hyatt Unit . . . “for the purpose of miring all of Mr. Hyatt’s applications in administrative purgatory until Mr. Hyatt gives up or dies.”

The Hyatt Unit began its work by restarting prosecution from scratch, throwing out years of work and enormous effort by Mr. Hyatt in the process. It blanketed Mr. Hyatt in what its leader described as a “boatload” of hundreds of burdensome Office Actions in just a few months, forcing him to scramble to make any response. And now it is in the process of systematically abandoning and rejecting his applications, piling on numerous, overlapping rejections on every patent claim and entering frivolous “objections” that take years to correct due to the PTO’s refusal to decide his administrative petitions for relief on a timely basis or at all. . . The Hyatt Unit has never allowed a single one of Mr. Hyatt’s claims in its more than-5 years of existence.

Finally, in an attempt to eliminate all of Hyatt’s claims, the PTO asserted prosecution laches against all of Hyatt’s applications.  That approach has seemingly now failed with a 2017 district court decision rejecting the PTO’s prosecution laches case.

In this action, Hyatt is looking for several forms of relief — perhaps most pointedly is a mandamus action from the court ordering the PTO “expeditiously to conduct a fair, impartial, and timely examination of his applications in accordance with law, to allow patentable subject matter, to issue patents claiming such patentable such subject matter upon payment of the issue fee, to provide timely action on Mr. Hyatt’s petitions, and to permit Mr. Hyatt to obtain timely final agency action on rejections from the Appeal Board.”

In addition, Hyatt is requesting compensation for post-GATT patent applications whose potential term have expired due to PTO delay and issuance of those patents.

= = = = =

The complaint is an interesting read, but was filed partially under seal (based upon a protective order from a prior case), including the following paragraph:


A separate proceeding is ongoing in DC Federal Court  Hyatt v. Iancu, Nos. 05-2310, 09-1864, 09-1869, 09-1872 (D.D.C.).  In a recent briefing, the PTO explained its contention regarding the bulk of Hyatt’s patents:

Mr. Hyatt filed a patent application in 1984 that describes, in over 650 pages of text and figures, a system for manipulating images on a screen by rotating, sliding, and zooming. His explanation includes something that he called a “window” that is in the computer’s memory and is not visible to the user. Mr. Hyatt amended his claims a number of times and, fifteen years later, in 1999, filed the claims that are now at  issue. By 1999, the term “window” had taken on a much different and more valuable meaning in computing and to the general public. Mr. Hyatt’s claims now recite a type of window that is visible on the user’s screen, can be overlapped to run multiple applications at once, includes interactive features such as menus and icons, and allows the user to interact directly with the display monitor by, for example, clicking on a pull-down menu or choosing a menu option. Those claimed inventions are not described in Mr. Hyatt’s original specification, and that lack of written description means the claims have correctly been rejected by the USPTO and should also be rejected by this Court.

USPTO Proposed Findings of Fact and Conclusions of Law [04e9202c-6214-442a-998d-3b74156ca79b]

= = = =

Example claim (1984 priority date):

Claim 131. A process comprising the acts of:

generating background image information;

generating a first window of three dimensional perspective image information;

overlaying the first window of three dimensional perspective image information onto the background image information;

generating a second window of three dimensional perspective image information;

overlaying the second window of three dimensional perspective image information onto the background image information overlapping with the first window of three dimensional perspective image information; and

displaying a background image overlaid by a first window of three dimensional perspective images and overlaid by an overlapping second
window of three dimensional perspective images in response to the background image information overlaid with the first window of three dimensional perspective image information and in response to the background image information overlaid with the overlapping second window of three dimensional perspective image information.

Layers of Doctrine with a Faulty Claim Construction at the Core

by Dennis Crouch

D Three Enterprises v. SunModo Corp. (Fed. Cir. 2018)

Reading this decision feels akin to slowly peeling off the layers of an onion – hoping to reach some prize at the core but only reaching a rotten core.

D-Three’s patents in suit are directed to roof-mount sealing assemblies for solar panel installation.  U.S. Patent Nos. 8,689,517; 9,068,339; and 8,707,655.   The district court found the asserted claims invalid as obvious or anticipated.  The basic central dispute, however, was whether the claims could rely upon a 2009 provisional application filing date.  Although the formalities of the priority chain was met — the district court found a substantive problem. In particular, the court ruled that the 2009 provisional did not sufficiently disclose the inventions as claimed — i.e., failure of written description.  Going one layer deeper, it seems that the real dispute is about claim construction — do the claimed assemblies require a “washerless” approach?  The courts found that the claims recite a washerless assembly but that the limitation was not disclosed by the provisional application — so no priority.

Unrecited Recitation: In the appeal, the Federal Circuit’s analysis began with its conclusion on the claims: “All Asserted Claims except [except two] recite washerless assemblies.” The problem with the statement is that the claims don’t expressly recite a washerless assembly.  In its brief, D Three characterized the claims as “not includ[ing] a limitation that would require the presence of a washer. No claim in the Patents-in-Suit states that there cannot be a washer, i.e., no claim requires an assembly be washerless.”  (See claim 1 below).

Unfortunately, the Federal Circuit goes no further in explaining its conclusion that the claims recite washerless assemblies but rather jumped into consideration of whether the priority claim provides a sufficient disclosure.

35 U.S.C. § 120 provides for the right-of-priority from prior U.S. applications.  Under the statute, the priority claim only works if the earlier-filed application sufficiently disclosed the invention being claimed in the later-filed application.  In particular, the statute requires disclosure “in the manner provided by section 112(a).”  In other words, the earlier-filed application’s disclosure must satisfy the enablement and written description requirements to support the claims of the later-filed application. Here, the focus was on written description — the requirement that the disclosure clearly allows a PHOSITA “to recognize that the inventor invented what is claimed” and that the “inventor had possession of the claimed subject matter as of the filing date.” Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) (en banc).

Here, the provisional application does actually disclose a washerless assembly, but only one.  However, the appellate court affirmed that that one specific example (using W-shaped prongs) was not sufficient to provide written description support for the claims that were not limited to W-shaped prongs.  According to the court, the result is that we can only “speculate as to the modifications that the inventor might have envisioned, but failed to disclose.” Quoting Lockwood v. Am. Airlines, Inc., 107 F.3d
1565 (Fed. Cir. 1997). At base, this case looks a lot like Gentry GalleryLizardTech and ICU Medical, although none of these cases were cited.

In the end, we have a failure of written description; failed priority claim; and invalid patents.

= = = = =


Claim 1 of the ‘517 patent:

1. A roof standoff device for use in mounting an object to a roof, said standoff device comprising:

a base bracket having at least one mounting hole for receiving an attachment element for attaching the base bracket to a roof surface, said base bracket further including a first threaded attachment element;

a flashing having:

a raised section with an upper surface and an aperture extending through said raised section, wherein said aperture is configured for alignment with said first threaded attachment element of said base bracket;

a flange extending beyond a base of said raised section, wherein, when disposed over said base bracket on the roof surface, an inside surface of said raised section receives and surrounds said base bracket and said flange rests on the roof surface;

a core body having a first end and a second end, said second end having a contact surface;

a second threaded attachment element associated with said second end of said core body, said second threaded attachment element configured to threadably engage said first threaded attachment element, wherein, upon said first and second threaded attachment elements being threadably engaged, said flashing is compressed between said base bracket and said second end of said core body; and

said core body having a third attachment element disposed proximate to said first end for attaching an object to said core body.

Respecting Foreign Judgments and $79 million for clicking “I agree”

by Dennis Crouch

An interesting new petition before the Supreme Court focuses on international licensing and copyright issues.  What happens when foreign courts give less weight to contracts and copyrights than would a US court? World Programming Ltd. v. SAS Institute, Supreme Court Docket No. 17-1459 (2018). [petition][docket]

Agreeing not to Reverse Engineer, then Reverse Engineering: WPL, a UK software company purchased a copy of SAS’s popular software and began to study its functionality (all in the UK).  As part of the process, WPL clicked “I agree” on the SAS clickwrap licenses. Those licenses included a prohibition on reverse engineering and also limited the software use to “non-production purposes.”  According to the petition, however, “under U.K. and E.U. law, such observation and study is lawful, and contractual terms restricting such acts are null and void. . . .While  WPL was required to agree to that license before installing the SAS System, it also knew that E.U. and U.K. law permitted use of software for observation, study, and testing regardless of contrary contractual restrictions.” Consider Council Directive 2001/29/EEC, ¶ 50, 2001 O.J. (L 167/10) (EC); Council Directive 91/250/EEC, art. 5(3), 1991 O.J. (L 122/42) (EC); Copyright, Designs and Patents Act 1988, c. 48, §§ 50BA(1), 296A(1)(c) (U.K.).

When SAS later sued, the High Court of Justice sided with WPL — rejecting SAS Institute’s copyright infringement claim (functionality of software not protected) and breach of contract claim (contract cannot bar lawful right of study). Thu U.K. Court of Appeal affirmed — finding the contract provision “invalid to the extent that it prohibits the observation, study or testing of the functioning of the program in order to determine the ideas and principles underlying it” and that the software functionality “does not count as a form of [copyrightable] expression.”

After losing in the UK, SAS brought its lawsuit to the USA and won on the same contract claim that was a loser in the UK (but lost on the copyright claim).  The US lawsuit also included a fraudulent inducement and unfair trade practices under N.C. UDTPA.  A jury found WPL liable — although WPL was barred from presenting any evidence regarding its reliance upon the UK and EU safe harbors.  Damages $80 million.

In this process, the district court refused to give any preclusive effect to the UK judgment.

On appeal, the Fourth Circuit held that the UK judgment was properly denied preclusive effect since it was contrary to North Carolina policy.  “North Carolina courts [are] more protective of the sanctity of contracts” than are UK or EU courts.

On the copyright claim, the 4th Circuit declined to resolve the copyright question — finding it moot.  Here, SAS received all of its sought-for damages from its other claims and the 4th Circuit ruled that it could not prove grounds for injunctive relief.  “Thus, the legal resolution of the copyright question would have no effect on the relief afforded the parties” and therefore the issue is moot. “Absent a practical effect on the outcome of this case, the copyright claim is moot.” SAS Inst., Inc. v. World Programming Ltd., 874 F.3d 370 (4th Cir. 2017).

Now, in its petition, WPL asks two questions:

  1. Whether federal or state law governs the respect that must be accorded to the judgment of a foreign court in diversity cases.
  2. Whether a district court’s decision on the merits of a claim becomes moot, and must be vacated, if the court of appeals determines that the plaintiff has not proven entitlement to the only remaining relief sought in connection with that claim.

In its argument, WPL reaches back to Hilton v. Guyot, 159 U.S. 113 (1895) where the Supreme Court spelled-out its jurisprudence for respecting foreign judgments.  Basically – foreign judgments must be respected by U.S. courts “unless they contravene basic principles of decency and morality.”  The difficulty here, though is how a Federal Court should operate when sitting in diversity and weighing the differences between a foreign judgment and the law of a US state’s law.  Basically – state law is regularly “less respectful of foreign judgments.”

Printed Matter, Mental Steps, and Functional Relationships: Oh My!

Guest post by Professor Kevin Emerson Collins, Washington University School of Law.

Praxair Distribution, Inc. v. Mallinckrodt Hospital Products IP LTD., 2018 U.S. App. LEXIS 12707 (Fed. Cir. 2018)

In a divided opinion, the Federal Circuit held that all of the claims challenged in an IPR were obvious, upholding the PTAB’s obviousness determination with respect to most of the claims but reversing its nonobviousness determination with respect to a few. Praxair Distribution raises of a number of distinct, yet interrelated, issues concerning the cryptic, yet essential, printed matter doctrine: the opinion addresses the doctrine’s extension to mental steps, its implications for the relationship between sections 101 and 102/103, and the breadth of its functional-relation exception.

U.S. Patent 8,846,112 covers methods of distributing nitric oxide gas cylinders for pharmaceutical applications. Inhaling nitric oxide dilates blood vessels in the lungs and improves blood oxygenation, and it is approved for treating neonates with hypoxic respiratory failure. The prior art taught that inhaled nitric oxide may lead to pulmonary edema, a serious adverse event, in neonates with left ventricular dysfunction. The claims of the ‘112 patent address methods that build on this prior art. Roughly, the claims can be sorted into three groups: the informing claims, the informing-and-evaluating claims, and the informing-and-discontinuing-treatment claims. This commentary addresses each of these three groups of claims in turn.

The Informing Claims: Easy Cases?

In gross, the informing claims recite supplying nitric oxide to a medical provider and providing the medical provider with information relevant to the clinical use of the nitric oxide on neonatal patients. Claim 1, for instance, includes the steps of:

  • “supplying the cylinder containing compressed nitric oxide gas to a medical provider responsible for treating neonates” and
  • “providing to the medical provider (i) information” about the recommended dose for neonates with hypoxic respiratory failure “and (ii) information” about the risk of that dose for neonates with left ventricular dysfunction, wherein “the information of (ii) [is] sufficient to cause a medical provider … to elect to avoid treating one or more” neonates with left ventricular dysfunction in order “to avoid putting [them] at risk of pulmonary edema.”

The PTAB held, and the Federal Circuit affirmed in a majority opinion authored by Judge Lourie and joined by Chief Judge Prost, that the informing claims were unpatentable as obvious under the printed matter doctrine. Under recent Federal Circuit precedent, the informing claims present an easy case of unpatentability. The printed matter doctrine states that “[c]laim limitations directed to printed matter are not entitled to patentable weight unless the printed matter is functionally related to the substrate on which the printed matter is applied.” Opinion at *9. If a limitation is not given patentable weight, it cannot be relied upon to distinguish the claimed invention from the prior art in the novelty or nonobviousness analyses. In claim 1, the limitations apart from the providing-information limitation are obvious in light of the prior art as an ordered combination, and the providing-information limitation cannot be given patentable weight. Federal Circuit precedent clearly establishes that printing information about how to use a product onto that product as a substrate does not create a functional relationship between the printed matter and the substrate. See, e.g., In re Ngai, 367 F.3d 1336 (Fed. Cir. 2004). But see In re Miller, 418 F.2d 1392 (CCPA 1969) (finding a functional relationship between volumetric indicia and the measuring spoons on which they were printed). Importantly, the printed matter doctrine still applies even though the providing-information limitation does not require the information to be in the form of printed matter per se. In King Pharmaceuticals v. Eon Labs and In re Kao, the Federal Circuit had already extended the printed matter doctrine to encompass the conveyance of information in non-printed forms, such as verbal speech or sign language. See, Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent L.J. 111.

Not only is the lack of patentable weight for “informing”-type limitations settled law, but it is good policy, as well. As I have repeatedly argued elsewhere, the core of the printed matter doctrine, as well as its expansion to information conveyed through speech and other non-print media, is necessary to ensure that the knowledge disclosed in patent specifications remains free for all to use qua knowledge during the term of the patent. Kevin Emerson Collins, The Structural Implications of Inventors’ Disclosure Obligations, 69 Vand. L. Rev. 1785 (2016); Kevin Emerson Collins, The Knowledge/Embodiment Dichotomy, 47 U.C. Davis L. Rev. 1279 (2014). Claim limitations that read on communicative acts can restrain the diffusion of the teachings contained in patent disclosures, so a broad interpretation of the printed matter doctrine is necessary to ensure that patentee’s exclusive rights to claimed inventions cannot interfere with the free dissemination of the informational content of patent specifications.

The Informing-and-Evaluating Claims: Mental Steps and Patent Eligibility

The informing-and-evaluating claims depend from the informing claims, adding a number of steps to be performed, presumptively, by medical providers who use nitric oxide. (Bracket the divided infringement issue afoot here.) For example, claim 3 adds inter alia the following limitations to claim 1:

  • identifying a neonate with hypoxic respiratory failure,
  • determining whether the neonate has left ventricular dysfunction, and
  • “evaluating the potential benefit of treating” that neonate with nitric oxide “vs. the potential risk” of doing so.

The PTAB and the Federal Circuit both identify the evaluating limitation as a mental step performed in a medical provider’s mind. They then both extend the printed matter doctrine to preclude giving patentable weight to mental steps and, as a result, hold the informing-and-evaluating claims obvious. The Federal Circuit breaks new ground by extending the printed matter doctrine to mental activity in this manner, and Judge Newman’s concurrence argues that the extension is not proper. Simply put, “[m]ental steps are mental, not printed.” Concurrence at *1. (The concurrence may also be read more broadly to suggest that even the extension of the printed matter doctrine to spoken information in King Pharmaceuticals, discussed in the previous section addressing the informing claims, is legal error.)

Given the policy concerns discussed above for extending the printed matter doctrine to speech, however, I believe that its extension to at least some mental steps is a logical and justifiable move. As Judge Louie correctly notes, the evaluating limitation:

requires a medical provider to think about the information claimed in the providing information limitation of claim 1. But adding an ineligible mental process to ineligible information still leaves the claim limitation directed to printed matter. To hold otherwise would make the printed matter doctrine a dead letter, requiring no more than a “think about it” step to give patentable weight to a claim limitation directed to information content. There is no meaningful distinction between claim limitations directed to written information … verbal information … and mentally-processed information.

Opinion at *13. In brief, the extension of the printed matter doctrine to encompass “mentally-processed information” prevents form from trumping substance.

Although Praxair Distribution does not expressly make this point, it seems to revive some variant of the historical mental steps doctrine. In the mid-twentieth century, the mental steps doctrine did for mental steps what the printed matter does today for printed matter: it invalidated claims that relied on the content of mental processes to establish a distinction from the prior art. See, e.g., In re Abrams, 188 F.2d 165, 165 (C.C.P.A. 1951). The PTAB cited to some of these mid-century mental steps cases to support its extension of the printed matter doctrine to mental steps. 2016 WL 3648375 at *10 (2016). The Federal Circuit, however, did not, most likely because the CCPA abandoned the mental steps doctrine decades ago in the course of grappling with the patent eligibility of software, In re Musgrave, 431 F.2d 882, 889 (C.C.P.A. 1970), and the Federal Circuit has refused to reinstate it, Prometheus Labs. v. Mayo Collaborative Servs., 628 F.3d 1347, 1358–59 (Fed. Cir. 2010). Nonetheless, in practice, if not in name, Praxair Distribution plainly reinvigorates some variant of the mental steps doctrine. Technically, the opinion could be read narrowly so that the printed matter doctrine only extends to mental steps when claims recite both a printed matter limitation with certain informational content and a think-about-it limitation to the same informational content. However, the argument that the informational content of an evaluating, think-about-it limitation should be given patentable weight if the informing limitation is removed from the claim is difficult to fathom.

Another interesting aspect of Praxair Distribution is that it opens a new front in the ongoing debate concerning the intermixing of sections 102 and 103, on the one hand, and section 101, on the other hand. The Supreme Court’s opinions on patent eligibility in Mayo and Alice are highly controversial, in part, because their “inventive concept” analysis—i.e., what is now known as Mayo/Alice “step 2″—requires consideration of the advance over the prior art, a factual issue that is usually addressed in the novelty and nonobviousness analyses. Mixing the patentability requirements in the other direction—that is, using 101 concerns to inform 102/103 doctrine—has to date not received much attention. However, the printed matter doctrine has long mixed in this other direction, and Praxair Distribution brings this other-direction mixing into the spotlight:

Claim limitations directed to the content of information and lacking a requisite functional relationship are not entitled to patentable weight because such information is not patent eligible subject matter under 35 U.S.C. § 101. Cf. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 90 (2012). While the doctrine’s underlying rationale is in subject matter eligibility, its application has been in analyzing other patentability requirements, including novelty … and nonobviousness.

Opinion at *10. (Interestingly, the European Union, too, mixes patent-eligibility concerns into the inventive step analysis with its requirement that that the inventive step reside in a technical effect. European Patent Office, Guidelines for Examination, Part G, Chapter VII.5.2.) The printed matter doctrine reveals that, at least under limited circumstances, what are often conceived of as the rigid statutory silos of patent law must break down. As Judge Newman notes in her concurrence, the printed matter doctrine started out as a prohibition on patenting business forms that was administered as part of the doctrine of patent eligibility. Concurrence at 2–3. However, over time, as patent applicants attempted to claim printed matter in combination with otherwise patent-eligible subject matter, the doctrine developed the two statutory branches that it has today: it is administered via section 101 in cases that involve claims to printed matter per se and via sections 102 and 103 in cases that involve claims to printed matter in combination with statutory processes, machines, manufactures, or compositions of matter. The extension of the printed matter doctrine to mental steps merely further highlights the mixing that is already occurring because mental processes are today, understood, well-understood to be the basis of patent-eligibility rejections. The mental steps doctrine, that the printed matter doctrine now resembles, was administered entirely as a section 101 doctrine, employing the equivalent of a patentable-weight analysis as part of patent eligibility. It never partially migrated from section 101 into sections 102 and 103 like the printed matter doctrine did.

Finally, the dispute underlying the Praxair Distribution opinion also reveals an overlap between sections 102 and 103 and section 101 in yet another way. The parallel district court proceeding invalidated all claims of the ‘112 patent that were at issue for lack of patent eligibility under Mayo, although the representative claim was a more conventional diagnostic claim from a different patent. 2017 WL 387649, *14–*20. The PTAB, of course, could consider this section 101 ground because it is limited in IPRs to 102 and 103 grounds.

The Informing-and-Discontinuing-Treatment Claims: An Expansive Functional-Relation Exception

Like the informing-and-evaluating claims, the final group of claims also depends from an informing claim. Technically, however, these claims depend from a claim that requires slightly different information to be provided to the medical provider with the nitric oxide cylinders, namely information in the form of a “recommendation that, if pulmonary edema occurs in a [neonate] who has pre-existing left ventricular dysfunction … the treatment with … nitric oxide should be discontinued.” Again like the informing-and-evaluating claims, they add further steps presumptively performed by medical providers to the steps performed by nitric oxide distributors. The representative claim here is claim 9. After reciting the limitations of identifying a neonate with hypoxic respiratory failure and determining whether the neonate has left ventricular dysfunction, it adds treatment and treatment-cessation steps:

  • “treating the neonatal patient with left ventricular dysfunction with … nitric oxide, whereupon the [neonate] experiences pulmonary edema; and
  • in accordance with [the information provided], discontinuing the … nitric oxide due to the neonatal patient’s pulmonary edema.”

The PTAB held claim 9 not unpatentable as obvious. It construed the “in accordance with” language to mean that the discontinuation of the treatment was performed “based on, or as a result of” the information/recommendation provided with the nitric oxide cylinders. It then concluded that the fact that the information was the reason or motivation for the medical provider to discontinue treatment created a functional relationship between the information and the discontinuing-treatment step. Opinion at *6. In turn, the PTAB held that the functional-relation exception to the printed matter doctrine applied, that the information provided could be given patentable weight, and that claim 9 was not obvious.

The Federal Circuit approved of the PTAB’s interpretation of the functional-relation exception to the printed matter doctrine as well as its application to claim 9. Opinion at *17. However, the Federal Circuit reversed the PTAB’s ultimate nonobviousness determination, concluding that, even when the content of the information is given patentable weight, the claim is obvious in light of the prior art. The prior art taught that nitric oxide may be given to patients with left ventricular dysfunction as long as those patients are monitored during treatment. The information provided—namely that nitric oxide should be discontinued for patients with left ventricular dysfunction upon pulmonary edema—was too small of an advance over the prior art to render the claim patentable.

The point of agreement between the PTAB and the Federal Circuit on the expansive interpretation of the functional-relation exception raises an interesting—and possibly troubling—precedent for future cases. The logical reason for a real-world, extra-mental action can now distinguish a claim reciting the action from the prior art. That is, the “invention” of a nonobvious mental motivation for a human actor to perform an already-known, real-world (i.e., non-mental) action, like discontinuing treatment, can give rise to a patentable method claim.

Consider a simple hypothetical. Assume that doctors routinely decrease the dosage of a drug when a metabolite of the drug in a patient’s bloodstream exceeds a certain threshold because of a known potential for a serious adverse event, namely liver problems. Now assume that a researcher discovers that, unexpectedly, the same metabolite in a patient’s bloodstream exceeding the same threshold also raises the risk of a different, serious adverse event, namely heart problems. The researcher claims a method of a medical provider: (a) administering a dose of a drug to a patient from a package with a printed indication that a metabolite level exceeding a threshold creates a medically unacceptable risk of heart problems, (b) determining the level of the drug’s metabolite in the patient’s bloodstream, and (c) reducing the dosage of the drug “in accordance with” the printed indication (i.e., due to the risk of heart problems) if the threshold is exceeded. Even though the medical provider infringing the claim performs conduct that, to an external observer, cannot be differentiated from the prior art (except for the printed indication on the drug package), the claim is patentable. The functional-relation exception to the printed matter doctrine allows the content of the printed matter be given patentable weight because the information conveyed motivates the medical provider’s conduct, and the unexpected nature of the connection between high metabolite levels and heart problems strongly supports nonobviousness.

To be clear, even if one finds the patentability of this hypothetical claim to be problematic—and reasonable minds may differ on whether it is problematic—there is no reason to question the Federal Circuit’s actual holding concerning claim 9 in Praxair Distribution. The Federal Circuit held the claim unpatentable for obviousness even when it gave the content of the printed (or spoken or thought) matter patentable weight. By necessity, it therefore would have reached the same holding if it had refused to give that content patentable weight. The expansiveness of the functional-relation exception in Praxair Distribution will only become outcome-determinative in future cases when a claim recites information that provides an unexpected reason or motivation for a real-world, extra-mental action that, standing alone, is known or is merely an obvious departure from the prior art.

Inversely, a narrow interpretation of the functional-relation exception—one that does not label the content of information as functionally related to an action recited as a limitation when the action is performed because of the information—would not widely undermine patentability. In particular, it would not invalidate most claims to actions that are motivated by newly discovered information. For example, consider a researcher who discovers that, unexpectedly, a particular genetic mutation means that a patient should be taking a lower dosage of a drug. The researcher may claim a method of a medical provider: (a) testing a patient for the mutation and (b) administering the lower drug dosage to the patient if the mutation is present. The printed matter doctrine is irrelevant to the nonobviousness of this claim because the claim does not recite the content of printed information (or a mental state of a doctor who thinks about the information) as a limitation. Such an information limitation is not required for validity, and would thus be unnecessary drafting surplusage, because the real-world (non-mental) conduct of testing and administering under the specified conditions is sufficient to distinguish the claim from the prior art. Although it is not recited as a claim limitation, the newly discovered information still provides an explanation for why the claimed invention is useful and why it produces unexpected results. (Further highlighting the interconnection of the printed matter doctrine and patent eligibility, compare the outcome in this hypothetical to the Federal Circuit’s recent holding in Vanda Pharmaceuticals Inc. v. West-Ward Pharms Int’l Ltd., 887 F.3d 1117 (Fed. Cir. 2018), which upheld the patent eligibility of a hybrid diagnostic/treatment claim under Mayo.)

The Federal Circuit’s expansive interpretation of the functional-relation exception to the printed matter doctrine in Praxair Distribution can be traced to a recent shift how the Federal Circuit articulates that exception. Traditionally, the functional-relation exception was applied only when there was a functional relationship between the content of the printed matter “the substrate on which the printed matter is applied.” Opinion at *9 (emphasis added). For example, in one of the few non-software cases in which the Federal Circuit actually held that the functional-relation exception allowed the content of printed matter to receive patentable weight, the content of a series of numbers printed on a loop of paper was held to be functionally related to the substrate/paper because the numbers themselves were a looping series. In re Gulack, 703 F.2d 1381 (Fed. Cir. 1983). In contrast, the PTAB and the Federal Circuit in Praxair Distribution looked for, and found, a functional relationship between the content of the printed matter and a different limitation in the claim other than the printed-matter limitation, namely the discontinuing-treatment limitation. From my quick research, Praxair Distribution appears to be the first case in which the functional-relation exception has been found to apply based on a functional relationship between printed matter and a claim limitation directed to something other than the printed matter’s substrate. Both King Pharms. and Kao use language that suggest the possibility of such a non-substrate relationship satisfying the functional-relation exception, but neither finds that it exists on the facts presented. If the functional-relation exception were limited to claims in which there is a functional relationship between the printed matter and the substrate in particular, then claims to new motivations for already-performed conduct would not be patentable under the printed matter doctrine.

Patents as Holdups and the DOJ Controversy

by Dennis Crouch

In February 2018, I wrote an essay titled Patents and Antitrust: Trump DOJ Sees Little Connection.  USDOJ’s chief antitrust lawyer Makan Delrahim has repeatedly stated his position that patent holders rarely create antitrust concerns — even in the standard setting organization and FRAND framework. Mr. Delrahim explained recently:

By denying injunctive relief to standard essential patent holders except in the rarest circumstances, courts in the U.S. run the risk of turning a FRAND commitment into a compulsory license. As a defender of competitive markets, I am concerned that these patent law developments could have an unintended and harmful effect on dynamic competition by undermining important incentives to innovate, and ultimately, have a detrimental effect on U.S. consumers.

Another advocacy position we have taken relates to how patent holders are held to their commitments to license on FRAND terms. . . [U]nilateral patent hold-up is not an antitrust problem. Where a patent holder has made commitments to license on particular terms, a contract theory is adequate and more appropriate to address disputes that may arise regarding whether the patent holder has honored those commitments. . . . Using the antitrust laws to impugn a patent holder’s efforts to enforce valid IP rights risks undermining the dynamic competition we are charged with fostering. So when it comes to disputes that arise between intellectual property holders and implementers regarding the scope of FRAND commitments, we advocate for the application of more appropriate theories, other than the blunt instrument of antitrust.

A third topic I have addressed recently is the need for balanced patent policies in standard setting organizations. As I and others at the Division have said on many occasions, by allowing products designed and manufactured by many different firms to function together, interoperability standards create enormous value for consumers. But standard setting only works—and consumers only reap the benefits of innovative and interoperable products—when both patent holders and patent implementers have the incentives to participate in the process. To that end, I have encouraged standard setting organizations to think carefully about the patent policies they adopt, so that incentives are not skewed towards one group or the other.

Delrahim Keynote Text.

A large group of leading law professors and former government antitrust enforcement officials have now continued the debate with an eight-point letter explaining the “broad bipartisan legal and economic consensus” on the antitrust concerns of patent holdups and the market benefit of SSOs.  [Read the Full Letter: DOJ patent holdup letter].

The points:

  1. “The anticompetitive harms from patent holdup have been consistently acknowledged by officials in Republican and Democratic administrations,” including in a unanimously adopted 2007 joint agency report.
  2. “The holdup problem has been recognized by courts and standard setting organizations themselves.” This is the reason why SSOs (made-up of industry player patent owners) adopt FRAND practices.
  3. Holdup concerns (by the patentee) “presents the more serious antitrust concern” as compared with Holdout concerns (by infringers who refuse to license).
  4. A patentee who obtains or maintains market power by breaching a FRAND commitment is liable for monopolization.
  5. While “injunctive relief often is appropriate” as a remedy in patent cases, the right to exclude granted by patents does not mean that a patentee’s unilateral refusal to license is ‘per se legal.’  Rather there are many doctrines that the right of a property owner to exclude others whether land, personal property, or intellectual property.
  6. eBay is the law; patent infringement no longer necessarily results in an injunction. “Because there could be thousands of patents in a product today, it is not appropriate uniformly to apply standards from the 18th century.”
  7. Patent rights should be considered for their utilitarian purpose – rather than as primarily a natural property right.
  8. Holding patentees to their own FRAND licensing commitments should not be seen as controversial in any way.

The letter here different from an amicus brief or comments to a notice of proposed rule-making since Delrahim need not respond or even consider the ideas presented.  The reality is that nothing in the letter is ‘new’ information and I am confident that Delrahim has already considered all of these points.  Still, it makes sense to speak the truths that you know. But still I wonder whether there is an intended shadow audience for the letter.

Law of the Flag and Patent Infringement on the High Seas

by Dennis Crouch

Due process ordinarily requires that a court have personal jurisdiction over the parties to a lawsuit.  In its 2016 opinion, the District Court dismissed M-I Drilling’s lawsuit against the Brazilian company Dynamic Air Ltda. (DAL) for lack of personal jurisdiction. M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda, 2016 U.S. Dist. LEXIS 27357, 2016 WL 829900 (D. Minn. 2016).  On appeal here, the Federal Circuit has reversed. M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda., 2018 U.S. App. LEXIS 12497 (Fed. Cir. May 14, 2018).

Law of the Flag: The alleged infringement here did not occur within the United States proper, but rather aboard U.S. flagged ships in international waters – the vessels Resolution and Pinnacle.  The district court held that the U.S. Patent Act applies to U.S. flagged ships — “While on the high seas, a vessel is deemed to be part of the territory of the nation to whose citizens it belongs, and under whose flag it sails.” However, the district court then dismissed the case for lack of personal jurisdiction.

Personal Jurisdiction over a Foreign Entity: In most U.S. civil litigation, personal jurisdiction is considered on a state-by-state basis: we ask “does the defendant have sufficient contacts with the state housing the particular court?”  A special rule (R.4(k)(2)) kicks in for foreign entities such as DAL who are not subject to the general jurisdiction of any U.S. State.  Under 4(k)(2), any court across the country will have personal jurisdiction so long as the defendant’s contacts with the United States (as a whole) are sufficient to comport with Constitutional due process and not offend “traditional notions of fair play and substantial justice.”

In finding sufficient minimum contacts with the U.S. here, the Federal Circuit counted contacts with the U.S. flagged ships — finding that DAL’s installation of the accused pneumatic conveyance systems on the HOS Pinnacle and the HOS Resolution created specific jurisdiction over the entity. “Nothing more is required to show that DAL purposefully directed its activities at the United States.”

Judge Hughes wrote the opinion for the court joined by Judges Reyna and Stoll. Judge Reyna also filed a concurring opinion to further discuss the international maritime issues.

Prior to the enactment of the 1952 Act, the only authority speaking on whether U.S. patent laws apply to U.S-flagged ships on the high seas was Gardiner v. Howe, an 1865 case from then-existing Circuit Court of the District of Massachusetts. 9 F. Cas. 1157, F. Cas. No. 5219 (C.C.D. Mass. 1865). In Gardiner, the asserted patent claimed an improvement in the sails of vessels. The accused infringer allegedly used the improvement on the sails of his U.S.-flagged vessel while on the high seas and argued at trial that he could not be held liable for infringement because U.S. patent laws did not apply on the high seas. The court disagreed, stating that the U.S. patent laws “extend[] to the decks of American vessels on the high seas, as much as it does to all the territory of the country, and for many purposes is even more exclusive.” The court reasoned that any contrary ruling would render valueless “patents for improvements in the tackle and machinery of vessels, or in their construction . . . .” Our predecessor court recognized the vitality of Gardiner in Marconi Wireless Telegraph Co. of America v. United States, when it held that U.S. patent laws extend to infringing acts at the American Legation at Peking in China. 99 Ct. Cl. 1 (1942).

Nothing in the legislative history of the 1952 Patent Act evidences congressional intent to narrow the territorial scope of the patent laws from that articulated in Gardiner. . . .

In 1990, Congress applied the logic expressed by the Gardiner court in drafting legislation to extend U.S. patent law to U.S. spaceships. 1990 U.S.C.C.A.N. 4058, 4060-62. . . . Section 105 of Title 35 thus provides that “[a]ny invention made, used or sold in outer space on a space object or component thereof under the jurisdiction or control of the United States shall be considered to be made, used or sold within the United States for the purposes of this title . . . .” Congress’s logic in extending U.S. patent laws to U.S.-spaceships in outer space lends strong support for finding U.S. patent laws extend to U.S.-flagged ship on the high seas. . . .

What is particularly troubling in this case is that if U.S. law does not apply to infringing activity on a U.S.-flagged ship in international water, then it is possible no law applies.

Personal jurisdiction is proper – on remand we’ll see if there was actually any infringement of a valid patent.

A few notes:

  • Although the majority refers to the “high seas” and actions “beyond the territorial boundary” of any nation, Judge Reyna points out that “[t]he alleged infringement in this case occurred in the exclusive economic zone (“EEZ”) of Brazil. The EEZ is “‘an area beyond and adjacent to the territorial sea’ which ‘shall not extend beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is measured.'” Elizabeth I. Winston, Patent Boundaries, 37 Temp. L. Rev. 501, 508 (2015) (quoting the United Nations Convention on the Law of the Sea, Dec. 10, 1982, 1833 U.N.T.S. 397, 418-19 (arts. 55, 57)).
  • One of the most interesting quotes from the article is the following statement: “Our subject matter jurisdiction over this appeal is grounded in the commercial tort of patent infringement.” That phrase has only been used in one other court decision – Judge Newman’s dissent in the damages case of Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995) (en banc) (“Patent infringement is a commercial tort, and the remedy should compensate for the actual financial injury that was caused by the tort.”) 

Patently-O Bits and Bytes by Juvan Bonni

Ed. Note: Mizzou Law Student Juvan Bonni is one of our new Bits and Bytes authors. Juvan’s background in international issues should help bring some perspective to these pages. If you have news updates or event listings you can send them his way: – DC

Recent Job Postings in Patent Law:

Microsoft, Corel, and the “Article of Manufacture”

Guest Post by Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law (Tweet @design_law)

Microsoft v. Corel, Order Regarding Post-Trial Motions (N.D. Cal. 2018)

A district judge recently issued a decision that—if affirmed by the Federal Circuit—could have major implications for design patent law and policy.

Microsoft accused Corel of infringing five utility patents and four design patents. The four design patents all claimed designs for particular elements of the Microsoft Office graphical user interface (GUI). The images below show each of the claimed designs, along with a corresponding image of an accused product (images source: Microsoft’s complaint):

Corel initially denied infringing these design patents but, early last year, it amended its answer to admit infringement and dismiss most of its defenses, stating that, “to properly develop and prove out those defenses will simply cost more than the damages could rationally be in this case.” By the time of trial, the only remaining issues were damages, whether Corel had pre-suit notice of three of the design patents, and willfulness.

In its Rule 50 motions, Corel argued that Microsoft was not entitled to recover its “total profits” under 35 U.S.C. § 289 because Corel had not applied the patented designs to any articles of manufacture.

Section 289 provides a special disgorgement remedy for certain acts of design patent infringement. (For more on what § 289 does and doesn’t cover, see FN 74 here.) It provides that:

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.

35 U.S.C. § 289.

Corel noted that each of Microsoft’s design patents claimed an “ornamental design for a user interface for a portion of a display screen, as shown and described…” Corel argued that the relevant article of manufacture for each of the design patents was, therefore, a display screen. Sine Corel had not sold any display screens, it argued, there were no applicable profits for Microsoft to recover.

Corel also argued that its software products did not themselves constitute “articles of manufacture.”

Microsoft argued that each of its patents claimed a design “for a user interface for a portion of a display screen” and argued that, in its stipulation of infringement, Corel had “admitted that its products include[] the claimed interface.” Microsoft also argued that software does qualify as an “article of manufacture,” relying mainly on the Supreme Court’s statement in Samsung v. Apple that “[a]n article of manufacture . . . is simply a thing made by hand or machine.” Therefore, according to Microsoft, it was entitled to recover the “total profits” from Corel’s infringing software pursuant to § 289.

The district court agreed with Microsoft. According to Judge Davila, Corel waived its “article of manufacture” arguments because it “already admitted that its products. . . infringe” the design patents. Judge Davila further decided that, even if the arguments weren’t waived, “[s]oftware is a ‘thing made by hand or machine,’ and thus can be an ‘article of manufacture,” citing Samsung. The judge further stated that Corel’s arguments about the claim language were “misplaced” because the claimed design was “broad enough that it could be ‘applie[d]’ to software.”

Both of these conclusions deserve closer attention.

The admission of infringement

As noted above, Corel admitted that its software infringed Microsoft’s design patents. According to the court, this meant that “Corel has already admitted there exists an ‘article of manufacture’ to which the patented designs . . . have been applied.” It’s not entirely clear why the court reached this conclusion. But, reading the discussion as a whole, it appears that the court may have been laboring under the (unfortunately, somewhat widespread) misapprehension that § 289 sets forth the standard for design patent infringement. In other words, it appears that the court may have been under the mistaken impression that design patent infringement occurs only when the patented design is applied to an article of manufacture.

To be fair to the court, there is some dicta floating around to that effect. But, as Microsoft argued, it is § 271 that sets forth the standard for infringement of design patents – just like it does for utility patents.

In theory, someone could infringe a design patent by, for example, inducing someone else to use a patented design without themselves applying the design to any “article of manufacture” or selling an article to which the design has been applied. One reason for this is that we don’t yet have a clear conception of what it means for a design to be “applied” to an article. This decision highlights the need for more clarity in this area. (For my own views on what “applied” should mean, see here.)

The court also seems to conflate the digital instructions for rendering a design from the actual visual design itself. In copyright law, we distinguish between the code (a literary work) and the visual design displayed by the work (an audiovisual or PGS work). That distinction might be helpful in understanding the issues in these GUI design patent cases. Effectively, Judge Davila’s ruling allows for the protection of the process used to display these designs, as opposed to the designs themselves. If upheld, this could have major implications for the protection of CAD files used in 3D printing.

Software as an “article of manufacture”

The court’s alternate conclusion—that software can be an “article of manufacture”—is both surprising and, if upheld on appeal, could have far-reaching implications.

Section 171 provides for the grant of a design patent for “any new, original and ornamental design for an article of manufacture.” There does not seem to be any good reason to interpret the phrase “article of manufacture” differently in § 289 than in § 171. (While some scholars have argued that the scope of GUI design patents should not be limited based on their verbal claims, the—admittedly scarce—case law suggests otherwise. This article collects all the relevant cases I could find as of 2015; here is another, more recent, decision.)

The question of whether a GUI design is, in fact, a “design for an article of manufacture” has never actually been decided by a court. According to the USPTO, a GUI claim “complies with the ‘article of manufacture’ requirement” if the GUI is claimed as “shown on a computer screen, monitor, other display panel, or a portion thereof.” MPEP § 1501.(a). At least in the view of the USPTO, the relevant article is the screen. Of course, this interpretation has not, however, been considered—let alone ratified—by any court. And Corel didn’t mention any of this to Judge Davila. But it’s notable how starkly the court’s reasoning in Microsoft contrasts with the USPTO’s reasoning in allowing this type of patent in the first place.

The Microsoft ruling also stands in striking contrast with Apple’s arguments in its currently-pending retrial against Samsung. Apple is arguing that the relevant article for its GUI patent is the complete Samsung phone, not the software installed thereon. It would seem odd to say that the relevant article of manufacture for a GUI is the software unless the defendant happens to sell its software bundled with a piece of hardware—especially since the Supreme Court rejected the Federal Circuit’s rule that the relevant article is whatever the defendant sells. And if it seems strange to treat Corel and Samsung differently with respect to § 289, that may suggest a deeper flaw in the reasoning the USPTO used to grant design patents for GUIs in the first place.

In any case, if the Federal Circuit affirms the decision that software can be an “article of manufacture,” that would be a major change to U.S. design patent law.

It could also have implications for utility patent law. The phrase “article of manufacture” in the design patent statutory subject matter provision has long been understood to be synonymous with the term “manufacture” in the utility patent subject matter provision. (For more on the longstanding equation of these terms, see here.) One notable exception is In re Nuijten, where the majority rather clumsily tried to distinguish a CCPA design patent case, In re Hruby, on the way to deciding that only tangible items can be “manufactures” under § 101. (Neither Corel nor Microsoft mentioned Nuijten in their “article of manufacture” briefing.)

Eventually, the Federal Circuit will need to sort all of these issues out. But this decision demonstrates how urgent the need is for clarity—and clear thinking—in this space.

Venue in Multi-District States

by Dennis Crouch

The same panel that recently decided In re ZTE (Fed. Cir. May 14, 2018) (Judges Reyna, Linn, and Hughes) has now also decided another improper venue mandamus action: In re BigCommerce, Inc. (Fed. Cir. May 15, 2018).

BigCommerce focuses on the issue of proper venue in multi-district states. The potential confusion comes from the Supreme Court’s central holding in TC Heartland that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” BigCommerce is a Texas Company, but its HQ is in Austin (W.D.Texas) and argues that the Supreme Court’s statement was incomplete.  Now, on mandamus, the Federal Circuit has sided with BigCommerce — holding that the rule is more nuanced for multi-venue states.

[A] domestic corporation incorporated in a state having multiple judicial districts “resides” for purposes of the patent-specific venue statute, 28 U.S.C. § 1400(b), only in the single judicial district within that state where it maintains a principal place of business, or failing that, the judicial district in which its registered office is located.

Thus, the outcome here is that E.D.Texas is an improper venue for BigCommerce under 28 U.S.C. 1400(b) since the company neither (1) resides nor (2) has a place of business in the venue.

1400(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.

On remand, the District Court should either dismiss the lawsuits or grant a motion to transfer.

The Federal Circuit’s decision here has to be correct, and the only difficulty is the loose Supreme Court wording in TC Heartland.

In its analysis, the Federal Circuit started with the statute, which focuses on “the judicial district where the defendant resides.” The focus here is not on the “state” as a whole but on the district itself.  For its part, the appellate panel though emphasis should be added to the article “the judicial district” — i.e., what is the one single district where the defendant resides? “A plain reading of ‘the judicial district’ speaks to venue in only one particular judicial district in the state.”  The court also cited Stonite Products Co. v. Melvin Lloyd Co., 315 U.S. 561 (1942) for what it identified as the Supreme Court’s “view on the issue” — “that a corporation incorporated in a multi-district state is not a resident of every district in the state.”

Eligibility Fails: Improving the Physical Realm vs. Improving an Abstract Idea

by Dennis Crouch

In SAP America v. InvestPic (Fed. Cir. 2018), the court repeated a number of well known maxims regarding patent eligibility:

  • Even if the underlying invention is “‘[g]roundbreaking, innovative, or even brilliant,’ . . . that is not enough for eligibility.”  Quoting Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591 (2013).
  • Nor is it enough for subject-matter eligibility that claimed techniques be novel and nonobvious in light of prior art, passing muster under 35 U.S.C. §§ 102 and 103. See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 89–90 (2012); Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) (“[A] claim for a new abstract idea is still an abstract idea. The search for a § 101 inventive concept is thus distinct from demonstrating § 102 novelty.”)

InvestPic sued SAP for infringing its patented method of analyzing investment information. U.S. Patent No. 6,349,291. Claim 1 reads as follows:

1. A method for calculating, analyzing and displaying investment data comprising the steps of: (a) selecting a sample space, wherein the sample space includes at least one investment data sample; (b) generating a distribution function using a re-sampled statistical method and a bias parameter, wherein the bias parameter determines a degree of randomness in a resampling process; and, (c) generating a plot of the distribution function.

After considering the claims, the district court granted SAP’s motion for judgment on the pleadings — finding that the claimed process of “performing statistical analysis” is an ineligible abstract idea.  In particular, the district court saw core of the claim as being directed toward an ineligible mathematical calculation.  The field limitation (investment data) and generically claimed usable output (“a plot”) were insufficient to transmute the idea into a golden claim.  On appeal, the Federal Circuit has affirmed:

The focus of the claims, as is plain from their terms, quoted above, is on selecting certain information, analyzing it using mathematical techniques, and reporting or displaying the results of the analysis. That is all abstract.

Distinguishing this case from McRO, the court appears to have recast that case as focusing on the “physicality” of lip-syncing:

The claims in McRO were directed to the creation of something physical—namely, the display of “lip synchronization and facial expressions” of animated characters on screens for viewing by human eyes. The claimed improvement was to how the physical display operated (to produce better quality images), unlike (what is present here) a claimed improvement in a mathematical technique with no improved display mechanism. The claims in McRO thus were not abstract in the sense that is dispositive here. And those claims also avoided being “abstract” in another sense reflected repeatedly in our cases (based on a contrast not with “physical” but with “concrete”): they had the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it.

The court goes on:

Here, in contrast, the focus of the claims is not a physical-realm improvement but an improvement in wholly abstract ideas—the selection and mathematical analysis of information, followed by reporting or display of the results.

USPTO Announces Recipients of 2017 Patent Pro Bono Achievement Certificate

From USPTO: Alexandria, VA– The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) today announced the recipients of the 2017 Patent Pro Bono Achievement Certificate in recognition of individuals who help make the Patent Pro Bono Program available to financially under-resourced inventors and small businesses.

In 2017 more than 85 volunteer patent practitioners reported 50 or more hours of patent pro bono service to a regional patent pro bono program. To acknowledge their contributions, USPTO provided certificates and listed their names and employers on the Patent Pro Bono Program website.

“I want to congratulate the recipients for their dedication, time, and commitment they’ve demonstrated in an effort to help spur innovation on behalf of under-resourced inventors and small businesses,” said Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Andrei Iancu. “Their assistance is crucial not only to the success of our Patent Pro Bono Program, but the success of our nation toward inspiring innovation across the country, and ensures that everyone who has the desire is given the opportunity.”

The continued efforts of patent practitioners across the country have strengthened the success of the Patent Pro Bono Program since 2015. To date, more than 1,500 patent professionals have volunteered their availability, time, and resources to help make the Patent Pro Bono Program a success.

In 2018, USPTO will expand its recognition to include law firms and corporations in addition to individual patent practitioners. Those whose registered practitioners cumulatively contribute a minimum number of hours (based on firm size) to one or more participating regional patent pro bono programs may receive the 2018 Law Firm and Corporate Achievement Certificate.

2017 Winners Include: (more…)

Supreme Court Vacates Secure Axcess Precedent – Finding it Moot

by Dennis Crouch

As you’ll read below, the Supreme Court has vacated the Secure Axcess CBM decision on mootness grounds.  This means that the “financial services” limitation of the covered-business-method provisions are again up for interpretation. 

In the America Invents Act (AIA) of 2011, Congress created a trio of AIA-Trials: Inter Partes Reviews; Post Grant Reviews; and Covered Business Method (CBM) Reviews.

The CBM program is particularly targeted at claims for data processing or other operations used in the “practice, administration, or management of a financial product or service” and not covering “technological” inventions.  In PNC Bank v. Secure Axcess, the Federal Circuit narrowly interpreted the eligibility for CBM review – holding that the claims themselves must be directed to a financial service.  A patent does not qualify for CBM simply because it can be used in the financial service industry.

PNC then petitioned the Supreme Court for writ of certiorari asking the following question:

  1. Whether the U.S. Court of Appeals for the Federal Circuit’s judgment should be vacated and remanded with instructions to dismiss the appeal as moot, in accordance with United States v. Munsingwear, Inc., when the claims of the challenged patent are invalid, and there is no longer a live case or controversy between petitioners and respondent; and
  2. Whether, if the case is not moot, the lower court erred in holding that the statutory definition of a patent eligible for covered business method review requires that the claims of the patent expressly include a “financial activity element”—in other words, that the claim have no use outside of financial activity—rather than making covered business method review available for patents that claim “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”

In its list of orders, the Supreme Court has decided the case — agreeing with the first question that the case is moot:

The petition for a writ of certiorari is granted. The judgment is vacated as moot, and the case is remanded to the United States Court of Appeals for the Federal Circuit with instructions to remand the case to the Patent Trial and Appeal Board to vacate the Board’s order. See United States v. Munsingwear, Inc., 340 U. S. 36 (1950). Justice Alito took no part in the consideration or decision of this petition.

The mootness issue here stems from the fact that the challenged Secure Axcess patent claims were also cancelled in a separate IPR proceeding that has been affirmed by the Federal Circuit and the time for petitioning the Supreme Court has passed. Petitioner writes:

The now unreviewable invalidation of those claims, and resulting dismissal of Secure Axcess‘ infringement claims with prejudice moots any live case or controversy between the parties here.

The cited Supreme Court Munsingwear decision comes from mootness-on-appeal. In that case, the court explained its establish practice of vacating judgments on issues that become moot while on appeal or pending decision:

The established practice of the Court in dealing with a civil case from a court in the federal system which has become moot while on its way here or pending our decision on the merits is to reverse or vacate the judgment below and remand with a direction to dismiss.

United States v. Munsingwear, Inc., 340 U.S. 36 (1950).