In re Ikeda Food Research Co., Ltd. (Fed. Cir. 2019)
Ikeda is attempting to patent a glucose sensor using a particular enzyme (“a soluble flavin compound-binding glucose dehydrogenase”) that promotes glucose oxidizing. U.S. Application No. 12/851,668. One U.S. patent is already issued in the family as well as Japanese , Chinese, and European patents. In this case, however, the examiner rejected the claims as obvious and the PTAB affirmed. The Federal Circuit has now also affirmed that finding.
The case is most interesting for its inherency finding. Here, the claims at issue particularly require low-maltose activity (“enzymatic activity to maltose in the enzymatic reaction layer is 5% or less relative to the enzymatic activity to glucose.”) The prior art did not expressly teach that limitation, but the PTAB found it inherently disclosed. In particular, the cited prior art used the same enzyme preparation as the patentee, and the PTAB concluded that it would inherently exhibit the same low-level maltose activity.
Teachings that are inherent to a disclosure work as prior art — both for anticipation and obviousness. However, the court applies fairly strict requirements before it will assume the existence of unstated elements. “[T]he limitation at issue necessarily must be present[] or the natural result of the combination of elements explicitly disclosed by the prior art.” PAR Pharm., Inc. v. TWI Pharm., Inc., 773 F.3d 1186 (Fed. Cir. 2014).
In reviewing the evidence, the Federal Circuit found that the PTAB had reasonably concluded that when the enzyme was used in the prior art that it had the identical activity as claimed by Ikeda. In particular, the PTO properly made a prima facie case of inherency that was not sufficiently rebutted by the patent applicant.
The one good argument Ikeda made here involved a separate reference (Tsuji) that also used the identical enzyme and ended up with high-maltose activity. The courts, however, distinguished Tsuji because there was evidence of sample contamination in that case and no evidence that other non-related samples were contaminated.
The approach here follows Southwire Co. v. Cerro Wire LLC, 870 F.3d 1306 (Fed. Cir. 2017), where the court found it reasonable to assume that functional limitations were met if all of the other process limitations are met. “[T]here is no indication that
the limitation is anything other than mere quantification of the results of a known process.” Id.
In the absence of any evidence that the claimed [low activity] would have been unexpected in light of [Senior’s] disclosure, there is no indication that the limitation is anything other than mere quantification of the results of a known process.
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One unusual aspect of this case is that the parties are not fully named. Although Ikeda is apparently title owner, there is a second unnamed party that is “the Real Party in interest.” In its certificate of interest, Ikeda explains that it “shares a confidential business relationship with this entity.” Judge O’Malley granted Ikeda’s unopposed motion to keep this info secret.
Before the PTAB, Ikeda apparently did not reveal the darkhorse real-party in interest. In its decision, the PTAB explains “According to Appellants, the real party in interest is Ikeda Food Research Co. Ltd.”
Google, LLC v. Oracle America (Supreme Court 2019)
This new petition from Google asks important questions about the role of copyright in protecting software. Questions presented:
Whether copyright protection extends to a software interface.
Whether, as the jury found, petitioner’s use of a software interface in the context of creating a new computer program constitutes fair use.
Rather than licensing Java, Google rewrote the programming language for Android App development in a way that mimics Java. No problem there so long as done without copying. However, rather than renaming all the function calls, Google decided to copy the names of all the function calls. I previously explained:
As an example, Google used the Java method header “Math.max(a,b).” . . . 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.
Google’s reason for copying the naming structure was a form of free-riding. There were already many thousand Java programmers and Google was looking for a way to get them to develop Apps for Android. In its shortest form, Google explains the case as follows:
As is relevant here, software interfaces are lines of computer code that allow developers to operate prewritten libraries of code used to perform particular tasks. Since the earliest days of software development, developers have used interfaces to access essential tools for building new computer programs. Contravening that longstanding practice, the Federal Circuit in this case held both that a software interface is copyrightable and that petitioner’s use of a software interface in a new computer program cannot constitute fair use as a matter of law.
After reading the Federal Circuit decision, I wrote that the case is “likely heading to the Supreme Court.” Although I believe that the case has a very good shot – one difficulty is that it involves a decision by the Federal Circuit applying Ninth Circuit law — it effectively holds no weight and can be simply rejected by the next Ninth Circuit panel addressing the same issues.
Willis Electric (Taiwan) owns several patents on artificial Christmas trees. In 2015, Willis sued Macao-based Polygroup for infringement. Polygroup turned-around and filed several inter partes review (IPR) petitions that were granted. In its final decisions, the PTAB sided with the patentee – finding that Polygroup had not proven the claims unpatentable. On appeal, the Federal Circuit has rejected the PTAB’s claim construction. Below, I look at just one of the cases — this one involving “modular artificial tree.”
Claim Construction: The PTAB has recently begun performing “standard” claim construction during inter partes review proceedings – rather than the broadest reasonable interpretation. This case, however falls under the old regime.
The claim term at issue in the preamble phrase – “modular artificial tree”
A modular artificial tree, comprising: . . .
Even applying the broadest-reasonable-interpretation, the PTAB found the phrase limiting — and construed it to require “a tree constructed of modular portions, each modular portion being a separate tree section” with pre-attached branches. The cited prior art references all had branches that separately attached to the trunk — and thus did not provide a prior art teaching of the pre-attached branchs.
On appeal, the Federal Circuit rejected this construction — finding that it “does not represent the broadest reasonable interpretation of ‘modular artificial tree.'” None of the claims require branches, and the proffered expert testimony regarding the term’s meaning was “conclusory” and “unsupported” by corroborating evidence.
Relying on the testimony of Willis’s expert, Dr. Brown, the Board concluded that a modular tree is “a ‘distinct’ type of artificial tree with tree sections that come ‘with branches pre-attached to the trunk.’” . . .
Dr. Brown’s statement is a conclusory and unsupported assertion, and we find it to be inconsistent with the intrinsic record. So, his testimony does not provide substantial evidentiary support for the Board’s conclusion that a modular tree is one with “branches pre-attached to the trunk.”
Instead, the Federal Circuit found that a more natural broadest-reasonable construction of modular artificial tree is as “an artificial tree with elements capable of being easily joined or arranged with other parts or units.”
On remand, the Board will consider whether this change alters the non-obviousness conclusion.
In a split decision, the Federal Circuit has sided with the patentee Dr. Barry — affirming the induced infringement and $17 million damages judgments as well as several determinations regarding the public-use and on-sale statutory bars. The patents here are directed to spine surgery methods that involve large screws drilled into the spine. U.S. Patent Nos. 7,670,358 and 8,361,121.
The dissenting opinion by Chief Judge Prost offers a concise explanation of a primary issue in the case:
The facts are simple. More than one year before filing for the ’358 patent, Dr. Barry successfully performed his claimed surgical method on three different patients, charging each his normal fee. Dr. Barry’s method was thus prima facie “on sale” or in “public use” before the critical date under 35 U.S.C. § 102(b) [pre-AIA].
The majority added to these facts — that Dr. Barry was not satisfied that his method worked well enough until follow-up testing that occurred after the third surgery.
Here, the patented invention is a method — and so cannot really be “on sale.” In addition, Barry’s pre-critical-date performance of the method was within the surgical rule where HIPAA and other privacy rules ensure that the method was not publicly used. However, one conflict was the extent that Barry was commercializing the the invention — with the idea that commercialization counts as a public use. In a footnote, the Court concludes that he did not “exploit” his invention prior to the critical date since he charged the same for his new surgery has he did for the old.
Though earning his normal fees from the three surgeries [likely $$$$$], Dr. Barry did not “exploit” his invention as a means to attract the three patients for those surgeries or to charge more because he used his new technique. The jury could find that he would have gotten the same business, and earned the same fee, even if he had not planned to use or used the inventive process.
There are a number of major problems with this conclusion from the court — likely enough to fill a law review article.
In the end, for the majority, the case turned on the question of whether the invention was “ready for patenting” at the time when it was used for the surgeries. The majority found that it was not yet ready for patenting – and thus that the uses did not serve as prior art. Even though the invention had been reduced to practice used in practice, it was not ready for patenting because Dr. Barry didn’t really know if it worked to create a stable improvement in spine function. “[T]here is substantial evidence that Dr. Barry’s invention was not ready for patenting until January 2004 because the final follow-up from the October surgery was reasonably needed for the determination that the invention worked for its intended purpose.” The dissent again disagrees — arguing accurately that “Dr. Barry could have obtained a patent before the critical date.”
Note here that in my original short explanation of this decision, I indicated that the invention “had been reduced to practice.” According to the majority, the invention was not reduced to practice because that requires a determination (by the inventor) “that the invention would work for its intended purpose.” In re Omeprazole Patent Litig., 536 F.3d 1361 (Fed. Cir. 2008).
The Eastern District of Texas winds its way from the gulf coast along the Louisiana and Arkansas border and up to Oklahoma. The district does not include of the largest Texas cities, but it does include the Dallas suburb of Plano (we can debate whether it is a suburb, but it is). Plano is important because it is Corporate HQ for a number of large companies and also serves as regional HQ for many others.
Plano is also supporting E.D.Tex. as an ongoing venue for patent infringement cases.
In TC Heartland (2017) the Supreme Court ruled that a patent infringement lawsuit against a US company can only be filed in a venue (1) where the defendant is registered as a corporation (i.e., “a Delaware Corporation”); or (2) a venue where the defendant “has committed acts of infringement and has a regular and established place of business.” Quoting 28 U.S.C. 1400(b). Previously, the Federal Circuit had ruled that venue was proper in any court with personal jurisdiction over the defendant.
The new narrower venue rules have shifted the field because many prior E.D.Tex. defendants are not Texas Corporations and do not satisfy the alternate “regular and established place of business” prong of the proper venue test. The resulting shift has been major. Prior to TC Heartland about half of patent infringement lawsuits were filed in E.D.Tex; Now the number has dropped to about 14%.
I wanted to look at who is still getting sued in E.D.Tex. For this mini-study, I just looked at the original complaints of the 18 patent infringement lawsuits filed in E.D.Tex during the first three weeks of 2019. Of the 18, the vast majority (two-thirds) assert venue based upon the defendant having a regular and established place of business located in Plano. The remaining lawsuits can be broken into two different categories for venue: Three (17%) involve defendants that are residents of Texas and whose HQs are located in the District; and three more (17%) are foreign defendants who can are arguably not limited by the two-prong TC Heartland test, but rather can be sued in any jurisdiction for venue purposes. 28 U.S.C. 1391(c)(3).
Cases:
PlasmaCAM, Inc. v. Fourhills Designs, et al al
Hawk Technology Systems, LLC v. Whitesboro Independent School District
Ironworks Patents LLC v. AsusTek Computer Inc.
Rembrandt Wireless Technologies, LP v. Apple Inc.
ICON Health & Fitness, Inc. v. Flywheel Sports, Inc.
Proximity Sensors of Texas, LLC v. AMS-TAOS USA, Inc.
Axcess International, Inc. v. Avigilon USA Corporation
Beverage Packaging Solutions LLC v. PepsiCo, Inc. et al
The USPTO has released additional information regarding its current operations and the ongoing Federal Government funding crisis. Bottom line is that the PTO expects to continue its patent operations “until at least the second week in February.” Things on DC appear to be thawing enough to provide hope that an appropriations bill will see some light before then.
Although the USPTO is user-fee funded, it may only spend money that has been appropriated by Congress. This limit comes directly from the US Constitution, which says “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Article I, Section 9.
The most recent USPTO appropriations authorization ended on December 22, 2018 — seemingly cutting of the agency’s ability to spend money. However, the USPTO has been setting aside previously appropriated money in an “operating reserve” fund for a rainy-day (or rainy month+). It is this operating reserve that is now being spent and set to run-out in a couple of weeks.
Many federal agencies receive budget authority for a single fiscal year, and any money appropriated but not spent by year-end will lapse and no longer be available. Thus, for instance, 31 U.S. Code § 1301 provides that an annual appropriation “may be construed to be … available continuously only if the appropriation … (2) expressly provides that it is available after the fiscal year covered by the law in which it appears.” USPTO appropriations ordinarily include the this type of additional express caveat that appropriated funds are “to remain available until expended.” That provision allows the USPTO to set-aside its rainy-day fund from prior appropriations.
The aforementioned reserve fund is part of the USPTO’s strategic plan. And the plan particularly involves setting user fees at a high enough level to grow that fund to withstand even fairly unreasonable funding lapses. One concern though is whether the USPTO fee setting authority covers such overage. In particular, the USPTO is authorized to set fees “only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees).” Adding a strategic operating-reserve-fund in case of a shutdown does not appear to fit within this list of cost bases.
Following-up on Yesterday’s PTA post, I wanted to run some numbers on Patent Term Adjustment. The chart below shows the average patent term adjustment for patents issued issued since 2005. The bump in early 2010 is due to a change in interpretation of the law in the Wyethdecision. If the PTA had been calculated consistently during this entire period, we would now be seeing the lowest values during the entire 13 year reporting period.
In many ways, PTA levels are a good measure of USPTO timeliness and performance because they are based upon Congressional goals for patent prosecution, including (i) a first office action within 14 months of filing; (ii) responses within 4-months; and (iii) total pendency of not more than 3-years (regardless of the cause). One important measure not captured by PTA involves RCE filing because that filing cuts-off the three-year expectation.
The second chart shows the percentage of patents with 2 or more years of PTA. Note that drop has been quite dramatic. Congratulations to the PTO.
The largest PTA cases typically involve successful appeals. For instance, recently issued U.S. Patent No. 10,025,588 was given 13 years PTA. In that case, the examiner first rejected the claims as anticipated (reversed on appeal) and then came back to apply the same prior art as an obviousness rejection (again reversed on appeal).
Claim 1 of the patent owned by Teradata is written as follows:
1. A process, executed by at least one processor in a database system, of parsing a database query, comprising:
transforming, by the at least one processor, the database query containing at least one user defined data type method into a statement; and
removing, by the at least one processor, redundant invocations of the at least one user-defined data type method in transforming the database query to the statement.
Supernus is an important case that may substantially extend the patent term adjustment (PTA) for your client. You’ll need to review the case files of recently issued cases to determine whether PTA was reduced by some supplemental filing (such as a late IDS). You may get the time back with a showing that the delay was reasonable. Deadlines in this area are tight. – DC
Supernus Pharmaceuticals, Inc. v. Iancu (Fed. Cir. 2019)
This case involves calculation of patent term adjustment (PTA) that extends the 20-year patent term due any delays in obtaining the patent. The statute attributes most delays to the USPTO (extending PTA), but some are attributed to the patent applicant (reducing PTA). With regard to PTA reduction, the statute particularly calls-out late office action responses as “failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application.” 35 U.S.C. 154(b)(2)(C). In addition, the statute particularly gives the PTO Director authority to “prescribe regulations” that spell-out the times where PTA should be reduced due to an applicant’s failure to engage in such reasonable efforts.
This case involves supplemental filings by a patent applicant that potentially delay prosecution. The dates here are important:
February 2011, Supernus (the patentee here) filed a request for continued examination (RCE) in the case;
August 2012, Sandoz filed an opposition in the the parallel European case that cited 10 new documents.
September 2012, Supernus received notice of the opposition from its European counsel.
November 2012, Supernus filed an information disclosure statement providing the cited documents.
When the patent issued, the USPTO caculated the patent-term-adjustment as 1,260 days. Although that adds years to the patent term, the patentee wanted more. In particular, the PTO had reduced the term by 646-days — the entire time from the filing of the RCE until the filing of the IDS. The PTO stood-by its calculation and cited its regulation that PTA is reduced by any “submission” by the applicant “after a reply has been filed” by the applicant. 37 C.F.R. 1.704(c)(8). Under the regulation, the PTA reduction is calculated as the number of days between the original “reply” filing (here, the RCE) and the later “submission” (here, the IDS).
Supernus has a legitimate complaint. The statute says that PTA should be reduced when the applicant has failed to engage in reasonable efforts. Here, Supernus apparently had no knowledge of the new documents for at least 18-months (Feb 2011 – Aug 2012). In fact, one of the documents (the opposition itself) had not even been created yet. The point here is that even a highly reasonable actor could not have submitted the documents during that 18-month period.
A difficulty for Supernus is that the Federal Circuit previously upheld this particular regulation ( 37 C.F.R. 1.704(c)(8)) — finding it “reasonable.” Gilead Scis., Inc. v. Lee, 778 F.3d 1341 (Fed. Cir. 2015).
On appeal here, the Federal Circuit has distinguished Gilead and sided with the patentee. In Gilead, the information found in a late-filed IDS was already known to the patentee — thus it was proper to attribute the entire delay to the applicant. The basic holding in Gilead was that the PTO does not have to prove that applicant delay actually caused a delay in issuance.
Here, the court focused on whether the PTA reduction can exceed “time during which the applicant failed to engage in reasonable efforts to conclude prosecution.” After considering the language of the statute, the court concluded that the USPTO is only permitted to reduce PTA for periods where the applicant acted in an unreasonable manner. This conclusion follows easily from the statute:
The period of adjustment of the term of a patent under paragraph (1) shall be reduced by a period equal to the period of time during which the applicant failed to engage in reasonable efforts to conclude prosecution of the application.
35 U.S.C. § 154(b)(2)(C)(i) (emphasis added by the court).
Although the PTO has authority to regulate this area, it does not have authority to contravene the statute — as such the office acted inappropriately here. “We find the USPTO’s PTA reduction to be inconsistent with the PTA statute and, as a result, we accord no deference to the USPTO’s application of the regulations at issue in these circumstances.”
The PTO will now need to think-up some new regulations. Two potential solutions.
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The patent at issue – U.S. Patent No. 8,747,897 – is somewhat interesting in the way that it claims the use of polyvinyl pyrrolidone (PVP) as a “complexing agent” in its pills.
The Supreme Court has affirmed the Federal Circuit’s interpretation of the “on sale bar” — holding that “Congress did not alter the meaning of ‘on sale’ when it enacted the AIA.” The particular focus here was whether “secret” sales continue to qualify as prior art under the revised Section 102. Here, the court says yes — “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a).”
In light of this settled pre-AIA precedent on the meaning of “on sale,” we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase. . . . Given that the phrase “on sale” had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase [otherwise available to the public] to upset that body of precedent.
After deciding that the AIA did not change the law, the Supreme Court also took some time to address the question of what is the law. An interesting aspect of the decision here is that the Supreme Court has never expressly addressed the question of whether or the extent that an offer or sale must be public. However, the court noted its prior implicit precedent that secret sales count as prior art:
Although this Court has never addressed the precise question presented in this case, our precedents suggest that a sale or offer of sale need not make an invention available to the public. . . . The Federal Circuit … has made explicit what was implicit in our precedents. It has long held that “secret sales” can invalidate a patent. E.g., Special Devices, Inc. v. OEA, Inc., 270 F. 3d 1353 (2001) (invalidating patent claims based on “sales for the purpose of the commercial stockpiling of an invention” that “took place in secret”); Woodland Trust v. Flowertree Nursery, Inc., 148 F. 3d 1368 (1998) (“Thus an inventor’s own prior commercial use, albeit kept secret, may constitute a public use or sale under §102(b), barring him from obtaining a patent”). . . .
Given that the phrase “on sale” had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase to upset that body of precedent.
The Supreme Court decision is short – nine pages of text – and unanimous – authored by Justice Thomas.
Guest post by Howard Skaist, founder of Berkeley Law & Technology Group, LLC.
In 2014, two months after Alice was decided by the Supreme Court, a post that I wrote appeared on Patently-O proposing an approach to claim drafting in light of the Alice decision using a “thought experiment” as an illustration. A hypothetical in that post suggested trying to claim the original computer spreadsheet VisiCalc before the Alice decision and then after the Alice decision. The conclusion of the post as to Section 101 was summarized at the time, as follows:
“…from a formal perspective, it is necessary that innovative aspects of the invention, as implemented or intended to be implemented, be on the face of the claim …” (emphasis supplied)
One problem, however, as illustrated starkly by the hypothetical is that claims drafted in light of the Alice decision are generally narrower than they would have been otherwise. Today, perhaps, one could write better (e.g., broader) claims to pass muster under the Mayo–Alice Framework than the example claims provided in that 2014 post. However, the point of this post is not to attempt to do that, but rather to consider the pre-Alice claim provided as an illustration and ask the following two questions.
First, how would the pre-Alice claim from that original post fare under the subject matter eligibility guidance recently published in January 2019? Second, how might that claim (or claims) be re-drafted to hopefully significantly improve the chances that the claim (or claims) will pass muster under that same new guidance?
To refresh, the ‘before’ claim of the post was:
A method comprising: implementing a spreadsheet on a computer.
The primary change under the new subject matter guidance is to so-called step 2A (using the terminology of the US Patent Office) — whether the claim is directed toward a judicial exception such as an abstract idea. The new subject matter guidance adds a first prong and a second prong to Step 2A. Following the first prong, an examiner is to determine whether the claim recites a judicial exception, in this case an abstract idea, by referring to subject matter groupings. The subject matter groupings are specified as: mathematical concepts, certain methods of organizing human behavior, and mental processes.
I note that the guidance is quite specific in saying that the claim must “recite” matter that falls within the enumerated groupings. Thus, here, I would say it does not. Nonetheless, I have to question if an examiner would take that view. While the claim clearly does not recite a mathematical concept, I could imagine an examiner asserting that the claim recites a mental process. While I would not agree with this latter conclusion, I could imagine that an examiner might say, for example, that a spreadsheet can be a mental process and that the language “implementing … on a computer” is nothing more than clever patent drafting.
How, then, might the claim be re-drafted to overcome such a rejection, but still retain some measure of breadth? To challenge ourselves, and perhaps, recite slightly more than necessary, how about this claim?
A method comprising: implementing a spreadsheet via a computer, including determining contents of one or more cells thereof, based at least in part on one or more user-specified operations to be applied to signals and/or states to be provided as operands for the one or more user-specified operations.
This re-drafted claim at least arguably does not recite a mental process. Rather, the claim language is pretty specific to make it clear that physical processes are taking place. Thus, at least two out of three groupings have been drafted around.
Still, an examiner might say that a spreadsheet is a long-standing, fundamental economic practice or one that is a method of organizing human activities, demonstrating one danger with this particular grouping. It is, by its very nature, a bit vague. Without making any admissions, thus, it would not be not entirely unreasonable for an examiner to suggest that a spreadsheet might fall into this grouping.
Fortunately, all is not lost. Even if one fails to pass muster under the first prong, an opportunity to satisfy section 101 under the second prong remains. Here, the new guidance says that if the recited exception is integrated into a practical application, then the claim is still patent-eligible.
Specifically, the guidance says that to meet the second prong the claim is to integrate the judicial exception into a practical application that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort to monopolize the judicial exception. Being an advocate, my position would be that we have met this already with the claim above.
However, again, to be especially hard on ourselves, perhaps we need to make it clear that some sort of result is generated, so that, as a whole, the claim comprises an improvement over a spreadsheet generated by hand, perhaps, as follows:
A method comprising: implementing a spreadsheet via a computer, including: determining contents of one or more cells thereof, based at least in part on one or more user-specified operations to be applied to signals and/or states to be provided as operands for the one or more user-specified operations; and generating output signals and/or states based at least in part on the determining, wherein the generating includes generating a report that comprises at least a table portion or a sub-portion of the spreadsheet.
Now, it seems that it would be challenging to assert that a practical application with meaningful limits has not been claimed. Furthermore, if needed, more dependent claims could be used to flush out more application specific features. Thus, it would seem, we have successfully written or could successfully write a claim that is patent-eligible under the new guidance.
Given the length limitations of a post such as this, it is important that I now quickly move to the point of my prior musings. So, I have three general observations to make in light of my “thought experiment” above.
First, that my re-drafted claim would pass the Mayo–Alice Framework under the close scrutiny of a court at best is unclear. Thus, as one conclusion, even if you are able to draft a claim to pass the new subject matter guidance, it seems prudent to include, as dependent claims, features that you believe more clearly pass the patent eligibility test being applied by courts.
As a second conclusion, in an attempt to provide greater certainty, it appears that the new guidance permits one to present broader patent-eligible claims to the US Patent Office than previously. To rephrase this latter point, the Patent Office has provided guidance intended to ferret out the more egregious cases of patent-ineligibility, thereby leaving it to courts to sort out closer question situations, as this example might illustrate.
As a third conclusion, with respect to the new guidance, the “money,” so to speak, resides in meeting the second prong. More specifically, while a patent drafter should certainly attempt to draft claims to comply with the first prong and the second prong; still, given the vagueness at the edges of the first prong groupings, efforts by a patent claim drafter to comply with the second prong appear to me to be more likely to succeed.
We are only 21 days into 2019, but trajectories in patent infringement lawsuits appear to be following the same patterns as 2018 — with the top-four venues staying in the same almost identical rank-order:
D.Del
E.D.Tex.
C.D.Cal.
N.D.Cal.
For 2018, N.D. Cal. slightly outranked C.D.Cal. That result is flipped thus far in 2019. For 2018 and 2019, these five venues represented 55% and 57% of total case filings respectively. (Data compiled from LexMachina Dockets)
The New Judge in town is Alan Albright. Albright was a long-time patent litigator and is now the lone federal judge in the Waco division of the W.D. Texas. If you file your patent case in Waco, it will be heard by an experienced patent litigator. Congratulations Judge Albright.
The Federal Circuit is not off to an auspicious start in 2019 in terms of its opinions and decisions in patent cases. Of the 20 patent decisions issued thus far, only 4 (20%) are precedential. The majority (65%) are actually no-opinion judgments known as R.36 judgments with three more (15%) short non-precedential decisions added to the mix. Hopefully this trend will not continue.
For the whole of 2018, the stats are approximately as follows:
Guild Mortgage’s above-pictured mark was refused registration was refused based upon a Trademark Trial & Appeal Board (TTAB) conclusion of a likelihood of confusion with the registered mark “GUILD INVESTMENT MANAGEMENT.”
On appeal, the Federal Circuit has vacated that decision — holding that the TTAB “failed to consider relevant argument and evidence directed to DuPont factor 8.”
Under Lanham Act § 2(d), the USPTO refuses to register marks that are likely to cause confusion or mistake based upon a resemblance to a prior used or registered mark.
No trademark … shall be refused registration on the principal register on account of its nature unless it—(d) Consists of or comprises a mark which so resembles a mark registered in the [USPTO], or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.
15 U.S.C. § 1052(d). The Federal Circuit’s predecessor court – the CCPA – set out a series of factors in a case captioned In re E.I. DuPont DeNemours & Co., 476 F.2d 1357 (C.C.P.A. 1973) (defining the DuPont Factors).
Those factors are:
(1) The similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation and commercial impression.
(2) The similarity or dissimilarity and nature of the goods or services as described in an application or registration or in connection with which a prior mark is in use.
(3) The similarity or dissimilarity of established, likely-to-continue trade channels.
(4) The conditions under which and buyers to whom sales are made, i.e. “impulse” vs. careful, sophisticated purchasing.
(5) The fame of the prior mark (sales, advertising, length of use).
(6) The number and nature of similar marks in use on similar goods.
(7) The nature and extent of any actual confusion.
(8) The length of time during and conditions under which there has been concurrent use without evidence of actual confusion.
(9) The variety of goods on which a mark is or is not used (house mark, “family” mark, product mark).
(10) The market interface between applicant and the owner of a prior mark . . . .
(11) The extent to which applicant has a right to exclude others from use of its mark on its goods.
(12) The extent of potential confusion, i.e., whether de minimis or substantial.
(13) Any other established fact probative of the effect of use.
Stone Lion Capital Partners, LP v. Lion Capital LLP, 746
F.3d 1317, 1321 (Fed. Cir. 2014).
In this case – the particular factor being debated is Number 8 – longstanding “concurrent use without evidence of actual confusion.” Here, Guild Mortgage and Guild Investment have been using their marks concurrently in Southern California for more than 40 years without any evidence of confusion. Guild Mortgage presented testimony from its CEO to the following :
Guild [Mortgage] has never received any communication from Guild Investment Management, Inc., or from any third party contending that Guild’s use of its mark has infringed upon Guild Investment Management Inc’s mark, or has caused confusion with regard to any other business which uses or incorporates the word “Guild” in its mark, in any way. Guild has no knowledge of ever receiving any inquiries from consumers regarding investment management services of any kind. Guild has never received any communication from consumers or any third party inquiring as to whether Guild was in any way affiliated with Guild Investment Management, Inc.
However, in its consideration of the DuPont factors, the TTAB did not address Factor 8 or the 40-year concurrent use. “The Board’s opinion does not mention factor 8, let alone address Guild’s argument and evidence directed to that factor. The Board erred in failing to consider Guild’s arguments and evidence.”
One factor here is whether the uncorroborated statement from Guild Mortgage’s CEO should be given any weight. Here, the Federal Circuit held that it should be given weight.
In this case, although Guild did not submit declarations from the owner of the registered mark or other parties testifying as to the absence of actual confusion, Guild nonetheless presented evidence of concurrent use of the two marks for a particularly long period of time—over 40 years—in which the two businesses operated in the same geographic market—southern California—without any evidence of actual confusion.
On remand, the TTAB will add-in its analysis of the 8th factor and then see whether its likelihood-of-confusion analysis sticks.
= = = = =
Similar issue in my hometown of Pittsburg Kansas with 70+ years of next-door competition between Chicken Annie’s and Chicken Mary’s. Fried Chicken War.
WesternGeco LLC, v. ION Geophysical Corp. (Supreme Court 2019) [Petition]
In 2018, WesternGeco seemingly won its international-patent-damages case against ION — with the court agreeing that lost-profit damages are available even for extra-territorial sales. After winning its $100 million trial against ION, WesternGeco sued another competitor, Petroleum Geo-Services (PGS), for infringement. PGS then challenged the asserted patents in an Inter Partes Review (IPR) proceeding that resulted in all of the claims being cancelled as obvious or anticipated.
35 U.S.C. §315(b) bars the Patent Office Director from instituting an IPR proceeding on a petition “filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” By the end of its infringement trial, ION was time-barred — however, PTO still allowed ION to join PGS’s case once instituted – but gave it “spectator status.” Still, ION (but not PGS) defended the Board’s decision on appeal.
The Federal Circuit affirmed the Board decision, finding that unpatentability findings supported by substantial evidence, and that the Section 315(b) time-bar didn’t apply since ION did not have any direct or indirect control PGS’s IPR filings and PGS had a separate legitimate reason to file the IPR other than protecting ION.
WesternGeco presented evidence that the two companies worked together to launch the infringing product, and that their agreement included an indemnity agreement — with ION making a “product assurance pledge” for products delivered by PGS. The Federal Circuit, however, disregarded the evidence as insufficient to create the specific privity needed to trigger the Section 315(b) time-bar.
Now, WesternGeco is back before the Supreme Court asking for review on the real-party-in-interest question. Here is how WesternGeco frames the question:
ION worked closely for years with another company, PGS, as its “launch partner,” to develop a product found to willfully infringe WesternGeco’s patents. ION and PGS shared an indemnity relationship, with ION making a “product assurance pledge” regarding the accused product and the asserted patents. After ION lost at trial and was concededly time barred from pursuing IPRs, PGS filed petitions (which ION later joined), resulting in the invalidation of many of WesternGeco’s patents. The Patent Office not only denied WesternGeco discovery into details of the PGS-ION relationship, it prohibited WesternGeco from even filing a motion for such discovery because WesternGeco did not already have evidence that ION “controlled” these IPRs. The Federal Circuit applied a “control” test in affirming.
The questions presented are:
1. Whether the court of appeals and agency erred by holding that “real party in interest, or privy of the petitioner” refers only to others who “control” the petitioner’s litigation before the agency.
2. Whether the Patent Office. may deny discovery—or even leave to file a discovery motion—designed to meaningfully test whether that statutory prohibition applies, and then invalidate a patent.
I see this as a good case for the Supreme Court to take and hear – especially since the court is already familiar with the patents and parties in question. I find it interesting how the Federal Circuit identified the indemnification provision as “fairly standard” and not specific enough to trigger the real-party-in-interest or privity clauses of 315(b).
One issue of importance in this area is the implied Warranty Against Infringement found in Article 2 of the Uniform Commercial Code.
Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.
UCC 2-312(3). Although the UCC does not apply to WesternGeco’s case, it likely applies in many others as a potential way to show sufficient privity to trigger the time-bar against against a supplier.
Absent a more creative solution, the current Federal Government shutdown will continue until a new appropriations law is passed by Congress and signed by the President (or veto-overridden). The Patent Office (USPTO) is caught-up in this, but in a little bit of a quirky way.
The USPTO is a fee funded agency. Generally, patent applicants pay the USPTO, and the USPTO uses that money to pay the examiners. However, Congress has not provided USPTO with authority to simply spend whatever it collects. Rather Congress declares annual appropriation amounts that may be spent – if collected. If the USPTO brings-in more funds than appropriated then it can put those funds in a “Patent and Trademark Fee Reserve Fund” held by the US Treasury.
And, under the Patent Act, the USPTO can only spend funds that have been appropriated to the Agency. As a consequence, the USPTO cannot spend new-money coming in the door and it cannot spend money in the aforementioned Reserve Fund (that is empty anyway).
So, how is the USPTO Operating: The USPTO has continued to operate for the past 25 days without much of any slowdown — paying its employees and contractors. Over the past several years, the PTO has begun placing some amount of appropriated spending into an “Operating Reserve” — treating the money as spent for the purposes of appropriations, even though it hasn’t really been spent. The Administration has determined that it is proper to save that money on an annual basis and to spend the money now on operations despite the lack of an appropriations bill. This same approach has been used in the recent prior shutdowns as well and is a primary justification for the fund in the first-place.
Although the Agency’s goal is to have three-months operating reserve, it only had about five-weeks set aside (~$320 million) at the start of the shutdown. Funds have not yet run-out, but they are now dwindling.
The chart below comes from the 2018 PPAC Annual Report. In that report, the PPAC suggested that the optimal balance be boosted to $700 million+. Once the reserve reaches that amount, the PPAC would then consider suggesting reduction in fees.
When the Funds Run Out: The USPTO has indicated that once those funds are too-low, the PTO will shut down examination activity. However, the Agency will keep a small-staff working (perhaps unpaid) “to receive new applications and any other examination, post-examination, post-issuance, and PTAB or TTAB filings; receive payments related to such filings; and maintain IT infrastructure, among other functions.”
Congratulations to the PPAC members, PTO Directors, and especially Tony Scardino (PTO Chief Financial Officer since 2010) for their forethought and dedication to this important issue that is now serving the patent community.
The United States Court of Appeals for the Federal Circuit will be closed on Monday, January 14, 2019, due to the inclement weather. For purposes of computation of time and for motions to enlarge time under Fed. R. App. Proc. 26 and Fed. Cir. R. 26, January 14, 2019, will be considered a “legal holiday.” Telework-ready employees should follow their office’s policies.
Before the PTAB, Ikeda apparently did not reveal the darkhorse real-party in interest. In its decision, the PTAB explains “According to Appellants, the real party in interest is Ikeda Food Research Co. Ltd.”
