2019

Sovereign Indignity: Texas must Litigate its Infringement Case in Delaware

Patent

by Dennis Crouch

University of Texas v. Boston Scientific Corp. (Fed. Cir. 2019)

UT sued Boston Scientific for patent infringement in its home district of W.D. Texas (Austin).  BSC responded with a motion to transfer/dismiss on venue grounds — arguing that venue was improper under 28 U.S.C. 1400(b).  BSC is not a Texas corporation and has no regular-and-established place of business in W.D. Texas.  As such, the district court found venue improper and transferred the case to D.Delaware. (BSC does have a few dozen employees in W.D.Tex., all of whom work from home, but that did not create proper venue.)

UT appealed the transfer — arguing sovereign immunity, sovereignty, and “State Dignity”.  In particular, UT argued that an implicit exception to the venue statute allows for State of Texas has a right to sue for patent infringement in the state of Texas. The argument:

Venue is proper in the Western District of Texas because UT is an arm of the State of Texas, has the same sovereign immunity as the State of Texas, it would offend the dignity of the State to require it to pursue persons who have harmed the State outside the territory of Texas, and the State of Texas cannot be compelled to respond to any counterclaims, whether compulsory or not, outside its territory due to the Eleventh Amendment. . . .

[T]he federal patent venue statute cannot abrogate a State’s right to choose the forum when asserting infringement of its federal patent rights. UT also argues that the District
of Delaware lacks jurisdiction because UT never consented to suit in Delaware, never waived its sovereignty in Delaware, and never had its sovereignty abrogated by statute.

On appeal, the Federal Circuit “disagree[d] with UT on all grounds. . .  state sovereignty principles asserted by UT do not grant it the right to bring a patent infringement suit in an improper venue.”

We acknowledge that States are sovereign entities that entered the Union with particular sovereign rights intact. We are not convinced, however, that the inherent powers of Texas as a sovereign allow UT to disregard the rules governing venue in patent infringement suits once it chose to file such a suit in federal court.

Here, the appellate panel is effectively making a waiver argument — since UT filed suit in Texas, it implicitly agreed that the suit might be transferred to another state if such a transfer fit under the rules of civil procedure.

When a State voluntarily appears in federal court . . . [i]t logically follows that the State must then abide by federal rules and procedures—including venue rules—like any other plaintiff. We see nothing in UT’s cited authorities that suggests  otherwise. Indeed, it would be “anomalous or inconsistent” for UT to both invoke federal question jurisdiction and then to assert sovereignty to defeat federal jurisdiction.

Slip opinion.

Of some interest — UT might be able to refile the case directly to the U.S. Supreme Court under the “original Jurisdiction” clause of Article III, Section 2 of the U.S. Constitution.

In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction.

This jurisdiction is not ‘exclusive’ to the Supreme Court and so the normal route is to go through the district courts.

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Note that ordinarily parties do not have a right to directly appeal a transfer order. Here, however the court found appellate jurisdiction under the collateral order doctrine.

= = = =

The patents at issue here cover implantable drug-releasing biodegradable fibers used in stents. U.S. Patent Nos. 6,596,296 and 7,033,603.  The patents are exclusively licensed to TissueGen, another Delaware Corp.

Berkheimer: Coming Up this Fall

Patent

The Berkheimer case has been pending for a while.  Steven Berkheimer first filed his infringement lawsuit against HP back in 2012. (N.D. Ill.) In 2016, the district court dismissed the case on summary judgment — finding the claims ineligible. That decision included two key legal findings (1) eligibility is purely a question of law; and (2) the clear and convincing evidence standard does not apply to questions of eligibility.   The appeal then took two years and in 2018 the Federal Circuit vacated that holding — finding that underlying issues of fact may be relevant here to the question of patent eligibility. Judge Moore explained in her decision:

While patent eligibility is ultimately a question of law, the district court erred in concluding there are no underlying factual questions to the § 101 inquiry. Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.

Berkheimer (Fed. Cir. 2018).  Following the Federal Circuit’s decision, HP then petitioned for writ of certiorari and that petition is still pending.  In particular, briefing on the petition was completed in December 2018, but the Supreme Court then requested that the Solicitor General provide an amicus brief with the views of the U.S. Gov’t.  That CVSG request was sent out in January 2019 and the Solicitor General’s office has not yet responded.  I expect that at this point, a draft brief has been completed and there is now some debate between various elements of the administration.  I would have expected the brief to be filed by now (7 months later), but now expect it in by about October 10.

HP’s question presented in the case is as follows:

whether patent eligibility is a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of the art at the time of the patent.

As I mentioned previously, the petition creates a false dichotomy.  As we know from claim construction, not all questions-of-fact are given to a jury to decide.  And, the Federal Circuit did not hold that eligibility is “a question of fact for the jury.”  Despite the intentional misdirection by HP’s Counsel Mark Perry (Gibson Dunn) and David Salmons (Morgan Lewis), the case is interesting and important and I look for the court to take the case.

“Exceptional Case” Rule does Not apply to Doctrine of Equivalents

Patent

by Dennis Crouch

Amgen v. Sandoz (Fed. Cir. 2019) (on rehearing) [RehearingOrder][AmgenBrief][SandozBrief]

When I wrote about this case back in May 2019, I headlined the post with the court’s statement that “The Doctrine of Equivalents Applies ONLY in Exceptional Cases.” I noted that the court’s statement was “a major step without precedential backing.” It is possible that the court was simply intending to state that DOE is rare.  The decision was so problematic though because “exceptional case” is a term of art used elsewhere in patent law and suggests creation of an additional test prior to allowing a patentee to rely upon DOE.  Citing my post, Amgen petitioned for rehearing on the issue.

The court has now responded by altering its opinion to remove the most offensive portion of its decision.  The new statement:

The doctrine of equivalents applies only in exceptional cases and is not “simply the second prong of every infringement charge, regularly available to extend protection beyond the scope of the claims.” London v. Carson Pirie Scott & Co., 946 F.2d 1534, 1538 (Fed. Cir. 1991); see
also Duncan Parking Techs., Inc. v. IPS Grp., Inc., 914 F.3d 1347, 1362 (Fed. Cir. 2019) (“[T]he doctrine of equivalents cannot be used to effectively read out a claim limitation . . . because the public has a right to rely on the language of patent claims.” (citing Primos, Inc. v. Hunter’s Specialties, Inc., 451 F.3d 841, 850 (Fed. Cir. 2006))).

In its decision, the court maintained the ultimate holding that DOE did not apply here — because of substantial differences between the claimed and accused processes.

The decision as it reads now recognizes that DOE winners will be rare — and that rarity stems from the nature of the DOE test. In particular, DOE only applies when the accused device or method is different from what is claimed but may not be “substantially different” on an element-by-element basis.

= = = =

Appellate Litigation Strategy. Deanne Maynard (MoFo) represented Sandoz in the case did a masterful job in her en banc brief suggesting that the court take the action that it did — simply strike out the offending words.  The opposition brief explains:

[T]he Court neither adopted nor applied an “exceptional case” standard. Its doctrine of equivalents ruling broke no new ground. Applying settled law to the undisputed facts of this case, it correctly held that Amgen’s equivalents argument fails because Sandoz’s accused “purification process works in a substantially different way” from the asserted claim. For that reason, Amgen can only speculate about what an “exceptional case” standard might require or how one might be applied in future cases. This Court said nothing about that because it adopted no such standard. Without the six words Amgen highlights, the reasoning and outcome of the Court’s decision would remain the same; the only change would be in this observation: “The doctrine of equivalents applies only in exceptional cases and is not ‘simply the second prong of every infringement charge, regularly available to
extend protection beyond the scope of the claims.”

Maynard did something here that is really hard for attorneys in battle — admit (albeit implicitly) that the court went too far with its language.  In doing so, she opened the pathway to easy victory.

Broad Interpretation of 315(b) time-bar applied to 315(a) challenge

Patent

Cisco Sys., Inc. v. Chrimar Sys., Inc. (PTAB 2019) (precedential)

This case was decided back in January 2019, but the USPTO has now designated the decision as precedential. The decision provides another time-bar / preclusion scenario.

Prior to filing its IPR petition, Cisco had filed a declaratory judgment (DJ) action in district court seeking to invalidate Chrimar’s U.S. Patent 8,902,760. However, rather than pursuing the case to judgment or settlement, Cisco dismissed its lawsuit without prejudice. Under typical principles of preclusion, this type of dismissal would not prohibit or estopp Cisco from challenging the patent again at a later date.  However, the question here was how those rules mesh with the Patent Act.

The Federal Circuit has decided several time-bar cases that arise under Section 315(b). That provision creates a one-year deadline for a challenger to file its IPR petition after being sued (and served) for patent infringement.  315(b) does not apply here because Cisco was not sued for infringement but rather filed its own declaratory judgment lawsuit.

Section 315(a) provides:

An inter partes review may not be instituted if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.

The petitioner Cisco easily checks the boxes of the statute — it filed a civil action challenging validity before it filed the IPR petition.  However, Cisco argued that that the voluntary dismissal should reset the case. The voluntary-dismissal argument had already been foreclosed in the 315(b) situation.

Cisco argued that 315(a) (unlike 315(b)) parallels estoppel provisions and thus should follow the same rules.  The PTAB panel rejected that argument — following the Federal Circuit’s lead here to strictly apply the statute as written and without judicial exception. The statute “does not include an exception.”  Thus, the holding: Cisco’s IPR Petition is barred by its prior DJ action even though voluntarily dismissed. 

= = = = =

Representative claim:

73. A BaseT Ethernet system comprising:

Ethernet cabling having at least first and second individual pairs of conductors used to carry BaseT Ethernet communication signals, the at least first and second individual pairs of conductors physically connect between a piece of BaseT Ethernet terminal equipment and a piece of central network equipment, the piece of central network equipment is a BaseT Ethernet hub;

the piece of central network equipment having at least one DC supply,

the piece of BaseT Ethernet terminal equipment having at least one path to draw different magnitudes of current flow via the at least one DC supply through a loop formed over at least one of the conductors of the first pair of conductors and at least one of the conductors of the second pair of conductors,

the piece of central network equipment to detect at least two different magnitudes of current flow through the loop.

= = = =

The patent arguably covers IEEE standards for Power over Ethernet (PoE).

= = = = =

It looks like this was an all male case: James Marina at Kirkland (along with Robert Kang and Eugene Goryunov) represented the petitioner Cisco while Frank Angileri at Brooks Kushman (along with Tom Lewry, Marc Lorelli, and Chris Smith) represented the patent owner.  The opinion was penned by Judge Robert Weinshenk and joined by panel members Karl Easthom and Gregg Anderson.

= = = = =

 

 

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes, Patent

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Final and Nonappealable: construed as “may be reconsidered” and not reviewable in “at least some circumstances.”

Patent

BioDelivery Scis. Int’l v. Aquestive Therapeutics, Inc. (Fed. Cir .2019)

The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

35 U.S.C. 314(d).

In 2014, BioDelivery filed three separate IPR petitions against Aquestive’s U.S. Patent 8,765,167.  The USPTO partially-instituted the proceedings (on some, but not all grounds) but then sided with the patentee — finding that the claims had not been proven unpatentable. BioDelivery then appealed to the Federal Circuit who vacated the final written decision on SAS grounds — holding that the USPTO cannot partially institute an IPR.

Back on remand, the PTAB essentially restarted the whole case at institution and eventually decided not to institute the case at all (terminating all three IPR petitions).  BioDelivery then appealed again — arguing that the appeal should have remained instituted and that the PTAB should not have reconsidered that decision.

Back on appeal, the Federal Circuit reconstituted the same panel of Judges Newman, Reyna and Lourie.

Not Final Final: In its decision, the Federal Circuit first held that the “final” aspect of an institution decision does not mean that it cannot be reconsidered.  Rather, “administrative agencies possess inherent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess explicit statutory authority to do so.” Medtronic, Inc. v. Barry, 891 F.3d 1368 (Fed. Cir. 2018). Without interpreting the statutory meaning of “final,” the Board simply concluded that it does not clearly deprive the Board of its “inherent default authority.” (Note a minor problem with the decision in how it conflates statutory authority given to the Board with statutory authority given to the Director who then administrative delegated that authority to the Board).

NonAppealable: Although the “final” portion of the statute carried no weight, the court here ultimately dismissed the appeal — finding that it fell squarely within the nonappealable provision.

Congress clearly intended to bar review of institution decisions in at least some circumstances by passing the “No Appeal” provision—§ 314(d).

In Cuozzo, the Supreme Court explained that an appeal focused on the likelihood of success element of institution would be barred by the provision.  Here, the majority identifies BioDelivery’s appeal as “merely challenge the Board’s determination not to institute review, something the Board has discretion to do even upon a showing that there is a ‘reasonable likelihood of success with respect to at least 1 claim challenged’ in the petition.”

Judge Reyna wrote this order for the majority panel joined by Judge Lourie. Judge Newman wrote in dissent. Judge Newman argued that the prior appellate decision “ordered further proceedings in conformity to the Court’s ruling in SAS” and that the PTAB’s dismissal avoided that order.

= = = =

The patent here covers a dissolvable thin-film used for drug delivery (Clozabim).

Refusing to Seal: Should Patent Ownership and Licenses be Public Information?

Patent

Uniloc 2017 v. Apple (Fed. Cir. 2019) (appeal pending)

As in most patent cases, the parties to this litigation stipulated to a fairly tight protective order that was entered by Judge Alsup. Many of the documents filed in the case were filed under seal, including elements of the motion to dismiss for lack of standing (arguing that the plaintiff doesn’t actually own the patent).

However, in January 2019, the Electronic Frontier Foundation (“EFF”) moved to intervene and request unsealing of the parties various briefs and documents “for the limited purpose of vindicating the public’s right to access court records.”  EFF explained:

Defendant Apple has filed a dispositive motion asking the Court to dismiss this case on the basis of lack of subject matter jurisdiction. But page after page of the public briefing relating to that motion is hidden behind redactions. The public has no access to the underlying facts. Even lengthy sections of the legal argument are redacted, leaving the public with no way to understand the dispute. This conflicts with the public’s common law and First Amendment right of access.

The Ninth Circuit has held that “compelling reasons,” are required to seal documents used in dispositive motions. . . . While all court proceedings are presumptively open, the public interest in patent disputes is particularly strong because patents potentially govern the conduct of anyone who wants to make, use, or sell the claimed inventions. Thus, the public has an interest in knowing who owns, or might claim rights to enforce, a patent. Plaintiffs in this case appear determined to hide such facts from the public. But Plaintiffs’ desire to confound the public cannot trump the public’s First Amendment right of access. The Court should deny the motions to seal and ensure access to court records.

[EFFMotion] In response, Judge Alsup denied the motion to seal documents — holding that the parties had failed to provide compelling reasons to justify sealing and that generalized assertions of “potential competitive harm” are insufficient to outweight the public’s right to know. [DenialOfMotionToSeal]

Although Judge Alsup agreed to unseal the documents, he also granted a stay of deadlines pending appeal. Thus, the question of sealing is now pending before the Federal Circuit.  Meanwhile, Uniloc has agreed that it was initially overzealous in its approach to sealing documents (offering to unseal 90% of the materials originally filed under seal), but also argues that the court should particularly avoid unsealing a a document that includes “a table of the 109 of licenses Uniloc entered into between 2010 and mid-2017 [that] identifies the licensee, the date of the license, the amount paid and the license type for each license.”  According to Uniloc, the names of patent licensees and their payments are rightfully kept confidential. [Uniloc2017AppealBrief]

[To be updated as EFF and Apple weigh in].

 

 

When the Congress wrote “Nonappealable” . . .

Patent

by Dennis Crouch

In Power Integrations, Inc. v. Semiconductor Components Industries, LLC, 926 F.3d 1306 (Fed. Cir. 2019), the Federal Circuit held that the one-year 315(b) time-bar for filing an IPR petition can be impacted by post-petition activity. In the case, the petitioner (Semiconductor Components) merged with Fairchild after filing the petition but before the institution decision.  Fairchild had been previously sued by the patentee more than 1-year prior and so was barred from filing its on IPR petition.  In its decision, the Federal Circuit held that that privy relationships developed post-petition but pre-institution should be considered for the 1-year time bar purposes.

Pre-Institution Merger Foils Inter Partes Review Challenge

Following the Federal Circuit’s June 2019 decision, Semiconductor petitioned for rehearing en banc — arguing (1) a petition’s timeliness should be judged as of the petition’s filing date (as supported by statutory analysis and legislative history); and (2) this sort of issue should not have been appealable under Section 314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”).  [OnSemiconductorEnBancPetition].

The Federal Circuit has now denied the petition for rehearing — setting-up the case for Supreme Court review. Michael Hawes (Baker Botts) handled the original appeal for petitioner; and Kathleen Sullivan (Quinn Emanuel) was added to the team for this rehearing. Frank Scherkenbach (Fish & Richardson) represents Power Integrations.

Once filed, this will be one of several cases pending before the Supreme Court on the 1-year time bar of 315(b). In Click-to-Call, the Supreme Court has already agreed to hear the question of “Whether 35 U.S.C. § 314(d) permits appeal of the PTAB’s decision to institute an inter partes review upon finding that § 315(b)’s time bar did not apply.” Dex Media, Inc. v. Click-To-Call Techs., LP, 139 S. Ct. 2742 (2019)(petition “granted limited to Question 1 presented by the petition”).

Do No-Opinion Judgments by the Federal Circuit Violate Due Process?

Patent

Straight Path IP Group, LLC, Petitioner v. Apple Inc. (on petition for writ of certiorari 2019)

The patentee straight path provides the court with the following question:

Petitioner holds four patents that claim a new method for establishing point-to-point communications over a computer network. The validity of these patents was sustained by the Patent Trial and Appeal Board (“PTAB”) and by two decisions of the Court of Appeals for the Federal Circuit. Claiming infringement of its patents, petitioner sued Apple and Cisco Systems in the Northern District of California, the defendants’ home district. In an unreported decision, the District Judge granted summary judgment to Apple and Cisco Systems. He ruled that statements made by petitioner’s counsel during oral argument in one of petitioner’s successful appeals to the Federal Circuit narrowed the petitioner’s patent claims so that the Apple and Cisco systems did not infringe petitioner’s patents. The District Court decision raised only issues of law. Petitioner appealed to the Federal Circuit with a 54-page principal brief and a 38-page Reply Brief. Apple’s and Cisco Systems’ briefs totaled 110 pages. Less than two weeks after oral argument, a Federal Circuit panel issued a decision that stated, in toto, “AFFIRMED. See Fed. Cir. R. 36.”

The Question Presented is: Whether Rule 36(e) of the Federal Circuit’s Rules of Procedure violates the Fifth Amendment by authorizing panels of the Federal Circuit to affirm, with no explanation whatever, a District Court judgment resolving only issues of law.

Read the petition here.

Artificial Intelligence (AI) Patents

Patent

The USPTO is seeking information on artificial intelligence (AI) inventions.  This topic generally includes both (a) inventions developed by AI (wholly or partially) and (b) inventions of AI.  Although the focus here is AI invention, the relevant underlying thread is corporate invention.

  1. What are elements of an AI invention? For example: If a person conceives of a training program for an AI, has that person invented the trained AI?  If a person instructs an AI to solve a particular problem; has that person invented the solution (once it is solved by the AI)?
  2. What are the different ways that a natural person can contribute to conception of an AI invention and be eligible to be a named inventor? For example: Designing the algorithm and/or weighting adaptations; structuring the data on which the algorithm runs; running the AI algorithm on the data and obtaining the results.
  3. Do current patent laws and regulations regarding inventorship need to be revised to take into account inventions where an entity or entities other than a natural person contributed to the conception of an invention?
  4. Should an entity or entities other than a natural person, or company to which a natural person assigns an invention, be able to own a patent on the AI invention?
  5. Are there any patent eligibility considerations unique to AI inventions?
  6. Are there any disclosure-related considerations unique to AI inventions? For example, under current practice, written description support for computer-implemented inventions generally require sufficient disclosure of an algorithm to perform a claimed function, such that a person of ordinary skill in the art can reasonably conclude that the inventor had possession of the claimed invention. Does there need to be a change in the level of detail an applicant must provide in order to comply with the written description requirement, particularly for deep-learning systems that may have a large number of hidden layers with weights that evolve during the learning/training process without human intervention or knowledge?
  7. How can patent applications for AI inventions best comply with the enablement requirement, particularly given the degree of unpredictability of certain AI systems?
  8. Does AI impact the level of a person of ordinary skill in the art? If so, how? For example: Should assessment of the level of ordinary skill in the art reflect the capability possessed by AI?
  9. Are there any prior art considerations unique to AI inventions?
  10. Are there any new forms of intellectual property protections that are needed for AI inventions, such as data protection?
  11. Are there any other issues pertinent to patenting AI inventions that we should examine?
  12. Are there any relevant policies or practices from other major patent agencies that may help inform USPTO’s policies and practices regarding patenting of AI inventions?

Send your comments to the USPTO (AIPartnership@uspto.gov) by October 11, 2019.

“Lofty”: not precise, but precise enough for patent work

Patent

by Dennis Crouch

Guandong Alison Hi-Tech Co. v. International Trade Commission and Aspen Aerogels, Inc. (Fed. Cir. 2019)

The USITC issued a limited exclusion order prohibiting Alison from importing certain aerogel composite products used for insulation. U.S. Patent 7,078,359. On appeal, the defendant argued that the claimed “lofty” structure was indefinite.

The Patent Act requires that the patent include claims “particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.”  35 U.S.C. 112(b) (formerly 112 ¶ 2). The Federal Circuit has long interpreted this provision as creating an “indefiniteness requirement.” In its most recent pronouncement on the issue, the Supreme Court held that claims must “be precise enough to afford clear notice of what is claimed.” Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898, 909 (2014) (holding that patent claims must “inform those skilled in the art about the scope of the invention with reasonable certainty.”)  A claim that is indefinite is also invalid and unenforceable.

On appeal, the Federal Circuit agreed with the defendant that “lofty” batting is a term of degree whose boundary is not fully clear.  However, it is clear enough for patent law work.  In a particular, the court defined “lofty” batting is batting that “shows the properties of of bulk and some resilience.”   The specification further explains that “bulk” refers to air between the fibers, and “sufficient resilience” occurs where the batting can be compressed and then substantially spring back to its original bulk.  The court also noted that the specification includes more than 20 different examples (some from the prior art) of “lofty” batting that can be used to understand the scope of the term.

In sum, the written description of the ’359 patent provides sufficient detail to inform a person of ordinary skill in the art about the meaning of “lofty . . . batting.”

How lofty is “lofty” Alison asks, “Alison seeks a level of numerical precision beyond that required when using a term of degree” rather “some modicum of uncertainty” is permitted. Quoting Nautilus.

Enforcement Action Affirmed.

PTAB Precedent: Infringement Claim Filed before Patentee Owned the Patent Still Triggers 315(b) Timeline

Patent

by Dennis Crouch

Gopro v. 360heros, IPR2018-01754, 2019 WL 3992792 (PTAB Aug. 23, 2019) (U.S. patent 9,152,019)

In a new precedential decision, the PTAB Percedential Opinion Panel (POP) has reversed a prior institution decision in this case — holding “that service of a pleading asserting a claim alleging infringement triggers the one-year time period for a petitioner to file a petition under 35 U.S.C. § 315(b), even where the serving party lacks standing to sue or whether the pleading is otherwise deficient.”

The POP here consisted of Director Andrei Iancu; Commissioner Andrew Hirshfeld, and Chief Judge Scott Boalick. Robert Greenspoon represented the patent owner 360Heroes.

The basic facts: 360Heroes infringement claim was filed and served more than 1-year before GoPro’s IPR. However, the claim had a major defect — 360Heroes did not actually own the patent at the time. The district court eventually dismissed the case for lack of standing.

Holding: Following the Federal Circuit’s lead in Click-to-Call, the POP found Section 315(b) “plain and unambiguous,” finding that GoPro’s petition was time-barred and denying institution.

[T]he plain language of “served with a complaint” “does not contain any exceptions or exemptions,” “[n]or does it contain any indication that the application of § 315(b) is subject to any subsequent act or ruling.” Quoting Click-to-Call. . . .

We agree with, and follow, the Federal Circuit’s decision that “served with a complaint alleging infringement” in § 315(b) is plain and unambiguous, and means “presented with a complaint or delivered a complaint in a manner prescribed by law.” Id. And, given this clear articulation of “served with a complaint,” we see no gap in the statute’s language to fill or ambiguity to resolve. See SAS Inst. Inc. v. Iancu, 138 S. Ct. 1348 (2018). Thus, we determine that, if service of a pleading asserting infringement occurred “in a manner prescribed by law,” then the one-year time period for a petitioner to file a petition under § 315(b) is triggered on the date of service. The one-year time period is triggered regardless of whether the serving party lacked standing to sue or the pleading was otherwise deficient.

Petition Denied.

After fixing the formalities of its assignment, 360Heroes refiled its infringement lawsuit. D.Del Case No. 1:17-cv-1302.  That case was stayed pending outcome of this IPR.

Notes:

  1. The perhaps most important note here is that the Supreme Court will decide the Click-to-Call case next term on the question of whether the time-bar applies to complaints dismissed without prejudice. That decision will likely impact this case as well.
  2. Although the assignment to 360Heroes had not been formalized, that gap truly was a formality. Mike Kintner is listed inventor and thus original owner. Kintner is also CEO, founder, and sole-shareholder of 360Heroes.
  3. Language of the statute: “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”
  4. I simplified this for the brief above, but GoPro was the one that actually started the litigation with a TM/Copyright claim against 360Heroes as well as a declaratory judgment action of non-infringement of the ‘019 patent. 360Heroes then responded with the patent infringement counterclaim.  The PTAB did not directly address wither the declaratory judgment action should also trigger the time-bar under 315(b).

USPTO Proposed Fee Changes

Patent

The USPTO has issued a set of proposed fee changes with public comments due September 30, 2019 (fee.setting@uspto.gov). Basically, all of the fees are going up by around 5-10% with a few much higher.

Major proposed new fees:

  • New Fee: Non-DOCX Application Filing Surcharge Fee of $400
  • New Fee: Annual Fee for Patent Practitioner

Significant Fee Adjustments:

  • Late maintenance fee payment – $500 up from $160.
  • Expedited Design Patent Examination – $2,000 up from $900.
  • Utility Filing + Search + Examination Fees – $1,720 up 6% from $1620
  • Utility Issue Fee – $1,200 up 20% from $1,000.
  • First Maintenance Fee – $2,000 up 24% from $1,600.
  • Provisional Application Fee – $300 up from $280.

https://www.federalregister.gov/documents/2019/07/31/2019-15727/setting-and-adjusting-patent-fees-during-fiscal-year-2020

What to do if Someone Offers you an Opponent’s Information.

Ethics, Patent

By David Hricik, Mercer Law School

The L.A. bar association is the latest to offer an opinion on what to do if someone, say the opposing party’s former employee, offers you information from the opposing party that looks purloined or seems confidential.  In Los Angeles City Bar Ass’n Professional Responsibility & Ethics Committee Opinion No. 531 (July 24, 2019) (here), the committee gave some useful guidance.

First, the committee stated the lawyer had to determine if the person possessed the information unlawfully.  If so, the lawyer might need to alert the court or appropriate authorities.

Second, the lawyer had to determine if the information was privileged or otherwise protected. As stated in a prior post, this can trigger obligations to at least notify the opposing party.

Third, because the lawyer does not represent the person providing the information, the lawyer had to comply with Rule 4.3, which, stated generally, requires the lawyer advise the person the lawyer does not represent her, and to ensure the lawyer does not appear disinterested.

Finally, the lawyer may need to consult with the client about what to do next, and to ensure the client does not use the lawyer’s services to unlawfully access information.

Of course, disgruntled former employees are often valuable sources of information but, as this opinion shows (in good detail!), there are things to be wary of.

Are you a Patent Troll, or merely Rhetorical Hyperbole

Patent

by Dennis Crouch

Automated Transactions, LLC v. Am. Bankers Assn., 2018-0198, 2019 WL 3849518 (N.H. Aug. 16, 2019)

Automated Transactions holds several patents on automated teller machines (ATMs) and was seeking licensing revenue (reportedly receiving more than $3 million in a single year).  Potential licensees started identifying the patentee a “patent troll” and the licensing effort “extortive.” Automated (along with its founder Barcelou) sued in NH state court alleging defamation and violation of the NH Consumer Protection Act (CPA).

The district court dismissed the case — holding that the patent-troll statements by the defendants were non-defamatory “expressions of opinion” based upon known underlying facts and that the “extortion” statements were rhetorical hyperbole.

On appeal, the NH Supreme Court has now affirmed the dismissal — basically finding that the term “patent troll” has no objective meaning and therefore is not itself a statement of defamatory fact.  A statement of opinion can be defamatory – if it implies the existence of undisclosed defamatory facts.  Here, however, the speakers described the underlying basis for their opinions (primarily aggressive assertion of patent rights with no plans for marketing any actual product).  The Supreme Court also agreed that the “extortive” claim, was non-actionable hyperbole.

[Read the Decision Here]

Damages for Improvement Patents: Are the Georgia-Pacific factors sufficient?

Patent

by Dennis Crouch

Time Warner Cable, Inc., v. Sprint Communications Company, L.P. (Supreme Court 2019) [Petition for Writ of Certiorari]

The Kansas jury sided with Sprint — finding all five patents infringed and not invalid and awarding a $140 million reasonable royalty verdict.

On appeal, the Federal Circuit affirmed judgment – albeit in a 2-1 split.  Time Warner has now petitioned the Supreme Court on two questions of patent law: damage apportionment; and written description requirement.

Questions presented:

  1. Whether the Federal Circuit erred by affirming a damages award based on unapportioned end-user service revenues.
  2. Whether the Federal Circuit erred in ruling that a patent satisfies 35 U.S.C. §112(a)’s requirement of “a written description of the invention” merely because the specification does “not expressly exclude[]” technology within the scope of the patent claims.

In its petition, Sprint explains the basis for damages — that they should be calculated as adequate to compensate for the infringement” — no more and no less.

Apportionment: For over 150 years, courts have struggled with the apportionment issue for improvement or component patents.  The question is how to ensure that full damages are awarded for infringement of the patent; but simultaneously avoiding an award of damages for non-patented features.  In its 1884 decision, the Supreme Court wrote that patentee “must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented feature.” Garretson v. Clark, 111 U.S. 120 (1884), quoting Garretson v. Clark, 10 F. Cas. 40, 44 (C.C.N.D.N.Y. 1878).  In its opinion, the Federal Circuit concluded that apportionment is implicitly achieved by applying the Georgia-Pacific factors “under proper instructions.”  The petitioner here calls BS on that implicit approach.

Written Description: The patent here claims voice communication via “packet communication” that is clearly broad enough to encompass the accused Voice-over-Internet-Protocol (VoIP) systems.  However, the patent specification does not disclose or discuss VoIP, but rather asynchronous transfer mode (ATM).  ATM uses packets, but mimics legacy circuit-switching by establishing a virtual circuit (something not done by an IP system). As IP has proven itself capable and less expensive, it is largely replacing the ATM approach.  The petition here argues that the breadth of claims are not supported by the written description.

In its opinion, the majority sided with the patentee — noting that that IP technology “is not expressly excluded” by the specification and that the document refers to ATM as one possible “broadband system.”  The “such as” language “strongly suggests that the patents are not limited to ATM technology.”  Here, the court also concluded that a lightweight disclosure was acceptable since IP systems were known in the art as a form of broadband.

Judge Mayer wrote in dissent. He concluded that VoIP should not be understood as within the disclosure since the specification repeatedly focused on ATM style virtual circuits with no disclosure of other packet networks. “[T]he specification’s disclosure makes sense only in the context of ATM technology.”

Former Solicitor General Paul Clement (Kirkland & Ellis) is leading the petition.

Chamberlain’s Garage Door Opener invalid as an Abstract Idea

Patent

The Chamberlain Group, Inc. v. Techtronic Industries Co. (Fed. Cir. 2019)

Chamberlain’s asserted patents cover various garage door opening inventions.

U.S. Patent No. 7,224,275 in particular claims a garage door opener that includes a status-condition-data-transmitter to know if the door is open or closed without looking.  The jury found that Techtronic willifully infringed and the patent not invalid.  The district court then awarded enhanced damages, attorney fees, and injunctive relief.

On appeal , the Federal Circuit has overturned the verdict — holding that the claims are invalid as directed toward the abstract idea of “wirelessly communicating status information about a system.” Alice Step 1. Further, the claims do not include any inventive concept under Alice Step 2. All of the physical elements in the claim were admittedly “well understood in the art” and claimed in a generic fashion.  The only arguably new element is that the actual information being transmitted is “a status condition signal that: corresponds to a present operational status condition (open or closed).

Claim 1:

A movable barrier operator comprising:

a controller having a plurality of potential operational status conditions …;

a movable barrier interface operably coupled to the controller;

a wireless status condition data transmitter that is operably coupled to the controller, wherein the wireless status condition data transmitter transmits a status condition signal that:

corresponds to a present operational status condition defined, at least in part, by at least two operating states from the plurality of operating states; and

comprises an identifier that is at least relatively unique to the movable barrier operator, such that the status condition signal substantially uniquely identifies the movable barrier operator.

For its part, the N.D. Ill district court (Judge Leinenweber) had concluded that the claims are directed to “garage door openers that wirelessly transmit data . . . us[ing] a particular manner of sending and experiencing data.”

In reviewing the case, the Federal Circuit placed the invention here within the context of the art — finding that the “only described difference between the prior art movable barrier operator systems and the claimed movable barrier operator system is that the status information about the system is communicated wirelessly, in order to overcome certain undesirable disadvantages of systems using physical signal paths—additional cost, exposed wiring, and increased installation time.”  From that framework, the court easily found the claim directed to an abstract idea.

On Alice Step 2, Chamberlain argued an inventive step — since it proposed a new garage door opener “that includes an integrated controller and a wireless transmitter to transmit a status signal.”  Nothing of record in the case provided evidence that such a setup was “well-understood, routine and conventional to a skilled artisan.”  On appeal, the Federal Circuit rejected this approach finding that the patentee “misunderstands our case law.”

The appropriate question is not whether the entire claim as a whole was “well-understood, routine [and] conventional” to a skilled artisan (i.e., whether it lacks novelty), but rather, there are two distinct questions: (1) whether each of “the [elements] in the claimed [product] (apart from the natural laws themselves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field,” and (2) whether all of the steps “as an ordered combination add[] nothing to the laws of nature that is not already present when the steps are considered separately” Mayo. In other words, beyond the idea of wirelessly communicating status information about a movable barrier operator, what elements in the claim may be regarded as the “inventive concept”?

Here, the court found that once the abstract idea was removed, nothing in the claim remained except for conventional and well known elements.

= = = =

The lawsuit also included a second Chamberlain patent that that the jury had also found infringed and not anticipated.  U.S. patent No. 7,635,966.  The second patent was directed to a garage door opener that includes a rechargeable battery backup for use if the normal power supply is temporarily unavailable. On appeal, the Federal Circuit affirmed the no-anticipation jury verdict — holding that the single prior art reference was “less than clear” and thus the jury had room to make its factual determination.

On remand, the district court will need to re-do its remedies analysis, including enhanced damages, attorney fees, and injunctive relief now that only one of the patents is infringed.

= = = =

Improper Venue. Venue was apparently improper under TC Heartland. However, that decision was released only three months before trial.  The defendant requested a transfer of venue within 30 days of the Supreme Court decision.  However, that request was denied. On appeal, the Federal Circuit affirmed — holding that 28 USC 1406(b) provides the court with authority to reject venue transfer requests that are not “interpose[d] timely.”  The court writes:

TTI waited almost thirty days after TC Heartland and two months before trial to file a motion to transfer venue. The district court did not abuse its discretion in denying TTI’s motion to transfer venue under the circumstances here.

Here, a 30 day delay isn’t bad at all — except in the context of upcoming trial.

= = = =

Final note on the case and evidence. The defendant had petitioned the PTAB for inter partes review of the ‘966 patent. The PTAB however, denied institution.  The district court allowed that denial to be admitted as evidence.  However, the judge gave a limiting instruction to the jury — that the legal standards may differ.  On appeal, the Federal Circuit found no abuse of discretion.

“Customization Module” is a Means-Plus-Function Element; Indefinite Without Disclosed Algorithm

Patent

William Grecia v. Samsung Electronics (Fed. Cir. 2019)

In a non-precedential decision, the Federal Circuit has affirmed the district court’s holding that Grecia’s asserted claims invalid as indefinite.  The claims include a means-plus-function limitation, but an example of the underlying mechanism was not disclosed in the specification.

In the years leading up to the Patent Act of 1952, several courts (including the U.S. Supreme Court) severely limited the ability of applicants to use functional claim limitations (rather than structural) in order to obtain broader patent protection.  See, for example, Halliburton Co. v. Walker, 329 U.S. 1 (1946) (barring functional limitations at the point of novelty). Traditionally, patent attorneys had drafted these functional limits in “means-plus-function” language.  In Halliburton, for instance, Walker’s invalidated claim required “means … for creating pressure waves of known frequency.”

The 1952 Act added 35 U.S.C. § 112 ¶ 6 (now 112(f)) that allows for functional claims in certain circumstances:

An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

Section 112 ¶ 6.  Although this provision left patentees in a much better position than under Halliburton, most patent drafters attempt to avoid having claims fall under its ambit — preferring instead to rely upon quasi-functional limits that include some amount of structure and some amount of function and that do not use the magical words “means for.”  That approach is preferred because, under the statute true means-plus claims are construed narrowly — to cover only the “corresponding structure” that was actually described in the specification (“and equivalents thereof”).  In addition, as this case reiterates, a means-plus claim will be deemed invalid as indefinite if the specification does not actually disclose a corresponding structure.

It used to be much easier for attorneys to slip through the eye of the needle — but in recent years the gap has tightened as the Federal Circuit ruled that “nonce words” should not be seen as structural. (Is the eye too small, or the camel too large?)

Here, the patent claims a “customization module” that the district and appellate court found to be equivalent to a “means for customization.”  In Williamson v. Citrix, the Federal Circuit previously explained that “‘Module’ is a well-known nonce word that can operate as a substitute for ‘means.'”

After finding “customization module” to invoke 112 ¶ 6, the court then found that the specification did not provide any specific disclosure of how such a module would actually work.  Grecia’s patent is focused on computer implemented technology. In that context, the court has repeatedly held that disclosure of the associated computer algorithm can be sufficient (and is often required). Here, however, the specification did not include such an algorithm:

[T]he specification fails to explain how such customization is performed. Instead, the specification only describes the results of customization. . . . We have held that describing “the results of the operation of an unspecified algorithm” is not sufficient to transform the disclosure of a general-purpose computer into the disclosure of sufficient structure to satisfy § 112, ¶ 6. Aristocrat Techs. Because the ’860 specification merely describes the results of customization without any algorithm for configuring the claimed module to obtain those results, we agree with the district court that the specification fails to disclose the “corresponding structure” required under § 112, ¶ 6, thus rendering claim 21 indefinite under § 112, ¶ 2.

Invalidity affirmed.

Notes: The patent does discuss the “customization module” a few times and includes an image (below), but it is all very mushy.

The password module 204 prompts the user to enter a master password which provides access to the encrypted digital media. Subsequently, the customization module 206 allows the user to customize the user access panel of the encrypted digital media.

According to an embodiment of the present invention, the customization module 206 facilitates adding one or more of a banner, a logo, an image, an advertisement, a tag line, a header message and textual information to the user access panel of the encrypted digital media.

= = = =

In a prior unpublished decision, the Federal Circuit McDonald’s escaped liability on a divided infringement claim. Grecia v. McDonald’s Corp., 724 Fed. Appx. 942 (Fed. Cir. 2018). The case against Samsung focused on Claim 21.  Claims 1-8 and 11-20 had been cancelled by the PTAB. Mastercard International Inc. v. Grecia, IPR2017-00791 (PTAB 2017).

After Filing Statutory Disclaimer, Constitution Bars Court from Finding Claims Invalid

Patent

by Dennis Crouch

Sanofi-Aventis U.S., LLC v. Dr. Reddy’s Laboratories, Inc. and Fresenius, 2018-1804, 2019 WL 3807979 (Fed. Cir. Aug. 14, 2019)

Judge Shipp (D.N.J.) upheld the validity of several claims of Sanofi’s patent, but found several claims invalid. On appeal, the Federal Circuit vacated the obviousness holding — finding the invalidity judgment barred by the U.S. Constitution (no case or controversy).

Fresenius and several others filed ANDAs to start selling generic versions of Sanofi’s prostate cancer drug Jevtana (cabazitaxel). Sanofi then sued for infringement on U.S. Patents 8,927,592 and 5,847,170.

In parallel proceedings, the PTAB found most of the claims of the ‘592 patent invalid. Sanofi appealed to the CAFC on some of the claims* — but filed a “statutory disclaimer” of claims 7, 11, 14–16, and 26.  Note here that the disclaimer was not filed until December 2017, well after the close of trial, but before the district court issued its bench-trial judgment.

Rather than dismissing those claims from the lawsuit, the district court went ahead and held the claims invalid, including those that had been disclaimed.  The district court found (1) that a case or controversy still existed with respect to the disclaimed claims and (2) that those claims were obvious.

[On the last day of trial] Defendants [stated] that they “continue[d] to ask for a judgment of invalidity on all of the claims that have been a part of the case.” Plaintiffs did not object. In addition, Plaintiffs did not move at any time prior to the conclusion of the trial to voluntarily dismiss their assertion of Claims 7, 11, 14-16, and 26. The current procedural posture of the case also reflects that the claims at issue have not been cancelled [by the PTO]. The Court, therefore, finds that it has subject matter jurisdiction over Claims 7, 11, 14-16, and 26.

Sanofi-Aventis U.S. LLC v. Fresenius Kabi USA, LLC, CV147869MASLHG, 2018 WL 9364037 (D.N.J. Apr. 25, 2018).  The remaining claims that had been rejected by the PTAB were revived by the Federal Circuit in a Feb 2019 decision — ordering the PTAB to consider allowing amendments to the claims. Sanofi Mature IP v. Mylan Laboratories Ltd., 757 Fed. Appx. 988 (Fed. Cir. 2019)(unpublished).

On appeal, the Federal Circuit has vacated this decision — holding that “disclaimer of the disclaimed claims mooted any controversy.” Rather, once the claims were disclaimed the invalidity relief became “both speculative and immaterial to its possible future defenses, and Defendants thus failed to demonstrate an Article III case or controversy.”

Fresenius pointed to the fact that Sanofi is now in the process of amending its claims before the PTAB — and could potentially recaputure some aspect of those claims.  In addition, Fresenius argued that the decision could provide the company with issue preclusion armor in the future.  On appeal, the Federal Circuit found these potential harms too speculative and insufficient to be considered.

The decision here is somewhat surprising to me because we’re talking about a Constitutional question. Would the constitution allow a judgment on these claims — especially taking into account the ongoing litigation, the potential for recapture, and the notion that a patent covers a single invention (even if re-stated in number of claims).  The Federal Circuit did not cite the Supreme Court’s recent, Already, LLC v. Nike, Inc., 568 U.S. 85 (2013).  In that case, Nike sued Already for trademark infringement (Air Force 1) and Already counterclaimed that the mark was invalid.  Prior to judgment, Nike dismissed its side of the lawsuit and also issued a broadly worded “covenant not to sue” Already.

While the suit was pending, Nike issued a “Covenant Not to Sue,” promising not to raise any trademark or unfair competition claims against Already or any affiliated entity based on Already’s existing footwear designs, or any future Already designs that constituted a “colorable imitation” of Already’s current products.

The Supreme Court found that covenant left the case moot and therefor must be dismissed under the U.S. Constitution.  In its decision, the court held that Nike had the burden of showing that it could not “reasonably be expected” to resume enforcement efforts.

The difference between Already and the present Sanofi case is the breadth of the disclaimer. While Nike disclaimed any TM action based upon products already on the market, Sanofi only disclaimed a handful of claims within a patent – and maintained many other family-member claims as well as the ability to amend claims.

 

 

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