by Dennis Crouch
Thousands of patents claims have been cancelled by the PTAB in inter partes review proceedings. These are cases where a third party was willing to pay hundreds-of-thousands-of-dollars to cancel a set of claims. A good number of those patents would have been enforced by a district court. In fact, a good number of those patents have been enforced in Federal Court.
Personal Audio, LLC v. CBS Corporation (Supreme Court 2020) again builds a montage of competing patent tribunals — a district court that enforces and an administrative court that undermines. This case adds an important third tribunal to the story — the jury. The disappointing climax is usually the same — spent on the Federal Circuit who sides with the administration.
In this case, the jury sided with Personal Audio — finding the asserted claims of its US8112504 both valid and infringed. (Verdict excerpt below from September 2014). The jury awarded $1.3 million.
By the time of the jury verdict, the IPR petition filed by the non-profit EFF had already been instituted by the PTAB. Tthe district court allowed post-judgment motions to flounder for months and by April, the PTAB had released its final judgment finding the same claims invalid. (Note, the PTO no longer institutes IPRs on patents that are close to trial).
The IPR was affirmed on appeal, and the district court relied upon that determination to cancel the jury verdict and enter a final judgment in favor of the Defendant. The Federal Circuit then affirmed based upon its prior precedent of XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018); Dow Chemical Co. v. Nova Chemicals Corp. (Canada), 803 F.3d 620, 628 (Fed. Cir. 2015); ePlus, Inc. v. Lawson Software, Inc., 789 F.3d 1349, 1358 (Fed. Cir. 2015); Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013).
Now, Personal Audio is up before the U.S. Supreme Court with a few interesting questions. The basic argument is that collateral estoppel (issue preclusion) is not an open-and-shut business. Rather, any time a prior judgment of invalidity is invoked, the “patentee-plaintiff must be permitted to demonstrate, if he can, that he did not have a fair opportunity procedurally, substantively and evidentially to pursue his claim the first time.” Blonder-Tongue Laboratories, Inc. v. U. of Illinois Found., 402 U.S. 313, 332–33 (1971). The Restatement of Judgments § 29 further walks through a series of reasons and factors for issue preclusion might not apply to a later case.
Blonder-Tongue was a very big case for defendants supporting non-mutual issue preclusion. The point here, though is that it set limits and provided a contextual analysis while the Federal Circuit has moved to an if-then rule-based approach post-IPR.
Here, the patentee argues against estoppel because (1) the PTAB judges were unconstitionally appointed (via Arthrex); and (2) the PTAB determination overturns a prior jury’s finding of facts in a case protected by the 7th Amendment Right to Trial.
The trouble – as usual – is that the claims are pretty bad: Personal Audio’s patent claims a system for distributing “a series of episodes represented by media files via the Internet.” The new portion appears to be updating a compilation file of currently available episodes. The list of new episodes (and their links) are downloaded by a client computer that can then use the links to request the actual media files.
The other big difficulty here is a question of when does the jury verdict stick. Is it worthless until the judge enters final judgment?
The Supreme Court will rule on the petition later this Fall.
Blonder-Tongue 1971. The Federal Circuit lost their way again.
Standard Havens (1993) (dicta) – “In addition, if a final decision of unpatentability means the patent was void ab initio, then damages would also be precluded.”
Translogic (2007) – “In light of this court’s decision in In re Translogic Tech., Inc., this court vacates the district court’s decision and remands this case to the district court for dismissal.”
Fresenius (2013) – The Federal Circuit invented a new estoppel doctrine – claims invalidated by the USPTO are void ab initio. They rationalized this by citing law on reissue patents. When an inventor requests a material correction to the patent, they must surrender ab initio the original patent. An inventor cannot have a patent with 2 different scopes – they must choose to keep the original or surrender it in exchange for the corrected one. This is a matter of equity.
This is a very poorly reasoned decision and the rationale simply does not apply to a patent that is unilaterally cancelled by the agency.
I commend Judge Newman’s dissent in Fresenius to see what the law should be and eventually will be. link to joshtheballoonguy.org
“And yet the defendant could not explain as much convincingly to the jury.”
The defendant probably used the classic, “It’s so obvious nobody ever bothered tow write it down!!!!!” defense.
That defense kills on this site. And at the PTAB.
Not as effective on juries apparently.
+1
Why are the claims bad? Because you are reading them in 2020 with hindsight bias? Is there some particular well of prior art you’re drawing from that wasn’t presented to a jury?
+1,000,000
The claims are ‘bad,’ because such claims easily fit a desired narrative of ‘bad claims.’
Nothing more than that is needed.
(note as well that the ‘blame’ is on the claims — and the patent holder — as opposed to any recrimination on the allowance of those claims, or the Office quality of examination)
The trouble – as usual – is that the claims are pretty bad…
And yet the defendant could not explain as much convincingly to the jury. Whose fault is that? Let the defendant lie down in the bed that they made. The Blonder-Tongue logic is correct here. These claims made be invalid, but the time to prove as much is before the jury gives a verdict. Once the verdict is given, then—as against that defendant—the claims are valid (for legal, but not equitable, relief).
Agree Greg. You took your best shot. You lost. Oh, well.
Go home. Cut the check. Lick your wounds. Fight another fight another day.
The unconstitutional PTAB should not be able to overrule a jury.
But hey — welcome to today’s America.
Well, there’s two problems with your question: First, people are stupid. Juries are swayed by persuasion, not facts. But persuasion is not what makes a claim valid. Second, juries get told about “presumptions of validity,” and “clear and convincing evidence,” both things they don’t really understand. I think a better question is, why do we impose the highest burden before the least-informed tribunal and the lowest burden before the most-informed tribunal?
“Second, juries get told about “presumptions of validity,” and “clear and convincing evidence,” both things they don’t really understand.”
I am curious as to you understanding of these things.
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