The Supreme Court has granted certiorari in the procedural copyright case of Unicolors, Inc. v. H&M Hennes & Mauritz. Anyone who has registered copyrights know that the Copyright Office has a set of seemingly arcane and odd rules that often arise when registering a collection or series of works. A copyright owner that fits within the rules can save quite a bit on copyright office fees. In this case, the copyright owner seemingly lied to get a lower fee. In particular, during January 2011 Unicolors created 31 different fabric designs. It published 22 of those together as a collection, but the other 9 were not published by Unicolors. It then submitted all 31 to the copyright office and indicated that they had all been first published as a bundle. This saved them a few hundred dollars in governmental fees. Although I do not know, I believe that many copyright holders have taken similar steps.
Later Unicolors sued H&M for copyright infringement and H&M was found liable. H&M had unsuccessfully asked the district court to invalidate the copyright registration based upon inaccuracies in the registration. On appeal, the Ninth Circuit reversed — ordering the district court to refer the case to the Copyright Office under 17 U.S.C. § 411(b). Section 411(b) begins with a statement that a copyright registration is generally valid as a precursor to enforcement except where the registrant knowingly included “inaccurate information” that “would have caused the Register of Copyrights to refuse the registration.” A district court faced with this situation is instructed by the code to refer the case to the Copyright Office for advice.
In any case in which inaccurate information … is alleged, the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration.
17 U.S.C. § 411(b)(2).
But, as noted above, what have here is a relatively minor, but still knowing inaccuracy in the registration. And the question for the Supreme Court is basically whether the statutory statement requiring referral “in any case in which inaccurate information” is submitted to the copyright office include some implicit materiality standard? Here is roughly the question presented:
Whether 17 U.S.C. § 411 requires referral to the Copyright Office where there is no indicia of fraud or material error as to the work at issue in the subject copyright registration?
Patent terms generally last for 20-years from filing. Since the prosecution process typically takes about three years, the result is roughly 17 years of effective patent term. That amount can shift somewhat depending upon various factors, including patent-term-adjustment, terminal disclaimers, patent family size, prosecution timing, and payment of maintenance fees.
The 20-year-from-filing rule started on June 8, 1995 (the GATT deadline). Applications filed prior to that date were treated under the old rule that patent terms last for 17-years from the issue date.
Like many other patent applicants, Gil Hyatt filed a large number of continuation patent applications in the days leading up to the GATT deadline. One difference from most applicants is that Hyatt’s applications were already quite old — claimed priority back to filings from the 1970s and 1980s. The big difference today is that Hyatt’s 300+ cases are STILL PENDING. Under the rules, if these issue as patents then they will be given 17-year patent terms from the issue date — even on applications claiming priority back to the 1970s. To be clear, Hyatt’s applications focus on fundamental aspects of microchip and integrated circuit technology and so could be extremely valuable as enforceable patents.
Hyatt was already a known quantity at the PTO, having battled over his integrated circuit patents in the past, and the PTO very quickly began treating Hyatt a bit different than other applicants. Part of the difference also came as Hyatt amended his applications to add claims — a total of 115,000 (averaging 300 claims per patent application). From 2003-2012, the PTO stopped examining Hyatt’s applications pending litigation in a couple of the cases that culminated in the Supreme Court’s decision in Kappos v. Hyatt, 566 U.S. 431 (2012). When it did start examining, the PTO spent extra hours examining Hyatt’s applications and eventually calculated that it would “532 years of examiner time” to process Hyatt’s applications — this is the equivalent of about 40,000 “typical” patent applications.
Things eventually moved forward with some applications. This case involves four applications that were rejected by the examiners and the PTAB. Hyatt then filed a civil action 35 U.S.C. §145 seeking a court order that the USPTO issue his patents.
The PTO raised an old, but rarely used defense–prosecution laches. See Woodbridge v. United States, 263 U.S. 50 (1923); Webster Elec. Co. v. Splitdorf Elec. Co., 264 U.S. 463 (1924).
Any practice by the inventor and applicant for a patent through which he deliberately and without excuse postpones beyond the date of the actual invention, the beginning of the term of his monopoly, and thus puts off the free public enjoyment of the useful invention, is an evasion of the statute and defeats its benevolent aim.
Woodbridge. The PTO argued that Hyatt should be estopped from obtaining these patents or presenting further arguments based upon the equitable doctrine. The district court held a five-day bench trial on laches and eventually concluded that the PTO should have done a better job. Although Hyatt was not easy to work with, substantial aspects of the blame-for-delay rest with the PTO. In particular here, the Judge entered a R.52(c) judgment against the PTO – finding that it had failed to present a prima facie case of prosecution laches. The district court also found some of the claims at issue were patentable and thus issued an order to the PTO to issue those claims.
On appeal, the Federal Circuit has revived the defense and remanded for further consideration–holding that the district court “failed to properly consider the totality of the circumstances.” Effectively, the PTO’s delay does not excuse Hyatt’s actions. This is a 40 page opinion filled with various procedural gamesmanship, but the court primarily noted several actions:
Repeated complete rewriting of claims after receiving rejections — often 30+ years after filing, and often in identical form found in one of the other applications.
Claiming priority to a large number of prior applications with a variety of priority dates.
Long specifications.
The appellate court writes that Hyatt’s “patterns of prosecution conduct created
a perfect storm that overwhelmed the PTO.”
On remand, the Judge will now permit Hyatt to present his defensive evidence and then rule on the issue of prosecution laches. The court also held “in abeyance ” the appeal with respect to the other issues of anticipation and written description.
Bio-Rad Labs v. ITC and 10X Genomics, 20-1475 (Fed. Cir. May 28 2021).
In April 2021, the Federal Circuit decided a separate ITC appeal between these parties, affirming that Bio-Rad infringed the micro-fluidic chip patents owned by 10X (a company started by Bio-Rad former employees). U.S. Patent Nos. 9,689,024, 9,695,468, and 9,856,530.
Cross-allegation: In this separate ITC action, Bio-Rad accused 10X of infringing its U.S. Patent Nos. 9,500,664, 9,636,682, and 9,649,635 (mechanisms for generating droplets suitable for droplet-based assays). In this counter lawsuit, the ITC split its decision, finding two of the patents infringed but one not infringed. On appeal here, the Federal Circuit has affirmed.
The most losingargument on appeal centered on the ITC’s judgment that 10X was liable for inducement and contributory infringement. On appeal, 10X argued that it could not be held liable because it did not have knowledge of the patents-in-suit.
Inducement requires that the defendant “knew of the patent” and knew that the “induce acts constitute patent infringement” as well as “specific intent to encourage” the infringement.
Contributory Infringement also requires that the defendant knew of the patent and the patent infringement.
In an ordinary case, the evidence of knowledge presented by Bio-Rad might have been insufficient. This case has a kicker — some of named inventors on Bio-Rad’s patents left Bio-Rad to form 10X.
Bio-Rad Named Inventor – Ben Hindson – later 10X Chief Science Officer.
Bio-Rad Named Inventor – Kevin Ness – later 10X CTO/COO.
Bio-Rad Named Inventor – Don Masquelier – later 10X Director of Engineering.
10X admitted that these individuals had knowledge of the patent applications, there was no proof that they had evidence of the issued patents themselves. On appeal, the Federal Circuit found the argument incredible–not credible–and explained:
10X’s various arguments attempt to distract from the reality of this case: named inventors of the asserted patents sold their company and patent rights to Bio-Rad, worked for Bio-Rad for a short time, left Bio-Rad to start a new company, and launched new products that have been determined to infringe the patents they assigned to Bio-Rad. . . .
Ultimately, 10X fails to persuade us that there is a lack of substantial evidence to support the ALJ’s findings regarding induced and contributory infringement.
Guest post by Paul Gugliuzza and Jonas Anderson. Paul Gugliuzza is Professor of Law at Temple University Beasley School of Law. Jonas Anderson is Associate Dean for Scholarship and Professor of Law at American University Washington College of Law.
We’ve discussed in this space a fewtimes the remarkable lengths Judge Alan Albright has gone to to attract patent cases to his Waco, Texas courtroom. Judge Albright’s efforts have succeeded in large part because his court, the U.S. District Court for the Western District of Texas, assigns cases to judges in a way that allows plaintiffs to know, with absolute certainty, that their case will be assigned to Judge Albright and not one of the fifteen other judges in the district.
Judge Albright’s been back in the news the past couple weeks because he’s granted two motions to transfer cases out of the Western District of Texas—something he’s rarely done in his two-plus years on the bench.
But, at the same time, Judge Albright has been drawing a roadmap for patentees who want to make sure their cases aren’t transferred away from Waco in the future.
The relevant cases all have the same basic facts: the patentee, a North Carolina LLC called Ikorongo Technology, created a Texas LLC and assigned the Texas LLC the right to several patents only in certain counties in Texas, including counties in the Western District. The LLCs jointly filed infringement suits in Waco against Samsung, LG, Lyft, Uber, and Bumble. Each defendant filed a motion to transfer to the Northern District of California.
In a series of orders—including one issued earlier this week—Judge Albright denied the motions. According to Judge Albright, Ikorongo’s assignment to the Texas LLC made transfer out of Texas impossible. Under the transfer of venue statute, the proposed transferee district must be one in which the case “might have been brought.” Because the defendants infringed the Texas LLC’s patent rights only in Texas, Judge Albright reasoned, the case couldn’t have been “brought” anywhere else.
The patentee’s tactic here is a brazen and transparent attempt to manipulate venue. If Judge Albright’s decisions are allowed to stand, patentees will be able to guarantee their cases are never transferred away from the Western District of Texas by simply creating a shell company that has an exclusive license to the patent only in the Western District of Texas. When the companies file suit as co-plaintiffs in Judge Albright’s Waco courtroom, escape will be impossible.
Fortunately, the Federal Circuit has a chance to step in and condemn these machinations in a pair of pending mandamus proceedings challenging orders by Judge Albright denying motions to transfer in cases filed by Ikorongo. [LG Mandamus Petition; Samsung Mandamus Petition].
We’re optimistic the Federal Circuit will grant those petitions. Both the Supreme Court and the Federal Circuit have repeatedly and forcefully condemned the sort of jurisdictional and venue gamesmanship Ikorongo is plainly engaged in. Moreover, there’s a good argument based on the patent venue statute that the question is not whether the plaintiff’s patent rights have been infringed in the proposed transferee district, as Judge Albright ruled, but whether the defendant has committed acts of infringement in the district.
Regardless of what the Federal Circuit rules in these cases, patentees will continue to develop clever strategies to keep their lawsuits in the Western District of Texas. As we discuss in a forthcoming law review article, the stakes surrounding venue choice are just too high and the advantages Judge Albright offers to patentees are just too great. Congress, the Judicial Conference of the United States, or the district courts themselves need to step in and stop the case assignment practices that enable plaintiffs to shop for specific judges, that incentivize judges to favor the parties who choose the forum, and that have repeatedly led to a single judge—whether in the Eastern District of Texas or, now, the Western District of Texas—hearing a quarter or more of all patent cases nationwide.
I wrote previously about Tiffany Cunningham who has been nominated to join the Court of Appeals for the Federal Circuit. Judge Wallach is set to take senior status at the end of May 2021.
Today the Senate Judiciary Committee held its hearing on Cunningham’s nomination. The Senate is quite busy to day and her nomination is not considered truly controversial as such there were only a few questions and statements.
Sen Durbin (Chair) and Sen Grassley (Ranking Member) both indicated that they would support the nomination (as did all other Senators who spoke).
Sen Booker: It is amazing that we are still doing “firsts.” Congratulations.
Sen Coons: Will you ensure access to independent inventors and small start-up companies?
Sen Grassley: Will you take a hard look at takings jurisprudence and protect personal property in cases from the Court of Federal Claims?
These days there is often not much to learn from the hearing because the nominees are coached to evade and generally answer along the lines of “Thank you for the question, I will endeavor to faithfully apply the law to the facts of the particular cases before me.” The only real answer of interest telling came in response to a question from Senator Grassley.
Grassley: “Do you think it is appropriate for district judges to actively create favorable patent venues in their courts?”
Cunningham: Federal Judges should not be “really taking into consideration what sorts of cases they might want to appear before them.”
I expect that Cunningham will be confirmed by the Senate within the next few weeks.
There are two interesting patent provisions being debated in the Senate as amendments to bipartisan Endless Frontier Act S.1260. Although it is difficult to tell exactly what will happen, the EFA Bill as a whole is likely to pass through the Senate. Both amendments were proposed in a bipartisan manner by Sens Tillis (R) and Leahy (D) and so also carry some weight. This is being pushed through the Senate and so there are unlikely to be any hearings on these amendments.
Requirement of Recording: Most patent owners record their ownership interest, but many do not. The proposal would require expressly require recordation of any foreign ownership:
[N]ot later than 90 days after the date on which a patent, or any interest in a patent of not less than 10 percent (in the aggregate), is assigned to any foreign entity or person, [the USPTO shall] require the recording of that assignment.
In addition, the proposal creates a penalty for failure to follow the recordation rules:
No party may recover, for infringement of a patent in any litigation, any monetary damages for any period in which ownership with respect to the patent is not properly recorded in accordance with the requirements of this subsection.
Since the current rules do not require recordation, it is unclear to me if this penalty would only apply to the new foreign ownership recordation requirement or would it apply to all forms of ownership. Read my redline version of the proposal here: RedlineOfAssignmentProposal.
Although most patentees record their ownership, many do not. Non-recording is especially common among patent assertion entities. As such, this proposal could potentially have a big impact (depending upon how it is interpreted) and would ate least generate further litigation regarding its applicability and effective dates.
Certificate of Unenforceability: The second proposed amendment alters the ex parte reexamination statute. Currently ex party reexaminations can be filed based upon printed prior art. The proposal would also allow for a reexamination to challenge a patent’s enforceability “on the basis of credible evidence that any claim was obtained through fraud.” The PTO would then issue a “certificate of unenforceability.”
Another mandamus venue case from Judge Albright’s Waco Texas courtroom. This time, however, the Federal Circuit has denied mandamus, holding that the defendant-petitioner had failed to show the requisite extraordinary cause.
The underlying lawsuit was filed in July 2020. Koss Corp. v. Bose Corp., 6:20-cv-00661 (W.D. Tex.). In December 2020, Bose filed its motion to dismiss/transfer for improper venue under 28 USC 1400(b). Briefing completed on the motion in March 2021. Then, in April 2021 Judge Albright indicated that he planned to rule on the venue motion “next week” and that all deadlines remained in place as they await the decision. Today, May 25, 2021, Judge Albright has still not ruled on the motion. earlier this month Bose petitioned for mandamus asking the the appellate court to order Judge Albright to set everything aside until he decides the venue question.
In its analysis, the Federal Circuit found that Judge Albright has already taken steps to place the venue question next in line, and that he is not required to unduly delay other aspects of the case. Notably, Judge Albright has entered standing orders regarding motions to transfer/dismiss:
With these elements in place, the Federal Circuit found no serious harm associated with allowing a case to incrementally move forward while parties await outcome of the venue motion. In particular, Bose wanted a stay of briefing of the Markman dispute, but the court found no “clear legal right to stay those deadlines” or any “irreparable harm” that may occur.
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Bose obviously sells its speakers on a global basis. The company also used-to have a set of Bose retail locations, including one within the W.D. Texas. However, in February 29, 2020, Bose its local store (as well as its other North American retail stores). Thus, the question appears to be whether a recently closed business still counts as a “regular and established place of business” for venue purposes under the statute. The Federal Circuit has not squarely addressed this issue. See In re Google, 949 F.3d d 1338, n.1 (Fed. Cir. 2020) (“The regional circuits appear to be split on the exact timing for determining venue. … We need not decide the correct standard [in this case].”).
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Patents at issue: U.S. Patent Nos. 10,206,025 (“the ’025 Patent”), 10,368,155 (“the ’155 Patent”), and 10,469,934 (“the ’934 Patent”) (collectively “the Patents-in-Suit”).
Editor’s Note: Avery Welker is a rising 2L at Mizzou and likely a future patent attorney. He authors a series linking law school canonical cases with intellectual property counterparts. You can email ideas for future posts to avery@patentlyo.com. – Dennis Crouch
By Avery Welker
This past Spring semester, I had Civil Procedure II on my schedule. As taught this year, Civil Procedure II took us through personal jurisdiction, subject matter jurisdiction, and finished off with the Erie doctrine. Personal jurisdiction was the bulk of our semester, taking us through midterms. I had my midterm on March 19, 2021 – six days before the Ford Motor Co. v. Montana Eighth Judicial Dist. Ct. decision. Ford Motor Co. v. Montana Eighth Judicial Dist. Ct., 141 S.Ct. 1017 (2021). Prof. Crouch[1] diligently placed Ford on our class’s radar as the midterm approached, and I was crossing my fingers every day to hope that my new Civil Procedure book wasn’t going to become outdated less than six months after I bought it.
Luckily, that wasn’t the case! Instead of a radical ripple effect on personal jurisdiction, it made a splash in another way: expanding on our understanding of due process and specific jurisdiction. As of May 24, 2021, 63 cases have cited Ford. Upon reading Ford, it’s easy to see why. Ford is a fantastic resource for personal jurisdiction, elaborating on general and specific personal jurisdiction, expanding understanding of minimum contacts, and giving a north star to perform the analyses. Id. at 1024-25.
Ford’s utility as a roadmap is immediately apparent. One example stems from a budding Trademark infringement suit: Galaxy America, Inc. v. EZ Inflatables, Inc., No. 2:19-cv-855-JES-MRM, slip op. at *1 (M.D. Fla. May 12, 2021). Galaxy America, Inc. (Plaintiff / Galaxy) alleged that EZ Inflatables, Inc. and its owner, Edgar Abraamyan (Defendants / EZ Inflatables), designed and sold knock-off products based on Galaxy’s designs. Id. Galaxy designs various commercial amusement inflatables (e.g., slides, obstacle courses, etc.), marketed under their TOXIC® trademark and Galaxy’s trade dress. Id. This decision partly responds to Abraamyan’s Rule 12(b)(2) motion to dismiss all counts against him for lack of personal jurisdiction. Id.
In performing the personal jurisdiction analysis, the Middle District of Florida lays out the roadmap for the examination, indicating that the court will need to go through specific and general jurisdiction analyses. Id. at *2. Here, the court produces a lengthy quote from Ford, setting the scene for the examinations. The gist of Abraamyan’s argument is that he is not a Florida resident and has insufficient contacts with Florida to warrant the exercise of personal jurisdiction. Id. at *3.
Of course, that is the same song and dance as every personal jurisdiction question hypo given in Civil Procedure classes. In Civil Procedure II, the analysis pattern I learned flowed from first looking to a long-arm statute, seeking out any traditional Pennoyer bases of personal jurisdiction (e.g., presence), and performing an International Shoe minimum contacts analysis.
The Middle District of Florida follows the pattern set out by Ford. The court first analyzes whether Florida may exercise general jurisdiction over Abraamyan, which it declines to assert. Id. at *4-5. Next, the court looks to whether Galaxy pled sufficient facts to plausibly demonstrate specific jurisdiction, based on directing tortious activity to Florida, satisfying Florida’s long-arm statute and the court’s exercise of personal jurisdiction. Id. at *6.
At this point in the decision, my understanding of personal jurisdiction expanded. It was often easy to take the statutory authorization for granted or as a given in class. Generally, most of our analysis came from the multitude of court cases involving personal jurisdiction (e.g., International Shoe, Bristol-Myers Squibb, Daimler A.G., etc.). For me, it serves as a reminder that the analysis must cover all the bases in the analysis. In my first reading of this decision, I assumed that what the court was doing in the specific jurisdiction was a pared-down version of a minimum contacts analysis. Instead, it was what we usually readily assumed in a classroom setting.
Upon finding that the tortious activity alleged by Galaxy was plausible, the court continues the personal jurisdiction inquiry into a third prong of due process under the Fourteenth Amendment. Id. Here is where the comfortable terms “purposeful[] avail[ment],” “arise out of or relate to,” and “traditional notions of fair play and substantial justice” come into play. Id. The court finds that personal jurisdiction is authorized and fair. Id. at *7. Soon, I will be taking a look more in-depth at these factors in future posts.
Personally, Civil Procedure was one of the most interesting classes I had in my 1L. The Ford decision handed down a half-semester’s worth of studying in one neatly wrapped decision. While the Galaxy decision didn’t necessarily take advantage of the more heavy-hitting parts of Ford (e.g., expanding on the “arise out of or relate to” from Bristol-Myers Squibb, see footnote 1.), the decision used the succinctly worded descriptions of specific and personal jurisdiction as their targets for analysis.
Ford will be my quick-reference guide for personal jurisdiction for the time being!
We have a new Chief Judge at the Federal Circuit: Chief Judge Kimberly Moore. Prior to law school, Judge Moore worked as an electrical engineer for the Navy’s Naval Surface Warfare Center. Her BSEE and MS are both from MIT. Judge Moore then attended Georgetown Law Center; clerked for Judge Archer at the Federal Circuit; and also worked for a short time at Kirkland & Ellis. She was a law professor from 1997-2006 (Chicago-Kent; Maryland, and then George Mason) before being appointed to the Federal Circuit by President George W Bush with unanimous consent from the Senate. Throughout the past 30 years, Chief Judge Moore has primarily focused her attention on patent law issues.
From all appearances, Judge Moore strongly believes in the patent system and its potential to encourage innovation and progress. Still, Judge Moore has little forgiveness for parties that game the system or who fail to come fully prepared to her courtroom.
Pure & Simple Concepts v. 1 H W Management (Finchley Group) (Fed. Cir. 2021)
Pure & Simple holds a collection of INDUSTRY trademark registrations for use on apparel. P&S licenses these to the Manhattan Group who sells clothing with the logos.
IN 2015, Finchley applied to register the word mark BLUE INDUSTRY for its apparel. P&S opposed registration — arguing both confusion and dilution. Opposition proceedings are initially decided by a panel of Trademark Trial & Appeal Board (TTAB) judges. In this case, the judges sided with Finchley and found no likelihood of confusion and no potential for dilution. On appeal, the Federal Circuit has affirmed.
The Trademark Act (Lanham Act) prohibits registration of a mark that “so resembles” another registered/used mark “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 TTAB’s approach is to make factual conclusions regarding the DuPont Factors before determining the existence of a likelihood of confusion. Here, the Board did not expressly consider all of the factors. That was no problem though since evidence/argument had not been presented for all of the factors.
The record before us shows that P&S only presented arguments and evidence based on DuPont factors 1 (similarity or dissimilarity of the marks), 2 (similarity of the goods and services), and 3 (similarity of established, likely-to-continue trade channels). Finchley presented counterarguments as to factors 1, 2, and 3, and additionally presented arguments and evidence as to factor 6 (number and nature of similar marks in use on similar goods). Neither party briefed the other factors.
Thus, on appeal, the Federal Circuit refused to hear new arguments regarding the other factors. The court also affirmed that the BLUE part of BLUE INDUSTRY was a “lead term” that would make a bigger impression than INDUSTRY. Also, the word “INDUSTRY” is fairly ubiquitous in the … industry.
[T]he Board found that given the “sheer volume of third-party registrations and examples of third-party use, consumers are conditioned to look for differences between INDUSTRY formative marks to determine the source of a given product and are therefore less likely to be confused.”
We conclude that the number of registered “industry” marks, combined with the specific examples of advertised use that were considered by the Board, are substantial evidence indicating that the sixth DuPont factor weighs in favor of Finchley.
The opposition also argued that the mark would cause dilution. However, a mark (or family of marks) must be “famous” before they can be diluted. “A mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” Slip Op. Here, the TTAB concluded that P&S had not proven that its marks were famous or that its marks even formed a “family.” On appeal, the Federal Circuit affirmed — finding the Board’s conclusion supported by substantial evidence.
Affirmed, BLUE INDUSTRY can be registered (or at least is not barred by P&S’s marks). After Finchley argued so convincingly that BLUE is the key feature of the mark, the PTO might need to reconsider whether there are other related BLUE marks out there in use.
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The opinion refers to the Lanham Act four times, and the Trademark Act twice. I believe these are all directed to the same set of laws. What do you think?
Lets say you are talking about Section 2 of the _____ Act.
Q 11: (16 points) By the year 2050, Dean Lidsky has retired and is now spending her time as an inventor. She has created a set of self-replicating crawling “bugs.” To be clear, these are small autonomous robots that do the following: (1) individually move about the world scavenging for parts; (2) once enough parts are collected, a bug will build a replica of itself. The bugs have not been shown to be generally dangerous and have learned to largely avoid human contact.
Mitchell has a “feeder” setup in his back yard with all sorts of spare-parts that the bugs have been using for self-replication. Mitchel included a radio-isotope in the spare parts he set-out and so can prove that 90%+ of the bugs in his area were built from his spare parts. Mitchell’s neighbor Trachtenberg has been capturing bugs to study them.
Can someone help me understand what’s going on with the rise in withdrawn patents? (FYI – since 2000 the numbers have been growing substantially faster than the rate of new patent issues).
I posted last week about recently issued U.S. Patent No. 11,000,000. I should note though that the 50,000+ patents "withdrawn from issue." This messes up the count.
The Supreme Court should release its Arthrex decision within the next 3-4 weeks on whether PTAB Judges were appointed in accordance with US Constitutional requirements. Officers of the United States must be nominated by the President and confirmed by the Senate; inferior Officers may be appointed by a head-of-department if authorized by Congress. US Const. Art. II, Sec. 2, Cl. 2. PTAB Judges were implicitly deemed inferior officers by Congress and appointment authority given to the Secretary of Commerce. However, in Arthrex, the Federal Circuit ruled that the Judges had significant independent authority and thus must be considered Principal Officers. The case was argued to the Supreme Court on March 1, 2021 and the court is set to decide (1) whether the PTAB judges are Principal Officers; and (2) if so, what result? The outcome has the potential to impact several thousand PTAB decisions — either by rendering them void or by confirming their validity.
The Cure: As part of its Arthrex decision, the Federal Circuit struck-out an employment protection provision as it applied to PTAB Judges; and then ruled that, without those employment protections that PTAB judges were reduced to inferior officers. The court then ruled that its on-the-fly ointment applied cure to any post-Arthrex PTAB decision.
The Federal Circuit’s recent decision in Corephotonics, Ltd. v. Apple Inc. (Fed. Cir. May 20, 2021) offers an example of the cure. [CorephotonicsDecision]. Timeline:
2018, Apple filed an inter partes review petition to challenge Corephotonics’ U.S. Patent No. 9,538,152.
October 31, 2019, the Federal Circuit decided Arthrex and also issued its curative ruling.
Then, 32 days later (December 2, 2019), the PTAB issued its final written decision in Corephotonics–siding with Apple and finding the challenged claims obvious.
On appeal the Federal Circuit applied its precedent to hold that Arthrex cured the appointments problem for any PTAB determination issuing post-Arthrex.
Corephotonics made the clever argument that Arthrex did not actually apply to the lower courts until the mandate issued in the case. In the Federal Circuit, the mandate typically issues 7-days after the time for filing of a petition-for-rehearing. Because a petition was filed in Arthrex, the mandate did not issue until 2020. On appeal, the Federal Circuit did not take the bait and instead found “no reason to depart from our holding in Caterpillar for purposes of resolving this appeal.” In Caterpillar, the court did not address this particular mandate argument, but did uphold a PTAB decision issued immediately following Arthrex. See Caterpillar Paving Prods. Inc. v. Wirtgen Am., Inc., 957 F.3d 1342 (Fed. Cir. 2020).
On the merits, the Federal Circuit also affirmed — finding that substantial evidence supported the obviousness determination. The parallel infringement action has been stayed awaiting outcome of the IPR. Corephotonics, Ltd. v. Apple, Inc., Docket No. 5:17-cv-06457 (N.D. Cal. Nov 06, 2017).
At 12:01 a.m., this past Tuesday, the USPTO issued its newest batch of patents. 6549 utility patents; 13 reissues; and 699 design patents.
Back in 1848, the USPTO began its tradition of issuing patents every Tuesday. Over the course of 173 years, more than 9000 Tuesdays have passed and more than 11,000,000 patents issued. During this time, the Patent Office has missed a handful of Tuesdays. In the summer of 1945, the office skipped two weeks while the US was in the midst of WWII. It also skipped two weeks in the summer of 1970. I believe that delay was associated with the changeover to electronic databases at the Office and computerized printing. On point, March 1971, the NYTimes published an article suggesting that the USPTO would pause printing that summer for a 12-week period due to printing cost increases associated “the inauguration of printing by computer.” The times reported that “or several months it has been impossible to buy copies on the issue date.” For those weeks, the patents “issued” on time, but were not really available until later.
Between 1850 and 1880, the Office also missed a handful of Tuesday issuances — always during Christmas week. Overall result though is 99.9% on time.
REISSUE patents continue to issue every week. This historic chart is super interesting! Back in 1875, the Patent Office Reissued 631 patents. In 2020, the PTO Reissued 581.
Apple Inc. v. Qualcomm Inc. (Fed. Cir. 2021) [Apple En Banc]
In this Inter Partes Review, the PTAB sided with the patentee Qualcomm and issued a final written decision that the challenged claims had not been proven obvious. (Note – this was after Qualcomm disclaimed some of the more dubious claims). Apple appealed. (U.S. Patent No. 7,844,037).
Apple has a right to appeal under the statute, but Federal Courts will only hear cases involving an actual case-or-controversy that involves “an injury in fact.” “To establish injury in fact, the alleged harm must be ‘concrete and particularized and actual or imminent, not conjectural or hypothetical.'” Slip Op; quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) and Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992). The standing requirement is derived from Article III of the U.S. Constitution. Thus, although Congress purported provide a statutory right to appeal, no appeal is permitted unless the appellant can show some injury stemming from the outcome of the case below.
Apple and Qualcomm have a license deal, and Apple has licensed the patent at issue (along with at least 20,000 other patents). Typically, a licensee has standing to challenge a patent, because it will help it escape from paying royalties. Here, however, Apple did not allege that the patent’s invalidity would impact any ongoing royalty payments. Presumably, the rate is identical even if it is only 19,999 patents under the license. In other words, Apple did not show how it is injured by the ongoing validity of the one challenged patent. (Actually there are two parallel cases, so “two challenged patents.”)
Now, Apple has petitioned the Federal Circuit for en banc rehearing, arguing that the outcome is contrary to MedImmune Inc. v. Genentech, Inc., 549 U.S. 118 (2007); Cardinal Chem. Co. v. Morton Int’l Inc., 508 U.S. 83 (1993); and Altvater v. Freeman, 319 U.S. 359 (1943).
The Federal Circuit’s decision is a classic Judge Moore opinion that identifies and defines a particular rule (here the in-fact-injury) and then strictly applies the rule to that facts at issue. The problem though is that the Supreme Court’s constitutional analysis is not so cut-and-dry. Here, the petition argues that the court’s analysis provides “rigid, patent-specific rules” that the Supreme Court has previously rejected.
This pending petition for certiorari involves a trademark registration dispute between Kaszuba (HOLLYWOOD BEER) and Hollywood Vodka LLC (HOLLYWOOD VODKA). Kaszuba first registered his mark (albeit on the Secondary Register). Later, HVL was denied registration — in part because of the existence of the Kaszuba’s mark. HLV then filed a cancellation proceeding before the Trademark Trial & Appeal Board (TTAB). After a drawn-out process, the Board eventually sided with HLV—entering judgment against Kaszuba as a sanction for discovery violations.
I’ll note that neither of these brands stand-up to the more popular Hollywood Brewing Co. (Hollywood, FL).
Kaszuba’s new petition for writ of certiorari to the U.S. Supreme Court asks three interesting questions:
Whether the Federal Circuit erred in finding that Hollywood Vodka had standing under Lexmark and 15 U.S.C. § 1064.
Whether the Federal Circuit err in allowing Intervention by the USPTO Director under, the patent law provision of 35 U.S.C § 143.
Whether Administrative Trademark Judges are, for purposes of the Appointments Clause, Principal Officers who must be appointed by the President with the Senate’s advice and consent.
The second question is where plain error lies. In its decision, the Federal Circuit allowed the U.S. Gov’t to intervene in the case based upon Section 143 (Hollywood Vodka did not participate in the appeal). That section of the Patent Act does provide for intervention, but only specifically for appeals from the PTAB, and only in derivation, IPR, or post-grant review proceedings.
The Director shall have the right to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board in a derivation proceeding under section 135 or in an inter partes or post-grant review under chapter 31 or 32.
Section 143 obviously does not provide authority for the PTO to intervene in an appeal from the TTAB. However, that may be harmless error as the Federal Circuit has previously allowed intervention in trademark cases. See In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009) (“Because the original appellee Hexawave did not appear, the PTO moved, and the court granted leave to the Director, to participate as the appellee.”).
Note there are lots of brewing Hollywood TM disputes. Below is a screenshot of a few TM cases at the PTO.
The Federal Circuit’s new decision in Trimble Inc. v. PerDiemCo LLC reads like my recent Civil Procedure final exam.[1] The topic is personal jurisdiction–when may a Federal Court exercise its power over an out-of-state patentee in a declaratory judgment action challenging the patent’s validity. The holding is important–repeated and specific threats of litigation by an out-of-state patentee can be sufficient to establish personal jurisdiction for a declaratory judgment action.[2] The decision relies upon the an expanded notion of purposeful availment from the Supreme Court’s 2021 decision in Ford,[3] but should also be seen as further limiting the holding of Red Wing Shoe.[4]
In the U.S., personal jurisdiction is handled on a state-by-state basis, even if the case is filed in Federal Court. “Due process” requires a defendant to have sufficient connection with the forum state before a court can exert power over the defendant or the defendant’s assets.[5] This lawsuit was filed in California against PerDiemCo, and so the personal jurisdiction question boils down to whether PerDiemCo has directed its activities toward California in a way that makes jurisdiction fair, just, and reasonable according to our traditions.[6]
PerDiemCo, the patentee, is a Texas LLC with rented office space in Marshall, TX. Its sole employee is Robert Babayi–a patent attorney practicing in Washington DC who has apparently never visited the Texas office. PerDiemCo owns a number of U.S. patents covering the electronic logging of hours for commercial vehicles and also a process known as geofencing.[7] (Geofencing is the process of electronically “monitoring whether a vehicle enters or leaves” an area.) PerDiemCo’s only apparent business is licensing its patents.
Trimble is a Delaware corporation with its headquarters in N.D. Cal. (Sunnyvale). Trimble is traded on NASDAQ and has a current market cap of $18.75 billion. (TRMB) — most of its business is related to geospatial technology. ISI has does business and has offices throughout the United States. Innovative Software Engineering, LLC (ISI) is also involved in the lawsuit. ISI is a subsidiary of Trimble that is both incorporated and headquartered in Iowa.
The Purposeful Availment: Back in 2018 PerDiemCo’s Babayi mailed a letter to a ISI’s corporate HQ in Iowa, accusing ISI of infringing PerDiemCo’s patents. ISI is a subsidiary of Trimble, and so forwarded the letter to Trimble’s Chief IP Counsel Aaron Brodsky located in Colorado. The parties then began to conduct some amount of negotiation: “Throughout these negotiations, PerDiemCo communicated with Trimble via letter, email, or telephone at least twenty-two times.” The communications apparently included express threats to sue Trimble for patent infringement. However, all the communications were apparently via Brodsky in Colorado.
PerDiemCo exchanged twenty-two communications with Trimble in California over a period of three months, some through its subsidiary ISE in Iowa and others through its Chief IP Counsel in Colorado.[8]
In 2019, Trimble and ISE sued for declaratory judgment. Rather than choosing Iowa or Colorado, the companies chose the Northern District of California, which is Trimble’s home court.
The Question: On these facts, may the California district court exercise personal jurisdiction over the defendant?
The Answer: The district court dismissed the case, finding that it would be unreasonable to assert personal jurisdiction.[9] On appeal, however, the Federal Circuit reversed—finding no problem with the case proceeding in California. In particular, the Federal Circuit found (1) sufficient minimum contacts with the state of California related to the cause of action and (2) that exercise of jurisdiction by a California court would be reasonable.
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Directed to California: If you recall, PerDiemCo repeatedly communicated with Trimble, but only through individuals residing outside of California. These were seen as contacts directed to California because they are “communications sent to Trimble, a California resident.”[10] The court did not spend much time on this particular issue, but addressed it in a footnote:
The [District] court held that PerDiemCo’s communications with Mr. Brodsky in Colorado were, for personal jurisdictional purposes, directed to Trimble in California, rather than in Colorado. This focus is consistent with our cases. Maxchief Investments Ltd. v. Wok & Pan, Ind., Inc., 909 F.3d 1134, 1139 (Fed. Cir. 2018) (holding that, for personal jurisdiction purposes, a letter sent to a company’s counsel is directed to the company at its headquarters, not the location of counsel); Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001) (same); Akro Corp. v. Luker, 45 F.3d 1541, 1546 (Fed. Cir. 1995) (same).
Thus, we have contacts and threats of litigation directed toward a resident of California; and these threats relate directly to the eventual cause of action.
What about Red Wing: One big hurdle for Personal Jurisdiction is the Federal Circuit’s 1998 decision in Red Wing Shoe Co.[11] In that case, court held that a patentee does not open-itself to personal jurisdiction in a particular state simply by accusing an in-state resident of infringement. According to the court, that result would be unfair.
Principles of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum. A patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement. Grounding personal jurisdiction on such contacts alone would not comport with principles of fairness.[12]
In Red Wing, there were three warning letters sent by the patentee HHI to the DJ Plaintiff Red Wing. These letters apparently accused Red Wing of infringement and also offered to license the patents. In addition, HHI’s prior licensees sold licensed products in the forum state (Minnesota), but HHI did not control those sales. After reviewing those facts, the Federal Circuit found those connections insufficient to for Personal Jurisdiction. In particular, the court suggested that the minimum contacts prong had likely been met, but that it remained unfair that those limited contacts would lead to a court proceeding.
In Trimble, the Federal Circuit purported to uphold Red Wing Shoe, but limited the case situations with a small number of communications. Rather, the court found that PerDiemCo’s contacts were “extensive” and went beyond simply “informing” Trimble of its infringement and seeking a license agreement.
PerDiemCo amplified its threats of infringement as the communications continued, asserting more patents and accusing more of Trimble and ISE’s products of infringement. Indeed, PerDiemCo went so far as to identify the counsel it retained to sue Trimble and ISE and the venue in which it planned to file suit. PerDiemCo’s twenty-two communications over the course of about three months fall well outside the “sufficient latitude” we sought to grant patentees “to inform others of [their] patent rights without subjecting [themselves] to jurisdiction in a foreign forum” on the basis of three letters sent over a similar time period in Red Wing.
The Trimble court found that the PerDiemCo communications should be collectively termed “a negotiation” rather than merely providing information. “And Trimble is headquartered in California, connecting California to Trimble’s claims, which is a consideration the Court in Ford found relevant in distinguishing its earlier decision in Bristol-Myers.” In the end, the court found that the minimum contacts were “easily satisfied.” And, any fairness concerns were also overcome.
In its 1985 Burger King Decision,[13]the Supreme Court expanded upon the five fairness elements highlighted by World-Wide Volkswagen Corp. v. Woodson.[14]Trimble walks through these same elements, concluding that it is indeed fair to haul PerDiemCo into a California court.
Burden on the defendant. Although PerDiemCo has a Texas office, the courts found that office “pretextual” and certainly a distance from Washington DC where Babayi is located. Still, the company has repeatedly filed lawsuits in Texas. According to the appellate court, if Texas is OK, so is California. The basic decision here is that PerDiemCo does not really have any home because it is merely the owner of intangible assets. If PerDiemCo was instead an operating company, then outcome would have been totally different.[15]
Forum state’s interest in adjudicating the dispute. On this second point, the court found that N.D. Cal. Has a significant interest in hearing the dispute because Trimble is a “resident” of Northern District of California.
Plaintiffs’ interest in obtaining convenient and effective relief. Nearby federal court is helpful to the plaintiff Trimble.
Interstate judicial system’s interest in obtaining the most efficient resolution of controversies. On this point, the court did not find any favor one way or the other.
The shared interest of the several states in furthering fundamental substantive social policies. This does not appear to apply directly.
As you can see, the BK bullet points did not reveal any fairness concern, and thus the appellate panel reversed the lower court’s dismissal for lack of personal jurisdiction.
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Personal Jurisdiction as Patent Law Specific but Not Patent Law Specific.
The Federal Circuit has for many years applied its own law to personal jurisdiction questions even though the doctrine is procedural in nature. Unlike questions of inconvenient venue, the court has found that jurisdiction is “intimately involved with the substance of the patent laws.”[16] For convenient venue questions, the court applies the law of the regional circuit court of appeals.
This patent-focused personal jurisdiction doctrine goes back several decades. In Trimble though the court explains that since that time the Supreme Court has “made clear that the analysis of personal jurisdiction cannot rest on special patent policies.”[17] In Particular, in its 2017 SCA Hygiene decision, the Supreme Court stated that “[p]atent law is governed by the same … procedural rules as other areas of civil litigation.”[18] The appellate panel also notes other areas where the Supreme Court “has repeatedly rejected special rules for patent litigation in the context of rules governing civil litigation generally.”
In its decision, the appellate panel only takes this change toward generalism halfway. In particular, the court uses the Supreme Court’s guidance to narrow its application of Red Wing. But, the court does not question the underlying premise that Federal Circuit law should prevail on the question of personal jurisdiction. This seems to be a bit of doublespeak or perhaps a lack of coherence that could be resolved by an en banc rehearing.
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[1]Trimble Inc. v. PerDiemCo LLC, 2019-2164, 2021 WL 1898127, at *1 (Fed. Cir. May 12, 2021).
[2] See, Silas K. Alexander and Nicole R. Townes, Repeated and Specific Litigation Threats – Sufficient Minimum Contacts, Knobbe Martens Blog (2021).
[3]Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021).
[4]Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998); See also Jack Henry & Associates, Inc. v. Plano Encryption Technologies LLC, 910 F.3d 1199 (Fed. Cir. 2018).
[6] See Int’l Shoe Co. v. Washington, 326 U.S. 310, 316–17 (1945) and Bristol-Myers Squibb Co. v. Superior Ct. of Cal., 137 S. Ct. 1773, 1779 (2017).
[7] Patents at issue here include: (1) U.S. Patent No. 8,149,113; (2) U.S. Patent No. 9,485,314; (3) U.S. Patent No. 9,621,661; (4) U.S. Patent No. 9,680,941; (5) U.S. Patent No. 9,871,874; and (6) U.S. Patent No. 10,021,198; (7) U.S. Patent No. 9,319,471; (8) U.S. Patent No. 9,954,961; (9) U.S. Patent No. 10,104,189; (10) U.S. Patent No. 10,148,774; and (11) U.S. Patent No. 10,171,950.
[13] Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)
[14] World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980).
[15] See Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, 848 F.3d 1346 (Fed. Cir. 2017) (treating non-practicing entity differently than operating company who also owns patents).
[16]Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed.Cir.1995).
