by Dennis Crouch

Here, the CAFC has vacated a PTAB IPR decision based upon a sua sponte claim construction. The court found that the agency did not provide the notice and opportunity to respond required by the Administrative Procedures Act (APA). 

Qualcomm Inc. v. Intel Corp., Appeal No. 20-1589 (Fed. Cir. 2021)

Intel filed six different IPR petitions challenging Qualcomm’s US Patent No. 9,608,675.  The PTAB complied and cancelled the challenged claims as obvious.  On appeal here, the Federal Circuit has vacated and remanded — holding that the Board’s sua sponte claim construction in its final written decision was unfair to the patentee because it did “failed to provide Qualcomm adequate notice of and opportunity to respond.”

The invention here relates to mobile phone signal amplifiers, and particularly to  “power tracking” circuitry used to measure the the power amplification over multiple signals and carriers. (“a plurality of carrier aggregated transmit signals”, exemplary claim 1).

The patent makes clear that a key purpose of using multiple signals is to increase  a user’s transmission bandwidth, but exemplary claim 1 does not expressly require that result. Still, Intel asked the PTAB to construe the “plurality of carrier … signals” as having the purpose “to increase the bandwidth for a user.”  Although Qualcomm disputed portions of Intel’s proposed construction, it did not argue against that port. It simply was not at issue, most likely because the same patent claim had already been construed in a separate case before the ITC using that exact language.

During a post-briefing claim construction hearing, a PTAB judge asked Intel’s attorney for textual support in specification for the proposed “increase the bandwidth” construction.   At that point, the attorney responded that Intel would also “be comfortable” with removing the bandwidth portion as an element of the construction.  The judge later responded during the hearing that “we’ll think about whether [that limitation is] necessary.”  Qualcomm’s attorney did respond raise the issue during the hearing. And, prior to that time, the issue of increased bandwidth was not in dispute.  The following day, the Board issued its claim construction that followed Intel’s proposed approach, but without the “increase the bandwidth” requirement.

On appeal, the court found this process improper as a violation of the Administrative Procedures Act (APA) process requirements.

• Parties to a hearing shall be informed of “the matters of fact and law asserted … and issued controverted.” 5 U.S.C § 554(a)-(b).
• The agency must provide opportunity for “(1) the submission and consideration of facts [and] arguments” 5 U.S.C § 554(c).
• “Parties are entitled to present their case . . . as may be required for a full and true disclosure of the facts.”  5 U.S.C § 555(d).

Collectively, these rules require that the patentee has notice of any grounds for cancelling its claims and also an opportunity to fully argue those grounds. The notice requirement does not require a formal summons served by a U.S. Marshall, but rather the Board must consider whether the parties should anticipate that the particular question is at issue.  In prior cases, the Federal Circuit found found when the PTAB “change[d] theories midstream or depart[ed] from a construction it previously adopted.”  Here, the situation was slightly different – an agreed upon claim construction.  Still, no one would anticipate that

Here, the patent owner agreed with the increased bandwidth requirement proposed by the petitioner. . . . it is . . . difficult to imagine either party anticipating that this agreed-upon matter of claim construction was a moving target. And, unlike with disputed terms, it is unreasonable to expect parties to brief or argue agreed-upon matters of claim construction. This is particularly true here given that a separate agency (the Commission) had already adopted the increased bandwidth requirement for the claim term. Accordingly, under the circumstances of this case, the Board needed to provide notice of and an adequate opportunity to respond to its construction.

Slip Op.

One Judge?: The opinion makes note that only one judge (of the three-member panel) asked a question regarding the claim construction and then the same judge also made a comment indicating that panel will “think about” whether the particular limitation is necessary.

“[O]ne judge asked Intel a single question about increasing bandwidth . . . Shortly thereafter, the same judge commented . . .  In sum, one judge asked one question about the increased bandwidth requirement, directed only at Intel, during the entire hearing. . . . The single question-answer exchange between one judge and Intel regarding the increased bandwidth requirement, followed by that judge’s offhand comment that the panel would “think about whether that’s necessary,” did not provide Qualcomm notice that the Board might depart from the increased bandwidth requirement.

Slip Op. I believe the appellate court is trying to imply that questions or comments from a single judge provides less notice than if two or even three of the judges had made comments on point.  I have not previously heard of this partial tribunal doctrine.

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So what. Errors generally must be meaningful in order to be appealable. Harmful errors vs harmless errors.  However, the Federal Circuit noted an ongoing open question as to whether an agency’s failure to comply with the APA requires harm.

Intel cites WesternGeco to assert Qualcomm’s APA challenge requires a showing of prejudice. We need not address whether WesternGeco requires such a showing because Qualcomm was prejudiced here.

In particular, Qualcomm had repeatedly argued that the prior art did not
“disclose the increased bandwidth requirement.”  “By removing that requirement [from the claims], the Board eliminated an element on which Intel bore the burden of proof.”

Vacated and Remanded.

by Dennis Crouch

Shure v. ClearOne (Fed. Cir. 2021)

I previously mentioned this appellate case and the oral arguments remarks by Chief Judge Moore suggesting that ClearOne file a motion for sanctions against Shure for bringing the appeal.

Stinging Oral Arguments from Chief Judge Moore

At the district court, N.D. Ill. Judge Edmond Chang had issued a preliminary injunction prohibiting Shure from certain actions regarding its drop-ceiling microphone product. Later, Judge Chang found that Shure had violated the preliminary injunction.  In its new opinion, the court has dismissed the case, finding that it lacks appellate jurisdiction over the interlocutory contempt order.  ClearOne has also moved for sanctions.

Right to Appeal: Although a losing party has a right to appeal, the rules of civil procedure strictly limit the timing of appeals.  Generally, a losing party has a right to appeal only after the case is fully and finally decided by the district court. 28 USC 1291.  This is known as the “final judgment rule.” The contempt order that Shure appealed did not end the case. Rather the case is still pending before the district court and thus is not yet final.

Appeal Injunction Order: In addition to the final-judgment timing, a party has a right to appeal an injunction related orders.  28 USC 1292(a)(1).  The statute is written quite broadly to include orders “granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions.” 28 USC 1292(a)(1).  Notably, however, the statute does not expressly call-out contempt orders for violation of an injunction.

Here, Shure argued that Judge Chang had modified the preliminary injunction in the contempt order by enjoining all sales of Shure’s MXA910-A.  The appellate court disagreed. Although that particular product was not particularly named in the contempt order, it is a colorable imitation of the named MXA910 and fits within the injunction’s language of being “capable of being installed in a drop-ceiling” configuration.

With no right to appeal, the appellate court dismissed the case. “[W]e have no jurisdiction over this interlocutory appeal.”  The court explained that Shure should have appealed the preliminary injunction order itself. Of course, that deadline is in the rear view camera.

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ClearOne’s sanctions motion argues that Shure’s appeal was frivolous and seeks “just damages” as permitted by FRAP 38.  Here, in particular, the court has previously ruled (repeatedly) that an order interpreting an injunction is not immediately appealable. Sanctions Motion ClearOne.

The Senate has confirmed Tiffany Cunningham, President Biden’s first pick for the Court of Appeals for the Federal Circuit.  Judge Cunningham is expected to be sworn in this week and immediately step into her new role (although the court typically slows down during August).  Judge Cunningham will be the first African American judge on the Federal Circuit. The vote was bipartisan, although 33 republicans voted NO, including my two senators (Josh Hawley and Roy Blunt).

by Dennis Crouch

If affirmances by the Patent Trial and Appeal Board (PTAB) are any guide, patent examiners appear to now have a good handle on applying the PTAB eligibility examination guidance.  I looked at  PTAB patent eligibility decisions from the past month and found that examiner eligibility rejections were affirmed in 92% of cases (55 of 60 decisions). There were also five cases where the PTAB added eligibility as a new ground for rejection.

92% affirmance for eligibility issues is quite high compared to other issues being appealed.  So far in FY2021, the PTAB is fully affirming examiner decisions in only 56% of cases and partially affirming in an addition 10%.

The PTAB’s general approach is to follow the USPTO’s eligibility examination guidance and then supplement that approach with Federal Circuit and Supreme Court cases.  Most often, the PTAB is able to draw a direct analogy with a prior appellate decision.

The following are three recent affirmances:

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Ex Parte Ausubel, Appeal No. 2021-000765, 2021 WL 2982136 (PTAB)

Lawrence Ausubel is a Professor of Economics at Maryland and has published dozens of articles on efficient auction design and holds several patents. His pending patent application claims a computer-implemented system for allowing smaller-quantity intra-round bidding during a “clock auction.”

The examiner rejected the claims as directed to a fundamental economic practice rather than a practical invention and that, absent the computer limitations, the method is a mental process (with pencil + paper). On appeal though the PTAB affirmed:

Hedging risk is a fundamental economic practice. … Here, claim 1 seeks to hedge risk in a clock auction by using intra-round bids with generic computers and components that perform generic data processing of sending and receiving data to auction securities, contracts, commodities, spectra, and other items.

The Board’s analysis directly analogized to Bilski’s patent application which the Supreme Court rejected.

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Ex parte Knoll, Appeal No. 2021-000035, 2021 WL 3015118 (PTAB) (Philips Medizin)

The invention here is directed to a method of approximating a patient’s pulse-wave using the pressure signal from a blood pressure cuff.  The claims require receipt of repeated measurement of pulse-curves as the clamp pressure changes.  Those curves are weighted and combined to create the approximated pulse wave.  The examiner rejected the claims as directed toward ineligible abstract idea.   On appeal, the PTAB has affirmed, finding the claims directed to a series of mathematical calculations based upon selected information.  Further, the fact that data is received from a blood-pressure cuff does not transform the idea into a patent eligible practical application.

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Ex Parte Tazono, Appeal No. 2021-000816, 2021 WL 3015120 (PTAB) (Alpine Electronics).

Tazano’s application is directed to methods of acquiring and presenting information about upcoming events.  The PTAB affirmed the examiner rejection — finding the claims directed to the abstract idea of organizing human activities.  Further, the claims rely only upon generic computer technology and do not “recite an improvement to a particular computer technology. . . . All purported inventive aspects reside in how the data is interpreted and the results desired, and not in how the process physically enforces such a data interpretation or in how the processing technologically achieves those results.”

by Dennis Crouch

BOT M8 v. Sony (Fed. Cir. 2021)

Pleading Standards: The starting point of a civil lawsuit is the filing of the complaint that makes a claim for relief.  FRCP 3.  In order to properly state a claim, the rules require “a short and plain statement of the claim showing that the pleader is entitled to relief.” FRCP 8.  For many years, the rules included an Appendix of Form Complaints deemed legally sufficient to satisfy R. 8. Form 18 focused on patent infringement and included a bare-bones set of allegations that (1) the plaintiff owns a particular patent and (2) the defendant has infringed that patent. (Image of Form 18 below).   In general, Form 18 was plaintiff friendly, making it easy to file a patent infringement lawsuit without providing any details beyond the patent number at issue.  That approach was in place for a number of years and only began to crumble with the Supreme Court’s decision in  Bell v. Twombly, 550 U.S. 544 (2007), followed by Ashcroft v. Iqbal, 556 U.S. 662 (2009).  Those cases interpreted the “short and plain statement” requirement as requiring “facial plausibility” that can be satisfied by the inclusion of factual allegations that lead to a reasonable inference of liability.  Still, even after Iqbal, the form-pleading-sufficiency rule was still in place in a way that forestalled complete implementation of the Iqbal regime. In 2015, Form 18 was removed and the transformation complete.

Element-by-Element Claim Analysis in Pleadings: Post-Iqbal, the courts have struggled with line-drawing-what quality of factual allegations are sufficient to survive the plausibility test.  In patent cases, one question is whether then plaintiff needs to provide an element-by-element analysis of how the accused activity practices each element of the asserted claims.   Here, the Federal Circuit holds (again) that element-by-element analysis is not a pleading requirement:

To the extent this district court and others have adopted a blanket element-by-element pleading standard for patent infringement, that approach is unsupported and goes beyond the standard the Supreme Court articulated in Iqbal and Twombly.

Slip Op.

In Bot M8 v. Sony, the district court dismissed Bot M8’s infringement claims against Sony’s PlayStation 4 (PS4). (Dismissing claims stemming from four patents).   On appeal, the Federal Circuit has reversed-in-part.  While plausibility is required, the court repeated its prior statement that the plaintiff “need not prove its case at the pleading stage.” Bill of Lading (Fed. Cir. 2012).

Regarding infringement, the court found that a complaint may be sufficient without an element-by-element infringement analysis. “A plaintiff is not required to plead infringement on an element-by-element basis.”  Rather, the focus of complaint sufficiency is notice — a complaint needs to provide fair notice of what activities by the defendant constitute infringement.

The court then tried to draw some lines:

• Insufficient: merely alleging an entitlement to relief (as was done in Form 18)
• Insufficient: reciting claim elements and “merely concluding that the accused product has those elements.”
• Sufficient: providing factual allegations that, when taken as true, articulate why it is plausible that the accused product infringes.

Again, the focus is on fair notice to the defendant and “specific facts are not necessary” when the general allegations are sufficient.

Although the district court required too much by demanding element-by-element analysis in the complaint, the Federal Circuit still affirmed the dismissal with regard to two of the four patents.  For those two patents, the court concluded that allegations found in the complaint actually disprove infringement.  The complaint “contains too much rather than too little, to the point that Bot M8 has essentially pleaded itself out of court.”  In particular, Bot M8 alleges that the “authentication program” is stored on the motherboard, but the claims require the program to be stored on a separate board. “That allegation renders Bot M8’s infringement claim not even possible, much less plausible. While claim 1 requires that the game program and authentication program be stored together, separately from the motherboard, the [complaint] alleges that the authentication program is located on the PS4 motherboard itself.”

The conclusion here warns against a “kitchen sink” approach to infringement assertions within a patent complaint. In particular, patentees will need to be cautious when alleging infringement of alternative claim language such as below.

1. A system comprising an authentication program stored in a first memory and a motherboard…
2. The system of claim 1 where the first memory is located on the motherboard.
3. The system of claim 1 where the first memory is not located on the motherboard.

Barring unusual claim construction, an accused system cannot infringe both claims 2 and 3 since they are claimed in the alternative.  It turns out that you might not know at the time of filing the exact location of the motherboard.  Although some amount of pre-filing investigation is required, the rules allow for plaintiffs to rely upon  potential discoverable evidence when making the complaint. In Bot M8, plaintiff’s counsel argued that it “had not previously reverse engineered the PS4 to support the prior pleadings because ‘jailbreaking’ the PS4 is illegal under the Digital Millennium Copyright Act (“DMCA”) and other anti-hacking statutes.”  In this particular case, the district court did not rule on the merits of the of the excuse, but ruled that that the concern had been raised too late in the litigation to be viable. “Because Bot M8 did not raise any concerns about its ability to reverse engineer the PS4 until after the district court issued its decision on Sony’s motion to dismiss, the court found that Bot M8 was not diligent.”

An easy solution here is to “plead in the alternative.” The FRCP permits parties to set out two different statements of a claim “alternatively or hypothetically . . . A party may state as many separate claims or defenses as it has, regardless of consistency.” FRCP 8(d).  One difficulty though is that each alternative pathway must meet the plausibility standard. The difficulty for Bot M8 is that it did not plead in the alternative. “Notably, Bot M8’s allegations were not pled in the alternative.” Slip Op. at Note 3.  Rather, Bot M8 told one story that effectively disproved infringement for two of the asserted patents.

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Claim 1 of another asserted patent had also been determined invalid as ineligible. On appeal, the Federal Circuit affirmed that the asserted claim 1 “recites the abstract idea of increasing or decreasing the risk-to-reward ratio, or more broadly the difficulty, of a multiplayer game based upon previous aggregate results. But the claim leaves open how to accomplish this, and the specification provides hardly any more direction.”  Slip Op. (quoting district court and affirming on the same reasoning).

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• US 8,078,540: Dismissal affirmed, claims contradict factual assertions in claim (memory location)
• US 8,095,990: Dismissal affirmed, claims contradict factual assertions in claim (memory location)
• US 7,664,988: Dismissal reversed, element-by-element infringement analysis not required in the complaint.
• US 8,112,670: Dismissal reversed, element-by-element infringement analysis not required in the complaint.
• US 7,338,363: Dismissal affirmed, claims lack eligibility.

Interesting pending civil action in Grupo Bimbo v. Hirshfeld (E.D.Va. 2021).

The Mexican company Grupo Bimbo makes more bread than any other company — including Wonder Bread and Sara Lee brands in the USA.  Bimbo is attempting to register a mark for its “ARTESANO” line of bread — after apparently selling more than $1 billion in pre-packaged sliced bread product.

The PTO found that “Artisan Bread” is a generic term, and that consumers will translate the Spanish word “ARTESANO” to its English equivalent when purchasing.

In this appeal, the resemblance between ARTESANO and the word “Artisan” is so evident in both sound and appearance that the average American consumer will automatically translate ARTESANO and equate ARTESANO and the word “artisan.”

Bimbo has now filed a civil action under 15 U.S.C. 1071(b) seeking a declaration from the District Court that its mark is not generic but instead is distinctive.

Bimbo Complaint.

by Dennis Crouch

Timberland has been selling its iconic boots back in 1973 – almost 50 years ago.  Actually, at the time the company name was Abington Shoes, but quickly changed its name to Timberland Boot because of the popularity.  Timberland did not patent or register a copyright the design, and the market it rife with copycat boots.

Over the past several years, Timberland has been attempting to register the shape of the boots as protectable trade dress. However, the USPTO’s Trademark Trial & Appeal Board (TTAB) rejected the application, finding that the the company had failed to demonstrate that the boot shape had acquired secondary meaning in the eyes of consumers.  The examiner had also rejected the trade dress registration as  improperly functional, but the TTAB did not reach that issue.

In a new lawsuit, Timberland has asked a district court judge to overturn these rulings and find that the trade dress is distinctive and registrable.

Complaint: TBL Registering TM on Timberlands

Should Timberland be permitted to register a trademark (Trade Dress) on its "iconic timberland boot"??

Lawsuit pending in TBL Licensing v. Hirshfeld (EDVA).

Read the complaint: https://t.co/GOS65fmvK8 pic.twitter.com/sldUCc5eHU

— Dennis Crouch (@patentlyo) July 8, 2021

In its brief, Timberland provides examples of other shoe shape trade dress that have been registered, including the classic low-top Converse sneakers.

DataCloud Techs v. SquareSpace (D.Del. 2021)

Eligibility and indefiniteness are both judged primarily as questions of law, although both can occasionally depend upon some underlying factual finding.  And, even when questions of fact are at issue, it is a judge (rather than a jury) that hears the evidence and determines the facts.

In recent years, eligibility determinations have moved forward in the litigation context and become a true “threshold test.”  See Bilski v. Kappos, 561 U.S. 593 (2010).   Often, eligibility is the first substantive determination in patent litigation and it is typically decided either on a motion to dismiss (12(b)(6)) or motion on the pleadings (12(c)).

With all the parallels, it is not surprising that some litigants are also suggesting that indefiniteness be decided at the pleadings stage.

The recent motion for dismissal by SquareSpace is on point — arguing that DataCloud’s patent claims indefinite functional limitations parallel to those rejected by the Supreme Court in O’Reilly v. Morse. [Brief in Support of Motion to Dismiss].

The brief walks through Supreme Court history in indefiniteness associated with functional claim limitations.

• O’Reilly v. Morse, 56 U.S. (15 How.) 62 (1854)
• Corning v. Burden, 56 U.S. (15 How.) 252 (1854)
• Burr v. Duryee, 68 U.S. (1 Wall.) 531 (1864)
• Fuller v. Yentzer, 94 U.S. 288 (1877)
• Risdon Iron & Locomotive Works v. Medart, 158 U.S. 68 (1895)
• Westinghouse v. Boyden Power Brake Co., 170 U.S. 537 (1898)
• Busch v. Jones, 184 U.S. 598 (1902)
• Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245 (1928)
• General Electric Co. v. Wabash Appliance Corp., 304 U.S. 364 (1938)
• United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942)
• Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946)
• Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 336 U.S. 271 (1949) (“Graver I”)

SquareSpace filed its motion to dismiss in May and DataCloud has recently filed an amended complaint and has argued that the amended complaint renders the motion “a nullity.”  The new complaint adds three additional patents and also includes an allegation that attempts to skirt the indefiniteness question:

A person skilled in the art … would understand that each of the limitations and/or steps in the claims … are defined by what they do (not what they are). Even if any limitation and/or step of the claims is “functional”— and none are—the teachings of the … Patent provides to any skilled artisan sufficient structure, material, or acts necessary to perform the recited function or provides information sufficiently identifying a finite group of structures, materials, or acts necessary to perform the recited function that were well known to skilled artisans at the priority date.

Amended Complaint.

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Lawyers on the brief include James Dabney and Sue Robinson (as well as others).