A group of pro-patent senators and members of Congress have published what they are calling “a bipartisan, bicameral framework on Section 101 patent reform.”
Basics of the framework are to create a defined, closed list of subject matter category exclusions: Fundamental scientific principles; Products that exist solely and exclusively in nature; Pure mathematical formulas; Economic or commercial principles; Mental activities. Under the framework, a patent would not be eligible based upon “simply reciting generic technical language or generic functional language.” At the same time, the framework suggests that “practical applications” should be patent eligible. Finally, the framework calls for a divide-and-conquer approach — making clear “that eligibility is determined by considering each and every element of the claim as a whole and without regard to considerations properly addressed by 102, 103 and 112.”
E.I. DuPont de Nemours & Co. v. Unifrax I LLC (Fed. Cir. 2019)
In 2014, DuPont sued Unifrax for infringing its patented flame-barrier that is both lightweight and thin. U.S. Patent 8,607,926 (“Composite Flame Barrier Laminate for a Thermal and Acoustic Insulation Blanket”). The jury sided with DuPont — finding the asserted claims infringed and not proven invalid. Over a dissent from Judge O’Malley, the Federal Circuit has affirmed — finding that substantial evidence supports the verdict. (Majority authored by Judge Reyna and joined by Judge Hughes).
When 90% counts as 100%: A key issue on appeal was the meaning of the claim term “100%.” DuPont’s claims required an “inorganic refractory layer” made of “platelets in an amount of 100% by weight.” That particular limitation was added during prosecution to get around a prior art reference that taught a platelet concentration of less than 100%.
The accused product layer approximates 100% platelets, but has some small amount of residual dispersant that didn’t fully evaporate. Prior to trial, the district court sided with DuPont on claim construction and ruled that “100%” be interpreted as allowing for “some residual dispersant.” This substantially foreclosed Unifrax’s non-infringement argument that it had hoped to take to the jury.
On appeal, the Federal Circuit affirmed — finding a more-relaxed construction of 100% was correct because of how the mathematical construct was used in the patent document itself. The key phrase from the specification is as follows:
The refractory layer comprises platelets. Preferably at least 85% of the layer comprises platelets, more preferably at least 90% and most preferably at least 95%. In some embodiments, platelets comprise 100% of the layer. The refractory layer may comprise some residual dispersant arising from incomplete drying of the platelet dispersion during manufacture.
According to the court, the final sentence of this paragraph — allowing for residual dispersant in the layer — applies to all of the embodiments, including the 100% layer. Thus, when the patent says “100%” platelets, it really meant almost-all platelets with potentially a bit of dispersant. According to the majority the defendant is wrong that “‘100%’ means one hundred percent.”
Writing in dissent, Judge O’Malley argued that the majority’s construction “ignores the plain meaning of ‘100%’ and introduces more ambiguity than it resolves.”
There is no ambiguity in this language. The “platelets” must be present in the refractory layer “in an amount of 100% by weight.” The “100% by weight” language, coupled with the requirement that the platelets exist in an “inorganic refractory layer,” clearly contemplates that the platelets—i.e., inorganic material—constitute the entirety of the refractory layer. That leaves no room for other organic additives. There is perhaps no clearer or simpler way the patentee could have conveyed such a requirement.
Dissent.
The claim language is actually quite mess in the same clause it indicates that the refractory layer comprises “platelets in an amount of 100% by weight” but may also have a moisture content of up to 10% by weight. 110% by weight concentration is not ordinarily allowed in physics. However, we do sometimes talk about “110% effort” and Cecil Quillin has reported a USPTO’s patent grant rate as greater than 100% (by comparing original filings to all patents issued in the resulting family).
I pulled up the prosecution history and found that the 100% and 10% elements were added at the same time in the same amendment with the statement that the claim now “requires a refractory layer containing 100% platelets (and also requires . . . a defined residual moisture content).” In my mind, this works strongly in the patentee’s favor — that the 100% allows for residual moisture. Still, it is unfortunate that the ultimate holding is a rejection of the defendant’s argument that “‘100%’ means one hundred percent.”
= = = = = =
Product on sale before the patent filing. A unique aspect of this lawsuit is that the accused products were already on sale before DuPont filed its patent application.
Unifrax’s product was on-sale by May 2011; DuPont filed its application in December 2011. To be clear, DuPont’s patent does claim priority to prior applications, but only as a continuation-in-part. The prior applications apparently do not sufficiently disclose the invention at-issue here.
For DuPont, the fact that its patent was filed prior to the AIA saved its bacon. On appeal, the Federal Circuit agreed that DuPont had presented substantial evidence to antedate Unifrax’s prior use/sale.
The critical point of law focused on proof of the prior invention. The courts have long been suspicious of inventor’s self-serving testimony regarding prior inventorship. Here, the duPont provided inventor testimony along with substantial documentation of the prior invention timing. However, the company did not provide o corroborating evidence as to one particular limitation in the claims — a requirement that the refractive layer have a “dry areal weight of 15 to 50 gsm.”
On appeal, the Federal Circuit sided with duPont — reflecting on the requirement for corroboration.
[O]ur case law does not require that evidence have a source independent of the inventors on every aspect of conception and reduction to practice. . . Here, the law requires only that the corroborative evidence, including circumstantial evidence, support the credibility of the inventors’ story.
The reason for corroboration is a concern that inventors will commit perjury. Thus, the role of corroboration is help ensure inventor credibility.
In this case, the Federal Circuit held that the prohibition on registering “immoral” or “scandalous” marks is a facial violation of a registrant’s First Amendment free speech rights. Here, Brunetti is seeking to register the mark “FUCT,” which the solicitor identified as a close homonym of “the paradigmatic word of profanity in our language.” Oral arguments were held on April 15 before the nine Supreme Court justices.
In the case before the Supreme Court, the Government has conceded that the USPTO’s historic application of the test has been hit-or-miss, but that going forward the agency can be trusted to to draw the line against “marks that are offensive [or] shocking to a substantial segment of the public because of their mode of expression,
independent of any views that they may express.” This would include words like FUCT, as well as certain sexually explicit images, for instance.
Although the prohibition is content based, the government argues that its approach would be viewpoint neutral – just like many of the other conditions for obtaining trademark rights. This should lead to a lower level of scrutiny than that faced in Tam v. Matal (2017). In addition, my view is that Tam itself was decided on thin grounds because trademark denial does not actually limit anyone’s speech. The difficulty with merging speech issues with trademark law is – as Chief Justice Roberts stated at oral arguements – The whole point of this program [i.e., trademark law] is to regulate content.”
Here, it is clear that some regulations would be allowable — such as prohibiting registration of “obscene” marks. However, the statute goes to far by broadly prohibiting registration of both “immoral” and “scandalous” marks. The question is whether the Supreme Court is willing to effectively rewrite the statute to fit within the constitutional limits. Justice Gorsuch got to the point: “We can fix your [overbroad statute] problem for you, I got that. . . [But] how is a person who wants to get a mark supposed to tell what the PTO is going to do? Is it a flip of the coin?” As an example, this case focuses on FUCT, but FCUK and FVCK are already registered marks.
Justice Alito sees the case as potentially reinvigorating manifest destiny – “There’s going to be a mad scramble by people to register these marks . . . whatever lists of really dirty words . . . and all their variations.”
Brunetti’s attorney John Sommer started off well with his two points:
There are two important points to be made. First, the government does not defend the plain language of the statute. Nor does it defend how it’s been consistently interpreted for the last 70 years. Rather, it asks this Court to validate a hypothetical statute not enacted.
The second point is that a substantial number of Americans think that gambling, drinking, eating some types of meat, eating meat at all is immoral. A substantial number of Americans, as to abortion, gun control, immigration, our two political parties, a substantial number think that those are — the con is immoral, and a substantial number think that the pro is immoral. There’s no — simply
no way to make a — a sensible determination between those that come in and those must stay out.
In a classic line, Sommer also discussed the Supreme Court’s 1971 decision in Cohen v. California:
Mr. SOMMER: Cohen could have said fooey on the draft, and that’s what the government says he should have done, and if he said something else, he should have been arrested and his conviction should have been affirmed, but we know his conviction was reversed. . . . You know, if the government had a list of seven dirty words [that cannot be registered], would that be constitutional?
JUSTICE ALITO: Oh, come on. You know, come on.
JUSTICE GORSUCH: Cohen can have his T-shirt, but we are not going to trademark them, and we’ve held just last year that a patent is a public benefit that can be withdrawn without a judge. Why isn’t this also similarly a public benefit rather than a private right?
JUSTICE SOTOMAYOR: Why can’t the government say, no, we’re not going to give you space on our public registry for words that we find are not acceptable?
MR. SOMMER: Would the government be allowed to refuse registration of ownership of property because it’s bought by a church with a name that’s considered offensive? Could the Coast Guard refuse to register a boat because they think the name of the boat is a little bit salacious?
JUSTICE SOTOMAYOR: Actually, you’re right.
. . .
MR. SOMMER: We have a facial challenge here, so the question is, is it overbroad? And it doesn’t matter if Mr. Brunetti’s mark should be granted or not. It’s the statute as written and as applied, without exception, covers a fair amount of clearly core speech, of high-value speech.
. . .
[the risk of regulation here is that it can] take our level of discussion in our diverse society . . . to, you know, the lowest common denominator, the most squeamish among us.
Sommer made his point here, but where he faltered was on his additional argument that many of the scandalous restrictions are viewpoint based — the justices did not appear to follow that line of thinking.
JUSTICE BREYER: No, I don’t agree with it’s viewpoint. I think that very often the word involved in your case and the racial slur is not viewpoint. It is used to insult somebody, rather like fighting words, or it’s used to call attention to yourself. That’s the purpose of the slur. That isn’t viewpoint. Fighting words isn’t viewpoint. Or, if it is, it’s overcome.
MR. SOMMER: I don’t think the profanity always expresses viewpoint.
JUSTICE KAVANAUGH: When does it not?
MR. SOMMER: Well, fleeting expletives and I think when it’s used without any relevance to the subject matter, such as in high school speech, and, of course, there still can be – –
JUSTICE SOTOMAYOR: Some — some of us would say that a vulgar word with relationship to selling clothes is sort of irrelevant?
MR. SOMMER: Well, it’s not irrelevant because, as Justice Ginsburg pointed out, the audience that Mr. Brunetti is appealing to is young men who want to be rebels. And this is how they do it.
Some interesting points of the discussion: does the “scandalous” nature of the mark apply to the public as a whole or only potential consumers (gov says “public as a whole”); if the statute is struck down, can the PTO still reject obscene marks (ans: yes, if not used in commerce).
In the rebuttal, the Government offered what appeared to be something of a veiled threat of dire consequences if the statute is invalidated — noting that the PTO already views TAM as prohibiting denial of registration for racial slurs
But with respect to the single-most offensive racial slur, the PTO is currently holding in abeyance applications that incorporate that word, pending this Court’s decision on — leave open the possibility that that word might be viewed as scandalous.
Section 2 of the Lanham Act includes a host of reasons for refusing to register a trademark. The PTO may not register immoral or scandalous marks; marks that are deceptive; marks that disparage, falsely suggest a connection with, bring into contempt, or disrepute “persons, living or dead, institutions, beliefs, or national symbols;” governmental flags or coats of arms; “name, portrait, or signature” of a living person (without consent) or of a dead President “during the life of his widow;” marks likely to cause confusion or mistake because of their resemblance to other registered marks; marks that are merely descriptive or deceptively misdescriptive of the goods; etc. If the Federal Circuit is affirmed here, it will be interesting to see what comes next.
Gilbert P. Hyatt v. Andrei Iancu (Supreme Court 2019)
The following is a fairly typical pattern within the USPTO:
After final rejection, applicant files a PTAB appeal notice and brief;
Rather than pursue its side of the appeal, the Examiner withdraws the pending rejections — and then re-opens prosecution with a new set of rejections.
Although few cases go through this more than one cycle. Gilbert Hyatt has long been an exception — both in terms of how he treats the PTO and how he is treated by the PTO.
Going back to the my typical pattern above — note that the Manual of Patent Examination Policy (MPEP) expressly permits cycling by the examiner, although it requires SPE approval:
The examiner may, with approval from the supervisory patent examiner, reopen prosecution to enter a new ground of rejection in response to appellant’s brief.
MPEP § 1207.04.
Hyatt’s petition to the U.S. Supreme Court argues that a patent applicant has a right to appeal — and that this examination cycling violates his statutory rights. In particular, Hyatt points to 35 U.S.C. § 134 and § 6.
134(a). An applicant for a patent, any of whose claims has been twice rejected, may appeal from the decision of the primary examiner to the Patent Trial and Appeal Board, having once paid the fee for such appeal.
6(b). Duties.—The Patent Trial and Appeal Board shall— (1) on written appeal of an applicant, review adverse decisions of examiners upon applications for patents pursuant to section 134(a).
In a remarkably parallel situation from the early 1900’s the U.S. Supreme Court held that mandamus was appropriate where the examiner refused to forward cases to the Board. U.S. ex rel. Steinmetz v. Allen, 192 U.S. 543 (1904).
Thus, Hyatt’s Question Presented:
Whether MPEP § 1207.04 violates patent applicants’ statutory right of appeal following a second rejection.
If you’re in the Iowa region, we invite you to attend Patent Law’s New Directions: An Update from Director Porcari at the University of Iowa College of Law on Tuesday, May 14, from 2:45 PM to 5:00 PM. Damien Porcari, Director of the Elijah J. McCoy Midwest Regional United States Patent and Trademark Office, will talk about the new 101 guidelines, design patents and USPTO policies.
Two hours of CLE credit are pending. There is no cost for the seminar, but we ask that attendees register in advance. More information and a registration link can be found the Iowa Innovation, Business & Law Center website.
On appeal, the Federal Circuit has sided with the ATI — finding the patentee’s Unifed Shader claims patentable over the prior art. U.S. Patents 7,742,053, 6,897,871, and 7,327,369 (Graphics processing architecture employing a ‘unified shader’).
These patents are pre-AIA and the patentee is claiming that its invention pre-dates the prior art. The PTAB agreed that ATI’s conception was early enough, but concluded that the patentee lacked diligence.
One problem with the PTAB opinion was its statement requiring “continuous reasonable diligence” in reducing the invention to practice while the actual traditional standard is “reasonably continuous diligence.” The Federal Circuit has previously decided this exact point:
A patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence.
Perfect Surgical Techniques, Inc. v. Olympus Am., Inc., 841 F.3d 1004 (Fed. Cir. 2016) (emphases original).
In the IPR, the inventor provided testimony and supporting document that showed that at least one person worked on the design of a working model embodying the invention every business day during the diligence period. The PTAB, however, dismissed this evidence because at least some of the time was spent working on alternative chip designs and optional features not particularly claimed.
On appeal, the Federal Circuit severely chastized the PTAB, Solicitor, and PTO Director for rejecting diligence while failing to identify any delays or gaps in activity.
“We are directed to no view of the evidence that could support a conclusion that ATI set aside the development of the Unified Shader. The PTAB cited no basis for finding that this technology was not being diligently pursued. The Director seeks to excuse the PTAB’s absence of support for its holding, by stating that ATI bears the burden of proof of diligence. However, the Director does not explain where the burden of proof was not met, upon the extensive evidence of daily activity. . . . [T]he purpose of the diligence requirement is to show that the invention was not abandoned or set aside. Here, the Director does not point to the remotest suggestion of abandonment or setting aside of the Unified Shader technology.”
In January 2019, the Federal Circuit issued a non-precedential opinion in this trademark case. Based upon a USPTO request, the court has now reissue the decision as precedential. See Fed. Cir. R. 32.1(e).
As part of the trademark registration process, an applicant must submit a specimen of the mark as used in commerce. Here, Siny is seeking to register the mark CASALANA for its knit wool fabric and submitted a printout from a webpage purporting to show the mark being used in commerce.
The page did not allow direct ordering but simply listed a phone number and email “for sales information.” In addition, the mark was not shown on images of the fabric itself or its packaging but rather simply in the website text. The examining attorney and TTAB found the specimen insufficient to prove use in commerce. Here, prior precedent indicates that a specimen using the mark on a “display associated with goods” is only sufficient if it is a “point of sale” display and not mere advertising.
On appeal, the Federal Circuit affirmed both on the law and the factual conclusions — holding that “the Board carefully considered the Webpage Specimen’s contents and determined, on the record before it, that the specimen did not cross the line from mere advertising to an acceptable display associated with the goods.”
Siny could have likely fixed its problem a few ways. (1) providing quantity/pricing information on the site; (2) providing e-commerce option; (3) providing evidence of its sales process — that consumers saw the website, called the number, and bought the goods; (4) putting the mark on the images of the goods for sale rather than the just the on the surrounding website; (5) it may have been enough to simply change the general “for sales information” statement to a more direct — “call to purchase, pricing available on request.”
Acorda Therapeutics, Inc., v. Roxane Laboratories, Inc. (Supreme Court 2019)
Obviousness is the core doctrine of patentability and primary focus of both patent examination and post issuances PTAB challenges. In this case, Acorda has asked the U.S. Supreme Court to spend some time on this important doctrine — and particularly consider the role of objective indicia of nonobviousness such as “commercial success, long felt but unsolved needs, [and] failure of others.” Quoting Deere.
The question presented is whether objective indicia of nonobviousness may be partially or entirely discounted where the development of the invention was allegedly “blocked” by the existence of a prior patent, and, if so, whether an “implicit finding” that an invention was “blocked,” without a finding of actual blocking, is sufficient to conclude that an infringer has met its burden of proof.
The infringement lawsuit was triggered when Roxane (and others) filed Abbreviated New Drug Applications (ANDAs) with the FDA to start making generic versions of Acorda’s drug treatment for multiple sclerosis (Ampyra). Roxane successfully defended the lawsuit by arguing that the asserted claims were obvious.
For the obviousness analysis, the patentee Acorda provided evidence of commercial success and long felt but unmet need that was tied to the invention at issue. However, the Federal Circuit found that those secondary factors did not apply because of a broader blocking-patent already exclusively licensed to Acorda.
The setup here begins with the fact that Acorda is the exclusive licensee of a broad patent for treating 4-AP to treat MS (Elan patent). The Elan patent has now expired, but it was firmly in place as Acorda conducted its research and obtained FDA approval. This petition here focuses primarily on four follow-on patents obtained by Acorda covering tweaks to the treatment plan. Despite the tweaks, it appears that Elan’s broad patent still covers the drug treatment at issue here. I.e., Elan’s patent is a “blocking patent.”
When it came to the secondary indicia of nonobviousness, the Federal Circuit majority determined that a key reason why Acorda was able to do research on its four follow-on patents is that it was protected by the blocking patent — no other company was ready to risk infringement liability to do the research. In other words, the commercial success, failure of others, and recognized but unmet need were all due to the Elan patent’s chilling effect on competition. From the majority:
“The risk of infringement liability for marketing in the US would have provided and independent incentive [for third parties] not to develop the invention of the Acorda patents, even if those inventions were obvious.”
The decision in Acorda falls in line with the court’s 2005 decision in Merck & Co. v. Teva Pharmaceuticals USA, Inc., 395 F.3d 1364 (Fed. Cir. 2005) (en banc denied; cert denied). In that case, the Federal Circuit also held that a prior patent that precluded market entry was the cause of Merck’s commercial success — not the invention’s ingenuity.
The Federal Circuit’s invocation and expansion of its judicially manufactured blocking-patent doctrine to negate Acorda’s “significant,” “convincing,” and unrefuted evidence of nonobviousness is plainly irreconcilable with this Court’s decision in Graham v. John Deere Co., 383 U.S. 1 (1966), which established that an inquiry into commercial success, failure of others, and long-felt but unmet need is an important protection against hindsight bias in the obviousness analysis. As Judge Newman recognized in her dissent—and as Federal Circuit judges have emphasized in prior dissents highlighting the blocking-patent doctrine’s deficiencies—the elimination of that essential safeguard makes it far more likely that courts will submit to the “temptation” of invalidating patents that are obvious only when viewed through the lens of the patents’ own teachings.
The Federal Circuit’s application of its blocking-patent doctrine in this case was particularly problematic because the court of appeals identified no evidence that anyone was actually deterred by the Elan patent from researching low-dose uses of 4-AP—and instead shifted the burden of proof to Acorda to “supply evidence” to negate the district court’s “implicit finding” of blocking. In so doing, the Federal Circuit upended the clear-and-convincing-evidence burden of proof for invalidity challenges that this Court recognized in Microsoft Corp. v. i4i Limited Partnership, 564 U.S. 91, 101–02 (2011), and obliterated the presumption of validity that Congress codified in the Patent Act, 35 U.S.C. § 282(a).
Omega’s patents cover remote control and monitoring systems for vehicles. The defendant, CalAmp, helps companies and governments monitor their vehicles (location and status, such as battery health and vehicle speed). In the infringement trial, a Florida jury sided with the patentee – finding the patents willfully infringed and not invalid. The district court then trebled the damages and awarded attorney fees — for a tidy sum of $15 million (with an ongoing royalty of $13 per unit).
On appeal, the Federal Circuit has made several interesting rulings. In a later post, I’ll return to the validity issue.
This post will focus on infringement: Some of Omega’s claims require both “a transmitter and a receiver for receiving signals from said transmitter.” (33 and 31 in the figure above). CalAmp’s accused device has the transmitter, but the accompanied receiver is a cell-phone tower. Since CalAmp does not supply cell towers, the appellate panel found CalAmp cannot be a direct infringer under the All Elements Rule.
Making and Selling vs Using: Note here that we’re talking about system claims, and the patentee particularly accused CalAmp of “making and selling” the invention. As explained below, infringement allegations for “using” an invention can be treated more expansively under the beneficial control doctrine.
The patentee had also alleged CalAmp’s indirect infringement — that CalAmp should be liable for its customers’ infringing use of the system. On appeal, the court agreed that there was sufficient evidence to find that the customers had “used” the claimed system:
“[T]o use a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.” Centillion Data Sys., LLC v. Qwest Commc’ns Int’l, 631 F.3d 1279 (Fed. Cir. 2011). “[A] person must control (even if indirectly) and benefit from each claimed component.” Intellectual Ventures I v. Motorola Mobility, 870 F.3d 1320 (Fed. Cir. 2017). Here, there was evidence from which the jury could infer that customers controlled and used the system and received the required benefits.
In other words, the cell-phone tower was being “used” by the customers as part of the system, and therefore it didn’t matter that they were owned by and more generally controlled by a separate entity.
Despite finding potential liability here, the court substantially vacated the infringement verdict on other grounds (informing the jury of the proper claim construction / proof of knowledge for inducement / etc).
At the end of the appeal, only one claim was left as valid/infringed. The Federal Circuit determined that the patentee had not provided sufficient evidence at trial to support the full damage award based upon that lone claim. Thus, the new trial will also be needed on damages.
On April 3, 2019, President Trump released a “memorandum on combating trafficking in counterfeit and pirated goods” which calls for a report on the state of the issue to be completed by November 1, 2019. Homeland security is in charge, with consultations from Commerce, Justice, OMB, USTR, and others, including intellectual property rights holders.
The memorandum mentions a couple of prior studies on counterfeiting and piracy, but the current data continues to be lacking — as the GAO wrote in 2010: “U.S. government estimates of economic losses resulting from counterfeiting cannot be substantiated due to the absence of underlying studies.”
A few elements of the memorandum are important to consider:
The Administration is treating counterfeit goods and copyright piracy as homeland security and law enforcement issues — directing those groups to to step-up their efforts.
The Administration is focusing as much on trafficking as it is production. Think about vendors such as Amazon, Physical carriers such as FedEx, digital pipeline operators; payment providers, and customs brokers. For legitimate intermediaries, however, the focus is on acting as “beneficial partners in combating trafficking.”
Although counterfeit goods may be costing the makers of branded products, the companies trafficking in the goods are making money. It will be interesting to see the extent that those companies operating on an international scale will be willing to cooperate with US law enforcement.
A key point of argument and policy over the past decades has been the level of authority given to the USPTO as the government’s expert patent law agency. When the USPTO makes a decision — is that decision respected by other tribunals? At times the agency is given substantial deference (factual conclusions made by the PTAB), but other agency decisions are also regularly reviewed de novo without deference. With regard to interpretation of substantive patent law, PTO determinations are often simply ignored.
Cleveland Clinic Found. v. True Health Diagnostics LLC (Fed. Cir 2019) (nonprecedential) offers a case-in-point with the following key statement from the Federal Circuit:
While we greatly respect the PTO’s expertise on all matters relating to patentability, including patent eligibility, we are not bound by its guidance. And, especially regarding the issue of patent eligibility and the efforts of the courts to determine the distinction between claims directed to natural laws and those directed to patent-eligible applications of those laws, we are mindful of the need for consistent application of our case law.
In the case at hand, the Federal Circuit refused to follow or give any deference to PTO guidelines and instead affirmed a lower court determination that the claims at issue were ineligible as effectively claiming a law of nature.
Over the years, the PTO has shifted policy. In the old eligibility cases like Diehr and Chakrabarty, the agency was refusing to issue patents that it saw as crossing-the-eligibility-line. However, the new statements by Dir. Iancu go the other-way, with the USPTO creating a policy of issuing patents that the courts would find invalid (if given the opportunity).
The statement from the court here is important although buried in a non-precedential opinion. One reason for its importance is its clear tension with the Federal Circuit’s recent decision in Natural Alternatives that called for Skidmore deference to be given to the PTO statement on eligibility.
The U.S. Patent and Trademark Office has adopted guidance on how examiners [and the agency as a whole] should determine whether a claim is eligible under § 101 and provided examples of eligible and ineligible claims. Under these guidelines, a claim to a practical application of a natural product to treat a particular disease is patent eligible. The parties dispute the persuasiveness of this document and the weight we should afford it under Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944).
Nat. Alternatives Intl., Inc. v. Creative Compounds, LLC, 2018-1295, 2019 WL 1216226, at *5 n.2 (Fed. Cir. Mar. 15, 2019). Although Natural Alternatives was precedential, its statement regarding Skidmore deference was admittedly dicta by Judge Moore. Judge Moore was also on the Cleveland Clinic panel, and I suspect that she would not have signed the opinion if it had been issued as precedential. Of course, that begs the question of why sign it as a non-precedential opinion?
I first worked with Wes Austin back in 2006 as he developed his Dunes CLE program and later followed with some interest his Utah-based patent firm Austin-Rapp. As the image shows below, Austin has expanded from patent law into comedy as well. His new sitcom – THE IP SECTION – merges the two (as well as Mormonism) and stars a patent lawyer who wants to be a stand-up comedian.
In its new petition to the Supreme Court, Romag asks “whether willful infringement is a prerequisite for an award of an infringer’s profits.” In utility patent law, courts have held that disgorgement of the infringer’s profits is never available as a remedy. That option was eliminated from the Patent Act in 1946. In design patents, however, disgorgement is the ordinary remedy.
Romag’s case falls under a different law (Trademark Law) and statutory scheme (The Lanham Act). Section 35 of the Lanham Act (15 U.S.C. § 1117(a)) expressly provides for disgorgement of an infringer’s profits:
When a violation of any right of the registrant of a mark registered in the [USPTO], a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.
The setup here appears pretty clear — defendant’s profits are available as a remedy to trademark infringement action – so long as they comport with “the principles of equity.”
This is a major circuit split: Six of the appellate circuits follow the statute by allowing a plaintiff to recover infringer’s profits without any additional showing (such as willfulness); Five other circuits require a prerequisite showing of willfulness prior to allowing disgorgement; and one circuit (the First Circuit) has hybrid requirement where willfulness must be shown when the parties are not direct competitors. The Federal Circuit does not have its own law on this issue, but follows the law of the appropriate regional circuit court when hearing a TM case.
The plaintiff here – Romag – is a leading supplier of magnetic fasteners for bags and wallets. In 2002 Fossil started using Romag fasteners. Around 2008, however, Fossil’s products began appearing with counterfeit Romag branded fasteners.
A jury found for Romag — both for trademark infringement and patent infringement. However, the jury also found that the infringement was not willful. The basic idea is that the mental-state culpability was on Fossil’s Chinese supplier, not Fossil itself. The jury did go ahead and award a portion of Fossil’s profits — finding that 1% of Fossil’s profits were attributable to the TM infringement ($6.7 million).
Following trial, the Connecticut district court threw-out the profit disgorgement verdict — holding that the 2nd Circuit required willful infringement before disgorging profits. The appeal went to the Federal Circuit (because of the patent issue) who affirmed — applying 1st Circuit law. After a bit more civil procedure, the petition is now before the U.S. Supreme Court:
Whether, under section 35 of the Lanham Act, 15 U.S.C. § 1117(a), willful infringement is a prerequisite for an award of an infringer’s profits for a violation of section 43(a), id. § 1125(a).
This is a case with a very good shot of being heard by the U.S. Supreme Court.
Romag Fasteners, Inc., v. Fossil, Inc., et al., 2018-1233 (RomagCertPetition])
In two separate IPR proceedings, the PTAB found several of IBM’s claims unpatentable as anticipatedobvious. U.S. Patent No. 7,631,346 claims 1, 3, 12, 13, 15, and 18. On appeal, the Federal Circuit has vacated / reversed those opinions. [error fixed above]
The patent here claims a user-authentication method for a “single-sign-on . . . within a federated computing environment.” The basic setup here is that user known to a “first system” wants access to resources on a “second system” that doesn’t know about the user. The invention works by the first system providing an “identifier” associated with the user and the second system creating a user account using that identifier — not too complex here. A “single-sign-on” is basically a setup for user convenience so that the user only logs-in on one system but can access the whole federation.
Both systems are part of a “federated” environment – which seems potentially complex except for the definition found in the patent:
A federation is a loosely coupled affiliation of enterprises which adhere to certain standards of interoperability; the federation provides a mechanism of trust among those enterprises with respect to certain computational operations for the users within the federation.
In the appeal here, the patentee argues that the Board too-broadly defined the terms “federated computing environment.” Of some interest here, both IBM and the IPR petitioners (Priceline, OpenTable, etc.) agreed upon the term’s definition and that it was limiting even though it appeared only in the claim preamble. The PTAB disagreed with the parties — and in particular held that the term “federation . . . is not limited to enterprises” but could instead more generally includes a group of “entities.” Under the Board’s interpretation, any two computer systems could be seen as “entities” even if both are within a single “enterprise.” That broader scope is important because the closest prior art authentication system involved two computers within a single enterprise.
On appeal, the Federal Circuit found the PTAB’s construction unreasonable – given the plain definition in the specification. On remand, the PTAB will consider whether the prior art still anticipates the invention based upon this narrower construction.
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I considerably simplified the facts above. It turns out that the patent specification was not as consistent in stating that a “federation” required computers from at least two different “enterprises.” In particular, the specification states that:
In the context of the present invention, a federation is a set of distinct entities, such as enterprises, organizations, institutions, etc., that cooperate to provide a single-sign-on, ease-of-use experience to a user. . . . The terms ‘entity’ or ‘party’ generally refers to an organization, an individual, or a system that operates on behalf of an organization, an individual, or another system.
Notice that this definition of federation is not limited to enterprises, but instead is tied to the broader category of “entities,” and entities include “systems” — i.e., computers. Thus, the Board found that a federation can be created by two computer systems even if operating within the same business enterprise.
In the appeal, the Federal Circuit rejected this approach holding here that the “such as” language limits was intended as an exclusive listing of what counts as federation elements.
The column 10 passage refers to entities “such as” the ones listed and includes “etc.”—both of which, in this context, indicate that only things of a type similar to the itemized ones are covered, namely, other establishments or ventures or firms or the like. We have recognized that “such as” and “etc.” sometimes have just that meaning. (“rule of ejusdem generis). That understanding is the only reasonable one for the passage, given the plain meaning of the definitional and other language we have already discussed.
It is hard for me to say what the take-away is for patent drafters on this claim construction except – who knows what the court will decide?
I’ll note here that the IPR petitioners settled the case with IBM but the USPTO stepped in to defend the PTAB sua sponte claim construction decision.
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Does Silence Disclose a Negative Limitation: The panel also addressed the single-sign-on element of the claims — the single-sign-on requirement is interesting because it may sound like a positive limitation but is really being interpreted as a negative limitation. Basically, once the user gives credentials for the first system, the user doesn’t need more authentication (i.e. passwords) to access the second system. In the appeal, the Federal Circuit found that the silence on a topic was not sufficient to disclose the absence of a feature:
Even if the Board were correct that Mellmer is “silent” … that characterization would not alone support a finding that there was no user authentication action…. Silence in that sense would not by itself suffice for the Petitioner to meet its burden to prove, by a preponderance of the evidence, that there was no user authentication action in this scenario.
In other words – a negative limitation can be powerful. On appeal, the Federal Circuit has reversed the holdings based upon single-sign-on being found in this reference.
In a decision today, the High Court of Justice (Chancery Div.) has upheld the UK Intellectual Property Office (UKIPO) decision siding with DTTM and finding that Trump Int’l. had filed its opposed trademark application in bad faith and also acted in bad faith during the proceedings.
A quirk here regarding the names –– DTTM most likely stands for “Donald Trump Trademarks” and is a holding company owned by President Trump and/or his family. Trump International Limited is not related to President Trump in any way and is rather owned by Michael Gleissner an “infamous trademark troll.” To avoid confusion, I’ll use the name Gleissner rather than Trump Int’l.
A few days before the 2016 election, Gleissner applied to register ‘TRUMP TV” — DTTM opposed. The UK IPO Hearing Officer sided with DTTM. The High Court has now affirmed that judgment (1) rejecting the argument that the hearing officer was biased — finding it “obviously unsustainable”; and (2) agreeing with the bad-faith finding.
[Gleissner] had applied to register a trade mark which was plainly associated with Mr Trump, with whom it had no connection. That, of itself, required a very clear explanation to refute an inference of bad faith. The similar fact evidence was not mere rumour or supposition. It raised some very serious matters, which required a detailed explanation and refutation, in evidence. The fact that other companies owned or controlled by Mr. Gleissner had made numerous other applications to register well-known trade marks with which they had no connection (for example EUIPO) was potentially probative of
the issue of bad faith. It made it less likely that the inference of bad faith could be refuted.
Consideration of such evidence in the Registry proceedings accorded with the overriding objective of deciding cases justly.
Thus, a key holding in this case is that a pattern of bad-faith trademark filing is admissible as evidence that a new filing was also done in bad faith.
The people of the UK can also rest easier knowing that TRUMP TV will not be controlled by a notorious troll.
This case focuses on patents covering the opioid drug oxymorphone that Endo sells as Opana ER. In 2017, the FDA requested that (reformulated) Opana ER be removed from the market in response to the high risk of its illicit use. Endo had previously pulled Opana ER from the market in 2012 and then re-launched in a “non-crushable form.” However, that form continued to be abused (including by liquefying and injecting). In response to a new FDA request, Endo again removed the reformulated version from the market. The appeal here is focused on one a subset of the patents covering Opana — a fight between Endo and generic manufacturers who want to start distributing the drug once again.
Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2019)
Endo’s patents at issue on appeal claim a personalized method-of-treatment that has three distinct steps:
“Providing” the drug (5 to 80 mg of oxymorphone in a controlled release matrix);
“Measuring” the patient’s creatine clearance rate; and
“Administering” the drug with dosage calculated based upon the patient’s creatine clearance rate (using a particular formula).
The inventors here were concerned about renal impairment experienced by some folks taking oxymorphone. In their research, they discovered that some folks clear the drug faster (and have fewer kidney problems). The inventors here used the metabolite creatine as an easier to measure proxy for measuring drug clearance (creatine clearance rate) since it comes out in the urine.
These discoveries in hand, the inventors came up with the scheme of giving lower dosages of oxymorphone to individuals with lower clearance rates.
The district court reviewed the claims and found them invalid — holding that the claims were effectively directed to a law of nature. On appeal, the Federal Circuit has reversed and reinstated the patent’s validity. This decision here is the next in a series of decisions creating a hard rule that method-of-treatment claims are patent eligible. See Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd., 887 F.3d 1117 (Fed. Cir. 2018) and Natural Alternatives International v. Creative Compounds, LLC, 2019 WL 1216226 (Fed. Cir. Mar. 15, 2019). Here, the court writes:
[T]he asserted claims are not directed to patent-ineligible subject matter. On the contrary, the claims are directed to a patent-eligible method of using oxymorphone … to treat pain in a renally impaired patient. . . .
The claims at issue here are legally indistinguishable from the representative claim in Vanda. Both claims recite a method for treating a patient.
The key precedent here is Mayo v. Prometheus (2012). As in Vanda and Natural Alternatives, the Federal Circuit has characterized Mayo as directed only to a method of optimizing a treatment plan — rather than being a treatment itself. The claims at issue in Mayo require administering a particular drug for treatment of a GI disorder. However, the Federal Circuit explained away that aspect of the claim:
Although the representative claim in Mayo recited administering a thiopurine drug to a patient, the claim as a whole was not directed to the application of a drug to treat a particular disease. Furthermore, the administering step in Mayo is distinguishable from the administering step in the [Endo] patent because the administering step in Mayo is the first step in the method that simply describes giving the drug to a patient with a certain disorder. By contrast, the administering step in the ’737 patent is the step that describes giving a specific dose of the drug based on the results of kidney function testing.
The district court had rejected the clams — agreeing with its magistrat judge that “[t]he administering step merely instructs physicians to dispense oxymorphone for the treatment of pain in a well-know[n] manner, while utilizing the natural law to manage the dosage.”
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Question for those of you doing software – What is your equivalent of a “method-of-treatment” claim.
