Dickstein Shapiro Dodges Malpractice Suit by Showing Long-Ago Issued Claims Were to Ineligible Subject Matter

By David Hricik

This one will make your head spin, especially the statutory construction part.  The case is Encylopaedia Britannica, Inc. v. Dickstein Shapiro LLP (D. D.C. Aug. 26, 2015).

The Dickstein Shapiro firm was retained by Encyclopaedia Britannica, Inc. (EB) in 1993 to file a patent application. The patent issued, and in 2006 EB sued several companies for infringing it. The patent was held invalid due to “an unnoticed defect” in the 1993 application.  The basis for invalidity was not 101, however.

EB then sued the law firm for malpractice in prosecuting the 1993 application.  EB contended that, but for the firm’s negligence, it would have made a lot of money in the infringement suit.

After the malpractice suit was filed, Alice was decided.  The firm then argued that, as a result, the claims were ineligible and so any malpractice by it in 1993 could not have been the but-for cause of harm.  The claims would have been “invalid” under 101 even had it not botched the 1993 application, and so there was no harm caused by any error it made.

To put this in context:  Because of a 2014 Supreme Court decision, the 2006 case would have been lost anyway because, in 1993, the claims were not eligible for patenting.

And the argument worked.  The district court granted a motion to dismiss for failure to state a claim, finding the subject matter ineligible on the face of the patent.

I’ll leave the merits of that to others.

What is interesting is the court’s approach to retroactive application of Alice.  The issue was whether in the 2006 case, even had the firm’s alleged malpractice not caused the invalidity judgment, the claims were “invalid” under 101 then.  The district court held that Alice did not change the law, but merely stated what it had always been.    Specifically, the district court stated:

When the Supreme Court construes a federal statute… that construction is an authoritative statement of what the statute has always meant that applies retroactively.  Alice represents the Supreme Court’s definitive statement on what 101 means — and always meant.  Because the underlying case is governed by 101, it is appropriate for this Court to apply the Supreme Court’s construction of 101 as set forth in Alice.

(Citations omitted).

For this and other reasons, the court reasoned that “the only rule that makes sense in this context is to apply the objectively correct legal standard as enunciated by the Supreme Court in Alice, rather than an incorrect legal standard that the [district court in the 2006 infringement case] may have applied prior to July 2015 [when the court was deciding the motion.]”  The court then applied Alice and found the claims “invalid” under 101.

There’s a lot to unpack here.

First, the retroactivity of Alice bodes ill for lawyers who obtained patents now being held “invalid” under 101.  If the law “always” was this way, why did you advise your clients to spend so much money on a patent so clearly invalid that a judge could decide it by looking at it? But keep reading, because you and I know Alice and the rest changed the law.  (Indeed, the USPTO changed its examination procedures to adjust to it!)

Second, there could be enormous consequences if Alice changed the Court’s prior interpretations of 101.

While as a matter of statutory construction the retroactivity principle relied upon by the district court is correct, retroactivity does not ordinarily apply when an interpretation is changed.  (This perhaps explains why the Supreme Court is careful to avoid saying it is changing an interpretation, because changes to interpretations of a statute are prospective, only, as a general rule.  In that regard, think about Therasense for a moment.) So, if Alice changed the law, then the district court was likely wrong to apply it retroactively.

More broadly, however, if Alice (and the rest) changed the meaning of 101, then it means many patents now being held “invalid” should not be judged under Alice.

I’ve been waiting for someone to make the retroactivity argument (as with Therasense, which clearly changed the CAFC’s interpretation of “unenforceability”).  It would be fun to try to see someone use Alice and apply it to the Supreme Court line of cases and make them all fall in a line.

Case dismissed as sanction for misrepresentations

Judge Keith Ellison issued a scathing order dismissing a patent case after it had been tried to verdict.  Tesco Corp. v. Weatherford Int’l., Inc. (S.D. Tex. Aug. 25, 2014).  Four days into a three-week trial over infringement of some patents relating to drilling rig equipment, an inventor testified that a brochure that constituted 102(b) prior art showed his invention.  The following day, a Friday, patentee’s counsel told the court he would spend the weekend getting to the bottom of the facts about it (there was even a dispute over whether the brochure had been produced to the defendants).

Come Monday, the patentee’s lawyer said that the brochure had been rendered by someone else, Karr, not the inventor and that Karr would unequivocally, no doubt, for sure, and so on say that it was not the inventor’s device.  Trial proceeded.  There was a mixed and inconsistent verdict rendered by the jury.  Rather than enter judgment, Judge Ellison let the case proceed to other issues.

After trial during discovery relating to exceptional case and inequitable conduct, Karr testified that he had had nothing to do with the brochure and that everything the patentee’s counsel had said was false.

The defendants, not surprisingly, moved for sanctions.  Making matters worse, in opposition to those motions, the patentee’s counsel quoted portions of the deposition excerpts that, Judge Ellison felt, were at best misleading.

In this order, the judge dismissed the claims with prejudice, holding that nothing less would protect the judicial system.  It then invited motions for attorneys’ fees to be submitted.  Stay tuned.

District Courts and Patent Cases, Part I

By Jason Rantanen and Joshua Haugo*

During the oral argument in Octane Fitness, Justice Alito asked an interesting question about the frequency at which district court judges hear patent cases.  In response to a comment from Mr. Telscher that “I do think district court judges see a lot of patent litigation,” Justice Alito asked:

Is that really true? There’s nearly 700 district judges in the country.  If we had a statistic about the average number of patent cases that a district judge hears and receives on, let’s say, a 5 ­year period, what would it be?

Oral Argument Transcript at 14 (full transcript available here).

The question was posed in such a way as to imply that patent cases were a rare occurrence for most district court judges, and since neither counsel nor research into secondary sources provided a ready answer, we pulled data from Lex Machina to seek some insight into this issue.

Since we were interested in frequency, we looked at the number of patent cases filed between 2010 and 2013 on a per judge basis.  Our analysis shows that while patent cases are relatively common generally, their distribution is indeed highly skewed.  Nevertheless, most active judges heard at least one patent case during the time and the median number of patent cases received per judge was higher than one might expect (it’s eight).  The below chart illustrates the number of patents cases received by each judge who was active during the 4-year time period, sorted by the number of patent cases received (i.e.: the judges who heard no patent cases are to the left and the judges who heard the most patent cases are to the right, with Judge Gilstrap being judge #760).  The chart cuts off at 100 cases received, but the line continues up with seven judges receiving more than 600 patent cases each (Judges Robinson, Sleet, Andrews, Schneider, Stark, Davis, and Gilstrap).

Figure 1Methodology: To obtain the data set, we ran a search on Lex Machina for all patent cases filed between 2010 and 2013.  We then copied the judge data from Lex Machina’s dynamic filter, giving us the number of patent cases per judge.  We obtained data on all district court judges (not just those that appeared in the Lex Machina search results) from the Federal Judicial Center.  This allowed us to filter the results to include only judges that met our criteria of “active” judges for the time period (i.e.: judges that were confirmed to a district court prior to 12/31/2013 and had not retired or been terminated until after 1/1/2010).  There were a total of 760 active district court judges between 2010 and 2013, although some were active for only a short time during the window we analyzed.  We were also able to limit our data set to only judges who were active for the entire time period (i.e.: who were confirmed to a district court prior to 1/1/2010 and who did not retire or take senior status prior to 12/31/2013); a chart using this data is below.

Background Statistics: In total there were 19,325 patent cases filed before 865 judges over the four year period.  The judge with the most patent cases was Judge Gilstrap of the Eastern District of Texas, who received 1,636 patent cases. Although several judges received an extraordinary number of cases, many judges that heard patent cases had only 1 patent case filed before them during the 4 year window we examined.  

Of the 19,325 total cases heard in District Courts, 18,061 cases were heard by 760 active judges.  The remaining 1264 cases were heard by 165 judges that were primarily senior status, although there were several appellate judges sitting by designation.  For this analysis, we did not include any cases filed before judges that were not active during at least some portion of the period.

There is one important caveat to this data: it reflects patent cases received by the judges.  As a result, it does not directly report on the number of patent cases actually heard by district judges (since sometimes case settle soon after filing), nor does it directly report perhaps an even more important statistic relating to Justice Alito’s questioning, that of judges’ experience rendering substantive decisions in patent cases.  This data does, however, provide some insight into these issues because we know that both figures cannot be greater than the number of patent cases received and (unless there is a particular selection bias operating in certain districts that affects settlement rates), it seems likely that the distribution of both patent cases heard and decided would follow a similar pattern.

Analysis: The average number of cases received by active judges was 23.8 cases over the span of four years, or almost 6 cases per year, while the median was 8 cases over the four-year span.  While the highest districts in terms of filings did affect the mean, removing the three highest (the Eastern District of Texas, Central District of California, and District of Delaware) still resulted in an average of 13.3 cases per judge.  Of the active judges, there were 71 that did not receive any patent cases within the window.  Thus over 90% of active judges received at least 1 patent case filed during the window.

Additionally, we looked at the numbers for judges that were active throughout the 4 year time period, in order to get a sense of what an average “active” judge might see.  These judges were commissioned prior to 1/1/2010 and had not been terminated or retired prior to 12/31/2013 (thus excluding both judges who were on the bench for only a part of the period and judges who took senior status during a portion of the period).  For this set, there were a total of 11,096 patent cases received by 434 judges.  The average number of cases received was 25.6 with a median of 11 cases over the four-year period.  Removing the top three districts from this data set still produced an average of 20 cases and a median of 10 cases received over the four-year period.  In total, only 28 of the 434 active judges did not receive a patent case during this time; over 93% of judges received at least 1 patent case.  The graph below shows a frequency chart of only judges that were active during all 4 years (the bar on the far right reflects the fifteen judges who received over 100 patent cases during the four-year period).

Figure 2 While the numbers suggest that patent cases are not unicorns, even outside of the top three districts, there also may be some merit to Justice Alito’s concern that at least a substantial number of District Court judges do not hear more than an occasional patent case, and thus may find it difficult to determine which cases are “exceptional” based on their past experience with other patent cases.  Of course the ultimate issue may not be one of determining whether a patent case is exceptional, but in simply determining whether a complex litigation suit is exceptional.  And as to that, as Mr. Telscher observed in response to Justice Alito’s questioning about numbers of patent suits received by district court judges, “I don’t know what that number is, Your Honor. But I know that district court judges carry a widely varying docket of different areas of law and are called upon to learn the law and assess the reasonableness of those positions.”

*Joshua Haugo is a second-year law student at the University of Iowa College of Law.

Edit: Michael Risch pointed out that there may be an effect depending on how Lex Machina counts transferred cases, which he estimates at 15-20% of cases.  I’m looking into the way that Lex Machina counts these types of cases: its database certainly includes both the transferor and transferee dockets, but it does not appear to count the transferor judge as being the “judge” of the case.  Instead, it appears to only count the transferee judge.  I’ll update the post once I have a better sense of this effect.

Edit2: Based on further investigations (and subject to confirmation from the folks at Lex Machina), Lex Machina counts both the transferring court and the transferee court; in other words, its not deduplicating.  The effect of this is to artificially inflate, perhaps by as much as 15-20%, the case counts below.  This causes me to echo the caution I noted originally: just because a judge “received” a case does not mean that he or she “heard” it, let alone on the substantive merits.

Edit3: Lex Machina confirmed that “each separately assigned civil action number is a case except, if it is an intradistrict transfer, we detag it so it does not count as a patent case.  In the event of a inter-district transfer, we will have one case with the outcome “procedural: interdistrict transfer” and the other case with whatever its outcome was.”  So what I observed above holds.


Harvard’s US OncoMouse Patents are All Expired (For the Time Being)

By Dennis Crouch

Harvard College v. Kappos, 12-cv-1034 (E.D.Va. 2012)

Harvard’s patented OncoMouse has been a bestseller for cancer research here in the US. Two Harvard researchers took an available laboratory mouse and inserted a heritable cancer-causing gene into the creature’s DNA. In the US, Harvard owns three patents covering aspects of the mouse and its creation that are exclusively licensed to Du Pont. U.S. Patent Nos. 4,736,866, 5,087,571, and 5,925,803. The patents were filed pre-1995 and thus have a term that lasts for 17 years from the patent issuance. The first two 17-year terms have expired, but the third could last until 2016 – except for the terminal disclaimer discussed below.

In 2010, an anonymous third party requestor (TPR) filed a reexamination request for the ‘803 patent. Last June, the USPTO confirmed the patentability of the challenged claims. However, the USPTO agreed with the TPR that a broadly worded terminal disclaimer filed in the parent ‘571 application meant that the’803 patent also expired in 2005. Thus, it doesn’t matter whether the claims are valid over the prior art because they are expired. Because the patent had expired, the USPTO refused to allow Harvard to add additional claims to the patent during reexamination.

In the terminal disclaimer filed in the parent case, the patentee agreed to disclaim the term of the parent patent as well as any patent claiming benefit of the patent under 35 U.S.C. §120. Since the ‘803 patent claims priority to the parent under §120, that disclaimer seems to be effective to limit the ‘803’s term as well. However, the disclaimer was never particularly filed in the ‘803 case (only its parent). Further, nothing in the record indicates that the examiner acknowledged receipt of the disclaimer in the parent case and there is no evidence that the terminal disclaimer fee was actually paid. The examiner did, however, remove the double patenting rejection had been blocking the issuance of the parent case and the filed terminal disclaimer authorized payment of the fee.

In the reexamination, the USPTO gave full support the examiner’s decision that the terminal disclaimer limited the ‘803 patent term – finding that Harvard could have corrected the problems with the filing back when the patents were pending but that it is too late now.

It is only now that the non-standard disclaimer language of the terminal disclaimer filed in 1989 has an effect … [that] the patent owner [is] attempting to argue that ther terminal disclaimer had no legal effect. . . . [B]ecaues patent owner did not timely seek withdrawal of the terminal disclaimer from the parent patent as per the procedures in MPEP [at the time], patent owner cannot seek now to nullify the effect of the terminal disclaimer after the issued patent has reached its expiry date.

In response, Harvard has now filed a civil action in the Eastern District of Virginia asking the court to overturn the USPTO decision. For now, however, it appears that the mice are finally free although their title (OncoMouse) is still a registered trademark owned by DuPont.

Cornell wins $184 Million in Damages for Past Infringement by HP

Federal Circuit Judge Randall Rader has been sitting by designation as a district court judge in the Northern District of New York.  His case is an epic patent battle between Cornell University and Hewlett-Packard (HP), and the jury trial recently concluded with an $184 million calculated as 0.8% of HP’s $23 Billion in sales.

The patent — No. 4,807,115 — issued in 1989 and expired during the seven years of litigation. It is directed toward an internal computer messaging mechanism that boosts the function of multi-processor computers.

Interestingly, Cornell and HP had discussed a licensing agreement as early as 1988 (even before the patent issued). In 1997, Intel licensed the ‘115 patent for use in its Pentium Pro chips.

Unpublished Thesis: In a pre-trial decision, Judge Rader denied Cornell’s motion in limine and allowed HP to show the jury an unpublished masters degree thesis as 102(b) prior art.  The court found the thesis publicly accessible because the thesis had been cited in a later article that was in the same area of technology as the issued patent (analogous art.).

“After weighing all the circumstances of accessibility, this court views as vitally important the citation of this scholarly work in the Tjaden-Flynn article.”

Inventor Rewards: Unlike most companies, universities generally offer a percentage royalty cut for its employee-inventors. Professor Torng, the inventor of the ‘115 patent, will reportedly receive 25% of the award (if it is ever paid). Torng has announced that he’ll only keep a few million and donate the rest (perhaps over $30 million) to charity.

The post-trial decisions and eventual appeal should be interesting.

First Sale Doctrine: Copyright & Patent

PatentLawPic307In some ways, the Supreme Court case of Quanta v. LGE is a symbol of the ongoing struggle between property law and contract law.  With concepts like the first sale doctrine (and the rule against perpetuities), property law has typically operated to limit dead hand and downstream control over property rights.  These limiting doctrines are largely ignored in a freedom of contract regime.

Vernor v. Autodesk (W.D. WA 2008)

A federal copyright case last week landed on the side of property & the first sale doctrine.  The court denied summary judgment to Autodesk — finding instead that Vernor may well have a legitimate right to re-sell his copies of AutoCAD. Autodesk argues that he only holds a contractual license to use the software (via shrink-wrap license) and does not actually hold full property interests in the programs.

“[T]he transfer of AutoCAD packages from Autodesk to CTA was a sale with contractual restrictions on use and transfer of the software. Mr. Vernor may thus invoke the first sale doctrine, and his resale of the AutoCAD packages is not a copyright violation.”

In copyright law, the first sale doctrine is codified in statute — allowing the owner of a particular copy to resell that copy even if the owner had contractually agreed not to do so. 

“[T]he owner of a particular copy or phonorecord lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” 17 USC 109.

In patent law, the first sale doctrine – also known as patent exhaustion – has no statutory support. Rather, like the doctrine of equivalents, patent exhaustion is grounded in common law principles.  The Quanta case is fairly technical and could result in a narrow low-impact opinion. However, it is also quite possible that the Supreme Court will re-solidify the property concepts.  Expect a decision within the next few weeks.


  • Patry and InternetCases have more details on the Autodesk case.
  • More on Quanta v. LGE.
  • Comment on Chain of Title: M. Slonecker: “For the sake of factual accuracy, AutoDesk “sold” the software to CTA. At a later date CTA auctioned off its assets, and Mr. Vernor was the winning bidder for the software program discs. With copies in hand, Mr. Vernor placed the discs he purchased at the auction on sale at eBay. Apparently AutoDesk is not pleased with this state of affairs and has been engaged in a running battle with Mr. Vernor about his eBay activities.”