BSG Tech v. BuySeasons, Inc. (Fed. Cir. 2018)

On appeal here, the Federal Circuit affirms a lower court ruling that the claims of BSG’s three asserted patents are invalid as ineligible under 35 U..S.C.  § 101. U.S. Patent Nos. 6,035,294, 6,243,699, and 6,195,652.

The claims relate to indexing a database according to “relative historical usage information.”  Thus, in an automobile database with a “model” parameter, the system could display index by the popularity of the various models.  In the claims, the popularity is measured by prior users of the system.  Note here – the claims don’t technically require indexing by the frequency, only being able to access that information.

The patents here have been asserted in 50+ lawsuits – the vast majority of these cases settled up until E.D.Tex. Judge Schroeder ruled them ineligible.

On appeal, the Federal Circuit made fairly quick work of the patents finding:

1. The asserted claims are directed to the abstract idea of considering historical usage information while inputting data; and
2. The claims do not include anything beyond the abstract idea sufficient to transform the claim into a patent-eligible invention.

In making its determination, the court distinguished DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) — holding here that the use of historical information is not “rooted in computer technology.” “Whether labeled as a fundamental, long-prevalent practice or a well-established method of organizing activity, this qualifies as an abstract idea.”

Enfish was a similar case — also involving a self-referential database structure.  That case, the court determined that the focus was on database function and machine efficiency. Here, on the other hand, the historical information is stored just like any other data. “The claims do not recite any improvement to the way in which such databases store or organize information analogous to the self-referential table in Enfish or the adaptable memory caches in Visual Memory.”

Although the court recognized that underlying factual determinations may inform the legal decision of eligibility — especially whether the “something more” is merely routine application of conventional technology — a court is free to decide the issue as a full question of law if the only inventive concept identified in the claim is the ineligible abstract idea.

Here, the only alleged unconventional feature of BSG Tech’s claims is the requirement that users are guided by summary comparison usage information or relative historical usage information. But this simply restates what we have already determined is an abstract idea. At Alice step two, it is irrelevant whether considering historical usage information while inputting data may have been non-routine or unconventional as a factual matter. As a matter of law, narrowing or reformulating an abstract idea does not add “significantly more” to it.

Ineligiblity affirmed.

In re Facebook (Fed. Cir. 2018) (nonprecedential opinion)

Facebook’s U.S. Patent Application No. 13/715,636 claims a method for displaying a set of images after reshuffling or resizing the images.  The Examiner rejected Claim 1 (below) as anticipated; and that rejection was affirmed by the Patent Trial and Appeal Board.  Now on appeal, the Federal Circuit has reversed and remanded — finding that the USPTO had too loosely interpreted the prior art.

The claimed image rendering process begins with a sequence of images. Each image is assigned a “first position” within an “array of contiguous image elements” — in other words, the images are put in a particular order.  When a user adjusts the position or size of an image — there may be a need for reshuffling of the images into “second positions.”  The claimed method includes a requirement that the reshuffled sequence “be contiguous.” — i.e., no gaps in the array.

Notice the reshuffle above that occurred from 1A to 1B when a user resized image 130.

The claims expressly require that the reshuffle retain contiguity.  The problem for the PTO is that the identified prior art (Perrodin) did not require contiguity “in all cases.”   The court wrote:

Nothing about Perrodin’s algorithm required contiguity. It is true that the example depicted in Figures 18 and 19 happened to result in contiguity. But that cannot represent a general rule that would demand contiguity for all images, as required by the claims here. . . . Perrodin’s algorithm could not guarantee contiguity.

So, we have a situation here where the prior art teaches contiguity-after-reshuffle, but is also open to situations where a reshuffle might result in non-contiguity.  The claims – on the other hand – include “a rule requiring [contiguity].”  Since the prior art does not include the rule requiring contiguity, it cannot anticipate.

The court here did not discuss obviousness because the PTO had conceded that “the anticipation and obviousness rejections rise and fall together.”

= = = = =

Claim 1 of the Facebook application reads as follows:

1. A method comprising:

by a computing device, determining a sequence of image elements;

by the computing device, determining, for each image element in the sequence, a first position in an array of contiguous image elements, the first position being based on a size of the image element, an order of the image element in the sequence, and dimensions of the array;

by a computing device, determining, in response to an instruction to adjust the position or size of a first image element, a second position in the array for at least one second image element, the second position determined based on a rule requiring the image elements to be contiguous such that each available image position between the first image element in the sequence and the last image element in the sequence is occupied by an image element; and

by the computing device, providing information to render the array of contiguous image elements.

The USPTO has quietly proposed adding new annual bar dues ($240 – $410) for patent practitioners as well a continuing legal education (CLE) requirement.  The proposal is buried in the Table of Proposed Fees that will serve as the basis for an upcoming September 6, 2018 PPAC meeting on fees.

The Agency has not yet released any other information regarding the proposal. However, the suggestion from the fee requirement here is that the CLE requirement would only be a “soft” requirement — if you complete the CLE then the Annual Active Patent Practitioner Fee would be reduced.  The USPTO previously proposed annual fees back in 2003.

by Dennis Crouch

In July 2018, Amgen filed its petition for certiorari asking the Supreme Court to reject the Federal Circuit’s imposition of separate “written description” and “enablement” requirements along with their various requirements and standards.  Amgen argues that the Court should simply follow the statute — requiring “a written description of the invention . . . in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains . . . to make and use the same.”  Amgen Inc. v. Sanofi, Aventisub LLC, SCT Docket No. 18-127 (Petition filed July 23, 2018) (Cert Petition).

The basic push here is against the “possession” standard that serves as the core of the Federal Circuit’s written description requirement.  Apart from any policy arguments — Amgen argues that the statute spells out the test — and it is enablement, not possession.  Rather than focusing on what the inventor possesses, the Act requires the specification simple teach others — “as to enable an person skilled in the art . . . to make and use” the invention.

The brief provides a statutory linguistic argument that makes sense — the “grammatical structure [is] inescapable” and shows that statute provides one standard for judging the written description — the enablement standard.

This statutory argument goes a long way, but in my view will lack compelling force to the Supreme Court (as it did for the Federal Circuit in Ariad).  Rather, for 112(a), historical cases are the key since the language of 112(a) all stems directly from the Patent Act of 1793.  A grammar diagram (seemingly based upon modern language usage) is a rather weak argument for interpreting this olde language.  Rather, a successful argument here should seen in light of the history of the statute and how it has been directly addressed by the Supreme Court over the past 225 years.  In Ariad, the Supreme Court looked particularly to the Supreme Court decision in Schriber-Schroth Co. v. Cleveland Trust Co., 305 U.S. 47 (1938) as recognizing a separate written description (possession) requirement that goes beyond mere enablement.  Although the cert petition repeatedly cites Schriber-Schroth it doesn’t actually address the portion relied upon by the Federal Circuit that served as the crux of its decision.

by Dennis Crouch

I just bought my first electric car – 2018 Honda Clarity.  Love it.  I should say that it is not fully electric — rather it is a PHEV (Plug-in Hybrid Electric Vehicle).  When fully charged, the car goes about 50 miles on battery — then becomes a hybrid vehicle once the battery juice is spent.  Since we generally drive less than 50 miles per day, the car has used almost no gasoline — although the engine will kick-in as a support at times when you need extra power.

The dual power vehicle system has been the subject of lots of patent litigation stemming from Paice LLC’s enforcement of its U.S. Patent Nos. 7,237,634 and 8,214,097.  The Paice inventor, Alex Severinsky, claims to have invented the “hyperdrive power-amplified internal combustion engine power train” that uses a variety of metrics to determine whether to use the Battery, the Engine, or Both Simultaneously.

Back to my new Clarity.  I tend to be fairly slow to change cars – until last week I was still driving my 1998 Honda Civic from law school days.

In addition to the “Severenski hyperdrive” possibilities — I’m also enamored with the fact that I’ll only be stopping at the gas station when taking a road trip.  In general, electric motors are more efficient than gas engines. Electricity production tends to have a better environmental impact than burning gas, and the zero exhaust in my garage is really nice.  For this battery size, the car fully charges in about 6 hours with my ordinary 110 power supply.

I had been eyeing other PHEV’s such as Volvo’s XC90 or the Porsche Cayenne. However, those vehicles have a much lower electric-only range and are well beyond my law-professor-salary range.  In addition to being much cheaper, the Clarity also qualifies the buyer for a $7,500 federal tax credit.

Finally, I’ll note that the Clarity is my first electric car — but not my first electric vehicle.  I still ride my Volton eBike to the law school several days each week (depending on the weather).

JTEKT Corp. v. GKN Auto (Fed. Cir. 2018)

GKN’s Patent No. 8,215,440 covers a 2wd/4wd dual drivetrain.  This general type of drivetrain was already well known in the automotive industry — and the claims of the patent appear to my eyes to be quite broadly written.

JTEKT (a subsidiary of Toyota) makes automotive components.  Although JTEKT does not yet have a competing product on the market, saw the ‘440 patent as a major roadblock and filed an Inter Partes Review (IPR) proceeding — asking the USPTO to cancel the patent claims. During the IPR, GKN disclaimed the broadest claims — and the PTO confirmed the validity of the remaining claims. (The key limitation appears to be that the system coupling is “without a differential gearing”.)

On appeal the Federal Circuit has refused to hear the case — finding that the case lacked Constitutional standing since JTEKT had not alleged any “actual injury.”  The case here follows Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168 (Fed. Cir. 2017).  In that case the patent challenger Phigenix was not planning to actually use the Immunogen patent, but argued its injury was based upon the competitive advantage that the patent gave to its owner.  Although that injury might be sufficient for standing purposes — the Federal Circuit still dismissed the case because Phigenix failed to present sufficient facts to make the injury plausible.

Standing is an oddball with IPRs.  Anyone can file an IPR request and the USPTO will consider that request.  The Patent Act directly states that a losing petitioner has a right to appeal if it loses the IPR.  (A party “who is dissatisfied with the final written decision of the Patent Trial and Appeal Board . . . may appeal the Board’s decision . . . to the United States Court of Appeals for the Federal Circuit.” 35 U.S.C. § 141(c).) Still, the Supreme Court has repeatedly held that the Constitution requires an actual controversy between the parties — and that the Article III courts cannot offer advisory opinions. A particular element in question for appellate IPR standing is injury-in-fact —  “an injury that is both ‘concrete and particularized.’” Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016)(non-IPR case).

In ordinary lawsuits, this sort of standing is established at the lower court level. Here, however, it must be done at the appellate level (since the PTO doesn’t worry about the issue).  On appeal, JTEKT was given an opportunity to provide evidence of injury-in-fact – but failed:

While JTEKT has submitted two declarations in support of its standing, JTEKT’s problem is that these declarations do not establish that its planned product would create a substantial risk of infringing [the particular claims on appeal] or likely lead to charges of infringement.

Appeal dismissed.

Note here – Folks interested in this issue should consider the pending Supreme Court petition in RPX Corporation v. ChanBond LLC (SCT Docket No. 17-2346).

By Dennis Crouch

(1) Under Dir. Iancu, the USPTO appears to be moving away from eligibility rejections. The chart below shows that the past year about 8% of all examiner rejections were eligibility rejections. Over the past three months, that statistic has dropped to about 6.6%. During that time, the PTO has officially changed its approach via the Berkheimer memo, and Dir. Iancu’s leadership lends authority to the Office’s approach to broader eligibility.

(2) AIA Trial institution rates continue to fall – although slightly. Post-Grant Review proceedings are not becoming popular. Several hundred patents have been subjected to multiple (3+) petitions challenging validity.

(3) Although I am not clear how this will happen, the USPTO expects that its spending and revenue will level out perfectly by the end of the fiscal year.

(4) Several bills are pending in Congress. None are currently likely to pass.

(5) Draft of 2018-2022 USPTO Strategic Plan to be released later in August.

(6) USPTO AI Conference set for December 5th, 2018, USPTO Madison Auditorium.

With two-months left in the fiscal year, the USPTO is on-track for another 300,000+ patent year. The chart above shows the number of utility patents issued each fiscal year for the past two decades. The current forecast for FY2018 is a bit below FY2017 – but still the second highest number of patents issued in a single year. Examiners will push to make their quotas prior to the end of the year – however those will not be reflected in issued patents in FY18 because of the lag between allowance and issuance.