In a nuanced set of opinions the Federal Circuit – with no clear majority opinion – holds merely that:
The final written decision of the Board in this case is vacated insofar as it denied the patent owner’s motion to amend the patent. The matter is remanded for the Board to issue a final decision under § 318(a) assessing the patentability of the proposed substitute claims without placing the burden of persuasion on the patent owner.
The ‘leading opinion’ by Judge O’Malley goes on to explain:
Because the participating judges have different views—both as to the judgment we should reach and as to the rationale we should employ in support of that judgment, as explained below, today’s judgment is narrow.
This result was supported by a 7-member panel.
The opinion package, is 148 pages in length and includes five separate opinions walking the question of deference to PTO Decisionmaking.
Opinion filed by Circuit Judge O’MALLEY, in which Circuit Judges NEWMAN, LOURIE, MOORE, and WALLACH join, and in which Circuit Judges DYK and REYNA concur in result.
Opinion filed by Circuit Judge MOORE, in which Circuit Judges NEWMAN and O’MALLEY join.
Opinion filed by Circuit Judge REYNA, in which Circuit Judge DYK joins, and in which Chief Judge PROST and Circuit Judges TARANTO, CHEN, and HUGHES join in part.
Opinion filed by Circuit Judge TARANTO, in which Chief Judge PROST and Circuit Judges CHEN and HUGHES join, dissenting from the judgment, and in which Circuit Judges DYK and REYNA join in part in other respects.
Opinion dissenting from the judgment filed by Circuit Judge HUGHES, in which Circuit Judge CHEN joins.
The setup and context here is ripe for Supreme Court review. More to come later.
Don’t stare too deeply into the pattern above – it embodies Columbia Sportswear’s U.S. Design Patent No. D657093 – covering “the ornamental design of a heat reflective material, as shown and described.” The recent $3 million jury verdict in Columbia Sportsware v. Seirus Innovative Accessories appears to be the first post-Samsung verdict on design patent damages.
The design patent damages verdict here is important for Columbia because the jury found the parallel asserted utility patent claims invalid as both obvious and anticipated. [ColumbiaSportsVerdict]
If you remember, the Patent Act includes a special profit-disgorgement provision for design infringement damages requiring that “Whoever during the term of a patent for a design … sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit.” 35 U.S.C. 289.
In the case, the district court had already ruled on summary judgment that Seirus infringed and so the only question for the jury was damages. [Columbia Infringement Decision, holding that as a matter of law “an ordinary observer familiar with the prior art would be likely to confuse Seirus’s design with Columbia’s patented design.”]
In Samsung, the Supreme Court held that, the relevant article of manufacture used as the profit-disgorgement baseline need not be the end product sold to the consumer but might be only a component of that product. As the patent images show below, the case here involves multi-component parts (clothing) and the patented inner-layer can be seen as one of the components.
Here, in Columbia Sportswear, the court instructed the jury to “First, identify the article of manufacture’ to which the infringed design has been applied. The article of manufacture may be the product as a whole or a component of that product. Second, calculate the infringer’s total profit made on that article of manufacture.” The jury instructions then explain this process as (1) first identifying whether the accused-product being sold is multi-component and then, if so, (2) considering a set of factors to determine whether the “article of manufacture” is the whole product or some sub-component. These factors include: the scope of the design as patented; the relative prominence of the design within the product as a whole; whether the design is conceptually distinct from the product as a whole; and the physical relationship between the patented design and the rest of the product. These factors match the test called-for in the Government brief in Samsung v. Apple, but that the Supreme Court declined to expressly articulate.
The jury instructions also explain the burdens:
Columbia [the patentee] bears the initial burden of producing evidence identifying the article of manufacture for which it seeks profits. Columbia may meet that burden by showing that Seirus applied the patented design to a product that was sold and further proving Seirus’s total profit from the sale. Seirus bears the burden of proving that the article of manufacture is something less than the entire product.
A snippet from the jury award is included above. You’ll note that the jury was not asked to actually define the article of manufacture, but the $3 million figure appears to be Seirus’s profits on all of its infringing sales.
At this point, it looks like both parties will appeal various aspects of the decision (after first filing post-verdict motions with the district court). Going back to Apple v. Samsung the case has been remanded back to Judge Koh who is considering party briefs on the article-of-manufacture issue and consequently. [AppleBrief][SamsungBrief]
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In a bit of wild civil procedure, the lawsuit here was originally filed in Oregon but jumped down to Southern California on September 1, 2017 — less than three weeks before the trial. The transfer was deemed appropriate under the TC Heartland case. The trick is that Oregon Judge Hernandez also had himself temporarily transferred to the S.D. Cal. so that he could continue hearing the case.
Suppes v. Katti and Fender (Fed. Cir. 2017) (non-precedential)
I should probably be a bit careful writing about this case because of its closeness to home. Galen Suppes is a recently fired engineering professor from University of Missouri (my employer); Chris Fender is the director of our University Technology Transfer office, known here as the Office of Technology Management & Industry Relations and Katti is a professor of radiology and physics.
When it hired Suppes, the University (a wing of the State of Missouri) bound Suppes to an agreement that, inter alia, gave the University ownership and control over the filing of patents stemming from Suppes future inventions.
The University “shall have ownership and control of any Invention or Plant Variety developed in the course of the Employee’s service to the University.” University of Missouri Collected Rules and Regulations § 100.D.1.a.
The basis of Suppes lawsuit was that the University took control, but then failed to actually file patent applications on his inventions.
In the appeal, Suppes (acting pro se) presented some interesting arguments:
That pre-patent invention ownership is a right reserved to the people under the 10th Amendment of the U.S. Constitution and that the State thus violated his constitutional rights by taking ownership and then failing to file for patent rights.
The State actions stifled the progress of science and thus violatedhis due process rights; and
The State violated Suppes 5th Amendment rights by taking his invention-rights without just compensation.
These were all rejected by the the district court, and that decision is affirmed on appeal (nonprecedential opinion).
One way to think about Suppes argument here is to consider the employment contract as a state law that applies to anyone who works for the state (at least this branch of the state). And, the state law says that the University (rather than the inventor) owns the inventions.
In discussing inventorship rights pre-patent-application, the Federal Circuit makes an interesting set of holdings. First, the court holds that the Constitution does not directly set any limit on inventorship rights. Rather, the Article I provision is simply an authorization to Congress to act:
The Constitution, standing alone, grants the power to Congress to “secur[e] for limited times to . . . inventors the exclusive right to their . . . discoveries.” Any rights Mr. Suppes has in his inventions are thus subject to Congress’s implementation of the Constitution by statute. 35 U.S.C. § 261 provides that “[a]pplications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”
Of course, Section 261 only directly applies to “applications,” “patents,” and “interest[s] therein.” A straightforward interpretation of the provision is that Section 261 says nothing about pre-application assignments. As such, pre-application assignment of rights falls back to state law. “The allocation of interests prior to the filing of a patent application is thus a matter of state contract law and is not preempted by the Patent Act.” Later, the court reiterates that no Federal public policy (such as preemption) would void the state contract:
The determination of whether a statute prohibiting the assignment of “inventive thoughts” would promote the Progress of Science is therefore, at least initially, allocated to Congress by the Constitution. To the extent that Mr. Suppes is arguing that the contract is void as a matter of public policy, that is once again a matter of state contract law.
In the end, Suppes easily loses this case, but it raises some interesting issues in my mind, including: (1) a tacit recognition that states could enact a set of pre-filing quasi-patent rights without those being preempted by Federal Law – perhaps as an expansion of state trade secrecy law; and (2) an implicit call for uniform law associated with ownership and transfer of pre-filing invention rights.
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Follow-up reading: Regents of University of New Mexico v. Knight, 321 F.3d 1111 (Fed. Cir. 2003).
Senator Orrin Hatch has been a deep participant in all major legislative patent reform initiatives for the past 35 years. In a recent update, Sen. Hatch lists upcoming issues for legislative patent reform:
Venue: The Senate will consider the impact of TC Heartland and whether further guidance is needed from Congress. The statement suggests Hatch’s position that the limitations are beneficial because they limit “patent trolls’ ability to forum-shop.”
Inter Partes Review: Hatch suggests that there may be ways to better calibrate the AIA Trials so that it is easier to cancel “unsound patents” while also ensuring that “valid patents” survive the review process.
Eligibility: Hearing calls for eligibility reform, Hatch indicates that the Supreme Court has recently applied the non-statutory exceptions to eligibility “in a way that has caused considerable uncertainty for technology and life sciences companies.”
In its first action for the October 2017 term, the Supreme Court has (inter alia) denied Certiorari in three pending Patent Cases:
16-1288 SYNOPSYS, INC. V. MENTOR GRAPHICS CORPORATION
16-1442 ARUNACHALAM V. SAP AMERICA, INC.
16-1427 OLEKSY V. GENERAL ELECTRIC CO.
Of these, only Synposis was truly interesting. That case asked for a review of the law and procedure of the Abstract Idea inquiry under Section 101:
In Alice Corp. Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), the Court reaffirmed the two-part test for determining whether an invention is patent-eligible under 35 U.S.C. § 101: (1) whether the patent claims are directed to a patent ineligible concept, such as laws of nature, natural phenomena, or abstract ideas, and (2), if so, whether the elements of the claim contain an “inventive concept” that transforms the ineligible concept into an invention that is patent-eligible. Here, a panel of the Federal Circuit held that in determining whether a patent is directed to an abstract idea, a court must ignore the specification and evaluate only the express limitations in the claims. The panel further held that the accused patents failed the second step of Alice because the claims do not explicitly call for involvement of a computer and therefore could not be characterized as an improvement to computers. The questions presented are:
1. Whether the § 101 inquiry requires courts to ignore the specification, as the Federal Circuit held, or whether courts should ascertain the true scope of the claims in light of the specification and intrinsic record in determining whether they are drawn to a patent-ineligible concept.
2. Whether an otherwise revolutionary technological breakthrough is not an “inventive concept” under the second step of Alice merely because the court believed the breakthrough could theoretically be implemented without a computer.
In NobelBiz v. Global Connect, the Federal Circuit has asked the winning appellant Global Connect to respond to NobelBiz’s Petition for Rehearing en Banc with response due October 13.
The case here focuses on whether the district court should have particularly construed the claim term “replacement telephone number” (as the Federal CIrcuit majority ruled) or instead was it permissible for the district court to let the infringement case to go to the jury on the simple and ordinary term (as the District Court did and supported by Judge Newman’s dissent). NobelBiz presents three questions:
May a district court ever assign a “plain and ordinary meaning” construction? Or is an express construction required whenever a litigant asserts an O2 Micro “dispute,” as dictated by NobelBiz and Eon?
May the Federal Circuit narrow claim scope without finding lexicography or prosecution disclaimer, by parsing the intrinsic record and relying on “extra-record extrinsic evidence,” as occurred in NobelBiz?
May a district court refer the question of infringement to a jury when claim terms are assigned their plain and ordinary meaning?
For Friday enjoyment, I post Pirri v. Cheek. So far we only have a complaint associated with the dating site Cheekd that bombed on Shark Tank but is now gaining steam. [h/t Prof. Brian Love]
The idea behind Cheekd is “Online Dating in Reverse” – basically when you meet someone in person, you give them a business card links to your online dating profile. There is even a patent – U.S. Patent No. 8,543,465 claiming the process. [US8543465]. You can read Claim 1 for yourself, but my quick review lets me classify the patent as quite low quality; very difficult to infringe; and likely invalid under 101 (abstract idea).
Now, here comes Alfred Pirri Jr, a mild-mannered “single man living in the New York tri-state area.” Pirri had some difficulty finding a date — notably, he “keenly noted through his personal experiences that, although there were plenty of single people living in New York City, there were very few efficient ways a person could use to meet single people in order to date them.” In particular, Pirri lamented that “In a crowded bar, a person could be standing 10-feet from the person’s future spouse and never know it.” Around 2006, Pirri then had the idea – of reverse online dating as described above although he never filed for patent protection, he did consult with a patent attorney who “confirmed that no identical nor similar ideas were ever disclosed in registered patents, pending patent applications and non-patent publications.”
Although Pirri kept his idea quite secret, he did disclose the details of his idea to his personal counselor Joanne Richards (a licensed clinical social worker). According to the allegations, Richards disclosed the idea to a social acquaintance — “That social acquaintance was no other than Defendant Lori Cheek, one of the so-called inventors of the Cheek’d dating website and app.”
The tale goes on, but now we reach the lawsuit claiming:
Unenforceability of U.S. Patent No. 8,543,465 (for lying about inventorship);
Unjust Enrichment;
Breach of Fiduciary Duty;
Misappropriation of Trade Secrets;
Unfair Competition;
Conversion; and
Fraud.
So far, we only have a complaint, but it will be interesting to watch to see how this moves forward. Assuming the allegations are are true, how do you rule?
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UPDATE: Lori Cheek has contacted me to say that the entire story is a bizarre fabrication.
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1. A method for personal meeting comprising the steps of: an initiator developing a profile with a central organization; the central organization providing the initiator by computer with a number of cards on which are printed at least an icebreaker, a website designation, and a code comprising elements corresponding to the icebreaker printed on the card; the initiator giving the card to at least one recipient; the recipient going to the website designated on the card; the recipient entering the code printed on the card at the designated website; the recipient being given access to the initiator’s profile with the central organization; the recipient sending a message to the initiator; and the initiator tracking activity comprising:
the central organization storing data by computer corresponding to when the recipient enters the code from the card bearing the specific icebreaker; the central organization storing data by computer corresponding to when the recipient sends the message to the initiator after the recipient has received the card bearing the specific icebreaker; the central organization compiling data by computer corresponding to a number of times the recipient enters the code from the card bearing the specific icebreaker and a number of times the recipient sends the message to the initiator after the recipient has received the card bearing the specific icebreaker; and the central organization displaying the compiled data by computer to the initiator.
Prof. Christopher Beauchamp has added further to the historical analysis relevant to the question of whether it the AIA-trials – trial-like administrative patent revocations – are Constitutionally proper. That question juxtaposes contemporary expansive administrative law against the Constitutional notion that “judicial power [rather than administrative power] shall extend to all cases” and the requirement that the 1791 right to a Jury Trial be preserved. Although a law professor, Beachamp is also a legal historian (Ph.D. in History from Cambridge University) and his his legal publications center on questions of legal history.
Beauchamp’s newest essay focuses on the first known patent case in U.S. history. Beauchamp writes:
The first known patent case in the United States courts did not enforce a patent. Instead, it sought to repeal one.
After reviewing a set of previously uncited archived decisions, Beauchamp concludes that
These sources suggest that the early statutory provisions for repealing patents were more widely used and more broadly construed than has hitherto been realized. They also show that some U.S. courts in the early Republic repealed patents in a summary process without a jury, until the Supreme Court halted the practice.
One of Beauchamp’s most interesting conclusions here is that the early (i.e., pre-Bill-of-Rights) revocation proceedings should probably be seen as creating a break from prior English tradition. Thus, for patent revocation, the focus should be on the jury right as contemplated by the repeal process found in Section 5 of the 1790 Patent Act, which allowed for any member of the public to seek cancellation. Unfortunately for clear resolution of the Oil States question, the original Patent Act is ambiguous as to whether the repeal should be tied to a jury trial.
There is much more to learn from this short (34 page) paper. [Download Here]
The USPTO has completed its patent issuances for Fiscal Year 2017 which ends for the Federal Government on September 30, 2017. The primary raw number 315,386 utility patents issued in FY 2017. This is the most patents issued by the USPTO in a single year and tops the record set in FY 2016 by 11k – a healthy but still modest 3.5% increase. Although the PTO has slightly reduced its number of patent examiners, the allowance-rate for 2017 is at an all-time-high (71.4%)
USPTO Backlog of unexamined applications remains steady at about 540,000 – this is slightly more than the number of disposals (allowances + abandonments) completed by the PTO in a year. PTO’s reported grant rate
The validity of Smith’s patent turns on proper definition of the claim term “body” as used in U.S. Patent No. 6,732,817. With the basic question being: what is the “broadest reasonable interpretation” of the term “body” as used by the patentee. In its decision here, the Federal Circuit has reversed the PTAB unpatentability conclusion (ex parte reexam) — holding that the PTO had seemingly forgotten that BRI requires a “reasonable” construction.
The patent is directed to an oil drilling tool that can collapse down to fit through a small borehole and then expand-out to fill a larger borehole. Claim 28 shown below shows that the claim basically includes two elements, a body and an arm. The claim itself does not include any further express limitations on the Body. Still, it is clear from the patent document that the claimed body is something totally different from the human figure shown above-right (from a different patent). Rather, the specification describes “a generally cylindrical tool body 510 with a flowbore 508 extending therethrough” and “one or more moveable, non-pivotable tool arms 520.”
The PTO interpreted the term in-context but still in a broad manner – finding that the term “Body” can encompass additional components such as the mandrel and cam-sleeve and noting that the specification does not actually define the term. The Board noted that the term is generic – similar to “member” or “element” that “by itself provides no structural specificity.” Here, in particular, the claim was directed to the entire tool, but only claimed two parts – the body and arm. It was perfectly reasonable, according to the Board, for the examiner to interpret Body as including other unclaimed elements of the tool. This broad definition made it easy to find the claims unpatentable based upon a single prior art reference.
On appeal, the Federal Circuit has reversed – holding that the Board’s construction was “unreasonably broad.” Here, although reasonableness is – in most circumstances – usually a question of fact, because it is part of claim construction the Federal Circuit calls it a question of law with de novo appellate review. Here, the court found that “body” should be more narrowly construed — even at its broadest reasonable scope. In reaching its conclusion, the Federal Circuit found that the Board erroneously based its broad interpretation upon the fact that the specification did not “in and of itself proscribe the Examiner’s construction.” On appeal, the Federal Circuit noted that the BRI is does not extend so far as to cover all definitions not prohibited by the specification:
The correct inquiry in giving a claim term its broadest reasonable interpretation in light of the specification is not whether the specification proscribes or precludes some broad reading of the claim term adopted by the examiner. And it is not simply an interpretation that is not inconsistent with the specification. It is an interpretation that corresponds with what and how the inventor describes his invention in the specification, i.e., an interpretation that is “consistent with the specification.”
Slip op., quoting In re Morris, 127 F.3d 1048 (Fed. Cir. 1997). The court went on to reiterate that a term’s ‘broadest reasonable interpretation’ is narrower than the the logically ‘broadest possible interpretation’ of a claim.
Looking through the specification it does appear, indeed, that the patentee did not use the “body” term as a generic “member,” but used it consistently to refer to a cylindrical tool body that was separate and distinct from the other elements of the tool. However, one important issue that the court did not discuss is that of claim differentiation. Pointedly, many the claims focus on particular bodies: “tubular body”; “tool body”; and “a body including a plurality of angled channels.” The court does not consider here whether those seemingly more narrow recitations of the element should be seen as broadening the definition of the bare “body.”
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Claim 28:
28. An expandable downhole tool for use in a drilling assembly positioned within a wellbore having an original diameter borehole and an enlarged diameter borehole, comprising:
a body; and
at least one non-pivotable, moveable arm having at least one borehole engaging pad adapted to accommodate cutting structures or wear structures or a combination thereof;
wherein said at least one arm is moveable between a first position defining a collapsed diameter, and a second position defining an expanded diameter approximately equal to said enlarged diameter borehole.
The following comes from Joe Matal’s Director’s Forum Blog. Matal is acting as Director of the PTO (“Performing the Functions and Duties”) pending Senate Confirmation of Andrei Iancu.
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Patents for Humanity, the USPTO’s top honor for patent owners and licensees who use game-changing technology to meet humanitarian needs, is now accepting applications for the 2017 – 2018 cycle. Anyone who owns or licenses a U.S. patent or patent application is eligible. Winners receive an acceleration certificate to expedite proceedings at the USPTO, as well as public recognition of their work.
Patents for Humanity recognizes inventions that address global development issues such as medicine, nutrition, sanitation, energy, and living standards. We invite innovators of all kinds to tell their stories of helping underserved communities through the power of technology. Individuals, corporations, nonprofits, small businesses, academic institutions, and government agencies are all welcome to apply.
This year marks the fourth cycle of the Patents for Humanity program. Previous awardees have improved lives worldwide. Winners from the last round include Case Western Reserve University, for a low-cost malaria detection device, and startup company GestVision, Inc., for a quick diagnostic test for preeclampsia, a potentially life-threatening pregnancy complication.
If your organization uses patented technology to help address basic human needs, we encourage you to participate. The USPTO will accept applications through December 8. Please submit your completed application online through the Patents for Humanity page of the USPTO website. You can send any questions to patentsforhumanity@uspto.gov.
Peter Menell and Daniel Yablon, Star Athletica’s Fissure in the Intellectual Property Functionality Landscape. The article advises courts to “disregard the unsubstantiated dicta in Star Athletica” that potentially promotes the “protection for functional features of useful articles outside the auspices of the utility patent system.” For practitioners, the professors’ concerns should likely be considered as strategies for layering of intellectual property rights.
Sarah Burstein, The ‘Article of Manufacture’ Today. Burstein argues, inter alia, for the historical meaning of the phrase “article of manufacture” in interpreting and applying 35 U.S.C. § 289. The article is relevant to Step 1 of the Supreme Court’s design patent analysis from Samsung v. Apple: identify the ‘article of manufacture’ to which the infringed design has been applied.
Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2017)
An invention that is “on sale” prior to the associated patent’s critical filing date is not patentable. 35 U.S.C. 102. Although the AIA used the same “on sale” wordage as pre-AIA 102(b), many believe that it should interpreted differently. The particular question is whether private and non-public offers-to-sell still count as prior art post-AIA. In Helsinn, the Federal Circuit did not fully answer the question since some information regarding Helsinn’s pre-filing sale had been made public — still the invention was not publicly disclosed. Thus, Helsinn made the limited holding that “after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of the sale.”
In its petition for en banc review, Helsinn asks the following question:
Does mere public disclosure of the “existence” of a sale trigger the on-sale bar under 35 U.S.C. § 102(a)(1) of the America Invents Act (“AIA § 102(a)(1)”), even though the invention was not made “available to the public” before the critical date?
In June, Helsinn filed for en banc review with support from the big players:
The decision here is important as one example of a single-reference obviousness decision upheld by the Federal Circuit on appeal. Here, the prior-art is a published international patent application also owned by the patentee and with overlapping (but not identical) inventorship.
Idemitsu’s U.S. Patent No. 8,334,648 covers an organic LED and claims priority back to a July 19, 2002 Japanese patent application. The asserted prior art is an international application (PCT) publication from a two-weeks prior – July 4, 2002. International Publication WO 02/052904 (claiming priority to December 2000 and named Arakane). At this point it is unclear why, but Idemitsu never challenged the status of prior-art status of Arakane.
In its obviousness analysis, the Board found that Arakane taught all of the elements of ‘648 patent’s challenged claims and that it would have been obvious to combine them in the way claimed. On appeal, the Federal Circuit has affirmed – holding that the Board had made reasonable conclusions both on the facts and the law.
The case includes a couple of procedural findings — importantly the Court permitted (at least in this situation) the PTAB to reach factual and legal conclusions not directly addressed in the petition.
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Note: The opinion here does not discuss why the single-reference decision was based upon OBVIOUSNESS rather than ANTICIPATION.
Important mandamus order narrowing patent venue. In re Cray (Fed. Cir. 2017) [Read the Case]
Following the Supreme Court’s decision in TC Heartland, the debate has moved to interpretation of the requirement that an infringement defendant have either residence or “a regular and established place of business” in the chosen venue.
Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business. 28 U.S.C. § 1400(b).
In Raytheon v. Cray, the defendant is a Washington corporation with facilities in Austin and Houston – both of which are outside of the Eastern District of Texas. Still, E.D. Texas Judge Gilstrap found the company to fit within the regular and established place of business venue requirement based upon evidence that. Two Cray sales executives worked from home within the district – developing new sales and accounts worth ~ $350 million over the past 7 years. The execs received reimbursement for certain utilities and charges within the district and publicly advertised their “office” phone numbers within E.D. Texas.
In the process of deciding its case, Judge Gilstrap also set forth an open four-factor test finding a regular and established place of business: physical presence, defendant’s representations, benefits received, and targeted interactions with the district.
As a general matter, Judge Gilstrap’s interpretation appears fairly broad, and on writ of mandamus, the Federal Circuit has rejected Gisltrap’s analysis and directed that he transfer the case to a more appropriate venue.
As a patent-focused statute, the Federal Circuit applies its own law to interpret the scope of 1400(b). Here, the Federal Circuit interprets the requirement of a “regular and established place of business” to require three key elements: (1) a physical place within the district (2) that is a regular and established place of business (3) of the defendant. The key focus here – regular and established place of business – i.e., a place of business that is both regular and established. According to the appellate panel these elements are requirements of the statute and all of them “must be present” for venue to be proper under the provision. Thus:
The district court’s four-factor test is not sufficiently tethered to this statutory language and thus it fails to inform each of the necessary requirements of the statute.
According to the appellate panel, a court’s venue inquiry walk step-by-step through each of the requirements of the statute to ensure that each is present. “We stress that the analysis must be closely tied to the language of the statute.”
In looking at the application in this particular case, the Federal Circuit found that the home office and local sales were not sufficient to fill the statutory requirements.
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The decision here further solidifies the impact of the TC Heartland case — spreading jurisdiction out and away from E.D. Texas.
Of note, in its analysis, the Federal Circuit paid special attention to historical application of the statute that was originally adopted in 1897. At that time, one congressman indicated its purpose was to “give original jurisdiction to the court where a permanent agency transacting the business is located.” 29 Cong. Rec. 1900 (1897) (statement of Rep. Lacey). The court favorably cited pre-Federal-Circuit cases from the various circuits. Phillips v. Baker, 121 F.2d 752, 756 (9th Cir. 1941) (“A ‘regular place of business’ is, obviously, a place where such business is carried on ‘regularly’ and not merely temporarily, or for some special work or particular transaction.”); Knapp-Monarch Co. v. Casco Prods. Corp., 342 F.2d 622, 625 (7th Cir. 1965); Remington Rand Bus. Serv. v. Acme Card Sys. Co., 71 F.2d 628, 629 (4th Cir. 1934); Am. Cyanamid Co. v. Nopco Chem. Co., 388 F.2d 818, 820 (4th Cir. 1968); Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1185–86 (7th Cir. 1969); Univ. of Ill. Found. v. Channel Master Corp., 382 F.2d 514, 516 (7th Cir. 1967); Shelton v. Schwartz, 131 F.2d 805, 808 (7th Cir. 1942). In addition, the court revisited its important Cordis decision on point: In re Cordis Corp., 769 F.2d 733 (Fed. Cir. 1985).
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The opinion here is by Judge Lourie and joined by Judges Stoll and Reyna, and the basic holding is that the statute means the same as it did in 1897 and the same as it did in the 1940s and the same as it did in the 1980s (the last time it was interpreted directly). Even if taken en banc, I would not expect any significant departure from this result.
Depending upon your mood, this case might make you happy, sad, angry, or afraid — perhaps even fill you with love.
Daniels is known for creating the Moodsters – five anthropomorphic color-coded, gendered characters each representing a single abstract emotion that live in an world inside a child’s mind.
This might sound familiar if you have watched the Disney/Pixar movie Inside Out.
The recently amended complaint alleges Copyright Infringement and Breach of Implied Contract:
Daniels conceived of The Moodsters, a children’s animated television pilot (“The Moodsters Pilot”) starring five color-coded anthropomorphic characters, each individually representing a single emotion: happiness, sadness, anger, fear, and love. These characters live in an abstract world inside a child. For instance, early materials about The Moodsters explain that “[s]omewhere deep down inside every child is a wonderous world where The MoodstersTM live.”
According to the allegations, Moodsters was pitched to several folks at Disney/Pixar 2005-2009. In 2010, Disney began work on Inside Out.
Following an IPR administrative trial, the Patent Trial & Appeal Board (PTAB) concluded that the challenged claims of NFC’s U.S. Patent 6,700,551 are unpatentably obvious. The focus of the dispute is on a pre-AIA inventorship claim — The PTAB rejected NFC’s attempt to claim priority to its date of invention.
Although the Patent Act itself has never directly defined inventorship, a substantial body of cases have worked through the problem. In general, the courts have determined that invention is a two-step process that begins with a complete mental conception of the invention and concludes with reducing the invention to practice (i.e., creating a working model). Most of the inventions claimed within patent documents are not actually reduced to practice prior to the application filing. Rather, that substantial majority relies upon the judicially created exception that the filing of a patent application should be deemed (in the eyes of the law) a reduction to practice.
Here, NFC’s near-field communication patent application claims priority back to an original French patent application filed March 25, 1999, while the primary prior art reference has an effective date of February 8, 1999. If the patent in question was a post-AIA patent, NFC would easily lose. Here, however, NFC has the opportunity to claim back to its date of invention because its patent fits under the old law.
Under the old law, the inventor could claim priority back to that initial date of conception. However, that was generally a difficult prospect because the courts also required extensive post-conception diligence on the part of the patentee to reduce that invention to practice. It is much simpler if the patentee did actually reduce the invention to practice prior to filing because diligence is no longer required post-RTP (just no suppression, abandonment, or concealment). Although this ability to claim back to a date-of-invention is a benefit to patentees, it is usually thought of as something of a trap because of the high evidentiary burden placed on the inventor for proving prior conception, diligence, and reduction to practice.
Here, NFC argued that the named inventor (Charrat) and his team had reduced the invention to practice as of November 1998 by creating a device embodying the invention. The PTAB rejected the argument — holding that a portion of the prototype had been built by a third party chip fabricator (Concept Electronique – CE) and, therefore, Charrat isn’t the one who reduced it to practice. According to the Board, when a third-party reduces the invention to practice, that RTP only inures to the inventor if the inventor can show that he had already conceived of the invention and communicated that to the third party. “For Charrat to receive the benefit of that reduction to practice, the Board read [the Federal Circuit] precedents as requiring that Charrat conceived the claimed invention and communicated the underlying subject matter to CE.”
On appeal, the Federal Circuit has reversed – finding that NFC had provided sufficient evidence of conception.
Here, Charrat provided testimony of his conception, but oral testimony alone is insufficient to prove prior invention. Charrat also provided a data-sheet order to CE. The Board found that the data sheet had “no named author” – on appeal, however, the Federal Circuit credited the document’s statement “By BC” (BC are Charrat’s initials). “Thus, contrary to the Board’s finding, the data sheet does name an author.”
The PTAB also found it odd that there was not more specific evidence (such as an email) from Charrat to CE that provides information on how to build the circuit (if Charrat had actually been the inventor). The Federal Circuit rejected that analysis:
Here … Charrat’s account of a period of a few months, nearly twenty years ago, is nonetheless supported by documentary evidence. The relevant period and presence of documentary evidence places this case closer to Loral Fairchild Corp. v. Matsushita Electric. . . . [W]e characterized the inventor’s inability to submit [production] documents as “not surprising” given the amount of time that had passed. Here, similarly, Charrat’s account is corroborated by the initial data sheet that began the project, communications with CE, and documents generated after Charrat and INSIDE received the prototype and began to test it. “[C]orroboration of every factual issue contested by the parties is not a requirement of the law.” In re Jolley, 308 F.3d 1317, 1328 (Fed. Cir. 2002). On these facts, and particularly considering the amount of time that has passed, we determine that Charrat’s account was adequately corroborated.
In a typical murder mystery plot, the accused criminal wins by successfully pointing the finger toward the true killer. Here, the appellate panel suggests that the the PTAB should have also considered that approach. In particular, the Federal Circuit asks “who, if not Charrat, designed the prototype. . . . Charrat is the only source identified by the evidence for the design of the prototype. Indeed, there is no record evidence of any other INSIDE employee communicating with CE. Under the rule of reason, the totality of the evidence establishes the credibility of Charrat’s account.”
On remand, it looks like the IPR case will continue — in its original analysis, the PTAB did not actually determine whether the prototype embodied the claimed invention since it dismissed on other grounds. Thus, NFC is simply one step closer to success.
