The Gatekeeping Function of Patent Eligibility as Part of a More Complete Understanding of § 101 Principles

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Guest Post by Bruce Wexler and Edwin Mok

From a review of the opinions expressed in the majority decision and rehearing denial in Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, reh’g en banc denied, 809 F.3d 1282 (Fed. Cir. 2015), petition for cert. filed (No. 15-1182, Mar. 21, 2016), and in the briefs filed by various parties in relation to Sequenom Inc.’s petition for writ of certiorari, we can see several different viewpoints emerge with respect to the case.  Some express the viewpoint that the case reached the wrong outcome, either because the Court (a) misunderstood the facts relating to the invention or patent, (b) misapplied existing § 101 principles, or (c) both.  Others express the viewpoint that the case reached the right outcome, either because the Court (a) correctly applied § 101 principles, or (b) incorrectly did so but would have reached the same outcome under a correct analysis.  And there are also some who express the viewpoint that the case correctly applied current § 101 eligibility principles but still reached a wrong outcome, such that § 101 requires a serious overhaul, or should be done away with altogether as a patentability criterion.  In this article, we do not take a position on any of these viewpoints.  Rather, we write to shed more light on the gatekeeping function of patent eligibility which we see permeating judicial decisions on § 101, making it worthy of careful contemplation when considering any one of the positions expressed above.

Analysis of § 101 patent eligibility generally involves discourse using the term “preemption.”  The Supreme Court, for example, has described preemption as driving the exclusionary principle under § 101.  Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347, 2354 (2014); see also Mayo Collaborative Services v. Prometheus Labs. Inc., 132 S.Ct. 1289, 1294 (2012) (“[Our precedents] warn us against upholding patents that claim processes that too broadly preempt the use of a natural law.”).  But, at the same time, we see in the cases that complete preemption by a patent claim—in the sense of a claim so broad it just recites an abstract idea or natural phenomenon—has not been the sine qua non of patent ineligibility.  For example, we have seen the Supreme Court reject eligibility arguments that merely contend that the claim in fact recites some physical structure, and so does not completely preempt the underlying abstract idea or natural phenomenon itself (putting aside for the moment what that structure is).  The late Chief Judge Archer explained why such arguments are unsatisfactory in a dissent he authored over twenty years ago in In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994), in which he opposed the patentability per se of a mathematical algorithm just because the claim referenced generic computing structures.  His reasoning was strikingly similar to that appearing more recently in Mayo.  As Chief Judge Archer observed, if patent eligibility was necessarily satisfied by reciting any physical structure, then Diamond v. Diehr would have been a much shorter opinion, and Flook and Benson would have come out the other way.  Alappat, 33 F.3d at 1557.  Alice too would have come out the other way, since some of the claims there recited generic computing structures.  See Alice, 134 S.Ct. at 2358-59 (“There is no dispute that a computer is a tangible system (in § 101 terms, a ‘machine’) . . . [b]ut if that were the end of the § 101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept.”).

A way to make sense of this situation is to consider the gatekeeping function that § 101 plays within the patent law, also discussed within the Supreme Court cases but at times in a more subtle way.  To understand this function more clearly, we can look to the hypothetical discussed by Chief Judge Archer to explain how § 101, when correctly applied, “lays the predicate for the other provisions of the patent law.”  Alappat, 33 F.3d at 1553.  This hypothetical illustrates that, but for § 101 eligibility principles, a patent could be awarded for originating a new musical composition—something generally agreed to be outside the subject of patent law—by claiming the song in a generic physical form such as a CD (it was the 1990s, after all).  Id. at 1553-54.  Assuming the musical composition was original, the physical structure of the CD would contain a unique assembly of pits and lands specific to that new piece of music, and thus it would be a composition of matter that is structurally novel under § 102.  And because “the patent law cannot examine music for ‘nonobviousness,’ the Patent and Trademark Office could not a make a showing of obviousness under § 103” (which it would be their burden to do).  Id. at 1554.  And even if they could examine this question, the PTO examiners ought not to be judging musical compositions for obviousness (e.g., imagine patent examiners charged with determining whether a guitar lick or chord progression is obvious under patent law).  The result of allowing through the eligibility gate a claim reciting a CD (or equivalent generic structure) embodying the new song could be patent exclusivity granted for discovering a new musical composition.  Chief Judge Archer posited that § 101 acts as a gatekeeper to prevent such discoveries from being eligible themselves for analysis of patentability under the remaining patent law provisions.

The Supreme Court has also discussed this gatekeeping aspect of patent eligibility.  In Mayo, the Court rejected the government’s argument as an amicus that “virtually any step beyond a statement of a law of nature itself should transform an unpatentable law of nature into a potentially patentable application sufficient to satisfy § 101’s demands.”  Mayo, 132 S.Ct. at 1303.  In so doing, the Court discussed the limitations of patent law’s other provisions to judge ineligible subject matter:

We recognize that, in evaluating the significance of additional steps, the § 101 patent-eligibility inquiry and, say, the § 102 novelty inquiry might sometimes overlap.  But that need not always be so.  And to shift the patent-eligibility inquiry entirely to these later sections risks creating significantly greater legal uncertainty, while assuming that those sections can do work that they are not equipped to do.

Id. at 1304 (concluding that §§ 102, 103, and 112 cannot “substitute . . . for the better established inquiry under § 101”).  The Court recognized that the presence of a law of nature in a claim would not be entirely ignored when analyzing novelty and nonobviousness, since it is indeed an aspect of the claimed invention.  Id.  In other words, the entirety of the claimed subject matter that passes through the eligibility gate is evaluated for novelty and nonobviousness.  This operation of the patent law is viewed as supporting a need for an eligibility inquiry up front, which asks whether the invention as described and claimed by the patentee as a whole resides in something more than just the new idea or law of nature itself, so that it is appropriate to allow the claim as a whole to be judged by the remaining substantive patentability provisions.  And, from this perspective, we can also understand how very basic questions of a patent’s stated novelty for the claimed subject matter, and the breadth of the claim, can impact how the eligibility question is answered.  See, e.g., id. at 1295, 1297-98; Alice, 134 S.Ct. at 2359-60; Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107, 2116-19 (2013).

Chief Judge Archer’s hypothetical in dissent wound up playing out in the area of business method patents.  The Federal Circuit’s decision in State St. Bank & Trust Co. v. Signature Fin. Grp., Inc., 149 F.3d 1368 (Fed. Cir. 1998), having as a foundation the majority opinion in Alappat, opened the floodgates for patenting new methods of conducting business.  Seismic changes in the way banking was done during the late 1980s (see The Big Short for a dramatization of that happening) fostered this eventual patenting explosion.  Although these patents generated controversy, it would take over a decade and a half, until Alice, for the Supreme Court to rule that inventions residing in a way of doing banking business were simply beyond the realm of patent law, even where the claims recited generic computing structures.  See Alice, 134 S.Ct. at 2360.  This decision has dramatically changed how lower courts look at business method patents.  See, e.g., Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014) (reversing its own two pre-Alice rulings that had upheld validity, and finding the patents in suit to be ineligible).

Currently, the gateway through which a proposed invention must pass is based on Supreme Court precedent, including the Mayo ruling.  In close cases, the § 101 principles may not be so easy to apply, especially since inventions generally speaking are constituted from arrangements of physical forms, which call into operation laws of nature and natural principles, arriving at a useful result.  See, e.g., Alappat, 33 F.3d at 1551-52 (quoting G. Curtis, A Treatise on the Law of Patents for Useful Inventions at xxiii-xxv (4th ed. 1873)); cf. Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 609-10 (1950) (underlying a claimed invention is its “way,” the physical form; “function,” the principles of operation; and “result,” the effect achieved).  Thus, the task of separating what is appropriate for the subject of patent law from what is not appears to inevitably demand a set of core principles, rather than a detailed recitation of rules that neatly answers every case in all technical areas.  Historical efforts by courts to construct rigid mechanical tests for eligibility have, after struggling and evolving, ultimately failed.  For example, in the late 1970s and early 1980s, the Federal Circuit’s predecessor court developed a series of rules for eligibility, which lengthened in name as subsequent cases recognized the need to address existing inadequacies—the so-called Freeman‑Walter‑Abele test—before it was finally rejected.  See, e.g., State St. Bank, 149 F.3d at 1374.  As Chief Judge Archer explained, “[w]ithout particular claimed subject matter in mind, it is impossible to generalize with bright line rules the dividing line between what is in substance [a patent-eligible application] versus merely the discovery of an abstract idea or law of nature or principle outside § 101.”  Alappat, 33 F.3d at 1554.  He observed that the copyright law has long lived with a similar tension in the idea/expression dichotomy (i.e., the principle that the expression of ideas can be protected by copyright but not ideas themselves).  Id. at 1554 n.15; see also 17 U.S.C. § 102(b).  However, as he explained, “[t]here are . . . answers in every § 101 case.”  Alappat, 33 F.3d at 1554.  One question that has arisen is whether the Federal Circuit’s more recent decision in Genetic Techs. Ltd. v. Merial L.L.C., Nos. 2015-1202, 2015-1203 (Fed. Cir. Apr. 8, 2016)—which stated (slip op. at 11) that it was effectively bound to its outcome by Ariosa, which was itself said to be compelled by Mayo in the opinion of Judge Lourie (Ariosa, 809 F.3d at 1284)—altogether signals an attempt to return to a set of bright-line rules, or whether these cases instead reflect a genuine acceptance and application of the Supreme Court’s § 101 principles on their specific facts.  Either way, the Supreme Court precedents are ultimately bookends for understanding how to apply the law of eligibility in any particular situation.

As we can therefore see, § 101’s gatekeeping role is not distinct from the provision’s policy purpose of preventing undue preemption.  A possible way to think about it is that if the Mayo test is properly applied, and the totality of claimed subject matter is allowed through the eligibility gate, then the law of novelty and nonobviousness and claim breadth should, for example, be operating on subject matter in a way that is appropriate under the patent law.  This is a way to make sense of the different outcomes in Diamond v. Diehr (finding eligible a claim to an improved rubber-curing process that involved use of a computer algorithm) and Parker v. Flook (finding ineligible a claim to a method for using an algorithm to adjust alarm limits).  See Alice, 132 S.Ct. at 2358.  From a practice standpoint, thinking about § 101’s gatekeeping function in relation to the totality of the claimed subject matter may in some cases serve as a useful check on understanding how a court may perceive the patent eligibility issue.  For example, if the novelty or nonobviousness analyses would devolve into an evaluation of the novelty or nonobviousness of an idea or natural phenomenon itself, without significantly more to that inquiry, that may indicate to the inventor, the patent examiner, or the court that the invention is treading near the borderline of patent-ineligible subject matter.  This is a more nuanced understanding than simply regarding Mayo as articulating a “two-part test,” without adequate recognition as to what that test is trying to do.

In our next post, we consider the different opinions in the denial of the petition for rehearing in Ariosa and particularly their expressed commentary on principles of patent eligibility.

Bruce Wexler is a partner, and Edwin Mok an associate, in the New York office of Paul Hastings.  Their practice focuses on patent litigation and trials.  Mr. Wexler is also an adjunct professor at New York University School of Law, where he teaches an advanced patent course.

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Patent Protection for Scientific Discoveries: Sequenom, Mayo, and the Meaning of § 101

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Guest post by Jeffrey A. Lefstin, Professor, University of California, Hastings College of Law, and Peter S.  Menell, Professor, University of California, at Berkeley School of Law.  Professors Lefstin and Menell recently filed an amicus brief in support of Sequenom’s petition for certiorari.

The Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012) triggered the most radical redefinition of patent-eligible subject matter in U.S. history by engrafting onto § 101 an ‘inventive application’ requirement for patenting practical applications of scientific discoveries. In Ariosa v. Sequenom (2015), the Federal Circuit held that under Mayo, a diagnostic process based on the discovery of cell-free fetal DNA in the maternal bloodstream was not patent-eligible under § 101, because the steps of amplifying and detecting DNA were conventional at the time the invention was made. Now that Sequenom has filed its petition for certiorari, the Supreme Court has the opportunity to revisit its holding in Mayo that discoveries are not patent-eligible unless inventively applied.

The decision in Mayo came as a shock to patent practitioners and the inventive community.  How could the Supreme Court overlook the clear language running throughout the history of patent law authorizing patent protection for inventions and discoveries? Why would the Court turn away from the long tradition holding that practical application, not inventive application, suffices to render a discovery patent-eligible?

As we have discovered, highly pertinent material in the patent statutes, legislative history, and jurisprudence was never presented to the Mayo Court. The result is a deeply flawed decision that contradicts Congress’s patentability framework and misinterprets critical precedent.

The Mayo Court did not discuss the statutory basis for patent-eligibility of scientific discoveries. Instead, the Court revived Parker v. Flook (1978), which had been supplanted by Diamond v. Diehr (1981), to require that scientific discoveries be inventively applied to be patent-eligible.  Mayo, like Flook, relies upon a single quotation from Neilson v. Harford, an 1841 English case—“We think the case must be considered as if the principle being well known”—to conclude that courts must treat scientific discoveries as part of the prior art in assessing the eligibility of applications of such discoveries. Therefore, unless the scientific discovery is inventively applied, the claim is ineligible for patent protection under § 101.

Unfortunately, many patent litigators – and many of the amicus briefs filed in Sequenom – have shied away from directly confronting the fundamental mistakes in the Mayo decision. They understandably fear that the Supreme Court will not be willing to acknowledge error.  We hope otherwise.  It is critically important that the Court be apprised of the proper basis – the clear text of the statute, legislative history, and the meaning and context of key cases – for interpreting patent eligibility.

Our brief filed in support of Sequenom’s petition makes three basic arguments:

First, the patent statutes have always defined inventions and discoveries to be patent-eligible subject matter. The very first patent statute, the Act of 1790, permitted patents for an “invention or discovery,” and every subsequent statute – the Acts of 1793, 1836, 1870, and 1952 – incorporated both “inventions” and “discoveries” into its text. Legislative history, such as the House and Senate Reports accompanying the Plant Patent Act of 1930, expresses Congress’s understanding that the patent laws have always applied “both to the acts of inventing and discovery.”

Furthermore, the intent to protect conventional applications of new discoveries was incorporated directly into § 101 of the 1952 Act. The legislative history of the Plant Patent Act shows that Congress defined routine and conventional applications of new discoveries as patent-eligible subject matter under § 101’s predecessor statute, R.S. § 4886. And the legislative history of the 1952 Act shows that Congress intended to carry forward that standard of patent-eligibility in § 101.

Even more significantly for Sequenom’s claims, the 1952 Act added a new definition of “process” in § 100(b), defining “process” to include “a new use of a known process, machine, manufacture, composition of matter, or material.” P.J. Federico, one of the chief drafters of the Act, explained that § 100(b) was intended to clarify that the new use of a known material in a known process was patent-eligible subject matter under § 101:

[A] method claim is not vulnerable to attack, on the ground of not being within the field of patentable subject matter, merely because it may recite steps conventional from a a procedural standpoint and the novelty resides in the recitation of a particular substance, which is old as such, used in the process.

Section 100(b) removes any doubt that a process based on the discovery of a new property in a known substance is patent-eligible – even if the process merely recites conventional steps.

Second, Flook and Mayo’s grounding of the ‘inventive application’ requirement in Neilson v. Harford profoundly misinterprets that case. The Exchequer’s reference to treating Neilson’s discovery as “well known” was merely invoking an earlier case, Minter v. Wells (1834), to rule that Neilson had claimed a patentable application of his discovery – a machine – rather than an unpatentable abstract principle. Moreover, Mayo could not have been further from the truth when it claimed that Neilson’s patent was sustained because Neilson had applied his discovery in an inventive way. Neilson’s patent was sustained against an enablement challenge precisely because his means of application were routine, conventional, and well-known. In both English and American law, Neilson became the principal authority for the well-accepted proposition that specific and practical applications of discoveries were patentable, without any novelty or ‘invention’ in the means of application, provided that the patent supplied an enabling disclosure.

Third, a test of inventive application or undue preemption in § 101 disregards the framework established by Congress in the 1952 Act. The great advance of the 1952 Act was to differentiate the amorphous concepts of “invention” and “undue breadth” into the non-obviousness and disclosure requirements of §§ 103 and 112. Shoehorning an extra requirement for ‘inventiveness’ or lack of preemption into § 101 reverses those doctrinal innovations. The Supreme Court recognized as far back as O’Reilly v. Morse (1854) that disclosure, not subject matter, polices the patent bargain against unduly broad claims. That an inventor’s claim might practically preempt all use of a discovery will, as the Court said in The Telephone Cases (1888), “show more clearly the great importance of his discovery, but it will not invalidate his patent.”

Applying §§ 103 and 112 may require fact-intensive inquiries into the state of the prior art, the capabilities of skilled artisans, and the claim scope permissible based on the specification. But that is the structure prescribed by Congress under the 1952 Act. The judicial branch may not discard that statutory framework in favor of an “I-know-it-when-I-see- it” standard for patentability under § 101.

Section 101 – Pivotal Moment for Clarity on Patent Subject Matter Eligibility

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Guest post by Bart Eppenauer.  Mr. Eppenauer is the Managing Partner of the Seattle office of Shook Hardy & Bacon and former Chief Patent Counsel at Microsoft. In the interests of disclosure, Shook represents three of the many defendants/appellees in the McRo (Planet Blue) case discussed below. Mr. Eppenauer is not involved in that case.

We have reached a pivotal moment for the courts to provide more meaningful guidance on the contours of what actually is patent eligible subject matter (rather than what is not) and a workable framework for applying such guidance. A number of important cases are before the U.S. Supreme Court and the Federal Circuit involving patent subject matter eligibility in the wake of Alice v. CLS Bank Int’l and Mayo Collaborative Services v. Prometheus Labs. Given the high invalidation rate of patents on Section 101 grounds at the Supreme Court, Federal Circuit, U.S. District Courts, and the Patent Trial and Appeal Board (PTAB), interested stakeholders have justifiable concerns on the future value of patents involving software and life sciences, and the fallout this could have on American investment in these crucial industries.

On March 21, 2016, Sequenom, Inc. filed a Petition for Writ of Certiorari seeking to overturn the Federal Circuit’s decision invalidating its pre-natal genetic testing patent as a patent ineligible natural law or phenomenon, in Sequenom, Inc. v. Ariosa Diagnostics, Inc. Ten days earlier, Versata Development Group also filed a Petition for Writ of Certiorari challenging multiple findings by the Federal Circuit involving a Covered Business Method (CBM) Patent Review by the USPTO invalidating its software based hierarchical pricing engine patent. See Versata Development Group, Inc. v. SAP America, Inc. Petitions for Writ of Certiorari on subject matter eligibility were also filed in March in Cloud Satchel v. Barnes & Noble and Vehicle Intelligence Safety v. Mercedes-Benz USA. At the Federal Circuit, several important “abstract idea” cases are soon to be decided, including McRO (Planet Blue) v. Bandai Namco Games America on patents for automated lip synchronization of 3D animated characters, Intellectual Ventures v. Symantec involving malware and spam detection and email filtering patents, and Thales Visionix v. USA relating to a helmet mounted display system patent. Several of these cases could provide an excellent opportunity for the courts to provide more clarity on application of the Mayo/Alice test under Section 101.

The Sequenom case in particular may be the right case for the Supreme Court to reexamine the boundaries of Section 101, especially given the dramatic, if not unintended, impact that Mayo and Alice have had on subject matter eligibility decisions. At the heart of Sequenom, the Court has another opportunity to determine whether a novel method is patent eligible when it involves the research and discovery of naturally occurring phenomenon. Petitioner Sequenom asserts that the Court’s Mayo decision set out uncertain and indiscernible limits on Section 101 doctrine that has eroded trust in the patent system, such that the issue is “particularly life-threatening to life-science innovators.” (Petition p. 12). Several Federal Circuit judges seem to agree with this proposition. In his concurrence in affirming the district court’s decision under Section 101, Judge Linn remarked:

I join the court’s opinion invalidating the claims of the ’540 patent only because I am bound by the sweeping language of the test set out in Mayo…. In my view, the breadth of the second part of the test was unnecessary to the decision reached in Mayo. This case represents the consequence—perhaps unintended—of that broad language in excluding a meritorious invention from the patent protection it deserves and should have been entitled to retain.

In their concurrence on denial of rehearing en banc, Judges Lourie and Moore also strongly asserted that the Sequenom claims at issue were neither solely directed to a natural phenomenon, nor abstract, and “it is unsound to have a rule that takes inventions of this nature out of the realm of patent-eligibility on grounds that they only claim a natural phenomenon plus conventional steps, or that they claim abstract concepts.” But these judges agreed that the Federal Circuit panel “did not err in its conclusion that under Supreme Court precedent it had no option other than to affirm the district court.” And in his separate concurrence of denial of rehearing en banc, Judge Dyk noted:

Yet I share the concerns of some of my colleagues that a too restrictive test for patent eligibility under 35 U.S.C. § 101 with respect to laws of nature (reflected in some of the language in Mayo) may discourage development and disclosure of new diagnostic and therapeutic methods in the life sciences, which are often driven by discovery of new natural laws and phenomena. This leads me to think that some further illumination as to the scope of Mayo would be beneficial in one limited aspect. At the same time I think that we are bound by the language of Mayo, and any further guidance must come from the Supreme Court, not this court.

Without question, Section 101 is no longer a “coarse filter” for subject matter eligibility, as many jurists and practitioners believe it should be. That is evident from the recent landscape of Section 101 decisions since Alice. Of the more than 250 federal court decisions invoking Section 101 since Alice, 70% of those cases have found the patent invalid. And at the Federal Circuit, DDR Holdings v. Hotels.com stands alone as the sole decision upholding the patent under Section 101 among 31 decisions since Alice. My optimistic view that DDR Holdings would forge a sensible path on software patents and that more decisions would follow this path has simply not proven true to date. Nonetheless, given that so many of the patents before the Federal Circuit involved simple financial or business practices or other non-technical practices implemented on generic computers, there still may be hope that DDR Holdings will provide the underpinnings for further decisions clarifying the eligibility of software technology inventions.

Perhaps the nearest opportunity for such a clarification lies in the McRO/Planet Blue case, where we can expect a decision at any time. The case has been noted as a case to watch on software patentability in that the patents at issue arguably utilize complex and specific computer-implemented techniques for automated lip synchronization of 3D animated characters. Based on questions and comments from the judges during oral argument, the Federal Circuit may view this case as involving a technology-based patent that will dictate a different outcome under the Mayo/Alice test than so many of the negative decisions on business method or ecommerce patents with token computer implementation.

It will most likely be several months for a decision in Intellectual Ventures v. Symantec as the Federal Circuit heard oral argument on April 6, 2016. Intellectual Ventures (IV) argues that its patents are designed to improve computer network security through novel approaches to malware and spam detection and email screening. As such, IV believes that their patents solve problems “specifically arising in the realm of computer technology” and DDR Holdings demonstrates that the patents are patent eligible. Symantec counters that the IV patents use generic computing technology to apply basic concepts such as using the Dewey decimal system on digital files or applying standard mail routing practices to email instead of postal mail. IV likely has a better argument that DDR Holdings should apply than many of the recent Federal Circuit decisions where that argument has failed, but I could see this case going either way.

The Thales Visionix case involves a patent for helmet-mounted display systems (HMDS) for use in defense and aerospace applications such as the F-35 Joint Strike Fighter. Unlike traditional heads-up display systems which require a pilot to look straight ahead at a display to read tactical information, a HMDS projects tactical information onto the interior visor of a pilot’s helmet. This frees the pilot from looking straight ahead at a fixed point to receive the displayed information. The claims at issue are not as specific as their intended application, yet recite a motion tracking system that includes inertial sensors and an element for receiving signals from the inertial sensors to determine orientation of a tracked object. The Court of Federal Claims judge applied Alice in a sweeping fashion and found claim 1 amounted to nothing more than a system of generic inertial sensors and a receiving element, and claim 22 as nothing more than an instruction to solve a navigation equation. In concluding that the ultimate concern under Section 101 is one of “preemption,” the judge found that the scope of the patent’s claims is insufficiently limited under Mayo and Diamond v. Diehr, and granted the motion for judgment on the pleadings. Frankly, I was quite surprised to see this decision, and believe that it is an unfortunate example of the Mayo/Alice framework taken to its extreme. Briefing is ongoing in the case, so a decision is months away.

We are at a critical juncture on defining the proper scope and application of Section 101. Unless the judiciary delineates a clearer framework for enabling meaningful patent protection in areas like biotech and software where America has been a technology leader, the U.S. could rapidly lose its competitive edge in these vital industries. Without this guidance, the U.S. will cement its recent reputation as even more restrictive and less open to patenting important new and potentially life-saving technologies than other jurisdictions such as China and Europe, which was unthinkable just a few years ago. It is critical that the Federal Circuit take the opportunity in one of these pending cases to provide meaningful guidance on the proper scope and contours of patent subject matter eligibility applied to software related technology. Even more importantly, the Supreme Court should agree to hear the Sequenom case and clarify (or revise) its Mayo/Alice test to ensure that meritorious inventions in life sciences and software remain patentable. While I don’t believe it is yet time to take legislative action, recent calls for the abolition of Section 101 entirely and dissatisfaction with application of the Mayo/Alice test is reaching a critical level. These key cases offer a significant opportunity to establish much-needed clarifications. Should this opportunity be missed, it is hard to see how Congressional action can be avoided.

Patent Applications and Grants Holding Steady for FY 2016

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By Jason Rantanen

We’re now halfway through financial year 2016, and so far patent application and grant numbers are looking similar to the past few years.  The below graph shows the number of UPR patent applications filed over the past several fiscal years (which run from October 1 to September 30), along with a simple projection of the applications for FY 2016.  The vast majority of these are utility patent applications.

Patent Application data

On a month-over-month basis, this fiscal year is following the same trajectory as 2013, 2014 and 2015.

UPRs per month

Patent grants also look similar to the past few fiscal years.  If current trends continue, we may see a slight increase over FY 2015.  (Note that the numbers in the below chart are for the fiscal year; Dennis’s post from the other day is on a calendar year basis.)

Patents Granted Through March 2016

Design Patentees

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Design patents continue to be a popular protection scheme for developers of consumer products and screen displays. Top ten assignees thus-far in 2016 with most recent examples:

  1. Samsung (Toner Cartridge)  [Samsung has 4x more design patents than any other assignee on the list]
  2. LGE (Mobile telephone)
  3. Apple (Mobile telephone)
  4. Microsoft (Icon)
  5. Ford (Truck Grille)
  6. Google (Screen display for Maps)
  7. Nike (Tights)
  8. Jaguar & Land Rover (Rims)
  9. 3M (clip)
  10. P&G (sanitary napkin)
  11. Tencent (screen display)

New Old Patents

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So far in 2016, the USPTO has issued three patents that claim priority pre-GATT.  These three are grandfathered in under the old 17-year-from-issuance patent term because they were filed before June 8, 1995.

  1. John Harvey’s Signal Process Patent No. 9,294,205 is one of dozens held by the company claiming priority back to a 1981 filing. The patents are owned by Personalized Media Communications.  PMC is an active plaintiff in the Eastern District of Texas.
  2. Dr. Robert Gallo and Flossie Wong-Staal received another patent relating to their discovery that HIV is the cause of AIDS. U.S. Patent No. 9,309,574 claims priority back to a 1985 filing and relates to the creation of an immortal cell line that reproduces HIV. At the time, Gallo worked at the National Cancer Institutes and the patent rights are held by the U.S. Government.
  3. Finally, U.S. Patent No. 9,294,184 has issued to Lockheed Martin covering covers a repeater that receives and transmits polarized RF signals. The application was originally filed in 1973 but was held under a secrecy order until 2010.  From 2010 until 2015 the case awaited examiner action that finally arrived with a notice of allowance.

 

DTSA Moving Forward

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The House Judiciary Committee has taken the next major step toward implementation of the Defend Trade Secrets Act of 2016 (DTSA).  In an unopposed voice vote the committee has approved the text of the already-passed Senate version (S.1890). DTSA would create a federal civil remedy for trade secret misappropriation.  Next step – is passage by the full House. President Obama has indicated his support as well.

From the committee:

Trade secrets are an increasingly important form of intellectual property that have become more vulnerable to theft as a result of our globalized economy. While current federal law protects other forms of intellectual property by providing access to federal courts for aggrieved parties to seek redress, there is no federal option to do so for trade secret theft. The bipartisan Defend Trade Secrets Act seeks to change that by allowing companies to seek civil penalties in order to protect their businesses from those engaging in economic espionage. S. 1890 gives American innovators a powerful new tool which will help them compete in an ever-evolving global market.

At Mizzou, we’re planning our symposium for next academic year that will focus on implementation of the new federal cause of action.

Nationalizing Trade Secret Law

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by Dennis Crouch

Defend Trade Secrets Act: The House Judiciary Committee is moving forward with the Defend Trade Secrets Act (DTSA) with a discussion of the bill (H.R. 3326) and its Senate companion (S. 1890) that was unanimously passed by the U.S. Senate.  The House and Senate versions were originally identical, but a set of amendments were added to the Senate version before its passage that both improved the language and reduced some potential negative impact of injunctive-relief associated with employee mobility. [See Pooley].  There is a strong possibility that the Senate version will be accepted by the House and passed with overwhelming majority.  Rep. Goodlatte (R-VA) is pushing the Bill through the Judiciary Committee (of which he is Chair).  Ranking Member Conyers (D-MI) is one of 155 co-sponsors of the legislation.  The Intellectual Property Owners Association (IPO) has announced its “strong support” for the bill.

Nationalizing Contract Law?: It is interesting that congress is moving forward so quickly with nationalizing the traditional state-law claim of trade secret misappropriation.  Most trade secret cases involve an underlying breach of contract between the parties.  The current bill would implicitly have courts rely upon local contract law to determine the scope of rights of the parties before then determining whether a federal claim of trade secret misappropriation exists.

 

Pending Supreme Court Patent Cases 2016 (April 18 Update)

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by Dennis Crouch

Cuozzo: Prof Mann provides his preview of the April 25 oral arguments in Cuozzo v. Lee; and Cuozzo has filed its reply brief. Neither document address my the mootness concern regarding Cuozzo’s demand for an ordinary construction of claim terms rather than their broadest reasonable interpretation.  As far as I have seen, nothing in the record suggests that a change in claim interpretation standard would alter the PTO’s determination.

Following its April 15 Conference, the Supreme Court denied certiorari in a set of cases, including Vermont v. MPHJ; Limelight v. Akamai; Hemopet v. Hill’s Pet Nutrition; and Tas v. Beachy. In its April 1 Conference, the Court denied cert in Retirement Capital v. US Bancorp. That case had questioned whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2).

The only patent cases surviving the April 15 conference are (1) Interval Licensing v. Lee that asks the same question as Cuozzo: Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?; and (2) Medinol v. Cordis that focuses on whether “the equitable defense of laches [may be used to] bar legal claims for damages that are timely under the express terms of the Patent Act.”   Medinol is conceptually linked to the SCA Hygiene case that also raises the laches issue. The court will consider both cases in its April 22 conference and may likely couple the decision to grant/deny.  The court is also scheduled to consider Cloud Satchel (abstract idea eligibility) and Globus Medical (appellate jurisdiction) at Friday’s conference. Neither of these cases offer much hope for the respective petitioner.

In Cooper v. Lee, the US Government filed its brief opposing certiorari. The government argues that Cooper’s Article III challenge to the IPR system “lack’s merit.”

[P]atents are quintessential “public rights” whose issuance and cancellation Congress may permissible entrust to a non-Article III tribunal. . . . Pursuant to its constitutional authority to “promote the Progress of Science and useful Arts” by establishing a patent system, Congress created the PTO – an agency with “special expertise in evaluating patent applications.” Kappos v. Hyatt, 132 S. Ct. 1690 (2012). It directed that agency to issue a patent if “it appears that the applicant is entitled to a patent” under standards set by federal law, 35 U.S.C. 131. Patents are accordingly rights that “exist only by virtue of statute.” Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 n.5 (1964). They “dispose of public rights held by the government on behalf of the people.” Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 849 n.2 (2015) (Thomas, J., dissenting).

The government also argues that the posture of the case lacks merits – in particular that Cooper’s collateral challenge to the procedures doesn’t work.  Cooper has argued that “inter partes review violates Article III of the Constitution by authorizing an Executive Branch agency, rather than a court, to invalidate a previously issued patent.”

Daniel Bohnen has filed a brief on behalf of UK’s Chartered Institute of Patent Attorneys (CIPA) in support of the Sequenom v. Ariosa petition.   The brief argues that the court should look to “maintain international harmonisation in the law of patent-eligibility.”[AriosaCIPA].  More briefs in support of the petitioner are expected this week as is Ariosa’s opposition brief (if any).

Finally, Nova has filed its opposition in Dow v. Nova and is attempting to refocus attention on the merits of the indefiniteness decision rather than the procedure for reaching that decision.  The difference in question presented is interesting:

Dow: Whether factual findings underlying a district court’s determination on the definiteness of a patent claim under the Patent Act, 35 U.S.C. 112, like a district court’s factual findings underlying construction of a patent claim, are subject to appellate review only for clear error or substantial evidence rather than de novo review.

Nova: Whether the court of appeals correctly invalidated Dow’s patent claims as indefinite under 35 U.S.C. § 112.

Explaining its shift of the question, Nova argues that “Dow’s petition rests on a false premise that the Federal Circuit refuses to give deference to factual findings” that underlie the definiteness determination.  Nova is correct as to the Federal Circuit’s position — the only question here is whether the Supreme Court will order the appellate court to follow its own law in this case. [DowPetition][NovaOpposition]

The big list: (more…)

Epic Trade Secret Case Billion Dollar Verdict

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by Dennis Crouch

I expect that 2016 will be the year that Congress to creates a federal cause of action for trade secret misappropriation.  Acting in rare unanimous fashion, the Senate recently passed the Defend Trade Secret Act (DTSA) with republican leadership.  The house is expected to follow with President Obama also indicating support.  In his most recent State of the Union Address, President Obama noted that “[n]o foreign nation, no hacker, should be able to . . . steal our trade secrets.”

Meanwhile, state-law trade secret and business tort claims continue to wield power.

In Epic Systems v. Tata Group, a W.D.Wisc. jury has awarded Epic just shy of $1 billion on state-law trade-secret misappropriation, computer-fraud (trafficking in passwords under the CFAA), breach-of-contract claims, and unfair competition.  The damages included $240 million for compensatory damages and $700 million in punitive damages.

Tata Group (one of India’s largest companies) is accused of downloading documentation for hospital management software and then providing that documentation to its subsidiary Med Mantra.  This appears to be a case of exceeding authorization.  Thus, although Tata employees were permitted access the documentation, the breach came when the documentation was shared beyond what was contractually permitted.   If it collects, the verdict will more than double Epic’s annual profits.

The verdicts:

Following any post-verdict decisions, the appeal will be handled by the 7th Circuit. The damages theory of the case is tricky — it is unclear to what extent Epic should be permitted to use Wisconsin (or US) law to collect for damages either caused or felt in India.

Patent Grants 2016 Update

Patent

2016 is back-on-track in terms of patent grants.

In February I reported USPTO patent grant numbers were trending lower than the record levels set in 2014 and 2015.  However, the PTO has picked-up-the-pace and is now set to match its 2014 record of 300,000+ utility patents issued during the calendar year. During this time the number of patent examiners on staff has actually fallen from a high of over 8400 in 2015 to now around 8100.

GrantsPerYear

 

Reissues

Patent

Reissue applications have resumed their somewhat steady-state following the pre-AIA rise associated that had been associated with a counter strategy against third-party reexamination filings.

For those issued thus far in 2016, the average reissue pendency is 28 months (median 22 months).

ReissueHistogram

ReissuePatents

Judge Dyk’s Concurrence in the Denial of Rehearing En Banc in Sequenom

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By Jason Rantanen

In preparing for a talk on recent developments in patent law that I’m giving in a few days at the Salishan Patent Conference, I went back and reread Judge Dyk’s opinion concurring in the Federal Circuit’s denial of rehearing en banc in Sequenom v. Ariosa (available here: 14-1139.Order.11-30-2015.1).  In my view, he hits the nail on the head with this one, framing the patent eligible subject matter issue as an issue of claim breadth.  I find his discussion particularly appealing because unlike many conventional critiques of the Supreme Court’s Mayo/Alice framework, Judge Dyk acknowledges that patent law is not limitless, and that patentable subject matter should not be completely unbounded, subject only to the constraints of §§ 102, 103 & 112.  Accepting this proposition frees Judge Dyk to articulate a conceptually coherent approach to patentable subject matter in the context of discoveries of natural laws, one that allows for valid claims in this space but which still imposes limits on what can be claimed.  When discovery of a natural law supplies the innovative aspect of the invention, Judge Dyk writes, claims should be limited to what the inventor has actually done:

“In my view, the breadth of the claim should be critical. Even when a patent applicant has demonstrated some particular utility for a newly discovered law of nature and reduced it to practice, the claim should be invalid unless narrowly tailored to the particular application of the law that has been developed. Claims that extend far beyond the utility demonstrated by the patent applicant and reduced to practice should be invalid, as they “too broadly preempt the use” of the underlying idea by others. Mayo, 132 S.Ct. at 1294; see also Diamond v. Diehr, 450 U.S. 175, 191–92, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981). But, so long as a claim is narrowly tailored to what the patent applicant has actually invented and reduced to practice, there is limited risk of undue preemption of the underlying idea. In Myriad the Court noted, 133 S.Ct. at 2120, that an example of a meritorious claim might be claim 21 of Myriad’s U.S. Patent No. 5,753,441 (“the ′441 patent”), which was not at issue in the case and which Judge Bryson discussed in his concurring opinion on our court’s decision below, Ass’n for Molecular Pathology, 689 F.3d at 1348 (Bryson, J., concurring). Claim 21 of the ′441 patent covers a method of detecting any of several specific mutations in the BRCA1 gene, newly discovered by the patent applicant and shown to increase a person’s risk of developing particular cancers, using conventional methods. See In re BRCA1 & BRCA2, 774 F.3d at 765.

This approach appears also to be supported by Morse. The Supreme Court established in Morse that the extent to which a patentee can claim is the extent to which he has actually made some concrete use of the discovery and reduced it to practice. “The specification of this patentee describes his invention or discovery, and the manner and process of constructing and using it; and his patent … covers nothing more.” Morse, 56 U.S. at 119. Limiting patentees to narrow applications they have actually developed and reduced to practice would be in keeping with Mayo ‘s commandment that “simply appending *1292 conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas cannot make those laws, phenomena, and ideas patentable.” Mayo, 132 S.Ct. at 1300 (emphasis added).

This proposed approach, limiting the scope of patents based on new discoveries to narrow claims covering applications actually reduced to practice, would allow the inventor to enjoy an exclusive right to what he himself has invented and put into practice, but not to prevent new applications of the natural law by others.5 This would ensure that the scope of the patent claims would not “foreclose[ ] more future invention than the underlying discovery could reasonably justify.” Id. at 1301. Limiting the scope of the patent also would avoid the problem that “the more abstractly [a process patent’s] claims are stated, the more difficult it is to determine precisely what they cover.” Mayo, 132 S.Ct. at 1302 (quoting Christina Bohannan & Herbert Hovenkamp, Creation without Restraint: Promoting Liberty and Rivalry in Innovation 112 (2012)).”

Ariosa Diagnostics, Inc. v. Sequenom, Inc., 809 F.3d 1282, 1291 (Fed. Cir. 2015).  Of course, I may be biased to agree with Judge Dyk here: I’ve long thought that Section 112(a) doesn’t do an adequate job, by itself, of limiting claim breadth. (And §112(b) only relates to claim clarity, a different issue than claim breadth.)  (c.f. fn 5 of Judge Dyk’s concurrence).

Battles between the PTO and Courts

Patent,

The dispute between the University of Alabama, Paul Bryant Jr., and Houndstooth Mafia stems from the latter’s unlicensed use of a houndstooth pattern and other ‘marks’ that relate to the University and former legendary coach Bear Bryant.

Prior to the September 2013 federal complaint, Alabama & Bryant Jr. (the heir) had previously attempted to oppose Houndstooth Mafia’s trademark registration of the mark shown below. However, in a precedential opinion the TTAB sided with the Mafia – finding that the opposers’ failed to show (a) “acquired distinctiveness in their alleged Houndstooth Pattern”; (b) likely confusion as to source or sponsorship; or (c) that the mark is disparaging. As such, the TTAB dismissed with prejudice.

HoundstoothMafia

After losing at the board, the named plaintiffs filed the aforementioned trademark infringement and unfair competition lawsuit.

The parties eventually settled and, as part of the consent decree, the district court ordered vacatur of the TTAB decsion.  However, the TTAB refused take any action to vacate its prior decision, writing: “The Final Consent Judgment points to no legal error in our prior decision, and we have not been alerted to any aspect of the public interest that would be furthered by vacatur and would outweigh our initial determination of the precedential value of the prior decision.”

Back in the district court, Alabama then asked for and received a new order from the district court judge — this time expressly ordering the USPTO to vacate its prior determination.  The court wrote: “In June 2015, the TTAB essentially (and inexplicably) treated the court’s Order as a request, and issued a decision refusing to comply with this court’s Order.”

The court’s February 23, 2016 order was quite specific:

Within fourteen (14) days of this order, the USPTO Trademark Trial and Appeal Board is ENJOINED TO AND SHALL VACATE its July 23, 2013 Opinion on Opposition No. 91187103, and otherwise take any further action necessary to effectuate this Order and the Court’s May 27, 2014 Final Consent Judgment, including permitting the HOUNDSTOOTH MAFIA & Design Application (Serial No. 77/342,852) to be registered on the Principal Register with the University as its owner.

HoundstoothMafia.

The USPTO has complied with the order.  In a March 3 order, the TTAB issued an order vacating its prior decision and ordering that the HOUNDSTOOTH MAFIA mark be registered (and that its ownership be changed to Univ of Alabama). An April 5, 2016 the mark was registered.

Meanwhile . . . The USPTO has filed its notice of appeal with the 11th Circuit court of appeals its brief will be due May 3, 2016.  The agency is likely to challenge the district court’s power to order vacatur under U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994).

 

The Heavy Burden: Overcoming the Presumption Against Improper Inventorship

Patent

An important change made in the America Invents Act of 2011 was to allow patent owners to file for patent protection as patent applicants rather than relying upon sometimes uncooperative inventors to do so.[1]  However, the AIA did not make any changes to the ever-present rule that ownership stems from invention and thus initially vests in the inventors.[2]  Because ownership is tied to invention, inventorship disputes remain a part of patent law even under this new regime.

Meng v. Chu (Fed. Cir. 2016) focuses on two superconductivity patents purportedly owned by the University of Houston based upon assignment from the listed inventor Prof. Ching-Wu Chu.[3]  I discussed this case previously in my post titled: Can you Wait 20-Years to Challenge Inventorship?: In this case, Yes, Patently-O (November 15, 2012).  In its 2012 decision, the Federal Circuit rejected the lower court’s conclusion that the challenger (Meng & Hor) claims were barred by laches or equitable estoppel.[4]  A difficulty with the case is that the patents were filed in the 1980’s but did not issue until 2006 and 2010 respectively.   Meng & Hor worked with Chu during the research, but were not listed as inventors.

In the remand, the district court held an eight day bench trial on the inventorship claims and ultimately rejected both Meng & Hor’s claims – finding (1) that Meng had failed to show that her contribution exceeded the ordinary skill in the art; and (2) that Hor had not provided sufficient corroborating evidence so as to overcome the clear-and-convincing standard required for correcting inventorship. On appeal here, the Federal Circuit has affirmed.

In order to prevail on a § 256 claim, an alleged co-inventor must show that he contributed to the conception of the claimed invention and that his contribution was “not insignificant in quality, when that contribution is measured against the dimension of the full invention.” Acromed Corp. v. Sofamor Danek Grp., 253 F.3d 1371 (Fed. Cir. 2001). An alleged co-inventor’s testimony regarding his contribution must be corroborated, which courts assess under a “rule of reason” analysis. Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998).

Here, the Federal Circuit reviewed the evidence presented and agreed that it was ambiguous at best. As such it was insufficient to overcome the ‘heavy burden.’

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[1] As most patent attorneys know, the old rules provided a mechanism for an owner to file for patent protection on behalf of an uncooperative or unavailable inventor.  However, that model is different than the rights-holder filing on its own behalf.

[2] See Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237 (Fed. Cir. 1993).

[3] U.S. Patent Nos. 7,709,418 (“’418 patent”) and 7,056,866 (“’866 patent”).

[4] See Hor v. Chu, No. 4:08-CV-3584, 2015 WL 269123 (S.D. Tex. Jan. 21, 2015) and Hor v. Chu, 765 F. Supp. 2d 903, 906 (S.D. Tex. 2011), aff’d in part, rev’d in part and remanded, Hor v. Chu, 699 F.3d 1331 (Fed. Cir. 2012).

Adding Fuel to the Bonfire of Patents

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Genetic Tech. v. Merial (Fed. Cir. 2016)

Lincoln famously explained the role of the patent system of adding “the fuel of interest to the fire of genius.”  In GTG, the court simplified the phrase by finding that genetic testing patents only value may be literally as fuel.

The decision by Judge Dyk and joined by Chief Judge Prost and Judge Taranto affirms a lower court’s dismissal on-the-pleadings of GTG’s patent infringement claim.[1]  The holding is that the claimed method for analyzing DNA for linkage disequilibrium is ineligible for as effectively claiming a law of nature.  The basic idea stems from the inventors discovery that coding regions (exons) typically correlate with “linked” certain non-coding regions (introns).

The parties agreed that claim 1 of the GTG ‘179 patent was representative for purposes of the eligibility issues. The claim encompasses methods of detecting a particularly genetic allele using the two step process of (1) amplifying and then (2) analyzing the linked intron region.

In analyzing the claims here, the court highlighted the similarity of the claims here to those in both Mayo v. Prometheus[2] and Ariosa v. Sequenom.[3]

The similarity of claim 1 to the claims evaluated in Mayo and Ariosa requires the conclusion that claim 1 is directed to a law of nature. . . .  The claim is directed to a natural law—the principle that certain non-coding and coding sequences are in linkage disequilibrium with one another. We hold that claim 1 is directed to unpatentable subject matter at the first step of the Mayo/Alice test. . . .

Claims directed to laws of nature are ineligible for patent protection when, “(apart from the natural laws themselves) [they] involve well-understood, routine, conventional activity previously engaged in by researchers in the field.” Mayo.

We conclude that the additional elements of claim 1 are insufficient to provide the inventive concept necessary to render the claim patent-eligible.

GTG is an Australian company that had previously sued a few dozen companies for infringing the ‘179 patent. The claims have been reexamined (at Merial’s request) and patentability confirmed.

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[1] The courts found that claims 1-25 and 33-36 of U.S. Patent No. 5,612,179 are ineligible under Section 101.

[2] Mayo Collaborative Serv. v. Prometheus Lab., Inc., 132 S.Ct. 1289 (2012)

[3] Ariosa Diagnostics, Inc. v. Sequenom, Inc., 726 F.3d 1296 (Fed. Cir. 2013); rehearing en banc denied by Ariosa Diagnostics, Inc. v. Sequenom, Inc., 809 F.3d 1282 (Fed. Cir., Dec. 02, 2015); on petition for writ of certiorari (No. 15-1182, filed March 21, 2016).

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New Trial for False Expert Testimony

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This is a troubling case involving both plaintiffs and defendants presenting false expert testimony.

Rembrandt v. J&J Vision (Fed. Cir. 2016)

On cross-examination, Rembrand’s technical expert witness Dr. Thomas Beebe “drastically” changed his testimony regarding his methodology for testing whether the accused contact lenses were “soft.”  After being called-out by the defense’s expert Dr. Christopher Bielawski, a jury found no-infringement.  Post-trial, the district court doubled-down by also granting J&Js motion for JMOL of non-infringement. Bielawski’s testimony may have been particularly damaging – with his statement:  “You should not trust Dr. Beebe, and you should throw out his testimony, not in part, but in whole. You should not trust Dr. Beebe.”

After trial, however, the Rembrandt discovered that Bielawski had testified falsely on the stand.  Although the court denied post-trial discovery on the issue, Rembrandt used Texas open records law to discover that, although Bielawski had repeatedly testified that he personally conducted XPS and SIMS testing on the products, it turned out that he did not , that he was not even qualified to conduct those tests, and that he withheld results and analysis that would have undermined his opinions.  After hearing these allegations, the district court refused to order a new trial or to re-open discovery.

On appeal, the Federal Circuit reversed and remanded – ordering a new trial under Fed. R. Civ. Pro. 60(b)(3) which permits relief from final judgment based upon “fraud, misrepresentation, or misconduct by an opposing party.”

Here, the appellate panel found that Bielawski’s false testimony prevented Rembrandt from “fully and fairly presenting its infringement case. The verdict was irretrievably tainted by Dr. Bielawski’s false testimony and Dr. Bielawski’s and JJVC’s withholding of relevant documents.”  The court also found that the false testimony could be attributable to J&J even without a ‘fraud’ finding because 60(b)(3) is operable even in the case of “accidental omissions” and does not even require “proof of complicity” (under 11th Circuit law).

Remanded for new trial.

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Judge Stoll wrote the majority opinion and was joined by Judge Moore.

Writing in dissent, Judge Dyk disagreed on both of the major issues decided by the majority.  In particular, the dissent argues that the patentee shouldn’t get another shot because, even without the misconduct it failed to prove infringement (since its expert testimony was struck).

Rembrandt has failed to show how knowledge of Dr. Bielawski’s misconduct would have changed its approach to the “soft” limitation. The JMOL was based entirely on the exclusion of Dr. Beebe’s testimony because of his “abrupt and still unexplained implosion [on the stand]” that “led to the derailment of the trial” on the softness issue.

In addition to not being material, Judge Dyk also argues that the fraud, misrepresentation, or misconduct must be attributable to the party (rather than merely to a witness).  The usual rule, according to Judge Dyk, is that false statements by expert witnesses are not attributable to the parties unless the false statements were known to be false by the party who hired the expert.

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