AIPLA Patent Year-in-Review

Patent, ,

By Jason Rantanen

I’m very much looking forward to giving the Patent Year-in-Review talk at the AIPLA annual meeting tomorrow.  If you’re at the AIPLA conference, I’d love to chat with you tonight at dinner or Saturday morning.  Look for the somewhat geeky guy with glasses.  😉

In connection with that talk, AIPLA asked me to put together an essay as well.  I posted a copy of that original essay a month ago; surprisingly, there have been developments in patent law since then! So if you’re looking for the updated version, which includes the Federal Circuit’s en banc opinion in SCA Hygiene and the Supreme Court’s grant of certiorari in Halo and Stryker earlier this week, it’s here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658737

Three Recent PTAB Decisions on Patent Eligibility

Patent,

Ex Parte Bak, Application 12/822,772 (PTAB 2015) (Owned by IBM)

Claim at issue: 1. In a network of computer controlled user interactive display stations, a method for the scheduling of meetings on the calendars of invitee users comprising:

prompting an inviter, at a sending display station, to enter into an invitation a predetermined set of general attributes for the scheduled meeting;

enabling each invitee to predetermine a set of invitee-specific attributes applicable to each invitation; and

enabling each invitee to prioritize each predetermined general attribute and each invitee-specific attribute to a numerical priority level to determine the priority of said meeting on the invitee’s calendar.

Holding: [T]he claim is directed to the abstract idea of scheduling a meeting. . . . In this case, to the extent that claim 1 requires a network of computer controlled user interactive display stations and a sending display station, we determine that the recitation of such generic component is insufficient to transform the nature of the claim into a patent-eligible application.

Ex Parte Base, Application 10/489,651 (PTAB 2015) (Owned by Siemens)

Claim at issue: 11. A method for video coding using symbols, the method performed by execution of a computer program stored on a non-transitory computer readable medium and comprising the steps of:

providing a prediction error matrix;

converting the prediction error matrix by coefficient sampling into a series of symbols; and

performing context-adaptive arithmetic encoding of the symbols, wherein the encoding includes for a symbol being encoded, selecting from different predetermined distributions of symbol frequencies a particular predetermined distribution of symbol frequencies based on the symbol encoded immediately beforehand, the predetermined distribution of symbol frequencies indicating the likelihood of different types of symbols occurring immediately following the type of the symbol encoded immediately beforehand based on known statistical interdependencies between different types of symbols occurring in succession;

wherein a number of symbols read out for coefficient sampling is encoded and transmitted.

Holding: Independent claims 11, 20, and 21 are directed to methods of video coding using symbols with three steps: providing a prediction error matrix; converting the prediction into a series of symbols; and performing context-adaptive arithmetic encoding of the symbols. These are mental process steps which can be performed in the human mind, or by a human using a pen and paper. . . . And the recitation in the preamble of independent claims 11 and 21 of performing the method “by execution of a computer program” does not transform the recited abstract idea into a patentable invention.

Ex parte Shideler, Application 11/779,876 (PTAB 2015)

Claim at issue: 12. A method of playing a story based card game associated with a predetermined story and having a series of locations associated with the predetermined story and wherein the game includes a preset number of sequential rounds, the card game comprising: a plurality of sets of location cards, one set of location cards for each of the plurality of locations associated with an aspect of the predetermined story, each set of location cards including one card for each round of the game, wherein each round includes at least one correct location card for that round, wherein each correct location card for each round includes indicia indicating that it is the correct card for that round and including a continuation of the story, whereby a series of correct locations cards for the rounds of the game combine to form a story summary, the method comprising the steps of having the players selectively choose a location card for each round and having the players repeat the selection process until one player can identify all of the correct location cards in the series of correct location cards.

Holding: It is our view that selectively choosing a card and repeating that step until a predetermined goal is reached amounts to merely receiving and evaluating data, and therefore constitutes an abstract idea. . . . [Step 2:] The use of cards having indicia specific to the subject matter of a game is well-known, well-understood, routine and conventional in the field. Thus, from our perspective, such cards, and the other limitations of claim 12, do not add “significantly more” than an abstract idea.

Stay Pending Petition Consideration.

Patent

Interesting set of motions in an E.D. Texas case that I’ve been following where one of my former students – Adam Baumli – is representing NexusCard who is asserting United States Patent No. 5,924,080 against a set of retailers.

Retailer defendants petitioned the PTO for Covered-Business-Method-Review and then immediately petitioned for a stay of the district court proceeding under AIA Section 18(b).  Although judges generally have the power to stay civil cases, Section 18(b) makes it easier to obtain a when a CBM (“transitional proceeding”) is pending.  The big problem for the defendants here is the Federal Circuit’s clear holding that the proceeding is not pending (and Section 18(b)) doesn’t apply until the PTO grants the petition.  See Intellectual Ventures v. JPMorgan (Fed. Cir. 2015).

Docs: Kroger’s Motion to Stay, Nexuscard Opposition

The CBM petition challenges the patent claims under 35 U.S.C. 101 — arguing that they lack subject matter eligibility under Alice Corp and that the patent qualifies for CBM review because it claim a method for using a financial product and is not a technological invention. KrogerCBMPetition.

Claim 1 itself is a long one with parts (a) through (q) — all relating to a method of member coupon processing:

1. The method of processing and applying merchandise discounts to a consumer’s purchases by providing a computerized membership system, said membership including a plurality of consumer members, a plurality of point of purchase merchant members, a plurality of manufacturer members, and a centralized system provider, said membership system having:

a point of purchase merchant member computer terminal and computer and a centralized provider’s computer, said provider’s computer having a database for the storage and retrieval of information, said database storing information regarding point of purchase merchant members, manufacturer members, and consumer members, in predetermined files, at least some of said information being entered into the system at the time of a member establishing membership in said system and
communication means, said communications means providing real time communication between said member merchants’ computer terminal and said provider’s computer,

comprising the steps of:

a. providing consumer members with individual identification codes, said identification codes accessing said databases;
b. storing said consumer member identification codes on said provider’s computer in a consumer database;
c. providing each consumer member with a membership ID, said membership ID having memory storage means, said memory storage means containing at least said consumer identification code;
d. storing merchandise information provided by said manufacturer members in a manufacturer member database in said provider’s computer, said merchandise information including at least a merchandise identification code and the discount on predetermined merchandise,
e. displaying to consumers indicia, said indicia identifying point of purchase merchandise subject to a price discount,
f. transporting, by said consumer, consumer selected discounted and non-discounted point of purchase merchandise to a purchase location at said merchant member to form a collection of transported merchandise, each of said transported merchandise having a merchandise identification code,
g. scanning merchandise identification codes of each of said transported merchandise, at said communication means,
h. scanning said consumer ID,
i. uploading said scanned consumer identification code, from said merchant member, through said communication means to said provider’s computer,
j. comparing said consumer identification code with consumer identification codes stored in said provider’s computer and verifying said consumer’s membership,
k. uploading said merchandise identification code for each of said scanned merchandise from said merchant member’s computer, through said communication means to said provider’s computer,
l. comparing said uploaded merchandise identification codes with the identification codes of merchandise subject to a price discount,
m. computing the discounts on said merchandise subject to a price discount,
n. downloading to said merchant’s computer through said merchant communication means, the discounts on said merchandise subject to a price discount,
o. printing a sales slip for said member consumer including the discounts for said merchandise subject to a price discount,
p. sorting and storing in said provider’s databases said uploaded data on said consumer and said merchandise purchased by said consumer,
q. storing merchant member sales data on said merchant member computer,
wherein said provider maintains and processes, in real time, discounts provided by manufacturer members to member consumers without said member merchant being required to process said discounts or member consumers being required to present coupons or file rebates to obtain said discounts.

Federal Circuit on Fee Award and Partial Stipulated Agreements

Patent,

Integrated Tech Corp (ITC) v. Rudolph Tech (Fed. Cir. 2015)

Rudolph and ITC both make testers to test semiconductor chip testers (yes, layers of testing here). Basically, their equipment looks for bent and damaged probe wires that are used in the testing process. In 2006, ITC sued Rudolph for infringing its U.S. Patent No. 6,118,894 covering testing systems and methods.

At some point after being sued, Rudolph updated its software with a redesign. However, the trial court found that both the original and the redesign infringed and awarded both enhanced damages for willful infringement (on the re-design) and attorney fees. The fees were at least partially based upon changes in Rudolph’s CEO’s testimony and the eventual revelation that he knew Rudolph’s original design was infringing but continued to argue non-infringement. In an original appeal, the Federal Circuit altered the claim construction and found that the redesign did not infringe and, as a result vacated the willfulness and attorney fee issues.

On remand, the district court then reinstated the attorney fees – finding that:

[T]he record establishes the following: Rudolph hid its infringement for years, provided false discovery responses, filed summary judgment papers even though it knew its product infringed, argued a never fully explained theory that ITC did not own the underlying patent, and during and after trial played semantic games regarding what its machines did and what functions were important to it and its customers. . . . The striking weakness of Rudolph’s position regarding its pre-2007 PRVX machines, as well as the unreasonable manner in which it litigated the case through trial and post-trial motions, satisfy the Supreme Court’s standard under § 285 for awarding fees. In fact, either the substantive strength of many of Rudolph’s litigating positions or the “unreasonable manner in which the case was litigated” make this case stand out from others. An award of fees is appropriate. The parties previously stipulated to the amount of fees [as $3.25 million].

On appeal for the second time, the Federal Circuit has now affirmed that a fee award was proper – holding that the district court did not abuse its discretion in awarding fees – particularly citing Rudolph’s CEO (Ronald Seubert’s “inconsistent deposition and trial testimony”).

Stipulating the Amount of Fees: The bulk of the Federal Circuit’s opinion focused on the stipulation — Prior to the first appeal, the parties had stipulated to the amount of attorney fees as $3.25 million. The parties agreed particularly that “Rudolph will not contest the reasonableness of ITC’s request for fees in the amount of $3,252,228.” On appeal here, however, the Federal Circuit ruled Rudolph can (despite the stipulation) still challenge the amount of fees.

The Federal Circuit implicitly agreed that the stipulated fee contract is binding, but found that it inapposite to the challenge here since the stipulation occurred prior to the first appeal and the first appeal resulted in Rudolph winning on a number of important issues (e.g., the re-design is no longer considered infringing). In particular, Rudolph is not challenging the “reasonableness” of the fees that was stipulated-to but rather whether the fee award can properly be tied to the new – much more limited – scope of liability. The Federal Circuit relied upon its contractual analysis to reach its conclusion, which suggests that a well drafted contract could have fully settled the issue. However, the court also indicated that fee award must “bear some relation to the extent of the misconduct” – thus indicating that even a well drafted fee agreement stipulation would not be enforceable if not tied to the misconduct.

A general take-away here is to also take-care with regard to contractual agreements with a party in the midst of an ongoing bet-your-business litigation – it is likely to be parsed fairly tightly and given de novo review by the Federal Circuit.

Georgia Annual Corporate IP Institute October 27-28 in Atlanta

Current Affairs, Ethics, Patent

By David Hricik

On October 27-28, 2015, the Ninth Annual Corporate IP Institute® is being held in Atlanta.  I’ll be speaking along with a lot of other folks.  As usual, the Intellectual Property Owners Association (IPO) has organized a panel for the event for corporate IP management best practices.  Registration for the Institute (and a bonus charity golf game, the CIP CUP® — these folks obviously have trademark and marketing lawyers around) is available here.

 

Patentlyo Bits and Bytes by Anthony McCain

Patent

Get a Job doing Patent Law 

Supreme Court to hear cases on Federal Circuit’s Rigid Limits on Treble Damages

Patent,

The Supreme Court has now granted certiorari in two enhanced fee award patent cases: Halo Electronics, Inc. v. Pulse Electronics, Inc., S.Ct. No. 14-1513 and Stryker Corp. v. Zimmer, Inc., No. 14-1520.

The court linked the two together and will hold one big oral arguments (one hour) focusing on whether the Federal Circuit’s rigid test limiting enhanced patent damages is appropriate — especially following the Supreme Court’s decision in Octane Fitness where the Supreme Court rejected a parallel rigid test in the fee-shifting situation.

Those familiar with treble-damages know that the Federal Circuit has created a complex and rigid test for determining whether such awards may be granted.  The statute though is simple and only states that “the court may increase the damages up to three times the amount found or assessed.” 35 U.S.C. 284.

In this case, the Supreme Court is very likely to require flexibility – what is unclear is what level of flexibility will be allowed. For instance, will enhanced damages continue to be limited to willful infringement?

= = = = =

Questions presented (both of these appear to be in close parallel):

Halo: Whether the Federal Circuit erred by applying a rigid, two-part test for enhancing patent infringement damages under 35 U.S.C. § 284, that is the same as the rigid, two-part test this Court rejected last term in Octane Fitness, LLC v. ICON Health & Fitness, Inc. for imposing attorney fees under the similarly-worded 35 U.S.C. § 285.

Stryker: Whether the Federal Circuit improperly abrogated the plain meaning of 35 U.S.C. § 284 by forbidding any award of enhanced damages unless there is a finding of willfulness under a rigid, two-part test, when this Court recently rejected an analogous framework imposed on 35 U.S.C. § 285, the statute providing for attorneys’ fee awards in exceptional cases.

 

Federal Circuit: Prior Art Enabled by Applicant Admissions in his Patent Application

Patent, ,

by Dennis Crouch

In re Steve Morsa (Fed. Cir. 2015) (Morsa II)

This is the return-appeal, a divided panel has now agreed with the patent office that its cited prior art is sufficiently enabling to serve as an anticipating reference.

In its 2013 Morsa decision (Morsa I) involving the same issues, the Federal Circuit ruled the PTO had applied the incorrect prior-art-enablement procedure and remanded.  The disclosure in question is a short press-release from Peter Martin Associates that announces a product known as “HelpWorks” that allows folks to “use the Web to screen themselves for benefits, services, health risks, or anything else an agency wishes to implement via its eligibility library.”  Morsa’s claim in question – Claim Number 271 – is directed toward a “benefit information match mechanism” that requires (1) storing benefit registrations; (2) receiving a benefit request; (3) determining whether the request matches a registration; and (4) providing a benefit results — all “at least in part via a computer compatible network.”

Enabling Prior Art: A prior art reference being used for anticipation must be enabling.  To be anticipating, the prior art must “teach a skilled artisan … to make or carry out what it discloses in relation to the claimed invention without undue experimentation.”  However, during patent prosecution prior art cited by the USPTO is presumed to be enabling unless that issue is directly challenged by the patent applicant.  In Morsa I, the Federal Circuit ruled that an applicant’s direct challenge shift’s the burden to the PTO if it is a “non-frivolous argument that cited prior art is not enabling.”

While an applicant must generally do more than state an unsupported belief that a reference is not enabling, and may proffer affidavits or declarations in support of his position, we see no reason to require such submissions in all cases. When a reference appears to not be enabling on its face, a challenge may be lodged without resort to expert assistance. Here, Morsa identified specific, concrete reasons why he believed the short press release at issue was not enabling, and the Board and the examiner failed to address these arguments.

On remand following Morsa I, the PTO particularly addressed Morsa’s enablement argument and ruled that the anticipating reference was enabled — finding that the reference taught everything that person with ordinary computing kills needed to know in order to make and use Morsa’s claimed invention.  Now on appeal, the Federal Circuit has affirmed.

In the process, the court made a set of important findings. First, the starting point of this analysis is the level of knowledge of a skilled artisan as of Morsa’s critical date — and the question is whether the prior art reference enables that skilled artisan to create Morsa’s invention.  Building upon this starting point, the court included a number of admissions from Morsa’s application. In particular, Morsa had indicated in his background section that several different aspects of the invention (processors, memory, search routines, etc.) were  “within the knowledge of those of ordinary skill in the art.”  The court next focused a bit on Morsa’s claimed invention — finding that in includes only four basic claim limitations and that “each of those limitations can be mapped directly onto the [prior art] reference.”

Writing in dissent, Judge Newman offers the following:

The Board recognized that some of the claim steps are not described in the press release. The Board solved this dilemma by taking what it called “Official Notice” of the missing subject matter. And my colleagues solve this dilemma by finding the missing subject matter in the Morsa specification by stating that since the specification states that a person skilled in the art would know how to “implement” the claimed system, that person would have “knowledge” to fill the gaps in the prior art. However, we are directed to no disclosure in the prior art of all the claim elements and steps. “Anticipation” is not established in accordance with law.

“Official Notice” is not anticipation. . . The applicant’s specification is not prior art . . . [Rather] Enablement of the prior art must come from prior art.

= = = = =

I have pasted below the entirety of the 1999 press release being used as prior art.

CHICAGO–(BUSINESS WIRE)–Sept. 28, 1999–

Peter Martin Associates is moving eligibility screening one step closer to public availability with the announcement that its expert screening solution, HelpWorks(TM) is now Web enabled.

The launch of HelpWorks Web Edition(TM) took place today at the APHSA-ISM (American Public Human Services Association – Information Systems Management Conference) in Columbus, Ohio. The talk at the conference was the Government’s migration to e-commerce empowering the public to avoid long lines and seemingly endless forms to secure government services.

HelpWorks(TM) is a state-of-the-art software program designed to help maximize the benefits and services that consumers receive from Government agencies. It can be configured to evaluate any or all benefits and programs required – Federal, State and/or local.

HelpWorks Web Edition(TM) supports both a professionally-directed deployment model – in which end users are professional caseworkers – or as stated above, a self-service model in which consumers use the Web to screen themselves for benefits, services, health risks, or anything else an agency wishes to implement via its eligibility library.

The power behind this unprecedented flexibility in application and access is PMA’s newly released Expert Eligibility Server(TM) (EES) technology. The EES engine allows an agency to utilize HelpWorks Web Edition(TM) as well as other applications that will leverage this dynamic technology. With EES as the backbone, agencies can rapidly deploy eligibility solutions for touch-screen kiosks, interactive voice response systems, the Web and many other platforms.

Peter Martin Associates is the premier provider of software designed to support public and private social service agencies, focusing on family centered case management, information and referral, and eligibility screening. Information about Peter Martin Associates may be found on the web at www.petermartin.com.

Guest Post: A Small Practice Note on Patent Family Licensing with a Billion Dollar Effect?

Patent,

By François deVilliers, Chief IP Counsel, Plantronics, Inc.

When negotiating a patent license, the family of patents may not have matured fully yet. The “Licensed Patents” are thus normally expressly defined to be “anything related” to the original patents (typically continuing applications and foreign counterparts) and are listed in an exhibit that may be updated during the term of the agreement as additional patents issue or are filed. The term of the license agreement is then usually defined as ending upon “the expiry date of the last to expire of the Licensed Patents.”

There may only be one or two relevant patents but the Licensee is typically amenable to a broader definition of Licensed Patents because this could reduce the likelihood that the Licensor will come knocking again and there is a perception that more licensed patents equals more value. If the license is fully paid up then there is no real problem – a broader definition of Licensed Patents may in fact be better and the expiry date is irrelevant except perhaps for amortization by the accountants.

If there are ongoing royalties then there are a number of concerns.

Firstly, if there is no defined end date when the contract details are entered into the relevant legal and financial systems, there might be no flag to cease royalty payments when the license finally expires. Don’t expect the licensor to notify the licensee of the end date either when it becomes determinable or when it arrives. Do an audit right now of patent license agreements and payments, determine the expiry dates if possible or docket a reminder if not possible and investigate whether any post-expiry license payments have been made and if they can be recovered.

Secondly, licensors have been known to add later-expiring, irrelevant but ostensibly “related” patents to updates of their exhibits. While the US twenty year patent term has alleviated this problem somewhat, all it takes is one “related” patent with a significant patent term adjustment for a licensee to be on the hook for another year or two. Review any updates to exhibits and reject any that add later-expiring irrelevant patents. Be mindful though of the language of the agreement – there may be a risk of a breach of contract claim.

Thirdly, foreign counterparts may expire a year later than their local counterparts. A first-filed US patent without a term extension will expire twenty years from its filing date, while a corresponding UK patent filed up to a year later claiming priority from the US filing will expire twenty years from its filing date. If the license agreement does not comprehend geographic differences in the royalties due, the licensor may end up paying post-expiration royalties in its biggest market as a result of the existence of a later-expiring patent in an irrelevant market.

Of course the best time to deal with these issues is at the time the agreement is negotiated. If at all possible, specify or negotiate a specific date when the license terminates based on the expiry date of a representative and relevant patent. Provide that the license becomes fully paid up on this expiry date with respect to all related or “Licensed Patents” to avoid the possibility of a post-expiry claim based on an extended or later-expiring related patent. If it is not possible to specify an explicit expiry date, include “relevant” in the definition of related patents and require that the licensor motivate any update to the exhibit listing the Licensed Patents. Alternatively (or in addition), provide for breach-free rejection of an updated schedule by the licensor even if the added patent(s) fall within the strict definition of “related patents.” Further, make sure that patents in lesser jurisdictions don’t extend payments in the most important jurisdictions. Finally, the recent Kimble v. Marvel Entertainment ruling reaffirming the bar on post-expiry royalties may be of assistance in any negotiation.

Federal Circuit Denies En Banc Request in BPCIA case

Patent

by Dennis Crouch

Following the Federal Circuit’s first interpretation of the Biologics Price Competition and Innovation Act (“BPCIA”), neither the patentee (Amgen) nor the biosimilar applicant (Sandoz) were satisfied. Each petitioned separately for en banc rehearing and both petitions have now been denied in a per curium opinion.  (Background from Andrew Williams at PatentDocs). Both parties will likely petition the Supreme Court for further interpretation of the “biologics patent dance”

[AmgenSandozDenial]

US Patent Application Filings for FY 2015

Patent

By Jason Rantanen

The USPTO recently released the data on the number of patent applications filed in Fiscal Year 2015 via its Data Visualization Center (i.e.: the Dashboard) page.

Based on this data, the number of patent applications hasn’t taken a nosedive.  Instead, applications have remained at the same level as the preceding year.  The number of UPR (Utility, Plant and Reissue) applications did drop by about 0.5% as compared with Fiscal Year 2014, but that’s a very small change, especially when compared with the growth in UPR filings over the past several years.  In addition, when Requests for Continued Examination are broken out (the PTO includes RCEs in its numbers of UPR filings on the Dashboard spreadsheet), the number of applications actually rose by about 1%.

Figure 1 depicts the numbers of UPR applications filed per fiscal year, with and without RCEs.  (Additional note: these numbers do not distinguish between applications that do not claim the benefit of an earlier U.S. application and those that do, such as continuations and continuations in part.  Also, historically plant and reissue applications have made up a de minimus proportion of the UPR applications (about a thousand of each per year).)

UPR - FY 2015To check whether there might have been a sudden drop at the end of the year that affected these results, I also plotted the cumulative numbers of applications filed on a monthly basis for each fiscal year from 2009-2015. Fiscal year 2015 really doesn’t look all that different from Fiscal Year 2014 when viewed on a monthly basis and there’s no sudden unexpected dropoff at the end.

Applications - Time Series (2015)

Finally, I graphed the numbers of design patent applications filed each fiscal year.  I was a bit surprised that design patent applications were essentially flat as compared to FY 2014, indicating that – so far at least – there hasn’t been a huge surge in these applications.

Design applications 2015

 

Life Tech v. Promega: Inducing with Yourself

Patent

InducingYourselfIn Life Technologies Corp. v. Promega Corp., the Supreme Court has asked for the views of the Solicitor General — greatly raising the likelihood that the high court will take the case.  The kicker will be how the US Gov’t responds.

The case centers around Life Technologies’ international sales of genetic testing kits.  A portion of the kit included Taq polymerase that was manufactured in the US and sent to the UK where it was combined with additional components to produce the infringing kit.  Of course, the UK manufactured kit isn’t infringing under ordinary U.S. patent law because it is being manufactured, sold, and used outside of the US.  However, Section 271(f) of the Patent Act provides a cause of action for infringement based upon export of components of a patented invention to be combined abroad.

This case focuses on Section 271(f)(1) that provides:

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

The elements of infringement under Section 271(f)(1) appear to be:

  • Supply or cause to supply in or from the US;
  • A substantial portion of the components of a patented invention in uncombined form; and
  • In a way that actively induces the combination outside of the US in a manner that would infringe the patent if it had been combined within the US.

In finding for the patentee, the Federal Circuit made two interesting decisions:

  1. The exporter can induce itself to combine the components abroad.
  2. A single component (here the Taq polymerase) can serve as “a substantial portion of the components.”

In his essay on the decision, Jason Rantanen wrote that these holdings are “probably erroneous—doctrinal developments.”

Now, in its petition for certiorari, the adjudged infringer has followed Prof. Rantanen’s lead and asks the following questions:

  1. Whether the Federal Circuit erred in holding that a single entity can “actively induce” itself to infringe a patent under 35 U.S.C. § 271(f)(1).
  2. Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.

 

The basic arguments here stem from the Supreme Court’s prior statements that 271(f) should be interpreted narrowly.  In his amicus brief supporting the petition, Dean Tim Holbrook argues that the Federal Circuit “consistently fails to consider the presumption against extraterritoriality” and that important interpretive doctrine leads to the conclusion that the court went too far here.

Next step in the case will be a brief submitted by the US Government staking out its position as to whether export should count as infringement. Although I am sympathetic to Holbrook’s position, the US administration is active enough in patent cases so that it can be the one making the argument if the case so warrants.

Steed: Proving Conception

Patent

In re Steed (Fed. Cir. 2015)

This decision offers an example of failures of the first-to-invent regime. Basically, Steed (acting pro-se in a pre-AIA application) attempted to swear behind a 102(e) prior art reference.  However, prior conception, diligence, and reduction-to-practice all must be proven with documentary evidence. Here, the applicant submitted a Section 131 declaration attempting to show prior conception, diligence, and reduction to practice, but the evidence submitted was ultimately found lacking.

Through a series of cases, the courts have defined invention more as a process than a point in time.  This process is triggered and begins with an inventor’s (or inventors’) conception of the invention that includes a “definite and permanent idea of the complete and operative invention,” including all of the elements of the eventually claimed invention.  Although conception seemingly occurs in the mind of inventors, the evidentiary requirements demand written proof of conception.  Although invention is triggered by conception the process is not deemed complete until the idea has been actually reduced to practice (RTP).  Today, few patent applicants actually reduce their idea to practice prior to filing (certainly not covering all of the claimed arrangements), however, the the courts have deemed the filing of a patent application satisfying the patentability requirements to be a constructive reduction to practice.   In essence, the courts have noted that the elements of invention were not actually completed, but we will close our eyes and simply assume the legal fiction.

Here, the patent applicants had a number of documents showing that they were working on a variety of ideas. However, nothing submitted was sufficient to show that the applicants had conceived of the whole idea (with the claim limitations being sought) prior to the critical prior-art date.

The point here is that it is hard to prove a prior invention date unless you have kept very good records enough to prove an early conception date of the invention that you are now claiming.

= = = = =

An odd aspect of the case involved the PTO’s argument that the pro-se inventors had waived their arguments associated with proving an early date of actual reduction to practice. Basically, in briefing the applicants had stated that their evidence showed a prior constructive reduction to practice even though it was clear that the applicants were attempting to prove prior actual reduction to practice.  Since the applicants had used the wrong word, the PTO solicitor argued that the applicant waived their right to argue actual reduction to practice. On appeal, the Federal Circuit rejected the waiver argument, but ultimately found that the applicants had not proven actual reduction to practice.

= = = = =

One take-away from this case is the importance of relying upon highly qualified patent counsel. Although the AIA has largely eliminated the particular issues in this case, a large number of pitfalls remain to trap the unwary.

 

Federal Circuit Operating Procedure: Affirm PTO Decisions Without Opinion

Patent

The Federal Circuit released two more “Rule 36” from the Federal Circuit: Hill-Rom Services, Inc. v. Stryker Corporation; and First Quality Baby Products v. Kimberly-Clark Worldwide, Inc. Both of these cases involved the patentee appealing PTAB obviousness determinations during reexamination proceedings.

The Federal Circuit’s local Rule No. 36 provides:

Rule 36. Entry of Judgment – Judgment of Affirmance Without Opinion

The court may enter a judgment of affirmance without opinion, citing this rule, when it determines that any of the following conditions exist and an opinion would have no precedential value:

(a) the judgment, decision, or order of the trial court appealed from is based on findings that are not clearly erroneous;

(b) the evidence supporting the jury’s verdict is sufficient;

(c) the record supports summary judgment, directed verdict, or judgment on the pleadings;

(d) the decision of an administrative agency warrants affirmance under the standard of review in the statute authorizing the petition for review; or

(e) a judgment or decision has been entered without an error of law.

Since January 2015 (10 1/2 months), the court has issued 101 precedential opinions.

Although the two cases here do seemingly turn on factual questions, they also deal with obviousness – which is the key issue in the vast majority of Patent Office decisions.

Over the past year, the Federal Circuit has decided a large number of Patent Office appeals with R.36 judgments or non-precedential opinions.  Looking at Federal Circuit decisions since January 1, 2015 that stem from Patent Office appeals: approximately 20% are precedential opinions; 20% are non-precedential opinions; and 60% are Rule 36 affirmances without any opinion at all.

IPO Executive Director: Mark Lauroesch

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Mark LauroeschI wanted to take a moment to welcome Mark Lauroesch as the new Executive Director of the Intellectual Property Owners Association (IPO) following the retirement of longtime director Herb Wamsley.  Lauroesch was previously in house counsel with Corning for 20 years, including 10 years as VP and General IP Counsel.  Congratulations on the new role! 

Phil Johnson (J&J) remains president of the IPO Board of Directors with Carl Horton  (GE) as VP and Kevin Rhodes (3M) as treasurer.

Federal Circuit Summarily Affirms Apple v. Samsung judgment without Merits Briefing

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Apple v. Samsung (Fed. Cir. 2015) (SamsungSummaryAffirm)

Most recently in the patent battle between Apple and Samsung, district court Judge Koh awarded $550 million to Apple for based largely upon design patent infringement findings.  That awarded followed immediately after the Federal Circuit’s 2015 remand to Judge Koh “for immediate entry of final judgment.”  Samsung is again appealing the damages ruling, but meanwhile there remains the question of whether Samsung needs to go ahead and pay the money or can stay execution of the judgment.

The Federal Rules of Civil Procedure allow a party to stay payment of money damages (but not injunctive relief) pending appeal of a final judgment and upon payment of a “supersedeas bond.”

Fed. R. Civ. Pro. 62(d): Stay with Bond on Appeal. If an appeal is taken, the appellant may obtain a stay by supersedeas bond…. The bond may be given upon or after filing the notice of appeal or after obtaining the order allowing the appeal. The stay takes effect when the court approves the bond.

Here, Samsung requested that Judge Koh accept $600 million as the bond, but Apple objected – arguing that Samsung’s substantive appeal is frivolous.  Because Judge Koh had not ruled on the bond request, Samsung filed an emergency appeal to have the Bond accepted.  As part of its briefing, Apple also requested “Summary Affirmance” of the district court’s final judgment regarding the half-billion-dollar judgment.

In the appeal, the Federal Circuit has sided with Apple – not only refusing to grant the bond but also summarily affirming Judge Koh’s damages award (that was already subject to a prior appeal).

Summary affirmance is appropriate when “the position of one party is so clearly correct as a matter of law that no substantial question regarding the outcome of the appeal exists.” Joshua v. United States, 17 F.3d 378, 380 (Fed. Cir. 1994). We have reviewed the parties’ arguments and conclude that summary affirmance is appropriate.

The Federal Circuit had granted a temporary stay of execution of the award and indicated that the stay would continue for seven days and by that time Samsung must have paid the money or be in contempt of court (absent action from the en banc Federal Circuit court or the Supreme Court).

In all likelihood, Samsung will immediately (today or tomorrow) file a request for rehearing and the en banc court may agree with the adjudged infringer that the summary affirmance shortcut was too quick.  In its briefing, Samsung wrote:

A motion for approval of a supersedeas bond is not … the proper vehicle to decide or even address the merits of an appeal. Indeed, Apple cites no decision permitting such an inquiry in this context, let alone one disapproving a supersedeas bond based on such an inquiry.

If it ever reached the merits, Samsung has indicated its planned appeal strategy on the following questions:

  1. Whether the PTO’s final decision* invalidating a patent-in-suit is entitled to collateral estoppel effect in a pending federal court case.
  2. Whether a district court my enter a partial final judgment that does not satisfy Fed. R. Civ. Pro. 54(b).

Absent en banc rehearing, those issues will not be addressed in this case.

= = = = = =

* The “PTO Final Decision” raised by Samsung refers to one of Apple’s infringed patents – No 7,844,915.  That patent has been working its way through the third-party-requested ex parte reexamination process since 2012.  Most recently, the examiner issued a final rejection of the asserted claims and that judgment was affirmed by the PTAB and Apple’s request for rehearing denied.  The patent covers the “pinch-to-zoom” feature of Apple’s iPhone.

Pending Cases at the Supreme Court

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As we sit here today, there are no pending patent cases before the Supreme Court where the court has granted certiorari.  That said, there are a large number of pending petitions.  These include Cuozzo & Pulse that I have previously discussed. WilmerHale has been covering these, but is a few months behind.

The following are a few recently filed petitions:

Teva Follow-On: FiveTech v. SouthCo: (1) Can the Federal Circuit limit the role of the intrinsic evidence in construing patent claims under the exacting “lexicography and disavowal” standard; (2) Does the “lexicography and disavowal” standard improperly circumscribe the objective standard of the person of ordinary skill in the art in construing claim terms.

Teva Follow-On: Chunghwa Picture Tubes v. Eidos: Whether a district court’s factual finding(s) underlying its construction of a patent claim term must be reviewed for clear error under Rule 52(a)(6) as this Court held in Teva, or is an exception created to clear error review where the appellate court finds the intrinsic record clear after a de novo review of that record, as the Federal Circuit held in this case.

Attorney Fees in Copyright:

Kirtsaeng v. John Wiley (Kirtsaeng II): What is the appropriate standard for awarding attorneys’ fees to a prevailing party under § 505 of the Copyright Act?

Omega v. Costco (Costco II): (1) Can Copyright attorney fees be based on a finding that petitioner engaged in copyright misuse when the issue of misuse was appealed but left undecided on appeal? (2) Can the pursuit of a claim of copyright infringement constitute “copyright misuse” when the allegedly infringing copy is a “pictorial, graphic, or sculptural work” that is reproduced in a “useful” article.

Inter Partes Review Challenges:

Automated Merchandising v. Michelle Lee: (1) Must the federal judiciary await the substantive conclusion of an agency proceeding before it can evaluate whether an express statutory limitation on that agency’s jurisdiction requires that agency to terminate its proceeding? (2) Did the Federal Circuit err in refusing to order the USPTO to terminate the subject inter partes reexaminations under 35 U.S.C. § 317(b)?

Luv N’ Care v. Munchkin: Did the Federal Circuit err by affirming a PTAB administrative judgment based on new issues raised sua sponte by the PTAB at the Final Hearing, thus depriving the patent owner of notice and a meaningful opportunity to respond?

ANDA Loophole Cases:

Mylan v. Apotex:  (1) Whether Article III’s case or controversy requirement can be satisfied by a suit which seeks a judgment of non-infringement of a disclaimed patent. (2) Whether Congress can create Article III jurisdiction by imposing statutory consequences that turn on obtaining a judgment of non-infringement of a disclaimed patent.

Daiichi Sankyo v. Apotex: Whether an action seeking a declaration judgment of non-infringement presents a justiciable case or controversy under Article III of the Constitution where the patent at issue was previously disclaimed and thus cannot be enforced.

Design Patent Summary Judgment: Butler v. Balkamp: Is summary judgement proper in a District Court when a factual dispute exists in a Design Patent action and the District Court substitutes its own opinion for that of the ordinary observer?

Reasons to Combine and Obviousness: Arthrex v. KFX Medical: (1) Is the “reason to combine” inquiry a subsidiary question of fact, subject to deferential review on appeal, or a legal question for the court, and reviewed de novo. (2) Should the ultimate legal issue of obviousness be resolved by the court rather than submitted to the jury for resolution.

Trans Pacific Partnership IP Chapter

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The final draft document for the Trans Pacific Partnership (TPP) agreement intellectual property chapter has apparently been provided by Julian Assange at WikiLeaks.

Some highlights:

Article QQ.E.1:

  1. Subject to paragraphs 3 and 4, each Party shall make patents available for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step, and is capable of industrial application.
  2. Subject to paragraphs 3 and 4 and consistent with paragraph 1, each Party confirms that patents are available for inventions claimed as at least one of the following: new uses of a known product, new methods of using a known product, or new processes of using a known product. A Party may limit such processes to those that do not claim the use of the product as such.
  3. Each Party may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to nature or the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law. Each Party may also exclude from patentability: diagnostic, therapeutic, and surgical methods for the treatment of humans or animals; animals other than microorganisms; and essentially biological processes for the production of plants or animals, other than non-biological and microbiological processes.
  4. Each Party may also exclude from patentability plants other than microorganisms. However, consistent with paragraph 1 and subject to paragraph 3, each Party confirms that patents are available at least for inventions that are derived from plants.

Article QQ.E.11: {Publication of Patent Applications}

  1. Recognizing the benefits of transparency in the patent system, each Party shall endeavor to publish unpublished pending patent applications promptly after the expiry of 18 months from the filing date or, if priority is claimed, from the priority date.
  2. Where a pending application is not published promptly under paragraph 1, Parties shall publish such application or the corresponding patent as soon as practicable.
  3. Each Party shall provide that an applicant may request the early publication of an application prior to the expiry of the period mentioned in paragraph 1.

Remedies:

6. Each Party shall ensure that its judicial authorities shall have the authority to order a party at whose request measures were taken and who has abused enforcement procedures with regard to intellectual property rights including … patents, copyright and related rights, and industrial designs, to provide the party wrongfully enjoined or restrained adequate compensation for the injury suffered because of such abuse. The judicial authorities shall also have the authority to order the applicant to pay the defendant expenses, which may include appropriate attorney’s fees.

The provisions on Pharma, Ag, Biotech Data Protection, and Trade Secrets need further analysis.

– DC

The Concentrated Market of Patent Jurisdictions

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The chart below shows the relative distribution of new patent lawsuit filings (complaints) over the past decade.  I included the top four most popular jurisdictions (E.D.Tex., D.Del., C.D.Cal., and N.D.Cal.) and also a catch-all category for the sum of the other 90 or so districts in the country.  LawsuitDistribution

You’ll note that E.D.Tex. has been the leading district almost every year for the past decade, but that growth has increased since the AIA (2011) and even further increased in 2014 and 2015.  Part of ramp-up comes from the fact that the E.D.Tex. cases already had more defendants-per-patent and the joinder provisions of the AIA could be seen as a natural expression of that phenomenon.  However, the rise in 2015 can’t be so easily explained.

If you calculate the HHI, this now looks like a very concentrated market.