If you thought Alice v CLS Bank lacked a useful analytic structure

Patent,

wait until you read Aereo.

By Jason Rantanen

American Broadcasting Cos., Inc. v. Aereo, Inc. (2014) Download ABC v Aereo

This morning the Supreme Court issued the much-awaited opinion in American Broadcasting Cos. v. Aereo, in which a 6-3 majority concluded that Aereo’s subscription television service, which uses thousands of small antennas and other equipment housed in a warehouse, violates the petitioners’ exclusive rights to perform their copyrighted works publicly within the meaning of the Transmit Clause.  Writing for the majority, Justice Breyer eschewed formal distinctions, instead reasoning that if it’s basically the same as a duck, it’s a duck:

In other cases involving different kinds of service or technology providers, a user’s involvement in the operation of the provider’s equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act.  But the many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here.  We conclude that Aereo is not just an equipment supplier and that Aereo “perform[s].”

Much of the critiques and discussion immediately following the release of the opnion focused on the difficulty in applying this “looks-like-cable-TV” rule to the vast ecosystem of current and emerging content access, distribution and dissemination technologies.  These criticisms mirror points made by Justice Scalia in dissent (who used the “looks-like-cable-TV” term):

III. Guilt By Resemblence

The Court’s conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs.  [] That reasoning suffers from a trio of defects

(Internal citation omitted).

While Aereo unquestionably has profound implications for the technology sector generally, for patent law purposes it offers another insight into how the Judges might approach the issue of claim construction that is currently being briefed in Teva v. Sandoz.  Aereo involved a question of statutory interpretation – itself undeniably a question of law.  Here, the majority adopted a legislative history/legislative intent/legislative purpose that resulted in something akin to the “essence” of the statute being what was really important.  The dissent would have applied a much more formal textualist approach in ascertaining its scope.  It is the first of these two approaches that seems to me to be strikingly similar to how the Court has approached patent claims in recent opinions when directly confronted with substantive issues in cases such as KSR, Bilski, and Alice.  If the Court does embrace a more purposivist approach to claim construction in Teva, it would be dramatically alter the landscape of patent claims even more than its decisions on substantive doctrines such as nonobviousness and patentable subject matter.

Of course, the question presented in Teva is nominally only about the question of whether deference to district courts on issues of claim construction is appropriate, not about claim construction philosophies generally.  That said, it seems to me that it will be difficult for the Court to avoid interjecting its views on claim construction into whatever opinion it issues on deference.

Hindsight in 101 Jurisprudence: an early morning half-baked thought or an insight?

Patent,

Dennis is on vacation and said I could post so I’m running with it!

The analysis everyone suggests is right under 101 (recall I don’t think it’s an invalidity defense; not sure what impact, if any, it has on patentability) goes something like this:

Is the claim “directed to” some natural law/natural thing/abstract idea?

If so, there must be more than ‘conventional’ application of it.

Applying that to a lot of medical method claims (Ariosa v. Sequenom is discussed by others below), the problem is that, before the discovery of the natural thing/idea/law, no one knew that you could apply anything to do whatever the claim says.  Nothing was “conventional” with respect to the newly discovered thing/law/idea.

By asking what’s conventional, we are importing hindsight.

Thoughts, or am I not yet awake and Dennis should come back and get this ship righted?

One last thought for those of you who think “invention” has meaning beyond 103.  I think the legislative history is beyond clear, as is the statute, but here’s a committee report:

“The major changes or innovations in the title consist of incorporating a requirement for invention in § 103 and the judicial doctrine of contributory infringement in § 271.”

 

The Three Faces of Prometheus: Alice and Generic Application

Patent, , ,

Today continues our mini-symposium on Alice v. CLS Bank with a guest post by Jeffrey A. Lefstin, Professor at the University of California, Hastings College of the Law.  

Alice Corp. marks the Supreme Court’s eighth subject-matter eligibility case since the 1952 Act. Without question, the most problematic aspect of the Supreme Court’s § 101 jurisprudence has been discerning the actual test for patent-eligibility. In Mayo v. Prometheus, the Court purported to establish a general framework for subject-matter eligibility: that to be patent-eligible, a claim must include an “inventive concept” beyond an underlying fundamental principle, such as a law of nature, natural phenomenon, or abstract idea. The Court’s omission of significant reference to Mayo in Association for Molecular Pathology raised some doubt as to whether Mayo defined a universal test for eligibility under § 101.  Yet Alice Corp. appears to confirm that Mayo is a universal framework for discriminating between ineligible principles and patent-eligible applications.

Mayo’s ambiguity led to the Federal Circuit’s fracture when it heard CLS Bank en banc.  Mayo suggested three possible tests for patent-eligibility, without committing definitively to any one of them:  inventive application, pre-emption, and “more than just apply it.” Justice Thomas’s opinion in Alice does not expressly commit to a single interpretation of Mayo. Yet Thomas’s presentation of Mayo, his framing of the Court’s prior precedent, and his application of Mayo to Alice’s claims all indicate that Alice endorses the last aspect of Mayo: that a claim must do more than set forth a fundamental principle and add a generic instruction to “apply it.”  If this interpretation is correct, then Alice may in the long run be more significant for fields such as biotechnology, where Mayo’s “inventive application” aspect has cast doubt on the patent-eligibility of many discovery-based inventions.

Mayo’s first test of patent-eligibility is a test for inventive, or non-obvious, application of a fundamental principle.  Drawing from Flook, where Justice Stevens wrote that “conventional and obvious” post-solution activity cannot transform an unpatentable principle into a patentable process, and Funk Brothers, where Justice Douglas held that a composition of matter was not patentable because the patentee’s application was “a simple step” once his discovery was assumed away, Justice Breyer invalidated Prometheus’s claims because the steps of the claimed method beyond the underlying natural law were merely “well-understood, routine, conventional activity already engaged in by the scientific community.” Breyer contrasted those steps with the additional steps claimed in Diamond v. Diehr, which in context were not “obvious, already in use, or purely conventional.”  The Mayo Court drew support for this test from the Court of Exchequer’s 1843 opinion in Neilson v. Harford, where the patent was said to have been sustained because the patentee implemented his newly discovered principle “in an inventive way.”*  This view of Mayo – that obvious applications of fundamental principles are not patent-eligible – was the one taken by the Northern District of California in the Ariosa v. Sequenom litigation, where Judge Ilston invalidated Sequenom’s claims largely because once Sequenom’s discovery of cell-free fetal DNA in the maternal bloodstream was assumed to be known, the application in the form of a test for fetal abnormalities required only routine and well-known methods of DNA amplification.

The second test of eligibility suggested by Mayo is a test of pre-emption. The Court explained that subject-matter exclusions were grounded in pre-emption, echoing Benson’s concern that patents should not monopolize “the basic tools of scientific and technological work.”  Mayo seemed to state that pre-emption was analytically secondary to categorical exclusion:  the concern that Prometheus’s claims would tie up too much future use of the underlying natural laws “simply reinforces our conclusion” that the claimed processes were not patent-eligible.   Yet Breyer’s opinion intertwined pre-emption with inventive application as a criterion for patent-eligibility:  Diehr was described as a case where the patentee had not sought to pre-empt the use of the Arrhenius equation. While the patentee in Flook had failed to “limit the claim to a particular application,” the supposedly unconventional steps in Neilson had “confined the claims to a particular, useful application of the principle.” This interpretation of Mayo was followed by the majority of the Federal Circuit when it heard CLS Bank en banc. Both Judge Rader and Judge Lourie rejected the notion that Mayo’s “inventive concept” demanded “inventiveness” in the sense of a non-obvious application. And while they disagreed on the proper framework, both Judge Lourie and Judge Rader founded their analyses on the question of whether Alice’s claims would pre-empt every practical application of the underlying abstract idea.

But Mayo suggests a third test beyond inventive application or pre-emption: that a claim must represent more than a mere direction to apply a fundamental principle. According to Justice Breyer, one could not transform a law of nature into a patent-eligible application by simply disclosing the law of  nature, and adding the words “apply it;” Einstein or Archimedes, for example, could not have patented their famous discoveries by merely appending an instruction to apply them. This aspect of Mayo has received the least attention in subsequent cases and commentary. And yet in Justice Thomas’s opinion in Alice, it is this aspect of Mayo that becomes the core of the doctrine.

In Alice’s framework, once it has been determined that a claim is drawn to an abstract idea, ‘step two’ of the Mayo test is to determine whether it contains an “inventive concept” sufficient to transform the claim into a patent-eligible application. But in contrast to Flook and Mayo, “inventive concept” in Alice bears little trace of “inventiveness.” Justice Thomas does describe the computer implementation in Alice as “conventional.” But nowhere does he label it non-inventive, and the word obvious is conspicuously lacking from the opinion. And while Alice hardly addresses the Federal Circuit’s opinions at all, it may be significant that Thomas never contradicts Judge Lourie’s and Judge Rader’s rejection of “inventiveness” as an aspect of “inventive concept” in their CLS Bank opinions.
The contrast between Alice and Mayo is most apparent in their treatment of Diehr.  In Mayo, the claims in Diehr represented an inventive application of the Arrhenius equation, and were not “obvious, already in use, or purely conventional.” But in Alice, the claims in Diehr were sustained not because they were non-obvious, but because “they improved an existing technological process,” and achieved a result the industry had not been able to obtain. Likewise, in Mayo, the failing of the Flook claims was that the steps of the claim were well-known, conventional or obvious; in Alice, while Thomas notes that the Flook implementation was purely conventional, Flook primarily stands for the proposition that limitation to a particular technological environment does not render an abstract idea patent eligible.

As for pre-emption, which intertwined so closely with inventive application in Mayo, is hardly present for ‘Mayo step two’ in Alice. Again the characterization of precedent is telling: in Mayo, the claim in Benson was vulnerable because it was “overly broad.”  In Alice, Benson requires a “new and useful” –  but not inventive – application of an idea for patent eligibility, but the lesson of Benson is that simply implementing a principle on a computer is not a patentable application.

For Justice Thomas, the ‘step two’ inquiry involves neither inventiveness nor pre-emption, but revolves around Mayo’s proscription against “more than just apply it.” Alice follows Flook and Mayo in holding that “conventional” activity cannot transform a principle into a patent-eligible application, but in Alice “conventional” seems to connote generic more than it connotes obvious.  Thus Thomas introduces ‘step two,’ the search for an inventive concept, by invoking the third aspect of Mayo: patent-eligible application requires more than a statement of the abstract ideas plus the words ‘apply it.’  And while Thomas notes that the measuring steps in Mayo were “well known in the art,” he again quotes the ‘more than apply it’ language from Mayo to establish that those steps adding nothing of significance to the underlying natural law.

Most significantly for the Alice analysis, Thomas ends his summary of Mayo by quoting language that played little role in Mayo itself: it was not that conventional steps cannot supply an ‘inventive concept,’ but “conventional steps, specified at a high level of generality” (emphasis added) could not supply an inventive concept. For it is genericness, not lack of invention or pre-emption, that dominates the remainder of Thomas’s opinion.  His summary of the Court’s § 101 jurisprudence touches upon the notion of pre-emption, but emphasizes above all else the requirement of “more than generic” application:

These cases demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Nor is limiting the use of an abstract idea “‘to a particular technological environment.’ ” Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to “implemen[t]” an abstract idea “on . . . a computer,” that addition cannot impart patent eligibility. This conclusion accords with the pre- emption concern that undergirds our §101 jurisprudence. Given the ubiquity of computers, wholly generic computer implementation is not generally the sort of “additional featur[e]” that provides any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.”

(citations omitted).

Similarly, Alice’s application of the test to the claims in suit emphasizes “more than apply it” and generic application;  the question for Justice Thomas “is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” Thomas does describe the functions performed by the computer as “routine, conventional, and well-known in the field,” but his characterization serves to support the conclusion that the claimed steps do nothing more than define generic computer implementation. And taken as a whole, the claims at issue fail not because they lack inventiveness, nor because they reach too broadly, but because they amount to “’nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.

So Alice may fail to provide clear boundaries for the eligibility of computer-implemented inventions. But it could clarify something more important.  As I have described in a recent paper, the actual test for patent-eligibility in cases like Neilson v. Harford, and in American jurisprudence for the next century, was a requirement that the patentee claim a specific mode of application of a fundamental principle, rather than a generic claim to the principle as applied. If Alice does indeed endorse the third aspect of Mayo, then the test for patent-eligibility is not a question of non-obvious application, nor a question of pre-emption, but a question of whether the claim does significantly more than state a fundamental principle coupled with an instruction to “apply it.” Embracing that aspect of Mayo could signal a return to the historical standard of patent-eligibility.

*As I discussed in a previous post, the Court’s reliance on Neilson in Mayo and Flook was entirely misplaced.  The patent in Neilson was sustained not because the patentee’s implementation was inventive, but precisely because it was entirely conventional and well-known in the art.

The Supreme Court’s Alice Decision on Patent Eligibility of Computer-Implemented Inventions: Finding an Oasis In the Desert

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Guest Post by Donald S Chisum, Director of the Chisum Patent Academy and author of Chisum on Patents.

In Alice (June 19, 2014), the Supreme Court held that the two step framework for determining the Section 101 patent-eligibility of a patent claim, which the Court previously articulated in the 2012 Mayo decision on the patentability of a diagnostic method, applied to computer-implemented inventions.  Thus, one determines: (1) does the claim recite an ineligible concept (natural phenomena, natural law or abstract idea), and (2) if so, does the claim recite sufficient additional elements to make the claim one to an application of the concept, rather than to the concept itself?

On Mayo step one, Alice held that the claims at issue were to an abstract idea, an “intermediated settlement.”  On step two, it held that “merely requiring generic computer implementation” did not “transform that abstract idea into a patent-eligible invention.”  Thus, claims to a method, a computer system configured to carry out the method, and a computer-readable medium containing program code for performing the method all fell invalid under Section 101.

I considered but then reconsidered entitling this comment “Alice in Wonderland.”  For, indeed, the Supreme Court’s chain of decisions creating a judicial exception to the statute defining patent eligible subject matter (35 U.S.C. § 101) and holding unpatentable claims to algorithms and abstract ideas, stretching from Benson in 1972 to Alice in 2014, is wondrous.  But I will not here review the “big picture,” including the fundamental flaws in the chain; I and others have already done that.

Instead, my focus is on the “small picture,” the every day problem: does the Alice opinion provide some meaningful guidance to fill the near void left by the Court in its prior Mayo and Bilski decisions?  Those decisions provided no definition of an “abstract idea” (or “law of nature”) and little direction on, precisely, how much “more” was required for the transformation.

The Court’s fuzz left stranded in a desert of uncertainty an array of feet-on-the-ground decision makers, from inventors to rights owners to patent professionals drafting and amending claims to examiners to PTO officials to licensing negotiators to litigators to district court judges to federal circuit judges to treatise authors.

Positive news.  At least on first analysis of Alice, I find some additional guidance, perhaps enough to lead us toward an oasis in the desert.

In particular, the Alice opinion supports the following proposition:  a novel and unobvious solution to a technical problem is not an “abstract idea,” and a claim drawn to such a solution, even if broad, is not subject to the Mayo framework (though, of course, it is subject to scrutiny for disclosure support).

The Alice opinion does not state the proposition directly.  The Court expressly indicated that it did not need to “delimit the precise contours of the `abstract ideas’ category” because the concept at issue was so similar to that in Bilski.  But the proposition is fairly inferred from the Court’s rejection of the patent owner’s argument that the intermediated settlement concept in its claims was not an “abstract idea” within the implicit exception to Section 101 and from its novel description of the prior Diehr decision.

Based on prior Supreme Court cases and language in Mayo, the patent owner argued that the definition of “abstract ideas” for Section 101 was: “preexisting, fundamental truths that exist in principle apart from any human action.”  The Court disagreed because that definition did not fit Bilski, which held that risk hedging was an abstract idea. Hedging was a “longstanding commercial practice” and a “method of organizing human activity,” but not a “truth” about the natural world that “always existed.”  Hedging and the similar concept of intermediated settlement were abstract ideas because they were “fundamental economic practices.”

Thus, concepts that constitute abstracts ideas fall into two categories.  First are mathematical equations, mathematical formulae and algorithms (at least ones of a mathematical nature, and, I would emphasize, not all algorithms are mathematical or numerical).  Second are methods of “organizing human activity,” at least if they constitute a fundamental economic practice “long prevalent in commerce.”

What’s left out of the “abstract idea” category?  The Court in Alice declined to say explicitly, but there are hints in its discussion of the 1981 Diehr decision in connection with the second Mayo step.  The Court noted that Diehr had held a computer-implemented process for curing rubber was patent eligible, not because it involved a computer but rather because “it used that equation in a process designed to solve a technological problem in `conventional industry practice.”  It reiterated: “the claims in Diehr were patent eligible because they improved an existing technological process, not because they were implemented on a computer.”  In contrast, the claims in Alice did not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.”

The Court had discussed and distinguished the Diehr case before, in both Bilski and Mayo, but never on the basis that Diehr entailed a technological improvement.  Thus, the Alice discussion of Diehr in terms of a solution to a technical problem is important new ground.

Hence there are strong grounds for the proposition that a patent claim reaches a safe harbor from Section 101 abstract idea scrutiny, including the Mayo second question for an “inventive concept,” if the claimant establishes that the claim is directed to a solution of a technological problem.  This definition of abstract idea as excluding applied technology accommodates the case law treating pure mathematical statements, economics and finance, and schemes of a non-technical character (“methods of organizing human activity”) as “abstract ideas” that must be include additional elements to achieve patent eligibility (Mayo step two).

Is this shift in focus to “technological” an oasis of greater clarity?  No doubt there will be arguments about what is technological and what is not.  But there are at least three advantages to the verbal change.  First, technology is the historic core of the patent system, especially given  the Constitutional phrase “useful Arts,” which is 18th century terminology for “technology” in 21st century terminology.  Thus, an inquiry about the technological is much less of an alien intruder than prior Supreme Court language about the abstract idea exception to Section 101.  Second, evaluating the Section 101 abstract idea prohibition in terms of technological versus non-technological conforms to the language Congress used in Section 18 of the America Invents Act in setting up special PTO review of business method patents.  Finally, a technology test aligns the United States standard with the language used in Europe and elsewhere to address exceptions to patent eligible subject matter.

SCOTUSblog symposium on Alice v. CLS Bank

Patent,

By Jason Rantanen

SCOTUSblog is publishing a series of essays on Alice v. CLS Bank.  Current participants include:

David Kappos – Supreme Court leaves patent protection for software innovation intact

From the perspective of the parties involved, this week’s Alice Corp. v. CLS Bank decision held that a process that lessens settlement risk for trades of financial instruments is too abstract for patenting. However, to the leagues of interested onlookers holding their collective breath across our country and indeed around the world, the Supreme Court’s unanimous ruling subtly conveyed a much more significant judgment:  software, as a class, is every bit as worthy of patent protection as any other medium in which innovation can be practiced.

Robert Merges – Go ask Alice — what can you patent after Alice v. CLS Bank?

Those of us who sweat in the clammy gymnasia of patent law have been waiting – with a mix of excitement, dread, and cynical disregard – for the Alice v. CLS Bank decision.  The idea was, when the Court took the case, that we would finally have an answer to the question whether software can be patented under U.S. law. To say we did not get an answer is to miss the depth of the non-answer we did get. Reading the opinion reminds me of a famous passage in The Hitchhiker’s Guide to the Galaxy.  Acolytes wait at the feet of a giant supercomputer, which 7.5 million years before had been asked “What is the meaning of life?”  Finally, after eons of waiting, the computer spoke.  Its answer was: “42.”  The acolytes went forth, armed with this non-answer.  And life went on.  So it is with us, in the patent field. We have met our “42,” and its name is Alice.  Now life must go on.

Justin Nelson – For patent litigants, Court affirms status quo

The reaction from patent litigants to the Supreme Court’s decision yesterday in Alice Corp. v. CLS Bank was one big shrug.  The decision was exactly as expected.  While the Court made clear that abstract ideas remain unpatentable, it “tread[ed] carefully” in construing patentability.  Indeed, the most notable part of the decision was that it shied away from any grand pronouncements.  Rather, it relied heavily on prior cases such as Bilski v. Kappos, Mayo Collaborative Services v. Prometheus Laboratories, Inc., and Association for Molecular Pathology v. Myriad Genetics. As the Court correctly concluded, “[i]t follows from our prior cases, and Bilski in particular, that the claims at issue here are directed to an abstract idea.”  Yet it went no further than necessary: “[W]e need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.  It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here.”

Sandra Park – The Supreme Court as promoter of progress

Yesterday’s Supreme Court decision in Alice Corp. v. CLS Bank International revisits a fundamental question about our patent system:  which patents promote the progress of science?

There’s also a detailed analysis and commentary by John Duffy that begins:

Although Alice Corp. v. CLS Bank was identified by this website and many other commentators as a major case on patent law, the Supreme Court’s unanimous resolution of the case does little to change, or even to clarify, pre-existing law.  The case becomes the fourth Supreme Court decision since 2010 to hold patent claims invalid based on judicial exceptions to patentability. While Alice Corp. is only an incremental addition, the continuation of that larger trend is hugely important because, as the Court itself acknowledges, the judge-made doctrine in this area has the potential to swallow all of patent law.

Which Side of the Mushroom did Alice Eat From?

Ethics, Patent

If you don’t know the story, Alice meets up with a hookah-smoking caterpillar who tells her that if she eats out of one “side” of a (round) mushroom, she’ll get bigger, but out of the other side, she’ll get smaller.  He doesn’t fully explain to Alice what will happen to make her taller and shorter, and so here is a fun read:

This time Alice waited patiently until [the caterpillar] chose to speak again. In a minute or two the Caterpillar took the hookah out of its mouth and yawned once or twice, and shook itself. Then it got down off the mushroom, and crawled away in the grass, merely remarking as it went, ‘One side will make you grow taller, and the other side will make you grow shorter.’

‘One side of what? The other side of what?’ thought Alice to herself.

‘Of the mushroom,’ said the Caterpillar, just as if she had asked it aloud; and in another moment it was out of sight.

Alice remained looking thoughtfully at the mushroom for a minute, trying to make out which were the two sides of it; and as it was perfectly round, she found this a very difficult question. However, at last she stretched her arms round it as far as they would go, and broke off a bit of the edge with each hand.

‘And now which is which?’ she said to herself, and nibbled a little of the right-hand bit to try the effect: the next moment she felt a violent blow underneath her chin: it had struck her foot!

She was a good deal frightened by this very sudden change, but she felt that there was no time to be lost, as she was shrinking rapidly; so she set to work at once to eat some of the other bit. Her chin was pressed so closely against her foot, that there was hardly room to open her mouth; but she did it at last, and managed to swallow a morsel of the lefthand bit.

‘Come, my head’s free at last!’ said Alice in a tone of delight, which changed into alarm in another moment, when she found that her shoulders were nowhere to be found: all she could see, when she looked down, was an immense length of neck, which seemed to rise like a stalk out of a sea of green leaves that lay far below her.

Since law professors are, no doubt, going to beat the hell out of the Alice-in-Wonderland connection, I thought I’d stake my claim early. I’ve been reading a lot of law professor views, and several (if not many) think software patents are dead, or largely so.  Kappos, in contrast, thinks Alice ate out of the side that’s going to make software patents larger, or at least not shrink. His view is here.

My guess is Alice is going to cause us all to bang our heads, stub our toes, and wander through Wonderland for many years to come.

 

Guest Post by Prof. McKenna: The Implications of Blackhorse v. Pro-Football, Inc.

Patent,

Professor Mark P. McKenna of The University of Notre Dame Law School is one of the leading scholars of trademark law.  Below, he provides his thoughts on the legal consequences of the TTAB’s decision in Blackhorse v. Pro-Football, Inc.

The Trademark Trial and Appeal Board (TTAB) just wrote another chapter in the long-running battle over the registration of the Washington Redskins trademarks. In Blackhorse v. Pro-Football, Inc., the Board cancelled 6 federal registrations of various Redskins marks (including stylized versions and logos – though not the one currently used by the team) on the ground they were disparaging to a significant proportion of Native Americans at the time of registration. As most readers of this blog likely know, this is the second time the TTAB has ordered cancellation of the marks – in 1999, after seven years of litigation, the Board cancelled the marks, finding them scandalous and disparaging. That ruling did not stand up on appeal, and the petitioners in this case are different. (Significantly, unlike the petitioner in Harjo, the petitioners’ claims here were not barred by laches.)

There are many things one could say about this ruling – about its societal significance, about the legal standard the TTAB applied (especially the focus on a “substantial composite” of the affected group), or about the likelihood that the decision with withstand appellate review. I am going to focus here on the legal consequences of the decision, assuming it stands. (The PTO will not actually remove the marks from the register until the team has exhausted its appeals.) Contrary to some of the press reports on the decision, cancellation does not entail loss of exclusivity of the marks. In particular it does not mean that the marks are not enforceable under federal law. It simply means that the marks will no longer be federally registered and therefore will not receive any of the benefits of registration.

The team will lose the benefits of the statutory presumption of validity and incontestability. And it will lose the benefit of nationwide constructive use. For many other parties, limiting protection to the geographic areas of actual use would be a significant consequence, but here that is unlikely to be important since the team very likely has nationwide rights by virtue of its actual use. Of perhaps greatest economic consequence, the government will no longer seize imported goods bearing any of the cancelled marks, since only goods bearing registered trademarks are subject to forfeiture. 19 U.S.C. § 1526. And none of the civil or criminal counterfeiting provisions will apply, as counterfeits are by definition making unauthorized use of registered marks. 15 U.S.C. § 1116; 18 U.S.C. § 2320.

These consequences are not meaningless, of course, but they are not nearly as significant as some have made them out to be. ESPN’s report, for example, claimed that the decision stripped the team of all federal rights, and that, if the decision stands, “any fan can produce and sell Washington Redskins gear without having to pay the league or the team for royalties and wouldn’t be in violation of any law for doing so.” It’s obviously not news that press reports mischaracterize legal decisions, but these kinds of statements pretty egregiously overstate things, in my view. That would be true even if there were no federal enforcement of the cancelled marks, since the logos themselves were not cancelled and any merchandise bearing both the word marks and the logos is almost certainly subject to enforcement. But it’s not even true that there will be no federal enforcement of the cancelled marks.

Of course, all of this depends on the assumption that courts do not interpret §2(a) to impose a limitation on one’s ability to enforce rights in an unregistered mark under §43(a). I would have thought that assumption was pretty uncontroversial, but some discussions of the new decision suggest that not all my colleagues in the academy share my view. One recent district court decision (Renna v. County of Union, N.J., 2014 WL 2435775, No. 2:11–3328 (D.N.J. May 29, 2014)) is on their side – that case held that marks barred from registration (in that case, under § 2(b)) could not be enforced under §43(a) either. (See here for Rebecca Tushnet’s analysis of the case). If that conclusion were generalizable, then today’s decision on the Redskins marks would have much more significant effect, since it would leave the football team with only state law rights, and those rights might be uncertain given courts’ general tendency to interpret state law as identical to federal law. But I think people are reading far too much into a single district court case, and that in any case Renna is wrong to conflate registrability under § 2 with protectability under §43(a).

Section 2 of the Lanham Act begins “No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless …”. Thus, to be registrable, the claimed designation must (1) be a trademark; and (2) not run afoul of any of the limitations in subsections (a)-(f). That is to say that only a subset of trademarks qualify for registration, and the subsections of § 2 identify the boundaries of that subset. When the Lanham Act was originally drafted, it was fair to say that the limitations on registrability demarcated the universe of trademarks that warranted federal protection. When the Lanham Act was passed, it was clear that only federally registered marks were enforceable under federal law; unregistered marks could be enforced, if at all, only through a common law unfair competition claim. Thus, the unfair competition cases primarily involved unregistrable marks. As I explained here, those common law unfair competition claims were, post-Erie, state law claims. But federal courts were (probably unjustifiably) concerned that this would give rise to a lack of uniformity in the law, and beginning around the mid-1960’s they began to interpret §43(a) to embrace a cause of action for infringement of unregistered marks. In other words, they expanded the federal statute to embrace the claims that previously would have been relegated to the common law.

With this very brief history in mind, one can see just how radical is the claim that the registration bars apply in § 43(a) cases – the claim fully conflates registered and unregistered marks, applying all of the same limitations to unregistered marks despite the fact that § 43(a) was expanded specifically for the purpose of providing a federal cause of action for unregistrable marks. That would be a truly remarkable departure, and one that draws no support from the text of § 43(a), which makes actionable use of “any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which … is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.” Note that nothing in the section requires that the confusion result from use of a designation that meets the registrability requirements. There’s a reason for that.

It is therefore wrong, in my view, to say that the § 2 bars apply in § 43(a) cases, at least categorically. Nevertheless, one can understand why a court might be attracted to the argument that bars to registrability should be understood as bars to protection, full stop. After all, courts, with the active encouragement of trademark plaintiffs, have spent the last several decades eviscerating the substantive differences between trademark infringement and unfair competition. Indeed, the project has been so successful that courts and commentators alike now routinely say that registration status is largely irrelevant for purposes of enforcement. Such a sweeping claim is, of course, somewhat overstated, since registration obviously can affect priority and the geographic scope of rights in addition to the statutory presumptions and incontestability. Nevertheless, for most purposes courts have treated registered and unregistered marks the same, and the Supreme Court said in Two Pesos that “it is common ground that § 43(a) protects qualifying unregistered trademarks and that the general principles qualifying a mark for registration under § 2 of the Lanham Act are for the most part applicable in determining whether an unregistered mark is entitled to protection under § 43(a).”

I think courts that say this mean to say that the distinctiveness and functionality rules are the same for registered and unregistered marks (save for the question of which party bears the burden), and that infringement is determined the same way in either context. In this respect it is telling that these kinds of statements nearly always precede general statements of legal principles and that they rarely, if ever, accompany any real statutory analysis. The reason is that the registrability requirements and fundamental questions of trademark validity are, and have long been, understood to be distinct issues.  It is not simply that trademark rights arise through use such that one can develop trademark rights without having ever applied for a trademark registration. It is that the Lanham Act imposes requirements for registrability that simply do not apply to unregistered marks. (Some of the registrability requirements – non-genericness, for example – go to validity, and those obviously do apply in §43(a) cases, but not because they are registration requirements.)

It is, of course, possible that courts would import into § 43(a) cases some particular bars to registration for policy reasons, just as common law courts might have had policy reasons to refuse to provide unfair competition remedies in particular cases. And perhaps there are good policy reasons for courts to deny protection to disparaging marks in any context. But it is worth noting that nothing has precluded parties from making these policy arguments before, and hardly anyone has done so. We have not, for example, seen defendants disputing the validity of unregistered marks on the ground that they are primarily geographically deceptively misdescriptive. That could be because it has just taken a long time for litigants to discover these arguments, given how much § 43(a) has changed over time. But I think it’s much more likely that most people have assumed that arguments about registrability have no purchase in the context of enforcement of an unregistered mark.

Finally, even if one thought the § 2 bars ought to apply generally in § 43(a) cases, we should be reluctant to import the § 2(a) bars specifically, since barring enforcement of scandalous, immoral, or disparaging marks raises even more serious constitutional questions than does refusing registration. Section 2(a) has occasionally been challenged on the ground that it denies government benefits on the basis of the content of speech. Courts have rejected that argument primarily on the ground that § 2 only precludes registration and does not proscribe conduct or prevent use of a mark. That reasoning has always been suspect to me, but it is significantly more questionable if it is to be understood to mean that the restrictions are constitutional simply because they do not forbid use rather than because they leave the user with the ability to rely on use-based rights. If we can expect courts to start applying the § 2(a) bars in the context of unregistered marks, we can expect to see this issue litigated much more pointedly.

Mark P. McKenna is the Associate Dean for Faculty Development, Professor of Law, and Notre Dame Presidential Fellow at the Notre Dame Law School.

Alice v. CLS Bank: Claims Invalid Under Section 101

Patent, ,

By Jason Rantanen

Alice Corporation Pty. Ltd. v. CLS Bank International (2014)

Download opinion here: Alice v CLS

This morning the Supreme Court issued its opinion in Alice, unanimously affirming the Federal Circuit and finding all claims drawn to patent ineligible subject matter under Section 101.  Justice Thomas wrote for the opinion for the Court.  It begins:

The question presented is whether these claims are patent eligible under 35 U. S. C. §101, or are instead drawn to a patent-ineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.

The opinion includes both the actual language of representative claims (in a footnote) and the court’s interpretation of them (in the body of the opinion).  The latter is primarily what the court focuses on:

In sum, the patents in suit claim (1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the method of exchanging obligations (the media claims). All of the claims are implemented using a computer; the system and media claims expressly recite a computer, and the parties have stipulated that the method claims require a computer as well.

The Court next summarizes the long-standing nature of the law of nature, natural phenomena, and abstract ideas exception to patent eligibility, and reiterates that these exceptions are driven by a concern about pre-emption, balanced against caution in allowing the exceptions to swallow all of patent law:

Accordingly, in applying the §101 exception, we must distinguish between patents that claim the “‘buildin[g] block[s]’” of human ingenuity and those that integrate the building blocks into something more, Mayo, 566 U. S., at ___ (slip op., at 20), thereby “transform[ing]” them into a patent-eligible invention, id., at ___ (slip op., at 3).

Next comes the first key part: the Court reiterates the framework described in Mayo v. Prometheus, including the inventive concept language:

In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), we set forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. Id., at ___ (slip op., at 8). If so, we then ask, “[w]hat else is there in the claims before us?” Id., at ___ (slip op., at 9). To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. Id., at ___ (slip op., at 10, 9). We have described step two of this analysis as a search for an “ ‘inventive concept’”—i.e., an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Id., at ___ (slip op., at 3).3

Applying this framework, the Court first found the claims directed to an abstract idea.:

On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’”

It then concluded that the claims also failed the second step: “the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent eligible invention.”

Here’s the second piece of key language, which relates to the computer-implemented nature of the claims:

These cases [Mayo, Flook, Benson, and Diehr] demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Mayo, supra, at ___ (slip op., at 3). Nor is limiting the use of an abstract idea “‘to a particular technological environment.’” Bilski, supra, at 610–611. Stating an abstract idea while adding the words“apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to“implemen[t]” an abstract idea “on . . . a computer,” Mayo, supra, at ___ (slip op., at 16), that addition cannot impart patent eligibility.

It is irrelevant that a computer is a physical object:

There is no dispute that a computer is a tangible system (in §101 terms, a “machine”), or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But 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. Such a result would make the determination of patent eligibility “depend simply on the draftsman’s art,” Flook, supra, at 593, thereby eviscerating the rule that “‘[l]aws of nature, natural phenomena, and abstract ideas are not patentable,’” Myriad, 569 U. S., at ___ (slip op., at 11).

Applying this standard, the Court concluded that the claims at issue here did nothing “more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.”  Slip Op. at 14.

Note that the Court’s ruling applies to the method claims, the computer system claims, and the computer-readable medium claims.  Here’s the third bit of key language; I predict it’s going to tie folks in knots:

As to its system claims, petitioner emphasizes that those claims recite “specific hardware” configured to perform“specific computerized functions.” Brief for Petitioner 53.But what petitioner characterizes as specific hardware—a“data processing system” with a “communications controller” and “data storage unit,” for example, see App. 954,958, 1257—is purely functional and generic. Nearly every computer will include a “communications controller” and “data storage unit” capable of performing the basic calculation, storage, and transmission functions required by the method claims. See 717 F. 3d, at 1290 (Lourie, J., concurring). As a result, none of the hardware recited by the system claims “offers a meaningful limitation beyond generally linking ‘the use of the [method] to a particular technological environment,’ that is, implementation via computers.”

Put another way, the system claims are no different from the method claims in substance. The method claims recite the abstract idea implemented on a generic computer;the system claims recite a handful of generic computer components configured to implement the same idea. This Court has long “warn[ed] . . . against” interpreting §101“in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”

Justice Sotomayor, joined by Justice Ginsburg and Breyer, agreed that the method claims here were drawn to an abstract idea, but concurred to express agreement with Justice Stevens’ view in Bilski that a “claim that merely describes a method of doing business does not qualify as a‘process’ under §101.”

 

 

A REDSKINS football team is Disparaging to Native American Persons and thus Cannot be Registered as a US Trademark

Patent

By Dennis Crouch

Blackhorse v. Pro Football, Inc. (TTAB Cancellation No. 92046185)

Today, the USPTO granted the cancellation of a group of trademark registrations that all include the term “Redskins” and that are owned by The Washington Redskins.

Under the law registration may be refused when a mark:

Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.

15 U.S.C. § 1052.

In the cancellation proceedings, the challengers (a group of Native American individuals), were able to establish that the mark was disparaging to Native American persons as used in relation to the Professional Football team and thus, as the USPTO writes in a press release “in accordance with applicable law, the federal registrations for the ‘Redskins’ trademarks involved in this proceeding must be cancelled.”

Perhaps the strongest defense put forward by the team owners was that the mark was old, well used, and the subject of significant investment. However, the Trademark Trial and Appeal Board rejected that argument – finding it inapplicable to the particular claimants here since none of them unreasonably delayed in bringing the cancellation action.

The TTAB decision was not unanimous – Judge Bergsman dissented – arguing that the petitioners did not provide sufficient evidence that the marks were disparaging at the time they were registered (1960s – 1990s).

Next steps:

  1. The team owners may ask for rehearing or may take the case to Federal Court where the Supreme Court may have the final word.
  2. A trademark registration is not required in order to use a mark. Thus, the team owners can continue to use the mark. In addition, trademark rights continue to be strongly protected by state law and thus, even if the decision sticks, the team may still have protection in the various states.
  3. Prof Rantanen also points out that the mark may still be protectable under Section 43(a) as an unregistered mark, but that the law is unsettled. One take is here: Renna v. County of Union, 2014 WL 2435775 (D.N.J. May 29, 2014).  

 

Indefiniteness “Can Be” Difficult under Nautilus

Patent, , ,

Ex parte Breed, Appeal No. 2012-003990 (PTAB 2014)

On June 2, 2014, the Supreme Court decided Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014) lowering the standard for negating patentability due to indefiniteness. The new test requires that the claim scope be “reasonably certain” to one skilled in the art at the time of the patent.

On June 4, 2014, the Patent Trial and Appeal Board (PTAB) issued its first decision interpreting Nautilus. David Breed is a prolific inventor and is named on more than 300 patents and is one of the inventors of the airbag. More recently, Breed has collaborated with Acacia Research Corp to enforce his patents.

The application at issue in this case is part of a large family of at least seven issued patents that claim priority back to a 2000 provisional application and is directed to a highway monitoring system that provides reports and information on road conditions. Application No. 12/020,684.

Claim 1 is a system claim that includes a whereby clause indicating that “whereby roadway conditions from multiple roadways can be obtained and processed at the remote facility.” The examiner rejected the claim as indefinite based upon the “can be” limitation and the PTAB has now affirmed that finding:

Patent applicants face powerful incentives to inject ambiguity into their claims, a temptation that needs to be mitigated by the courts. See Nautilus, Inc. v. Biosig Instr., Inc., 2014 WL 2440536 at *7, __ U.S. __ (June 2, 2014). Patent drafters are in the best position to resolve ambiguities in their claims. See Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1255 (Fed. Cir. 2008). Section 112 places the burden of precise claim drafting on the applicant. See In re Morris, 127 F.3d 1048, 1056-57 (Fed. Cir. 1997).

. . .

Claim 1 recites that roadway conditions from multiple roadways “can be” obtained and processed at the remote facility and “can be” directed from the remote facility to other vehicles. The Examiner rejected claim 1 as indefinite. The Examiner stated that it is not clear if Appellants intended the “can be” claim limitation to be optional or that the phrase should be interpreted as a definite statement. . . .

Appellants now argue that the features following the “can be” phrases should be interpreted as optional and, as such, the claim is not indefinite. The verb form of the word “can” carries multiple meanings in the English language. It can be used to indicate a physical ability or some other specified capability. It can also be used to indicate a possibility or probability.

During examination of a patent application, pending claims are given their broadest reasonable construction consistent with the specification. In re Am. Acad. of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). In the instant case, Appellants have not directed us to any language in the Specification that supports a construction of “can be” that yields a particular and distinct meaning in claim 1. Instead, Appellants merely urge us to adopt one of two plausible interpretations. . . .

We agree with the Examiner that “can be” is indefinite, because it is susceptible to more than one plausible construction. It is unclear whether the limitation refers to a capability that is required to be present in the invention or whether it refers to a system capability that is a mere possibility that is not required. In other words, it is unclear whether a vehicle monitoring system can practice the invention of claim 1 by satisfying all of the other limitations of claim 1, without necessarily being required to possess the capability to obtain and process roadway conditions at a remote facility or to direct information from a remote facility to other vehicles on a roadway.

During prosecution, a claim is properly rejected as indefinite if it is “amenable to two or more plausible claim constructions.” Ex parte Miyazaki, 2008 WL 5105055 at *5 (BPAI Nov. 19, 2008) (precedential). The Miyazaki standard for indefinite rejection is justified, at least in part, because the applicant has the opportunity and the obligation to define his or her invention precisely during prosecution before the PTO.

Here, Appellants’ use of the phrase “can be” renders claim 1 indefinite and we sustain the Examiner’s rejection of claim 1 under 35 U.S.C. § 112(b).

The PTAB also quoted the Supreme Court’s nose-of-wax statement from its 1886 decision:

Some persons seem to suppose that a claim in a patent is like a nose of wax which may be turned and twisted in any direction, by merely referring to the specification, so as to make it include something more than, or something different from, what its words express. The context may, undoubtedly, be resorted to, and often is resorted to, for the purpose of better understanding the meaning of the claim; but not for the purpose of changing it, and making it different from what it is. The claim is a statutory requirement, prescribed for the very purpose of making the patentee define precisely what his invention is; and it is unjust to the public, as well as an evasion of the law, to construe it in a manner different from the plain import of its terms. This has been so often expressed in the opinions of this court that it is unnecessary to pursue the subject further.

White v. Dunbar, 119 U.S. 47, 51-52 (1886) (emphasis added by PTAB).

I think that the decision here is correct and the USPTO is right to force the patent applicant to nail-down the particular scope of the invention being claimed. One interesting counter-point comes from the Supreme Court’s notion that definiteness requires examination of the prosecution history – here Breed argued that the term meant “optional,” but the PTAB here indicates that it is not sufficient to merely indicate which of two possible interpretations is the correct – rather a claim amendment is in order to solidify and provide express notice of that applicant decision.

Regional Director Russ Slifer

Patent

By Dennis Crouch

USPTO Deputy Director Lee has named Russ Slifer as Regional Director of the Denver USPTO. Russ has been a patent attorney since his graduation from NIU Law in 1994 both in private practice and as Chief Patent Counsel for Micron. I have known Russ for a number of years and am confident in his deep understanding of patent practice, excellent management skills, and his willingness to listen to good ideas.

Congratulations to Russ on this transition and to Michelle Lee on continuing to build an impressive leadership team.

The missing link, of course, continues to be the absence of a Congressionally-Approved USPTO Director – now 500-days and counting.

Although already in operation, the Denver Patent Office is set to officially open on June 30, 2014.

More info: http://www.uspto.gov/blog/director/entry/update_on_our_satellite_offices

Judge Rader on Judge Rader’s Retirement

Ethics, Patent

You can read his email to a journalist here, which is similar to what I’ve heard privately.

I’ve had journalists, friends, lawyers, and others contact me for my thoughts.  Here are my thoughts:

I loved clerking for Chief (sorry, he’ll always be that).  The man is wicked smart, kind, full of life, and funny.  He cares passionately about the court and patent law.

His plan to move on now doesn’t surprise me, since I know he loved to teach (had the privilege of teaching one class for him at GW while I was up there) and he loves to travel (I’ve never seen someone bound off an airplane after 20 hours of flight with more energy than him).

The best is all I can wish for him, along with a good ticket to the next Stones tour.

Tesla Motors and the Rise of Non-ICT Patent Pledges

Patent

Guest Post by Professor Jorge L. Contreras, Associate Professor of Law at American University Washington College of Law.

This week, electric car developer Tesla Motors made news by publicly announcing that it will no longer “initiate patent lawsuits against anyone who, in good faith, wants to use our technology”. Tesla’s pledge has met with both praise and cynicism, with some applauding the company’s ostensible desire to spur the development of eco-friendly technology, while others have dismissed the announcement as a mere publicity stunt lacking in real effect.

Whatever the merits of Tesla’s patent pledge, it is only the most recent in a growing series of voluntary public commitments made by patent holders to refrain from exercising their patent rights to the fullest extent of the law. To date, most of these pledges have been made by companies in the information and communications technology (ICT) sector. For example, in 2004-05, a handful of firms publicly announced that they would not assert patents against use of the open source Linux operating system. Some large patent holders have issued blanket assurances covering substantial portfolios of patents and products, including IBM’s public commitment not to assert approximately 500 patents against open source software products, and Google’s more recent “Open Patent Non-Assertion Pledge“. As I have written elsewhere, these pledges are intended to assure the market that the pledged patents will not be used to disrupt or hinder the adoption of market-wide interoperability standards or open technology platforms.

But, as the Tesla pledge demonstrates, patent pledges are also becoming popular outside the ICT sector. Below are examples of a few recent patent pledges made by companies in non-ICT industries ranging from GM seeds to household electrical meters.

Company Patents Pledge
Monsanto Patents claiming genetically-modified seeds “It has never been, nor will it be Monsanto policy to exercise its patent rights where trace amounts of our patented seed or traits are present in farmer’s fields as a result of inadvertent means.”
Myriad Genetics Genetic diagnostic patents Myriad will not “impede non-commercial, academic research that uses patented technology licensed or owned by us… Myriad will continue its practice of not interfering with laboratories conducting genetic testing on patients for the purpose of confirming a test result provided by Myriad.. Myriad will continue to offer financial assistance programs and free testing to help patients with the greatest need..”
Southern California Edison US 11/626,810 (Method of communicating between a utility and its customer locations) SoCal Ed will grant anyone a non-exclusive royalty-free license under any patent issuing from this application covering basic “smart metering” technology.
Tesla Motors All patents Tesla will not “initiate patent lawsuits against anyone who, in good faith, wants to use our technology”

 

The full text of (and hyperlinks to) these commitments, as well as patent pledges from many companies in the ICT sector, can be found in the Non-SDO patent pledge database maintained by the Program on Information Justice and Intellectual Property (PIJIP) at American University’s Washington College of Law. As always, we welcome additional contributions to the database.

Upcoming Events with the IPO

Patent

By Dennis Crouch

June 17, 2014 2:00 pm EST: I will be helping lead the IPO’s IP Chat Channel discussion on indefiniteness. We’ll obviously be considering the consequences of the two recent important decisions of Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (June 2, 2014) and In re Packard, — F.3d —-, 2014 WL 1775996 (Fed. Cir. May 6, 2014). I will be on the panel along with Stephen Maebius (Foley) and Micky Minhas (Microsoft). As always, the chat is managed by Pamela Sherrid. Register here $130: http://www.ipo.org/index.php/events/ip-chat-channel/

September 7-9: I will be out in Vancouver with the IPO Annual meeting. I’ll be talking about the impact of recent Supreme Court decisions along with David Howard (Microsoft), Denise Kettelberger (Sunstien Kann), and Joseph Re (Knobbe). Our moderator will be none other than Herbert Wamsley (IPO). See you there: http://www.ipo.org/index.php/events/annual-meeting/.

 

Between these dates, you might want to check-out the Chisum Patent Academy that will be in Seattle, Washington, on August 13-15 and August 18-20, 2014. Two of the best teachers that I know: Don Chisum and Janice Mueller.

Akamai: Is the Answer in the Common Law?

Patent,

Guest Post by Professor Lynda J. Oswald. Editor’s Note – I asked Professor Oswald to write a guest post that links together her prior writing on divided infringement with the Supreme Court’s most recent decision on the subject-matter.

In its recent decision in Limelight Networks Inc. v. Akamai Techs., Inc., the Supreme Court decided the easy question—whether inducement must be supported by direct infringement—on precedent grounds, yet avoided the much more difficult question of how the courts should deal with multi-actor infringement of a method or process patent.

Precedent is indeed clear that direct infringement is a predicate to indirect infringement, and the Court’s decision on this question was exactly right. The interesting questions remaining, however, are why did the Federal Circuit attempt to rewrite precedent in this manner and what should the Federal Circuit do with multi-actor infringement doctrine on remand?

The answer to the why question is driven by the courts’ fundamental discomfort with strict liability. The Federal Circuit’s inartful attempt in its en banc decision in Akamai to move multi-actor infringement from direct infringement to inducement was an effort to relocate such infringement from the harsh rules of strict liability to the more forgiving rules of intent-based indirect liability. Justice Kagan highlighted this at oral argument:

But the reason [the Federal Circuit] put this under 271(b) rather than 271(a) is because of what Justice Scalia said, that 271(b) is not a strict liability offense . . . . [T[hey thought they were being very clever by putting it into a 271(b) box and avoiding the strict liability consequences of what they were doing, but also avoiding the possibility of an end run of the patent law.

As I explore in a work-in-progress, the courts similarly attempt to avoid the strictures of strict liability in other IP contexts such as imposition of officer liability in patent and copyright cases. Although strict liability is antithetical to the notions of fault-based liability that permeate most of American law, the courts are bound by the statutory language and the Supreme Court’s rejection of the Federal Circuit’s attempt to circumvent direct infringement’s strict liability requirement was spot-on.

The what question is harder to answer. The Supreme Court expressed significant skepticism about the Muniauction Inc. v. Thomson Corp. test, appearing, in fact, to characterize any current doctrinal difficulties as self-inflicted by the Federal Circuit:

[R]espondents, like the Federal Circuit, criticize our interpretation of §271(b) as permitting a would-be infringer to evade liability by dividing performance of a method patent’s steps with another whom the defendant neither directs nor controls. We acknowledge this concern. Any such anomaly, however, would result from the Federal Circuit’s interpretation of §271(a) in Muniauction. A desire to avoid Muniauction’s natural consequences does not justify fundamentally altering the rules of inducement liability that the text and structure of the Patent Act clearly require—an alteration that would result in its own serious and problematic consequences . . . .

The Court viewed the Federal Circuit’s multi-actor infringement precedent too narrowly, however. To adequately address the multi-actor infringement issue on remand, the Federal Circuit needs to reexamine not just Muniauction, but two additional decisions as well: BMC Resources, Inc. v. Paymentech and the panel decision in Akamai.

BMC Resources provided the foundation of the Federal Circuit’s current multi-actor infringement doctrine by stating that: (1) for inducement to exist, some other single entity must be liable for direct infringement but (2) a mastermind who controls or directs the activities of another party incurs vicarious liability for the actions of that other party such that the combination of acts would be deemed the act of a single actor for purposes of establishing liability. Muniauction‘s contribution was to refine the BMC Resources test by identifying a “spectrum” of relationships: at one pole is “mere arms-length cooperation,” which does not lead to liability; at the other is “control or direction over the entire process such that every step is attributable to the controlling party, i.e., the mastermind.” The panel decision in Akamai attempted to further clarify the standard by setting up two-pronged test of the type that the Federal Circuit seems to prefer these days: multi-actor infringement occurs only when the parties involved are in either (1) in an agency relationship or (2) contractually obligated to each other.

Perhaps it is a function of its narrow jurisdiction, but the Federal Circuit often misses the opportunity to apply traditional common law doctrines in a manner that would reconcile statutory language with the policies underlying the statute. As I discuss in a recent article, the Federal Circuit could resolve much (but not all—some aspects of this issue are amenable only to legislative resolution) of the confusion surrounding multi-actor infringement by explicitly invoking common law doctrines of tort and agency. The panel decision in Akamai got much of this right by looking at agency and contractual relationships. However, the Akamai panel decision ignored the possibility that there could be co-equals involved in the infringement, not bound by contract or agent-principal relationships but acting in concert in a joint tortfeasorship relationship. Early (pre-Federal Circuit) cases did recognize the role that joint torts can play in establishing multi-actor liability but that relationship was lost in the BMC Resources single-entity rule.

The Akamai Court issued a clear call to the Federal Circuit to revisit (and revamp) its troublesome multi-actor infringement standard. Judge Newman provided an elegant statement of how the court should approach this issue in her dissent in the Akamai en banc decision:

The court should simply acknowledge that a broad, all-purpose single-entity requirement is flawed, and restore infringement to its status as occurring when all of the claimed steps are performed, whether by a single entity or more than one entity, whether by direction or control, or jointly, or in collaboration or interaction.

On remand, the Federal Circuit will have the opportunity to articulate liability rules that are more principled, more grounded in traditional legal doctrine, and more consistent with the general patent law scheme; Judge Newman’s characterization provides an excellent starting point for that analysis.

The Proper Role for the Presumption of Validity

Patent

Guest Post by Derek Dahlgren

In 2011, the Supreme Court addressed the presumption of validity in Microsoft Corp. v. i4i Limited Partnership, 131 S. Ct. 2238 (2011). It confirmed that the standard of proof for invalidity is clear and convincing evidence. Initially, this opinion was seen by many as preserving the strength of patents. But closer scrutiny reveals that the Supreme Court’s analysis does not extend to all invalidity defenses. According to Justice Breyer’s concurrence, joined by Justices Scalia and Alito, the presumption of validity only provides protection against factual elements of an invalidity challenge. That concurrence, and the Supreme Court’s recent opinion in Nautilus, Inc. v. Biosig Instruments, Inc., suggest that the presumption of validity has no application to purely legal bases for invalidity.

A brief discussion of i4i and Nautilus is instructive. In i4i, Microsoft appealed a jury decision finding that it had not proven invalidity due to the on-sale bar, a purely factual inquiry, by clear and convincing evidence. On appeal, Microsoft argued that a defendant to an infringement action need only persuade the jury of an invalidity defense by a preponderance of the evidence. The Supreme Court rejected that argument.

Instead, the Supreme Court concluded that the presumption of validity codified the pre-1952 standard set forth in opinions such as Radio Corp. v. Radio Laboratories, 293 U.S. 1 (1934). The Supreme Court stated that by the time Congress enacted § 282, “the presumption encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof.” i4i, 131 S. Ct. at 2246. The Supreme then upheld the Federal Circuit’s articulation that “a defendant seeking to overcome [the presumption of validity] must persuade the factfinder of its invalidity defense by clear and convincing evidence.” Id. at 2243.

Justice Breyer wrote a separate concurrence. There, he stated “I believe it worth emphasizing that in this area of law as in others the evidentiary standard of proof applies to questions of fact and not to questions of law.” Id. at 2253. He also noted:

Many claims of invalidity rest, however, not upon factual disputes but upon how the law applies to facts as given . . . Where the ultimate question of patent validity turns on the correct answer to legal questions—what these subsidiary legal standards mean or how they apply to the facts as given—today’s strict standard of proof has no application.

Id.

In Nautilus, the same issue—the application of the presumption of validity—arose at oral argument. During the argument, Justice Kennedy pressed Nautilus’ counsel on how the presumption of validity applies to indefiniteness. Nautilus’ counsel conceded that the presumption of validity would accord deference to the PTO’s fact-finding. Tr. at 19:22 – 21:8. But he stated that since there were no fact-findings at issue in this case, the presumption did not apply. Id. At Justice Kennedy’s prompting, he also agreed that the PTO’s legal decisions are not accorded any deference. Id. at 21:4-8.

On June 2, 2014, the Supreme Court issued its opinion in Nautilus, and again touched on the issue. In footnote 10, the Supreme Court rejected the idea that a permissive definiteness standard accords with the presumption of validity. Slip Op. at 13 n.10. To the contrary, it stated that the presumption does not alter the degree of clarity that § 112, ¶2 requires. Id. That said, the Supreme Court ultimately did not address the parties’ dispute as to whether subsidiary factual issues trigger the clear-and-convincing evidence standard. Id. Because the Federal Circuit treated indefiniteness as a legal issue reviewed without deference, and the parties had not identified any contested factual matter, Supreme Court concluded the question could be settled another day. Id.

So where does that leave us? While the Supreme Court has not expressly held that the presumption of validity has no role in purely legal validity challenges, it certainly makes sense. According to i4i, the presumption of validity serves two functions: allocating the burden of proof and imposing the standard of proof. 131 S. Ct. at 2246. For a purely legal question, however, there is nothing to prove by clear and convincing evidence. Furthermore, to apply the presumption for a legal challenge would give deference to the PTO’s legal conclusions. The Federal Circuit does not do that. And the PTO lacks substantive rule-making authority, at least with respect to defining the metes and bounds of invalidity defenses. Thus, there does not appear to be any basis for according deference to the PTO’s legal conclusions. Consequently, for pure questions of law, it seems reasonable to conclude that the presumption of validity has absolutely no bearing. And as a result, invalidity challenges based on purely legal grounds may be much more powerful.

Nonetheless, while the Supreme Court may have circumscribed the application of the presumption of validity, it now has the opportunity to reject the assertion that claim construction is a pure question of law. See Teva Pharms. USA, Inc. v. Sandoz, Inc., No. 13-854. The Supreme Court hinted in Nautilus that factual questions permeate claim construction when it cited to Markman and stated that claim construction “may turn on evaluations of expert testimony.” Nautilus, slip op. at 11. Should that become settled law after Teva, one likely consequence would be a resurgence of the presumption in areas previously considered purely legal domains. Generally, the pure legal bases for invalidity are premised on the notion that claim construction is a pure question of law. Therefore, while the Supreme Court may have given patent challengers a gift in i4i and Nautilus, it could be short-lived to a certain degree.

Derek Dahlgren is an associate at Rothwell, Figg, Ernst & Manbeck, P.C. The opinions expressed are those of the author and do not necessarily reflect the views of Rothwell, Figg, Ernst & Manbeck, P.C. or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Tesla’s Patents are Your Patents

Patent,

Tesla Motors has notified has granted a public and free license to its patent to anyone who uses their technology “in good faith.”:

Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.

Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.

http://www.teslamotors.com/blog/all-our-patent-are-belong-you

The idea is partially a philosophical bent, but it is also business – Tesla feels that it needs real competitors in the zero-emission auto market in order to truly grow the market.

Christian Hicks, Co-Founder of Elysium Digital sent the following note regarding the likelihood that Tesla’s patents have already served their purpose for Tesla in its early-stage development:

No matter what, Tesla has benefitted from its patent program, because it prevented others from claiming what Tesla patented and used. At the same time, Tesla’s patents may very well have been valuable back when they were raising VC money, but they are obviously past that now.

Interesting perspectives.

Judge Chen and Nonobviousness

Patent, , , ,

By Jason Rantanen

The past two weeks have seen a substantial number of nonobviousness opinions emerge from the Federal Circuit.  These decisions are particularly interesting because they contain pairs of opinions with opposite outcomes.  Judge Lourie, the second longest-tenured active judge on the court, wrote two of them while Judge Chen, the second-newest member of the court, wrote a third and a dissent in the fourth.  Each found (or would have found) the patents in question to be obvious in one opinion and nonobvious in the other.  For those interested in the jurisprudential views of Judge Chen, especially, the pairing may provide some useful insights.

Allergan, Inc. v. Apotex Inc. (Fed. Cir. 2014) Download Allergan v. Apotex
Panel: Prost (author), Reyna, and Chen (dissenting in part)

Allergan and Duke University hold a pair of patents relating to an ophthalmic solution used as a treatment for eyebrow hair loss.  Allergan sells LATISSE a 0.03% bimatoprost ophthalmic solution as a topical treatment for eyebrow hair loss.  After Apotex and other manufacturers submitted Abbreviated New Drug Applications to the FDA seeking to market generic versions of LATISSE, Allergan and Duke sued for infringement.  Following a bench trial, the district court rejected the generic manufacturers’ invalidity arguments, found infringement, and entered an injunction.  The manufacturers appealed.

On appeal, the Federal Circuit addressed claim construction, anticipation and obviousness, affirming the district court’s contested claim construction of “treating hair loss” and its determination that the patents were not anticipated, but reversing the finding of nonobviousness.  I could write a lengthy post on the majority opinion alone, but this passage particularly caught my eye since it relates specifically to the issue of what subjects the Federal Circuit considers to be issues of law versus fact in the nonobviousness inquiry:

In sum, even if the district court did not commit clear error in its findings of fact, failure to consider the appropriate scope of the ’029 patent’s claimed invention in evaluating the reasonable expectation of success and secondary considerations constitutes a legal error that we review without deference.

Slip Op. at 23 (emphasis added).  The substantial breadth of the asserted claims of the ‘029 patent was particularly troubling to the majority, both in assessing the Graham factors and the nexus for secondary considerations.

Writing in dissent, Judge Chen would have found the ‘029 patent to be nonobvious.  In reaching this conclusion, he placed much more weight on the determination of the examiner during prosecution:

To begin with, issued patents enjoy a presumption of validity, which can only be rebutted by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2245–46 (2011). A party challenging a patent’s validity must do so with “evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions are highly probable.” Buildex Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (citing Colorado v. New Mexico, 467 U.S. 310, 316 (1984)). This is not a burden that is easily satisfied.

Dissent at 2.  Particularly persuasive to Judge Chen was the fact that examiner considered the key reference during examination and allowed the claims over it following an amendment by the patentee:

In light of the particularly heavy burden to show obviousness over a reference disclosed during prosecution and discussed by the examiner, Appellants have
not shown that Johnstone now somehow teaches or suggests the very structural feature that the patentee claimed to distinguish the Johnstone compounds.

Id. at 4.  On his part, Judge Chen found the disclosure Johnstone reference to be meaninglessly broad and generic:

This is not a situation in which there are a finite number of identified, predictable solutions. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007). Rather, the
single sentence in Johnstone actually proposes hundreds of thousands, or even millions, of variations on the alpha chain. [] The compound in Johnstone
could have a saturated bond at any position on the alpha chain, an unsaturated bond at any position, a triple bond at any position, or even a combination of any of these bonds. As a result, a person of ordinary skill in the art was not faced with a “small or easily traversed” number of options based on Johnstone. [] In this instance, covering everything effectively tells us nothing.

Id. at 5-6 (internal citations omitted).

Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2014) Download BMS v Teva
Panel: Prost, Plager, Chen (author)

Bristol-Myers Squibb (BMS) owns Patent No. 5,206,244, which relates to certain antiviral compounds.  At issue was claim 8, which covers entecavir, a treatment for hepatitis B that BMS markets under the name BARACLUDE.  Teva submitted an ANDA seeking to market a generic version of entecavir; BMS sued for infringement.  After trial, the district court held claim 8 to be obvious based on the selection of 2’CDG as a lead compound from the prior and a finding that a skilled artisan would have been motivated to make the necessary modification with a reasonable expectation of success at creating a compound with beneficial antiviral properties.  BMS appealed.

Unlike the Allergan case, the analytic framework presented by the parties for the question of obviousness was the lead-compound approach.  BMS contended that the district court had erred in selecting 2′-CDG as a lead compound, a particular legal framework that is frequently used in chemical compound cases.  The Federal Circuit disagreed, agreeing with the district judge’s conclusion that “those of ordinary skill in the art would have selected 2′-CDG, a carbocyclic analog, as a lead compound for
further development efforts before BMS applied for the 244 patent in October 1990.”  Slip Op. at 10-11.   The appellate court also rejected BMS’s argument on motivation to modify the lead compound to make the patented compound, pointing to detailed evidence and testimony on why the modification would have been obvious.

Nor was the presence of unexpected results sufficient to establish nonobviousness on their own.

Contrary to BMS’s argument, unexpected results do not per se defeat, or prevent, the finding that a modification to a lead compound will yield expected, beneficial
properties. Rather, as secondary considerations of nonobviousness, they come into play in determining “the ultimate question of patentability.”

…

Secondary considerations of nonobviousness “must always when present be considered,” and can serve as an important check against hindsight bias. See Cyclobenzaprine, 676 F.3d at 1075-76, 1079 (quoting Stratoflex, Inc. v. Aeroquip Corp, 713 F.2d 1530, 1538-39 (Fed. Cir. 1983)). While secondary considerations must be taken into account, they do not necessarily control the obviousness
determination.

Slip Op. at 15-16.  Here, the district court did not commit error in its factual findings that the unexpected properties did not compel a finding of nonobviousness, and the two legal errors that it committed (“(1) comparing entecavir to another hepatitis B drug on the market instead of the closest prior art, 2′-CDG; and (2) inappropriately look[ing] to what the inventor knew at the time of the invention—instead of one of ordinary skill in the art—to determine what was expected.”  Slip Op. at 18) were harmless.

First Impressions: My reading of Judge Chen’s majority opinion is that it reflects a careful, thorough review of the district court’s opinion (which itself is helpfully quite detailed and Magistrate Judge Burke should be commended for his own thoughtful analysis).  Conclusions are supported by detailed discussions and even if one disagrees with the overall conclusion of obviousness here, that disagreement seems less likely due to the carefulness of his approach and more likely due to some of the core difficulties inherent in pharmaceutical innovation such as the challenge of ascertaining marketable in vivo efficacy and the high value our society places on large-scale data-driven safety and efficacy determinations, determinations that can be quite costly yet have little if any direct role in substantive patent law questions.

Another possible reading of these two opinions is that they reflect a fair amount of deference to the decision making of others more familiar withe the specific facts.  In Allergan, in addition expressly referencing the examiner’s decision to allow the patent, Judge Chen’s view would also have affirmed the district court’s ruling of nonobviousness.   And in BMS, Judge Chen drew heavily on the district court’s findings.  (That said, one reason why these opinions aren’t in as much tension as they might be is because the district court’s analysis of obviousness in Allergan was at least an order of magnitude thinner than that of the judge in BMS).  At this point, this is merely an observation, and we’ll have to wait for future opinions from Judge Chen.

“Mine-run” and other puzzles

Patent,

By Jason Rantanen

I’m currently spending much of my time attempting to untangle the mess that is the law around Section 284 enhanced damages (i.e.: willful infringement) and Section 285 attorney fee awards (i.e.: exceptional case determinations).  Octane Fitness doesn’t reset the field so much as add a new layer to an already complex area of law, a layer that also potentially impacts willful infringement due to the Federal Circuit’s linking of the two standards.

There’s a term in Octane Fitness, though, that leaped out at me as I was reading the Court’s opinion.  In discussing what constitutes an exceptional case (and why the Federal Circuit’s objective + subjective standard is incorrect), Justice Sotomayor writes:

But a case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.

572 U.S. ___ (2014), Slip Op. at 9.  Perhaps you’re all snickering, but I had no idea what “mine-run” meant so I went and looked it up.  (My first thought was that it had something to do with Minecraft, but I knew that couldn’t possibly be right.)  In the interests of sharing my new-found enlightenment, here’s the definition from Meriam-Webster Online:

1:  the unsorted product of a mine
2:  a product of common or average grade <the mine-run of commercial breads pall with continued eating — Lee Anderson>
The term “mine-run” turns out to be quite popular in recent Supreme Court opinions, appearing in 34 since 2000 (and only 5 in the two centuries before that based on my Westlaw search), although there’s no consensus on whether the term is “mine-run” or “mine run.”
This got me to thinking about other somewhat-Delphic references that the Justices have used in their patent law opinions.  (Or at least, esoteric to me).  The one that immediately comes to mind is the Court’s periodic reference to candles and games, which popped up most recently in FTC v. Actavis.  I’m not planning on doing an exhaustive search, but I suspect there are others.