More on Patent Citations and the Impossibility Skew

This post adds somewhat to my prior one titled Citing References.

Citing References

A recent draft article by Professors Jeffrey Kuhn (UNC-Business) and Kenneth Younge (EPFL) along with former USPTO Economist (and former now professor) Alan Marco looks more in-depth at patent citations and arrived at a conclusion parallel to mine:

Specifically, we observe a dramatic increase in the number of citations generated per year and relate that change to a small proportion of patents flooding the patent office with an overwhelming number of references.

Read the article: https://ssrn.com/abstract=2714954.

The paper divides patents four categories according to the quantity of prior art citations.  Rather than call them “quartiles” the authors opt for names that relate to the examiner’s ability to review the corpus of submissions (given their time constraints):

  • 0-20 References – Routine
  • 21-100 References – Difficult
  • 101-250 References – Extreme
  • 251+ References – Impossible

Matching my parallel work, the authors write: “By 2014, patents that cite an “extreme” or “impossible” number of citations are responsible for more than 46% of all patent citations, even though they comprise less than 5% of all patents issued in that year.”  In my data – looking at patents issued Jan-Aug 2017 – I found that the skew has increased so that the “impossible” patents now cite half of all applicant-submitted patent citations.  [Note Here that Kuhn looks at citation of US patent documents only, while my approach considered all citations, but limited them to  those designated as applicant cited.]

Figure 1 from the article provides further information.

KuhnCitations

When focusing on those “impossible” patents, the team concluded that “the citations generated by highly citing patents appear to be particularly uninformative.”  This conclusion is based upon their conclusion that many of the cited references are dissimilar to the claimed invention.

Kuhn, et al., is directed at academic researchers who use patent citation in their empirical research on business and technological trends.  Thus, the conclusions drawn are not designed to either indict or improve the patent system – rather, the primary conclusion is that researchers should consider this skew when making assumptions about the importance of patent citations.  “The main contribution of this article is to provide prima facie evidence that the citation generating process is now generating significant measurement error for many academic studies.”

Gender Analytics: Using Litigation Data to Evaluate Law Firm Diversity  

 Guest Post by By Michael Sander,[1] Tara Klamrowski, and Rachel Sander

Legal analytics can now identify law firms committed to gender diversity by analyzing the gender of attorney appearances. Docket Alarm has done so for the United States Supreme Court and specialized patent courts. The lack of gender diversity is significant, especially in patent cases. Here we highlight firms breaking the mold.

More women are entering the legal profession than ever —women now make up about half of all law students and 36% of all licensed attorneys— but these ratios are not reflected at the highest levels of firm positions. Judges anecdotally report that women rarely act as lead counsel in litigation, and the percentage of female partners at firms hovers around 22%.

Corporate clients are aware of the gender imbalance and actively seek out firms that reflect their own commitment to gender diversity. Clients now regularly request firm diversity statistics as part of law firm pitches, putting pressure on firms to support female attorneys at the highest ranks.

Law firms typically measure diversity by tracking headcount; the number of male and female associates and partners in their ranks. These metrics can ignore the often more meaningful metric of how often female attorneys actually appear in court-room litigation.

How Legal Analytics Can Help Quantify Firm Diversity

Modern legal analytics can play an important role in increasing transparency in law firm gender diversity. Traditional legal analytics show how often parties or law firms win cases, or the likelihood of winning legal relief in front of a particular judge. However, they can also be used to rank and analyze more general litigation trends, including gender diversity.

To identify firms with the most balanced male-female attorney ratio, Docket Alarm scours the litigation record, looking at the names of attorneys and their law firm. The gender of each attorney in a case is identified based on the attorney’s first name and other factors.[2]

The result is that we can now measure firm gender diversity based on attorneys actually staffed on cases, i.e., those that most substantively participate in litigation, not just by firm head-count.

Gender Analytics in the Patent Trial and Appeal Board AIA Trials

The analysis began with the Patent Trial and Appeal Board (“PTAB”), a specialized court focused on patent validity. The analysis shows that patent litigation is dominated by male attorneys. Of the top 100 law firms, 55 have less than 10% female attorneys on cases, and 8 firms have never had a single female attorney work on their PTAB AIA-Trial cases. On average, attorney appearances are only 12% female. When representing patent owners, the percentage of female attorneys drops further to 9.8%.

However, some firms buck the trend. According to Docket Alarm’s statistics, the firms with the highest ratios of female attorneys working on PTAB patent cases are as follows:

Rank Firm Percentage Female
1 Osha Liang 72%
2 Goodwin Proctor 48%
3 Crowell & Moring 47.3%
4 McCarter English 46.7%
5 Arnold & Porter 42%

The “percentage female” here is calculated by dividing the number of female attorney appearances by the number of male and female attorney appearances for each firm.

Other runners up that have at least 25% of their AIA-Trial representations staffed by female attorneys include: Kasha Law; Covington & Burling; Mayer Brown; Drinker Biddle & Reath; Ascenda Law Group; Keker & Van Nest; Ropes & Gray; WilmerHale; and Venable.

The firms listed above, either by chance or design, have far more female attorneys working on cases than the average firm.

PTABGenderDiversity

Fig. 1: Screenshot of Docket Alarm’s Gender Diversity Statistics in the PTAB

 Gender Analytics in the U.S. Supreme Court

Compared to patent law, the male-female gap in Supreme Court practice is less severe, but by no means diverse. For the Supreme Court, Docket Alarm examined petitions for certiorari, analyzing the gender of the attorneys representing certiorari petitioners and respondents. Only two private law firms have half of their attorney appearances staffed by female attorneys, and only 7 have more than 25%. They are as follows:[3]

Rank Firm Percentage Female
1 Dykema Gossett 75%
2 Quinn Emanuel Urquhart & Sullivan 57%
3 Arnold & Porter 35%
4 Morgan, Lewis & Bockius 32.3%
5 Littler Mendelson 32.2%
6 Latham & Watkins 30.0%
7 Hogan Lovells 29.9%

In the rarefied world of Supreme Court practice, having just one or two top female attorneys on the team can make the firm a leader in gender diversity. Jill Wheaton leads Dykema’s Supreme Court practice. At Quinn Emanuel, it is Kathleen Sullivan and Sheila Birnbaum. Similarly, Deanne Maynard and Beth Brinkmann take the majority of cases at MoFo. These firms can attribute their strong diversity numbers to just a few highly specialized attorneys.

Win Rates and Gender Diversity

In addition to identifying the most gender diverse law firms, Docket Alarm’s analytics also show how case success rates are related to gender diverse firms. Docket Alarm found no statistically significant correlation between gender diversity and a firm’s win rate in the PTAB.[4]

PTABGenderDiversityWinRate

Fig. 2: Petitioner Win Rates Plotted Against Gender Diversity in the PTAB

The Future of Diversity Analytics

Now that gender diversity is becoming part of the law firm sales pitch to clients, there is demand to identify firms committed to gender diversity, and for law firms to track diversity recruitment efforts.

Analytics can also identify gender diversity of a particular client’s legal team across law firms. This metric can help clients identify the progress of diversity efforts.

Analytics are leading the way for a new look at diversity in law, one that relies on actual client representation, and not just firm head-count. The initial statistics are not encouraging, especially in patent law, but they highlight firms that are making progress, and provide a baseline to measure future progress for everyone else.

= = = = =

[1] Michael Sander is the founder of Docket Alarm (https://www.docketalarm.com).

[2] Attorneys where the gender cannot be determined due to a gender-neutral first name are not included in the statistics so as to not skew the results one way or another.

[3] The analysis did not consider firms that made fewer than 30 appearances as either a petitioner or respondent in petitions for certiorari since 2000. In an effort to home in on private civil litigation, the analysis disregarded cases filed forma pauperis.

[4] The methodology used a bivariate linear regression model. From a sample of the most active 100 law firms, gender diversity (measured as a percentage of female attorneys at the firm) was regressed on both petition institution as well as claim cancelation. The analysis was run separately for firms representing petitioners and patent owners.

35 U.S.C. 103   CONDITIONS FOR PATENTABILITY; NON-OBVIOUS SUBJECT MATTER.

35 U.S.C. 103 CONDITIONS FOR PATENTABILITY; NON-OBVIOUS SUBJECT MATTER.

A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.

Patentability shall not be negated by the manner in which the invention was made.

37 C.F.R. § 1.75(e), Jepson claims, and the Administrative Procedure Act

By David Boundy

The following is a guest post by David Boundy – a Cambridge Massachusetts attorney with a specialty at the intersection of patent and administrative law. In 2007-09, David led the teams that quashed the Continuations, 5/25 Claims, IDS, Markush, and appeal rules under the Paperwork Reduction Act.

This is a follow-up to Dennis’s two posts on Jepson claims, of Sept 1, 2017 and Aug. 30, 2017.

Wherein the Improvement Comprises

Jepson Claims (Part II)

37 C.F.R. § 1.75(e), recommending that applicants “should” use Jepson form, is a classic case of a “general statement of policy” under the Administrative Procedure Act, 5 U.S.C. § 553(b)(A).  It’s only hortatory, with no force of law.  The PTO did exactly the right thing, stating that its preference is non-binding, by using the word “should.”  Patent attorneys do exactly the right thing in recognizing the multiple substantive perils of Jepson claims, and ignoring § 1.75(e).

The point that controls everything else is that the PTO has no relevant substantive rule making authority, and therefore has no power to dictate any matter of claim form that might have substantive consequences.  The PTO is permitted to announce any preference it likes on issues of claim drafting, and can even alert the public that life is easier for the PTO if applicants follow this preference for Jepson form.  But the PTO has no authority to require any claim drafting technique that has substantive impact.

Because this is an issue where the PTO has no rule making authority, § 1.75(e) could not be promulgated as a “must” binding regulation.  To bind the public with force of law, an agency must have authority for the particular rule, and follow Congress’ procedures for promulgating it (35 U.S.C. § 2(b)(2)(B), the Administrative Procedure Act, Paperwork Reduction Act, Regulatory Flexibility Act, Executive Order 12,866, and all the rest).  So even though the PTO jumped all the procedural hoops and ended up with something that looks facially like a “regulation” in CFR (rather than in guidance), without authority, that regulation has no force of law (and would not, even if § 1.75(e) had used the word “must”).

The Administrative Procedure Act, § 553(b)(A), creates a pigeonhole for this kind of expression of agency preference, called a “general statement of policy.”  (I wrote about “policy statements” earlier this summer.)  “General statements of policy” are often used by an agency to offer helpful suggestions (at least suggestions that the agency thinks might be helpful to it).  But conversely, “policy statements” are purely hortatory, with no binding effect against the public.  That’s exactly what the PTO did here, using the word “should” in § 1.75(e) to indicate a non-binding preference, rather than “must” to indicate a requirement.

Legality of the Matal Appointment: Acting As PTO Director

“Policy statements” are also used to unilaterally promise a quid pro quo or set a floor (“If you the public do x, we the agency promise favorable outcome y.  If you don’t do x, you can still convince us to do y if you convince us under the controlling law.”)  Such quid pro quo policy statements bind the agency to give favorable action y for any member of the public that relies on x, but impose no binding requirement on the public to do x.  Here, the PTO made no promise of any favorable result that would occur if an applicant uses Jepson form, so § 1.75(e) signifies nothing—and does it without sound and fury.

When the PTO has preferences of this sort, there is no requirement to put them in CFR regulations—§ 553(b)(A) expressly exempts “statements of policy” from any requirement to be stated in regulation.  (They still have to be published, § 552(a)(1)(B), but need not be baked into CFR and notice-and-comment.)  The PTO’s preference for Jepson claims could just as well have been in a guidance document like the MPEP.  There’s no error or harm in putting a “should” policy statement in a regulation rather than guidance, but no requirement either.

The only ethical principle for patent attorneys that I see, in absence of force of law, is to avoid doing dumb stuff that hurts the client.  Patent attorneys have ethical obligations to their clients to avoid all the substantive pitfalls of Jepson claims.  I see no “ethical guideline” that would pull in the direction of § 1.75(e)—though of course I’d love to learn something new, and I look forward to the comments.

Two meanders on a rainy Labor Day weekend that were prompted by looking at  § 1.75(e)—

First—

37 C.F.R. § 1.75(d)(1) says “ terms and phrases used in the claims must find clear support or antecedent basis in the description.”  There are multiple drafting errors here, and the PTO should correct them.

(a)  There is no requirement whatsoever for “antecedent basis” agreement between the spec and claims.  Sure, § 1.75(d)(1) blurs the “must” requirement by adding an alternative, “clear support or antecedent basis,” but the Paperwork Reduction Act requires that regulations be “written using plain, coherent, and unambiguous terminology.”  Agencies are not permitted to waste the public’s time by tossing red herrings and irrelevancies into their regulations and leaving it to the public to decipher the agency’s sleight of hand (or spend hours over the years pointing examiners to the word “or” that so many overlook).

(b) § 112(b) permits “written description” and enablement support to be drawn from the drawings as well as the specification.  A rule that says it “must” be in the “description” is at the best unclear, and at worst over-prescriptive.

I get it, it’s easier for the PTO to examine an application when the claims and specification use the same terms.  But the PTO has no authority to put that preference in a “must” regulation.

Second—

The “single sentence rule” of MPEP § 608.01(m), affirmed by the D.C. District Court in Fressola v. Manbeck, 36 USPQ2d 1211 (D.D.C. 1995), stands on flimsy ground, though I’m not sure which way a better-argued case under today’s law would come out.

The D.C. District Court noted that claims can be drafted in single sentences or multiple, as only a matter of form, with no substantive effect, and the rule is thus “procedural” and not subject to requirements for notice and comment.  Even assuming that the Court’s characterization as “procedural” is correct, it doesn’t answer the question—the APA’s §§ 552 and 553 set procedural requirements for any rule that an agency wants to promulgate with binding effect, even procedural rules, and the MPEP doesn’t qualify and never did (an administrative law point that Fressola didn’t argue).  Today’s 35 U.S.C. § 2(b)(2) is even clearer, requiring § 553 “regulations” for procedural rules, and forbidding the PTO’s practice of promulgating procedural requirements in guidance.  Further, the language of today’s § 2(b)(2)(B) (especially when contrasted to pre-1999 § 6) is similar to the language in other statutes for other agencies, and the agencies accept that the language means they “must” use notice and comment.  See, e.g., Department of State, Notice of Proposed Rulemaking, 64 Fed. Reg. 53632 (Oct 4, 1999) (“Pursuant to [9 U.S.C. § 553], the rulemaking procedures of [5 U.S.C. § 553] apply to any determination to effectuate such a modification or amendment [of the Department’s procedural rules for international arbitration]. In accordance with those procedures, notice must be published in the Federal Register, time for comment provided, and the final rule published for 30 days before the rule may become effective.”).

The Fressola court stated (citing Chevron) “the Plaintiff must nonetheless overcome a quite deferential standard of review in order to justify the invalidation of a portion of the MPEP by a reviewing court.”  Nonsense.  That kind of deference only applies to interpretations (not rules cut out of whole cloth, like the single sentence rule), issued in a reasonably formal form published to the regulated public (not squirreled away in guidance directed to agency employees).  Subsequent developments in the Chevron administrative law space (specifically Mead and Christensen) make even clearer that informal guidance is not entitled to high deference.   An agency only gets that kind of deference after it earns it by jumping several hoops of formality for its interpretation.

The reasoning of Fressola is a terribly confused mish-mash of incompatible legal principles (see my upcoming article in ABA Landslide, later this fall, which provides a helpful taxonomy of rules).  The single sentence rule and Fressola have been entirely undercut by developments since 1995.  (The continuing vitality of Ex parte Quayle practice also comes to mind.)

But at the end of the day, the “single sentence” rule could squeak through a challenge, under the administrative law standing principles of “suffering legal wrong” and “harmless error”—even Fressola admitted that his single-sentence claims suffered no substantive disadvantage relative to his multi-sentence claims.

Citing References

For patents issued thus far in 2017, the average patent lists 44 references submitted by the patent applicant for the examiner to consider. The median patent, however, only has 10 applicant cited references.  The gulf between the mean and median is the result in skew in the dataset — here caused by a fairly small percentage of patents that cite a disproportionately large number of references.  Thus, if you pick a few patents at random, about half of them will have <10 references cited by the applicant.  Every once in a while, though, you’ll come across a big papi – see, for example U.S. Patent No. 9,535,563 and its 7,800 references cited by the applicant (inventor-patent attorney Steven Hoffberg).  At the other end of the spectrum, about 12% of applicants cite no prior art at all — this is down from about 20% in 2005.

One way to think about the skew is to look patents where applicants submit cite 250+ references — that represents about 3.5% of patents issued in 2017 thus far (though only 0.5% of patents issued in 2005).  Those 3.5% of issued patents account for half of the prior art submitted to the PTO.

To be clear – I’m not demonizing patentees who submit lots of references.  What I’m working toward is whether the large number of references creates any special difficulty or benefits for the examination process and whether examiners receive any special assistance in considering the large number of references submitted.

I think the chart below is interesting. I took the 2017 patents and grouped them in quintiles according to the number of references cited.  For each quartile, I then found the average pendency (in months) for the issued patents.  The results are clear – patents with more citations correlate with longer pendency.  (Note that the auto-created axis does not reach ZERO – this makes the slope appear more dramatic than reality).  Obviously we should be a bit cautious in interpreting this chart as suggesting a causal role.

ReferencesCitedQuint

 

 

 

En Banc: Construing Claims

by Dennis Crouch

Over the past several of years, the court has appeared to be increasingly divided on the question of when a district court (or PTAB judge) must offer an express construction of beyond simply assigning a claim its “plain and ordinary meaning” without further definition.  In NobelBiz v. Global Connect, the Federal Circuit ruled that disputed claims must be construed (despite some precedent to the contrary).  That result means that NobelBiz’s jury win is vacated and remanded.

Please Define What you Mean by Ordinary Meaning

Now in its en banc filing, the patentee has asked three questions:

  1. May a district court ever assign a “plain and ordinary meaning” construction? Or is an express construction required whenever a litigant asserts an O2 Micro “dispute,” as dictated by NobelBiz and Eon?
  2. May the Federal Circuit narrow claim scope without finding lexicography or prosecution disclaimer, by parsing the intrinsic record and relying on “extra-record extrinsic evidence,” as occurred in NobelBiz?
  3. May a district court refer the question of infringement to a jury when claim terms are assigned their plain and ordinary meaning?

The briefing is well done and does good job of highlighting the distinct approaches by the various Federal Circuit judges.  Even if they disagree on the appropriate rule, all of the Federal Circuit judges should agree that this is an issue that needs resolution.

[Panel Opinion with Newman Dissent][Petition for Rehearing En Banc]

More Briefs in Support of ending IPRs

Oil States v. Greene’s Energy (Supreme Court 2017)

Briefing continues in the Oil States constitutional challenge to the IPR System.  Amicus briefs supporting either the petitioner or neither party were due August 31 with at least 31 filings –  Respondents’ brief (both Greene’s Energy and USPTO) will be due October 23 with supporting amicus shortly thereafter.

I have not reviewed all of these these briefs, yet, but have a few notes above.  As expected, the vast majority of these top-side briefs support the petitioner. I have highlighted above the few briefs, including that by AIPLA, that support keeping the current system.

Jepson Claims (Part II)

by Dennis Crouch

In an earlier post, I wrote about the Code of Federal Regulations’ requirement that patent claims “should” be drafted in Jepson form. 37 C.F.R. 1.75(e).  This claim structure uses the preamble to particularly identify the elements of the invention known in the art with the body simply reciting the “portion of the claimed combination which the applicant considers as the new or improved portion.”  In my view, Jespon claims are so nice to read because they actually spell out what has been improved by the invention.  Unfortunately, they also are seen as increasing the chance that the patent will be both narrowly interpreted and found invalid – and that the statement regarding the prior art will be seen as an admission.  For much these same reasons, most patents no longer particularly identify their “invention” beyond stating that it is embodied by each claim taken as a whole.  Prof. Kayton, who trained generations of patent attorneys in his PRG classes was particularly adamant about avoiding Jepson claims.

Gene Quinn on his blog writes “No patent attorney in their right mind would follow this suggestion.” (referring to Rule 1.75(e)).  While I largely agree that Jepson claims are problematic for the reasons stated above – I would caution patent attorneys to ensure that their ethical guidelines are being met.  In particular, when the law says that attorneys “should” do something, it seems improper to entirely ignore the law’s suggestion. Rather, the patent attorney should consider – as stated in the Rule – whether “the nature of the case admits” such a claim form.  An additional ethical trick when thinking through this is to consider whether a family-member patent claim has already been (or will be) filed in a separate jurisdiction that requires this form.

 

In a 2009 post, Aaron Feigelson reported some interesting data on the use of Jepson claims in the US.  Essentially that its use had dropped tremendously as shown by Feigelson’s chart below (reproduced with permission).

Jepsonpercent

Feigelson’s data just ran through 2009 and may actually overstate the prevalence of Jepson claims because he includes any patent with the word “improvement” in the claim. I just updated the data up through 2017 with the chart shown below – looking for patents having at least one claim with the following phrase “the improvement compris.”  As you can see, less than 1 out of every 1,000 newly issued patents is in this claim form. JepsonPerYear

The most recent patent with a Jepson claim is U.S. Patent No. 9,744,559 covers the use of nanoparticle materials for “high contrast surface marking,” and is only found in Claim 24.

24. In a thermally activated, chemically based marking method comprising the steps of:

applying a layer of a marking composition to the surface of a substrate and irradiating said layer with radiant energy which is absorbed by at least one component of said marking composition,

the improvement comprising the use of marking compositions comprising amounts of at least one pigment encapsulated in silica nanoparticles and further comprising nanoparticles of materials selected from the group consisting of silica, metal oxides and metal compounds comprising at least one of tungsten, molybdenum and chromium, and combinations thereof,

wherein these materials are all colloidally suspended in a liquid comprising aqueous and/or organic solvents, said amounts being sufficient to produce a marking layer atop said substrate having improved properties including at least one of stronger bonds, better color properties, and finishes smooth enough not to retain bacteria.

Attorney Fees: What is the meaning of “all expenses?”

In a sua sponte en banc order, the Federal Circuit has announced its intent to reevaluate the NantKwest decision permitting the PTO to recoup its attorney fees in defending a Section 145 civil action.

Issue: Did the panel in NantKwest, Inc. v. Matal, 860 F.3d 1352 (Fed. Cir. 2017) correctly determine that 35 U.S.C. § 145’s “[a]ll the expenses of the proceedings” provision authorizes an award of the United States Patent and Trademark Office’s attorneys’ fees?

After being finally rejected by both the examiner and the PTAB, a patent applicant can then take its case to court.  The Statute provides two options – either (1) a direct appeal to the Federal Circuit or (2) filing a civil action in district court to pursue a trial on the merits under 35 U.S.C. 145.

An oddity of Section 145 civil action is the last line which states: “All the expenses of the proceedings shall be paid by the applicant.”  In 2010, the en banc Federal Circuit ruled that the statute means what it says – expenses are to be paid by the applicant “regardless of the outcome.” Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010) (en banc).  In NantKwest, the panel ruled that the “expenses” include attorney fees.

[Panel Decision][Patently-O Write-up]

The panel decision was split – with Judges Prost and Dyk in majority and Judge Stoll in dissent and arguing that the term “expenses” is not sufficient to overcome the traditional american rule regarding attorney fees.

Wherein the Improvement Comprises

We begin claim drafting today in my patent law course. I wonder what Patently-O readers think of the following patent office rule found in 37 C.F.R. 1.75(e)

Where the nature of the case admits, as in the case of an improvement, any independent claim should contain in the following order:

  1. A preamble comprising a general description of all the elements or steps of the claimed combination which are conventional or known,
  2. A phrase such as “wherein the improvement comprises,” and
  3. Those elements, steps, and/or relationships which constitute that portion of the claimed combination which the applicant considers as the new or improved portion.

Recognize here (1) as a promulgated rule, the provision has the force of law but (2) very few claims follow this suggested form.

Post-IPR: What Happens If IPRs are Unconstitutional? (Part I)

It is difficult for me to judge the merits of the Oil States constitutional arguments as I am neither a legal historian, a constitutional law expert, nor an expert on administrative law.  What I do know is that it would be a rather big deal if the Supreme Court ruled that the IPR regime is constitutionally prohibited.

My question of the day:

Assuming hypothetically that IPR is ruled unconstitutional, how should the courts and PTO deal with the thousands of patents whose claims have already been found unpatentable and cancelled by the PTAB?

An easy practical answer is that Oil States would effectively overrule those administrative decisions and thus removes any preclusive impact of an IPR cancellation.  That approach runs into significant problems when a court has already relied upon an IPR cancellation to issued a final judgment (with appeals exhausted).  Our federal courts strongly favor finality of judgments and are wont to revisit those judgments even when later evidence suggests that the judgment was based upon faulty information.

I should note here, however, that IPR cancellations or ordinarily not relied upon for their preclusive effect, but rather courts hold essentially that a patentee has no standing to assert cancelled claims – the patentee’s cause of action goes away.  In a property sense, the patentee no longer has any property right to the cancelled claims.  With that theory in mind, it is not clear to me that win for Oil States would automatically annul prior IPR final decisions.  Rather, those already-cancelled claims are likely to require a revival action by the PTO before the patents are again assertable.

Patentlyo Bits and Bytes by Anthony McCain

Get a Job doing Patent Law                  

Oil States Briefing: The Chancery-at-Law

JuryOfPeeersRecurring Patently-O contributor Ned Heller has filed his brief in support of petitioners in the Oil States case. Heller represented MCM v. HP in its parallel bid for consideration of the Article III issues.  [16-712 tsac Brief][Filed on behalf of Alliacence where Heller is Counsel]

The basic argument is historic — Inventors had a right to a trial by jury prior to 1791; those rights were guaranteed by the Seventh Amendment of the US Constitution; and Congress cannot now eliminate those established rights.

Heller reflects upon the remedy of scire facias that was at times commenced in the Chancery court.  As the law historians brief reflects, in this particular, the Chancery action operated as a common law court (rather than a court of equity) — “the Chancellor at all times was acting with his ordinary, common law powers, not his extraordinary, equitable powers.”  Thus, a scire facias action is also subject to the right of Jury Trial.

Because Inter Partes Review is effectively scire facias, it is improper without a jury trial.

[IPR] provides the same remedy, revocation, and the same grounds, invalidity as do scire facias, albeit, limited only to the claims challenged. Both are contested proceedings. Both begin with a petition by an interested party to the government. The common law proceeding was pursued in the name of the King, but the real party in interest was the petitioner who had to post a very large bond to pay the attorney’s fees of the patent owner.

Because IPR does not provide a jury trial, the statute authorizing IPR is unconstitutional.

Heller’s brief delves into the “public rights” debate and argues that argument is a red herring.  Regardless of the statutory basis of patent rights, a contested revocation proceeding has a right to a jury trial because it had such a right at common law in England in 1791.

Heller does offers an upper-cut to the Government’s argument at the petition stage:

Because they were filed in Chancery, the government has argued that the actions were equitable (apparently not even knowing that Chancery had a law side) thereby providing no basis for a Seventh Amendment right.

The law historians brief along with Heller’s brief here begin to nail down this historical point. “[E]quity could not and did not revoke patents for invalidity since an adequate remedy at law was available.”

 

Regarding the privy council’s ability to cancel patents without jury trial. Heller argues that longstanding political battle between the king and courts effectively ended in the 1750’s – in favor of a common law courts. However, in 1779, the Privy Council did cancel one last patent – this one on National Security grounds. (England needed the patented cannons to conduct war against the American colonies).

More amicus briefs in this important case are expected this week.

= = = = =

A key point in the briefs so far is that IPR is substantially parallel to litigation.  However, in the very recent Cuozzo decision, the Supreme Court held that in “significant respects, inter partes review is less like a judicial proceeding and more like a specialized agency proceeding.”  An upcoming amicus would do well to address this point.

PTAB Ducks the Record, but not the Judge Moore

Ultratec v. CaptionCall and Matal (Fed. Cir. 2017)

Ultratec’s patents relate to systems for facilitating phone calls for deaf people.  In eight parallel IPR proceedings, the PTAB found the challenged claims anticipated and/or obvious.   On appeal, the Federal Circuit has vacated – holding that “the Board failed to consider material evidence and failed to explain its decisions to exclude the evidence.”   As you might expect, the panel of Judges Newman, Linn, and Moore held the PTAB’s feet to the fire.

The setup here is typical of the problematic parallel proceedings with the PTAB cancelling patents after final court judgment enforcing patent rights:

Ultratec sued CaptionCall … for infringement [and] the jury found the patents valid and infringed and awarded damages of $44.1 million. Five months after the verdict, the Board issued final written decisions holding all challenged claims of Ultratec’s patents were either anticipated or would have been obvious. The district court subsequently stayed all post-judgment proceedings pending final resolution of the IPRs.

The particular issue here involves the patent challenger CaptionCall’s expert witness Benedict Occhiogrosso who provided testimony both for the court proceedings and for the IPR.

One week after the court trial, the patentee Ultratech attempted to introduce Occhiogrosso’s trial testimony into the IPR proceedings to show conflicts between the two – but the PTAB repeatedly blocked that attempt without ever reviewing the trial testimony. Ultimately, the PTAB issued a final decision crediting Occhiogrosso’s credibility for its final conclusion of unpatentaiblity.

When the patentee first attempted to introduce the original trial testimony, its request was denied because Ultratech had not followed the rules of first requesting authorization to file a such motion. 37 C.F.R. § 42.123(b).  Subsequently, Ultratech did request authorization, but that request was denied (orally) without the Board ever reviewing the conflicting testimony since, under PTAB rules, the request may not include information related to the supplementary evidence.   The PTO solicitor’s office then refused to include the full documentation regarding these submissions in the ‘official’ record submitted to the Federal Circuit.

Catch22

On Appeal, the Federal Circuit found that the Board had abused its discretion in refusing to supplement the record:

This record affords but one reasonable conclusion: Ultratec satisfied both of § 42.123(b)’s requirements for allowing Ultratec to file a motion to admit Mr. Occhiogrosso’s trial testimony. First, the evidence could not have been obtained earlier. Ultratec emailed the Board requesting authorization to file a motion to supplement the record the week after the jury trial concluded. This is not evidence that could have been located earlier through a more diligent or exhaustive search; it did not exist during the IPR discovery period. . . . The Board offers no reasoned basis why it would not be in the interest of justice to consider sworn inconsistent testimony on the identical issue. . . . Ultratec sought to offer recent sworn testimony of the same expert addressing the same patents, references, and limitations at issue in the IPRs. A reasonable adjudicator would have wanted to review this evidence. If Mr. Occhiogrosso gave conflicting testimony on cross-examination, this would be highly relevant to both the Board’s analysis of the specific issues on which he gave inconsistent testimony and to the Board’s overall view of his credibility. Mr. Occhiogrosso’s testimony was critical to the Board’s fact findings in this case, as the opinions’ repeated reliance on it establishes. Under such circumstances, no reasonable fact finder would refuse to consider evidence of inconsistent sworn testimony. Moreover, any such inconsistencies would likely bear on the overall credibility of the expert. . . . Admitting and reviewing Mr. Occhiogrosso’s trial testimony would have placed minimal additional burden on the Board.

After finding problems with this particular decision, the court went on to particularly find problems with the Board’s procedures that “contributed to its errors in this case.”

The first problem is that the rules suggest that the Board will decide motions to request a supplement without “the information necessary to make a reasoned decision.”  Basically, the problem is the required request to file a motion to supplement may not include any discussion of the content of what is to be supplemented — this means that the request may be denied (as here) without the Board ever reviewing the information. “The Board’s only exposure to the disputed testimony was the parties’ competing characterizations of it during the conference call for which there exists no record.”

The second problem is that “the Board’s procedures allowed it to make significant evidentiary decisions without providing an explanation or a reasoned basis for its decisions.”  This violates general principles of administrative law.

The third problem is that the Board’s procedures impede appeals by keeping meaningful information out of the record. For instance, the appellate court writes “We are also prohibited from viewing Mr. Occhiogrosso’s testimony because it is not part of the record.”

Unfortunately, although the Federal Circuit identifies problems with various PTAB rules and procedures, the Court did not expressly hold that those rules must be revised.  Rather, the holding is simply:

On remand, the Board shall admit and consider Mr. Occhiogrosso’s trial testimony. If the Board finds he gave inconsistent testimony, the Board shall consider the impact on the specific patents at issue in the trial testimony as well as on his credibility as a whole.

Read the decision.

= = = = = =

 

U.S. Patent Nos. 5,909,482 (“the ’482 patent”), 6,233,314 (“the ’314 patent”), 6,594,346 (“the ’346 patent”), 6,603,835 (“the ’835 patent”), 7,003,082 (“the ’082 patent”), 7,319,740 (“the ’740 patent”), 7,555,104 (“the ’104 patent”), and 8,213,578 (“the ’578 patent”).

Obviousness Law: A Reasonable Expectation of Success

In re Stepan Co. (Fed. Cir. 2017)

In a split decision, the Federal Circuit has vacated the PTAB ruling that Stepan’s claims are not patentable.  The claims here are directed to the use of ultra-high concentrate glyphosate and a particular surfactant to ensure “better adherence to leaves, thereby enhancing penetration.”  Although the PTAB (Board) found motivation to combine elements of the prior art to form the claimed system, the Board did not fully support that PHOSITA would have a ‘reasonable expectation’ that the combination would be a success.

Success

The decision here thus goes to the core of obviousness law:

The majority: An obviousness determination requires finding both “that a skilled artisan would have been motivated to combine the teachings of the prior art . . . and that the skilled artisan would have had a reasonable expectation of success in doing so.” quoting Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359 (Fed. Cir. 2016). . . . Absent some additional reasoning, the Board’s finding that a skilled artisan would have arrived at the claimed invention through routine optimization is insufficient to support a conclusion of obviousness. (Majority opinion by Judge Moore and joined by Judge O’Malley).

The Dissent (Judge Lourie): Where, as here, there is a single prior art reference, there does not need to be a finding of reasonable expectation of success for those skilled in a particular art to make conventional modifications to the prior art and look for improvements in some parameter. See In re Ethicon, Inc., 844 F.3d 1344, 1351 (Fed. Cir. 2017).

Majority’s Response in FN.1: The dissent suggests the PTO need not establish a reasonable expectation of success where there is a single prior art reference. We do not agree. Whether a rejection is based on combining disclosures from multiple references, combining multiple embodiments from a single reference, or selecting from large lists of elements in a single reference, there must be a motivation to make the combination and a reasonable expectation that such a combination would be successful, otherwise a skilled artisan would not arrive at the claimed combination.

To be clear here, the PTAB did appear to find a reasonable expectation of success. [PTAB Decision] The holding here though is that such a broad conclusory finding must also be supported by specific factual findings targeted to the patent at hand.  An important element of this decision is that the majority particularly held that the lack of factual findings supporting the PTO’s conclusion meant that the agency had not even established a prima facie case of obviousness.

Image result for stepan company

Dismantling Inter Partes Review

by Dennis Crouch

The America Invents Act of 2011 brought about sweeping changes to the US Patent System — most dramatic of these was the creation of the administrative trials: especially Inter Parties Review (IPR) and Covered Business Method Review (CBM).

But if initiation of the AIA Trial system has been dramatic, the potential outcome of Oil States Energy Servs., LLC v. Greene’s Energy Group, LLC (Supreme Court 2017) is even more so.  Oil States is asking the Supreme Court to find the IPR system unconstitutional and thus order the system dismantled.

Earlier in 2017, the Supreme Court agreed to hear the Oil States case on the following question:

Whether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

Oil States has now filed its very well written opening merits brief.  Briefing will continue over the next few months, and I expect substantial amicus filing on both sides of the case, as well as input from President Trump’s Department of Justice.

The patent at issue in the case is U.S. Patent No. 6,179,053 that covers a lockdown mechanism for well tools. After being sued for infringement, Green filed the IPR petition with the USPTO and the agency eventually found the challenged claims unpatentable on a broad claim construction (after first rejecting the district court’s claim construction).   The Federal Circuit then affirmed the case without opinion (R.36).  The implication here: Oil States believes its patent is valid when properly construed.

The argument in this case begins with a focuses on history — for centuries, patent infringement and validity disputes have been decided in courts. “Article III promises a court to these litigants, and the Seventh Amendment promises a jury.”  The America Invents Act (AIA) shifts the approach – to having an administrative agency handle the “trial proceedings.”

With this background, Oil States argument is straightforward:

As this Court has long held, “Congress may not ‘withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.’ ” Stern v. Marshall, 564 U.S. 462 (2011) (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272 (1855)). That is just what Congress has done with inter partes review, which wrests patent-validity cases from federal courts and entrusts them to administrative-agency employees, who decide questions of law that Article III reserves to judges and questions of fact that the Seventh Amendment reserves to juries. Neither Article III nor the Seventh Amendment tolerates this circumvention. . . . “When a suit is made of ‘the stuff of the traditional actions at common law tried by the courts at Westminster in 1789,’ * * * the responsibility for deciding that suit rests with Article III judges in Article III courts.”  Stern (quoting N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 90 (1982)).

The brief does an excellent job of demarcating a justiciable line for the Court.  According to the briefs, the problem with IPR isn’t really that the PTO is invalidating patents, but instead that the IPR regime is set-up as a full-on adversarial judicial proceeding to invalidate patents that is designed to promote a different outcome and without the Article III protections of district courts.  That wholesale replacement of the Article III court and Jury rights is simply not allowed.

One way that the court could rule against Oil States is by ruling that the IPR cancellation process involves “public rights” rather than private property rights.  To do so, however, would come in fairly directly conflict with the court’s recent statements in Stern.

More to come on this interseting ! Top-side amici briefs are due in 7-days.

Read the BriefOil States Energy Services 082417 AS FILED

The Federal Circuit rejected many of these arguments in MCM. Read the court’s decision here.

 

 

Correction: Bracha was Exactly Correct about the Privy Council Exception

by Dennis Crouch

In an earlier post, I commented on what I suggested was an error by Professor Oren Bracha in his SJD Thesis Owning Ideas: A History of Anglo-American Intellectual Property.  On further reflection – Bracha was not wrong, but exactly correct. 

Bracha’s work cited a 1904 treatise on English Patent Law as stating that “revocation clauses authorizing the Privy Council to revoke patents were continued to be inserted in the patent grants up to 1902.”  Although the 1904 treatise itself is somewhat cryptic, the 1852 patent law sets out a “statutory form” for a patent right that includes the caveat for the privy counsel (or the queen herself) to void the patent if it turns out it was improperly issued or becomes “prejudicial or inconvenient.”  The form indicates the following statement should be included with each patent grant:

Provided always, and these Our Letters Patent are and shall be upon this Condition, that if at any Time during the said Term hereby granted it shall be made appear to Us, Our Heirs or Successors, or any Six or more of Our or their Privy Council, that this Our Grant is contrary to Law, or prejudicial or inconvenient to Our subjects in general, or that the said Invention is not a new Invention as to the public Use and Exercise thereof, or that the said is not the true and first Inventor thereof within this Realm as aforesaid, these Our Letters Patent shall forthwith cease, determine, and be utterly void to all Intents and Purposes, anything herein before contained to the contrary thereof in anywise notwithstanding.

Patent Law Amendment Act of 1852 [PL Amendment Act (1852)].

The historic point here – although the it did not actually revoke any patents after 1779 — the privy council seemingly held that power up until at least 1902.

I only had a chance to look through one English patent issued during this time period – the 1896 Marconi patent. The patent does include the caveat that permits the Privy Council to void the patent – following the form language almost identically.

marconicaveatt

Thank you to Professors John Golden and Oren Bracha for providing copies of these historic references and pointing out my error. 

= = =

 

Applying it to Oil States: When the US was formed, we rejected the notion of royalty and the surrounding apparatus (including a privy council).  So, in my view, there is not a direct line of reasoning that somehow transfers the privy council power to the PTO or even to Congress to distribute as it wishes.  Rather, the way that I think about the privy council issue in relation to Oil States is to focus on the question of whether administrative revocation somehow offends our American court structure and its place within the federal government.  I can imagine the Supreme Court writing something along the lines of: “Even in England, at the heyday of common law courts, patents could be administratively cancelled upon private petition.”  Under this interpretation privy council supports the PTO’s power to revoke.

There is a flip-side argument here that might support Oil State’s position.  The argument involves the manner in which the Privy Council (and Queen’s) power to cancel was created for each patent by expressly including the power as an express caveat to each patent grant.  In the US, these sorts of caveats were never included within the patent grant (as far as I’m aware), and certainly were not included within pre-AIA patents being cancelled via Inter Partes Review.

= = =

One further note for those delving into history:  I mentioned Bracha’s Thesis work Owning Ideas: A History of Anglo-American Intellectual Property.   Bracha has a much more recent book: Owning Ideas: The Intellectual Origins of American Intellectual Property, 1790–1909 (Cambridge Press 2016) that focuses on development of American law.

PTAB: Serial Filing Past the Deadline and Adding Judges to Achieve a Result

by Dennis Crouch

Nidec Motor v. Zhongshan Broad Ocean Motor (Fed. Cir. 2017)

Serial Filings: Important statement here from the Court against allowing a PTAB IPR patent challenger to continue to file additional IPR petitions after the 1-year deadline of 315(b) via the joinder process of 315(c); and also against stacking of PTAB Board to achieve particular results on rehearing.  The court’s statement though is entirely dicta – it actually affirmed the PTAB decision here where these actions occurred. 

On appeal in this case is the PTAB’s cancellation of the claims of Nidec’s Patent No. 7,626,349.  The patent covers an HVAC with an improved motor controller that uses sinus-wave powering (rather than square-waves) for reduced noise.

SineWave

In September 2013, Nidec sued Broad Ocean for infringement and Broad Ocean followed with an IPR petition in July 2014 (within the one-year deadline).  The Board (acting on behalf of the PTO Director) partially instituted the IPR – but denied on the grounds relating to a Japanese Publication since Broad Ocean had attested to the translation accuracy.  In February 2015 (a month after the original petition decision), Broad Ocean filed a second petition – this one including the required affidavit.

The PTAB originally denied the new petition – holding that it was filed after the 1-year statutory deadline following the lawsuit initiation. 35 U.S.C. § 315(b).  That original panel decision was split, with Judges Wood and Boucher in the majority, and Tartal in dissent.  Tartal argued that the late-filing should be allowed to be joined (under § 315(c)) to the original IPR proceeding in a way that avoided the 1-year filing deadline.    Statutes at issue:

315 (b)Patent Owner’s Action.— An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner … is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).

315 (c) Joinder.— If the Director institutes an [IPR], the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director … determines warrants the institution of an inter partes review under section 314.

On the rehearing, the PTAB Chief (acting on behalf of the PTO Director) shuffled the Board seemingly to change the result – adding two additional judges – Medley and Arbes – with the result that the dissenting opinion became the majority who offered an interesting explanation of the statute.  Section 315(c) textually appears to focus on joinder of additional people.  However, the text actually allows for “joinder of any person” – and according to the majority that should be interpreted to allow the “same person” to join himself to his prior filing (and in the process bring-along additional claims).

§ 315(c) permits the joinder of any person who properly files a petition under § 311, including a petitioner who is already a party to the earlier instituted [IPR]. We also conclude that § 315(c) encompasses both party joinder and issue joinder, and, as such, permits joinder of issues, including new grounds of unpatentability, presented in the petition that accompanies the request for joinder.

After joinder, the Board went on to find the challenged claims obvious (based upon challenges instituted in the original petition) and anticipated (based upon challenges in the second petition)

Unfortunately for the appeal, the Federal Circuit determined that it “need not resolve” the joinder issue because the obviousness finding were proper and were based upon the original petition.

Because there is no dispute that Broad Ocean timely filed the First Petition (containing the obviousness ground), the issues on appeal relating only to the Board’s joinder determination as to anticipation ultimately do not affect the outcome of this case

ExpandedPanelThe court opinion affirming obviousness was written per curiam. An important concurring opinion was filed by Judge Dyk and joined by Judge Wallach suggesting that the PTAB’s joinder decision is wrong and that stacking of panels is problematic.  The opinion’s designation as concurring appears to be an implicit recognition that the additional opinion is dicta.

They write:

[W]e write separately to express our concerns as to the [PTO] position on joinder and expanded panels since those issues are likely to recur. Although we do not decide the issues here, we have serious questions as to the Board’s (and the Director’s) interpretation of the relevant statutes and current practices. . . .

The issue in this case is whether the time bar provision allows a time-barred petitioner to add new issues, rather than simply belatedly joining a proceeding as a new party, to an otherwise timely proceeding. Section 315(c) does not explicitly allow this practice. We think it unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding, whether the petitioner seeking to add new issues is the same party that brought the timely proceeding, as in this case, or the petitioner is a new party. . . .

Second, we are also concerned about the PTO’s practice of expanding administrative panels to decide requests for rehearing in order to “secure and maintain uniformity of the Board’s decisions.” . . .

[Although t]he Director represents that the PTO “is not directing individual judges to decide cases in a certain way”[,] we question whether the practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.

Part of the reason why this is all dicta is that the PTO Director’s decision whether or not to initiate proceedings is – by statute – not appealable.