Re-Calibrating Willfulness and Enhanced Damages

By Dennis Crouch

Corning Optical Communications v. PPC Broadband (Supreme Court 2018) (on petition for writ of certiorari).

This new petition for writ of certiorari is focused on the same willfulness issues as another recent petition, Bombardier Recreational Products Inc., et al. v. Arctic Cat Inc., No. 17-1645 (cert denied, October 2, 2018).

Does a finding of willful infringement based on a “should have known” standard violate the requirement that willfulness be “intentional or knowing”?

The Patent Act is remarkably unhelpful in terms of spelling out the doctrine of willfulness and enhanced damages.  The statute simply states that “the court may increase the damages up to three times the amount found or assessed” without providing further guidance or limitation. 35 U.S.C. 284.  The Federal Circuit has taken this simple statutory text and layered over a multi-step analysis and multi-prong doctrine that must be met prior to increasing the damage award.  In Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016), the Supreme Court cut through a portion of the complexity — holding that an infringer’s “objective reasonableness” in its infringement decision does not bar an enhanced damages award.   Still, the doctrine continues to have muti-layers, including a first decision as to whether the infringer’s behavior was “willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.” Halo. That factual inquiry (willfulness finding) is then followed by a judicial decision as to whether to actually enhance damages.

The question above focuses on the jury’s willfulness finding — are jury instructions sufficient if they include a “should have known that it likely infringed” standard?

The petition also asks a second question about the court’s process in determining whether to enhance damages (following a willfulness verdict).  Corning asks:

In determining whether to enhance damages for “egregious” infringement under §284, must courts consider all relevant circumstances, including evidence that the defendant’s position was objectively reasonable?

In Halo, the Supreme Court held that subjectively egregious behavior could be sanction by enhanced damages even if “objectively reasonable.”  That situation typically involves a defendant who recognized that they were likely infringing a patent but continued to infringe. Then, later in litigation, the attorneys came up with a credible non-infringement argument.  After being adjudged an infringer, the defendant finally argues that its after-developed attorney arguments should be considered as relevant to the willful infringement.

In the petition, Corning explains:

The District Court … joined a growing number of courts in concluding that a finding of willful infringement suffices to support enhanced damages, regardless of the reasonableness of the defendant’s conduct.

Rather, according to Corning, the court should have considered the objective evidence of non-infringement.

Here, I’ll note that the Corning’s objective evidence is pretty good — the US Court of International Trade (CIT) ruled that an ITC General Exclusion Order didn’t apply to the same products at issue here — since they weren’t covered by the patent at issue. U.S. Patent No. 6,558,194.  (Note that in that case the patent owner was not permitted to participate, even as an amicus).

Patenting Therapeutic Use of a Natural Compound

by Dennis Crouch

I wrote earlier about a Natural Alternatives decision regarding priority.  A separate Natural Alternatives was also the subject of the annual patent law moot court competition in my 2017 Patent Law course at the University of Missouri.

In that case, Natural Alternatives v. Creative Compounds, the district court dismissed the lawsuit on the pleadings (12(b)(6)) — finding that the claims were improperly directed toward the natural phenomenon – beta alanine.  The amino acid is apparently useful in muscle building.

The case is now pending appeal before the Federal Circuit. As an example, Claim 1 of U.S. Pat. No. 7,825,084 is directed toward:

A human dietary supplement, comprising a beta-alanine in a unit dosage of between about 0.4 grams to 16 grams, wherein the supplement provides a unit dosage of beta-alanine.

In my judges’ brief, I suggest that this is likely the weakest of the patentee’s claims and provide the argument that: Beta-alanine is a product of nature and thus unpatentable; The specific dosage is associated with a law of nature because the amount is designed to be the effective amount to work on the human body; and Formulating it as a supplement at a proper treatment dosage does not add an inventive concept.  The other side might argue here that the claim is a supplement for treatment — not an underlying product of nature (Myriad), and the effective amount is far in excess of any supplementation relied upon in nature. I’ll note here that a high-meat diet might get up to 0.4 grams per day, but remember that this case was decided on the pleadings — so any plausible factual disputes must be sided in the patentee’s favor.

Claim 34 of the ‘947 Patent is one of the best claim for the patentees:

A human dietary supplement for increasing human muscle tissue strength comprising

a mixture of creatine, a carbohydrate and free amino acid beta-alanine that is not part of a dipeptide, polypeptide or an oligopeptide,

wherein the human dietary supplement does not contain a free amino acid L-histidine,

wherein the free amino acid beta-alanine is in an amount that is from 0.4 g to 16.0 g per daily dose,

wherein the amount increases the muscle tissue strength in the human, and

wherein the human dietary supplement is formulated for one or more doses per day for at least 14 days.

My judges brief explained the issue of importance on the patentee’s side is that the district court’s conclusions appear to be based upon a number of factual conclusions that were decided on the pleadings without any evidence in support. (Berkheimer). The pro-infringer argument: that creatine, carbs,, and beta-alanin are all naturally occurring, and their mixture is not patentable (Funk Bros); although the claims use beta-alanine that is separated from other peptides, that breakage of chemical bonds does not make it patent eligible (Myriad); and the claimed increase muscle mass is simply a law of nature (result of taking the supplement).

In my mind, this is not the type of case that should be dismissed on the pleadings.  But, Judge Huff disagree.

The now pending appeal is interesting and Natural Alternatives has garnered Amici support from both BIO and a group of leading patent law scholars  that include Chris Holman (Drake and UMKC), David Lund (GMU), Adam Mossoff (GMU), Kristen Osenga (Richmond), and David Taylor (SMU).   The law scholar brief was filed by Kevin Noonan of MBHB.  In addition to the legal arguments made by the parties, the Scholars provide their view:

Amici contend that Natural Alternatives’ claims represent precisely how the patent system should reward discovery of a therapeutic use of a natural compound, and thus their invention should be eligible for patent protection. The Supreme Court has repeatedly emphasized that patents claiming new uses of known drugs or new applications of laws of nature are patent eligible, and these teachings properly applied provide patent eligibility for the kinds of claims at issue in this case. Assoc. for Molec. Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 594 (2013); Mayo Collaborative Servs v. Prometheus Labs., Inc., 566 U.S. 66, 87 (2012). The district court’s decision to the contrary conflicts with the Patent Act as an integrated statutory framework for promoting and securing innovation in the life sciences, as construed by this court as well as by the Supreme Court.

The case is pending before the Federal Circuit, although I don’t believe oral arguments have been scheduled (because of an attorney schedule conflicts).

Briefs in the pending case:

Strict Priority Claims: Unforced Errors in Priority Claiming — Results in Invalid Patents

by Dennis Crouch

This is an important case for anyone playing tricks with multiple patents and lots of priority claims.  In the decision, the court held that an ex post cancellation of priority claims in a parent application interrupted the previously claimed chain of priority in the child application — rendering that child invalid based upon the inventor’s own prior issued patents.  

Natural Alternatives v. Iancu (Fed. Cir. 2018), is one of those increasingly rare inter partes reexamination decisions. The timeline of this case serves as a helpful reminder of why this avenue of patent challenged was cancelled by the AIA.  In particular, this case is following a quite typical inter partes reexamination pathway — receiving an appellate court decision six years after the reexam’s initial filing.

The patent at issue here is U.S. Patent No. 8,067,381 is directed to a dietary supplement containing free beta-alanine:

1. A human dietary supplement comprising at least one of:

… beta-alanine … an ester of beta-alanine …. or an amide of beta-alanine

that is not part of a dipeptide, polypeptide or oligopeptide.

The problem for the patentee here an unforced error in its chain of priority. 

The patent at issue (applied for in 2011) is the last in a chain of eight U.S. patent applications plus one provisional and an original UK application originally filed in 1996. The new applications were filed in series just before the prior application’s issuance — such that the whole chain of priority needed to remain intact in order for the 1996 date to be effective.

The fifth and sixth in the series followed this approach and were filed with proper claims of priority reaching back all the way to the 1996 UK filing.  However, just before the fifth-application issued, “Natural amended the fifth application to delete its claim of benefit from the fourth through first applications in the series back to the 1996 British application’s filing date and, instead, claimed benefit solely of a provisional application filed in 2003.”  The idea here was that the fifth would have a later effective filing date and thus a later expiration date.  The problem, though, is that the changed priority claim in the fifth application broke the chain of priority for the sixth, seventh, and eighth.

On reexamination, the USPTO recognized the break in priority and rejected the eighth patent based upon the first patent in the series. And, on appeal, the Federal Circuit has affirmed:

Natural can only win on appeal if this Court accepts its erroneous thesis that a benefit claim vests on the day an application is filed and, thereafter, cannot be divested by events in another application. Natural’s thesis has no support in section 120 or this Court’s precedent.

Section 120 is is not clear on this point — it focuses on whether the prior application “contains or is amended to contain a specific reference to the earlier filed application.”  Although the statute does not delineate the result of eliminating a priority claim in a prior-filed application, the statute does suggest that amendments will be respected.  And, part of the difficulty here is that the chain of priority in the fifth application was not fully examined.  The court writes: “The mutable and unexamined nature of a benefit claim weighs against Natural’s argument that entitlement to a section 120 benefit claim permanently vests on an application’s filing date.”

Natural chose to delete the benefit claim in its fifth U.S. application and thereby obtained a longer term for the patent issuing therefrom. The foreseeable – and easily avoidable – consequence of this voluntary action is that Natural’s sixth through eighth U.S. applications would no longer be entitled to benefit of the filing date of its fourth through first U.S. applications.

The court notes that this problem was “easily avoidable.” Natural could have, for example, filed a separate continuation application from the fifth application to get those claims without soiling the trunk of priority claims.

Without the priority claim, Natural’s own prior patents become on-point prior art — as such, the invalidity is affirmed.






Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Quasi-Claim-Construction by Federal Circuit

by Dennis Crouch

Wisconsin Alumni Research Foundation (WARF) v. Apple Inc. (Fed. Cir. 2018)

I am fairly disappointed with this decision by Chief Judge Prost.  The Federal Circuit flipped the jury’s infringement verdict based upon its revised claim construction.  Nothing strange there, except that the court did so without actually construing the term in question.  Seems improper to me. – DC

WARF’s Patent No. 5,781,752 covers the use of prediction in parallel processing in order to increase the accuracy of processor speculation.  A Wisconsin jury agreed that Apple’s A7 and A8 chips infringed and awarded $234 million in damages.  On appeal, the Federal Circuit has reversed — holding that “no reasonable juror could have found infringement based on the evidence presented.”  As such, the district court improperly denied Apple’s JMOL motion.

Parallel processing can get through the code faster because it doesn’t require strict linear processing order.  That setup, however, can lead to “ambiguous dependency” problems — where one parallel process needs input (such as a data address) from another process also running in parallel. In that setup, the processor still might “speculate” and run the instruction with the expectation that things will work-out.  A “mis-speculation” leads to data errors.

The issue on appeal centers on the patent claims that require a “prediction” of mis-speculation associated with a “particular” data-load (LOAD) instruction that is then used to decide whether to call the instruction.

On appeal, the Federal Circuit reversed the jury verdict of infringement and instead held that the “particular” instruction is not met in Apple’s product.  While the accused processors do the prediction, the problem is that the each ‘prediction’ value is typically* associated with multiple instructions — not just one particular instruction.

Thus, in the appeal, the Federal Circuit effectively construed the “prediction associated with the particular [load] instruction” to require a one-to-one relationship between the prediction and the instruction rather than a one-to-many.  Thus, the no infringement result. So far, this seems like a fairly typical Federal Circuit decision.

Now comes the strange part: The “particular instruction” term was never construed.  Neither side requested construction and Apple argued that the the jury will understand its ordinary meaning.  During this process, the district court at one time stated that term requires a “prediction associated with a single load instruction” but later explained that the claim scope could include a prediction associated with “a particular load instruction even if that same prediction may be
associated with other load instructions.”  However, neither of these statements were given to the jury.

Of course, Apple couldn’t request a new claim construction on appeal since it had not requested any claim construction until the close of trial.  And, at that point the District Court held that Apple had waived its right to get the term construed with a jury instruction. The lower court wrote “Apple has waived any request to now insert a construction of the term into the closing jury instructions.”

On appeal, the Federal Circuit did not address the waiver and instead jumped-in with some sort of quasi-construction of the claim term.  The appellate panel never states that it is construing the claim term but does so in the following sentence:

In our view, the plain meaning of “particular,” as understood by a person of ordinary skill in the art after reading the ’752 patent, requires the prediction to be associated with a single load instruction.

Note here that this is the entirety of the court’s legal analysis of the claim term’s meaning.  The court does not review the prosecution history, or evidence of a person having skill in the art, etc.  But, instead just provides a conclusion.

The result is that the jury verdict is gone.  Perhaps on remand, the district court will order a new trial — and perhaps this time will go ahead and construe the term.  In addition, WARF has a narrow infringement argument suggested by the fact that Apple’s products are capable of operating with the prediction value associated with a single instruction.  During trial, however, WARF did not present evidence that showing that the processors actually ever worked in that manner.

Federal Circuit Ethics Opinion: Unnamed Firm Negligent in Monitoring Conflicts

by Dennis Crouch

Federal Circuit R. 50 states that:

No employee of the court shall engage in the practice of law. No former employee of the court shall participate or assist, by way of representation, consultation, or otherwise, in any case pending in the court during the period of employment.

In a new order captioned In re Violation of Rule 50, Docket No. 2018-9001 (Fed. Cir. Sept 27, 2018), the Federal Circuit has rebuked an unnamed former law clerk and her law firm for violation of the rule.

The basic setup: When the clerk left the Federal Circuit, she handed over a list of no-no cases to her new law firm. (“No-no cases” are those that were pending during the clerk’s time at the Federal Circuit.)  Several years later, the firm stepped-in as new counsel to one of the no-no cases and the former clerk appeared as a lawyer in the lawsuit (though not lead counsel).  Some unidentified time later, the clerk realized the violation and immediately withdrew from the case.  The clerk and firm then notified the Federal Circuit of the breach — noting that the clerk never saw any briefs, discussed the case, or heard any discussion of the case during her time at the Federal Circuit.

In its decision here, the court noted that R. 50 “must be strictly followed” and that the facts as explained are “proof of the firm’s negligence.”  Still, the court decided not to impose discipline since this was a first offence for the clerk and firm and no harm was shown. I expect that it would be personally difficult for the court to actually impose discipline on its former clerks absent egregious factors.  However, the court concludes with a general warning:

We emphasize that discipline may be imposed on similar Rule 50 violations in the future.

The decision also cites a second R.50 violation decision from earlier in 2018. In re Violation of R. 50, 712 Fed. Appx. 1005 (Fed. Cir. Feb. 15, 2018)(unpublished).  In that proceeding, the court explained:

Soon after joining the firm, the former clerk was approached by a partner to review, and provide feedback on, a draft opening brief to be submitted in consolidated appeals that were (and remain) pending before this court. It appears that neither the former clerk, nor the partner, nor any other employee of the firm checked to see whether the appeals had been before this court during the former clerk’s employment. The former clerk accepted the assignment and billed 9.7 hours the next day.

After the brief was filed, it occurred to the former clerk that “it was possible that the appeals had been docketed before [his] clerkship ended.” After checking his Appeals Pending List and discovering the violation, the former clerk was immediately removed from the case, and the law firm promptly informed the opposing party and this court of the Rule 50 violation. The opposing party did not object to the filing of the brief in question or the law firm’s continued representation during the appeals.

In that case – like this one – the court did not impose discipline, but acted to “remind the former clerk and the firm that the must be more vigilant.”  In that case, the court particularly stated that the burden of compliance is held by both the former clerk and the law firm.




Keeping Up with the Joneses

Mark Kapczynski’s new patent has the interesting title “Keeping Up with the Joneses.”  U.S. Patent No. 10,019,508.  It is basically a computers system that gamifies your life — comparing your life score to those of your neighbors, co-workers, or others. And, check out claim 1 that will fill several screens on your PC. This new patent is part of a family — see the parent U.S. Patent No. 9,576,030.

The Examiner rejected the claims as being directed toward an abstract idea, but the applicant was able to argue around that rejection.

1. A server computing system for providing user comparison information to a user, the server computing system comprising:

a demographic database storing demographic attributes associated with a plurality of users;

a non-transitory computer readable storage device configured to store software instructions;

a computer processor configured to execute the software instructions to:

serve a website or mobile application content including user interface content renderable on a user computing device, wherein the user interface content comprises dynamic user interface controls for

identification information of the user,

presenting identification information of a comparison individual, and

presenting a first category of demographic attributes and a second category of demographic attributes, wherein the first category of demographic attributes comprises first demographic attributes and the second category of demographic attributes comprises second demographic attributes;

communicate the website or mobile application content to the user computing device, wherein the user computing device renders the website or mobile application content to display the user interface content;

receive the identification information of the user, wherein the identification information is inputted via the dynamic user interface controls on the user computing device;

access first demographic data of the user from the demographic database based on the identification information, the first demographic data comprising data associated with the user in the first category of demographic attributes and associated with the user in the second category of demographic attributes;

access second demographic data of the comparison individual from the demographic database, the second demographic data comprising data associated with the comparison individual in the first category of demographic attributes and associated with the comparison individual in the second category of demographic attributes;

access a data structure storing information regarding most favorable levels of the first category of demographic attributes and the second category of demographic attributes, wherein for the first category of demographic attributes, the data structure indicates that higher numerical values of the first demographic attributes are more favorable and for the second category of demographic attributes, the data structure indicates that lower numerical values of the second demographic attributes are more favorable;

compare first values of the first demographic attributes in the first category of demographic attributes associated with the user with second values of the first demographic attributes in the first category of demographic attributes associated with the comparison individual to determine which of either the user or the comparison individual has a most favorable level associated with the first category;

compare third values of the second demographic attributes in the second category of demographic attributes associated with the user with fourth values of the second demographic attributes in the second category of demographic attributes associated with the comparison individual to determine which of either the user or the comparison individual has a most favorable level associated with the second category;

serve an updated website or mobile application content including updated user interface content including:

a first comparison result of the first category of demographic attributes wherein the first comparison result is generated based on comparisons between first demographic attributes of the user and the first demographic attributes of the comparison individual,

a second comparison result of the second category of demographic attributes wherein the second comparison result is generated based on comparisons between second demographic attributes of the user and the second demographic attributes of the comparison individual, and

a visual indication of which of the user or the comparison individual is associated with the most favorable level for the first category or the most favorable level for the second category; and

communicate the updated website or mobile application content to the user computing device, wherein the updated website or mobile application content is renderable by the user computing device to display the updated user interface content.

Rimini v. Oracle

The Supreme Court has granted a writ of certiorari in the copyright case Rimini Street Inc. v. Oracle USA Inc. following a Ninth Circuit decision in the case. See Oracle USA, Inc. v. Rimini St., Inc., 879 F.3d 948 (9th Cir. 2018).  In the case, the district court sided with Oracle in its copyright suit against the DB service provider Rimini and awarded $50 million in damages, plus an additional $70 million in interest, costs, and fees.  The Supreme Court case here focuses on the meaning of “full costs” as used in the Copyright Act: “In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party. . . the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.”  17 U.S.C. § 505.

The question presented asks whether this “full cost” provision is limited to “taxable costs” as defined by the general civil procedure statute, 28 U.S.C. §§ 1920 and 1821.

Issue Presented:

Whether the Copyright Act’s allowance of “full costs,” 17 U.S.C. § 505, to a prevailing party is limited to taxable costs under 28 U.S.C. §§ 1920 and 1821, as the U.S. Courts of Appeals for the 8th and 11th Circuits have held, or whether the Act also authorizes non-taxable costs, as the U.S. Court of Appeals for the 9th Circuit held.

In this case, $12 million of the “full costs” awarded were non-taxable.

Equitable Defenses to Legal Claims: Merck v. Gilead Sciences

by Dennis Crouch

Merck & Co., Inc. v.  Gilead Sciences, Inc., Docket No. 18-378 (Supreme Court 2018)

In its newly filed petition for writ of certiorari, Merck asks one simple question:

Whether the equitable defense of unclean hands precludes legal relief in the form of damages.

Getting to the answer though is a bit tricky and will take us back to the principles of equity in existence in the 1790s, the merger of law-and-equity, and the creation of the Federal Circuit.

In this case, a Jury sided with Merck with a $200 million for Gilead’s infringement of U.S. Patent Nos. 7,105,499 and 8,481,712.  However, the District Court judge rejected that verdict on grounds of unclean hands. In particular, the district court found that Merck had engaged in business and litigation misconduct sufficient to render the patents unenforceable.

Candor and honesty define the contours of the legal system. When a company allows and supports its own attorney to violate these principles, it shares the consequences of those actions. Here, Merck’s patent attorney, responsible for prosecuting the patents-in-suit, was dishonest and duplicitous in his actions with Pharmasset, with Gilead and with this Court, thus crossing the line to egregious misconduct. Merck is guilty of unclear hands and forfeits its right to prosecute this action against Gilead.

On appeal, the Federal Circuit affirmed in a decision that I originally noted had “a few substantial problems — most notably is the fact that unclean-hands traditionally only applies to block a party from seeking equitable relief (as opposed to legal relief).”  In its new petition for writ of certiorari, the patentee here seeks to piggy-back on the recent laches decisions that limited laches to issues in equity.

The pharma giant’s basic argument is that its unclean hands cannot bar the company from asserting its legal rights. As Dan Dobbs explains in his book on remedies: “If judges had the power to deny damages and other legal remedies because a plaintiff came into court with unclean hands, citizens would not have rights, only privileges.”

The patentee summarizes its case:

In Manufacturers’ Finance Co. v. McKey, 294 U.S. 442 (1935), this Court rejected the unclean-hands defense as “inapplicable” in damages actions. The plaintiff ’s legal rights were not “subject to denial or curtailment in virtue of equitable principles applicable only against one who affirmatively has sought equitable relief.”

The Federal Circuit has gone the opposite direction. Citing the Federal Rules of Civil Procedure’s 1938 merger of procedures for law and equity and the 1952 Patent Act, the Federal Circuit allows the equitable defense of unclean hands to bar legal actions for patent infringement. Thus, in the decision below, the Federal Circuit held that unclean hands could nullify a jury’s $200 million damages award. That mistaken expansion of unclean hands  beyond its equitable origins has profound impacts. And it reflects disarray on the issue throughout federal courts.

[Read the Petition]

I want to highlight the fact that this case has potentially very broad impact — at its broadest, Merck is asking the court that the defense of unenforceability due to inequitable conduct only be applicable to claims in equity.  In that case, a patent obtained through fraud would still be enforceable so long as the patentee was only seeking damages.



Rethinking Inconvenient Forum under 1404.

by Dennis Crouch

In re HP (Fed. Cir. 2018) [hp mandamus] (nonprecedential order)

The Federal Circuit has granted HP’s petition for writ of mandamus – ordering the E.D. Tex. Judge Schroeder transfer Cypress Lake Software, Inc. v. HP Inc. to N.D. California — HP’s home district.

Venue must be “proper.”  28 U.S.C. 1400(b).  But, even when proper, a district court may order a case transferred to another venue for convenience.  Although the law follows the traditional doctrine of forum non-conveniens, it has been codified at 28 U.S.C. 1404(a).

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.

Id.  Although the decision to transfer is within the district court discretion, the Federal Circuit has repeatedly held that some transfer-denials will be held an abuse-of-discretion.  Since its 2008 TS Tech decision, the Federal Circuit appears to have been particularly attuned to attempts by plaintiffs to shift venue to the E.D. Texas instead of filing in a more reasonably appropriate venue.

On the 1404 issue, the Federal Circuit follows the substantive law of the local circuit court. In the Fifth Circuit, the question is whether “the movant demonstrates that the transferee venue is clearly more convenient.”  Since that question is within the discretion of the district court, the appeals court will only overturn a transfer-denial based upon a “clear abuse of discretion.”  Although the standard appears discretionary, my take-away from the Federal Circuit line of cases is that the lower court does not really have discretion: if the movant provides evidence that the alternate venue is clearly more convenient, then it would be clear error to not transfer.

In the case-at-hand, the “district court here found that the relative ease of access to sources of proof factor and the local interest factor favored transferring the case to the Northern District of California, while no factor actually favored keeping the case in the Eastern District of Texas.”  The appellate court added additional factors favoring transfer — like the availability of third-party witnesses having potentially relevant information.  This setup makes the Federal Circuit’s decision easy:

The petition is granted. The district court’s order denying HP’s motion to transfer is vacated, and the district court is directed to grant the transfer motion.

In talking with my patent law class about this case, I noted today that the court walked through the motions here without actually addressing some of the real reasons for the venue transfer (1) getting out of E.D. Texas; (2) slowing down the litigation; (3) raising costs for the defendant.  The rehabilitation of 1400(b) as a venue limitation has removed substantial political pressure off of the court in terms of forum shopping.  I would suggest that the court use this reprieve as an opportunity to reform its convenient forum jurisprudence in a way that revives its practical common law origins.  In this case – is it really that inconvenient for HP to litigate in Texas? Answer – No its not.

Photo: HP’s 400,000 sqft facility near Houston.  “HP will be able to enjoy all of the first-class amenities we will offer within CityPlace, and Springwoods Village,” Robert Fields, president and CEO of Patrinely Group, said in an announcement.

Franchise Tax Board of California v. Gilbert P. Hyatt

I posted an article earlier on Gil Hyatt’s ongoing disputes with the USPTO.  He also has ongoing disputes with the California Tax Board that reach back to his early licensing revenue from his 1990 microprocessor patent.  The case is back before the Supreme Court for the third time.  See  Franchise Tax Board v. Hyatt (Hyatt I), 538 U.S. 488 (2003); Franchise Tax Board v. Hyatt (Hyatt II), 136 S.Ct. 1277 (2016).

The basic issue is that a Nevada jury found that California had used improper aggression in pursuing Hyatt for taxes that were not really owed.  At trial, the jury awarded Hyatt $300 million in damages. The punitive damages were reduced however by the Supreme Court.

The question that the court will focus on again this year:

Whether Nevada v. Hall, 440 U.S. 410 (1979), which permits a sovereign State to be haled into another State’s courts without its consent, should be overruled.

In its 2016 decision, the Supreme Court was evenly divided on the same question.

The board has asked us to overrule Hall and hold that the Nevada courts lack jurisdiction to hear this lawsuit. The Court is equally divided on this question, and we consequently affirm the Nevada courts’ exercise of jurisdiction over California.

This time though, that tie is potentially already broken with the addition of Justice Gorsuch.

Read more at ScotusBlog:


Self-sustaining and Resilient Human Habitation

Morgan Irons patented “Ecological System Model” is pretty cool — although deceptively simple. U.S. patent No. 9,970,208 — focusing on space agriculture.

Claim 1:

A system for a self-sustaining and resilient human habitation on the Moon and Mars and for food security and climate change mitigation anywhere on Earth, comprising:

a habitation zone where humans are quartered;

an agricultural zone providing 700 square meters of food growing space per human; and

an ecological buffer zone approximately three times the area of the agricultural zone that contains a wild growth of plants and provides the remaining ecological services that Earth life needs to live self-sufficiently and resiliently.

Issued on first-action allowance after a restriction/election.

No Substance: Hyatt’s Challenge of MPEP 1207.04 (reopening prosecution rather than hearing appeal)

by Dennis Crouch

Hyatt v. USPTO (Fed. Cir. 2018) (Judges HUGHES, Reyna, and Wallach)

This billionaire gets no respect!  Gilbert Hyatt is the named invenetor on 70+ US patents and has 400+ pending patent applications “all of which were filed prior to June 8, 1995.” That date is critical because those “pre-GATT” applications will remain in force for 17-years from their issue date (if they ever issue).  These applications claim priority back to the early 1970s. For the past 10 years, Hyatt has been trying to get his cases heard by the PTAB – but has been repeatedly foiled by PTO delays and unilateral reopening of prosecution.  Here, the Federal Circuit sided with the PTO in Hyatt’s generalized challenge to this practice — finding portions of his his petition time-barred and that the substance of his challenge lacked merit.

The Big Deal for this case for the rest of us: If the PTO has spelled out an improper practice within the MPEP, an APA challenge on procedure or policy must be filed within six years of MPEP publication, if at all.  Also, the Court says its fine for the USPTO to reopen prosecution rather than hearing the appeal.  (more…)

Iowa Law Review Symposium guest post by Prof. Vishnubhakat: Managing the PTAB’s Legacy of Partial Institution

Guest post by Saurabh Vishnubhakat, Associate Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering.  Although Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, his arguments here should not be imputed to the USPTO or to any other organization.  This post is based on a paper for the Iowa Law Review symposium Administering Patent Law and is forthcoming in the Iowa Law Review.  The full draft is available at at

It has now been four months since the Supreme Court decided SAS Institute v. Iancu, and it seems clear that ending partial institution will, indeed, be a significant disruption to the Patent Trial and Appeal Board’s administration of its docket.  As I noted on this blog just after the decision came down, the power of partial institution was at the heart of PTAB case management from the beginning, and the requirement of binary institution from now on raises several important questions.

In this post, I will offer some more detailed analysis of one of those issues in particular.  That issue is how the Patent Office should understand the stakes of binary institution—which is to say, fully appreciate how much work partial institution was truly doing.

The Stakes of Binary Institution

Now that the PTAB must either fully grant or fully deny each petition that comes before it, the stakes of accepting versus rejecting a case largely point toward rejecting.  The cases that were already being instituted in full or denied in full will be unaffected.  The cases that were being partially instituted, however, will not be accepted lightly.

Fully instituting such a case will necessarily bring significant obligations of deciding why arguments that the PTAB has already found likely to fail do, indeed, fail.  On top of that, the PTAB must also explain fully enough, under the Chenery doctrine, why these arguments lack merit.

Under partial institution, these unmeritorious portions of a petition could easily be dispensed with at the institution stage.  No judicial review was available—not even after final judgment, under Cuozzo—so Chenery obligations did not even come into the picture.  This is not to say the obligations of reasoned decision-making should not apply to the Patent Office at the institution stage.  (Judge Reyna’s concurring opinion in Shaw Industries, for example, made a persuasive case that mere nonappealability does not legitimize black box decisions such as denying “redundant grounds” without explanation.  Still, the panel majority in that case did not reverse the agency.)

Now that partial institution is unavailable, granting review will open the door to judicial scrutiny of the PTAB’s handling of the entire case, some or much of which will consist of arguments that the PTAB already had reason to think were not worth its time.  This change generally counsels against full institution of close cases.

On the other side of the agency’s choice is what effect a PTAB denial would have on the petitioner, for a denial would exclude meritorious arguments as well.  In general, the harm would be minimal, as denying review creates no estoppel and so does not prejudice the petitioner’s ability to make the same arguments elsewhere.  Under § 315(e), estoppel requires a final written decision under § 318(a), which applies only to a petition that has been “instituted and not dismissed.”  As most petitioners (about 70%) are district-court defendants seeking PTAB review in response to an infringement lawsuit (what my coauthors and I have termed standard petitioners), invalidity arguments in the district court will remain available.

The remaining petitioners (about 30%) who seek PTAB review preemptively would be similarly unharmed.  It is true that they may or may not have Article III standing to seek declaratory relief in the courts, standing that they would not have to show in the PTAB.  But they still remain free to refile their petitions in the PTAB itself, using the PTAB’s earlier denial of institution as a roadmap for filing a more successful petition.  Because these nonstandard petitioners have, by definition, not been charged with infringement, the one-year time bar of § 315(b) does not apply to them.

Thus, under the PTAB’s existing resource constraints, the burden of fully granting borderline petitions is generally higher, and the cost and prejudice on litigants inflicted by fully denying such petitions is relatively low, tilting on balance toward fully denying borderline petitions.  The next question is whether this analysis in the abstract has real-world relevance to the PTAB’s likely incentives.

The Scope of Partial Institution

The data strongly suggests that it does.  Partial institution was doing much more work than previously appreciated to filter out unmeritorious arguments and focus the PTAB’s resources on challenges that were reasonably likely to succeed.  The following two figures show why this has largely been overlooked.  Through April 2018, when SAS Institute was decided, the respective shares of petitions that were fully instituted (39.2%), partially instituted (25.8%), and fully denied (35.0%) suggest that partial institutions accounted for only a minor part of the agency’s workload.  Indeed, the trends of these shares over time suggest that partial institution was diminishing even before the Supreme Court abolished the practice.

But looking at petitions or cases as a whole misses the mark.  The legal grounds asserted vary from petition to petition.  An anticipation challenge generally relies on a single prior art reference rather than a combination of multiple references and so is less workload-intensive than an obviousness challenge.  The patent claims that a petition actually challenges vary as well, and the workload burdens posed by different petitions vary accordingly.  Taking these facts into account, the more granular and accurate measure of partial institution is the share of claim-ground pairs being challenged in the PTAB that were being granted, and the share that were being denied.

As the next three figures reveal, this share has been both large and persistent.  Through April 2018, the PTAB denied review of nearly half of all the claim-ground pairs that came before it in petitions.  This finding is robust across technologies.  It is also strikingly stable over time, starting at a rate of about 30% but quickly rising into the 40–50% range, where it has stayed for the past five years.  This evaluation shows that partial institution was a substantial filter on the challenges that were admitted into administrative review.

Confronted with the choice of full institution or full denial, therefore, the PTAB should think carefully about how much of a petition should present meritorious arguments before a panel is willing to take on the additional burden of adjudicating additional arguments that it already knows are likely to fail.

The PTAB’s treatment of transitional cases—where the PTAB had already made partial institutions but now had to be reevaluated under SAS Institute—is telling in this regard.  The agency’s April 26 Guidance on the Impact of SAS on AIA Trial Proceedings had stated it may issue a supplemental order to institute on all remaining challenges.  Though it did not say so, the agency also had the power, of course, to vacate its partial institution, effectively “deinstituting” the petition in full.  In an order earlier this month, the PTAB revealed an agency-wide thumb on the scale toward instituting-all rather than deinstituting-all:

If now faced with the Petition in the first instance, and understanding that we have only a “binary choice,” it may well be appropriate to deny the Petition in its entirety.  But we have been instructed that the Office SAS Guidance is to be interpreted with the weight of Office policy as precluding termination of a partially instituted proceeding in response to SAS Institute.

ESET LLC v. Finjan, Inc., IPR2017-01738, Paper No. 28 at 10 (Aug. 10, 2018).

This exercise of agency discretion for transitional cases is entirely sensible as a policy matter.  For cases where the PTAB has not only concluded that a patent is at least partly problematic but also invested resources to adjudicate those problems, terminating the proceeding would give the mistaken, but still potentially harmful, impression that the PTAB were actively abdicating its error-correction duties.

In future cases, evaluating petitions in the first instance, the PTAB would be much better positioned to balance its obligations with its resource constraints within its broad discretion over institution.


As I discuss further in the full paper, although the structural choices that lie ahead for the Patent Office are difficult, they are appropriate for the agency to have to make.  The policy judgments that are most rational for the Patent Office to reach in light of SAS Institute are likely to promote reasoned decision-making by the agency as well as more efficient substitution of administrative adjudication for judicial review.  These policy judgments, in turn, will also bring important questions—including the one-year time bar and the issuance of stays pending PTAB review—back to the Federal Circuit.  These questions are a valuable chance for the Federal Circuit to reconsider panel decisions that have largely been overtaken both by its own recent en banc decisions and by the Supreme Court.

2018 Iowa Law Review Symposium: Administering Patent Law

On October 5, the Iowa College of Law will host the 2018 Iowa Law Review symposium, Administering Patent Law.  This event is co-sponsored by the Iowa Innovation, Business & Law Center.  As an added bonus, I’ll be running guest posts by some of the speakers over the next few weeks.  We’ll also be live-streaming the symposium that day.  You can find the full agenda (and the livestream link, once it is live) on the symposium website.

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:


New Job Postings on Patently-O:

SUCCESS ACT: Study of Underrepresented Classes Chasing Engineering and Science Success

The SUCCESS ACT has been joined together with the USPTO FEES Act in the recently introduced H.R. 6758. The focus of the proposal centers around the stated Sense of Congress:

It is the sense of Congress that the United States has the responsibility to work with the private sector to close the gap in the number of patents applied for and obtained by women and minorities to harness the maximum innovative potential and continue to promote United States leadership in the global economy.

The basics of SUCCESS are buried in its acronym: Study of Underrepresented Classes Chasing Engineering and Science Success.  The proposal would order the USPTO to provide a report to congress on patents applied for and obtained: (1) by women and minorities, and (2) by small businesses owned by women and minorities.  The USPTO would also be directed to provide recommendations for promoting both patenting and entrepreneurship among these under-represented groups.

The Bill also includes the 8-year extension of USPTO Fee Setting Authority previously mentioned on Patently-O in the form of the USPTO FEES Act.

This Bill is not controversial– but nothing is easy in Congress.

Update: When I originally wrote that the bill is “not controversial” — I was thinking more about the SUCCESS portion of the Act rather than the FEES portion.  The virtually carte blanche fee authority continue to be somewhat controversial — especially for those sensitive to high fees.