My Take after Oral Arguments: Supreme Court Likely to Affirm in Peter v. NantKwest

by Dennis Crouch

Peter v. NantKwest (Supreme Court 2019) [TRANSCRIPT]

The Supreme Court heard oral arguments on October 7, 2019 in this case involving the question of attorney fees in Section 145 civil actions.  I’ll agree with Mark Walsh who identified this as a “a dry, procedural patent case.”  But, I really enjoyed the oral arguments — Read some of the drama below.

Before getting too dramatic: I recognize that the result of this case is basically not going to have much of any impact on patent cases. So, perhaps one benefit is that the court is unlikely to ruin the patent system with its decision here.  Depending upon the outcome, Section 145 civil actions will be seen as relatively more/less expensive for the applicant. But, they are already very expensive for an applicant to pay its own expenses. My take is that the added PTO-attorney expense will be a relatively small extension of the already high-costs assuming that the PTO continues to be fairly thrifty in its defense of these cases.  On the PTO side, the agency has to pay its attorneys from collected fees somehow.  If it doesn’t get the fees from the 145 challenger, then it will collect them from the applicant pool in general (about $1.60 per applicant) as it has done for many years.

Conventional wisdom in patent cases is reversal. The Supreme Court does not take cases to offer congratulations to the lower court. And the absence of circuit splits means that there isn’t a right vs wrong appellate court.  My read of the oral argument though goes against this conventional wisdom — I’m betting on affirmance.  The Gov’t dropped its argument that the American Rule does not apply; and so the American Rule as applied in other areas has the potential of being undermined by a Gov’t win here.



by Dennis Crouch

Prof. Erika Lietzan (Missouri) and Prof. Kristina Lybecker have released an important new article that they title Distorted Drug Patents. (Forthcoming in Washington Law Review).

The basics: New drug treatments require pre-approval based upon evidence of safety and effectiveness. That research takes time — with the treatment’s 20-year patent clock typically ticking away throughout the approval period. This is an old issue that was addressed in the 1984 Drug Price Competition and Patent Restoration Act.  However, as Lietzan and Lybecker point out – the Patent Term Extension (PTE) “doesn’t restore all of the lost time.”  In particular, PTE restors 1/2 of clinical testing time (after the patent issues) and caps recovery at five years of added time. In addition, PTE cannot extend the patent more than 14 years beyond regulatory approval and can only be applied to one patent for each drug treatment listing. Note – PTE is added to any PTA term.

The new data-driven article focuses on the question of whether the partial-restoration  steers research “away from drugs that take a long time to develop.”  

The article looks at every PTE grant (1984-2018) and ties that grant to product to the clinical research period and launch dates of the brand and generic (if launched). Some conclusions:

  1. Longer clinical period => shorter patent life post-approval;
  2. Being a “child” in a family of patents => shorter patent life post-approval;

This second point seems obvious to patent-law youngsters who have always seen patent term calculated from the parent-filing-date.  However, the article argues that the shorter child-life is “the opposite of what lawmakers intended in 1984.”

[Read it here]


Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

For Drug Treatment Patents: Prior Art Must Show Efficacy

OSI Pharma v. Apotex Inc. (Fed. Cir. 2019)

New use of a known compound: This decision focuses on OSI’s U.S. Patent 6,900,221 — a method for treating non small cell lung cancer (NSCLC) with the drug erlotinib (sold by OSI as Tarceva).  In the US dosage is about $200 per day that continues “until disease progression or unacceptable toxicity.”

44. A method for the treatment of NSCLC … comprising administering to [a] mammal a therapeutically effective amount of a pharmaceutical composition comprised of at [erlotinib] and a carrier.

Apotex petitioned the USPTO to cancel several claims, including Claim 44 so that it could begin marketing a generic version.  The PTAB agreed to hear the case and eventually cancelled the claims — finding them obvious when laid next to a prior patent (Schnur) in view either of an academic review article on anticancer drug targets (Gibbs) or OSI’s own 10-K (OSI SEC filing).

Schnur lists Erlotinib as a preferred compound for treating cancer in mammals — and note that the class of drugs (erbB) is good for treating human tumors, including “renal, liver, kidney, bladder, breast, gastric, ovarian, colorectal, prostate, pancreatic, lung, vulval, thyroid, hepatic carcinomas, sarcomas, glioblastomas, various head and
neck tumors.” (Lung emphasized in the court decision, but not in the original prior art). Schnur discloses lung cancer treatment – but does not particularly discuss “non small cell lung cancer.”

Gibbs is a review of prior publications and makes the conclusion that erlotinib (and a parallel compound) “appear to have good anti-cancer activity in preclinical models … particularly in patients with non-small cell lung cancer.”  However, when the Federal Circuit looked-into the articles cited by Gibbs — none of them provided any “data regarding the use of erlotinib to treat NSCLC.”  OSI also hired Gibbs to provide a declaration that he was “not aware of any published abstracts or articles describing the clinical or preclinical response of a NSCLC tumor to [erlotinib] that were available as of the time my article was published, and I reviewed no such abstracts or articles in drafting my article.”

The SEC Filing by the patentee is a prior printed publication from more than 1 year before OSI’s filing date. The Filing states that the company is pursuing research on Erlotinib “which targets a variety of cancers including ovarian, pancreatic, non-small cell lung and head and neck. . . . [The drug] is a potent, selective and orally active inhibitor of . . . a key oncogene in these cancers.”  The SEC Filing also indicates that Phase I safety trials had been completed and Phase II clinical trials were ongoing.  The SEC filing does not include any “DATA.”

For the Board, the combination of these references rendered the broad claim 44 obvious — the claim just requires administration of “a therapeutically effective” of the drug and a carrier.

On appeal, however, the Federal Circuit has reversed — holding that the references did not create a “reasonable expectation of success.”  As such, the Board’s factual conclusion was not supported by substantial evidence.

Over the past several years, the Federal Circuit has been rebuilding its obviousness doctrine post-KSR.  The court now asks two key questions of fact: would a person of ordinary skill in the art (1) have been motivated to combine/modify the prior art teachings in order to make the invention; and (2) have had a reasonable expectation of success in doing so.

The combination of references state rather plainly that erlotinib is believed to has anti-cancer activity against non-small cell lung cancer and that the drug is safe (enough).  On appeal, however, the Federal Circuit rejected the obviousness claim because the prior art did not provide any evidence that the drug would work in humans. “These references thus contain no data or other promising information regarding erlotinib’s efficacy in treating NSCLC.” In its explanation, the court notes that this area is “highly unpredictable” — 99.5% failure rate of NSCLC treatments entering Phase II.

The court concludes with a caveat — attempting to cabin-in this ruling:

To be clear, we do not hold today that efficacy data is always required for a reasonable expectation of success. Nor are we requiring “absolute predictability of success.” We conclude only that, on these particular facts, a reasonable fact finder could not find a reasonable expectation of success. The Board’s finding is thus not supported by substantial evidence, and accordingly we reverse its obviousness determination.

The decision here has a substantial amount of merit.

What gives me a lump in my throat is that the prior art discloses almost exactly what was claimed in these broad claims — with the addition of the functional language “therapeutically effective” amount.

Hey Mechanical Engineers: Your Patents are Also Ineligible

by Dennis Crouch

American Axle & Manufacturing, Inc. v. Neapco Holdings LLC (Fed. Cir. 2019)

This case focuses on Neapco’s U.S. Patent 7,774,911 that D.Del. Judge Stark found to lack eligibility. On appeal a divided panel has affirmed — with Judges Dyk and Taranto supporting invalidity and Judge Moore writing in dissent.

The ‘911 patent covers a method of manufacturing a drive-shaft assembly with an internal-liner that is designed to reduce vibration problems. Yes –  the method of manufacture is not patent eligible because it is directed to a law of nature.

One way to see this case is as a battle between Parker v. Flook and Diamond v. Diehr.  The majority follows Flook and finds the patent is invalid.  As suggested below, the issue here also looks like Halliburton — where the patent “conveniently” uses functional language at the point of novelty.  The majority also suggests – but does not decide – that the claims lack enablement and written description.

Essentially, the claim are directed to functional improvement in drive-shaft technology — a drive shaft with an internal liner that has 2-way damping.  However, the claims do not require a particular approach to achieving the damping result. Further, according to the majority, the specification does not provide enough guidance to let readers know that something real (beyond a law of nature or abstract idea) is being claimed.

Claim 1 at issue:

A method for manufacturing a shaft assembly of a driveline system … adapted to transmit torque …, the method comprising:

providing a hollow shaft member;

tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member; and

positioning the at least one liner within the shaft member such that the at least one liner is configured to damp shell-mode-vibrations in the shaft member by an amount that is greater than or equal to about 2%, and the at least one liner is also configured to damp bending-mode-vibrations in the shaft member,

the at least one liner being tuned to within about ±20% of a bending mode natural frequency of the shaft assembly as installed in the driveline system.

Drive shaft technology has been around for a long time and the subject of many patents.  One of the earlier U.S. patents is this 1861 Mower Machine (U.S. Patent No. 32,908).  Throughout this time, a common problem has been vibration control and various solutions have been the subject of hundreds of patents.

In this case, the core innovation disclosed in the ‘911 patent is that the shaft-liner has been attuned to dampen two types of vibration (shell mode and bending mode) and the patent provides several example shaft liner designs to accomplish this goal:

Critical Over Claiming: Rather than claiming these particular liner shapes, the patent claims a liner that is “attuned” so as to have a particular dampening profile. This is the patentee’s critical error.  In addition, the patent does not claim a particular method for attunement — just the functional result.  In considering what’s being done here, the Federal Circuit found that the claim is broadly directed to the broad physics principles associated with vibrational frequency and dampening of vibrations:

[The claims] simply state that the liner should be tuned to dampen certain vibrations. Thus, the problem is that the claims’ instruction to tune a liner essentially amounts to the sort of directive prohibited by the Supreme Court in Mayo—i.e. “simply stat[ing] a law of nature while adding the words ‘apply it.’” . . . [T]he mechanisms for achieving the desired result—are not actually claimed.

Since drive shafts and internal liners were already known in the art, the majority found nothing-new there — no inventive step sufficient to transform the abstract idea into a patent eligible invention.

Judge Moore’s dissent is a good read and I’ll save a post on it for this weekend.

Athena v. Mayo: Whither Diagnostic Method Patents

by Dennis Crouch

OK, here is an important case: Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, Docket No. 19-430 (Supreme Court 2019).  In its new petition, Athena asks — did the Supreme Court really intend to bar patenting new diagnostic methods absent creation of new technological equipment? [Petition for Writ of Certiorari][Appendix].

At issue are Claims 7-9 of Athena’s U.S. Patent No. 7,267,820. The district court dismissed Athena’s infringement complaint — finding the claims ineligible.  That decision was reluctantly affirmed by the Federal Circuit. The appellate court then denied en banc review — with eight separate opinions from the 12-member court.  In its Supreme Court petition, Athena now presents the question as follows:

The question presented is: Whether a new and specific method of diagnosing a medical condition is patent-eligible subject matter, where the method detects a molecule never previously linked to the condition using novel man-made molecules and a series of specific chemical steps never previously performed.


The invention process in this case started with the reality that the biological cause of Myasthenia gravis (MG) could be identified for only about 80% of patients.  The inventors here discovered that a substantial portion of those “unknown cause” patients generated autoantibodies to “muscle-specific tyrosine kinase” (MuSK). MuSK was previously known as a naturally occurring human protein.  Although the autoantibodies to MuSK were not previously known, but do naturally occur in individuals with the condition.  The key discovery of the inventors is the link between the autoantibodies and the particular form of MG.  Under Mayo v. Prometheus, that link is an unpatentable law of nature.

After discovering the link, the researchers designed and then patented a method of finding those MuSK antibodies to help diagnose the particular form of MG. Since the autoantibodies were not easy to directly detect, the claims requires that a lab first tag MuSK proteins with a radio-label (such as Iodine-125) and then mix the proteins with body fluid. If the autoantibody is present in the fluid then it should bind with the tagged-MuSK.  At that point, you immunoprecipitate any antibody/MuSK complex and look for the label in the precipitate.  The patent explains that these steps are well known in the art – “Iodination and immunoprecipitation are standard techniques in the art.”  However, they had never been done with MuSK and its autoantibody. At that tight level of granularity, these steps could be called “a series of specific chemical steps never previously performed” as they were in the petition.

If you think that Myriad Genetics might provide insight to this case, it will also be important to recognize that radio-labeling MuSK actually creates a new molecules — “novel man-made molecules.”

Claims 7-9 of Athena’s U.S. Patent No. 7,267,820 are at issue. These depend from a very broadly written claim 1 that Athena did not defend on appeal. Claims: 

1. A method for diagnosing neuro … disorders related to [MuSK] comprising: … detecting in a bodily fluid … autoantibodies to … MuSK.

7. A method according to claim 1, comprising

contacting [labelled] MuSK … with said bodily fluid,

immunoprecipitating any antibody/MuSK complex … from said bodily fluid and

monitoring for said label on any of said antibody/MuSK complex …,

wherein the presence of said label is indicative [of the disorder]

8. A method according to claim 7 wherein said label is a radioactive label.

9. A method according to claim 8 wherein said label is [Iodine-125].

Patent at issue.

I’ve unfortunately been reminded of Dickens multiple times this week. The Dickens link with this brief comes in the form of melodrama. The following comes from the petition introduction:

[T]he Federal Circuit issued an unprecedented cry for help from this Court to clarify the patent eligibility of medical diagnostic tests. This Court should heed that cry and provide much-needed guidance on the proper application of the judicially-created exceptions to Section 101 of the Patent Act. . . .

[Among members of the Federal Circuit] there was broad consensus that this Court’s review is desperately needed. Numerous government officials, practitioners, and scholars have echoed and amplified the message that the law of patent-eligible subject matter is in a state of turmoil and there is no more important question facing the patent system. . . .

If these claims do not even meet the threshold requirement of being the kind of subject matter eligible for patent protection, that is the end of patent eligibility for the overwhelming majority of medical diagnostic methods—leading to profound consequences for future investment in scientific research and public health.

It actually took me quite a while to write this post — I must have fainted from simply reading the introduction.

Seriously though – this is an important issue. The Federal Circuit judges agreed that this is the type of invention that SHOULD be patent eligible, but is NOT patent eligible.  The Supreme Court should also recognize that its action (or inaction) in this case will likely be followed-up by Congressional action — as such a well reasoned opinion would go far to smoothing that process.




Guest post by Prof. Chien: Comparative Patent Quality and the Prior Art Gap

Guest post by Colleen V. Chien, Professor, Santa Clara University Law School. This post is the third in a series about insights developed based on USPTO data.

“If we could further narrow this gap in prior art between examination and litigation, then the accuracy of the patent grant – and therefore, its reliability – would increase.”

Director Andrei Iancu

As Congress charts its path for the rest of the year, many in the patent community are eagerly awaiting new legislation on patentable subject matter. But to the extent that the Supreme Court’s jurisprudence can be understood as a clumsy response to the proliferation of weak patents, reversing these decisions will not address the underlying root causes of poor patent quality. It is therefore crucial to address the question raised at a recent Hearing before the Senate Subcommittee on Intellectual Property: how can the quality of US patents be ensured?

This post focuses on an aspect of patent quality that, though receiving scant focused attention by scholars (with some exception, such as the excellent work of Professor Steve Yelderman, now clerking at the Supreme Court), comes up in the examination of over 90 percent of all patent applications.[1] No other issue comes close: the USPTO reports that only about a third of office actions include a rejection based on 35 U.S.C. § 112 and just 11% percent receive a rejection based on § 101. The aspect is the robustness of prior art vetting under §§ 102 (novelty) and 103 (nonobviousness). Below I argue that policymakers should pay more attention to the patent system’s most important tool for ensuring a patent’s quality: not § 101 or inter partes review, but prior art.

The task of vetting inventions in view of the prior art is old, but there are a number of new challenges. As Director Iancu has repeatedly acknowledged, the “ever-accelerating publication and accessibility explosions” strain the ability of examiners to find the best prior art during examination. Foreign patenting, which creates harder-to-evaluate foreign language prior art, is on the rise. In areas of rapid development like artificial intelligence, not unlike the early days of software in which a President’s Commission recommended prohibiting software patents because of the inability to vet them, prior art is being generated at an extraordinary rate – but in repositories like or Google scholar, not necessarily in filings at the Patent Office. As part of its continued focus on prior art, the Office has multiple initiatives to improve access to prior art, including the Collaborative Search and Search Feedback Pilots. It’s asked about prior art in its recent call for comments about patenting artificial intelligence (deadline extended to 11/8). But how can we know if current or piloted approaches are enough?

In a recent paper, Comparative Patent Quality, I argue that the age-old tool of benchmarking can yield valuable insights for tracking quality in patent examination, and in particular the robustness of considered prior art. In it, I describe and apply an approach for benchmarking examiner citation patterns exploiting the natural experiment that occurs when the same application is filed in the USPTO and a foreign patent office (such as the European Patent Office (EPO)). The paper specifically considers the extent to which examiners are considering the full range of prior art—not just patents but also non-patent literature (NPL)—when vetting applications.

A second project, Rigorous Policy Pilots, considers two other prior art benchmarks. The first is the patent applicant’s Information Disclosure Statement (IDS), in which an applicant must disclose to the USPTO all of the prior art or other information of which she is aware material to her application. Another is the Patent Trial and Appeals Board’s inter partes review decisions, in which administrative law judges cite what they believe to be the most relevant prior art.

These papers validate and quantify what Director Iancu has called, the “gap between the prior art found during initial examination and the prior art found,” in this case, in inter partes review. Non-patent literature (NPL) is not being cited by US examiners in the majority of cases, and US examiners are citing it less than European examiners. Within a random sample, 3.2% of the prior art relied upon by a U.S. Examiner (as provided in an 892 Form) was non-patent literature while the comparable rate in European Patent Office cases (as an X or Y reference in the search report) was 20%.[2]

Figure 1 shows the gap in NPL citation rates among Examiners, PTAB judges, and applicants vetting the same invention (906 patents whose claims have been invalidated in inter partes review). While US Examiners cited non-patent literature on average 13% of the time, the PTAB was more than three times more likely to do so (41%). (Figure 1) Applicants were more than five times (66%) more likely to include NPL in an IDS than Examiners (13%) were to cite it. Though the sample size does not permit fine-grained comparisons, the basic finding – that US examiners are citing NPL far less frequently than PTAB judges or applicants – held across all technical centers.[3]

These comparisons have their limits: in inter partes review, the challenger, not Examiner supplies the prior art, and the patents of IPR are not representative of patents in general. An applicant’s inclusion of a reference in an IDS is very different than an Examiner’s consideration, then application of a reference. European examination is closer to US examination, however, and there’s also a gap, though it’s smaller: among the patents analyzed above that had a European counterpart, EPO examiners cited NPL at a 34% rate, more than double the US examiner rate on the same applications of 14% of the time.[4] But applicants do not necessarily treat European and US “twin” applications identically, and European patent law is not identical to US patent law. Perhaps most importantly, correlation does not imply causation, and it can’t be assumed from these contrasts that a lack of robust vetting is responsible for the issuance of patents later proved to be invalid.[5]

Still, because inter partes review only revisits the patent’s validity in light of the prior art under §§ 102 (novelty) and 103 (obviousness), it squarely presents the question, were there references that the examiner missed? This analysis suggests that the robustness of examiner-cited prior art in general, and the consideration of NPL in particular, deserves attention. Work is ongoing to tease out the differences and their relationship to quality not only according to this metric, but also other aspects of robustness pertaining for example to foreign patents and the classes from which patent citations are drawn.

What can the USPTO do now to pay more attention to the robustness of prior art and narrow the gap? I recommend a few steps. First, the Office should make the “robustness of the prior art considered,” whether measured by NPL citation, foreign patent citation, diversity of references, or other measure, an explicit quality metric within existing and future prior art initiatives, consistent with the Office’s commitment to continuous improvement. Studying the link between the robustness of cited prior art and quality and tracking this explicitly as a quality metric would signal the importance of this aspect of prosecution.

Second, the USPTO, as it seeks to leverage artificial-intelligence to improve examination, should take into account the “bias” against non-patent literature currently embedded in examiner citations. If a tool is trained primarily on examiner citations it will reinforce this bias, growing, not narrowing, the gap. As to artificial intelligence applications in particular, the USPTO should also work to ensure that US examiners have access to the same references and resources (including time and information) that those in industry[6] and their international counterparts do. With many AI patent applications coming from non-US sources, high patent quality now can protect freedom to operate later, for US innovators.

Second, as the USPTO continues to evolve its approach towards prior art, including through pilots, it should do so with an eye towards rigorous evaluation. This means explicitly identifying the goal of the piloted policy (the “treatment,” like enhanced search capabilities or examiner collaboration), the theory of change behind it, and a way to measure whether or not the approach being tested has succeeded in increasing the robustness of prior art cited, using experimental or quasi-experimental approaches. To see if a new approach is working, the Office would compare the robustness of art in applications receiving and not receiving the treatment.

While treating otherwise identical applications differently can present non-trivial challenges, existing caselaw and the experiences of agencies including the USPTO, in its own randomized trademark audits, suggest that they are surmountable and the resulting knowledge, well-worth pursuing. The “hard evidence” generated by a rigorous policy pilot, implemented with sufficient power and controls, could be particularly important for justifying changes, perhaps costly, to examination and prior art processes. More importantly, applying rigorous approaches to prior art pilots would do more to support the discovery of what works to advance patent quality, using the patent system’s most important tool for doing so: prior art vetting.

Thanks to research assistant Nick Halkowski, 3L at SCU Law, for providing excellent data support.

[1] Author’s analysis, using the USPTO Office Action Dataset.

[2] Comparative Patent Quality, n 239.

[3] Across all TCs except TC2800, where the gap was 17%, the gap between Examiner and PTAB NPL citation among the 906 invalidated patents was of 20% or more . (N=74-186).

[4] Rigorous Policy Pilots, appendix Figure 2.

[5] While several excellent studies of patent quality have considered the role of prior art including Wasserman and Frakes’ studies of the time devoted to patent examination, and work by my colleagues Professors Brian Love and Christian Helmers uncovering the determinants of quality, none of that I am aware has explicitly considered the “gap”, or “relative” citation of non-patent literature citation by US examiners, as compared to PTAB judges, judges, applicants, and EPO examiners as is contemplated by this analysis. Some evidence suggests that the robustness of US examiner vetting, relative to EP examiner vetting, may have implications for outcomes. Among the US patents granted by the USPTO but fully invalidated in IPR, 202 had an EPO counterpart application. Of these, approximately 1/3 of the EPO applications never matured into patents, primarily because they were withdrawn or revoked. But while applications that did not proceed in the EPO but were granted in the US were 30% more likely to have NPL cited in the search report than their US counterpart, the difference in non-patent literature citation among cases where both offices granted the patent was much smaller, a third of that or 10%.

[6] These sources include, based on my conversations with researchers:  DeepMind ResearchPapers with Code,  and conference proceedings from NIPSKDDISLVRC, and many others.

Tale of a Patent: Seeking Permission to File a Motion to Petition for Correction

by Dennis Crouch

Honeywell Int’l. Inc. v. Arkema Inc. (Fed. Cir. 2019)

On Arkema’s request, the PTAB initiated a post grant review against Honeywell’s U.S.
Patent 9,157,017 (“method for producing an automobile air conditioning system for use with 2,3,3,3-tetrafluoropropene”). (Filed 4-months after patent issuance).

The patent includes a priority chain that goes back to 2002 and Honeywell thus argued that the patent was not amenable to PGR review. However, it turns out that Honeywell had a mistake in its priority chain listing — having forgotten to add one additional filing to its priority chain. Honeywell then asked the PTAB for permission to petition the PTO Director for a Certificate of Correction under Section 255.

Whenever a mistake of a clerical or typographical nature, or of minor character, which was not the fault of the [PTO], appears in a patent and a showing has been made that such mistake occurred in good faith, the Director may, upon payment of the required fee, issue a certificate of correction, if the correction does not involve such changes in the patent as would constitute new matter or would require re-examination.

35 U.S.C. § 255

Honeywell admitted that the error was not clerical or typographical and Arkena argued that it was a major change to the patent — “not proper grounds for correction.” Honeywell argued good faith — that discovered the error only after institution, and there is no suggestion that the lack of priority claim benefited the patentee in any way — just a big mistake.

To be clear about PTAB procedure — before filing a motion , you first have to get permission (leave) to file the motion. Here, Honeywell asked PTAB for permission to file a motion for leave from the PTAB to file a petition for correction. The Board did not give permission — rejecting Honeywell’s request for leave.  In the process, the Board agreed with Arkena’s “not-minor” arguments and that the correction could prejudice the petitioner.   The Board subsequently cancelled the claims – finding that without the priority chain, the late-filed claims are anticipated by intervening prior art.

A Poor Man’s Tale of a Patent

On appeal, the Federal Circuit has vacated and remanded — holding that the PTAB should allow the Certificate of Correction petition. In particular, the court found that the PTAB had “abused its discretion by assuming the authority that 35 U.S.C. § 255 expressly delegates to the Director: to determine when a Certificate of Correction is appropriate.

Section 255 does not grant the Board authority to determine whether a mistake in an issued patent is of “minor character” or “occurred in good faith.” 35 U.S.C. § 255. That authority is expressly granted to the Director. Id. The Director has not delegated its Section 255 authority to the Board, but has instead promulgated procedures by which patentees may seek the Board’s leave to petition the Director for a Certificate of Correction. 37 C.F.R. § 1.323; MPEP § 1485.

The Federal Circuit has held that it is appropriate for the PTAB to require “sufficient basis” supporting a correction request before granting permission to petition the PTO Director.  The basic idea is that the correction process could slow-down the PTAB trial.  In this case, however, the PTAB went to far because it did not allow Honeywell to file a motion explaining its case.

By requiring that Honeywell “show that [the] requirements of 255 have been met” before authorizing Honeywell to file a motion for leave to seek a Certificate of Correction from the Director, the Board abused its discretion. The Board further abused its discretion by assuming the authority that § 255 delegates to the Director and deciding the merits of Honeywell’s petition for a Certificate of Correction. . . .

[B]y evaluating the merits of Honeywell’s § 255 request when Honeywell was merely requesting authorization to file a motion for leave to petition the Director, the Board “lacked the information necessary to make a reasoned decision.” [Quoting Ultratec] At that stage, the Board had not seen the language of Honeywell’s proposed correction to the priority chain language of the ’017 patent. Nor had the Board seen any evidence of whether the mistake was inadvertent and made in good faith or whether the correction prejudiced Arkema.

The Board also failed to provide an explanation or a reasoned basis for its decision. The Board provided no explanation for its conclusion that Honeywell “failed to show that the minor character prong has been met” or its conclusion that prejudice to Arkema required denial of Honeywell’s request to file a motion.

Slip opinion.  On Remand, the Federal Circuit ordered the PTAB to now allow “Honeywell to file a motion seeking leave to petition the Director for a Certificate of Correction.”

Vacated and Remanded


Back Out of the Deference Labyrinth—a Response to Prof. Golden

David Boundy

This is a response to Prof. Golden’s A Walk in the Deference Labyrinth: Further Comment on Facebook v. Windy City, Patently-O (Sept. 27, 2019).  In my view, Prof. Golden overlooked some things (the same things overlooked by the PTO in its brief).  When those additional factors are clearly in view, Prof. Golden’s labyrinth falls into nice straight lines of sight showing that the Chevron deference issue in Facebook v. Windy City is no labyrinth at all: the PTAB’s Proppant decision is not entitled to Chevron deference.


USPTO Patent Open Data Conference – Oct 22

I’m looking forward to being part of the upcoming Patent Open Data Conference at USPTO-Detroit – hosted by Regional Director Damian Porcari.  Attend in person or via web. Sign-up to join the conversation:





Patent Grants Per Year

FY2019 is over and the numbers are out.  The USPTO has issued 336,886 utility patents during the fiscal year. This is a big increase over both FY2018 (306,912) and FY2017 (315,367).

My take: The change here is substantially due to Dir. Iancu, including (but not limited to) his push on limiting the scope of examiner eligibility analysis.  The chart below superimposes images of the USPTO Director at around their start-date.  If you recall, Jon Dudas was known for limiting patent grants (“second pair of eyes review”); David Kappos opened the door with collaborative patenting (“right-sized patents”); Michelle Lee turned things back down with a focus on “patent quality”; and  finally, Andrei Iancu ‘We will not continue down the same path.’

From today’s obvious patents comes U.S. Patent 10,425,977:

1. A wi-fi connection method for a mobile terminal, comprising:

obtaining wi-fi hotspots near the mobile terminal;

obtaining a data list and location information of the wi-fi hotspots;

sending the data list and the location information to a server;

analyzing, via the server, the data list and the location information to obtain password information of an available wi-fi hotspot, and sending the password information of the available wi-fi hotspot to the mobile terminal; and

connecting, at the mobile terminal, the available wi-fi hotspot based on the password information.

USPTO removable media policy

If you are visiting the USPTO, do not bring a “personal removable media storage device.”  U.S. Gov’t computer security has been compromised on numerous occasions based via USB drive viruses. The solution is to email the file to the examiner (and yourself); bring in a “finalized CD/DVD“; or connect via a secure file sharing service (PTO suggests Kiteworks).

The prohibition is written broadly — prohibiting anyone from entering the with “devices that can operate as removable media storage devices (e.g. PDAs, digital cameras, and Apple iPods).”  Presumably, this also includes your smart phone — I have contacted the PTO for clarification.

The PTO Notice indicates that most USPTO locations will include scanning-equipment “to check removable media for policy compliance.”  However, that process will cause a delay in admittance (and invade the privacy of your device).

Supreme Court Long Conference – Patent Law

by Dennis Crouch

The Supreme Court is back in session and is holding its first conference – the Long Conference – on October 1, 2019.  The court is scheduled to consider whether to grant certiorari in a number of important patent cases:

  • Obviousness: Acorda Therapeutics, Inc. v. Roxane Laboratories, Inc., No. 18-1280 (When should the objective indicia of nonobviousness be discounted based upon alleged “blocking” by an existing prior patent).  This case is supported by five additional friend-of-the-court briefs
  • Obviousness: Senju Pharmaceutical Co., Ltd. v. Akorn, Inc., No. 18-1418 (Whether no-opinion judgments comply with 35 U.S.C. § 144; Whether objective evidence of non-obviousness must be considered before cancelling claims as obvious).
  • Prosecution Procedures: Hyatt v. Iancu, No. 18-1285 (Whether MPEP 1207.04 – allowing for reopening prosecution – violates patent applicants’ statutory right of appeal following a second rejection).
  • Eligibility: Glasswall Solutions Limited v. Clearswift Ltd., No. 18-1448 (role of factual assertions when patent eligibility is challenged in a R.12(b)(6) motion to dismiss for failure to state a claim) (Link to Berkheimer).
  • Eligibility: StrikeForce Technologies, Inc. v. SecureAuth Corporation, No. 19-103 (Facts in step two of Alice) (Link to Berkheimer).
  • Damages: Zimmer, Inc. v. Stryker Corporation, No. 18-1549 (is negligence enough for enhanced damages).
  • Litigation Procedure: Xitronix Corp. v. KLA-Tencor Corp., dba KLA-Tencor, Inc., No. 19-58; and No. 18-1170 (Does appellate jurisdiction over Walker Process claims lie in the regional circuits, or in the Federal Circuit?).
  • Litigation Procedure: Imperium IP Holdings (Cayman), Ltd. v. Samsung Electronics Co., Ltd., No. 19-101 (Overturning jury verdict and the Seventh Amendment).
  • Covered Business Method Review: IBG LLC v. Trading Technologies International, Inc., No. 19-120 (what is a “technological invention” under the CBM review program).



Likely PTO budget for FY2020 (starting Oct 1, 2019) is $3.45 Billion. 2.4% increase over FY2019. As in years past, the spending is limited by PTO collections — it cannot spend more than it collects.

Appropriations, 2019....................................  $3,370,000,000
Budget estimate, 2020...................................  $3,450,681,000

Senate Report

Patently-O Bits and Bytes by Juvan Bonni

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A Walk in the Deference Labyrinth: Further Comment on Facebook v. Windy City

by John M. Golden, Professor in Law at the University of Texas School of Law 

As noted in a Patently-O post of September 18, in Facebook, Inc. v. Windy City Innovations, LLC, Nos. 2018-1400 et al. (Fed. Cir. Aug. 12, 2019), the U.S. Court of Appeals for the Federal Circuit requested supplemental briefing on the extent to which it should give deference to the precedential interpretation of a Patent Act joinder provision that the Precedential Opinion Panel (“POP”) of the Patent Trial and Appeal Board (PTAB) adopted in Proppant Express Investments, LLC v. Oren Technologies, LLC, IPR2018-00914 (P.T.A.B. Mar. 13, 2019).  As explained in the earlier post, in Proppant, the POP interpreted the language of 35 U.S.C. § 315(c), which permits the Patent and Trademark Office (PTO) Director, in instituting an inter partes review (IPR), to “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.”  This post is not concerned with the substance of the POP’s interpretation but instead the different ways in which the Federal Circuit might resolve or avoid the deference question, which could determine more generally (i.e., in cases involving interpretation of other provisions of the Patent Act) the extent to which the Federal Circuit gives deference to statutory interpretations of the POP.  The deference question is relatively easily stated, but arguments about it can become intricate.

For starters, there are two basic forms of deference that the Federal Circuit might apply to the POP’s precedential interpretation.  First, the court may determine that the Chevron deference framework applies.  See generally Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).  Under United States v. Mead Corp., 533 U.S. 218 (2001), the Chevron deference framework applies if two threshold conditions are met: (a) Congress delegated to an agency relevant authority “to make rules carrying the force of law” in relation to a statutory scheme and (b) “the agency interpretation claiming deference was promulgated in the exercise of that authority.”  Id. at 226–27; see also Gonzales v. Oregon, 546 U.S. 243, 258–59 (2006).   If the Chevron deference framework applies, the court is to defer to the agency’s interpretation of the statute if two further conditions are met: (1) the statute is ambiguous after all the traditional tools for statutory interpretation are brought to bear and (2) the agency’s interpretation is reasonable.  See, e.g., Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2142 (2016); Horvath v. United States, 896 F.3d 1317, 1321 (Fed. Cir. 2018).   The court’s assessment of whether the statute is ambiguous is often described as Chevron Step One analysis, and the court’s assessment of whether the agency’s interpretation is reasonable in light of any found ambiguity is often described as Chevron Step Two analysis.  Finally, even if the court determines that the threshold conditions for the Chevron deference framework—sometimes characterized collectively as “Chevron Step Zero,” see, e.g., Cass R. Sunstein, Chevron Step Zero, 92 Va. L. Rev. 187, 191 (2006)—are not satisfied, the court should consider giving substantial, albeit presumably less decisive, weight to the agency’s statutory interpretation in accordance with Skidmore v. Swift & Co., 323 U.S. 134 (1944); see also Mead, 533 U.S. at 234 (“Chevron did nothing to eliminate Skidmore’s holding that an agency’s interpretation may merit some deference whatever its form ….”).

In light of the Chevron and Skidmore frameworks, the Federal Circuit could resolve its deference question in any of various ways:

  • The court could duck the question of what deference framework applies by determining that its holding on statutory interpretation will be the same regardless of any potentially applicable deference or lack thereof. For example, the court could conclude that, even without giving any weight to the POP’s statutory interpretation, the Court agrees with and therefore upholds that interpretation.  Alternatively, the court could duck the deference-framework question by (a) assuming that the Chevron framework applies (i.e., that Chevron Step Zero is fully satisfied) but (b) determining that the POP’s interpretation nonetheless must be overridden because that interpretation is contrary to unambiguous statutory language (failure at Chevron Step One) or otherwise unreasonable (failure at Chevron Step Two).  Because Skidmore deference is generally understood to be weaker than Chevron deference, the court could conclude that the POP’s interpretation likewise fails any potentially applicable deference under Skidmore.  Such a decision would resolve the statutory-interpretation question at issue but would leave unanswered questions about the degree of deference, if any, that the POP’s interpretations of the Patent Act might more generally warrant.
  • The court could determine that the POP’s precedential statutory interpretation satisfies Chevron Step Zero and thus that the Chevron deference framework applies to the court’s review. The United States argues for such a ruling in its amicus curiae brief and further contends that the POP’s statutory interpretation should be upheld under Chevron because it “is not foreclosed by the text and is ‘reasonable in light of the text, nature, and purposes of the statute’ ” Brief for the United States as Amicus Curiae 11–12 [hereinafter “U.S. Brief”] (quoting Cuozzo, 136 S. Ct. at 2142).  Even after determining that the Chevron deference framework applies, however, the Federal Circuit could rule against the POP’s statutory interpretation if the court finds this interpretation to be clearly contrary to the statutory language or an unreasonable reading of ambiguous statutory language (i.e., not within a set of alternative interpretations that the ambiguous language reasonably permits).  Moreover, the Federal Circuit might limit a holding that the POP’s precedential statutory interpretations may satisfy Chevron Step Zero to apply only for interpretations resolving questions that fall within the ambit of express statutory grants of PTO rulemaking authority.  See 35 U.S.C. § 316(a)(4) (“The Director shall prescribe regulations . . . establishing and governing inter partes review. . .”); see also id. §§ 2(b)(2)(A) (“The Office … may establish regulations, not inconsistent with law, which … shall govern the conduct of proceedings in the Office”).  By disclaiming an effort to claim Chevron deference for “the POP’s interpretations of patentability provisions of the Patent Act,” U.S. Brief, supra, at 5 n.2, the Government appears to seek only such a limited holding on Chevron Step Zero.
  • The court could determine that the POP’s precedential statutory interpretation does not satisfy Chevron Step Zero. The court would then need to determine how much weight to give the POP’s interpretation in accordance with Skidmore as well as what interpretation of the statute ultimately controls.  See Mead, 533 U.S. at 234 (“Chevron did nothing to eliminate Skidmore’s holding that an agency’s interpretation may merit some deference whatever its form ….”); Merck & Co. v. Kessler, 80 F.3d 1543, 1550 (Fed. Cir. 1996).  The significance of Skidmore deference is sometimes questioned, but Yoav Dotan discusses in a forthcoming article how Skidmore deference may be viewed as a form of deference that is distinct from that of Chevron but still meaningful, Yoav Dotan, Two Concepts of Deference, 71 Admin. L. Rev. (forthcoming 2020); John M. Golden, The USPTO’s Soft Power: Who Needs Chevron Deference?, 66 SMU L. Rev. 541, 549 (2013).

The Federal Circuit’s rulings in Facebook can have significance extending substantially beyond its particular joinder question if the court goes down either routes (2) or (3)—i.e., if the court resolves the question of whether, at least under circumstances like those in Proppant, the POP’s statutory interpretation satisfies Chevron Step Zero.  Various Federal Circuit judges opined on related questions in Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc).  For example, Judge Moore wrote an opinion, joined by Judges Newman and O’Malley, that explicitly contended that, “where Congress has delegated authority to ‘prescribe regulations,’ ” an agency must generally engage in “regulation” in order to exercise Chevron-level interpretive authority.  Id. at 1330–31 (Moore, J.); see also id. at 1316–22 (O’Malley, J.) (indicating a similar view).  By “regulation,” Judge Moore apparently meant a rulemaking process conducted separately from adjudication, rather than the issuance of precedential holdings in adjudication.  See id. at 1331 (Moore, J.).

The United States’ brief rejects the notion that a specific statutory authorization to issue “regulations” implicitly precludes an agency from “issu[ing] binding [statutory] interpretations through other mechanisms Congress also provided”—in this case, PTAB adjudication.  U.S. Brief, supra, at 8.  In support of this position, the Government invokes a principle that agencies generally have a choice of policymaking mode—a principle with long-standing resonance in U.S. administrative law, see, e.g., Peter L. Strauss et al., Gellhorn and Byse’s Administrative Law: Cases and Comments 385 (11th ed. 2011).  U.S. Brief, supra, at 8–11 & n.4.  Alternatively, the United States’ brief might have sought to distinguish Judge Moore’s position in Aqua Products on the narrower ground that this position primarily contemplated substantive “standards,” not “rules on procedure,” which the opinion explicitly noted “are exempt from the notice-and-comment rulemaking requirements of § 553,” 872 F.3d at 1331–32 & n.4.  Perhaps the United States declined to rely on this distinction because the Government wishes to avoid having deference questions turn on sometimes tricky classifications of substance and procedure.  Joinder rules, for example, might on their face seem fundamentally procedural, cf. Luxliner P.L. Export, Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 71–72 (3d Cir. 1993), but there might be an argument that the IPR joinder provision’s relationship with the statutory time bar for IPR petitions under 35 U.S.C. § 315(b) muddles its status, cf. Joseph v. Athanasopoulos, 648 F.3d 58, 65 (2d Cir. 2011) (quoting the New York Court of Appeals’ statement that “the impact of the Statute of Limitations, though often denominated as procedural, in a practical sense may also be said to be substantive,” Smith v. Russell Sage Coll., 429 N.E.2d 746, 750 (N.Y. 1981)).

In any event, given the background principle invoked by the United States, I tend to agree with Judge Hughes’ opinion in Aqua Products that Judge Moore’s opinion relied too much on the Patent Act’s specific use of the word “regulations” in expressly providing for PTO rulemaking.  See Aqua Products, 872 F.3d at 1364–67 (Hughes, J., dissenting).  The amicus curiae brief from David Boundy shows a way that Judge Moore’s position might be fortified, at least in principle, by reference to such language’s broader statutory context.  Although the Patent Act gives the Director power to act through rulemaking, the Patent Act generally assigns adjudication of proceedings such as IPRs to the PTAB.  See 35 U.S.C. § 6(b)(4); see also id. § 316(c).  Moreover, although the PTO Director can sit as a member of a multi-member PTAB panel such as the POP, the PTAB’s final decisions in such proceedings are not subject to reversal by the Director acting alone, see John M. Golden, Working Without Chevron: The PTO as Prime Mover, 65 Duke L.J. 1657, 1680 (2016), and the PTAB therefore appears to be something other than “a mere alter ego” of the Director, John M. Golden, PTO Panel Stacking: Unblessed by the Federal Circuit and Likely Unlawful, 104 Iowa L. Rev. 2447, 2454 (2019); see also id. at 2456.  Consistent with this apparent separation between the Director and the PTAB, Boundy’s brief suggests that the PTAB should be treated as an adjudicative entity that does not share in any Chevron-level interpretive authority that Congress delegated to the Director.  Brief of Amicus Curiae David E. Boundy, in Support of Neither Party 1–3 [hereinafter “Boundy Brief”]; cf. Martin v. Occupational Safety & Health Rev. Comm’n, 499 U.S. 144, 154 (1991) (stating that, with respect to “traditional agencies—that is, agencies possessing a unitary structure—the Court had “concluded that agency adjudication is a generally permissible mode of lawmaking and policymaking only because the unitary agencies in question also had been delegated the power to make law and policy through rulemaking” (emphasis in original)).

In the context of Facebook, however, there appears to be a problem for Boundy’s invocation of a lack of “consolidated rulemaking and adjudicatory authority,” Boundy Brief, supra, at 5.  Specifically, in contrast to the generality of decisions in an IPR that occur after institution, the Patent Act expressly assigns to the Director the authority to decide on IPR institution and joinder.  See 35 U.S.C.  §§ 314–15.  In combination with the Director’s express power to issue regulations, this original assignment to the Director of case-by-case determination of institution and joinder issues indicates that, from the statutory standpoint, there is “consolidated rulemaking and adjudicatory authority” over these issues.  In deciding institution and joinder issues, the PTAB’s POP apparently exercises authority delegated downward to it by the Director, rather than laterally vested in the PTAB by Congress directly.  Thus, in deciding questions of institution and joinder, the PTAB generally and the POP specifically might be viewed as acting in a manner relatively analogous to that of an adjudicatory body within a more traditionally unitary agency structure—for example, the Board of Immigration Appeals (BIA), an adjudicative body that decides matters based on authority delegated to it by the Attorney General and whose decisions, the Supreme Court has held, may merit Chevron deference.  See Golden, Working Without Chevron, supra, at 1687–89.  In short, even if the Federal Circuit is impressed by the consolidated-authority point, it might still find that the statutory interpretation in Proppant satisfies Chevron Step Zero but at the same time limit the significance of this finding by holding only that the POP’s precedential statutory interpretations are eligible for Chevron deference when those interpretations involve an issue with respect to which the Patent Act has vested both relevant rulemaking and relevant case-by-case decision-making authority in the Director—perhaps, in some circumstances, through an express grant of power to “[t]he Office,” 35 U.S.C. § 2(b)(2), whose “powers and duties” are in turn “vested in” the Director, id. § 3(a)(1).

The intricacies of the above arguments suggest that the Federal Circuit could do the patent community a substantial service by engaging with the question of what deference framework applies to a POP statutory interpretation such as that in Proppant—i.e., by pursuing path (2) or (3) in the three bullets above.  Of course, if the Federal Circuit does answer such a question of general significance, that could increase Supreme Court interest in reviewing the decision.  Several Justices have already signaled interest in reconsidering the reach and validity of the Chevron deference framework.  This past June, five Justices went out of their way to indicate a belief that the framework’s validity is an open question.  See Kisor v. Wilkie, 139 S. Ct. 2400, 2425 (2019) (Roberts, C.J., concurring in part); id. at 2446 n.114 (Gorsuch, J., concurring in the judgment); id. at 2449 (Kavanaugh, J., concurring in the judgment).  Could Facebook be yet another patent case taken up by the Supreme Court?