Guest Post: Against the Design-Seizure Bill

By Sarah Burstein, Professor of Law at the University of Oklahoma College of Law

As previously covered here on Patently-O, a new design patent bill has been introduced in Congress. The so-called “Counterfeit Goods Seizure Act of 2019” would allow Customs and Border Patrol (CBP) to seize goods accused of design patent infringement.

This is a bad idea.

This bill is not reasonably tailored to address its purported goal of “stem[ming] the flow of counterfeit goods.” Instead, it will allow design patent owners to foist their private enforcement costs onto taxpayers, under circumstances that are unlikely to result in accurate determinations of infringement. Moreover, this type of ex parte, non-public system of adjudication is ripe for abuse.

I have three major groups of concerns about this bill: substantive, procedural, and rhetorical. This post will address them in turn.

Substantive concerns

First, CBP will not be in a position to make accurate determinations of design patent infringement.

The test for design patent infringement, as set forth by the en banc Federal Circuit in Egyptian Goddess v. Swisa, involves two steps. (For more on the Egyptian Goddess test, see this short essay.)

The first step requires a comparison of the claimed design (i.e., what’s illustrated in the patent) and the accused product. If those designs look plainly dissimilar, the test is over; there is no infringement. If the designs look like they might be the same, then the factfinder must consider the designs in light of the closest prior art.

This second step is important. Often, two designs that look similar in the abstract look much less so when considered in light of the prior art. Consider this recently-litigated example. The patented design is shown below on the left; the accused design is below on the right:

These two designs might not look plainly dissimilar in the abstract. But when viewed in light of the prior art, a number of visual differences become apparent:

Ultimately, the judge correctly concluded that the patent owner was not likely to prove infringement (though the path to that decision was a bit more circuitous).

How would this have turned out under the design-seizure bill? Who would have collected the closest prior art? There are many things to like about the Egyptian Goddess test, but one downside is that step two requires an informed and motivated defendant to work well. In an ex parte CBP proceeding, there is no one to play that role. CPB officials are not trained (and one assumes, lack the resources) to conduct their own prior art searches. And patent owners have zero incentives to provide any—let alone the closest—prior art when they record their patents or when they give CBP information about “suspect inbound shipments.” See generally 5 McCarthy on Trademarks § 29:37 (“Trademark owners that see a higher success rate in Customs seizures are typically the ones that continuously and vigilantly provide Customs with information to use in identifying suspect inbound shipments. Such information could include the names of known foreign counterfeiters, countries of origin, suspect importers, and the like.”)

If CBP skips (or lacks sufficient information to properly conduct) Egyptian Goddess step two, competing products could seized even when they don’t infringe. CBP could seize products that merely practice the prior art or that resemble the claimed design solely in functional aspects (for all but the most pioneering products, one would expect to find any truly functional elements in the prior art).

Thus, ex parte assessments of design patent infringement are likely to lead to significant over-enforcement. At least one other commentator has voiced similar concerns. Over-enforcement would chill legitimate competition and ultimately raise prices for consumers—the very consumers who would be footing the bill through their tax dollars.

In any case, it is simply not correct—as some proponents of this bill have asserted—that all CBP would have to do is look at the design patent and the accused product and see if they look the same.

Some might argue that CBP could review the prior art cited on a particular design patent. But that’s by no means guaranteed to be the closest prior art. Some of it may not even be available at the time of enforcement; USPTO examiners often cite web pages using basic URLs and link rot is a very real concern.

One proponent of this bill has asserted that “Customs officers have already effectively demonstrated the ability to determine whether imported goods infringe a design patent, through its ongoing enforcement of design-patent exclusion orders.” But how do we know that is true? What kinds of orders are being issued by the ITC? How broad (or narrow) are they? How can we know whether CBP is enforcing them well? While we can assume CBP does the best it can in the restraints under which it operates, any assertion about what that actually looks like in practice requires something more that ipse dixit before it can have any persuasive weight.

Procedural concerns

This bill raises also raises serious due process concerns. What recourse is there for competitors whose goods are improperly seized? What accountability is there for design patent owners who direct CBP officials to competing products that don’t actually infringe? Based on my experience reviewing design patent complaints, it appears that many attorneys are under the mistaken impression that design patents cover design concepts, when they really only cover the specifically-claimed designs. I call this “the concept fallacy.” It’s remarkably common in federal court filings. If members of the bar feel comfortable making such allegations in federal court, where they are subject to both judicial sanctions and public scrutiny, what allegations will they feel comfortable making to the CBP?

The non-public nature of these seizures is also a concern. How can we know how well the system is (or is not) working? Based on the information Professor Rebecca Tushnet has been able to gather about trademark seizures, it appears that the agency does not keep good records and its substantive determinations are guided by materials provided by trademark owners. One would assume that if the design-seizure bill were passed, groups like INTA, AIPLA, and/or IPO would be happy to provide their own guidelines for CBP. If that happens, any such materials should be made public, to ensure accuracy. (Hopefully, it won’t take a FOIA lawsuit like the one Professor Tushnet had to file.)

Rhetorical concerns

Finally, the entire framing of this bill is based on conflating design patent infringement with “counterfeiting.” Those two things are not the same.

“Counterfeiting” is a term of art in U.S. IP law. The Lanham Act defines a “counterfeit” as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127.

Actual counterfeiting (i.e., as that term is defined in the Lanham Act) is arguably the worst type of IP infringement. But it’s already illegal. Indeed, it’s subject to criminal penalties.
If Congress thinks those remedies are not severe enough, it is free to increase them. But Congress should narrowly tailor any such efforts to acts that actually constitute counterfeiting. That’s not what’s going on here.

Proponents of this bill like to talk about “counterfeits without labels” (a strange concept in light of the relevant statutory definitions, but that’s an issue for another day) but the bill goes beyond anything that would seem to fall into that category.

Most design patents can be infringed by products that don’t replicate the entire appearance of the patent owner’s own product—if any. (Design patent owners, like other patent owners, aren’t required to produce products embodying their designs.) Even in the rare case where a design patent claims the entire shape and surface design of a product, that patent will still be infringed by a competitor who makes a product in that shape even if the color or material or some other non-shape attribute is so different that no one would mistake it for the original item.

Many (perhaps most) design patents claim just a small part of a larger design; the whole point of such patents is to capture competing products that don’t look the same overall. When an applicant claims a small part of a design, there is no requirement that it be an important or valuable part—let alone a part that would lead to serious consumer deception. (If you’re interested, I wrote more about these claiming techniques here and here.)

Over the years, I’ve heard many design patent attorneys say they want border enforcement. But it’s not because they’re worried about counterfeiting. They want it because it will make design patents more valuable—or at least seem more valuable—to their clients, which in turn makes it easier to sell their design patent prosecution services. (It’s perhaps not surprising that the push for CBP enforcement became more organized after the Supreme Court’s decision in Samsung v. Apple which, in the eyes of many, made design patents less valuable. The ultimate impact of that case, however, remains to be seen. For more on that case, see here; for more on the developments since then, see here.) While some proponents of this bill may truly, in their hearts of hearts, be worried about actual counterfeiting, the fact remains that many design patent attorneys want border enforcement for these other reasons.

We’ve seen this rhetorical technique before—in the past, proponents of broader copyright laws have used the word “counterfeiting” to conjure the specter of medicines laced with poisons and other horrors to scare legislators into enriching private rights holders. I hope Congress doesn’t fall for it.

PTO Informative Decisions: Patent Eligibility Rejection — Look to what is expressly “RECITED” in the claims

The USPTO has identified three recent PTAB decisions as “INFORMATIVE.” All three will be helpful to patent prosecutors and so should be considered:

  • Obviousness: Hulu, LLC v. Sound View Innovations, LLC, Case IPR2018-00582, Paper 34 (Aug. 5, 2019) (designated informative on Dec. 11, 2019) (finding insufficient justification to combine references);
  • Obviousness: Johns Manville Corp. v. Knauf Insulation, Inc., Case IPR2018-00827, Paper 9 (Oct. 16, 2018) (designated informative on Dec. 11, 2019) (denying institution based upon insufficient justification to combine references); and
  • Eligibility: Ex parte Linden, 2018-003323 (Apr. 1, 2019) (designated informative on Dec. 11, 2019) (reversing examiner rejection based upon 2019 Examination Guidelines for eligibility).

This post will focus on Linden, which is a patent application owned by BAIDU spun out of Prof. Andrew Ng’s lab at Stanford.

In Linden, the BAIDU patent application claims a method using a trained neural network to transcribing speech.  The claimed method involves several data processing steps: normalizing the input (to the training data); generating a “jitter set” of audio files (time-distorted versions of the original); generating a spectrogram for each time-jiggered audio file; predicting character probabilities with the neural network; and transcribing the audio based upon character probabilities and a language model.

The examiner rejected the claims as directed to an abstract idea of manipulating data; creating information sets (based upon prior information sets); and decoding data.  On appeal, the PTAB reversed — finding that the claim should not be classified as directed to an abstract idea under the 2019 Examination Guidelines.  Under the Guidelines, abstract ideas must be classified as either:

  1. Mathematical concepts;
  2. Certain methods of organizing human activities; or
  3. Mental processes.

* The guidelines note claims outside the enumerated groupings can be treated as abstract ideas, but only in “rare circumstance.” *

Here, the Board found that the transcription claims are not directed at these categories. Focusing first on mental processes and human activities, although transcription is a human/mental activity, the Board found that the specific process here (jiggering/spectrogram sets/etc.) cannot be “practically performed mentally” nor do they recite “organizing human activity” — which is defined as activities such as using fundamental economic principles, commercial and legal interactions, and managing relationships.

Regarding mathematical concepts.  The claims here require several mathematical operations to be performed: jiggering; creating spectrogram; predicting character probabilities; etc.  However, the Board found that none of these operations actually “recite” a mathematical algorithm or formula.

[T]he Examiner identifies that the Specification discloses an algorithm to obtain the predicted character probabilities.  The mathematical algorithm or formula, however, is not recited in the claims.  As such, under the recent Memorandum, the claims do not recite a mathematical concept.

Linden. In case you didn’t see it – this is bonkers. The Board here is saying that the claim would be problematic only if it actually and expressly recited the algorithm that it uses.  Since the claim is drafted more broadly (i.e., at a higher level of abstraction), it cannot be seen as abstract.

The PTAB went on to explain that even if the claims did recite a mathematical concept — they are still not problematic because the claims as a whole are not “directed to an abstract idea” but rather any abstractions are “integrated into a practical application.”

Regarding Alice Step 2, the Board also faulted the examiner for failing to provide evidence that the claims do not include an inventive concept:

[T]he examiner concludes the claims do not include “any additional elements that amounts to significantly more than a judicial exception” but fails to provide sufficient factual support.  Berkheimer.


= = = =

Typo by the PTO?.  The Board identifies the case as “Ex PARTE LEE LINDEN, BENJAMIN LEWIS, AND ABHEEK ANAND.”  This is confusing to me because none of these individuals are listed as inventors on the patent (Awni Hannum is the first named inventor).

Take care Patently-O Commenters — Lawsuits are in the Air. 

by Dennis Crouch

Three commenters to John Welch’s TTABlog were recently sued for defamation after criticising an attorney Lee Thomason who lost a case before the TTAB. I know both John and Lee (who recently retired as a clinical professor at OSU) which makes this a bit more interesting and unfortunate.  Prof. Eugene Volokh has written more about the new lawsuit on his blog Volokh Conspiracy.

To be clear, the TTAB case was not simply lost on the merits. Rather, the TTAB issued a precedential decision cancelling Corcamore’s SPROUT registration as a sanction for bad behavior:

Respondent has been engaging for years in delaying tactics, including the willful disregard of Board orders, taxing Board resources and frustrating Petitioner’s prosecution of this case. In view thereof, Petitioner’s motion for sanctions in the form of judgment against Respondent also is granted pursuant to the Board’s inherent authority to sanction.

SFM v. Corcamore (TTAB 2018). Thomason represented Corcamore but was not personally sanctioned by the Board.

In his post, Welch did not identify Thomason by name but did make the comment: “What about a sanction against counsel?”

Three folks (all trademark attorneys) then added comments noting: (1) the attorney Thomason was a professor at The Ohio State; (2) the board “certainly ought to sanction” such behavior; (3) that the attorney is likely to blame because this is a procedure issue; and (4) that the attorney has been previously called out for unprofessional conduct.

The new defamation lawsuit filed in Federal Court in Kentucky accused Dreitler, Reidl, and deWolf of “volitional contacts with readers in Kentucky of the defamatory comments.” Prof. Volokh, whose expertise is defamation (inter alia), reviewed the filing and suggests that the claim will not stand, but promises an attempt to keep readers updated.

Read the complaint with exhibits here:

Are you Smarter than a Law Student? Patent Exam 2019

My patent law course at Mizzou is primarily practice based — the students all write patent claims, reject claims, respond to office actions, and compete in a moot court competition. But, they also take a short exam. Here is the 2019 edition. – DC

= = = = =

Introduction: Mr. Crunch’s newest venture known as “Pause” is designed to help people relax and take a momentary meditative pause.

The basics: Crunch has designed an App (software program) to be installed an electronic device such as a mobile phone.  At points in time throughout the day, the App will provide a notification “ding” to the user indicating that it is time for a meditative pause.

The notification sound: One special feature of the App is that the notification ding is specially designed to elicit a relaxation response. The default sound is modeled from a Tibetan Singing Bowl. However, App includes a customization process where App can measure a user’s relaxation response to the various sounds using biofeedback (heart rate; skin temperature; sweat gland activity; digestion via breath sensor, etc.) and then automatically select the most effective; alternatively a user can manually select from various sounds.

Timing of the notification: The other feature of the App is timing of the notification dings.  Timing may be a pre-set time (such as 1:00 pm daily) or may be spaced randomly during awake hours.  App may also rely on biofeedback to identify stressful points during the day and target those times for the ding.

= = =

Crunch conceived of the idea during a Kundalini Yoga session in August 2018.  As he moved forward with development of the business, in September 2018 he fully disclosed all aspects of the invention to his banker (seeking a business development loan) and also to two software engineers that he hired on a contract basis to write the code.  He also told everything to his spouse and <18 y.o. children, although not until January 2019.

It is now December 2019 and Crunch is ready to file his patent application.  He understands that he cannot obtain a patent simply on an app that plays a sound. However, he thinks his customization processes are novel features. His proposed claim 1 is listed below.

I claim:

1. A process for customizing an application stored on a mobile electronic device, wherein the application is designed to elicit a relaxation response in a user, the process comprising:

(a) customizing the notification sound:

  1. causing the device to play a plurality of notification sounds for the user;
  2. recording a biofeedback response for each notification sound, wherein the biofeedback response includes user heartrate; and
  3. selecting a preferred notification sound based upon the biofeedback response; and

(b)  customizing the notification timing:

  1. measuring a stress level of the user based upon a biomarker, wherein the biomarker including user heartrate; and
  2. selecting a notification time at a point of relatively higher stress.

Question 1
. Is claim 1 directed toward eligible subject matter?

Question 2. Provide a concise argument why the USPTO should reject claim 1 as indefinite.

Question 3a. Crunch is concerned that his own pre-filing disclosures (as discussed above) might block him from receiving a patent. Do those disclosures qualify as prior art against his own application filing?

Question 3b If Crunch could go back in time, what are two steps he could have taken to better ensure that his pre-filing disclosures were not prior art?

Question 4. Crunch’s patent attorney performed a prior art search and found a publication from March 2019 describing an app that helps users maintain good posture. Key relevant features of the good-posture app publication:

  1. It measures heartrate and provide a signal to users when heartrate slows telling users to improve their posture (apparently slumping typically occurs as heartrate slows);
  2. Users can customize the signal according to their preferences. The publication suggests choosing a signal that the user finds pleasing.

Although the good-posture app is described in the printed publication, there is no evidence that the good-posture app was ever actually created. Will the good-posture publication prevent Crunch from obtaining a patent?

Question 5. The year is now 2021; Crunch’s US patent has issued without any amendment.  An India-based company (Vishraam) has started distributing an app (globally) that is quite similar to Crunch’s proposal. A user has the option of customizing both the notification sound and the notification timing in same way claimed by the patent.  Can Crunch hold Vishraam liable for patent infringement?


Note – The “Pause Mediation” image above comes from a real company in Westchester.

Historic Underpinnings of the Inventor Rights Act of 2019

I received some questions regarding my statement that the provisions of the Inventor Rights Act of 2019 “have historic roots.”  This post addresses those in more detail.

Profit Disgorgement – Reset to 1946: I will start with the profit disgorgement provision – which is a major change away from the current compensatory scheme in U.S. Utility Patent Law.  That said, disgorgement remains available for design patent infringement as well as other IP regimes such as copyright, trademark, and trade secret misappropriation.  The basic approach to disgorgement is to calculate the infringer’s profits associated with the infringement and then hand those profits over to the rights holder.  As Supreme Court explained in Tilghman v. Proctor, 125 U.S. 136 (1888), this approach is designed to avoid unjust enrichment by the infringer — what patent owners term “efficient infringement.”

The reasons that have led to the adoption of this [profit disgorgement] rule are that it comes nearer than any other to doing complete justice between the parties, that in equity the profits made by the infringer of a patent belong to the patentee and not to the infringer, and that it is inconsistent with the ordinary principles and practice of courts of chancery either on the one hand to permit the wrongdoer to profit by his own wrong

Tilghman v. Proctor, 125 U.S. 136 (1888).  Profit disgorgement was eliminated from the text of the Patent Act in 1946 and Courts have held that it is no longer an available remedy. See Aro Manufacturing Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961) (“The purpose of the change was precisely to eliminate the recovery of profits as such, and allow recovery of damages only.”); Caprice L. Roberts, The Case for Restitution and Unjust Enrichment Remedies in Patent Law, 14 Lewis & Clark L. Rev. 653 (2010).

The provision found in the Inventor Rights Act of 2019 would effectively reinstate the disgorgement option close to what it was back in the 1870s when disgorgement became available for cases at law in addition to those in equity where it was already available.

Venue – Reset to 2017: Under TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), federal patent infringement lawsuits can only be filed in states where the defendant either (1) is incorporated or (2) “committed acts of infringement and has a regular and established place of business.” Quoting 28 U.S.C. § 1400(b).  Prior to TC Heartland, venue was much broader and was proper so long as the court had personal jurisdiction over the defendant (i.e., minimum contacts).  The proposal in the Inventor Rights Act of 2019 would not fully restore the broad venue, but would allow an inventor to sue in states where the inventor conducted research or has a regular and established physical facility.

Injunctions – Reset to 2006: For many years courts issued injunctions as a matter of course against adjudged infringers.  That changed following eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In eBay, the Supreme Court ruled, inter alia, that no injunction should issue absent proof of irreparable harm caused by the infringement as well as inadequate remedy at law.

The proposal in the Inventor Rights Act of 2019 would would restore the pre-eBay law and thus allow for injunctive relief.

Post-Issuance Review – Reset to 1980: The Bayh-Dole Act (1980) authorized involuntary ex parte reexaminations. Since then, the scope of involuntary post issuance challenges have grown — most significantly with Trials under the 2011 America Invents Act (AIA).

The proposal in the Inventor Rights Act of 2019 would would restore the pre-1980 setup – barring any involuntary post-issuance review by the USPTO:

The United States Patent and Trademark Office shall not undertake a proceeding to reexamine, review, or otherwise make a determination about the validity of an inventor-owned patent without the consent of the patentee

IRA 2019.

Of course, a key principle of the proposal here is that it applies only to a subset of patents — those owned by their inventors.

(k) The term ‘inventor-owned patent’ means a patent with respect to which the inventor of the invention claimed by the patent or an entity controlled by that inventor—(1) is the patentee; and (2) holds all substantial rights.’


Special Rights for Inventor Owned Patents

by Dennis Crouch

Rep. Danny Davis (D-Il) and Paul Gosar (R-Az) have introduced the Inventor Rights Act. H.R.5478 that creates a set of rights and privileges associated with inventor-owned patents.  These are patents owned by their respective inventors or owned by an entities controlled by the inventors.  In addition to ownership, the inventor must hold “all substantial rights.”

Big Four: 

  1. No Involuntary Post-Issuance Proceedings against inventor-owned patents.  No IPR, Post-Grant Review, or reexamination, or any other “determination about the validity” without “consent of the patentee.”
  2. Injunctions would now be likely against infringers of inventor-owned patents. The Bill would create a presumption of both irreparable harm and inadequate remedy at law for infringement of an inventor-owned patent.
  3. Broadened Venue for filing of infringement lawsuits.  Here, the proposal does not recapture all of the venue “lost” in TC Heartland. 
  4. Damages law would offer a new option: Profit disgorgement + attorney fees + treble damages for willfulness when inventor-owned patents are infringed.

Inventor Rights Act 2019. These are all major changes.  Although all of the provisions have historic roots.

Currently, only a rather small fraction of patents would qualify as “inventor-owned patents” under the statute. However, the Bill would tend to both (1) encourage individual inventorship and (2) encourage patent holding situations that take advantage of the inventor-owner rights. Tech company founders would likely keep ownership of their patents, although I suspect that large companies would remain wary of allowing regular employees to retain “all substantial rights” in the patent.

Folks at US Inventor, including Josh Malone and Paul Morinville, have lobbied for the proposal and have included substantial discussion on their website:




Elijah E. Cummings Lower Drug Costs Now Act

The House recently passed H.R. 3 – the Elijah E. Cummings Lower Drug Costs Now Act — and the Bill has been received by the Senate for consideration.

The basic proposal is to require the U.S. Gov’t to negotiate on Medicare drug prices for insulin and >25 of the top-125 drugs (by national spending). The negotiation includes a price cap:

The negotiated maximum price may not exceed (1) 120% of the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom; or (2) if such information is not available, 85% of the U.S. average manufacturer price.

If the manufacturer fails to comply then there will be civil/tax penalties. So, the word “negotiation” should be placed within quotation marks. The Congressional Budget Office predicts that price negotiation prevision would lower government spending by about $500 billion over the next decade.

This particular proposal spends most of the money – by adding dental, vision, and hearing to Medicare.

Current law includes a “noninterference” clause associated with Medicare Part D:

Noninterference.—In order to promote competition under this part and in carrying out this part, the Secretary—

(1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors; and

(2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.

42 U.S.C. 1395w-111(i).

Although not a “patent” bill, the proposal would significantly impact the market for patented drugs and biologics. What is unclear at this point is how research would shift. PhRMA estimates that the US Bio / Pharma industry spent about $100 billion on research in 2017.

This Bill is likely to be blocked by Republican leaders in the Senate, although many Republicans have offered some support for “interference” in principle.


A Novel and Useful System for Ruling Middle Earth…

Section 285 Fee Award: Whole Case Must be “Exceptional;” Exceptional Portion is Insufficient

by Dennis Crouch

Intellectual Ventures I LLC v. Trend Micro Inc. (Fed. Cir. 2019) [IVFeeAward]

IV sued Trend Micro back in 2010 for infringing its U.S. Patent Nos. 5,987,610, 6,073,142, 6,460,050, and 7,506,155.   After substantial back and forth, we eventually learned that the patents are invalid as directed toward abstract ideas. See Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307 (Fed. Cir. 2016).  On motion, the Judge Stark then awarded attorney fees to Trend Micro based upon the changed testimony of IV’s expert witness at trial in the parallel Symantec case.

Ruling from the bench, the … district court concluded that Intellectual Ventures’s conduct was exceptional “solely with respect to this collection of circumstances regarding [its expert’s] changed testimony.” Considering “whether the case overall is exceptional,” however, the district court expressly “f[ou]nd it was not.” The district court also concluded that “it would be wrong to say that [Intellectual Ventures’s] case was objectively unreasonable.”

Slip. Op.  The district court ruled that the case is not “exceptional” but went ahead and awarded attorney fees. The problem is that 35 U.S.C. § 285 expressly limits attorney fee awards to “exceptional cases.”

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

35 U.S.C. § 285.  On appeal, the Federal Circuit has vacated and remanded — holding that the district court erred in its analysis.  It is improper to find that the case is not exceptional and also award attorney fees under Section 285.

A portion but not the Whole: The district court did find that a discrete portion of IV’s litigation misconduct was improper and exceptional.  However, the district court ultimately concluded that discrete misconduct did not taint the case enough to render the whole “exceptional.”  On appeal, the Federal Circuit found that Section 285 attorney fees are only available when the case as a whole is exceptional.

Instead of determining whether the case was exceptional, it appears that the district court may have focused on whether one discrete portion of the case stood out…. This is not the appropriate analysis. Section 285 gives the district court discretion to depart from the American Rule and award attorney fees “in exceptional cases.” Accordingly, under the statute, the district court in this case should have determined whether the circumstances surrounding the expert’s changed opinion were such that, when considered as part of the totality of circumstances in the case, the case stands out as exceptional.

Slip Op.  A “district court has discretion, in an appropriate case, to find a case exceptional based on a single, isolated act.”  Such as finding must also consider the case as a whole and the totality of circumstances. Here, the district court did not make such a conclusion — and in fact concluded that the case was not exceptional.


Nexus: Product must be “Essentially the Claimed Invention”

by Dennis Crouch

Fox Factory, Inc. v. SRAM LLC (Fed. Cir. 2019)

This is an important case for anyone arguing secondary indicia — not a good case for patent holders. The court here again raised the “nexus” hurdle by holding that a presumption of nexus can only be achieved by proving that the product being sold by the patentee is “essentially the claimed invention.”  This is a situation where SRAM owned two patents in the same patent family — both of which covered aspects of its X-Sync bicycle chainring (gear).  Each patent included elements not claimed in the other — for the court that was enough evidence to disprove coexistence.


Guest post by Profs. Yu and Contreras: The Uncertain Criminal Status of PAE Litigation in China

Guest post by Professor Jorge L. Contreras and Associate Professor Yang Yu of Shanghai University of International Business and Economics.  Professor Yu has graciously provided translations of core parts of the court’s judgment and Prosecutor’s protest.

On September 30, 2019, the Shanghai Pudong New Area People’s Court (court of first instance) ruled that an individual, Mr. Li Xingwen, was guilty of criminal extortion for asserting patents against a number of Chinese companies shortly before their initial public offerings (IPOs). The case was widely reported in the international press (see here, here and here) before the official release of this first-instance judgment, and gave rise to concern about the risks of asserting patents in China. The full text of the Shanghai court’s decision was finally released on September 30, 2019 and reveals several interesting details about the case. In particular, Mr. Li’s conduct giving rise to the judgment of extortion involved the falsification and backdating of a license agreement with a related company in order to extract additional royalties from a company with which Li had already settled.  However, most of Mr. Li’s other patent assertions, notwithstanding their strategic filing prior to the defendants’ IPOs, were viewed as legitimate.  Then, on October 18, 2019, the Shanghai Pudong New Area People’s Procuratorate lodged a protest with the Shanghai No.1 Intermediate People’s Court, arguing that the judgment against Mr. Li was too lenient.  Below, we summarize the facts of the case and the findings of the court of first instance, then assess the implications of the People’s Prosecutor’s protest.

The Patent Assertions

According to one news report, Mr. Li was a prolific inventor and patent agent. Beginning as a university student, he reportedly applied for over 1,000 patents, more than 600 of which had issued at the time of the case. These patents covered a diverse range of products including “a folding bicycle, a flushing water tank, a self-filtering aquarium, [and] an insecticidal device” (IAM, Oct. 1, 2018).  In addition to these, Mr. Li filed numerous patents covering aspects of electrical equipment. Working with his brother, Li established several holding companies to which he transferred some of these patents.

Beginning in 2015, Li’s companies sued four Chinese electronics firms for patent infringement in the Beijing, Xiamen and Shanghai courts. In several cases, the litigation was brought as the defendant companies were in the process of registering their securities in IPOs on the Shanghai or Shenzhen stock exchanges.  In all cases, the alleged infringers settled the cases brought by Mr. Li’s companies, committing to pay him a total of RMB 2.163 million (RMB 1.163 million of which had been paid at the time of his prosecution).

Some cases involved the assertion of two Chinese patents claiming methods for data transmission and image acquisition against Zhang Yue Technology Inc., a manufacturer of e-book readers. A series of cases were brought from March 2017 to  July 2017 by Mr. Li’s company Shanghai Ke Dou Electronic Technology Co. Ltd. (Ke Dou) in the Beijing Intellectual Property Court and Shanghai Intellectual Property Court.  Zhang Yue settled with Ke Dou on 15 July 2017, agreeing to pay a total of RMB 800,000.

Then, at the end of 2017, Li’s holding company Ke Dou entered into an agreement with another Li company called Shanghai Bu Dao Industrial Co., Ltd. (Bu Dao).  Under this agreement, Ke Dou purported to grant Bu Dao an exclusive license to a data transmission patent (Patent No. ZL201010523269.X “Method and system for initiating data transmission between devices through image acquisition”). What’s more, the Ke Dou – Bu Dao agreement was back-dated so that it appeared to pre-date the license that Ke Dou granted to Zhang Yue.

Armed with this exclusive license, Bu Dao sued Zhang Yue in the Beijing IP Court under the same patent. To exert even greater pressure, Bu Dao reported the lawsuit to the China Securities Regulatory Commission (CSRC), which had oversight over Zhang Yue’s pending IPO.  In an attempt to avoid interference with the IPO, Zhang Yue agreed to settle the lawsuit with Bu Dao for an additional RMB 800,000.

Arrest and Charges

After signing the second license agreement, Zhang Yue reported Mr. Li and his brother to the police (IAM, Jul. 23, 2018). The case was investigated by the securities crime unit of the Shanghai Public Securities Bureau.  Mr. Li and his brother were arrested in January 2018 and prosecutors charged them with extortion on August 24. As reported by IAM (Oct. 1, 2018) the Shanghai Public Security Bureau explained the charges as an effort to preserve order in China’s capital markets, and justified them on the basis that the purpose of Li’s litigation was not to protect his patented technology but simply to earn large sums of money. This behavior, one official noted, “is in line with the characteristics of extortion”.

The Court’s Decision

The Shanghai Pudong New Area People’s Court rendered its decision in Mr. Li’s case on September 30, 2019. It evaluated the conduct of Mr. Li and his brother with respect to four different defendants that had been sued for patent infringement, including Zhang Yue.  In three of the cases, Mr. Li’s lawsuits were timed to coincide with the defendant’s preparation for or execution of an IPO.  Unlike the Public Securities Bureau, however, the court did not consider this fact to be dispositive.  In order to prove the crime of extortion, the court explained that the accused must have illegally obtained payment by means of threats and intimidation.

The court then noted that the patents asserted by Mr. Li’s companies against the four defendants were either recognized as valid by the China National Intellectual Property Administration (CNIPA) or were, at worst, of uncertain validity. As a result, seeking and obtaining license fees for such patents was not illegal. It was not relevant that Mr. Li’s demands for royalties came at sensitive times when the defendant companies were preparing for stock listing or financing.  Moreover, the court did not find evidence that Mr. Li’s companies carried out “threats or blackmail” simply by demanding payment for its patents.  Rather, it was possible that the defendants decided to pay the requested amounts for legitimate business reasons.  Accordingly, extortion was not found in these instances.

However, with respect to the second demand made against Zhang Yue, Mr. Li and his brother colluded “in bad faith” to fabricate an exclusive license agreement between their companies Ke Dou and Bu Dao. Bu Dao then sought additional royalties from Zhang Yue after it had already paid Ke Dou for the same patent.  Moreover, when Mr. Li reported Zhang Yue’s infringement of the patents to the CSRC, he did so only to pressure Zhang Yue to pay Bu Dao for these patents.  This action constituted coercion, and Zhang Yue’s payment to Bu Dau was made out of fear of the effect that nonpayment might have on its pending stock offering.  As a result, the court found that the Lis’ behavior toward Zhang Yue constituted criminal extortion.

The convictions required the Lis to refund the payment improperly paid by Zhang Yue, as well as additional fines of RMB 50,000 and 20,000 for Mr. Li and his brother, respectively.  In addition, Mr. Li and his brother were sentenced to four years and six months, and two years, imprisonment, and the unspecified “tools” used to commit the extortion were confiscated.

The Prosecutor’s Challenge to the Judgment

On October 18, 2019, the Shanghai Pudong New Area People’s Procuratorate (the local prosecutorial authority) lodged a protest with the Shanghai No.1 Intermediate People’s Court, arguing that the judgments against Mr. Li and his brother were too lenient, in that no extortion judgment was imposed with respect to their patent demands against the companies other than Zhang Yue. In its protest, the Prosecutor has argued that having the right to bring a patent enforcement action under the civil patent law does not necessarily exonerate a patentee from a criminal judgment of extortion. That is, civil and criminal offenses must be judged independently, and in this case, whether or not the Li brothers had patents, their conduct amounted to extortion.  The Prosecutor also questions the legitimacy of Mr. Li’s  enforcement actions under the patent law, arguing that the patents were not clearly valid or enforceable, were based on minor modifications to prior art technology, and involved extremely low R&D costs – all of which make the basis for his patent claims dubious.  What’s more, the settlement payments made by the alleged infringers were not related to the number, content or value of the patents, but were instead paid unwillingly in order to avoid litigation that could scuttle their other financing and corporate transactions. The Prosecutor points to Mr. Li’s deliberate targeting of companies that were in the process of obtaining financing and failure to make substantial preparations for litigation as further evidence of his malicious intent.  For all of these reasons, the Prosecutor has petitioned the court to extent its extortion judgment to the Li brothers’ other patent assertions.


It not clear when the People’s Court will rule on the Prosecutor’s protest, or when (or whether) a written decision will be issued in response. However, the outcome of this protest could be important for all firms considering the initiation of patent infringement litigation in China. While one can assume that few legitimate patent holders will resort to the clearly deceptive tactics adopted by the Li brothers (e.g., creating backdated licensing agreements between related shell companies), the Prosecutor seeks to impose criminal penalties on behavior that is far more common in the business environment:  asserting patents without certainty regarding their validity, confronting an infringer prior to or in the midst of a financing transaction, or obtaining a settlement payment that is not directly related to the number or value of the asserted patents. In the U.S. and other Western countries, tactics like these have generally been accepted as permissible, so long as a patent has been validly issued by the relevant granting authority.  But if the Shanghai Pudong New Area People’s Procuratorate has its way, an entirely new level of intent-based scrutiny could be applied to patent litigation.

Principal Officers: Three En Banc Petitions in Arthrex v. Smith & Nephew

by Dennis Crouch

None of the parties were happy with the outcome in Arthrex v. Smith & Nephew (Fed. Cir. 2019) and all three have now petitioned for en banc review:

In its decision, the Federal Circuit held that the appointment process for PTAB judges (APJs) violates the Appointments Clause of Article II of the U.S. Constitution.  The court explained that these judges are principal officers under the constitution and thus, must be appointed by the President of the United States rather than merely the Head of Department.  However, the court issued a cy-près ruling in an attempt to limit the upset caused by its ruling. In particular, the court invalidated a portion of the statute that limited the PTO’s ability to remove APJs from the board. According to the court, that change was enough to reclassify the PTAB Judges as inferior officers that do not need presidential appointment.  Despite its proposed “cure”, the Federal Circuit held that – in this case – the PTAB decision must be vacated and reheard in front of a new panel of APJs. “We hold that a new panel of APJs must be designated to hear the inter partes review anew on remand.”

Why is no-one happy?:

  1. The Patentee would like the case wholly thrown out and argues that the CAFC’s savings-cut was both incorrect and insufficient to convert principal officers to inferior officers.
  2. Both the Patent Challenger and USPTO as intervenor want the original final written decision reinstated (cancelling the claims) and argue that the en banc court should find the APJs were already inferior officers.  They also argue that, if APJs are principal officers then the en banc court should reconsider the appropriate remedy for such an appointments clause violation.

More to come on this.

Self Anticipation Dooms Chamberlain Patent

The Chamberlain Group, Inc. v. One World Techs, DBA Techtronic Indus. (Fed. Cir. 2019)

This case involves the same parties as my recent post on disavowal. Dennis Crouch, Disavowal: Case Closed Once the Inventor Manifests That the Invention Includes a Particular Aspect, Patently-O (December 12, 2019). This particular dispute an inter partes review (IPR) challenge of Chamberlain’s U.S. Patent No. 7,196,611 (garage door opener learning mode).

In its final written decision, the PTAB sided with the patent challenger — finding all challenged claims (18-25) anticipated by a prior Chamberlain patent, U.S. Patent No. 4,638,433 (Schindler).  On appeal, the Federal Circuit has affirmed — finding that substantial evidence supported the Board’s factual conclusion of Anticipation.

Although not express in the claims, the specification focuses the invention on setting a “max run timer” —  “the amount of time for the door to move between its open and closed limits, plus five to ten seconds.” In its decision, the Federal Circuit described the process as follows:

First, the user presses a button on the controller to enter learn mode. Next, the controller identifies the proper beginning status for the door and the steps the user must complete to set the timer. Finally, the controller guides the user through the identified steps by flashing the appropriate indicator LED for each step. For example, if the step requires the user to open the door, the controller will flash the open limit LED. Once the user completes all the steps, the controller counts the time for the door to travel from its closed limit to its open limit, adds five to ten seconds, and records that value as the max run timer.

Claim 18 – at issue here – is not expressly limited to the “max run timer” setup, but does follow the aforementioned process with its four-step method for “assisting in the installation and maintenance” of a garage door opener (“barrier movement operator”).

  • turning-on “learn mode”;
  • identifying by the controller the present “state” of the opener;
  • identifying by the controller activities to be completed by a user; and
  • responsively transmitting guidance signals to an “annunciating unit” to provide guidance to the user.

The prior art patent (Schindler) focuses on a different learning mode – programming the upper and lower limits for the garage door movements.  Schindler uses the same “annunciating unit” (i.e., flashing lights) to communicate which limits are being programmed.

The appeal here focused on whether Schindler disclosed activities (plural) to be completed by the user or only one activity (singular).  The Federal Circuit confirmed that the Board had it right — Schindler discloses having the user both set an “up limit” and a “down limit.”  One issue here is that Schindler first identifies one of the activities and then later identifies the second activity.  On appeal, the Federal Circuit held that the claims do not have any timing requirement:

We agree with the Board that nothing in claim 18 “requires the activities to be identified together or at the same time.” . . . Given the absence of any timing limitation, the Board reasonably found that “Schindler’s disclosure of transmitting the signals in sequence, one after the other in response to the previously-completed steps of identifying the garage door operator’s present status and activities to be completed” teaches the “responsive to” step.

Slip Op.

What’s going on here? Knowing Chamberlain’s history of pushing the limits of its IP protections, it looks to me like the company was using this new patent to extend of its old Schindler patent that was approaching expiration. Although Chamberlain may have something patentable here, that needed to be reflected in the claims.

Attorney Fees Designed to Deter Future Wasteful Litigation

Blackbird Tech LLC v. Health In Motion LLC (Fed. Cir. 2019)

This case involves U.S. Patent No. 6,705,976 (“the ’976 patent”) owned by Blackbird.  The patent claims an exercise equipment with a bow-shaped contour with cable-exit ports. And HIM’s M1-Multi-Gym was accused of infringement (Compare patent image with product below).

After of 1.5 years of litigation Blackbird voluntarily dismissed its complaint with prejudice and executed a covenant not to sue the accused infringers.  However, rather than simply dismissing the case, the district court also paused to award attorney fees ($300k) to the defendants.  On appeal, the Federal Circuit has affirmed the fee award.

35 U.S.C. 285 provides discretionary authority for a district court to award attorney fees to the prevailing party, although only in “exceptional cases.”

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

Id. In Octane Fitness, the Supreme Court interpreted an “exceptional case” as one that “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).  Applying that standard, the district court noted that Blackbird’s litigation position was substantively weak; that the case was litigated in an unreasonable manner; and that fees were warranted “to deter future abusive litigation.”

Weak Case: Although the accused device includes the bowed shape, it has several differences from the claims and the Federal Circuit found that “the exercise of even a modicum of due diligence by Blackbird, as part of a pre-suit investigation, would have revealed the weaknesses in its litigation position.”  Although no motion for sanctions was filed, Blackbird was aware from early-on (the original answer) that HIM was planning to seek attorney fees and thus had sufficient “notice” to ensure its affairs were in order and correct defects in the case.

Nuisance Offers: During the litigation, Blackbird made several offers to settle at what the Federal Circuit called “nuisance value settlement offers” ranging from $80k to $15k. Each of these were “significantly less than the cost of litigation.”  On appeal, the Federal Circuit affirmed that low settlement offers may be considered when determining bad faith and exceptional cases.  Citing Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314 (Fed. Cir. 2011) (patentee had “acted in bad faith by exploiting the high cost to defend complex litigation to extract a nuisance value settlement”).

Future Abusive Litigation: According to the Federal Circuit, Blackbird is an entity owned and controlled entirely by attorneys.  The firm makes its money by purchasing patents and then litigating them. Notably, the company has filed over 100 infringement lawsuits since 2014, none of which have reached a full, final decision on the merits.  The district court partially justified its fee award here on the idea that it would help deter Blackbird from bringing similarly weak positions in the future.  On appeal, the Federal Circuit affirmed — finding that reasoning proper to the exceptional case finding. “The District Court therefore did not abuse its discretion by considering the need to deter future abusive litigation.” This holding falls in-line with the court’s previous statement in Inventor Holdings:

We conclude that the district court acted within the scope of its discretion in finding this case to be exceptional based on the weakness of IH’s § 101 arguments and the need to deter similarly weak arguments in the future.

Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876 F.3d 1372 (Fed. Cir. 2017).

Fee award affirmed.

Patently-O Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Patent Books:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Validity Goulash: Functional Claim Language, Patent Eligibility, and Pick-up Truck Drive Shafts

by Dennis Crouch

In American Axle, the Federal Circuit found the patented method of manufacturing drifeshafts to be patent ineligible.  U.S. Patent No. 7,774,911. The claims “tuned” the shafts in order to reduce multiple forms of vibrational resonance, and the court held that the claims were improperly directed to “Hooke’s law, and possibly other natural laws.” The majority opinion was written by Judge Dyk and joined by Judge Taranto; while Judge Moore wrote a vigorous dissent identifying the majority opinion as “validity goulash” (and not the good tasting kind).

The majority worries about result-oriented claiming; I am worried about result-oriented judicial action.

Judge Moore writing in Dissent.

Hey Mechanical Engineers: Your Patents are Also Ineligible

American Axle has now petitioned for en banc review and has the support of six amici briefs.  Judge Moore largely wrote the brief here via her dissenting opinion, but the patentee does a good job of explaining (1) the “realness” of its invention and (2) how the accused infringer copied their approach.

  • AAM Rehearing Petition.
  • Amicus brief of 12 law professors. (The court’s opinion here does not fit with either Morse (1853) or the Bell patent case (1888).)
  • BIO amicus brief. (“Nothing in the claims or specification of the ‘911 patent recites or implies that an application of Hooke’s law to a liner is necessary or sufficient to tune the liner in accordance with the claim.”)
  • IPO amicus brief. (“The decision may open the floodgates to section 101 challenges to mechanical inventions, which have not been the subject of recent eligibility decisions of this Court or the Supreme Court.”)
  • U.S. Startups & Inventors for Jobs. (“From the standpoint of many entrepreneurs, inventors and investors that comprise the Invention Community, the U.S. Patent System appears to be on life support.”)
  • Michel amicus brief. (Former Chief Judge Michel argues that the decision here ignores core rules of summary judgment – disputed issues of material fact.)
  • Doerre amicus brief. (Patent attorney Jeremy C. Doerre argues (inter alia) that the law-of-nature exception does not present a fruitful approach to eliminating broadly drafted claims — the better approaches rely upon written description.)

The petition itself raises three questions:

  1. Must the court identify the “precise ineligible concept the claims are allegedly directed to.”
  2. Must the court consider disputed facts regarding the invention when determining whether the claims are directed toward an inventive concept?
  3. Should the court interpret Section 101 narrowly in order to avoid “swallow the enablement [and written description] requirements of Section 112?”

Truthfully, these questions are rather weak because they they have all been addressed by most members of the court in some form. The strongest aspects of AAM’s arguments are the facts of the case.

With the ’911 patent, AAM invented novel and unconventional methods of manufacturing improved driveshafts that include “liners”—low cost, hollow tubes made of a fibrous material (such as cardboard).

Before the ’911 patent, it had only been well understood to use liners in driveshafts to attenuate a single type of vibration called “shell mode” vibration. Neapco admitted that prior art liners had only attenuated shell mode vibration, and “presented no argument or evidence to contradict that” fact on appeal. As explained in the ’911 patent, prior art liners were not suitable (let alone well understood) to attenuate another type of vibration called “bending mode” vibration. And liners certainly were not well understood to attenuate both bending and shell mode vibration.

AAM solved these problems. It was the first to discover that liners could be “tuned” to attenuate bending mode vibration, or the combination of both bending and shell mode vibration. The claims of the ’911 patent recite these solutions.

Petition for rehearing.

The difficulty for AAM is that the point-of-novelty for the method claims is specified as a result rather than as a process:

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,

‘911 patent Claim 1. The real question here is whether these functional claim limitations should be seen as too abstract.  Or, instead, are they effective at providing a clear and limited scope once coupled with the specification disclosure and the knowledge of a skilled artisan?


Trumped-up Trademarks – or – How are you today?: I’m Peachy

by Dennis Crouch

As Congress moves forward impeaching President Donald Trump, business-minded Americans are also looking for ways to monetize the process.  The following are a few recent trademark applications.  Some are still pending while others have been abandoned after receiving rejections from trademark examiners at the US Patent & Trademark Office.

IMPEACH 45. President Trump is the 45th President and so the meaning of this proposed mark (IMPEACH 45) is clear. The USPTO examiner caught the implication and rejected the application “because the applied-for mark consists of or includes something identifying a particular living individual whose written consent to register the mark is not of record.”  The applicant then abandoned the registration application. A slightly more cryptic mark made it through the registration process.  The image to the right shows the general prohibition sign  (“no-sign”) covering the number 45 that is now a registered mark owned by Kamyar Shadan of Tiburon, CA.

Back in August 2016, it looked like Hillary Clinton would be No. 45.  Thus when Mark Allan filed for IMPEACH THAT BITCH, the TM examiner similarly found that the proposed mark improperly “identifies Hillary Clinton, a living individual.”  That registration application has also been abandoned. Other anti-Hillary registration applications include ANYBODY BUT CLINTON, WOMEN AGAINST CLINTON, and the catchy HILLARY.CON. These registration applications have all been abandoned.

Future Impeachments: One way to potentially overcome the prohibition on registering a mark identifying another person (without their permission) is to register the mark of a future identifier.  Thus, a Florida Attorney (Mitch Soligan) has already filed for rights on IMPEACH 46. Folks better start paying attention to who is running for VP.

MAGA: President Trump’s arguably misdescriptive slogan “Make America Great Again” is a registered mark owned by DONALD J. TRUMP FOR PRESIDENT, Inc. Ellen Lust filed her competing application with a catchy addition – “Make America Great Again Impeach Trump.”  The Senior markholder (trump-for-president) filed a pre-registration letter of protest and examiner refused to register the mark.

Although American, Lust is a professor of political science at the University of Gothenburg in Sweden. I reached out to Prof. Lust for more information, but she has not responded.

Impeach the President – This abandoned application was filed in 2018 for a board game. Unfortunately, I believe we are still waiting to see the actual game.  Although there is a logo (below) and a website:


Impeach the Cheat is a pending TM application filed November 2019 that includes an interesting graphic. “The mark has a meaning of justice being served to an individual for wrong-doing in public office.”  This one is graphically interesting with its allusion to Nixon.

Finally, my favorite is the IMPEACHMINTS – Peach Flavored Mints – that quaintly stretch back to GWB. Hopefully there is no bitter aftertaste.



Disavowal: Case Closed Once the Inventor Manifests That the Invention Includes a Particular Aspect

by Dennis Crouch

Techtronic Indus. v. International Trade Commission and The Chamberlain Group (Fed. Cir. 2019) (TechtronicvITC)

Chamberlain’s patent at issue here claims a garage door opener motor drive unit with two microcontrollers — one of which is sited in a “wall console” and the other presumably in the head unit, although this second portion is unclaimed. U.S. patent No. 7,161,319.

1. An improved garage door opener comprising a motor drive unit for opening and closing a garage door,

said motor drive unit having a microcontroller and a wall console,

said wall console having a microcontroller,

said microcontroller of said motor drive unit being connected to the microcontroller of the wall console by means of a digital data bus.

The accused infringer is Hong-Kong based TTI. TTI owns Ryobi, and Ryobi makes the accused garage door opening system.  hamberlain filed its case in the USITC which issued exclusion orders against the appellants.  On appeal, the Federal Circuit has reversed and vacated on claim construction.

Infrared Detector: It is clear from the patent document that the inventor’s saw the main point of their invention as a passive infrared detector housed in a wall console.

SUMMARY OF THE INVENTION: A passive infrared detector for a garage door operator … contained in a wall control unit.

‘319 patent, invention summary. This focus on the passive infrared detector is found throughout the patent document.  Consider the inventor’s statement of the problem to be solved by the invention:

What is needed then is a passive infrared detector for controlling illumination from a garage door operator which could be quickly and easily retrofitted to existing garage door operators with a minimum of trouble and without voiding the warranty.

‘319 patent, background.  The easy retrofit solution was to create a wall-unit with an infrared detector. Further, the only described embodiment places the passive infrared detector in the wall console.

Now, look back up at claim 1 and notice that a passive infrared detector is not expressly claimed. That limitation was spelled out in claims of the parent patent, but Chamberlain’s patent attorney at Fitch Even removed it from this continuation patent.

USITC decisions are made by the six commissioners (currently only five), but the Commission tasks an Administrative Law Judge (ALJ) to conduct the trial.  Here, the ALJ narrowly construed the “wall console” term — holding that “Chamberlain
… disavowed wall consoles lacking a passive infrared detector.”  This construction is important because Ryobi’s wall console does not have a passive infrared detector — thus, the narrow construction meant no infringement.

The Commissioners then took-up the ALJ’s decision and disagreed — ultimately giving “wall console” its ordinary broad meaning that resulted in an easy infringement finding (and resulting exclusion order preventing importation of Ryobi products).

On appeal, the Federal Circuit reviewed the claim construction de novo and found that the ALJ’s original decision was correct. “Chamberlain disavowed coverage of wall consoles without a passive infrared detector.”

[W]here the inventor … has manifested that the invention does or does not include a particular aspect, that intention is regarded as dispositive.

Here, such statements regarding the invention fall into the disavowal category – and must be “clear” although not necessarily “explicit.”

We conclude that the ’319 patent disavows coverage of wall consoles lacking a passive infrared detector because the specification, in each of its sections, discloses as the invention a garage door opener improved by moving the passive infrared detector from the head unit to the wall console. It is axiomatic that, where the specification “describes ‘the present invention’ as having [a] feature,” that representation may disavow contrary embodiments. See Poly-America (“[A]n inventor may disavow claims lacking a particular feature when the specification describes ‘the present invention’ as having that feature.” The ’319 patent, by consistently representing the invention as the placement of the detector in the wall console, has thus effected a disavowal of alternative locations.

According to the background section, the prior art taught the use of passive infrared detectors in the head unit of the garage door opener to control the garage’s lighting, but that locating the detector in the head unit was expensive, complicated, and unreliable. The ’319 patent therefore sets out to solve the need for “a passive infrared detector for controlling illumination from a garage door operator which could be quickly and easily retrofitted to existing garage door operators with a minimum of trouble and without voiding the warranty.”

The remaining sections of the patent—even the abstract—disclose a straightforward solution: moving the detector to the wall console.

Chamberlain argued that the patent recites a separate relating to programming of the microcontrollers. However, the Court rejected that argument:

The suggestion that the patent recites another invention—related to programming the microcontroller—in no way undermines the conclusion that the infrared detector must be on the wall unit. . . . But the entire purpose of [the microcontroller programming] part of the description is to enable placement of the detector in the wall console, and it never discusses programming the microcontroller or applying digital signaling techniques for any purpose other than transmitting lighting commands from the wall console.

The court appears to note that one problem with this additional invention is that the specification was not very specific.  The claimed “digital data bus”, for instance, is not expressly discussed in the specification other than an oblique reference to “lines carrying the normal wall control switch signals.”

Chamberlain also argues that disavowal is not clear because nothing in the specification suggests that it would be impossible or infeasible to put a passive infrared detector elsewhere.  On appeal, the Federal Circuit found some merit to that argument, but concluded that the specification here “plainly represents the scope of the invention to the exclusion of some embodiments.”

Here, the entire specification focuses on enabling placement of the passive infrared detector in the wall console, which is both responsive to the prior art deficiency the ’319 patent identifies and repeatedly set forth as the objective of the invention. Thus, the ’319 patent disavows locating the detector elsewhere, even without an express concession to that effect.

Slip Op.  Although not cited here, this case reminds me substantially of Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998) and its maligned “omitted elements” test.


Supreme Court: PTO Cannot Recoup its Attorney Fees in Defending §145 Civil Actions

by Dennis Crouch

Peters v. NantKwest, 589 U. S. ____ (Supreme Court 2019)

In a short, unanimous decision, the Supreme Court has upheld the “American Rule” of fee shifting — holding that the “all expenses of the proceedings” provision of § 145 does not authorize reimbursement of PTO attorney/paralegal costs associated with working on the case.

The question presented in this case is whether such “expenses” include the salaries of attorney and paralegal employees of the United States Patent and Trademark Office (PTO). We hold that they do not.

Slip. Op.

I have sympathy for the PTO in this case. It is expensive for the agency to defend itself in district court litigation and those costs must be recouped somehow.  If the PTO spends $300,000 on defending a § 145 trial, that money will likely be taken-away from examination and lead to increased fees for next year.  From the PTO’s perspective, almost every substantial request from the patent applicant comes with an associated fee that is related to the cost of providing the service and why should this be different? The answer, of course, is that a trial in Federal Court is a far cry from agency action and is particularly designed to cut-off and avoid agency overreach. The Supreme Court correctly decided the case today based upon the tradition and long history of the “American rule” that is also supported by are culture of providing access to the courts.

= = =

Background: When the PTO refuses to issue a patent, most applicants just turn their tail and go home.  Others are stubborn and take the matter to court.  The Patent Code provides two alternative approaches: (1) appeal immediately to the Federal Circuit; or (2) file a civil action under § 145 — demanding a federal trial on whether the PTO must issue the patent.  Law students write appellate briefs in their 1L advocacy class — writing a pretty good appellate brief is relatively easy and also relatively cheap.  One problem with appealing directly is that the Federal Circuit gives substantial deference to any factual findings by the PTO — As such, it is usually only fruitful to appeal on questions of law or where the factual error is exceedingly clear.  Section 145 civil actions, however, allow the patent applicant to present new evidence, including oral expert testimony, that is considered afresh by the district court without deference to prior PTO factual findings.  The primary downside, of course, is the expense of expert witnesses, depositions, and the trial.

The last line of § 145 states: “All the expenses of the proceedings shall be paid by the applicant.”  The Lanham Act has a parallel provision for times with the PTO refuses to register a mark: “Unless the court finds the expenses to be unreasonable, all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not.” 15 U.S.C. § 1071.

Do “all the expenses” include PTO attorney fees: The Sotomayor opinion begins with the long-held tradition that “[e]ach litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise.” The court explained that the tradition applies generally in civil cases. “This Court has never suggested that any statute is exempt from the presumption against fee shifting.”  Likewise, § 145 is not except.

The rule of no-fee-shifting is a presumption grounded in the common law — one that Congress can flip.  However, because the rule is so fundamental to American legal practice, the courts have required a “specific and explicit” statement of Congressional intent.  Here, the word “all the expenses” do not meet that threshold level of clarity.

The court’s interpretation of “all the expenses of the proceedings” is as follows:

The complete phrase “expenses of the proceeding” is similar to the Latin expensæ litis, or “expenses of the litigation.” This term has
long referred to a class of expenses commonly recovered in litigation to which attorney’s fees did not traditionally belong. See Black’s Law Dictionary 461 (1891) (defining “expensæ litis” to mean “generally allowed” costs) … These
definitions suggest that the use of “expenses” in §145 would not have been commonly understood to include attorney’s fees at its enactment. …

[T]he modifier “all” does not expand §145’s reach to include attorney’s fees. Although the word conveys breadth, it cannot transform “expenses” to reach an outlay it would not otherwise include. Cf. Rimini Street, Inc. v.
Oracle USA, Inc., 586 U. S. ___, ___–___ (2019) (slip op., at 6–7) (“The adjective ‘full’ in §505 therefore does not alter the meaning of the word ‘costs.’ Rather, ‘full costs’ are all the ‘costs’ otherwise available under law”).

The final section of the opinion delves briefly into PTO history and probably should have been left out because it appears to me to add more confusion than clarity. The court writes that:

There is no evidence that the (19th century) Patent Office, the PTO’s predecessor, originally paid its personnel from sums collected from adverse parties in litigation, or that the Office initially even employed attorneys.

This statement does not appear relevant –  a more relevant question would be whether the PTO collected attorney fees in those early cases.

In the end, the Supreme Court found that all signs pointed to a conclusion that the cost-shifting provision does not include attorney fees.