In September 2013, USPTO Acting Director Teresa Stanek Rea gave notice that she would step down from the agency in the near future. She has now acted-on that notice and has left the agency. Rea has been Acting Director since January 2013 when David Kappos left to take at the NY Corporate firm of Cravath. Congratulations to Director Rea on her successful tenure that will largely be seen as working toward practical goals of implementing the first-to-file and post-issuance review provisions of the America Invents Act (AIA) in a time of budget cuts and Washington contention. Prior to joining the USPTO in 2011, Rea was a partner at Crowell & Morning.
Peggy Focarino, the commissioner of patents, has now stepped in with the duties of acting director. The PTO’s closest link with the White House now is through its Chief of Staff Andrew Byrnes. Unfortunately, Mr. Byrnes has only been in the role since September 2013. Prior to that Byrnes was a litigator at Covington & Burling.
Under the patent statute, the USPTO Director “shall be appointed by the President, by and with the advice and consent of the Senate. The Director shall be a person who has a professional background and experience in patent or trademark law.” 35 U.S.C. § 3. The Deputy is then chosen by the Secretary of Commerce upon nomination by the PTO Director. The next director is expected to be a PTO outsider, but no names are forthcoming at this point.
In an email this morning, Hal Wegner distributed the above screen-shot with the caption: Whither Administration Leadership in Patents?
Joe Mullin is probably the country’s leading out-of-the-beltway journalist who regularly covers patent law issues. He writes for ArsTechnica and tends to take favor defendants (accused infringers) in his stories, although not as much as his colleague Timothy B. Lee.
Mullin’s recent story on the Newegg patent trial and Erich Spangenberg is a really interesting read.
Jake Lee’s patent No. 6,419,936 is directed to a novelty pipe whose bowl looks like a revolver cylinder and is actually rotatable so that there is more than one chamber for holding “tobacco.”
The accused device a knockoff version. In the infringement case, the jury awarded $40,000 in lost profits and the district court enhanced damages to $70,000 for willful infringement. The court also awarded $230,000 in attorney fees after finding an exceptional case.
On appeal, the Federal Circuit affirmed the infringement award but reversed on willfulness – finding that the defendant’s non-infringement arguments were “not objectively unreasonable.” Because the exceptional-case attorney fee award was partially based upon the finding of willful infringement (and also litigation misconduct), the court remanded for a determination as to whether the litigation misconduct alone was sufficient to warrant the exceptional case finding.
Technical experts testify in almost every patent case and explain to the jury how the accused product does (or does not) meet the limitations as construed by the court. In a low-value case such as this, an expert would have blown the budget wide open and so the patentee did not present expert testimony. On appeal, the Federal Circuit affirmed that expert testimony is not required to win a patent case – especially where the technology is “easily understandable” QuotingCentricut, LLC v. Esab Group, Inc., 390 F.3d 1361, 1369 (Fed. Cir. 2004).
Enhanced Damages: The text of the patent statute seemingly provides courts with broad discretion to award up-to treble damages. Under 35 U.S.C. § 284, “the court may increase the damages up to three times the amount found or assessed.” Despite the seeming broad discretion offered by the statute, the Federal Circuit tightly controls enhanced damage awards and requires that any award be based upon “willful patent infringement.” The willful component is further defined as requiring both (1) clear-and-convincing evidence that the infringer took steps to infringe the patent despite an objectively high likelihood that its actions constituted infringement of a valid patent and (2) that the accused infringer subjectively knew of the “objectively-defined risk” or should have known because the risk was so obvious. In re Seagate Tech., LLC, 497 F.3d 1360, 1368 (Fed. Cir. 2007). Further, this willfulness determination is not given to the discretion of the district court but instead reviewed de novo on appeal. Finally, a correct finding of willfulness permits the award of enhanced damages but does not require such an award.
In this case, the defendant had survived summary judgment based upon a “genuine issue of material fact” as to whether the accused turret met the weight limitation found in the claims. And, in oral arguments at the Federal Circuit, plaintiffs’ counsel admitted that the defendants’ argument was reasonable. One thing that is unclear from the case is when the defendant recognized its reasonable-but-wrong defense to infringement. Was there some time-period when the defendant continued to infringe prior to concocting its defense? And, would the infringement during that period constitute willful infringement?
Litigation Misconduct: The district court found several instances of litigation misconduct by the defendant and defendant’s counsel, including bad-faith settlement offers, bad faith conduct during discovery, and unacted-upon threats to report Lee’s counsel to state bar associations. However, the exceptional case award was based both on that misconduct and the willfulness finding. On remand, the district court will need to determine whether the misconduct alone is sufficient to make an exceptional case finding and award attorney fees. Depending upon the circumstances, the plaintiff in this case may do well to ask the district court to delay its determination until after the Supreme Court decides the two pending attorney-fee-award cases later this term.
In many ways, a patent infringement demand letter is akin to a debt collection action. And, we know that debt collection is highly regulated under both Federal and State consumer protection laws. The current mood in Congress and amongst the state attorneys general is that patent demand letters should also be regulated to control their negative impact on the marketplace. The particular focus is on patentees who threaten litigation against the users of off-the-shelf technology (such as WiFi technology or Flat-Panel Screens) with little or no due diligence or pre-threat investigations. In some cases, patentees are threating litigation with no intention of actually filing suit and are hoping to use the high cost of patent litigation to drive settlement value rather than the underlying value of the patented invention.
Senators Leahy and Lee have proposed the Patent Transparency and Improvements Act (PTIA) of 2013 (S. 1720) as a quite weak form of regulation that would only address the most egregious cases of threats that operate as an unfair competition.
Now, Representatives Jared Polis (D-Co) and Tom Marino (R-Pa) have proposed their own legislation that would have more teeth. See the Demand Letter Transparency Act of 2013 (H.R.3540). Download HR3540
H.R. 3540 includes a number of interesting features:
Any demand letter must include:
A listing of each claim being asserted and a listing of each accused device;
If indirect infringement is claimed, an explanation of the underlying direct infringement;
A description of the principle business of the party alleging infringement;
A list of other cases and review proceedings where the patent was asserted;
Identifying of any licensing term or pricing commitments associated with the asserted patent.
A listing of all people who have a direct financial interest in the outcome of the action, and a description of the agreements providing the legal basis for these financial interests; and
A statement to the recipient that 'You are not required to respond to this letter by law.'
A 20-demand-level threshold that raises heightened requirements, including the submission of demand information regarding the demands to the USPTO that will then be publicly available. (i.e., once a patentee sends out 20 demand letters, then it must begin complying with certain reporting requirements).
Failure to abide by the demand letter requirements would result in abandonment of the patent; other financial penalties; and also action by the FTC.
Under the statute, a demand letter is defined broadly as any "written communication directed to an unaffiliated third party stating or indicating, directly or indirectly, that the intended recipient or anyone affiliated with that recipient is or may be infringing a patent, or may bear liability or owe compensation to another because of such patent."
While the Leahy-Lee proposal is likely under-inclusive, H.R. 3540 is over-inclusive and would serve as a trap for unwary business leaders looking to license their company's technology. Two tweaks would bring focus: (1) only apply the demand letter requirements to instances where more than 20-demand letters have been sent-out; and (2) narrow the definition of demand letters so that some amount of written technology license negotiations can occur without raising the threat of abandonment (perhaps this could be done through some sort of safe-harbor).
Senators Leahy (D-VT), Lee (R-UT), and Whitehouse (D-RI) have proposed their own patent reform bill titled the Patent Transparency and Improvements Act (PTIA) of 2013 –this one much more narrowly focused on egregious patent enforcement abuses. As compared with the Goodlatte proposal, the Leahy-Lee proposal is much more measured and limited in its action. Democratic leaders on the House Judiciary Committee (Representatives Conyers and Watt) have announced their support of the Leahy-Lee approach over Goodlatte's that would include "far ranging changes to the litigation system, such as limits on pleadings and discovery, and intrusive mandates on the court system."
The Leahy-Lee PTIA includes a number of interesting provisions. Most of the provisions are replicas of those already proposed in other bills. One new provision here is a statement authorizing the FTC to act against unfair and deceptive practices associated with the sending of fraudulent or materially misleading demand letters in connection with the assertion of a patent. Although not stated, the new law would also be tangentially useful for both state attorneys general and for private class-action plaintiffs to seek compensation against egregious actions.
A key element of the proposal would be to require that any demand letters include a statement of (A) patent asserter's identity; (B) the patent being asserted; and (C) the reasons for the assertion.
Under the proposal, the new statute would state that:
It shall be an unfair or deceptive act … for a person, in connection with the assertion of a US patent, to engage in the widespread sending of written communications that state that the intended recipients or any affiliated persons are infringing or have infringed the patent and bear liability or owe compensation if –
(1) the communications falsely threaten that administrative or judicial relief will be sought if compensation is not paid or the infringement issue is not otherwise resolved;
(2) the assertions contained in the communications lack a reasonable basis in fact or law, including, for example, because—
(A) the person asserting the patent is not a person, or does not represent a person, with the current right to license the patent to, or to enforce the patent against, the intended recipients or any affiliated persons; or
(B) the communications seek compensation on account of activities undertaken after the patent has expired; or
(3) the content of the written communications is likely to materially mislead a reasonable recipient, including, for example, because the content fails to include such facts reasonably necessary to inform the recipient of—
(A) the identity of the person asserting a right to license the patent to, or enforce the patent against, the intended recipient or any affiliated person;
(B) the patent issued by the USPTO alleged to have been infringed; and
(C) the reasons for the assertion that the patent may be or may have been infringed.
The Senators will readily admit that this statute is only directed toward the worst offenders and would not serve the goal of generally weakening the ability of a patent holder to assert its rights.
In addition to the bad faith demand letter rules, the proposal would also improving post-issuance review procedures to require that the PTO apply the same claim construction as used in court rather than the “broadest reasonable interpretation.” In my view, this change should be implemented across the board so that all interpretations made on the record at the PTO will have a direct and foreseeable impact on the scope actually given to claims during litigation. At the same time, the PTO should be able to maintain wide authority to object to claim terms that are indefinite or poorly defined.
A full outline of the bill is here and the text is here. Up next – the Demand Letter Transparancy Act of 2013.
There are three main isues addressed in this opinion:
1) Collateral Estoppel based on similar claims in a different patent;
2) Obviousness involving the addition of numerical limitations in dependent claims; and
3) Inequitable conduct: reversal of SJ of no IC.
Background: The Ohio Willow Wood Company (OWW) asserted Patent No. 5,820,237 against Alps South. The '237 patent relates to directed to cushioning devices that go over the residual stumps of amputated limbs to make the use of prosthetics more comfortable. The district court granted summary judgment that OWW was collaterally estopped from challenging the invalidity of set of claims in the '237 patent, that the second set of asserted claims was invalid for obviousness, and that there was no inequitable conduct. OWW appealed the collateral estoppel and obviousness issues while Alps cross-appealed the inequitable conduct issue. Collateral Estoppel: The collateral estoppel issue in this case is notable because it involves a separate (albeit related) patent. OWW sued Thermo-Ply, Inc. for infringement of Patent No. 7,291,182, which issued from a continuation of the '237 patent, in a separate proceeding. The court in that litigation held the claims of the '182 patent invalid for obviousness, a ruling that was affirmed on appeal. Based on this previous disposition, the district court in the OWW v. Alps litigation ruled that a set of claims from the '237 were invalid due to collateral estoppel.
The Federal Circuit affirmed, holding that collateral estoppel can apply across patents. "Our precedent does not limit collateral estoppel to patent claims that are identical. Rather, it is the identity of the issues that were litigated that determines whether collateral estoppel should apply….If the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity, collateral estoppel applies." Slip Op. at 11.
Here, the differences between the patent claims did not materially alter the question of invalidity:
As reflected in the claim language above, these patents use slightly different language to describe substantially the same invention. For example, where the ’237 patent recites a “tube sock-shaped covering,” an “amputation stump being a residual limb,” and “fabric in the shape of a tube sock,” the ’182 patent analogously recites the same claim scope in the form of a “cushion liner for enclosing an amputation stump, said liner comprising a fabric covering having an open end for introduction of said stump and a closed end opposite said open end.” Thus, the mere use of different words in these portions of the claims does not create a new issue of invalidity.
Id. at 12.
Obviousness – Exercise of Ordinary Skill: OWW also challenged the district court's summary determination that a second set of claims was invalid for obviousness. The crux of OWW's argument was based on the addition of numerical limits on certain characteristics of the "gel composition" and "fabric" elements in dependent claims. The CAFC agreed with the district court that the addition of these numerical limits was nothing more than the exercise of ordinary skill in the art:
[N]othing in the record indicates that confining the otherwise obvious “gel composition” and “fabric” limitations to the recited numerical limits in the disputed dependent claims was anything other than the exercise of routine skill. Each of these features were well-known in the prior art and their use would have been predictable by one of ordinary skill in the art.
Slip Op. at 15. Nor did the analysis fo secondary indicia of non-obviousness change the outcome. OWW failed to show the requisite nexus between the secondary indicia and the patented invention (which in this case was specifically the claimed invention with the numerical limitations as distinguished from the invention minus the numerical limitations). Furthermore, "where a claimed invention represents no more than the predictable use of prior art elements according to established functions, as here, evidence of secondary indicia are frequently deemed inadequate to establish non-obviousness."
Inequitable Conduct: While the litigation was pending, Alps initiated two ex parte reexaminations of the '237 patent. Alps supported its second ex parte reexam request with the testimony of a Mr. Comtesse, who had been affiliated with the company that produced the prior art product that Alps relied upon. The examiner accepted this testimony as evidence that the prior art possessed certain characteristics, resulting in the rejection of all of the claims of the '237 patent.
In its appeal to the BPAI, OWW argued "that the examiner’s rejection was improper because it relied on the uncorroborated testimony of Mr. Comtesse, whom OWW characterized as a highly interested party." Slip Op. at 7. OWW denied the existence of any other evidence that would support the relevant testimonty of Comtesse. The BPAI subsequently reversed the examiner, finding that Comtesse was an interested third party and that his testimony was uncorroborated.
During the district court proceeding, Alps argued that there was contrary evidence that became known to OWW during the course of the litigation and should have disclosed to the PTO. Applying Therasense, however, the district court granted summary judgment in favor of OWW.
On appeal, the Federal Circuit reversed, finding that when viewing the evidence in a light most favorable to Alps, genuine issues of material fact remained. Here, the allegedly material information went to the issue of whether disclosure would have led the BPAI to credit Comtesse's testimony. The CAFC concluded that there was at least a genuine issue of fact. Furthermore, the CAFC concluded that viewing the facts in a light most favorable to Alps, OWW's (allegedly false and unfounded) assertions regarding the interested nature of Mr. Comtesse "would be tantamount to the filing of an unmistakably false affidavit."
By Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law
Apple, Inc. v. Samsung Electronics Co., Ltd. (Fed. Cir. Nov. 18, 2013) (Apple III) Download 2013-1129
Panel: Prost (author), Bryson, O’Malley
As Dennisreportedyesterday, Apple has scored another win at the Federal Circuit. Specifically, the Federal Circuit has vacated and remanded Judge Koh’s denial of a permanent injunction with respect to Apple’s utility patents.
But it wasn’t a complete win. The Federal Circuit affirmed Judge Koh’s denial of a permanent injunction with respect to Apple’s design patents and product-design trade dress. This post will focus on the design-related portions of the Federal Circuit’s decision.
Design patents: Last summer, the jury found Samsung liable for infringing three design patents—U.S. Patent Nos. D618,677 (“the D’677 patent”), D593,087 (“the D’087 patent”) and D604,305 (“the D’305 patent”).
The D’677 and D’087 patents claim partial designs for smartphone configurations. Here are representative drawings from each of them:
The D’305 patent claims a design for a graphical user interface. Here is one of the claimed embodiments:
(Although the D’305 patent was published in black-and-white, one of the drawings was submitted in—and therefore claims—color. The image shown above is from one of Apple’s district court filings.)
Judge Koh denied Apple’s request for a permanent injunction with respect to these design patents. In her order, Judge Koh concluded that Apple “simply [had] not established a sufficient causal nexus between infringement of its design patents and irreparable harm.”
On appeal, Apple challenged that conclusion, pointing to: (1) evidence indicating “that design is important [to] consumer choice” in smartphones; and (2) “evidence of quotations from Samsung consumer surveys and from an industry review praising specific elements of both Apple’s and Samsung’s phone designs, including some elements of Apple’s patented designs.” According to Apple, this evidence was sufficient to establish a causal nexus.
The Federal Circuit did not exactly disagree. The court took some pains to point out that it “might not reverse the entry of an injunction based on [that] evidence.” But, emphasizing the deferential standard of review, the Federal Circuit decided that Judge Koh had not abused her discretion in denying an injunction.
According to the Federal Circuit, Judge Koh “correctly noted . . . that evidence showing the importance of a general feature of the type covered by a patent is typically insufficient to establish a causal nexus.” She “was also correct that isolated, anecdotal statements about single design elements do not establish that Apple’s broader patented designs are drivers of consumer demand.”Therefore, the Federal Circuit affirmed the denial of a permanent injunction with respect to the design patents.
Comment: This decision could make it more difficult for patent owners to get injunctions for partial designs—that is, when they assert design patents that claim portions (instead of all or most) of a product’s design. The Federal Circuit specifically distinguished this case from AppleI, which involved a design patent that claimed the entire configuration of a tablet computer.
Trade dress: The jury also found that Samsung infringed Apple’s unregistered iPhone 3G trade dress and registered iPhone trade dress (Reg. No. 3,470,983). Here is the illustration from the trade dress registration certificate:
Judge Koh denied Apple’s motion for injunctive relief on its trade dress claims, based on “Samsung’s cessation of its diluting conduct.”
On appeal, the Federal Circuit looked to the controlling regional circuit law—in this case, the law of the Ninth Circuit. The Federal Circuit noted that, under Ninth Circuit precedent, “ongoing diluting behavior is not necessary to obtain an injunction.” But, according to the Federal Circuit, that does not mean “that a court commits legal error if . . . it considers a defendant’s voluntary cessation of diluting behavior as a reason to deny injunctive relief.”
In this case, the undisputed evidence showed that Samsung stopped selling the offending products. And there was no evidence that it would sell them in the future. In light of that evidence, the Federal Circuit concluded that Judge Koh did not abuse her discretion in denying an injunction.
Comment: One particularly interesting issue raised by Judge Koh’s order remains unresolved. In ruling on Apple’s motion for a permanent injunction, Judge Koh concluded that Apple did not have to make a “showing of irreparable harm beyond the harm of dilution itself.” She based this conclusion on the text of 15 U.S.C. § 1125(c)(1). The Federal Circuit did not reach this issue in Apple III. But it might not be able to avoid it for long. Many plaintiffs assert trade dress claims along with their design patent claims. And, as readers of this blog no doubt are aware, those cases are within the Federal Circuit’s exclusive appellate jurisdiction. So the Federal Circuit will likely be confronted with this issue again—quite possibly before the regional circuits have a chance to weigh in.
Ex Parte Ciprian Agapi, 2013 WL 6039024 (PTAB 2013)
The PTAB continues to decide a large number of subject matter eligibility issues. In this case, IBM is attempting to patent a "computer implemented" method and system for producing, brokering, and distributing digital content. The examiner rejected the pending claims under 35 U.S.C. § 101 as encompassing (1) a human organism and (2) an abstract idea, either of which is sufficient to render the claims unpatentable. The method of claim 1 includes ten steps that basically follow the process shown in the flowchart below. Claims 22 and 23 offer the same substantive limitations in the form of a "machine-readable storage" and "computer-implemented system" respectively. The claims do provide for "computer implemented … distribution" and "digitally conveyable content" but do not otherwise claim any particular technological implementation.
In interpreting the claims, the PTAB basically found that the claim form was critical for its analysis. In particular, the Board found that the system claim (23) is unpatentable because it encompasses a human being or group of human beings.
[W]e agree with the Examiner that the claimed content systems encompass a human being or a group of human beings, when given the broadest reasonable meaning in light of the Specification. We see nothing in the meaning of system itself or the Specification that would preclude these systems from being reasonably construed as encompassing a human being or a group of human beings. Further, we note that the Specification describes embodiments where these systems include both humans and computers, as well as, embodiments where these systems are fully automated.
In considering the machine-readable medium claim (22) and the method claim (1), the Board found that neither "reasonably encompass" human beings. Rather, the one is directed to "an article … that causes a machine" to act and the other is directed to the "use [of] human interaction but [does] not encompass the humans themselves."
Regarding the abstract idea, the Board found that the method claim (1) failed the machine-or-transformation test since it neither required a "particular" machine and because the "mere manipulation or reorganization of data . . . does not satisfy the transformation prong." CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011).
[Update] According to the examiner, the only claims that passed subject-matter-eligibility muster were those written in Beauregard form and directed to software stored on a machine readable device. However, [as LB correctly points out in the comments], the Board found cause to reject those as well – holding the claims are unpatentable because they closely track the unpatentable method and system claims. In addition, the Board also found the claims unpatentable as ineligible signals since the storage media could be a transitory signal.
Apple Inc. v. Samsung Electronics Co., Appeal No. 2013-1129 (Nov. 18, 2013)
In a unanimous opinion, the Federal Circuit has vacated Judge Koh’s decision denying Apple injunctive relief to stop Samsung’s ongoing infringement of Apple’s utility patents. These utility patents cover software features such as the “bounce-back” feature for scrolling; a multi-touch display for distinguishing between single-finger actions and multi-fingered actions such as “pinch-to-zoom”; and a “double-tap-to-zoom” patent. See U.S. Patent Nos. 7,469,381, 7,844,915, and 7,864,163. The appellate panel affirmed the finding of no irreparable harm (and thus no injunctive relief) for Samsung’s adjudged infringement of the related design patents and trade dress.
Injunctive relief requires a showing of irreparable harm due to ongoing infringement. In a prior Apple case (Apple II), the Federal Circuit explained that this showing can be broken-down into a two part requirement of “(1) that absent an injunction, it will suffer irreparable harm, and (2) that a sufficiently strong causal nexus relates the alleged harm to the alleged infringement.” Apple II. Following the jury determination of infringement, District Judge Koh held hearings on injunctive relief and found that Apple failed to prove a causal nexus. On appeal, the Federal Circuit partially rejected Judge Koh’s analysis – finding basically that Judge Koh had set-up the causal nexus test as too-difficult of a hurdle. In particular, the appellate panel determined that (1) ongoing infringement can be seen as the cause of irreparable harm even of not the sole-reason for the harm; (2) in considering irreparable harm a court should consider all of the infringed patents and patent claims rather than looking at each patent or claim one-at-a-time. See also, Apple I.
On remand, the district court will reconsider Apple should now be awarded injunctive relief. The Federal Circuit has been somewhat demanding on Judge Koh. Originally, Judge Koh had granted injunctive relief, but that award was rejected because Koh did not consider the new causal nexus requirement. Now, the her opinion denying injunctive relief has been rejected for placing too much emphasis on the causal nexus requirement.
In general, this case should be seen as relaxing the test of injunctive relief and will have its greatest impact in markets such as the smartphone market where devices include a large number of features and where market players have a large variety of patents covering those features.
Cases:
Apple III (This Case):Apple Inc. v. Samsung Elecs. Co., __ F.3d__ (Fed. Cir. 2013)(Prost, J.);
Judge Koh’s Decision reversed here:Apple Inc. v. Samsung Elecs. Co., 909 F. Supp. 2d 1147 (N.D. Cal. 2012);
Apple II:Apple Inc. v. Samsung Electronics Co., 695 F.3d 370 (Fed. Cir. 2012); and
Apple I:Apple Inc. v. Samsung Electronics Co., 678 F.3d 1314 (Fed. Cir. 2012).
Guest Post by Michael Risch, Professor of Law, Villanova University School of Law
Read the whole draft here, forthcoming in the Stanford Tech. L. Rev.
Before I was a patent guy, I was a copyright guy, and I did much of my work and research in user interfaces. In the 1980’s and 1990’s, there was a lot of uncertainty about how user interfaces would be protected by copyright. The latest version of the Copyright Act had just become effective, and graphical user interfaces (GUIs) were just taking off. Following a lot of litigation, and despite seemingly contradictory appellate rulings and an equally divided Supreme Court in one case, things eventually settled down.
It is against this backdrop that I took great interest in the Apple v. Samsung case, which is in trial right now on damages issues. Buried in all the talk about rectangles with rounded corners and pinch to zoom is a graphical user interface design patent.
Several of Samsung’s phones infringed this patent. In my article, I consider the implications of design patents, functionality, and graphical user interfaces. This is a realm previously limited to copyright. The difference in protection is important because design patents do not traditionally allow the same defenses — like fair use — associated with copyright.
The article answers three emerging questions:
1. Aren’t GUIs something that should be protected by copyright only? Why should there be a patent? The answer is relatively simple: the law has, since 1870, contemplated dual protection. The article traces the history to explain why the law could have evolved differently, but simply did not.
2. Display screens change, both before and after sale. How can someone patent an ephemeral screen design? It also turns out that ephemeral designs have been protected for some time. Even so, the article proposes some limitations on the protection of GUIs that should address the special nature of GUI design patents.
3. There are many differences between Apple’s patent and Samsung’s product. How can Apple own the idea of square icons in a grid with a dock bar at the bottom? This last question is the most intractable: determining when a design is infringing, and the role that functionality should play in that consideration. The bulk of the article is dedicated to answering this question.
To answer the third question, the article draws on lessons from prior copyright disputes about GUIs. It first suggests that courts must act as gatekeepers, rather than allowing juries to determine which elements to disregard as functional. It then develops economic factors that can help the court determine whether a design element is functional, and whether to allow reuse by a competing program.
While the economic factors, such as consumer switching costs, apply to both copyright and design patents, the legal doctrine to achieve economic ends will necessarily differ. As noted above, there is no fair use doctrine in design patent law. Even so, there is a form of filtration, and the article proposes that such filtration be expanded to exclude functional elements from infringement analysis. The full article is available here.
After an examiner twice-rejects a patent application, the applicant can then appeal that case to the Patent Trial and Appeal Board (PTAB). The appeal process has a number of problems, one of which is exemplified by the chart above. The backlog of pending ex parte appeals is large – over 25,000 pending cases. Over the past two years, the PTAB has been taking action by both adding some efficiencies, reducing opinion writing duties, and also by hiring a large number of additional judges. As the chart shows, those efforts are having some impact on the backlog and hopefully turning the corner. On average, new PTAB decisions in these cases take a little over 2 ½ years from the applicant's appeal brief until issuance of the PTAB decision.
My Upcoming Patent Events: Earlier this week I spoke at the 51st Annual Conference on Intellectual Property at the Center for American and International Law in Plano. My topic was on functional patent claims and the historic cycle of attacks on that claim type followed by novel approaches and work-arounds by patent applicants. In a few weeks from now, Bart Starr and I will be leading a discussion at the annual meeting of state Attorneys General (NAAG) on the topic egregious patent licensing behavior. AGs are looking for ways they can use the consumer protection laws in this arena. In the program, we are in the difficult position of speaking immediately following Kevin Costner. In January, I'll join the Association of Corporate Patent Counsel at their 2014 Winter Meeting and then in February I will be down in Naples at an interesting gathering put together by Hal Wegner and Judge Linn and sponsored by the University of Akron School of Law titled the Naples Midwinter Patent Experts Conference. Faculty for the Naples conference include Judge Linn, Judge Kathleen O'Malley, PTO Director Terry Rea, former PTO Deputy Sharon Barner, Former Commissioner, Robert Stoll, PTAB Chair James Smith, and Bob Armitage. A number of us law professors will be there as well, including Tim Holbrook (Emory), Timo Minnsen (Copenhagen), Christal Sheppard (Nebraska), Dennis Crouch (MU), Jason Rantanen (Iowa), W. Keith Robinson (SMU), William Hubbard (Baltimore) and Dr. Heinz Goddar. Register for the Naples event here http://www.uakron.edu/law/ip/naples-midwinter.dot or by calling conference coordinator Shannon Aupperle at (330) 972-7988.
The House of Representatives has passed H.R. 2655 titled Lawsuit Abuse Reduction Act of 2013 and the Bill now moves to the Senate for consideration. Although not a patent-focused bill, if enacted, the law could have a substantial impact on patent cases by amending Rule 11(c) by basically making sanctions mandatory for violations of Rule 11(b) certifications. In addition, the amendment would mandate that any sanctions compensate the reasonable expenses of the opposing side and also permit additional monetary and non-monetary sanctions as appropriate. The bulk of the amendment is as follows:
FRCP 11(c) Sanctions.
(1) In General. If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court shall may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee.
. . .
(4) Nature of a Sanction. A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated. The sanction may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney’s fees and other expenses directly resulting from the violationsituated, and to compensate the parties that were injured by such conduct. Subject to the limitations in paragraph (5), the sanction shall consist of an order to pay to the party or parties the amount of the reasonable expenses incurred as a direct result of the violation, including reasonable attorneys’ fees and costs. The court may also impose additional appropriate sanctions, such as striking the pleadings, dismissing the suit, or other directives of a nonmonetary nature, or, if warranted for effective deterrence, an order directing payment of a penalty into the court.
The House vote was almost strictly along party lines with Republicans voting in favor, Democrats against.
Prof Hricik has a new post on the Ethics Blog focusing on subject matter eligibility under 35 U.S.C. § 101 walking through how the Supreme Court has treated intangible laws of nature as compared with tangible natural phenomenon (or as he calls them ‘natural products’).
With that framework, here is what the Supreme Court cases teach: If a method claim is deemed to embrace intangible subject matter, or if a product claim embraces a natural product, the claim is at least suspect.
The point here is that the Supreme Court’s precedent is really tied-in to claim type – product versus method.
Update – After thinking reading through this post, it is probably too harsh against Cisco. I was primarily set-off because I read this case involving Cisco's problematic litigation tactics immediately after I read about Cisco's general counsel complaining to Congress about the problematic litigation tactics of patent licensing companies.
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By Dennis Crouch
Foreign litigants often have a real fear of American juries. Back in 2003, Judge Moore (then Professor Moore) authored an interesting article titled Xenophobia in American Courts. In her article, Judge Moore looked at a large dataset of patent cases and found substantial support for the hypothesis that foreign parties are treated worse by juries than their domestic counterparts. This issue has been explored in a number of ways by academics and has parallels to other jury bias issues based upon race or religion. In general, the notion is that it is cognitively easier for people to negatively judge the actions of someone considered an "other."
The recent case of Commil v. Cisco raises some of these issues. And, although Judge Moore was not on the panel, the Federal Circuit agreed that anti-foreign and anti-Semitic tactics before the jury create prejudice that warrant a new trial.
The patentee, Commil, is an Israeli company that filed an infringement suit against Cisco in the Eastern District of Texas. In the first trial, the jury awarded $3.7 million in damages. However, Judge Everingham ordered a new trial based upon the prejudicial effect of "Cisco's counsel's improper religious comments." In the new trial, the jury awarded $63.7 million in damages. On appeal, Cisco asked that the first trial judgment be reinstated. On appeal, however, the Federal Circuit affirmed the new trial finding.
The particular prejudicial are as follows:
While being cross-examined, Mr. David (the Commil inventor and co-owner) mentioned eating at a barbeque restaurant to which Cisco's counsel responded "I bet not pork." Counsel then went-on to ask Mr. David whether his cousin was a "bottom-feeder who swims around on the bottom buying people's houses that they got kicked out of for next to nothing."
In closing arguments, Cisco's counsel began with a reference of the trial of Jesus – saying "You remember the most important trial in history, which we all read about as kids, in the Bible had that very question from the judge. What is truth?"
Considering these statements, Judge Everingham wrote:
This argument, when read in context with Cisco's counsel's comment regarding Mr. David and Mr. Arazi's religious heritage, impliedly aligns Cisco's counsel's religious preference with that of the jurors and employs an "us v. them" mentality – i.e., "we are Christian and they are Jewish."
Commil USA, LLC v. Cisco Sys., Inc., No. 2:07–CV–341, slip op. at 3 (E.D.Tex. Dec. 29, 2010).
On appeal, the Federal Circuit found that these actions warranted review and additionally highlighted other aspects from the trial:
For instance, during the voir dire, Commil's counsel explained that the case began in Israel, "the Holy Land for many religions." Later, during closing argument, Commil's counsel argued with respect to damages that Cisco wanted the jurors to "split the baby" and "You know, that wasn't wise at the time of King Solomon. It's not wise today."
Based upon these elements, the Federal Circuit had no trouble finding that the new trial was warranted.
[Updated to delete my harsher remarks]
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The interesting and important legal issue in this case is how the Federal Circuit allowed a partial-new-trial rather than a full trial.
Earlier this week, I suggested that the Federal Circuit should independently be considering whether parties involved in administrative patent challenges (such as an inter partes review) have standing to appeal as required by Article III of the US Constitution. Now, the court has taken the first step and demanded that the public interest group Consumer Watchdog justify its standing to appeal in the inter partes review case against WARF's stem cell patent.
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Consumer Watchdog v. Wisconsin Alumni Research Foundation (WARF) (Fed. Cir. 2013)
Back in 2006 Dan Ravicher filed an inter partes reexamination request of WARF's U.S. Patent No. 7,029,913 on behalf of Consumer Watchdog (then known as the Foundation for Taxpayer and Consumer Rights). The patent contains only three claims and broadly directed toward human embryonic stem cells being grown in vitro. After WARF amended its claims, added one new claim, and worked through several rounds of prosecution and rejection, the Board finally agreed that the claims are patentable.
Now Consumer Watchdog has appealed, arguing that "an in vitro culture of human embryonic stem cells is [not] patent eligible under 35 U.S.C. § 101" and also that the claims are invalid based upon prior art known at the time of filing. Of course, one problem with the § 101 argument is that § 101 is not a cognizable ground for deciding an inter partes reexamination. The challenger here argues that subject matter eligibility is a fundamental and threshold issue that the court can and should address, and "[d]oing so is especially appropriate here given recent developments in the law of patent eligible subject matter."
Standing on Appeal: One issue that neither party raised was whether Consumer Watchdog has standing to appeal. In an essay earlier this week, I noted that this is generally an issue that is ripe for consideration at the Federal Circuit. Although the statute allows for appeals of adverse PTO decisions to the Federal Circuit, the US Constitution separately limits the court's power to hear cases where there is no "case or controversy" between the parties. Although I do not know for sure, it appears that Consumer Watchdog does not have any anything at stake in the case in terms of being directly (or even indirectly) impacted by the outcome of the lawsuit.
In an order issued today, the Federal Circuit ordered that the parties brief this particular issue – "whether Consumer Watchdog has standing to pursue this appeal." Briefs are due by November 25, 2013. Although I don't know, Consumer Watchdog may be able to argue that it has standing based upon the actual facts on the ground. Alternatively, it is possible that a party with standing (such as a stem-cell-researcher being blocked by the patent) may be able to join the case at the 11th hour. Another possibility is that Consumer Watchdog may be able to argue that a patent challenge at the PTO is essentially a public service action akin to a qui tam action. Under this last theory, would really be the general public or government that has standing to challenge a 'bad' patent and Consumer Watchdog is merely acting on behalf of us all.
In recent weeks several non-practicing "patent killers" have filed inter partes review requests including RPX and Unified Patents. It will be interesting to see whether they file amicus briefs here.
In its first full merits decision in an inter partes review case, the Patent Trial and Appeal Board (PTAB) has sided fully with the petitioner Garmin and ordered the three challenged claims cancelled. As you may discern from the docket number, this case was also the first IPR case filed on September 16, 2012 (the first day that such filings were allowed). The patent at issue is No. 6,778,074 and a parallel infringement lawsuit between Garmin & Cuozzo is pending in New Jersey District Court. Although the district court did not stay that case, Magistrate Judge Dickson has slowed the process to avoid making substantive decisions until the PTAB decision. In particular, the claim construction arguments have been delayed.
The patent itself is directed toward a speed-limit indicator tied to a GPS system that provides a signal to the driver when the care is moving faster than the speed-limit. Couzzo has accused several device makers (such as Garmin) as well as automobile manufacturers (such as Chrysler) of infringing the patent.
Garmin's IPR request actually challenged 17 claims of the '074 patent, but the PTAB only instituted the review for claims 10, 14, and 17 as such, it likely that Cuozzo will continue to pursue the litigation with a focus on the remaining claims. Those three claims were all found obvious by the PTAB. Based upon my quick read of the claims, independent claim 10 was the broadest in the patent and its elimination may give Garmin the opportunity to avoid infringement by pushing for a narrow construction of the remaining claims.
Four Reference Rejection: Patent attorneys regularly see obviousness rejections that hinge on the combination of four references. However, the conventional wisdom is that those complex factual arguments are much less likely to fly in disctrict court litigation. Here, the PTAB took on the challenge and found the patent obvious based upon four prior art references. The take-away here is that the PTAB is ready and willing to handle complex invalidity arguments that might not work at the district court level.
Claim Construction: One interesting aspect of the case is the way that the pending parallel litigation is clearly in the forefront of each decision by the parties. One limitation found in each claim of the patent is that a speedometer be "integrally attached" to a speeding-indicator. Couzzo that the proper construction of that term would require that the speedometer and speeding-indicator both be part of the same single component (i.e., shown on the same screen). On that point, the Board sided with Garmin – finding instead that the broadest reasonable interpretation of the claim scope required two separate components. In addition to making the claim more subject to prior art, the seeming result is also that a single Garmin device GPS cannot infringe unless somehow integrated with and integrally attached to a separate vehicle speedometer. Moving forward it will be interesting to see what level of respect the district court gives the PTO decision. I suspect that it will be given a great deal of respect.
Unable to Prove Early Conception or Diligence: Two of the important prior art references used by the board presumptively qualify as 102(e) prior art in that the references are published US patent applications that were filed prior to Couzzo's application. Under the old first-to-invent rules, the law allows Couzzo prove a prior invention date. Here, Couzzo's proof failed because (1) his conception evidence was based solely on inventor testimony which is never sufficient without corroboration; and (2) his evidence of submission to the "Invention Submission Corporation" was insufficient because the date of submission was not corroborated by any testimony. Thus, the PTAB found that the earliest provable date of conception was December 2000 when the ISC patent attorney sent a letter to Couzzo referencing Couzzo's invention disclosure. Because Couzzo had not yet reduced his invention to practice as of that December 2000 date, the law also requires that he act with "reasonable diligence." Here, Couzzo received a search report from the patent attorney in January 2001; did not respond until March 2001; and did not explain why it took two months to provide comments or his daily progress on the matter. Then, later in March 2001 he received a new favorable patentability report from the patent attorney who stated he would begin work once Couzzo paid a $3,500 fee. However, he did not pay that fee until August 2001. Couzzo stated that he did not have the money at the time, but did not provide any daily progress reports showing what he was doing to get the money. The PTAB found that each of these gaps showed failure of diligence. As such, his attempt to antedate the references was rejected. The unfortunate problem here is that it looks like it was the complexity and tricks of the system that failed Couzzo and that, had he been blessed with more cash-on-hand and more sophisticated patent counsel then he would have avoided these key prior art references either by filing the patent application earlier or by ensuring documentation of conception and diligence. Soon after Couzzo's case was filed, the USPTO went after the Invention Submission Corporation as a scam. My understanding is that InventHelp is the successor-in-interest to ISC.
