Guest Post by Prof. McKenna: The Implications of Blackhorse v. Pro-Football, Inc.

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Professor Mark P. McKenna of The University of Notre Dame Law School is one of the leading scholars of trademark law.  Below, he provides his thoughts on the legal consequences of the TTAB’s decision in Blackhorse v. Pro-Football, Inc.

The Trademark Trial and Appeal Board (TTAB) just wrote another chapter in the long-running battle over the registration of the Washington Redskins trademarks. In Blackhorse v. Pro-Football, Inc., the Board cancelled 6 federal registrations of various Redskins marks (including stylized versions and logos – though not the one currently used by the team) on the ground they were disparaging to a significant proportion of Native Americans at the time of registration. As most readers of this blog likely know, this is the second time the TTAB has ordered cancellation of the marks – in 1999, after seven years of litigation, the Board cancelled the marks, finding them scandalous and disparaging. That ruling did not stand up on appeal, and the petitioners in this case are different. (Significantly, unlike the petitioner in Harjo, the petitioners’ claims here were not barred by laches.)

There are many things one could say about this ruling – about its societal significance, about the legal standard the TTAB applied (especially the focus on a “substantial composite” of the affected group), or about the likelihood that the decision with withstand appellate review. I am going to focus here on the legal consequences of the decision, assuming it stands. (The PTO will not actually remove the marks from the register until the team has exhausted its appeals.) Contrary to some of the press reports on the decision, cancellation does not entail loss of exclusivity of the marks. In particular it does not mean that the marks are not enforceable under federal law. It simply means that the marks will no longer be federally registered and therefore will not receive any of the benefits of registration.

The team will lose the benefits of the statutory presumption of validity and incontestability. And it will lose the benefit of nationwide constructive use. For many other parties, limiting protection to the geographic areas of actual use would be a significant consequence, but here that is unlikely to be important since the team very likely has nationwide rights by virtue of its actual use. Of perhaps greatest economic consequence, the government will no longer seize imported goods bearing any of the cancelled marks, since only goods bearing registered trademarks are subject to forfeiture. 19 U.S.C. § 1526. And none of the civil or criminal counterfeiting provisions will apply, as counterfeits are by definition making unauthorized use of registered marks. 15 U.S.C. § 1116; 18 U.S.C. § 2320.

These consequences are not meaningless, of course, but they are not nearly as significant as some have made them out to be. ESPN’s report, for example, claimed that the decision stripped the team of all federal rights, and that, if the decision stands, “any fan can produce and sell Washington Redskins gear without having to pay the league or the team for royalties and wouldn’t be in violation of any law for doing so.” It’s obviously not news that press reports mischaracterize legal decisions, but these kinds of statements pretty egregiously overstate things, in my view. That would be true even if there were no federal enforcement of the cancelled marks, since the logos themselves were not cancelled and any merchandise bearing both the word marks and the logos is almost certainly subject to enforcement. But it’s not even true that there will be no federal enforcement of the cancelled marks.

Of course, all of this depends on the assumption that courts do not interpret §2(a) to impose a limitation on one’s ability to enforce rights in an unregistered mark under §43(a). I would have thought that assumption was pretty uncontroversial, but some discussions of the new decision suggest that not all my colleagues in the academy share my view. One recent district court decision (Renna v. County of Union, N.J., 2014 WL 2435775, No. 2:11–3328 (D.N.J. May 29, 2014)) is on their side – that case held that marks barred from registration (in that case, under § 2(b)) could not be enforced under §43(a) either. (See here for Rebecca Tushnet’s analysis of the case). If that conclusion were generalizable, then today’s decision on the Redskins marks would have much more significant effect, since it would leave the football team with only state law rights, and those rights might be uncertain given courts’ general tendency to interpret state law as identical to federal law. But I think people are reading far too much into a single district court case, and that in any case Renna is wrong to conflate registrability under § 2 with protectability under §43(a).

Section 2 of the Lanham Act begins “No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless …”. Thus, to be registrable, the claimed designation must (1) be a trademark; and (2) not run afoul of any of the limitations in subsections (a)-(f). That is to say that only a subset of trademarks qualify for registration, and the subsections of § 2 identify the boundaries of that subset. When the Lanham Act was originally drafted, it was fair to say that the limitations on registrability demarcated the universe of trademarks that warranted federal protection. When the Lanham Act was passed, it was clear that only federally registered marks were enforceable under federal law; unregistered marks could be enforced, if at all, only through a common law unfair competition claim. Thus, the unfair competition cases primarily involved unregistrable marks. As I explained here, those common law unfair competition claims were, post-Erie, state law claims. But federal courts were (probably unjustifiably) concerned that this would give rise to a lack of uniformity in the law, and beginning around the mid-1960’s they began to interpret §43(a) to embrace a cause of action for infringement of unregistered marks. In other words, they expanded the federal statute to embrace the claims that previously would have been relegated to the common law.

With this very brief history in mind, one can see just how radical is the claim that the registration bars apply in § 43(a) cases – the claim fully conflates registered and unregistered marks, applying all of the same limitations to unregistered marks despite the fact that § 43(a) was expanded specifically for the purpose of providing a federal cause of action for unregistrable marks. That would be a truly remarkable departure, and one that draws no support from the text of § 43(a), which makes actionable use of “any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which … is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.” Note that nothing in the section requires that the confusion result from use of a designation that meets the registrability requirements. There’s a reason for that.

It is therefore wrong, in my view, to say that the § 2 bars apply in § 43(a) cases, at least categorically. Nevertheless, one can understand why a court might be attracted to the argument that bars to registrability should be understood as bars to protection, full stop. After all, courts, with the active encouragement of trademark plaintiffs, have spent the last several decades eviscerating the substantive differences between trademark infringement and unfair competition. Indeed, the project has been so successful that courts and commentators alike now routinely say that registration status is largely irrelevant for purposes of enforcement. Such a sweeping claim is, of course, somewhat overstated, since registration obviously can affect priority and the geographic scope of rights in addition to the statutory presumptions and incontestability. Nevertheless, for most purposes courts have treated registered and unregistered marks the same, and the Supreme Court said in Two Pesos that “it is common ground that § 43(a) protects qualifying unregistered trademarks and that the general principles qualifying a mark for registration under § 2 of the Lanham Act are for the most part applicable in determining whether an unregistered mark is entitled to protection under § 43(a).”

I think courts that say this mean to say that the distinctiveness and functionality rules are the same for registered and unregistered marks (save for the question of which party bears the burden), and that infringement is determined the same way in either context. In this respect it is telling that these kinds of statements nearly always precede general statements of legal principles and that they rarely, if ever, accompany any real statutory analysis. The reason is that the registrability requirements and fundamental questions of trademark validity are, and have long been, understood to be distinct issues.  It is not simply that trademark rights arise through use such that one can develop trademark rights without having ever applied for a trademark registration. It is that the Lanham Act imposes requirements for registrability that simply do not apply to unregistered marks. (Some of the registrability requirements – non-genericness, for example – go to validity, and those obviously do apply in §43(a) cases, but not because they are registration requirements.)

It is, of course, possible that courts would import into § 43(a) cases some particular bars to registration for policy reasons, just as common law courts might have had policy reasons to refuse to provide unfair competition remedies in particular cases. And perhaps there are good policy reasons for courts to deny protection to disparaging marks in any context. But it is worth noting that nothing has precluded parties from making these policy arguments before, and hardly anyone has done so. We have not, for example, seen defendants disputing the validity of unregistered marks on the ground that they are primarily geographically deceptively misdescriptive. That could be because it has just taken a long time for litigants to discover these arguments, given how much § 43(a) has changed over time. But I think it’s much more likely that most people have assumed that arguments about registrability have no purchase in the context of enforcement of an unregistered mark.

Finally, even if one thought the § 2 bars ought to apply generally in § 43(a) cases, we should be reluctant to import the § 2(a) bars specifically, since barring enforcement of scandalous, immoral, or disparaging marks raises even more serious constitutional questions than does refusing registration. Section 2(a) has occasionally been challenged on the ground that it denies government benefits on the basis of the content of speech. Courts have rejected that argument primarily on the ground that § 2 only precludes registration and does not proscribe conduct or prevent use of a mark. That reasoning has always been suspect to me, but it is significantly more questionable if it is to be understood to mean that the restrictions are constitutional simply because they do not forbid use rather than because they leave the user with the ability to rely on use-based rights. If we can expect courts to start applying the § 2(a) bars in the context of unregistered marks, we can expect to see this issue litigated much more pointedly.

Mark P. McKenna is the Associate Dean for Faculty Development, Professor of Law, and Notre Dame Presidential Fellow at the Notre Dame Law School.

Alice v. CLS Bank: Claims Invalid Under Section 101

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By Jason Rantanen

Alice Corporation Pty. Ltd. v. CLS Bank International (2014)

Download opinion here: Alice v CLS

This morning the Supreme Court issued its opinion in Alice, unanimously affirming the Federal Circuit and finding all claims drawn to patent ineligible subject matter under Section 101.  Justice Thomas wrote for the opinion for the Court.  It begins:

The question presented is whether these claims are patent eligible under 35 U. S. C. §101, or are instead drawn to a patent-ineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.

The opinion includes both the actual language of representative claims (in a footnote) and the court’s interpretation of them (in the body of the opinion). (more…)

A REDSKINS football team is Disparaging to Native American Persons and thus Cannot be Registered as a US Trademark

Patent

By Dennis Crouch

Blackhorse v. Pro Football, Inc. (TTAB Cancellation No. 92046185)

Today, the USPTO granted the cancellation of a group of trademark registrations that all include the term “Redskins” and that are owned by The Washington Redskins.

Under the law registration may be refused when a mark:

Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.

15 U.S.C. § 1052.

In the cancellation proceedings, the challengers (a group of Native American individuals), were able to establish that the mark was disparaging to Native American persons as used in relation to the Professional Football team and thus, as the USPTO writes in a press release “in accordance with applicable law, the federal registrations for the ‘Redskins’ trademarks involved in this proceeding must be cancelled.”

Perhaps the strongest defense put forward by the team owners was that the mark was old, well used, and the subject of significant investment. However, the Trademark Trial and Appeal Board rejected that argument – finding it inapplicable to the particular claimants here since none of them unreasonably delayed in bringing the cancellation action.

The TTAB decision was not unanimous – Judge Bergsman dissented – arguing that the petitioners did not provide sufficient evidence that the marks were disparaging at the time they were registered (1960s – 1990s).

Next steps:

  1. The team owners may ask for rehearing or may take the case to Federal Court where the Supreme Court may have the final word.
  2. A trademark registration is not required in order to use a mark. Thus, the team owners can continue to use the mark. In addition, trademark rights continue to be strongly protected by state law and thus, even if the decision sticks, the team may still have protection in the various states.
  3. Prof Rantanen also points out that the mark may still be protectable under Section 43(a) as an unregistered mark, but that the law is unsettled. One take is here: Renna v. County of Union, 2014 WL 2435775 (D.N.J. May 29, 2014).  

 

Indefiniteness “Can Be” Difficult under Nautilus

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Ex parte Breed, Appeal No. 2012-003990 (PTAB 2014)

On June 2, 2014, the Supreme Court decided Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014) lowering the standard for negating patentability due to indefiniteness. The new test requires that the claim scope be “reasonably certain” to one skilled in the art at the time of the patent.

On June 4, 2014, the Patent Trial and Appeal Board (PTAB) issued its first decision interpreting Nautilus. David Breed is a prolific inventor and is named on more than 300 patents and is one of the inventors of the airbag. More recently, Breed has collaborated with Acacia Research Corp to enforce his patents.

The application at issue in this case is part of a large family of at least seven issued patents that claim priority back to a 2000 provisional application and is directed to a highway monitoring system that provides reports and information on road conditions. Application No. 12/020,684.

Claim 1 is a system claim that includes a whereby clause indicating that “whereby roadway conditions from multiple roadways can be obtained and processed at the remote facility.” The examiner rejected the claim as indefinite based upon the “can be” limitation and the PTAB has now affirmed that finding:

Patent applicants face powerful incentives to inject ambiguity into their claims, a temptation that needs to be mitigated by the courts. See Nautilus, Inc. v. Biosig Instr., Inc., 2014 WL 2440536 at *7, __ U.S. __ (June 2, 2014). Patent drafters are in the best position to resolve ambiguities in their claims. See Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1255 (Fed. Cir. 2008). Section 112 places the burden of precise claim drafting on the applicant. See In re Morris, 127 F.3d 1048, 1056-57 (Fed. Cir. 1997).

. . .

Claim 1 recites that roadway conditions from multiple roadways “can be” obtained and processed at the remote facility and “can be” directed from the remote facility to other vehicles. The Examiner rejected claim 1 as indefinite. The Examiner stated that it is not clear if Appellants intended the “can be” claim limitation to be optional or that the phrase should be interpreted as a definite statement. . . .

Appellants now argue that the features following the “can be” phrases should be interpreted as optional and, as such, the claim is not indefinite. The verb form of the word “can” carries multiple meanings in the English language. It can be used to indicate a physical ability or some other specified capability. It can also be used to indicate a possibility or probability.

During examination of a patent application, pending claims are given their broadest reasonable construction consistent with the specification. In re Am. Acad. of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). In the instant case, Appellants have not directed us to any language in the Specification that supports a construction of “can be” that yields a particular and distinct meaning in claim 1. Instead, Appellants merely urge us to adopt one of two plausible interpretations. . . .

We agree with the Examiner that “can be” is indefinite, because it is susceptible to more than one plausible construction. It is unclear whether the limitation refers to a capability that is required to be present in the invention or whether it refers to a system capability that is a mere possibility that is not required. In other words, it is unclear whether a vehicle monitoring system can practice the invention of claim 1 by satisfying all of the other limitations of claim 1, without necessarily being required to possess the capability to obtain and process roadway conditions at a remote facility or to direct information from a remote facility to other vehicles on a roadway.

During prosecution, a claim is properly rejected as indefinite if it is “amenable to two or more plausible claim constructions.” Ex parte Miyazaki, 2008 WL 5105055 at *5 (BPAI Nov. 19, 2008) (precedential). The Miyazaki standard for indefinite rejection is justified, at least in part, because the applicant has the opportunity and the obligation to define his or her invention precisely during prosecution before the PTO.

Here, Appellants’ use of the phrase “can be” renders claim 1 indefinite and we sustain the Examiner’s rejection of claim 1 under 35 U.S.C. § 112(b).

The PTAB also quoted the Supreme Court’s nose-of-wax statement from its 1886 decision:

Some persons seem to suppose that a claim in a patent is like a nose of wax which may be turned and twisted in any direction, by merely referring to the specification, so as to make it include something more than, or something different from, what its words express. The context may, undoubtedly, be resorted to, and often is resorted to, for the purpose of better understanding the meaning of the claim; but not for the purpose of changing it, and making it different from what it is. The claim is a statutory requirement, prescribed for the very purpose of making the patentee define precisely what his invention is; and it is unjust to the public, as well as an evasion of the law, to construe it in a manner different from the plain import of its terms. This has been so often expressed in the opinions of this court that it is unnecessary to pursue the subject further.

White v. Dunbar, 119 U.S. 47, 51-52 (1886) (emphasis added by PTAB).

I think that the decision here is correct and the USPTO is right to force the patent applicant to nail-down the particular scope of the invention being claimed. One interesting counter-point comes from the Supreme Court’s notion that definiteness requires examination of the prosecution history – here Breed argued that the term meant “optional,” but the PTAB here indicates that it is not sufficient to merely indicate which of two possible interpretations is the correct – rather a claim amendment is in order to solidify and provide express notice of that applicant decision.

Regional Director Russ Slifer

Patent,

By Dennis Crouch

USPTO Deputy Director Lee has named Russ Slifer as Regional Director of the Denver USPTO. Russ has been a patent attorney since his graduation from NIU Law in 1994 both in private practice and as Chief Patent Counsel for Micron. I have known Russ for a number of years and am confident in his deep understanding of patent practice, excellent management skills, and his willingness to listen to good ideas.

Congratulations to Russ on this transition and to Michelle Lee on continuing to build an impressive leadership team.

The missing link, of course, continues to be the absence of a Congressionally-Approved USPTO Director – now 500-days and counting.

Although already in operation, the Denver Patent Office is set to officially open on June 30, 2014.

More info: http://www.uspto.gov/blog/director/entry/update_on_our_satellite_offices

Judge Rader on Judge Rader’s Retirement

Ethics, Patent

You can read his email to a journalist here, which is similar to what I’ve heard privately.

I’ve had journalists, friends, lawyers, and others contact me for my thoughts.  Here are my thoughts:

I loved clerking for Chief (sorry, he’ll always be that).  The man is wicked smart, kind, full of life, and funny.  He cares passionately about the court and patent law.

His plan to move on now doesn’t surprise me, since I know he loved to teach (had the privilege of teaching one class for him at GW while I was up there) and he loves to travel (I’ve never seen someone bound off an airplane after 20 hours of flight with more energy than him).

The best is all I can wish for him, along with a good ticket to the next Stones tour.

Tesla Motors and the Rise of Non-ICT Patent Pledges

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Guest Post by Professor Jorge L. Contreras, Associate Professor of Law at American University Washington College of Law.

This week, electric car developer Tesla Motors made news by publicly announcing that it will no longer “initiate patent lawsuits against anyone who, in good faith, wants to use our technology”. Tesla’s pledge has met with both praise and cynicism, with some applauding the company’s ostensible desire to spur the development of eco-friendly technology, while others have dismissed the announcement as a mere publicity stunt lacking in real effect.

Whatever the merits of Tesla’s patent pledge, it is only the most recent in a growing series of voluntary public commitments made by patent holders to refrain from exercising their patent rights to the fullest extent of the law. To date, most of these pledges have been made by companies in the information and communications technology (ICT) sector. For example, in 2004-05, a handful of firms publicly announced that they would not assert patents against use of the open source Linux operating system. Some large patent holders have issued blanket assurances covering substantial portfolios of patents and products, including IBM’s public commitment not to assert approximately 500 patents against open source software products, and Google’s more recent “Open Patent Non-Assertion Pledge“. As I have written elsewhere, these pledges are intended to assure the market that the pledged patents will not be used to disrupt or hinder the adoption of market-wide interoperability standards or open technology platforms.

But, as the Tesla pledge demonstrates, patent pledges are also becoming popular outside the ICT sector. Below are examples of a few recent patent pledges made by companies in non-ICT industries ranging from GM seeds to household electrical meters.

Company Patents Pledge
Monsanto Patents claiming genetically-modified seeds “It has never been, nor will it be Monsanto policy to exercise its patent rights where trace amounts of our patented seed or traits are present in farmer’s fields as a result of inadvertent means.”
Myriad Genetics Genetic diagnostic patents Myriad will not “impede non-commercial, academic research that uses patented technology licensed or owned by us… Myriad will continue its practice of not interfering with laboratories conducting genetic testing on patients for the purpose of confirming a test result provided by Myriad.. Myriad will continue to offer financial assistance programs and free testing to help patients with the greatest need..”
Southern California Edison US 11/626,810 (Method of communicating between a utility and its customer locations) SoCal Ed will grant anyone a non-exclusive royalty-free license under any patent issuing from this application covering basic “smart metering” technology.
Tesla Motors All patents Tesla will not “initiate patent lawsuits against anyone who, in good faith, wants to use our technology”

 

The full text of (and hyperlinks to) these commitments, as well as patent pledges from many companies in the ICT sector, can be found in the Non-SDO patent pledge database maintained by the Program on Information Justice and Intellectual Property (PIJIP) at American University’s Washington College of Law. As always, we welcome additional contributions to the database.

Upcoming Events with the IPO

Patent,

By Dennis Crouch

June 17, 2014 2:00 pm EST: I will be helping lead the IPO’s IP Chat Channel discussion on indefiniteness. We’ll obviously be considering the consequences of the two recent important decisions of Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (June 2, 2014) and In re Packard, — F.3d —-, 2014 WL 1775996 (Fed. Cir. May 6, 2014). I will be on the panel along with Stephen Maebius (Foley) and Micky Minhas (Microsoft). As always, the chat is managed by Pamela Sherrid. Register here $130: http://www.ipo.org/index.php/events/ip-chat-channel/

September 7-9: I will be out in Vancouver with the IPO Annual meeting. I’ll be talking about the impact of recent Supreme Court decisions along with David Howard (Microsoft), Denise Kettelberger (Sunstien Kann), and Joseph Re (Knobbe). Our moderator will be none other than Herbert Wamsley (IPO). See you there: http://www.ipo.org/index.php/events/annual-meeting/.

 

Between these dates, you might want to check-out the Chisum Patent Academy that will be in Seattle, Washington, on August 13-15 and August 18-20, 2014. Two of the best teachers that I know: Don Chisum and Janice Mueller.

Akamai: Is the Answer in the Common Law?

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Guest Post by Professor Lynda J. Oswald. Editor’s Note – I asked Professor Oswald to write a guest post that links together her prior writing on divided infringement with the Supreme Court’s most recent decision on the subject-matter.

In its recent decision in Limelight Networks Inc. v. Akamai Techs., Inc., the Supreme Court decided the easy question—whether inducement must be supported by direct infringement—on precedent grounds, yet avoided the much more difficult question of how the courts should deal with multi-actor infringement of a method or process patent.

Precedent is indeed clear that direct infringement is a predicate to indirect infringement, and the Court’s decision on this question was exactly right. The interesting questions remaining, however, are why did the Federal Circuit attempt to rewrite precedent in this manner and what should the Federal Circuit do with multi-actor infringement doctrine on remand?

The answer to the why question is driven by the courts’ fundamental discomfort with strict liability. The Federal Circuit’s inartful attempt in its en banc decision in Akamai to move multi-actor infringement from direct infringement to inducement was an effort to relocate such infringement from the harsh rules of strict liability to the more forgiving rules of intent-based indirect liability. Justice Kagan highlighted this at oral argument:

But the reason [the Federal Circuit] put this under 271(b) rather than 271(a) is because of what Justice Scalia said, that 271(b) is not a strict liability offense . . . . [T[hey thought they were being very clever by putting it into a 271(b) box and avoiding the strict liability consequences of what they were doing, but also avoiding the possibility of an end run of the patent law.

As I explore in a work-in-progress, the courts similarly attempt to avoid the strictures of strict liability in other IP contexts such as imposition of officer liability in patent and copyright cases. Although strict liability is antithetical to the notions of fault-based liability that permeate most of American law, the courts are bound by the statutory language and the Supreme Court’s rejection of the Federal Circuit’s attempt to circumvent direct infringement’s strict liability requirement was spot-on.

The what question is harder to answer. The Supreme Court expressed significant skepticism about the Muniauction Inc. v. Thomson Corp. test, appearing, in fact, to characterize any current doctrinal difficulties as self-inflicted by the Federal Circuit:

[R]espondents, like the Federal Circuit, criticize our interpretation of §271(b) as permitting a would-be infringer to evade liability by dividing performance of a method patent’s steps with another whom the defendant neither directs nor controls. We acknowledge this concern. Any such anomaly, however, would result from the Federal Circuit’s interpretation of §271(a) in Muniauction. A desire to avoid Muniauction’s natural consequences does not justify fundamentally altering the rules of inducement liability that the text and structure of the Patent Act clearly require—an alteration that would result in its own serious and problematic consequences . . . .

The Court viewed the Federal Circuit’s multi-actor infringement precedent too narrowly, however. To adequately address the multi-actor infringement issue on remand, the Federal Circuit needs to reexamine not just Muniauction, but two additional decisions as well: BMC Resources, Inc. v. Paymentech and the panel decision in Akamai.

BMC Resources provided the foundation of the Federal Circuit’s current multi-actor infringement doctrine by stating that: (1) for inducement to exist, some other single entity must be liable for direct infringement but (2) a mastermind who controls or directs the activities of another party incurs vicarious liability for the actions of that other party such that the combination of acts would be deemed the act of a single actor for purposes of establishing liability. Muniauction‘s contribution was to refine the BMC Resources test by identifying a “spectrum” of relationships: at one pole is “mere arms-length cooperation,” which does not lead to liability; at the other is “control or direction over the entire process such that every step is attributable to the controlling party, i.e., the mastermind.” The panel decision in Akamai attempted to further clarify the standard by setting up two-pronged test of the type that the Federal Circuit seems to prefer these days: multi-actor infringement occurs only when the parties involved are in either (1) in an agency relationship or (2) contractually obligated to each other.

Perhaps it is a function of its narrow jurisdiction, but the Federal Circuit often misses the opportunity to apply traditional common law doctrines in a manner that would reconcile statutory language with the policies underlying the statute. As I discuss in a recent article, the Federal Circuit could resolve much (but not all—some aspects of this issue are amenable only to legislative resolution) of the confusion surrounding multi-actor infringement by explicitly invoking common law doctrines of tort and agency. The panel decision in Akamai got much of this right by looking at agency and contractual relationships. However, the Akamai panel decision ignored the possibility that there could be co-equals involved in the infringement, not bound by contract or agent-principal relationships but acting in concert in a joint tortfeasorship relationship. Early (pre-Federal Circuit) cases did recognize the role that joint torts can play in establishing multi-actor liability but that relationship was lost in the BMC Resources single-entity rule.

The Akamai Court issued a clear call to the Federal Circuit to revisit (and revamp) its troublesome multi-actor infringement standard. Judge Newman provided an elegant statement of how the court should approach this issue in her dissent in the Akamai en banc decision:

The court should simply acknowledge that a broad, all-purpose single-entity requirement is flawed, and restore infringement to its status as occurring when all of the claimed steps are performed, whether by a single entity or more than one entity, whether by direction or control, or jointly, or in collaboration or interaction.

On remand, the Federal Circuit will have the opportunity to articulate liability rules that are more principled, more grounded in traditional legal doctrine, and more consistent with the general patent law scheme; Judge Newman’s characterization provides an excellent starting point for that analysis.

The Proper Role for the Presumption of Validity

Patent,

Guest Post by Derek Dahlgren

In 2011, the Supreme Court addressed the presumption of validity in Microsoft Corp. v. i4i Limited Partnership, 131 S. Ct. 2238 (2011). It confirmed that the standard of proof for invalidity is clear and convincing evidence. Initially, this opinion was seen by many as preserving the strength of patents. But closer scrutiny reveals that the Supreme Court’s analysis does not extend to all invalidity defenses. According to Justice Breyer’s concurrence, joined by Justices Scalia and Alito, the presumption of validity only provides protection against factual elements of an invalidity challenge. That concurrence, and the Supreme Court’s recent opinion in Nautilus, Inc. v. Biosig Instruments, Inc., suggest that the presumption of validity has no application to purely legal bases for invalidity.

A brief discussion of i4i and Nautilus is instructive. In i4i, Microsoft appealed a jury decision finding that it had not proven invalidity due to the on-sale bar, a purely factual inquiry, by clear and convincing evidence. On appeal, Microsoft argued that a defendant to an infringement action need only persuade the jury of an invalidity defense by a preponderance of the evidence. The Supreme Court rejected that argument.

Instead, the Supreme Court concluded that the presumption of validity codified the pre-1952 standard set forth in opinions such as Radio Corp. v. Radio Laboratories, 293 U.S. 1 (1934). The Supreme Court stated that by the time Congress enacted § 282, “the presumption encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof.” i4i, 131 S. Ct. at 2246. The Supreme then upheld the Federal Circuit’s articulation that “a defendant seeking to overcome [the presumption of validity] must persuade the factfinder of its invalidity defense by clear and convincing evidence.” Id. at 2243.

Justice Breyer wrote a separate concurrence. There, he stated “I believe it worth emphasizing that in this area of law as in others the evidentiary standard of proof applies to questions of fact and not to questions of law.” Id. at 2253. He also noted:

Many claims of invalidity rest, however, not upon factual disputes but upon how the law applies to facts as given . . . Where the ultimate question of patent validity turns on the correct answer to legal questions—what these subsidiary legal standards mean or how they apply to the facts as given—today’s strict standard of proof has no application.

Id.

In Nautilus, the same issue—the application of the presumption of validity—arose at oral argument. During the argument, Justice Kennedy pressed Nautilus’ counsel on how the presumption of validity applies to indefiniteness. Nautilus’ counsel conceded that the presumption of validity would accord deference to the PTO’s fact-finding. Tr. at 19:22 – 21:8. But he stated that since there were no fact-findings at issue in this case, the presumption did not apply. Id. At Justice Kennedy’s prompting, he also agreed that the PTO’s legal decisions are not accorded any deference. Id. at 21:4-8.

On June 2, 2014, the Supreme Court issued its opinion in Nautilus, and again touched on the issue. In footnote 10, the Supreme Court rejected the idea that a permissive definiteness standard accords with the presumption of validity. Slip Op. at 13 n.10. To the contrary, it stated that the presumption does not alter the degree of clarity that § 112, ¶2 requires. Id. That said, the Supreme Court ultimately did not address the parties’ dispute as to whether subsidiary factual issues trigger the clear-and-convincing evidence standard. Id. Because the Federal Circuit treated indefiniteness as a legal issue reviewed without deference, and the parties had not identified any contested factual matter, Supreme Court concluded the question could be settled another day. Id.

So where does that leave us? While the Supreme Court has not expressly held that the presumption of validity has no role in purely legal validity challenges, it certainly makes sense. According to i4i, the presumption of validity serves two functions: allocating the burden of proof and imposing the standard of proof. 131 S. Ct. at 2246. For a purely legal question, however, there is nothing to prove by clear and convincing evidence. Furthermore, to apply the presumption for a legal challenge would give deference to the PTO’s legal conclusions. The Federal Circuit does not do that. And the PTO lacks substantive rule-making authority, at least with respect to defining the metes and bounds of invalidity defenses. Thus, there does not appear to be any basis for according deference to the PTO’s legal conclusions. Consequently, for pure questions of law, it seems reasonable to conclude that the presumption of validity has absolutely no bearing. And as a result, invalidity challenges based on purely legal grounds may be much more powerful.

Nonetheless, while the Supreme Court may have circumscribed the application of the presumption of validity, it now has the opportunity to reject the assertion that claim construction is a pure question of law. See Teva Pharms. USA, Inc. v. Sandoz, Inc., No. 13-854. The Supreme Court hinted in Nautilus that factual questions permeate claim construction when it cited to Markman and stated that claim construction “may turn on evaluations of expert testimony.” Nautilus, slip op. at 11. Should that become settled law after Teva, one likely consequence would be a resurgence of the presumption in areas previously considered purely legal domains. Generally, the pure legal bases for invalidity are premised on the notion that claim construction is a pure question of law. Therefore, while the Supreme Court may have given patent challengers a gift in i4i and Nautilus, it could be short-lived to a certain degree.

Derek Dahlgren is an associate at Rothwell, Figg, Ernst & Manbeck, P.C. The opinions expressed are those of the author and do not necessarily reflect the views of Rothwell, Figg, Ernst & Manbeck, P.C. or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Tesla’s Patents are Your Patents

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Tesla Motors has notified has granted a public and free license to its patent to anyone who uses their technology “in good faith.”:

Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.

Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.

http://www.teslamotors.com/blog/all-our-patent-are-belong-you

The idea is partially a philosophical bent, but it is also business – Tesla feels that it needs real competitors in the zero-emission auto market in order to truly grow the market.

Christian Hicks, Co-Founder of Elysium Digital sent the following note regarding the likelihood that Tesla’s patents have already served their purpose for Tesla in its early-stage development:

No matter what, Tesla has benefitted from its patent program, because it prevented others from claiming what Tesla patented and used. At the same time, Tesla’s patents may very well have been valuable back when they were raising VC money, but they are obviously past that now.

Interesting perspectives.

Judge Chen and Nonobviousness

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By Jason Rantanen

The past two weeks have seen a substantial number of nonobviousness opinions emerge from the Federal Circuit.  These decisions are particularly interesting because they contain pairs of opinions with opposite outcomes.  Judge Lourie, the second longest-tenured active judge on the court, wrote two of them while Judge Chen, the second-newest member of the court, wrote a third and a dissent in the fourth.  Each found (or would have found) the patents in question to be obvious in one opinion and nonobvious in the other.  For those interested in the jurisprudential views of Judge Chen, especially, the pairing may provide some useful insights.

Allergan, Inc. v. Apotex Inc. (Fed. Cir. 2014) Download Allergan v. Apotex
Panel: Prost (author), Reyna, and Chen (dissenting in part)

Allergan and Duke University hold a pair of patents relating to an ophthalmic solution used as a treatment for eyebrow hair loss.  Allergan sells LATISSE a 0.03% bimatoprost ophthalmic solution as a topical treatment for eyebrow hair loss.  After Apotex and other manufacturers submitted Abbreviated New Drug Applications to the FDA seeking to market generic versions of LATISSE, Allergan and Duke sued for infringement.  Following a bench trial, the district court rejected the generic manufacturers’ invalidity arguments, found infringement, and entered an injunction.  The manufacturers appealed.

On appeal, the Federal Circuit addressed claim construction, anticipation and obviousness, affirming the district court’s contested claim construction of “treating hair loss” and its determination that the patents were not anticipated, but reversing the finding of nonobviousness.  I could write a lengthy post on the majority opinion alone, but this passage particularly caught my eye since it relates specifically to the issue of what subjects the Federal Circuit considers to be issues of law versus fact in the nonobviousness inquiry:

In sum, even if the district court did not commit clear error in its findings of fact, failure to consider the appropriate scope of the ’029 patent’s claimed invention in evaluating the reasonable expectation of success and secondary considerations constitutes a legal error that we review without deference.

Slip Op. at 23 (emphasis added).  The substantial breadth of the asserted claims of the ‘029 patent was particularly troubling to the majority, both in assessing the Graham factors and the nexus for secondary considerations.

Writing in dissent, Judge Chen would have found the ‘029 patent to be nonobvious.  In reaching this conclusion, he placed much more weight on the determination of the examiner during prosecution:

To begin with, issued patents enjoy a presumption of validity, which can only be rebutted by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2245–46 (2011). A party challenging a patent’s validity must do so with “evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions are highly probable.” Buildex Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (citing Colorado v. New Mexico, 467 U.S. 310, 316 (1984)). This is not a burden that is easily satisfied.

Dissent at 2.  Particularly persuasive to Judge Chen was the fact that examiner considered the key reference during examination and allowed the claims over it following an amendment by the patentee:

In light of the particularly heavy burden to show obviousness over a reference disclosed during prosecution and discussed by the examiner, Appellants have
not shown that Johnstone now somehow teaches or suggests the very structural feature that the patentee claimed to distinguish the Johnstone compounds.

Id. at 4.  On his part, Judge Chen found the disclosure Johnstone reference to be meaninglessly broad and generic:

This is not a situation in which there are a finite number of identified, predictable solutions. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007). Rather, the
single sentence in Johnstone actually proposes hundreds of thousands, or even millions, of variations on the alpha chain. [] The compound in Johnstone
could have a saturated bond at any position on the alpha chain, an unsaturated bond at any position, a triple bond at any position, or even a combination of any of these bonds. As a result, a person of ordinary skill in the art was not faced with a “small or easily traversed” number of options based on Johnstone. [] In this instance, covering everything effectively tells us nothing.

Id. at 5-6 (internal citations omitted).

Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2014) Download BMS v Teva
Panel: Prost, Plager, Chen (author)

Bristol-Myers Squibb (BMS) owns Patent No. 5,206,244, which relates to certain antiviral compounds.  At issue was claim 8, which covers entecavir, a treatment for hepatitis B that BMS markets under the name BARACLUDE.  Teva submitted an ANDA seeking to market a generic version of entecavir; BMS sued for infringement.  After trial, the district court held claim 8 to be obvious based on the selection of 2’CDG as a lead compound from the prior and a finding that a skilled artisan would have been motivated to make the necessary modification with a reasonable expectation of success at creating a compound with beneficial antiviral properties.  BMS appealed.

Unlike the Allergan case, the analytic framework presented by the parties for the question of obviousness was the lead-compound approach.  BMS contended that the district court had erred in selecting 2′-CDG as a lead compound, a particular legal framework that is frequently used in chemical compound cases.  The Federal Circuit disagreed, agreeing with the district judge’s conclusion that “those of ordinary skill in the art would have selected 2′-CDG, a carbocyclic analog, as a lead compound for
further development efforts before BMS applied for the 244 patent in October 1990.”  Slip Op. at 10-11.   The appellate court also rejected BMS’s argument on motivation to modify the lead compound to make the patented compound, pointing to detailed evidence and testimony on why the modification would have been obvious.

Nor was the presence of unexpected results sufficient to establish nonobviousness on their own.

Contrary to BMS’s argument, unexpected results do not per se defeat, or prevent, the finding that a modification to a lead compound will yield expected, beneficial
properties. Rather, as secondary considerations of nonobviousness, they come into play in determining “the ultimate question of patentability.”

…

Secondary considerations of nonobviousness “must always when present be considered,” and can serve as an important check against hindsight bias. See Cyclobenzaprine, 676 F.3d at 1075-76, 1079 (quoting Stratoflex, Inc. v. Aeroquip Corp, 713 F.2d 1530, 1538-39 (Fed. Cir. 1983)). While secondary considerations must be taken into account, they do not necessarily control the obviousness
determination.

Slip Op. at 15-16.  Here, the district court did not commit error in its factual findings that the unexpected properties did not compel a finding of nonobviousness, and the two legal errors that it committed (“(1) comparing entecavir to another hepatitis B drug on the market instead of the closest prior art, 2′-CDG; and (2) inappropriately look[ing] to what the inventor knew at the time of the invention—instead of one of ordinary skill in the art—to determine what was expected.”  Slip Op. at 18) were harmless.

First Impressions: My reading of Judge Chen’s majority opinion is that it reflects a careful, thorough review of the district court’s opinion (which itself is helpfully quite detailed and Magistrate Judge Burke should be commended for his own thoughtful analysis).  Conclusions are supported by detailed discussions and even if one disagrees with the overall conclusion of obviousness here, that disagreement seems less likely due to the carefulness of his approach and more likely due to some of the core difficulties inherent in pharmaceutical innovation such as the challenge of ascertaining marketable in vivo efficacy and the high value our society places on large-scale data-driven safety and efficacy determinations, determinations that can be quite costly yet have little if any direct role in substantive patent law questions.

Another possible reading of these two opinions is that they reflect a fair amount of deference to the decision making of others more familiar withe the specific facts.  In Allergan, in addition expressly referencing the examiner’s decision to allow the patent, Judge Chen’s view would also have affirmed the district court’s ruling of nonobviousness.   And in BMS, Judge Chen drew heavily on the district court’s findings.  (That said, one reason why these opinions aren’t in as much tension as they might be is because the district court’s analysis of obviousness in Allergan was at least an order of magnitude thinner than that of the judge in BMS).  At this point, this is merely an observation, and we’ll have to wait for future opinions from Judge Chen.

“Mine-run” and other puzzles

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By Jason Rantanen

I’m currently spending much of my time attempting to untangle the mess that is the law around Section 284 enhanced damages (i.e.: willful infringement) and Section 285 attorney fee awards (i.e.: exceptional case determinations).  Octane Fitness doesn’t reset the field so much as add a new layer to an already complex area of law, a layer that also potentially impacts willful infringement due to the Federal Circuit’s linking of the two standards.

There’s a term in Octane Fitness, though, that leaped out at me as I was reading the Court’s opinion.  In discussing what constitutes an exceptional case (and why the Federal Circuit’s objective + subjective standard is incorrect), Justice Sotomayor writes:

But a case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.

572 U.S. ___ (2014), Slip Op. at 9.  Perhaps you’re all snickering, but I had no idea what “mine-run” meant so I went and looked it up.  (My first thought was that it had something to do with Minecraft, but I knew that couldn’t possibly be right.)  In the interests of sharing my new-found enlightenment, here’s the definition from Meriam-Webster Online:

1:  the unsorted product of a mine
2:  a product of common or average grade <the mine-run of commercial breads pall with continued eating — Lee Anderson>
The term “mine-run” turns out to be quite popular in recent Supreme Court opinions, appearing in 34 since 2000 (and only 5 in the two centuries before that based on my Westlaw search), although there’s no consensus on whether the term is “mine-run” or “mine run.”
This got me to thinking about other somewhat-Delphic references that the Justices have used in their patent law opinions.  (Or at least, esoteric to me).  The one that immediately comes to mind is the Court’s periodic reference to candles and games, which popped up most recently in FTC v. Actavis.  I’m not planning on doing an exhaustive search, but I suspect there are others.

Guest Post: The Rise of The End User in Patent Litigation (and Attorney Fee Shifting)

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Professor Bernstein’s current scholarship focuses on the role of end users in the patent system.  Because end users are fast becoming major stakeholders in the operation of the patent system, I asked her to write a few words about how she conceives of these players. – Jason

Guest Post by Gaia Bernstein, Professor of Law, Seton Hall University School of Law

We usually think of two players in the patent system: the patentee and its competitor.  Increasingly, however, end users – who are neither patentees nor competitors – are playing a significant role in the patent system.  The attention of the press has recently turned to patent assertion entities who are suing vast numbers of customers using patented technologies in their everyday businesses.  For example, one patent assertion entity has sued individual podcasters, including the Comedian Adam Carolla. End users were also principal players in some of the recent patent cases before the Supreme Court. In Bowman v. Monsanto, Monsanto sued a farmer for re-using its patented seed technology. End users also appear as patent challengers: in Association for Molecular Pathology v. Myriad Genetics, patients and physicians sued to invalidate breast cancer gene patents. And patients and drug stores repeatedly challenge pay-for-delay agreements between patentees and competitors, claiming they undermine patients’ interests in access to generic drugs.  This is only the beginning: end users are likely to become even more prevalent in patent litigation, as 3D printers become more popular, making it more likely that an individual or a small business will make an infringing item that will expose them to patent liability.

All of this begs the questions what is an “end user” and how well is patent law suited to deal with this new player?  In The Rise of The End User in Patent Litigation, forthcoming in the Boston College Law Review, I define end users as people and companies that use a patented technology for personal consumption or in their business.  I emphasize that they are strictly users.  Even if they incorporate the patented technology into a product or service they offer their customers, they do not make or sell the technology standing by itself.  I explain that end users differ from competitors in three respects.  First, end users usually lack technological sophistication – they are generally not technological companies and do not produce and supply the allegedly infringing technology. Second, end users usually become involved in the patent conflict relatively late in the life of the patent, after the patented technology enters the market and achieves widespread adoption.  Third, end users are typically one-time players. In most cases the technology is ancillary to their business and they do not have a long-term stake.

Patent litigation is exorbitantly expensive. It is all the more expensive for end users who lack the technological expertise to challenge validity and infringement claims and cannot rely on in-house technological expertise. Because end users are often one-time players, they prefer to avoid the expense of patent litigation and settle even strong cases, making them a particularly lucrative target for patent owners. Unfortunately, even the most recent substantive patent law legislation, the America Invents Act (“AIA”) fails to address the growing role of end users. I show that while the AIA attempts to address the needs of small entities, mainly by adding and changing procedures to challenge patents in the patent office, thus providing a cheaper and faster forum for contesting validity, those same novel procedures are largely unsuitable for end users because they permit expansive challenges mostly early in the life of the patent before end users are likely to be involved in the patent dispute. The procedures that allow challenges later in the life of the patent limit the grounds available for challenging the patent. Thus, unlike even small competitors of the patent holder, end users are unlikely to benefit from the enhanced patent office proceedings put in place in the AIA.  The effect of this is to leave them without the very same tools that were implemented to protect small entities.

Ultimately, the rise of the end user is a complex phenomenon that needs to be addressed by a series of reforms, which I am addressing in other works in progress.  Here, however, I focus on the role that fee shifting of attorney fees and litigation expenses to the prevailing party can play in end user cases because a modest change could contribute toward leveling the footing of end users in all type of end user-patentee disputes.

Fee shifting in patent litigation has been a hot topic this year. Recently, the Supreme Court decided two fee shifting cases: Highmark v. Allcare and Octane Fitness v. ICON Health & Fitness. In Octane Fitness, the Court lowered the standard for awarding fee shifting in patent litigation. Congress is also considering multiple bills advocating different versions of fee shifting. The problem is that although some of the congressional bills address PAE’s suits against customers, neither these bills nor the Supreme Court decisions address the broader role that end users are now playing in our patent system. In the article, I argue that the case for fee shifting is strong where end users are implicated particularly because of the great inequality in technological sophistication between end users and patentees and because end users frequently represent many other parties who are not before the court. For these reasons, end user status should be considered as a factor that weighs in favor of fee shifting, particularly when the end user fits the paradigmatic form of a classic end user.

There is more in the article than I can write about here. If you are interested, please take a look at the full version. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2440914.

Struggling with Nautilus: Patent Claims Through the Eyes of Non-Lawyer Technologists

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By Dennis Crouch

This post goes on a tangent from the recent decision in Q.I. Press Controls v. Michelle K. Lee, USPTO Chief (Fed. Cir. 2014).

Quad/Tech’s Patent No. 6,867,423 covers a visual inspection system for identifying errors in printing press operation – such as paper misalignment or poor color. The invention basically has a digital camera with a ring non-strobe LED’s surrounding the lens. The camera is pointed toward the printing press operation. The prior art included cameras with ring-LED lighting as well as the use of cameras to monitor printing press activity. However, none of the prior art references combine both of these features. In the bulk of the claims, the “printing press” element is found only something akin to a field-of-use limitation found in the claim preamble. Thus, claim 1 is directed to “[a] visual inspection system configured to be in optical communication with a substrate of a printing press, said visual inspection system comprising: . . .” However, claims 61-72 refer more expressly to the printing press linkage within the body of the claim.

The court’s opinion (as we cover in a separate post) focuses on obviousness and written description. Here, I write about indefiniteness as it relates to these preamble limitations.

Is it a Technical or a Legal Document?: A usual rule of patent claim construction is that limitations found in the preamble of a claim – especially field-of-use limitations – do not limit claim scope. However, sometimes preamble terms are limiting as the Court explained in Pitney Bowes:

If the claim preamble, when read in the context of the entire claim, recites limitations of the claim, or, if the claim preamble is ‘necessary to give life, meaning, and vitality’ to the claim, then the claim preamble should be construed as if in the balance of the claim.

Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1305 (Fed. Cir. 1999); M.P.E.P. 2111.02. Many claim construction questions involve drawing quite fine-lines of involving coverage scope. Preamble-limitations are different because we are often talking about importing an entire limitation into the coverage that was not previously there. By examining the body of court decisions, it is possible to elucidate a set of factors helpful in determining whether a particular preamble-limitation should be scope-limiting. But this is a pretty tricky issue and I don’t think that we should assume that inventors and technology developers would understand the particular circumstances of when certain preamble-limitations are limiting. Rather, those legal-technicality questions are typically the province of patent attorneys who work with the substance of the law on a daily basis.

It turns out this is important following the Supreme Court’s recent indefiniteness decision in Nautilus. In Nautilus, the Supreme Court provided a clear statement that patent claims are technical-in-nature and designed to be read by persons-having-ordinary-skill-in-the-art. For camera technology, someone of skill in the art might be a camera designer and in the indefiniteness context the indefiniteness question is whether the claim scope would be reasonably certain to the camera designer (after considering the intrinsic evidence).

Tying this back to the issue of preamble-limitations: An ordinary camera designer would not be familiar with the law of preamble-limitations and how they would apply in this case. And, this leaves us with a several of potential results. Perhaps (1) a claim is invalid as indefinite when its scope depends upon and substantially changes according to the particularities of the preamble-limitation doctrine. (2) An alternative tact is to assume that the Supreme Court’s PHOSITA has been advised by a skilled patent attorney and thus understands the law.

Presidential Elections: Campaign IP Enforcement

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By Dennis Crouch

As we move into 2015, the presidential campaign season will begin again in earnest. As part of that process, it is always interesting (for IP attorneys) to see candidate views on intellectual property law. The standard approach is for candidates to say something akin to: IP rights are a fundamental aspect of our innovation economy but, patent trolls are bad and we should be careful to avoid an overzealous system that would allow IP rights to hinder the market or further innovations.

Potential candidate Hillary Clinton has made the first move showing her cards – sending a cease and desist letter to the “libertymaniacs” for violation of the campaign’s IP rights. The offending copy is shown below as is its clearly copied-from source. At this point, it is unclear whether Clinton is claiming copyright infringement, trademark infringement, or some other IP rights violation.

In general, this action falls within the category of using intellectual property rights to chill speech. It is fairly rarely for patent rights to be asserted in this category, although the ACLU argued in Myriad (at the district court) that speech rights included the right to conduct a scientific inquiry and that any patent rights impinging upon that right should be seen as invalid. The STEM-related speech concern is more relevant when focused on trade secrets and confidentiality requirements. The more applicable “fundamental rights” concern associated with patents is likely to be tied up with basic freedoms that could loosely be termed ‘privacy rights’ that should allow individuals to tinker and study without creating the potential for liability.

Examples of Nautilus Impact

Patent

In Nautilus, the Supreme Court made it easier to void a patent claim based upon its ambiguity.

I’m looking for a few real examples of cases where the standard makes a difference — claims that do not fail the ‘insolubly ambiguous’ test but that do fail the ‘reasonably certain’ test.

– Dennis

How will Nautilus affect indefiniteness at the PTO?

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Guest post by Lisa Larrimore Ouellette (Visiting Fellow, Yale Law School Information Society Project) and Jonathan Masur (Deputy Dean and Professor of Law, University of Chicago Law School).

In our new draft article, Deference Mistakes, we examine indefiniteness doctrine as one example of how decisionmakers sometimes mistakenly rely on precedents in inapposite contexts. So we were very interested in the Supreme Court’s reformulation of the indefiniteness standard in Nautilus v. Biosig on Monday, and particularly in how this decision will affect the indefiniteness standard applied in the examination context.

Pre-Nautilus, claims under examination at the PTO were supposed to be evaluated under a stricter indefiniteness standard than granted claims. In Exxon Research (2001), the Federal Circuit stated that to “accord respect to the statutory presumption of patent validity,” it would find granted patent claims indefinite “only if reasonable efforts at claim construction proved futile” and the claim was “insolubly ambiguous.”

The obvious corollary to the Federal Circuit’s holding in Exxon is that when the presumption of validity does not apply, the indefiniteness standard should be more stringent. The BPAI explicitly clarified this point in the precedential Ex parte Miyazaki (2008) when it held that examiners should use “a lower threshold of ambiguity” such that claims are indefinite if “amenable to two or more plausible constructions,” and the MPEP emphasizes this point.

As we describe in Deference Mistakes, however, the less stringent “insolubly ambiguous” standard was mistakenly imported into the examination context and repeatedly cited in BPAI and PTAB decisions even after Miyazaki. And once ambiguous claims are granted, they are entitled to the presumption of validity and are less likely to be struck down, notwithstanding that they were granted under a mistaken standard.  The affirmance of these patents on appeal following infringement proceedings likely led to the PTO granting even more indefinite patents, which were then upheld on appeal, a vicious cycle. And if these patents came to be seen as the new normal, that could have made the PTO even more permissive. The result could have been creeping decay of the PTO’s effective indefiniteness standard, with indefinite patents begetting ever more indefinite patents.

At first glance, Nautilus appears to fix this problem of two different legal standards that might be mistakenly applied in the wrong context. In footnote 10, the Supreme Court states that the “presumption of validity does not alter the degree of clarity that §112, ¶2 demands from patent applicants,” suggesting that the legal test for indefiniteness should be the same in the infringement and examination contexts. The Court expressly leaves open whether this evaluation of the claims involves subsidiary factual findings and whether deference is due to any such findings—issues the Court will return to next Term in Teva v. Sandoz. But however these fact-based issues are resolved, it seems that Miyazaki‘s articulation of the legal standard for indefiniteness is no longer good law (unless, of course, the Federal Circuit adopts this as the unitary test).

Doctrinally, this requirement of a unitary legal standard for indefiniteness seems clearly right: as the Supreme Court explained in Microsoft v. i4i, the presumption of validity required by §282 is an evidentiary standard that requires invalidity to be proven by clear-and-convincing evidence, and it is thus inapplicable to questions of law. Eliminating the dual standard also has the apparent benefit of preventing the kinds of overt mistakes we point out in Deference Mistakes.

As we explain in Deference Mistakes, however, eliminating the formal legal distinctions between “deference regimes” may not solve the problem where such deference arises from functional considerations. We worry that preventing the PTO from applying “a lower threshold of ambiguity” might inadvertently undermine the PTO’s current efforts to improve patent claim clarity. Although the EFF cheered Nautilus for being likely to “invalidate many more patents,” the Court suggested at p. 12 that the test “the Federal Circuit applies in practice” may be fine, so on remand the Federal Circuit may well use the same analysis under a new name. Even if indefiniteness is a purely legal question such that the presumption of validity has no formal effect, in practice courts may apply a relatively loose standard due to an understandable reluctance to impose the drastic penalty of invalidity just because a claim could have been written more clearly. In the examination context, where applicants have the ability to amend vague claims, the PTO’s efforts to demand greater clarity make sense. But if the looser indefiniteness standard from the infringement context is incorporated into the examination context—no longer as a doctrinal mistake, but as a legal requirement—it may subvert these efforts and exacerbate the problem of ambiguous patents.