AstraZeneca AB v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2022)
The Federal Circuit has denied AstraZeneca’s petition for en banc rehearing in this scientific notation case. I’d like to see a Supreme Court petition on scientific notation. Here is the basic setup:
AZ’s formulation patent includes “0.001%” PVP K25.
Mylan’s accused product is slightly different, but still within standard rounding error (0.0005% to 0.0014%).
Is it infringing?
The court found it would normally be infringing, but the patent suggests a narrower range that includes “the precise number, with only minor variation.” Thus, the range of literal scope would be something like 0.00095 to 0.00104. And, that narrower scope means no infringement.
I’ve got three charts to show you below. The first and second are histograms showing the number of claims per US utility patent – 2021 and 2006 issue dates respectively. You’ll notice that the 2021 histogram has a much stronger central tendency focused on the buffet-limit of 20 claims. The 2006 patents are significantly more spread, with many more patents under and over 20-claims mark. That wider distribution is also shown in the time-series box-and-whiskers plot at the bottom (showing 25-50-72 percentiles in the box). And by the standard deviations: the standard deviation for the 2021 claim counts was less than half of that for the 2006 claim counts. Basically, the 2021 patents are much less likely to either a very large number of claims or a very small number of claims.
My hypothesis is that these changes are driven by several factors, with the following two most impactful: (1) Since 2006, there has been a substantially increases in USPTO fees associated with having more than 20 claims. That change has pushed folks away from having a large number of claims in a single patent; (2) Since 2006 we have also seen a further professionalization of patent prosecution, including a recognition that the applicant should include 20 claims if possible. This change has shifted applicants up from the very low numbers. Some may argue that restriction practice is also important. However, I don’t believe that restrictions have increased so dramatically as to cause this change.
But – why does someone need 20+ restatements of the invention? Would it be conceivable to have a system that includes just one claim? What do you think?
The fee structure for excess claims (>20) was established in the form we know back in 1982. The final chart below comes from 1980, and you see no 20-claim impact.
On his wonderful Fed Circuit Blog, Professor Taylor is hosting an interesting online symposium on the topic of Patent Law and Institutional Choice with the following nine thought provoking essays:
As expected, a panel of the Federal Circuit held last week that the PTO violated the First Amendment when it refused to register without his permission a mark criticizing former President Donald Trump. Unfortunately, the Court did little more than that. The PTO had denied registration under a provision in the Lanham Act requiring it to do so when a mark “[c]onsists of or comprises a name . . . identifying a particular living individual” without the individual’s “written consent.”[2] The Court held that, as applied to the mark TRUMP TOO SMALL, “section 2(c) involves content-based discrimination that is not justified by either a compelling or substantial government interest.”[3] But in an act of breathtaking judicial restraint, the opinion fails to provide any guidance as to what test the PTO should use in the future to avoid applying the statute in an unconstitutional manner as it processes thousands of routine registration decisions per year. Given that this issue will undoubtedly arise again, the PTO might justifiably wonder why it has been turned out onto Lafayette Square without any roadmap of what to do next.
Steve Elster’s trademark, TRUMP TOO SMALL as applied to shirts, is intended to “invoke[] a memorable exchange between President Trump and Senator Marco Rubio from a 2016 presidential primary debate, and aims to ‘convey[] that some features of President Trump and his policies are diminutive.’”[4] Hence, the mark is political speech at the heart of the First Amendment. Nonetheless, the PTO applied Section 2(c), determined that, unsurprisingly, the record did not contain any evidence that Trump consented to the registration of a mark calling his policies and “some features” too small, and therefore declined to grant the registration. In defense against Elster’s claim that this violated his free speech rights, the PTO justified the statute (or its mechanical application thereof) on the grounds that it was defending the right of publicity.[5] But as the Court of Appeals found, “challenges under state-law publicity statutes are ‘fundamentally constrained by the public and constitutional interest in freedom of expression,’ such that the ‘use of a person’s identity primarily for the purpose of communicating information or expressing ideas is not generally actionable as a violation of the person’s right of publicity.’”[6] In other words, as my previous post detailed, every jurisdiction that recognizes the right of publicity also recognizes some sort of First Amendment defense to the assertion of such a claim. The form these defenses take varies from state to state, and they are roundly criticized by scholars as offering insufficient free speech protection. The problem is, the PTO applies Section 2(c) to bar registration without any consideration of a First Amendment defense.
The Federal Circuit has decided that this application of the statute violated Mr. Elster’s rights, but declined to say which of the myriad First Amendment defenses to the right of publicity the PTO might apply in the future in making registration decisions of this sort. Instead, the Court suggested in dictum that the statute might be facially unconstitutional as overbroad, but declined to rule on that issue either:
As Elster raised only an as-applied challenge before this court … we have no occasion to decide whether the statute is constitutionally overbroad. We note, however, that section 2(c) raises concerns regarding overbreadth.[7]
The Court explained that “‘a law may be overturned as impermissibly overbroad’ when ‘a ‘substantial number’ of its applications are unconstitutional, ‘judged in relation to the statute’s plainly legitimate sweep.’”[8] The Court then enticingly offered that “[i]t may be that a substantial number of section 2(c)’s applications would be unconstitutional,” because “[t]he statute leaves the PTO no discretion to exempt trademarks that advance parody, criticism, commentary on matters of public importance, artistic transformation, or any other First Amendment interests.”[9] “Nonetheless,” the Court concluded, it will “reserve the overbreadth issue for another day.”[10] But why do we have to wait for another day? Now the PTO has to go to work violating the Constitution again, so that the same arguments can be briefed and argued again, to what end? One can only conclude that in addition to Trump, the opinion in In re Elster is also “too small.”
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[1] Professor of Law, Golden Gate University School of Law.
[3]In re Elster, No. 20-2205, slip op. at 5 (Fed. Cir. Feb. 24, 2022).
[4]Elster, slip op. at 2 (quoting Elster’s registration application).
[5] The PTO also argued that it must deny registration to safeguard Trump’s right of privacy, an argument so weak as to deserve even less attention than this footnote. As the Court held, a public official does not enjoy a right of privacy protecting him from criticism except in the case of “actual malice,” which is “the publication of false information ‘with knowledge of its falsity or in reckless disregard of the truth.’” Elster, slip op. at 11 (quoting Time, Inc. v. Hill, 385 U.S. 374, 388 (1967)).
[6]Elster, slip op. at 15 (quoting Restatement (Third) of Unfair Competition § 47 cmt. c.).
[8]Elster, slip op. at 19 (quoting Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442, 449 n.6 (2008) and New York v. Ferber, 458 U/S. 747, 769-71 (1982)).
In re: Violation of the Revised Protocols (Fed. Cir. 2022)
In a new precedential order, the Federal Circuit has issued notice to attorneys and parties to abide by the court’s COVID protocols. One such protocol is a strict limit on the number of people who can attend oral arguments — only two people:
Only arguing counsel and no more than one attendee whose presence is necessary to assist or supervise arguing counsel (e.g., a client, lawyer sitting second chair, or paralegal) are permitted access to the National Courts Building and the courtroom. All counsel are advised that the court will not entertain any motions to expand access to attend argument beyond arguing counsel and the one necessary attendee.
Notwithstanding the order, a group of attorneys involved in an appeal recently requested a party-of-six: attorney arguing; an assistant; two more attorneys; and two other individuals. The court denied that motion two days before oral arguments.
Still on the day of oral arguments, the four attorneys showed up “hoping . . . that the panel would let them attend.” Once inside the courtroom, the clerk then kicked them out of the building.
In its decision, the court found that these folks “clearly violated the Revised Protocols. . . Most troubling is Respondents’ decision to come together in person to the National Courts Building after this court had just denied their motion for additional attendees only two days earlier.”
Still, the court did not identify the parties responsible here and “decided not to impose sanctions” since “Respondents express earnest remorse, have not previously been accused of misconduct, and because this situation has not arisen before.” The opinion was drafted as a general warning:
[T]he bar is on notice that this court takes compliance with these protocols very seriously and that sanctions will likely be imposed if a future violation of the protocols takes place.
The Supreme Court has not yet granted writ of certiorari in any patent cases this term. And, absent an unusual shadow-docket patent case, it is now too late for any case to be granted and heard this term. Rather, any new grant this term will very likely be pushed back to the October 2022 Term for hearing and decision.
Still, there are a number of important patent cases pending before the court. Lets talk them through.
Although no petitions have been granted, the Supreme Court has requested amicus briefs from the Federal Government in four particular cases. The request, known as a CVSG, typically requires four of the nine Justices — the same number needed to grant certiorari. Because of that heavy threshold, a CVSG is typically seen as an important signal that the court is likely to grant certiorari. But, the real boost only happens if the government brief supports certiorari.
Here are the four CVSG cases, I describe them in more detail below.
Eligibility under Section 101: American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, et al., No. 20-891 (CVSG requested May 3, 2021);
Res Judicata and the Patent-Specific Kessler Doctrine: PersonalWeb Technologies, LLC v. Patreon, Inc., et al., No. 20-1394 (CVSG requested October 4, 2021);
Undermining Jury Decisions: Olaf Sööt Design, LLC v. Daktronics, Inc., et al., No. 21-438 (CVSG requested October 4, 2021); and
Appellate Standing for IPR Challenger: Apple Inc. v. Qualcomm Incorporated, No. 21-746 (CVSG requested February 22, 2022).
Standing: The most recent CVSG is in Apple v. Qualcomm, a case focusing on appellate standing following an IPR final written decision favoring the patentee. The statute indicates that any party to an IPR final-written-decision has a right to appeal. 35 U.S.C. § 319. However, a statutory right is insufficient for Constitutional standing. Rather, an appellant must show concrete injury caused by the PTAB decision and redressability of that injury. Qualcomm had previously sued Apple for patent infringement, and Apple responded with a set of inter partes review petitions. The parties settled the litigation before the IPRs were complete, but agreed that the IPRs could continue. The settlement also included a license to thousands of Qualcomm patents. Here’s the problem — in its appeal, Apple was not able to show Apple’s rights or duties under the license would change if the patents were cancelled. And, although the license is set to expire before the patents, the court found that potential future infringement to be too speculative. The petition asks the following question: Whether a licensee has Article III standing to challenge the validity of a patent covered by a license agreement that covers multiple patents. This question ties the case directly to MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) where the Supreme Court found standing for a licensee to challenge a patent — and rejecting the Federal Circuit’s reasonable-apprehension-of-suit requirement. Apple’s petition attracted four amicus briefs, including a bipartisan brief from Senator Patrick Leahy (D) and Congressman Darrell Issa (R).
Intel v. VLSI Tech, also focuses on IPR standing, albeit in somewhat different posture. Intel’s IPR petition was denied under the NHK-Fintiv Rule that permits the PTAB to deny institution of otherwise sufficient IPRs based upon the existence of ongoing parallel litigation involving the same patent and parties. The statute includes a statement that the USPTO’s discretionary denial of institution is “final and nonappealable,” but Intel argues that appeal is still proper here because the denial was “arbitrary and capricious”, “violates the AIA and undermines the role of IPR in Congress’s effort to improve the integrity of the patent system.”
Eligibility: American Axle v. Neapco has been awaiting views of the SG since May of 2021. The asserted patent covers a new method of manufacturing an automobile drive-shaft with reduced vibration. The basic idea: insert a “tuned” liner into a hollow shaft. The liner is special–it is made of a “reactive absorber” and its mass and stiffness have been “tuned” all for the purpose of attenuating both “shell mode vibrations” and “bending mode vibrations” of the shaft. The petition asks two questions: (1) What does it mean to be “directed to” an ineligible concept? (Alice Step 1). and (2) Is eligibility a pure questions of law (based upon the claims); or does it also involve a “question of fact for the jury based upon the state of the art at the time of the patent?” A number of folks filed amicus briefs in the case. The most interesting was submitted by Profs. Menell and Lefstin. Still, we are awaiting the views of the Solicitor General in American Axle.
Three other eligibility cases are pending:
PersonalWeb Technologies LLC, v. Google LLC;
Universal Secure Registry LLC v. Apple Inc.; and
Gabara v. Facebook, Inc.
These cases have all tied their mounts to the lead horse of American Axle and so may rise or more likely fall together. The court recently denied certiorari in Yu v. Apple. The invention in Yu was a multi-lens camera deemed abstract by the Federal Circuit.
The Kessler Doctrine: If you want to really dig into this case, please read my article on the topic that I wrote for an Akron Law review IP symposium issue. Dennis Crouch & Homayoon Rafatijo, Resorbing Patent Law’s Kessler Cat into the General Law of Preclusion, 54 Akron Law Ref. ___ (2022)(forthcoming).
The basics you know about res judicata (claim preclusion) and collateral estoppel (issue preclusion), but in patent law we have a third and apparent co-equal form of judge-made preclusion known as the Kessler Doctrine. Although the doctrine derives its name from a 1907 Supreme Court decision, the doctrine in the form know it today was created by the Federal Circuit in its 2014 Brain Life decision and then expanded later in SpeedTrack (Fed. Cir. 2015) and again in PersonalWeb Techs. (Fed. Cir. 2020). In its petition, PersonalWeb argues that Kessler should not be seen as a freestanding doctrine and should not apply in situations involving voluntary dismissal.
I expect that the SG’s office will agree with our argument that the Kessler should be seen as falling fully within the bounds of issue and claim preclusion and that the Federal Circuit improperly expanded its reach.
The fourth and final case with a pending CVSG is Olaf Sööt Design, LLC v. Daktronics, Inc. The petition offers a classic argument that the Federal Circuit’s sua sponte claim construction on appeal undermined the jury verdict in a way that conflicts with Soot’s Seventh Amendment rights. Although patent infringement is a question of fact that goes to the jury, in many cases the courts effectively decide the infringement questions as part of the claim construction. Here, the Federal Circuit did that, but in a further offensive way — sua sponte; after the jury had already decided the case; and in a manner that “essentially recasts” the factual infringement question as a claim construction issue.
For litigators familiar with the case law, the focus here is the Federal Circuit’s 2008 decision in O2 Micro and its subsequent expansion. The petition explains: “This line of authority … extends well beyond this Court’s Markman ruling and now fundamentally disrupts the orderly resolution of patent disputes at the trial level.”
A somewhat similar pending petition is Daikin Industries v. Chemours Co. Rather a jury trial, Daikin involved an IPR decision by the PTAB. The question in the petition is whether the Federal Circuit is permitted to “reverse an administrative agency’s decision on a factual ground not addressed by the agency.” And, rather than basing its argument on the 7th Amendment, Daikin’s petition is grounded in the Administrative Procedure Act and “the principles of separation of powers embedded within that Act.”
Full Scope Enablement: Amgen v. Sanofi has the potential of being a huge case in terms of how it impacts the future of biotech innovation. The patent here claims a genus of monoclonal antibodies that the Federal Circuit lacked sufficient enabling disclosure. The petition asks two particular questions: 1. Is enablement a question of fact for the jury or a question of law as the FedCir held; 2. Does the statutory “make and use” requirement require enablement to the “full scope of the claimed embodiments”?
Prior Art for IPRs: An interesting statutory interpretation petition is pending in Baxter v. BD. Congress was careful to limit the scope of IPR proceedings. The IPR petition may request claims “only on the basis of prior art consisting of patents or printed publications.” 35 U.S.C. 314(b). In the case, expert testimony was used to fill a gap in the prior art, and the question is whether the use of expert testimony in this manner violates the statutory provision.
PTAB Practice: The Supreme Court recently denied a number of NHK-Fintiv discretionary dismissal cases. One more is still pending – Intel Corporation v. VLSI Technology LLC. The Solicitor’s office filed a strong responsive brief which makes me think that we’ll see a denial here.
A lot of litigation power is being spent on whether or not the plaintiff’s choice of judge (Judge Albright) will stick. The statute for proper venue in patent narrowly proscribes appropriate venues and the Federal Circuit has further limited venue with its aggressive granting of mandamus actions on convenience grounds.
Ikorongo Texas LLC, v. Samsung Electronics Co., Ltd., the patentee (Ikorongo) attempted to alter the terms of the debate by geographically dividing its patent — with a particular company (Ikorongo Texas) rights to the patent only with respect to the counties encompassed by Judge Albright’s court in the Western District of Texas. When the defendants attempted to transfer venue to N.D.Cal., the patentee explained that district would not be proper under the venue statute 1400(b). On mandamus, however, the Federal Circuit cut through the corporate form — finding that this division of rights “recent, ephemeral, and artificial” and thus could not be used to keep the case in Texas. The petition directly challenges this aspect of the Federal Circuit decision and also asks the Supreme Court to rethink its public-and-private factors used for convenient forum — they are extremely outdated.
Last case still pending: Heat On-The-Fly, LLC. v. Energy Heating, LLC. In the case, the patentee lost due to inequitable conduct. Basically, the patentee failed to disclose pre-filing sales of the invention. The court also found the case exceptional and awarded attorney fees to the defendant. In addition to the fact of inequitable conduct, the court also noted that the patentee pursued aggressive litigation despite knowing that the patent was unenforceable. The trial court award was affirmed on appeal. Now, the patentee petitioned for certiorari with an argument that any analysis of attorney fees “must consider litigation misconduct, or lack thereof, in determining whether a case is exceptional under 35 U.S.C. § 285?” I don’t see this going anywhere.
In our new paper, The Truth About Design Patents, we debunk three widely held—but incorrect—views about U.S. design patents. Taken together, these myths paint a grim picture of design patents:
Half of all design patent applications are rejected.
Most asserted design patents are invalidated in litigation.
Most litigated design patents are not found infringed.
By this account, design patents are hard to get, hard to defend even if you do get them, and hard to recover on even if you do get and defend them. These beliefs are commonplace in the literature and often invoked without citation. But, when we traced these assertions back, we found an origin story of weak support and misunderstood data.
In our paper, we provide more current, transparent statistics to replace each myth that we debunk. However, we strongly caution against over-interpreting our findings.
Where do these myths come from?
The origins of these claims lie in three old and misunderstood sources: a 1985 study by Thomas Lindgren, a 1979 study by the USPTO, and a 1953 study by Raymond Walter. The Lindgren study contributed to all three claims, whereas the USPTO and Walter studies contributed mainly to the second claim—regarding frequent invalidation during litigation.
One big problem with these studies is that, as you can see from the summary above, they’re all really old. Walter’s data preceded the passage of the Patent Act of 1952. Even though the most recent one, the Lindgren study, was published in 1985, it only considers data through 1983. And the Federal Circuit hadn’t yet decided its first design patent case at that point. So these studies can’t tell us much about what’s going on in the Federal Circuit era, unless one assumes—unreasonably—that the Federal Circuit didn’t meaningfully change design patent law.
We also found other problems with these studies. For example, Lindgren noted in his article that his sample size was too small to draw statistically significant conclusions. But his data was cited by others, in citation networks we trace in much more detail in the paper, as if it were statistically significant. Moreover, a 1999 paper mis-cited Lindgren for a claim that the 1985 study didn’t actually make, and that mistake is what hardened into the first piece of conventional wisdom noted above: that half of all design patent applications are rejected.
What’s the real story?
Recognizing the best way to fight bad data is with better data, we also offer corrections and updates to the record. The following findings about the current state of affairs follow the same sequence: acquiring design patents, defending them, and enforcing them.
Acquiring Design Patents
For nearly the last quarter-century, the success rate of design patent applications seems to have been over 85%, not the 50% that Frenkel reported in 1999. (We note that our findings are consistent with what Professor Crouch found in his 2010 study of design patent examination.)
Allowance of Design Applications as a Share of Total Dispositions (1989–2020)
Allowance Rate of Design Applications as a Function of Total Design Applications Filed in the Same Year (1989–2020)
Our source is the USPTO’s own annual reports going back to 1989, the oldest data that is readily available. This data shows that, since 1989, the apparent grant rate for design patents has stayed at or above some 70%—whereas the volume of design patent filings has quadrupled over the same period. By the mid-1990s, that rate was nearly 80%.
But most regular design applications (i.e., those not filed through the Hague System) are kept confidential and unpublished unless and until they issue as patents. So how can we reach this finding if application-level data is all broadly unavailable? The USPTO annual report data reports three totals relevant for us: (1) design applications newly filed that year, (2) design applications allowed that year, and (3) design applications abandoned that year. From this, we can infer the success rate of design applications. It’s not perfect but it’s the best we can do right now.
Defending Design Patents
Similarly, our research did not support the assertion that most litigated design patents are invalidated in the courts. In fact, the opposite is true. For the period of 2008–2020, district courts making validity determinations about design patents upheld them (i.e., found them “not invalid”) 88.4% of the time—and only 11.6% of these determinations resulted in a patent being invalidated. Relatedly, over the same period, district courts making enforceability determinations about design patents upheld them 99.5% of the time—and only 0.5% were found unenforceable. The full paper explains how we reached these figures, which are based on a study of nearly 1200 case documents in U.S. district courts where a determination was made about patent validity or enforceability.
(We note that our findings are consistent with what Andrew Torrance found in his 2012 study of design patent litigation. To some extent, our findings are even more patentee-friendly than the Torrance study.)
We also looked at design patent outcomes in the International Trade Commission and the UPSTO Patent Trial and Appeal Board. There were fewer cases in these tribunals, but the data we found paints a picture that is far from grim.
For the period of 2011–2020, ITC determinations about validity upheld the patent 95% of the time and invalidated only 5%. Given the relatively small population of ITC design patent cases, we caution against strong conclusions about strategic behavior across tribunals as is often seen with utility patents. Still, the available data does suggest that the ITC is not invalidating two-thirds of the design patents asserted there.
Meanwhile, from when PTAB trial proceedings came online in 2012 through 2020, the survival rate of design patents in these administrative trials has been 79%, reflecting a survival rate of 78% among IPR cases and of 81% among PGR cases. We refer to an overall survival rate because patents can survive (1) when petitions challenging them are never instituted—i.e., taken up for review by the PTAB—as well as (2) when they are evaluated on the merits and are found not invalid. The overall PTAB survival rate we report accounts for both.
Enforcing Design Patents
Finally, our research did not support the assertion that most litigated design patents are found not infringed:
Findings of Infringement as a Share of District-Court Design Patent Infringement Findings (12-mo avg) (2011–2021)
Among district court cases decided between 2011–2021, the share of decisions in which the court found infringement showed some volatility, but generally, the share of design patent decisions in which the court found infringement has remained almost entirely above 50% since 2011. Since 2015, the share of design patent decisions in which the court found infringement has remained above 80%.
Again, we caution against over-interpretation of these findings. Our aim is to correct the record and reorient a conventional wisdom that rests on an inaccurate and incomplete statistical picture. Thus, we are acutely mindful of the risk in replacing one mistaken view with another.
What comes next?
A number of people have called for changes to the design patent system, relying frequently on the myths that we have now debunked. We hope that our paper will bring more light to these debates and, at a minimum, encourage more fact-based discussion on these important policy issues. We also call for more empirical research and for more transparency of data in this area. For example, we see no good reason for the USPTO not to publish all design patent applications. We know that the USPTO is bound by current law, and we call on Congress to reconsider that policy and to stop exempting design patents from the general publication requirements of 35 U.S.C. § 122.
Reasonable minds might differ over whether 18 months is the right time for publication as is the case for utility patents, but there is no good reason—at least none we’ve yet heard—to keep them secret forever (unless granted). Publishing these applications would not only provide more data for research and policy analysis but would also provide transparency on the issue of how the USPTO handles applications for this increasingly important category of patents.
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Editors Note: We require disclosure of conflicts-of-interest for guest posts, including both financial interest and representation of interested parties. One of the authors (Vishnubhakat) indicated an attenuated potential financial conflict in that he owns stocks in a number of companies, including some tech companies that hold utility and/or design patents.
California Institute of Technology v. Broadcom Ltd. (Fed. Cir. 2022)
The Federal Circuit inadvertently created some confusion when it released its February 4 opinion in CalTech. The original opinion indicated that Section 315(e) estoppel applies to “all claims and grounds not in the IPR but which reasonably could have been included.” The problem with that statement was that the statute appears to directly limit estoppel to challenged patent claims. I recently wrote about the issue and suggested that the court issue a clarification. See, Dennis Crouch, Federal Circuit Needs to Clarify that CalTech Estoppel Applies Only to Claims Challenged via IPR, Patently-O (Feb. 16, 2022).
The original panel has now released a correction as follows:
Accordingly, we take this opportunity to overrule Shaw and clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not stated in the IPRpetition but which reasonably could have been included in the petitionasserted. In a regime in which the Board must institute on all grounds assertedchallenged claims and the petition defines the IPR litigation, this interpretation is the only plausible reading of “reasonably could have been raised” and “in the IPR” that gives any meaning to those words.
Errata opinion (Feb 22, 2022). The result here is that CalTech still expands the scope of estoppel beyond prior Federal Circuit precedent, but the estoppel is now limited to attempts to re-challenge the same patent claims.
Going forward there will be a next step in litigating the scope of 315(2) estoppel — will they estoppel will apply to claims that are patentably indistinct from those challenged? In addition, we can recognize that issue preclusion (collateral estoppel) may also begin to apply more rigorously in the cross-tribunal context.
I expect that this quick errata opinion saved at least $1 million in legal fees associated with folks arguing this issue in cases across the country.
Ikorongo Texas LLC, et al. v. Samsung Electronics Co., Ltd., et al. (Supreme Court 2022)
Ikorongo Texas LLC holds exclusive rights to a set of patents, but only with respect to use of the inventions in counties within the Western District of Texas. This includes McLennan County, home of Waco Texas and Judge Albright’s court. Ikorongo Tech LLC holds the remaining interest in the patents. This cutting-up of ownership rights is supported by old Supreme Court precedent as well as the Patent Act itself. See, Waterman v. Mackenzie, 138 U.S. 252 (1891) and 35 U.S.C. § 261 (patent rights may be conveyed “to the whole or any specified part of the United States”). Ikorongo Texas is also a Texas LLC (corporate registration in Texas), although its principles reside in North Carolina.
Ikorongo Texas then sued several companies, including Samsung & LG for patent infringement in WDTX. The defendants asked that the case be transferred to the more-convenient forum of NDCal under 28 U.S.C. § 1404. Although Judge Albright denied the motion, the Federal Circuit ordered transfer on mandamus. Now, Ikorongo Texas has petitioned the Supreme Court for writ of certiorari. To be clear Samsung and LG have previously litigated in Texas, they have lawyers in the state and lawyers willing to go to the state. The inconvenience of litigation is almost a total farce here. The problem these companies have is with Judge Albright, and the likelihood that the case will go to trial rather than being dismissed on summary judgment.
Section 1404 Transfer: Absent consent from “all parties,” § 1404 only allows transfer to districts where the case “might have been brought.” The key problem is that Ikorongo Texas could-not have brought the lawsuit in California court because venue would have been improper.
Might have been Brought: Section 1400(b) defines proper venue for patent cases. The statute provides two different ways for finding proper venue. First, state of incorporation. A patentee can sue in federal court housed in the state where the defendant is incorporated. In this case though, the defendants are incorporated in NY and Delaware. The Second approach asks whether “the defendant has committed acts of infringement and has a regular and established place of business” within the district. Here, the defendants each have a place of business in N.D.Cal., and arguably infringe the patents in the district as well. The catch, Ikorongo Texas argues that the infringing acts in California don’t impact Ikorongo Texas’s rights and therefore do not satisfy this second proper venue prong. Bottom line, Ikorongo Texas argues that it could not have sued in California, and therefore it is improper to transfer the case to California.
In its decision, the Federal Circuit did not play the game but instead effectively pierced the corporate veil between the patent owners and their affiliated companies — holding that “Ikorongo Texas is plainly recent, ephemeral, and artificial—just the sort of maneuver in anticipation of litigation that has been routinely rejected.”
In its petition to the Supreme Court Ikorongo asks this question as follows: “Can a district court transfer a matter to a statutorily proscribed district based on expressly disregarding undisputed facts creating the proscription.”
The petition also asks a second question: “Should Gulf Oil Corporation v. Gilbert, 330 U.S. 501 (1946), be overruled, particularly in light of stronger technological abilities shifting the reasonable focus for determining what is convenient for parties and witnesses?” Gulf Oil was decided in 1946 based upon the judicial doctrine of forum non conveniens. Two years later, Congress enacted Section 1404. Still, Gulf Oil has remained a guidepost for these issues of convenient forum.
The petition takes issue with how convenient forum is litigated today — arguing that it is not simply a search for the “least inconvenient forum” nor is a search for the most convenient forum for the defendant. Rather:
[T]here must be some base significant inconvenience to a party to warrant transfer. . . [I]t is a remedy for when the plaintiff vexatiously chooses a forum that would cause undue hardship to the defendants. Simply weighing one forum against another defeats the purpose of Section 1404 by allowing defendants to abusively move a case to a forum that is inconvenient for the plaintiff. This case presents a robust example.
Petition. The petition also highlights the fact that electronic communications have properly and dramatically changed how cases are litigated. And, “[a]lmost all of the private and public factors discussed by the Court in Gulf Oil are affected by the march of technology.”
Daikin Industries v. Chemours Co. (Supreme Court 2022).
Daikin’s IPR was successful, and the PTAB concluded that challenged claims of the Chemours patents were obvious. US Patent Nos. 7,122,609 and 8,076,431. On appeal though, the Federal Circuit reversed — holding that the prior art “teaches away from the claimed invention” and that the Board also relied on non-analogous prior art. Now Daikin has taken its case to the Supreme Court with a really smart petition focusing on the procedural divide between law and fact in the administrative law context. The basic argument here is that the Federal Circuit grounded its decision on factual questions never expressly considered by the agency (the PTAB); but the proper procedure in that situation is a remand for agency determination of the facts rather than reversal.
Question presented:
May a federal appellate court, consistent with the Administrative Procedure Act and the principles of separation of powers embedded within that Act, reverse an administrative agency’s decision on a factual ground not addressed by the agency, without a remand to that agency?
Petition. The petition here is supported by Judge Dyk’s dissent in the case where he argued that the majority opinion was “nothing less than appellate factfinding.”
The petition here goes on argue that the court’s approach here is part of the Federal Circuit’s modus operandi.
The Federal Circuit’s brand of aggressive judicial review, which casts aside basic principles of deference to administrative adjudication, was on full display in this case. Regrettably, it has long been embedded in the Federal Circuit’s practices, and its roots go even farther back than that. . . . This absence of deference to factfinders, even expert agencies, has been a hallmark of Federal Circuit review since that court’s creation. . . . To this day, the Federal Circuit remains isolated from the mainstream of administrative law. Scholars have noted that court’s “exceptional control” over the patent agency, and have labeled this phenomenon with terms such as “patent exceptionalism” and “Federal Circuit exceptionalism.” See, e.g., Peter Lee, The Supreme Assimilation of Patent Law, 114 Mich. L. Rev. 1413, 1415, 1452 (2016); Robin Feldman, Ending Patent Exceptionalism and Structuring the Rule of Reason: The Supreme Court Opens the Door for Both, 15 Minn. J.L. Sci. & Tech. 61 (2014); Paul R. Gugliuzza, The Federal Circuit as a Federal Court, 54 Wm. Mary L. Rev. 1791, 1818 (2013) (“The Federal Circuit gives minimal deference to PTO fact-finding.”).
There are a number of Supreme Court cases on point, but the key quote is below:
It is a ‘foundational principle of administrative law’ that judicial review of agency action is limited to ‘the grounds that the agency invoked when it took the action.’”
Dep’t Homeland Sec. v. Regents of Univ. of Cal., 140 S. Ct. 1891 (2020) (quoting Michigan v. EPA, 576 U.S. 743, 758 (2015)).
Thad Gabara is a former Bell Labs engineer and is a prolific inventor with 100+ patents in his name. Along the way, Gabara also became a patent agent and personally prosecuted many of his recent patents, including the Sliding Window patents asserted here. U.S. Patent Nos. 8,930,131; 8,620,545; 8,836,698; 8,706,400; and 9,299,348.
Gabara’s Sliding Window patents cover various aspects of a map display for a mobile device. The problem: device screens are small and a user can only see a portion of an actual map at any one time. Gabara’s solution is something he calls a “sliding window.” Basically, the system has a data structure for the whole map, but the screen just provides a small window. The view window then slides around as you move the phone about. Figures 10(a) and 10(b) compare the prior art with Gabara’s invention.
Gabara sued Facebook for patent infringement. Facebook responded with petitions for inter partes review (denied) and a motion to dismiss on eligibility (granted). Judge Cote (SDNY) dismissed the case for failure to state a claim upon which relief could be granted (12(b)(6)). The district court concluded the claims were directed to an unpatentable abstract idea of “Moving the device to change one’s view of the image instead of scrolling on the device to change the view.” On appeal, the Federal Circuit affirmed without opinion. Now, Gabara has petitioned to the U.S. Supreme Court for review. Although Gabara’s petition is unique, it also ties its hopes to the pending petition in American Axle. That case is awaiting the views of the Solicitor General.
The Sliding Windows patents cover a novel data structure—a “background image of a stationary map”—that allows users to navigate large images on a smartphone by moving the phone itself. This data structure is required by the patents’ claims, emphasized as the key to the invention throughout the patents’ specifications, and was the explicit basis on which the PTAB relied to distinguish the patents over prior art. In ruling that the patents were invalid under 35 U.S.C § 101 for claiming an abstract idea, however, the court below did not consider this claimed data structure, excluded this express requirement from the patent claims from the court’s characterization of what the claims were “directed to,” and refused to consider the fact that because this claim limitation distinguished prior art, the Sliding Windows patents did not risk preemption of any abstract idea.
The questions presented are:
What is the appropriate standard for determining whether a patent claim is “directed to” a patent-ineligible concept under step 1 of the Court’s two-step framework for determining whether an invention is eligible for patenting under 35 U.S.C § 101?
Whether, and to what extent, a court may ignore the “claimed advance” that distinguishes a patented invention over the prior art in its determination of what a claim is directed to under step 1 of the Court’s two step framework for determining patent eligibility under 35 U.S.C. § 101?
Whether, and to what extent, a court may consider whether a patent claim provides sufficient disclosure regarding how the claimed invention may be made or used to determine whether a patent claim is eligible for patenting under 35 U.S.C. § 101, or whether that improperly conflates § 101 and § 112?
Whether preemption is a consideration that the lower courts must consider in determining whether a claimed invention is directed to patent-eligible subject matter under Section 101, or whether it can be properly ignored if not raised by the patent-challenger
Gabara v Facebook PetitionforWrit. Note here that Gabara initially pursued the case pro se. For the appeal and petition, he linked-up with Timothy Gilman’s team at Stroock.
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Claim 1 of the ‘400 Patent:
1. A method of moving a portable unit to search for a new location comprising the steps of:
displaying an image on a screen of the portable unit matched and superimposed to a corresponding portion of a background image of a stationary map;
mapping a first point of the display image located in a center of the screen of the portable unit to a corresponding reference point in the background image of the stationary map;
moving the portable unit to display a new portion of the background image of the stationary map on the screen;
identifying a new location in the new portion of the background image;
determining a first vector between the center of the screen of the portable unit and the new location; and
moving the center of the screen of the portable unit to the new location as determined by the first vector.
In Feb 2022, the Court of Appeals for the Federal Circuit released two separate opinions discussing the estoppel provisions of 35 U.S.C. § 315(e).
California Inst. of Tech. v. Broadcom Ltd., — F.4th —, 2022 WL 333669 (Fed. Cir. Feb. 4, 2022)
Intuitive Surgical, Inc. v. Ethicon LLC, — F.4th —, 2022 WL 414252 (Fed. Cir. Feb. 11, 2022)
Both decisions found that estoppel applied to bar certain post-IPR patent challenges. That said, the two opinions are also in a amount of tension with regard to what claim challenges are estopped. The decisions are important; Estoppel is a huge consideration of accused infringers as they consider how to structure their inter partes review (IPR) petition(s) and these are all multi-million-dollar cases.
Lets dig into the statute first, and then the decisions. The scope of estoppel was a major lobbying point during the passage of the America Invents Act of 2011 (AIA). Patentees raised concerns of harassment from multiple IPRs or IPRs followed by district court litigation. At the same time, Challengers were concerned that broad estoppel would leave them with no defense in court.
Under the 2011 statute, a patentee can challenge one or more claims of a patent via IPR. If an IPR is instituted, the IPR then typically ends with a final written decision determining whether to cancel the claims. Section 315(e) estoppel is triggered by that final written decision. Once the final written decision issues, the IPR petitioner (or RPI/Privy) cannot do either of the following:
[R]equest or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 315(e)(1).
[A]ssert either in a civil action arising [under the Patent Act] or in a [Section 337] proceeding before the International Trade Commission . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 315(e)(2).
You can see that these two subsections of 315(e) are substantially parallel and with only minor differences. One commonality is that both tie estoppel to “the claim” or “that claim” — meaning the claim challenged by the petitioner.
In CalTech, Apple had filed several IPR petitions against CalTech’s patents. Those were eventually won by the patentee. Meanwhile, the infringement litigation was ongoing and Apple and Broadcom (the RPI) had raised several invalidity defenses. However, the district court barred those defenses because they “reasonably could have [been] raised” in the IPR petition. On appeal, the Federal Circuit affirmed that finding — particularly rejected the notion the “reasonably-could-have” expansion only applied to additional arguments that could have been raised post-institution.
[W]e take this opportunity to … clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not in the IPR but which reasonably could have been included in the petition.
CalTech. As you read this quote from CalTech, focus in on the portion of the statement applying to claims: “estoppel applies . . . to all claims and grounds . . . which could have been included in the petition.” The implication from this statement in CalTech is that an IPR that challenges one claim of a patent could create estoppel vis-a-vis all claims of the patent. Now, this could be a sensible rule, but it doesn’t appear to be the rule codified by the statute.
The CalTech estoppel was being battled-out in district court infringement litigation and so Section 315(e)(2) was the focus. The second case, Intuitive Surgical looks instead to the parallel PTO-focused provision of Section 315(e)(1).
Intuitive filed three IPR petitions against the claims of Ethicon’s U.S. Patent No. 8,479,969. All three petitions were granted and the PTO proceeded toward final written decision. But along the way the timing of the three became a bit offset. In January 2020, the PTO issued final written decisions in two of the IPRs — both siding with the patentee and concluding the challenged claims had not been proven unpatentable. At that point, the estoppel of Section 315(e)(1) kicked in — Intuitive could no longer maintain an IPR against , and the PTAB ruled that Intuitive could no longer maintain an IPR against the claim already blessed as patentable. On appeal, the Federal Circuit affirmed that judgment over some fairly weak arguments from Ethicon. (Ethicon argued, inter alia, it was too tough and thus not reasonable to put all the arguments in one 14,000 word IPR petition. Ever heard of choosing your best arguments?).
In its opinion, the Intuitive court suggested that an IPR petition might avoid the estoppel by filing “multiple petitions where each petition focuses on a separate, manageable subset of the claims to be challenged—as opposed to subsets of grounds.” According to the court, this approach avoids estoppel because “§ 315(e)(1) estoppel applies on a claim-by-claim basis.” This conclusion appears directly contrary to the statement issued by the CalTech court one week prior.
Prior to CalTech, a the Federal Circuit had already ruled that estoppel applied on a claim-by-claim basis. See, for example, Credit Acceptance Corp. v. Westlake Services, 859 F.3d 1044, 1052 (Fed. Cir. 2017). However, those cases were based upon pre-SAS understanding of IPR procedure the source of those determinations appears to be Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016). The Shaw decision is important here because it was expressly overruled and rejected by CalTech. All this give the CalTech approach some credential. However, I believe that ultimately we’ll see the “all claims … which reasonably could have been included in the petition” to be an errant bit of dicta that will not be followed by the subsequent panels. I call it dicta, because the patentee in CalTech requested and obtained estoppel only for claims that Apple actually challenged via IPR petition. There was no decision regarding non-petitioned claims.
All that said, the CalTech panel may want to consider rewriting this critical sentence to make clear that estoppel applies only to claim challenged in the petition, but to any ground that reasonably could have been included in the petition.
Accused patent infringers are fighting to overturn NHK-Fintiv rules that permit the PTAB to deny IPR institution in favor of pending litigation between the parties.
A patent costs money; and the costs continue even after issuance. The U.S. requires a set of three “maintenance fees” to keep a utility patent in force for its entire 20 year patent term. These are due 3.5, 7.5, and 11.5 years after issuance, but the PTO allows for a 6-month grace period for payment. The chart below looks at the percentage of utility patents where the fees were paid prior to abandonment. The current schedule requires $2000 for the first fee; $3,760 for the second, and $7,700 for the third. These fees can be reduced by 50% and 75% for small and micro entities. There is also a $500 surcharge if you take advantage of that 6-month grace period.
The chart below shows the Percent of Utility Patents Whose Maintenance Fees have been Paid. The dates along the horizontal axis refer to the 4/8/12 year due date for fees (grouped by months) and the chart reflect number of fee cases were the fees were paid as a percentage of the total number of patents whose fees were due that month. You’ll note that a bit of a turn-down in early 2013. The USPTO instituted a major fee increase at that time with the 12-year fee up from $4,810 to $7,400. In addition, some of the 3rd-stage decrease can be explained by the shorter patent term experienced by some patentees under the 20-year-from-filing rule. This is most commonly experienced by international patent application (PCT) filers. The international application starts the 20-year clock and typically delays patent issuance by 2+ years.
One bottom line: Most utility patents have a post-issuance effective life of 12 years or less.
Tropp’s patents cover special lockable airline luggage. U.S. Patent Nos. 7,021,537 and 7,036,728. Basically, TSA has a master key to get into the lock. But, folks already knew how to make a combination lock with a master key. The inventive additions here are in the way the lock is marketed and used. The claimed method requires:
Provide a “special lock” designed to be applied to an individual piece of airline luggage having a combination lock portion and a master key lock portion and also an identifier (such as TSA APPROVED);
Market the lock to the consumers — letting them known that the TSA has the master key;
During baggage screening, the TSA sees the TSA-APPROVED identifier and uses the provided master key to open the luggage, if necessary.
‘537 patent, claim 1.
Travel Sentry sells luggage with TSA approved locks and sued Tropp seeking a declaratory judgment of non-infringement back in 2006. That case has been pending all this time. Most recently, the district court invalidated the claims — finding them directed to the abstract idea of “using and marketing a dual-access lock for luggage inspection, a longstanding fundamental economic practice and method of organizing human activity.” The court also found no inventive concept beyond the abstract idea itself.
On appeal, the Federal Circuit has affirmed in a short non-precedential opinion, finding that Tropp’s arugments on appeal were not properly preserved for appeal. Importantly, the Federal Circuit found that inventiveness arguments made with regard to 102/103 arguments could not be raised on appeal because Tropp did not particularly make those arguments in its eligibility briefing.
“In this court, Mr. Tropp argues that claim 1 is directed to ‘the creation of novel physical locks with a uniform master key (that works with a variety of locks that have different locking mechanisms).’ . . . But we do not address those questions, because Mr. Tropp has not preserved this argument for eligibility.
“We need not evaluate Mr. Tropp’s opposition to a different summary judgment motion (concerning prior art invalidity) or the statement of disputed facts under Local Civil Rule 56.1 to determine whether they contained meaningful assertions about physical changes in the locks. In his opposition to the § 101 motion, Mr. Tropp did not argue for the § 101 significance of the lock-mechanism improvement he now asserts to be required, an argument materially different from what he did argue. We decline to upset the district court’s judgment based on an argument like this made for the first time on appeal.”
GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., 18-1976 (Fed. Cir. 2022)
A divided Federal Circuit has denied Teva’s petition for en banc rehearing on the question of whether its FDA approved “skinny label” induced off-label infringement. The en banc rehearing vote appears to be 7-3 6-4 against rehearing. Chief Judge Moore and Judge Newman were both on the original panel. They were joined by Judges O’Malley, Taranto, Chen, and Stoll in denying the en banc petition. Judges Prost was a member of the original panel and penned another dissent. Judges Dyk, and Reyna each also wrote in dissent. Judge Hughes’ vote was not announced, but I assume here that he voted in dissent with the majority.* Judges Lourie and Cunningham did not participate in the voting.
Although Teva lost its petition for rehearing, it really won the battle. All of the judges agree that Teva “played by the rules” while GSK did something wrong. On remand, Teva will apparently have the opportunity to argue this fairness issue under the doctrine of equitable estoppel.
Statement that Patent Covers only CHF Use: The drug at issue here – carvedilol – is not patented. However, GSK has patented a particular use of carvedilol to “decrease a risk of mortality caused by congestive heart failure [CHF].” And, GSK provided a sworn statement to the FDA that identified CHF was the only patented use.
Skinny Label: The FDA approved Teva’s sales of carvedilol, but only for limited uses under a “skinny label.” In particular, Teva’s label says that its drug is for use only for treatment of hypertension and left ventricular dysfunction following a heart attack (“post-MI LVD”). This skinny label approach carves-out the still patented use and is part of the Hatch-Waxman approach. During Teva’s approval process GSK did not complain or suggest that the skinny label uses would be infringing.
Later in litigation, GSK argued that post-MI LVD uses statement induced infringement.
The original jury trial sided with the patentee, however Judge Stark flipped the verdict and issued a Judgment as a Matter of Law for the Teva. On appeal, the Federal Circuit flipped again and majority sided with the patentee — finding that the label coupled with other actions by Teva showed culpable intent to induce infringement of GSK’s use patent. However, here the majority walks through its explanation of Teva’s defense is equitable estoppel – rather than non-infringement. And, the district court left that issue for decision on remand.
Equitable estoppel, a doctrine designed to avoid injustice, has three elements: misleading conduct, reliance, and prejudice.
In the patent context, the typical misleading conduct must someway reasonably inform the alleged infringer that the patentee does not intend to take action against certain conduct. The majority here explains that estoppel is different from infringement analysis because estoppel includes a major focus on the patentee’s conduct rather than the accused infringing acts.
The dissent argues that the equitable estoppel approach is likely inadequate and unduly benefits the patentee. Rather, an FDA approved skinny label that carves out all uses claimed-to-be-patented should absolve a generic maker from any inducement liability based upon the the label. “How could this label, which faithfully followed what the brand said about its own patents and which the FDA required Teva to use, itself be evidence that Teva intentionally encouraged something it knew would infringe? . . . When a generic plays by the skinny-label rules, the FDA-required label can’t be evidence of intent.” Prost in dissent.
The dissents generally argue that that the majority approach here gives branded companies an incentive to mislead the FDA and generic competitors in order to later catch them for infringement.
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The opinion does not indicate how Judge Hughes voted, but Prof. Karshtedt and another reader suggested that we can infer that he voted with the majority. The Federal Circuit’s internal operating procedure indicate that the clerk’s opinion should note any dissenting votes. And here, Judge Hughes vote was not noted as dissenting.
