After Granting Certiorari In Enablement Case, Supreme Court Declines Opportunity To Address Written Description

Patent

by Chris Holman

As reported in posts by Dennis and Jason, the Supreme Court recently granted certiorari in Amgen v. Sanofi, marking the first time that the Court has taken up patent law’s enablement requirement since enactment of the Patent Act of 1952. The claims at issue are directed to a genus of functionally-defined molecules having therapeutic utility, i.e., monoclonal antibodies defined in terms of binding specificity. For the sake of brevity, I will refer to claims of this type as “chemical genus claims.”

A few days later, on November 7, the Supreme Court denied certiorari in Juno v. Kite, a case challenging the Federal Circuit’s interpretation of the written description requirement. The claims struck down for lack of adequate written description in Juno are strikingly similar to the claims that were invalidated under the enablement requirement in Amgen, being directed towards nucleic acids encoding chimeric T cell receptors (for use in Car T-cell therapy), comprising, inter alia, a functionally defined “binding element,” as exemplified by a single-chain antibody variable fragment (‘‘scFv’’).

The scope afforded to chemical genus claims under 35 USC § 112(a)’s enablement and written description requirements has been hot topic recently (at least in certain quarters). Professors Lemley, Seymore, and Karshtedt (it is so sad that he is no longer with us) published an article in 2020 entitled The Death of the Genus Claim, which asserts that “the law has changed dramatically in the last thirty years, to the point where it is nearly impossible to maintain a valid genus claim.” Amgen’s successful petition for certiorari relies heavily on Death, and its authors filed an amici curiae brief in support of Amgen’s petition.

While Death clearly raises some valid concerns regarding the challenges inventors face in trying to secure effective patent scope for inventions of this type, in my view it is an overstatement to say that chemical genus claims are “dead.” I responded to Death in a two-part article arguing, for example, that the case law identified in Death provides scant support for its assertion that the standard for compliance with the enablement and written description requirements has become significantly more stringent in recent years. Christopher M. Holman, Is the Chemical Genus Claim Really “Dead” at the Federal Circuit?: Part II, 41 Biotechnology Law Report 58 (2022); Christopher M. Holman, Is the Chemical Genus Claim Really “Dead” at the Federal Circuit?: Part I, 41 Biotechnology Law Report 4 (2022).

I also point out that relatively broad chemical genus claims continue to survive § 112(a) challenges in the district courts and at the Federal Circuit.  See, for example, Ajinomoto Co. v. Int’l Trade Comm’n, 932 F.3d 1342 (Fed. Cir. 2019); Bayer Healthcare LLC v. Baxalta Inc., 989 F.3d 964 (Fed. Cir. 2021); Plexxikon Inc. v. Novartis Pharmaceuticals Corp., Case No. 17-cv-04405-HSG, Document 565, July 22,2021 (N.D. Cal.).

Section 112(a)’s enablement and written description requirements, sometimes referred to as the “adequate disclosure requirements,” constitute U. S. patent law’s primary non-prior art-based limitations on claim scope. Although Supreme Court has in the past indicated that it views the patent eligibility doctrine as playing an important role in preventing patent claims from broadly “preempting” abstract ideas and natural phenomena, more recently the Court’s patent eligibility decisions have focused on the sufficiency of “inventive concept,” as opposed to claim breadth per se.  Absent such limitations, under a regime in which claim scope would only be limited by the prior art, an inventor could potentially secure patent claims encompassing huge swaths of yet-to-be invented technologies.

Hypothetically, for example, the inventor of the first practical method for communicating at a distance using electricity, e.g., the telegraph, might have ended up with a patent claim encompassing all means of communicating at a distance using electricity, e.g., the internet. The inventor of a rudimentary, barely functional electric light bulb could, assuming it was the first lightbulb, potentially have obtained a patent claim encompassing all lightbulbs, including far superior lightbulbs produced by subsequent inventors. While I have simplified the facts quite a bit, the gist of these examples have been the subject of actual Supreme Court decisions. O’Reilly v. Morse and Consol. Elec. Light Co. v. McKeesport Light Co..  Not surprisingly, in both cases the Supreme Court struck down the patent claims as overly broad, invoking what we would today refer to as the enablement requirement.

More pertinent to the facts of Amgen v. Sanofi, the inventor of the first antibody capable of recognizing a particular antigen could potentially obtain a patent encompassing all antibodies capable of recognizing that antigen. For example, an inventor who has succeeded in producing a mouse monoclonal antibody that binds to a particular human protein (useless as a human therapeutic) could in principle obtain a patent claim encompassing all monoclonal antibodies that bind to that particular human protein, even a fully humanized antibody that functions as a safe and effective biologic drug, e.g., AbbVie’s blockbuster Humira, or the accused product in Amgen, Praluent.  Again, the gist of this example comes from an actual Federal Circuit decision, Noelle v. Lederman, wherein the claims at issue were struck down under the written description requirement.

The Federal Circuit has invoked both the written description and enablement requirements as doctrinal tools for policing claim scope. Although as a formal matter the written description requirement focuses on whether the inventor has demonstrated “possession” of the full scope of the claim, while the enablement requirement asks whether the scope of the claim is “commensurate” with the scope of disclosure, as a practical matter the two requirements have been applied in a manner that is largely redundant, albeit with a few distinctions of arguable significance discussed later in this post. In my article responding to Death, for example, I point out that the Ariad factors that the Federal Circuit has identified as relevant to assessing compliance with the written description requirement are, in substance, virtually identical to the Wands factors used in the enablement inquiry. If anything, the written description requirement has been seen as the more stringent of the two, particularly in the context of biotechnology – the written description requirement has often been referred to as a  “super-enablement” requirement.

And in fact, prior to Amgen, the Federal Circuit has tended to invoke the written description requirement, rather than the enablement requirement, in striking down monoclonal antibody genus claims. See, for example, Noelle v. Lederman, 355 F.3d 1343, 1349 (Fed. Cir. 2004)(disclosure of mouse monoclonal antibody specific for mouse antigen (CD40CR) did not provide adequate written description for claim encompassing any monoclonal antibody capable of binding the human analog of the CD40CR antigen); Centocor Ortho Biotech v. Abbott Laboratories, 636 F.3d 1341(Fed. Cir. 2011)(disclosure of previously characterized antigen (human TNF-alpha) and mouse antibodies to the antigen did not provide adequate written description for claim encompassing fully human monoclonal antibodies capable of binding to a specific neutralizing epitope of the antigen); AbbVie Deutschland GmbH & Co., KG v. Janssen Biotech, Inc., 759 F.3d 1285 (Fed. Cir. 2014)(disclosure of about 300 antibodies falling within the scope of the claim did not provide adequate written description for a claim reciting neutralizing human antibodies capable of specifically binding human interleukin-12 (IL-12)).

Of course, given the redundancy of the doctrines, a claim struck down as overly broad for lack of enablement is highly likely to be invalid for lack of adequate written description, and vice versa. In Amgen, for example, the jury found Amgen’s claims not invalid under the enablement and written description requirements, but on a motion for JMOL the district court overruled the jury and found that, as a matter of law, the claims are invalid under both the enablement and written description requirements. In Amgen, the Federal Circuit decided the issue based on a failure to comply with the written description requirement, rendering the enablement issue moot, but in the past the Federal Circuit has been more inclined to find claims of this type invalid for failure to comply with the written description requirement.  See the examples provided above, as well as the Juno decision.

Thus, one of the big elephants in the room with respect to the grant of certiorari in Amgen is that the question for review appears to focus solely on the enablement requirement. Even if the Supreme Court lowers the bar for compliance with the enablement requirement, the ruling would presumably have no direct impact on the written description requirement, which has conventionally been thought of as imposing an even higher bar for the sort of claim at issue in the case, e.g., functionally defined chemical genus claims.

Sanofi raised this point in its Opposition brief, arguing that any ruling by the Supreme Court would not be dispositive of the case because, if the Supreme Court overturns the enablement verdict, the Federal Circuit would likely still find the claims invalid for lack of adequate written description. Sanofi points out that Amgen’s own amici, i.e., Professors Lemley, Seymore and Karstedt, concluded in Death that the Federal Circuit had “strongly suggested” that the claims were not only invalid under the enablement requirement, but also the written description requirement.

Indeed, the Federal Circuit has on occasion explicitly noted that a claim’s compliance with the written description and enablement requirements generally rise and fall together. For example, in Idenix v. Gilead, a recent case involving claims analogous to those at issue in Amgen, the jury also found the claims to be not invalid under the enablement and written description requirements. The district court overturned the jury verdict with respect to enablement, but denied a motion for JMOL with respect to written description. On appeal, the Federal Circuit affirmed the district court’s holding that the claims were invalid for lack of enablement, but reversed its denial of JMOL for failure to meet the written description requirement, finding the claims invalid under both doctrines.

Under the Federal Circuit’s current interpretation of the written description and enablement requirements, I think it would be highly unusual for the court to find claims of the type at issue in Amgen invalid for lack of enablement but not for lack of adequate written description. In fact, when the district court decision in Idenix v. Gilead initially came out, finding the claims invalid under the enablement requirement but not under the written description requirement, I thought it was so striking that I wrote an article about it.   Christopher M. Holman, Enablement Invoked as a ‘‘Super-Written Description Requirement’’ to Overturn $2.5 Billion Jury Verdict, 37 Biotechnology Law Report 63 (2018). So I was not at all surprised when the Federal Circuit reversed and explicitly found the claims invalid under both the enablement and written description requirements, even though the Federal Circuit could have chosen not to address the written description issue as moot in light of the enablement ruling, as it did in Amgen.

In retrospect, I wonder if it might have been better for the Supreme Court to take up the issue of adequate disclosure in a case like Idenix, where the Federal Circuit explicitly addressed both the enablement and written description requirements in the context of the same chemical genus claims. As Jason intimated in his blog post, while it is relatively easy to point out the shortcomings in the Federal Circuit’s current § 112(a) jurisprudence, it is much harder to come up with an effective alternative. I have to think that it will be particularly difficult for the Supreme Court to make a positive contribution to the law of adequate disclosure without also taking into account the written description requirement.

Although the written description requirement has long been used to police the claiming of new matter, it only took on the role of policing claim scope as what is in essence an alternate enablement requirement in 1997 when the Federal Circuit decided UC Regents v. Eli Lily, creating what I refer to as the “Lilly written description requirement” (so as to distinguish it from the “traditional written description requirement” used prevent the claiming of new matter). Early on, the Lilly written description requirement seemed to impose a much higher threshold than enablement, particular for biotechnology inventions, hence its characterization as a “super-enablement requirement.” But it seems to me that at this point in time the standards for compliance with the written description and enablement requirements have become for the most part indistinguishable, as illustrated by the redundancy of the Ariad and Wands factors, and the paucity (or, to my knowledge, the absence) of any judicial decisions (upheld on appeal) explicitly finding a claim invalid under the Lilly written description requirement but not invalid for lack of enablement, or vice versa.

Nonetheless, Federal Circuit precedent has carved out some clear differences between the written description requirement and enablement, although as a practical matter it is not clear to me how significant those differences are.  For example, the Federal Circuit treats the written description requirement as a question of fact, and the enablement requirement as a question of law based on underlying factual findings.  In its petition for certiorari, Amgen also asked the Court to rule that enablement, like written description, is a question of fact, but the Court declined to take up that question. In principle, a decision by a jury (or judge in a bench trial) should be afforded more deference with respect to a question of fact, which might explain why in Amgen and Idenix the district courts overturned the juries’ enablement decisions, but not their written description decisions. However, it seems to me that when case reaches the Federal Circuit the formal distinction between question of fact and “question of law based on underlying factual findings” has little practical effect.  See, for example, Centocor Ortho Biotech v. Abbott Laboratories, 636 F.3d 1341(Fed. Cir. 2011)(overturning jury decision finding claim encompassing fully human monoclonal antibodies not invalid for failure to comply with the written description requirement).

Another difference between the two doctrines has to do with the admissibility of evidence.  In the Federal Circuit’s first decision in Amgen v. Sanofi (the grant of certiorari is with respect to the Federal Circuit second decision in the case), the court held that the district court had committed legal error by improperly excluding post-priority date evidence of antibodies falling within the scope of the claim, including the accused product (Praluent). The district court based its decision to exclude the evidence on a 1977 decision of the Court of Customs and Patent Appeals, In re Hogan, which the Federal Circuit has interpreted as prohibiting, in the context of the enablement inquiry, admission of “post-priority-date evidence proffered to illuminate the post-priority-date state of the art.”  Without questioning the continuing vitality of Hogan, the Federal Circuit held that, in the context of the written description inquiry, post-priority-date evidence is admissible to show that a patent fails to disclose a representative number of species, explaining that Hogan is silent with respect to evidence of this type. Thus, it seems that under some circumstances post-priority-date evidence illustrating the structural and functional breadth of a chemical genus claim could be admissible for purposes of a written description challenge but not a challenge for lack of enablement.

Venue Transfers Without Delay

Patent

by Dennis Crouch

In re Apple, — F.4th — (Fed. Cir. Nov 8, 2022)

The Federal Circuit has again ordered Judge Albright to halt pending litigation until he decides Apple’s motion to transfer venue on grounds of inconvenience under 28 U.S.C. 1404(a).  In particular, the court (1) vacated the scheduling order; and (2) directed Judge Albright to postpone fact discovery and “any other substantive proceedings.”

Aire Technology sued Apple for infringement back in October 2021.  In April 2022, Apple filed its motion to transfer.  At that point, the parties conducted some amount of ‘venue discovery’ that was completed around the end of June 2022.  However, instead of ruling on the motion, Judge Albright  told the parties he would postponed ruling for another 7-8 months while fact discovery in the case was ongoing.  Apple then petitioned for writ of mandamus, arguing that delay created a critical injury to the tech giant’s convenience that deserved immediate remedy. And, the Federal Circuit has complied–ordering the district court to go ahead and decide the transfer motion.

In this situation, I have tremendous sympathy for Judge Albright’s ruling.  Albright had previously noted problems with Apple’s venue declarant, Mark Rollins who “frequently and repeatedly submitted unreliable and misleading declarations to this Court.”  Scramoge Tech. Ltd. v. Apple Inc., 2022 WL 1667561 (W.D. Tex. May 25, 2022) (finding Rollins to be not credible).  Even without these particular problems with a 30(b)(6) declarant, my experience is that the witnesses and evidence arguments made in the 1404(a) context at the pleading-stage are notoriously unreliable because they do not reflect the actual evidence/witness issues that become clear around the end of discovery.  Further, parties treat the Section 1404(a) factors as a scorecard or checklist in ways that are often divorced from the interests of justice.

This mandamus is particularly about delaying a transfer decision while the case is developed.  I see little harm in that delay.  Discovery in federal courts is a nationwide endeavor. Evidence is exchanged electronically; parties go to the location of witnesses to conduct discovery; and discovery disputes needing court intervention are ordinarily resolved over the phone (or Zoom).  Thus, there would not be much difference for the parties during this period in terms of litigating in N.D. Cal. vs W.D. Tex.–with the one exception that Judge Albright  remains the judge if the case stays in W.D. Tex.  It is clear that this final Albright-factor underlies Apple’s true purpose in filing these motions and mandamus actions: to escape from Judge Albright.  Of course, that true reason is not justified under the law and so is never mentioned.

One key benefit of an early transfer would be to permit the new district court to get up-to-speed on the issues in the case and begin exerting their own style of case management.  That said, N.D.Cal. judges ordinarily defer the whole discovery process to a magistrate judge and thus rarely become involved.  The Federal Circuit cited some precedent about how an early transfer avoids double-work by two district courts. However, it is not clear how that precedent is applicable in this situation.

In its decision, the Federal Circuit did not delve into the particular issues, but rather focused on prior precedent that “entitles parties to have their venue motions prioritized.”  Id.

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An Enabling Written Description

Patent

by Dennis Crouch

As Jason Rantanen posted, the Supreme Court has granted certiorari in Amgen v. Sanofi, agreeing to hear its first patent case in two terms.  The case has the potential of shaking up disclosure doctrine in a big way.  In particular, Amgen argues that the Federal Circuit incorrectly created two separate requirements from overlapping textual portions of Section 112(a): Written Description and Enablement.  Truthfully, having two separate and distinct requirements reflects an incoherent textual analysis of the statute. Over the past several years, both of these doctrines have increasingly focused on a “full scope” disclosure that makes it virtually impossible to include broad claims, especially genus claims with functional limitations as Amgen did in this case.   More to come. . .

 

Rethinking enablement: Court grants cert in Amgen v. Sanofi

Patent

By Jason Rantanen

On Friday, the Supreme Court granted certiorari on two petitions raising intellectual property issues, including the closely-watched enablement Amgen v. Sanofi.  The other case is a Abitron Austria GmbH v. Hetronic International, a trademark dispute involving extraterritoriality issues.

Over the past few years, the Federal Circuit has issued a series of enablement decisions, including Amgen v. Sanofi, that rely on a lack of enablement to hold that functionally defined genus claims are invalid. (Dennis’s post on Amgen is here.) This has been a topic to watch at the Federal Circuit, and two major law professor articles, one written by Mark Lemley and Jake Sherkow and the other co-authored by Dmitry Karshtedt, Sean Seymore, and Mark Lemley, have pointed out the problems with the Federal Circuit’s approach to genus claims, especially in the context of inventions such as antibodies. Karshtedt, Seymore and Lemley filed an amicus brief supporting en banc rehearing at the Federal Circuit (PatentlyO post here) as well as one supporting Amgen’s petition for certiorari.

The claim in Amgen illustrates this point. It claims the genus of antibodies that bind to a particular region on a specific protein. Here is a representative claim of Amgen’s Patent No. 8,829,165:

1. An isolated monoclonal antibody, wherein, when bound to PCSK9, the monoclonal antibody binds to at least one of the following residues: S153, I154, P155, R194, D238, A239, I369, S372, D374, C375, T377, C378, F379, V380, or S381 of SEQ ID NO:3, and wherein the monoclonal antibody blocks binding of PCSK9 to LDLR.

The problem is that there isn’t just one antibody that meets this requirement – rather, it encompasses potentially millions of currently unknown antibodies. The Federal Circuit held that the claims were far broader than the associated disclosure, requiring undue experimentation to identify undisclosed embodiments encompassed by the claims. Amgen petitioned the Supreme Court for review, extensively citing the Karshtedt/Seymore/Lemley article.  

On Friday, the Supreme Court granted certiorari on Question 2 of the Amgen petition, which focuses on the “full scope” and “undue experimentation” aspects of the of 112(a) jurisprudence. This was after the Solicitor General had recommended against certiorari.

Here’s the question that the Court granted cert on:

2. Whether enablement is governed by the statutory requirement that the specification teach those skilled in the art to “make and use” the claimed invention, 35 U.S.C. § 112, or whether it must instead enable those skilled in the art “to reach the full scope of claimed embodiments” without undue experimentation—i.e., to cumulatively identify and make all or nearly all embodiments of the invention without substantial “ ‘time and effort,’ ” Pet. App. 14a (emphasis added).

This will be the first time that the Supreme Court has addressed the enablement requirement in a very long time.  Those decisions used the pre-1952 version of the patent law statute, Rev. Stat. § 4888. Generally, however, it was very similar to the current 35 U.S.C. § 112(a). For example, as applied in Consol. Elec. Light Co. v. McKeesport Light Co., 159 U.S. 465 (1895) (a/k/a The Incandescent Lamp Case), it required:

“a written description of the device, and of the manner and process of making constructing, compounding, and using it in such full, clear, concise, and exact terms as to enable any person skilled in the art or science to which it appertains or with which it is most nearly connected to make, construct, compound, and use the same.”

To me, the issue of full scope enablement is one of the most challenging problems in patent law. Many patent law scholars have written about it, including myself, and I still haven’t seen a real solution. But I’m sure that much more will be said before and after the Court issues its decision.

Sadly, as I wrote about last week, Professor Karshedt passed away just a few days ago, and we’ll miss his insights on the case as it moves through the Supreme Court.

Here’s a link to the docket on ScotusBlog for those who would like to read more.

Patentees Can Still Win in the US

Patent

Provisur Technologies, Inc. v. Weber, Inc., Docket No. 5:19-cv-06021 (W.D. Mo. Feb 22, 2019)

 

A jury has sided with Provisur and issued a $10 million verdict against its  food-processing machinery competitor Weber Maschinenbau. This is about half what Provisur requested.

The patents cover various various high-speed slicers, conveyors, and packaging equipment.  I spent a summer working on the line of a bacon packing factory and know how critical it is to have machinery that is speedy and safe, and works well even with variable inputs and poorly trained handlers.

Following a nine-day trial, an eight-member jury found claims from three of the four asserted patents infringed.  The Judge in the case is Stephen Bough, a 2014 Obama appointee.  In cases like these, Judge Bough generally seats a six-member jury with two alternates. (Under FRCP 48, the jury needs to have at least six jurors in order to render a verdict in civil cases). 

The jury also found the infringement willful. The patentee will likely use that willfulness verdict to request punitive damages.   In post-verdict motions, the defendant will likely renew its motion for Judgment as a Matter of Law. A key question is raised in the pre-verdict JMOL motion was whether the patentee is entitled to rely upon an Entire Market Value Rule to calculate damages rather than an apportionment approach.  The patentee also indicated in its pre-trial brief that it planned to also seek injunctive damages.  That equitable issue is decided by a judge rather than jury.

One interesting aspect of the verdict is that the jury was authorized to to decide the case on either literal infringement or under the doctrine of equivalents (DOE).  The verdict form did not, however, require the jury to distinguish between the two. Thus, the verdict can be upheld on either ground. I have included the jury instructions on DOE below.

The patentee was represented by Willkie Farr & Gallagher on a team led by Craig Martin.  Sterne Kessler represented the defendants.  This appears to be one of several ongoing patent battles between the two parties in US court, the PTAB, and abroad.

Two Discovery Disputes

Patent

Google LLC v. Sonos, Inc., No. 20-cv-06754, 2022 U.S. Dist. LEXIS 197728 (N.D. Cal. Oct. 31, 2022) [GoogleSonosDiscovery]

Google sued back in 2020 seeking a declaratory judgment that several Sonos networked-speaker patents are invalid or not infringed.  Trial is set for May 2023.  The parties had a prior development agreement and in a recent discovery request, Google asked for a R.30(b)(6) corporate witness deposition regarding Sonos’ “understanding of the scope” of a prior agreement between the parties.  Sonos refused to provide the witness – arguing that the discovery request improperly sought Sonos legal theories (including contract interpretation) and trial strategy.  Google moved to compel discovery, but that request has been denied by Magistrate Judge Ryu.

Judge Ryu concluded that Sonos’ “understanding of” its contract implicated questions of law (since contract interpretation is a question of law rather than a question of fact).   Even though Google limited its request to discover “facts,”the request was also very much about Sonos’ interpretation of the contract.  The discovery request here seeking a party deponent is also different from an ordinary request for documents because a 30(b)(6) deposition allows 7 hours of questions that allows for more substantial development of legal theory as opposed to just sending over a set of responsive documents.  The court did not attempt to distinguish the deposition discovery here from interrogatories and requests for admission regarding legal contentions that are a regular practice in patent litigation.

In re PersonalWeb Techs., LLC Patent Litig., No. 18-md-02834-BLF, 2022 U.S. Dist. LEXIS 197706 (N.D. Cal. Oct. 31, 2022) [PersonalWebDiscoveryOrder]

Amazon won this litigation against PersonalWeb and also awarded more than $5 million in attorney fees to Amazon for 10,000 attorney hours.  Since 2021, Amazon has bene trying to get banking and investor records from PersonalWeb for enforcement purposes.

In this recent decision, Amazon is seeking discovery from PersonalWeb’s former attorneys, the Stubbs Alderton Law Firm. Of course, that information is likely privileged and/or work product. But, PersonalWeb apparently did not timely respond to the discovery requests directed to its counsel and so, according to Magistrate Judge Susan Van Keulen, has waived its privilege.

PersonalWeb’s failure respond to discovery directed to its counsel, followed by its failure to argue in the Joint Statement that it had not waived objections, cannot now save its privilege claims.

Id.

Distributing Cases in W.D.Tex.

Patent

On July 25, 2022, W.D.Tex. Chief Judge Garcia issued a unique order regarding assignment patent cases filed in Waco Texas federal court.  Prior to that order, all Waco cases were assigned to Judge Albright.  Many accused infringers complained that Albright was taking cases to trial to quickly and after some political pressure Judge Garcia issued this new order that going forward any patent actions filed in Waco will be distributed randomly to one of twelve W.D.Tex. Judges.

Since that date, 234 patent cases have been filed in W.D.Tex.  One surprise from looking at the judicial assignments — about 1/3 of these new cases have been assigned to Judge Albright. It appears that the court may be making an exception to the rule when new cases are closely related to already pending cases, but I have not seen any public statement on that front.  Of the other 11 judges, all have received at least one new case, with most having 9-11 patent cases to handle.  The new randomness appears to also create a delay in case assignment.  About 25% of the cases have not yet been assigned to any judge — most of these are cases filed in October.

Arthrex back at SCT: Does Director Review Require a Director?

Patent

by Dennis Crouch

Arthrex, Inc. v. Smith & Nephew (Supreme Court 2022)

The Supreme Court issued a major opinion in this case back in 2021, holding  that the IPR scheme was unconstitutional because it placed administrative patent judges in the role of entering final decisions that were unreviewable by any superior executive officer.  United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021).  The Court’s solution was to add a layer of review by the USPTO Director who has gone through the process of Presidential appointment and Senate confirmation. Id.  This is a process that we now call “director review.”  The point of this whole process created at our nation’s founding was an attempt to hold the President politically accountable for the actions of the administration.

Back on remand, the USPTO faced a slight problem. Director Iancu had resigned and President Biden had not yet nominated a successor or even an acting-director authorized by the Federal Vacancies Reform Act (“FVRA”).  Rather, then Commissioner for Patents Drew Hirshfeld stepped in to perform the duties of the USPTO Director but without any Presidential imprimatur.  As a reminder, the Commissioner is not nominated by the President nor confirmed by the Senate. Rather, the Commissioner is appointed by the Secretary of Commerce (just like the PTAB judges). Hirshfeld reviewed the PTAB’s Arthrex decision, and denied the petition for director review.

Now the case is headed back to the Supreme Court with Arthrex arguing that, just like the PTAB judges, Hirshfeld lacked authority to speak for the agency at this level.

Despite this Court’s instructions, Arthrex was not able to seek review by any presidentially appointed, Senate-confirmed principal officer. Nor was Arthrex able to seek review even by an Acting Director. The Director’s position was vacant, and the President had not appointed an Acting Director pursuant to the FVRA. Instead, Arthrex’s petition was denied by the Commissioner for Patents, an inferior officer appointed by the Secretary of Commerce, who purported to exercise the Director’s powers under an internal PTO organization plan. As a result, this case now presents a new important question of federal law: whether the Commissioner’s exercise of authority was consistent with the FVRA.

Arthrex motion for extension.  Arthrex has asked for a 60-day extension for filing its opining petition.  That petition has been granted and so the brief is due Jan 8, 2023.

Jeffrey Lamken (MoloLamken) is representing the patentee.

Prior Narrow Definition Does Not (Necessarily) Limit Claim Scope in Family Member

Patent

Finjan LLC v. ESET LLC, — F.4th — (Fed. Cir. 2022)

Finjan’s patents claim a system for checking downloadable files for security concerns.  Back in 1996 when Finjan filed its original provisional application, the focus was on applets or other small downloadable programs.  But downloadables today are much bulkier.  Here, the claims require a number of operations on “a downloadable” and the parties have debated throughout the litigation how to construe that term.

The district court’s approach was a bit convoluted.

  • Construction: The district court first narrowly construed the term as limited only to “small downloadables.” Although the asserted patents do not appears to require smallness, the patents do incorporate-by-reference a family member that particularly defines downloadable as “applets” and as “small executable or interpretable application program[s] which [are] downloaded.”
  • Invalidation: Later, the district court reviewed that construction and concluded that the term “small” is a term of degree without any limiting theory and therefor is invalid as indefinite.

(more…)

Guest Post – All Together Now: The Innovator Diversity Pilots Conference (November 18, 2022 at Santa Clara University and online)

Patent

By: Colleen V. Chien, Professor of Law, Santa Clara University School of Law and Margo A. Bagley, Asa Griggs Candler Professor of Law and Associate Dean for Research, Emory Law School and Hieken Visiting Professor in Patent Law, Harvard Law School (visiting Fall 2022) 

Link for more Information and to Register for the Conference

Growing the percentage of Americans of all backgrounds participating in the innovation system is not only the right thing to do, it is also critical to global economic competitiveness for the United States. But currently,  while women represent over 50% of the workforce and 27% of STEM workers, they comprise only 13% of inventors, according to the USPTO’s influential Progress and Potential report.  A growing number of stakeholders are actively experimenting with ways to narrow these and other innovator-inventor gaps* in participation and diversify the profession. We invite you to participate in our inaugural Innovator Diversity Pilots Conference, which will build on efforts like the USIPA Increasing Diversity in Innovation Pledge, signed by over 50 leading companies, USPTO Council for Inclusive Innovation (CI2), IPO Diversity in IP Toolkit, and Santa Clara Diversity in Innovation Best Practices Guide, to foster a community of practice, bolster the evidence base for what works, and inform policy and regulatory efforts to promote diversity and inclusion in innovation and invention.

Our focus on piloting – temporarily introducing new practices to learn from them – and rigorous research methods like field experiments to evaluate effectiveness underscores that the work of diversity and inclusion is hard and requires not only a focus on results, but also iteration, refinement, humility, and collaboration.

Featuring keynote remarks by USPTO Director Kathi Vidal and Professor John List (author of the Voltage Effect), the event is co-organized by the USPTO and co-sponsored by the law schools of Santa Clara University and Emory University, the Intellectual Property Owners Association, the US Intellectual Property Alliance, the National Academy of Inventors, the Institute for Progress, the Association for University Technology Managers, Meta, the Institute for IP and Social Justice, and Schwegman Lundberg & Woessner.

This year’s all-day event will take place on Friday November 18, 2022 in-person at Santa Clara University and on-line. Remote participation is free and the program will feature the following sessions:

  • The Why and How of Diversity Piloting – the case for diversity in innovation and rigorously piloting ways of advancing it, presented in part by leading economist and MacArthur Fellow Heidi Williams.
  • Getting People off the Bench – Learning from Doing – companies, researchers, and the USPTO will report on diversity nudges, affinity groups, and other practices for engaging and developing diverse talent.
  • Getting the Data and Tools Needed to Make Progress – how data and tools can be used, in privacy-respecting ways, to advance diversity in innovation and invention.
  • Innovator Diversity Policy Pilots – initiatives at the university, agency, state, and federal, levels to develop and use evidence to advance broad-based economic growth through greater participation and inclusion in innovation and inventing.

Fireside Chat with USPTO Director Kathi Vidal:  “USPTO Diversity Initiatives Changing the Innovation Ecosystem”

  • Let’s Pilot Together – conference participants will draw upon research, their experience, and the proceedings to “pitch” the USPTO and other sponsoring organizations with their ideas for piloting regarding, for example, attribution practices at the Office, mentorship, and adapting the diversity pledge to the academy.
  • Diversity in the Profession and Pipeline – discussion of existing and emerging initiatives and approaches like the Council for Inclusive Innovation (CI2), Patent Pipeline Program, LEAP, and the Mansfield Rule for supporting diversity in the legal profession and beyond.

Background resources and background materials are available here. We have designed the day to be informative, educational, and interactive. We hope you will join us, online or in-person.

*The Gender Innovator-Inventor Gap (source: Redefining Progress and the Case for Diversity in Innovation and Inventing) 

Link for more Information and to Register

Updated to reflect additional co-sponsors.

Dmitry Karshtedt

Patent,

By Jason Rantanen

George Washington University Law School Professor Dmitry Karshtedt has passed. Dmitry was a remarkable scholar, wonderful colleague, and incredible friend. We often had different ways of thinking about patent law, and I always hoped that some day we might have time to write something together. Sadly will never happen. The world was more with Dmitry and less without him.

Professor Karshtedt received an A.B from Harvard and a PhD from UC Berkeley, both in chemistry. After a few years working as a chemist for a semiconductor startup, he went to law school, receiving his JD from Stanford Law School in 2011. He worked for a short time at Wilson Sonsini in Palo Alto before clerking for Judge Kimberly Moore on the Federal Circuit. He joined GW Law in 2015 after a fellowship at Stanford and received tenure in 2020.

Professor Karshtedt’s work was wide-ranging. He is named as an inventor on 13 patents, is the first-named author on five scientific publications, and spoke at dozens of conferences and presentations.  His legal scholarship was deep and contemplative, and includes two articles published in the Iowa Law Review. His most recent work with Mark Lemley and Sean Seymore, The Death of the Genus Claim, 35 Harv. J. L. & Tech., is cited extensively in petitions for certiorari before the Supreme Court.

But more importantly, Dmitry was a wonderful colleague who contributed to every conference and workshop he attended. If you emailed him anything, whether a short question or a draft paper, he would always reply with a thoughtful response, including in depth comments on your work–comments that always made it better. I and many others had many wonderful conversations with Dmitry both over email and in person. I cannot speak personally about his teaching, but if it was any reflection of his professional interactions it must also have been terrific.

I have so many memories of Professor Karshtedt, but for now will end with a link to a PatentlyO guest post that he wrote just last year, in which he reconceptualized the framework for how courts should think about nonobviousness – an approach that will continue to influence my own thinking and make me sad for else might have been.

Guest Post by Prof. Dmitry Karshtedt: Nonobviousness and Time

 

Schedule-A Example

Patent

Here is a new example of a Schedule-A case filed in the Northern District of Illinois.

Dyson Tech. Ltd. v. Persons listed on Schedule A, Docket No. 1:22-cv-05946 (N.D. Ill. Oct 27, 2022).

DysonAnonComplaint.  The list of defendants is apparently in Schedule-A, but that document was filed under seal.  The complaint alleges that the defendants are all counterfeiters who operate in “foreign jurisdictions with lax intellectual property enforcement systems” such as “the People’s Republic of China.” They are selling products in the US via online stores such as eBay, AliExpress, Alibaba, Amazon, Wish.com, Walmart, Etsy, and DHgate. The justification for the under-seal filing is similar to that of sealed warrants or sealed indictment in criminal cases.  In particular, the patentee has indicated that it plans to seek a TRO in a way that will preserve evidence:

If Defendants were to learn of these proceedings prematurely, the likely result would be the destruction of relevant documentary evidence and the hiding or transferring of assets to foreign jurisdictions, which would frustrate the purpose of the underlying law and would interfere with this Court’s power to grant relief. Once the temporary restraining order has been served on the relevant parties and the requested actions are taken, Dyson will move to unseal these documents.

MotionToSeal.

Dyson’s patent here is U.S. Design Patent No. D853,642 and appears to cover its “Airwrap” product.  [$699 on Amazon]. According to RPX, the patentee here has already sued 1,000+ defendants for infringement even before this actions.

Guest Post: We need to talk about the NDIL’s Schedule-A cases

Patent

By Sarah Burstein, Professor of Law at Suffolk University Law School

On October 28, the Federal Circuit released two decisions stemming from a single case in the Northern District of Illinois. These appear to be the first—and certainly the first precedential—Federal Circuit cases dealing with the merits of one of the numerous “Schedule A” design patent cases that have been filed in recent years in the NDIL.

And when I say “numerous”: A search of Lexis CourtLink for NDIL cases with “Schedule A” in a party name results in a list of 2,669 cases filed since 2011.

In these cases, the plaintiffs name the defendants (and sometimes themselves) only in sealed “Schedules A.” Sometimes they don’t even file the patent number publicly. See, e.g., this case.

These plaintiffs assert that this secrecy is necessary to defeat nefarious Chinese “counterfeiters” who are monitoring U.S. PACER dockets. The use of this “counterfeiting” rhetoric is troubling in and of itself (for reasons including the ones I discussed in this previous Patently-O post) but these cases raise a number of additional concerns.

Professor Lorianne Updike Toler outlined some of these concerns in her motion to file an amicus brief in a different Schedule A case. That motion was denied because the judge (a different one from the one involved in the cases that are the focus of this post) felt that allowing Professor Toler “to present new arguments (no matter how meritorious or persuasive) on behalf of absent Defendants would thus pay insufficient heed to the principle of party presentation.”

One issue Professor Toler raised in her motion was the issue of fair notice. And, indeed, in ABC Case No. 21-2150, the Federal Circuit reversed a 2020 preliminary injunction (and a related order) because the judge issued preliminary injunctions against parties who had not yet been served with process and who were not given proper notice pursuant to Federal Rule of Procedure 65.

Since I first noticed the uptick in these cases a few years ago, I’ve had my own concerns about these cases, largely focused on the merits of these claims. These complaints often don’t include pictures of the infringing products in their publicly-filed pleadings, so an outside observer has no way to tell whether the claims have merit or not.

The Federal Circuit’s decision in ABC Case No. 22-1071 does nothing to assuage these concerns. In that decision, the Federal Circuit reversed a 2021 preliminary injunction in the same case, finding the court improperly analyzed the issue of design patent infringement.

It is clear, from reading the decision, that the design patent infringement claims lacked merit. The plaintiff’s infringement expert (and one might seriously question whether a designer’s option satisfies the requirements of Federal Rule of Evidence 702 when the standard for infringement relies on the perspective of the hypothetical ordinary observer, not on the perspective of a designer of ordinary skill) seemed to be a victim of what I’ve referred to as “the concept fallacy” in design patent litigation—i.e., the erroneous view that design patent protect design concepts, as opposed to the actual shapes or surface designs claimed.

Specifically, the plaintiff’s expert appeared to believe that the patents-in-suit covered the concept of a hoverboard with an “hourglass shape.” They do not.

Additionally, the expert appears to have relied on a theory—never adopted by, and in fact, specifically rejected by the Federal Circuit—that posits that a design patent may be entitled to a broader scope if it is “far from” the prior art. That’s not how design patent infringement works. As I explained here: “The use of the prior art in the design patent infringement analysis is a one-way ratchet—it can be used to narrow the presumptive scope of a claim but cannot be used to broaden it.” (For more on how the test for design patent infringement actually does work, see this short essay.)

These are serious problems, especially to the extent that the district court thought that “[r]esolving this expert dispute will likely require a trial.”

*           *           *

The panel’s discussion of the infringement standard on the merits also merits further discussion. In its decision on the 2021 injunction, the Federal Circuit correctly notes that the district court erred in concluding that a putative “clash of experts” meant that the plaintiffs had discharged their burden to show a likelihood of success on the merits. And the panel was correct that, overall, the plaintiffs failed to prove they were likely to succeed on the merits

But other parts of the Federal Circuit panel’s analysis are problematic.

For example, in a footnote, the panel suggests that “substantial similarity” means the same thing in design patent that it does in copyright. The panel suggests that the duplication of a “dominant feature” of a design patent might sometimes be sufficient to constitute design patent infringement:

In other words, where a dominant feature of the patented design and the accused products—here the hourglass shape—appears in the prior art, the focus of the infringement substantial similarity analysis in most cases will be on other features of the design. The shared dominant feature from the prior art will be no more than a background feature of the design, necessary for a finding of substantial similarity but insufficient by itself to support a finding of substantial similarity.

Op. at 13-14. This suggestion misapprehends the standard set forth by the en banc Federal Circuit in Egyptian Goddess.

As the en banc court made clear in Egyptian Goddess, design patent infringement requires evaluation of the design as a whole. That is very different from the way that copyright infringement is evaluated today.

In Egyptian Goddess, the en banc Federal Circuit was very clear: The prior art can be used to only to narrow the presumptive scope of the design. That is because “where there are many examples of similar prior art designs, as in a case such as Whitman Saddle, differences between the claimed and accused designs that might not be noticeable in the abstract can become significant to the hypothetical ordinary observer who is conversant with the prior art.” It is not, as the panel suggests here, due to some kind of “dominant feature” dissection analysis.

But in this case, we shouldn’t even have to get to the prior art step. The accused product shown in this decision is “plainly dissimilar” from the claimed design:

As can be seen from these images (included in the panel decision), there are numerous differences—none of them immaterial—between the shape of the claimed designs and the accused products. These are plainly dissimilar designs. The analysis should have ended at Egyptian Goddess step 1 with a finding of noninfringement.

So the result here (no injunction) is plainly correct. But the panel’s analysis muddies the Egyptian Goddess waters in unhelpful—and utterly unnecessary—ways.

Trade Secret Filings

Patent

I pulled up 10 recent federal complaints alleging trade secret misappropriations to get a sense of what filings look like today.  All 10 involved allegations against former employees.  Most focused on sales folks leaving and soliciting customers.  A couple of cases involve employees forming allegiances with  the competitor before leaving.  One involves a competitor trying to hire-away employees. And, one includes a text full of explicit emoji.  Overall, about 50 new Federal trade secret cases were filed in the past 30 days with about 600 over the past 12 months.

  1. MGA Home Healthcare Colorado, LLC v. Thun, Docket No. 1:22-cv-02534 (D. Colo. Sep 28, 2022).  According to the complaint: Former employee (Thun) was lead client manager but was terminated by MGA. Thun then joined a competitor Amazing Health Care and began soliciting clients.  The employment agreement included a non-solicitation clause extending for 12-months following the end of employment.
  2. Schnitzer Steel Industries, Inc. v. Dingman et al, Docket No. 1:22-cv-00361 (D.R.I. Oct 03, 2022). According to the complaint: Former employee (Dingman) had signed both a non-compete and non-disclosure agreement with scraper Schnitzer.  Dingman was fired in June 2022 and then formed a competing company to purchase and recycle catalytic converters.  He then started calling all of the same suppliers and has “successfully stolen business” from Schnitzer. 
  3. H.B. Fuller Company v. Strzegowski, Docket No. 0:22-cv-02389 (D. Minn. Sep 28, 2022). According to the complaint: Former employee (Strzegowiski) joined competitor and began soliciting former customers. 
  4. Cartiga, LLC v. Robles, Docket No. 9:22-cv-81612 (S.D. Fla. Oct 19, 2022). According to the complaint: Former employee (Robles) began soliciting former customers.  Attachments to the complaint include a nice row of middle fingers in response to the cease and desist letter.  
  5. NEBCO, Inc. v. Butler, Docket No. 4:22-cv-03217 (D. Neb. Sep 29, 2022). According to the complaint: Employee (Butler) allegedly began doing a bit of self dealing with a competitor with plans to join that company. 
  6. MERIDIAN BANK v. SANDY SPRING BANK et al, Docket No. 2:22-cv-03951 (E.D. Pa. Oct 04, 2022). According to the complaint: Nine former employees were hired away by competing bank who had been given confidential information regarding salary, benefits, and customer lists. 
  7. TRANSACTLY, INC. v. MOVE-IN READY, LLC et al, Docket No. 1:22-cv-00987 (W.D. Tex. Sep 29, 2022). According to the complaint: Employees formed a competing company and sent confidential information to the new company before quitting. 
  8. BIGRENTZ, INC. v. KGM Enterprises, LLC, Docket No. 1:22-cv-00430 (D. Idaho Oct 13, 2022). According to the complaint: Former employee formed competing company and began recruiting more employees with knowledge of customers lists and have begun soliciting those customers. 
  9. Gartner, Inc. v. G2.com, Inc., Docket No. 3:22-cv-01291 (D. Conn. Oct 13, 2022). According to the complaint: Competitor is hiring former employees seeking to “steal” plaintiff’s market share.  Sued both competitor and former employees. 
  10. BMO Harris Bank, N.A. v. Eimen et al, Docket No. 1:22-cv-05378 (N.D. Ill. Sep 30, 2022). According to the complaint: Former wealth management employees joined competitors and began soliciting former clients. 

Jumping In Line: IPR and District Court Dance

Patent,

Molly Metz is a competitive jump-roper (5-time world champ) and also an inventor of an innovative jump rope handle that allows super speed jumping loved by both competitors and cross-fit freaks.  U.S. Patent Nos. 7,789,809 and 8,136,208.  There has been massive infringement since her patents issued 10-12 years ago.  Financing an infringement lawsuit is a bit tricky, especially for a total-startup (micro entity) in a fairly small market.  After failed licensing discussions, her company Jump Rope Systems eventually sued Coulter Ventures (owners of Rogue Fitness) in 2018 for patent infringement.  Jump Rope Systems, LLC v. Coulter Ventures, LLC, 18-cv-731 (S.D. Ohio).  Coulter turned around and petitioned for inter partes review (IPR).  IPR2019-00586, IPR2019-00587.  The PTAB granted the petitions and eventually concluded that the claims were obvious compared against the prior art.  The PTAB decision here is fairly questionable as applying hindsight bias in justifying the combination of prior references. Still, the Federal Circuit affirmed without opinion.

The Federal Circuit precedent is clear that all enforcement litigation should end as soon as the PTAB finds a claim unpatentable in an IPR/PRG and the determination is affirmed on appeal.  “That affirmance … has an immediate issue-preclusive effect on any pending or co-pending actions involving the patent.” XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018).  As I write below, the Federal Circuit’s approach has some doctrinal holes.  Still, it is precedent and the district court followed that precedent–dismissing the case and siding with the accused infringer.  Jump Rope appealed, but made clear to the Federal Circuit that the purpose of its appeal was to change the law and moved for summary affirmance of the district court’s judgment.

The IPR Certificate eventually issued in August 2022 stating that the claims have been cancelled, but that time the district and appellate courts had already been treating them as cancelled for months.

= = =

Jump Rope Systems’ case is now pending before the US Supreme Court on petition for writ of cetiorari and it argues that the Federal Circuit’s approach is in direct conflict with our law of issue preclusion.   Question presented:

Whether, as a matter of federal patent law, a determination of unpatentability by the Patent Trial and Appeal Board in an inter partes review proceeding, affirmed by the Federal Circuit, has a collateral estoppel effect on patent validity in a patent infringement lawsuit  in federal district court. 

Jump Rope Petition.  

Although the Second Restatement of Judgments is not “law” as such, the Supreme Court (and other courts) have repeatedly concluded that its statements do reflect the law.  One theory for immediately applying the PTAB judgment is the doctrine of collateral estoppel (aka “issue preclusion”).   In XY, the Federal Circuit particularly concluded that collateral estoppel applies to immediately bar a patent infringement lawsuit once the PTAB finds the claims unpatentable and that determination is affirmed on appeal.  Judge Chen’s XY decision has numerous problems. The basic concern is that the opinion fails to consider standard limitations on the application of collateral estoppel, such as differing standards of review.  One key example: the PTAB decided obviousness based upon the low standard of preponderance of the evidence; and the IPR Appeal was decided on an even lower substantial evidence standard.  But, decisions on those low standards do not tell us whether the issue would be decided the same way under a higher standard of clear and convincing evidence. Standard issue preclusion rules prohibits this sort of application.  See Grogan v. Garner, 498 U.S. 279 (1991).  But, the Federal Circuit majority simply concluded that the patentee “had its day in court” and now is bound by the outcome.  As I noted above, in my view the PTAB obviousness decision here is quite weak in the way that it combines disparate references and identifies the problem to be solved.  I mention this because it seems like a case where the standard of review might make a difference.

To be clear, in my mind all of this might be a different situation once the USPTO issues its IPR certificate that actually cancels the claims.  At that point, the patent has been cancelled, but the parties here appear to be fighting about the pre-cancellation interim period.  One additional complication to this case is the reality that obviousness is a question of law, albeit one based upon substantial subsidiary facts.  Legal decisions by the courts also become binding precedent (apart from their preclusive impact on the parties), but this area becomes complicated when the legal determinations are based upon unique underlying factual conclusions.

 

Risk of the Catch-22 Argument as a Defense

Patent,

by Dennis Crouch

Rothy and Birdies compete in the shoe market.  Rothy’s launched its knit loafers in 2017; Birdies launched its product in 2021 and Rothy’s sued for infringing three of its design patents. D885,016, D885,017, D909,718, and D870,425.

Birdies moved for summary judgment of both invalidity and non-infringement.  For the invalidity defense it (partially) relied upon its prior calf-hair version of the shoe shown in the comparison chart above.  The defendant made the classic defensive argument that the prior art is so similar to the accused product that either (1) the patent is invalid [if broadly interpreted] or (2) the patent is not infringed [if narrowly interpreted].  On summary judgment, Birdies argued:

Ultimately, by accusing the knitted Blackbird—a shoe with a silhouette that predates Rothy’s patents—of infringement, Rothy’s has created a catch-22 for itself. If the asserted patents are given Rothy’s broad construction (broad enough to cover the knitted Blackbird), then the patents are necessarily invalid: the original (non-knit) Blackbird predates the asserted patents, and using a knit material does not save the patents from invalidity, particularly given the myriad of other preexisting knit flats, as well as the absence of knit from at least a subset of the asserted patents. Alternatively, if the patents are given a narrower reading that allows for differences (other than the knit material) between the original Blackbird and the asserted patents, then the knitted Blackbird does not infringe.

Birdies Motion for SJ.   The argument makes sense.  But, the district court didn’t agree.  For invalidity, the district court concluded that the prior art wasn’t quite good enough to find the design obvious.  Then, for infringement, the court noted that Birdies’ reliance on its own same-shaped shoe for invalidity almost admits infringement. “Birdies even admits as much by arguing that the original Blackbird—made of calf hair—and the Rothy’s patented designs share a silhouette.” Rothy’s, Inc. v. Birdies, Inc., 21-2438 (N.D. Cal. 2022).  In the end, the district court denied the defendant’s motion for summary judgment:  “A jury could reasonably find that Birdies’ knitted Blackbird, depicted [above], infringes each of Rothy’s patents.” The case here offers another example of why Inter Partes Review (IPR) proceedings are a godsend for accused infringers.  The separate tribunals allow for the patent challenger to tell two different stories without worrying about creating confusion.

The decision here was from May 2022. Since then, the parties settled the case with Birdies agreeing to stop making & selling the accused designs. 

The pleadings include the fabulous set of drawings of historic men’s shoes and boots from John Peacock’s book titled Shoes: The Complete Sourcebook.  I would buy (and wear) those 1880 English flowered loafers if I could find a reasonable pair.

NOVA v. Veterans Affairs: Rejecting Agency Deference and Protecting Health Benefits for Veterans

Patent

The following is a guest post from Logan Moore. Logan is a 3L at the University of Missouri School of Law and a member of our Veterans Law Clinic.  Under the leadership of Prof. Angela Drake, our clinic filed an amicus brief in this important new Federal Circuit case. — Dennis

by Logan Moore 

I. Introduction

Veterans are typically entitled to benefits for service-connected disabilities. The Department of Veterans Affairs (VA) has adopted a rating schedule, divided into different diagnostic codes (DCs) for various symptoms or conditions, to evaluate how an injury impairs a veteran’s earning capacity.[1] The VA recently amended its diagnostic code for claims related to prosthetic knee replacements (DC 5055) to clarify that the criteria apply to “total [knee] replacements only.”[2] The amendment resolved ambiguity as to whether DC 5055 also covered partial knee replacements. For claims filed under DC 5055 on or after February 7, 2021, the new, seemingly unambiguous rating criteria will be applied. For pending claims filed before February 7, 2021, however, the old, ambiguous rating criteria will be applied if more favorable to the veteran.[3] Therefore, even though the VA formally amended its rating schedule almost two years ago, courts’ interpretation of the “old” DC 5055 still has a meaningful impact on thousands of pending claims filed before February 7, 2021.

The National Organization of Veterans’ Advocates (“NOVA”) petitioned the Federal Circuit to review VA’s interpretation of the prior DC 5055 language. Specifically, VA set out its own interpretation of the diagnostic code in 2015 – in the “Knee Replacement Guidance” – and again in 2016 – in the “Knee Replacement Manual Provision.” Thus, in National Organization of Veterans’ Advocates v. Secretary of Veterans Affairs (“NOVA 2022”),[4] the Federal Circuit faced several important questions about DC 5055, including (1) whether the Knee Replacement Guidance or the Knee Replacement Manual Provision constitutes the “final agency action” reviewable by the Federal Circuit; (2) whether DC 5055 was ambiguous at the time of VA’s guidance; (3) whether Auer agency deference applied to VA’s interpretation;[5] and (4) whether the Gardner pro-veterans canon required any doubts to be resolved in NOVA’s favor.[6]

NOVA 2022 provides some clarity on two principles that are often in conflict in veterans’ law cases—the general rule of deference to an agency’s interpretation and a pro-veteran canon to resolve all doubt in favor of the veteran. And its holding gives important insight on how adjudicators should analyze disability claims under DC 5055 for claims filed before February 7, 2021.

Ultimately, the NOVA 2022 majority held: (1) the Knee Replacement Guidance published in July 2015 was the “final agency action” subject to the court’s review; (2) at the time of this final agency action, DC 5055 was ambiguous as to whether it covered partial knee replacements; (3) the Knee Replacement Guidance was not entitled to Auer deference as it was inconsistent with a vast majority of prior Board decisions; and (4) the petitioner’s interpretation was entitled to the pro-veteran presumption because the language of DC 5055 did not unambiguously support the Secretary’s argument.

With this preview in mind, it is helpful to briefly discuss a prior Federal Circuit decision regarding VA’s “Knee Replacement Guidance”—Hudgens v. McDonald, 823 F.3d 630 (Fed. Cir. 2016).[7]

II. Hudgens v. McDonald

Michael Hudgens injured his knee while serving on active duty in the United States Army. In 2003, he had partial knee replacement surgery, and, in 2006, he sought benefits from the VA for his injury. When he was eventually given a 0% disability rating for right knee instability, he appealed to the Board of Veterans’ Appeals (“Board”). At the time of Mr. Hudgens’s claim and appeal, DC 5055 provided the following guidance for prosthetic replacement of the knee joint:

For 1 year following implantation of prosthesis ……………… 100 [% disability rating].

With chronic residuals consisting of severe painful motion or weakness in the affected extremity …………….. 60 [% disability rating].

With intermediate degrees of residual weakness, pain or limitation of motion rate by analogy to diagnostic codes 5256, 5261, or 5262.

Minimum rating …………….. 30 [% disability rating].

Both the Board and the United States Court of Appeals for Veterans Claims (“CAVC”) denied Mr. Hudgens’s claim on the grounds that DC 5055 applied only to total knee replacements. Mr. Hudgens ultimately appealed to the Federal Circuit.

Prior to the court’s consideration of Mr. Hudgens’s case, the majority of the Board’s decisions regarding DC 5055 found that the regulation did apply to partial knee replacements.[8] But in July 2015, just before final briefs were due to the Federal Circuit in Mr. Hudgens’s case, the VA published an informal rule (the “Knee Replacement Guidance”) to clarify that the language of DC 5055 “refers to replacement of the joint as a whole.”[9] Thus, the Hudgens court was tasked with addressing the confusion surrounding DC 5055’s coverage.

In Hudgens, the Federal Circuit ultimately held that (1) DC 5055 was ambiguous ­– it did not expressly state that it applied to only full knee replacements, and the majority of Board decisions regarding DC 5055 found that it actually covered partial replacements, (2) Auer deference did not require acceptance of the VA’s interpretation in the Knee Replacement Guidance – it is the Veterans Court’s “stated practice” to look to Board decisions for guidance and the Knee Replacement Guidance conflicted with numerous prior Board rulings,[10] and (3) the pro-veteran presumption applied. Therefore, the Federal Circuit ultimately held that DC 5055 covered partial knee replacements.

III. NOVA 2022

Fast-forward a little more than six years, and the National Organization of Veterans’ Advocates (“NOVA”) petitioned the Federal Circuit to review the VA’s updated interpretation of DCs 5055.[11]

III.A. VA’s Post-Hudgens Amendment to DC 5055

Six months after Hudgens, the VA directed regional office (“RO”) adjudicators “to not evaluate under DC 5055 any claims for partial knee replacements filed and decided on or after July 16, 2015” (Knee Replacement Manual Provision).[12] And in 2020, the VA amended DC 5055 following notice-and-comment to “clarify [its] intent to provide a minimum evaluation following only total joint replacement.”[13] The amended regulation provides, in relevant part:

Prosthetic replacement of knee joint: … Minimum evaluation, total replacement only ……………….. 30 [% disability rating].

In addition, a note was added to the rating schedule to emphasize that “prosthetic replacement” in DC 5055 “means a total replacement of the named joint.”[14]

III.B. Jurisdictional Question

The Federal Circuit first briefly resolved the jurisdictional question: which VA instruction – the Knee Replacement Guidance or the Knee Replacement Manual Provision – constituted the final agency action subject to the court’s review? The court acknowledged that “Manual [P]rovisions that merely republish prior agency interpretations or restate existing law are not reviewable” in the Federal Circuit. Because the Knee Replacement Guidance “predates the Knee Replacement Manual Provision, and the Manual provision makes no substantive change to the Guidance,” the NOVA 2022 court held that the July 2015 Knee Replacement Guidance was the reviewable agency action.

III.C. Whether “Old” DC 5055 Covers Partial Knee Replacements After VA’s Knee Replacement Guidance

With the jurisdiction question answered, the court turned to address whether the VA’s interpretation of DC 5055 in its Knee Replacement Guidance was “arbitrary and capricious” or contrary to law.[15] The court noted that it must look to the text of DC 5055 “on the date the VA promulgated the Knee Replacement Guidance” because the court’s evaluation is whether the Guidance constitutes a valid interpretation of the code. The court followed Hudgens and concluded that the version of DC 5055 that existed when the VA promulgated the Knee Replacement Guidance is ambiguous.

Similar to Hudgens, the Federal Circuit then considered whether Auer deference or the Gardner pro-veteran presumption applied in this case. The court ultimately held that the prior conflicting Board decisions still precluded application of the Auer deference because “no relevant law or facts [had] changed since [its] decision in Hudgens.” Notably, since Hudgens, the Supreme Court reinforced the limits of the Auer doctrine. Specifically, in Kisor the Court provided that Auer deference is not appropriate where the agency interpretation “creates an unfair surprise” that upends reliance by regulated parties.[16]

According to the Federal Circuit, the Knee Replacement Guidance created unfair surprise because (1) Board decisions provide persuasive authority to the CAVC, (2) the vast majority of Board decisions prior to the Guidance applied DC 5055 to partial replacements, and thus (3) the prior Board interpretations may have “engender[ed] reliance interests that foreclose” Auer deference. Therefore, the NOVA 2022 court concluded that Hudgens still controlled its decision and the Knee Replacement Guidance did not qualify for deference.

Finally, under the pro-veteran canon of construction, the Federal Circuit determined that it must defer to NOVA’s interpretation of DC 5055. In Hudgens, the court held that “even if the government’s asserted interpretation of DC 5055 is plausible, it would be appropriate under the pro-veteran canon only if the regulatory language unambiguously supported the government’s interpretation.” And as the NOVA 2022 court explained, the text of DC 5055 at the time of the Knee Replacement Guidance was certainly ambiguous and thus any doubt should be resolved in favor of petitioners.

IV. Conclusion

There remain thousands of pending veteran disability benefit claims filed before the VA recently amended some of its rating criteria—including DC 5055. The Federal Circuit’s holding in NOVA 2022 provides important guidance to adjudicators charged with applying the old DC 5055 language to a veteran’s pre-2021 claim.

= = =

[1] 38 C.F.R. § 4.1.

[2] DC 5055 can be found at 38 C.F.R. § 4.71a.

[3] Under the “pro-veteran canon,” ambiguous VA regulations are interpreted in a manor favorable to the veteran.

[4] Nat’l. Org. of Veterans’ Advocates, Inc. v. Secretary of Veterans Affairs, 48 F.4th 1307, 1310 (Fed. Cir. 2022).

[5] Under Auer v. Robbins, an agency’s interpretation of its own regulation is controlling unless the interpretation is “plainly erroneous or inconsistent with the regulation.” 519 U.S. 452, 461 (1997).

[6] Under Brown v. Gardner, “interpretive doubt is to be resolved in the veteran’s favor.” 513 U.S. 115, 118 (1994).

[7] Hudgens v. McDonald, 823 F.3d 630 (Fed. Cir. 2016).

[8] To this point, 11 out of 14 relevant Board decisions found that DC 5055 was applicable to both full and partial knee replacements. Id. at 637.

[9] Agency Interpretation of Prosthetic Replacement of a Joint, 80 Fed. Reg. 42042 (July 16, 2015).

[10] The Supreme Court has clarified that Auer deference is unwarranted where “the agency’s interpretation conflicts with a prior interpretation.” Christopher v. Smithkline Beecham Corp., 567 U.S. 142, 155 (2012).

[11] Nat’l. Org. of Veterans’ Advocates, Inc. v. Secretary of Veterans Affairs, 48 F.4th 1307, 1310 (Fed. Cir. 2022).

[12] See VA Adjudication Procedures Manual M21-1 Section III.iv.4.A.6.a (“Knee Replacement Manual Provision”).

[13] Schedule for Rating Disabilities: Musculoskeletal System and Muscle Injuries, 85 Fed. Reg. 76453, 76456 (Nov. 30, 2020).

[14] 38 C.F.R § 4.71a.

[15] Under the Administrative Procedure Act (“APA”), a court should “hold unlawful and set aside agency action” that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or is promulgated “without observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (D).

[16] Kisor v. Wilkie, 139 S. Ct. 2400, 2418 (2019).

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The Patent Cup 2022

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One of my favorite of all global patent law events is the Patent Cup–a regatta that takes the battle of wits beyond the courtroom or patent offices.  The idea was hatched in 1989 by two friends, German patent attorney Peter Franck and French patent attorney Frederic Benech. The idea was to have a sailing patent attorney or agent organize in his or her own country a friendly race among IP professionals to showcase local sailing venues that might otherwise not be discovered. While a friendly competition, the Patent Cup has included sailors with both world-champion and Olympic pedigrees.  As with many other events, the pandemic delayed the event for a couple of years, but the 31st running of the Patent Cup was a great success a few weeks ago in my old town of Chicago.  The 2022 Patent Cup was organized by my former boss Marcus Thymian.

The regatta took place on Lake Michigan in September 2022 benefitted from perfect weather (not always a sure thing in Chicago). Principal Race Officer (PRO) and Chicago patent litigator Leif Sigmond, Jr., was able to run 9 competitive races and a more casual distance race. A mixed team from Australia, New Zealand, and Brazil (captained by Australian patent attorney James Cherry) claimed first place and were awarded the Patent Cup trophy. Thymian’s US team was second, while a team of current and former EPO patent examiners was third.

The regatta was sponsored Thymian and Sigmond’s respective firms: GrowIP Law Group and BakerHostetler and included sailors from 9 different countries. The competitors raced on the Chicago Yacht Club’s fleet of “Tom 28” boats. Next year’s Patent Cup is scheduled to take place at a yet-to-be-determined European location.  Congratulations to the winners!