Don’t Judge a Range by its Cover: Federal Circuit Sides with Patentee on Written Description Support

by Dennis Crouch

In a recent decision, the Federal Circuit held that a claimed range reciting narrower values than those described in the patent specification can still satisfy the written description requirement under 35 U.S.C. § 112(a). RAI Strategic Holdings, Inc. v. Philip Morris Prods. S.A., No. 22-1862 (Fed. Cir. Feb 9, 2024). Reversing a PTAB post-grant review decision, the court ruled that claims reciting a heating element with having a length of 75-85% of the disposable aerosol-forming substance had adequate written description support even though the specification only described broader ranges, such as “about 75% to about 125%.” Id.

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Broad Bayh-Dole March-In Licensing Rights Affirmed in Alzheimer’s Mouse Patent Dispute

by Dennis Crouch

The Federal Circuit recently upheld the US government’s royalty-free license rights over an Alzheimer’s disease research patent under the Bayh-Dole Act. University of South Florida Board of Trustees v. United States, 22-2248 (Fed. Cir. February 9, 2024). The decision confirms the broad scope of the government’s licensing rights under the Act — namely that it can include work that predates the funding agreement. It also comes at a salient time, as the Biden Administration weighs the idea of more aggressively exercising “march-in rights” under the Act to promote affordability of taxpayer-funded inventions. Read the Decision.

The dispute centered on U.S. Patent No. 5,898,094, which covers transgenic mice expressing mutated genes linked to Alzheimer’s. Scientists at the University of South Florida (USF) and Mayo Clinic developed the mice with partial funding from a National Institutes of Health grant. USF sued the government for infringement after a government contractor used the patented mice without authorization.

In its defense, the government argued the work that led to reducing the patented invention to practice occurred “under” its grant funding agreement with Mayo Clinic. The Bayh-Dole Act gives federal funding agencies certain rights over federally-sponsored inventions, including “a nonexclusive, nontransferrable, irrevocable, paid-up license” under 35 USC §202(c)(4).

With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world [with some further caveats].

35 USC §202(c)(4). The Court of Federal Claims agreed with the government’s interpretation and entered judgment of noninfringement.

On appeal, USF argued the statute requires the funding agreement predate the inventive work. It claimed the subcontract between Mayo and USF was not executed until months after the critical experiments. However, the Federal Circuit affirmed based on the breadth of the statutory language. It held that a subsequent agreement  can cover prior work, if payment for the prior work is within the grant’s scope. Since USF eventually accepted grant funds for the experiments under its subcontract with Mayo, §202(c)(4) applied.

[A necessary premise of USF’s argument] is that any “funding agreement” adequate to trigger § 202(c)(4) must be in place at the time of the relevant work (here, a first actual reduction to practice in April 1997), so that the November 1997 subcontract (whose execution and effective date were later than April 1997) does not suffice to trigger § 202(c)(4).

The court rejects this premise, finding the statutory language does not impose strict timing requirements for funding agreements to establish government license rights:

The Act says that “funding agreement” includes “any . . . subcontract of any type” for the performance of work under a funding agreement. § 201(b). That breadth-indicating language supports inclusion within the provision of a subcontract that provides for, among other things, payment for work already performed before the subcontract is executed or its “effective date.

The court later reaffirms this conclusion. “We reject this suggested temporal limitation on the scope of the relevant Bayh-Dole Act language.”

This conclusion is strongly bolstered by the record in this case, which suggests that what occurred here is not an uncommon fact pattern in government funding of research conducted in part by non-grantee members of a consortium called for in a government grant. Specifically, the record makes clear that subcontracts are commonly not executed until sometime after the grant is awarded, yet the grant-covered work proceeds without waiting for the inking of a subcontract.

Id. This decision endorses broad government rights under Bayh-Dole when research funding and contracting arrangements evolve over long timelines. The court refused to impose strict timing requirements not evident from the statutory text. As government witnesses observed, delays in memorializing inter-institutional agreements are commonplace in collaborative grant projects.

The ruling also comes amidst attention on the proper scope of Bayh-Dole march-in rights. USF’s lawsuit invoked the related §1498, where the government assumes liability for third-party patent infringement. Exercising march-in rights under §203 lets the government grant licenses to third parties for health or safety needs, yet this authority has almost never been affirmatively used. The Biden Administration recently sought public input on utilizing march-in rights to promote affordable access to publicly-funded inventions. Among other limitations, commenters noted march-in rights likely do not authorize the government to set product prices.

The case here highlights that the Government has broad power in situations where parties have accepted federal funding. It does not, however, answer when exertion of that power is sound policy.

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I received several emails and comments about this post unfairly treating Section 202 and 203 rights as the same thing.  I agree that I was cavalier in my post by not distinguishing the two. Although both involve actions that the Federal Government can take with regard to federally-funded inventions, Section 202 licenses are regularly relied upon, while Section 203 march-in rights are almost never relied upon (but the Biden admin would like to expand their use.)

Section 202 provides the Federal Government with a nonexclusive, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.  Section 203 allows the U.S. government to go further an grant a narrow “reasonable” license to a “responsible applicant” if the patent resulted from federally funded research and certain conditions are met.  The government can only exercise Section 203 march-in rights if it determines that action is necessary because the patent owner has not achieved “practical application” of the invention or because public health/safety needs are not being reasonably satisfied. So there must be a specific triggering condition.  Those limits are not in place for Section 202 license rights.

 

Federal Circuit Reverses PTAB on Printed Publication Status of Operating Manuals

by Dennis Crouch

It is interesting that we continue to have cases fighting over what counts as a “printed publication” under 35 U.S.C. § 102.

In Weber, Inc. v. Provisur Technologies, Inc., Nos. 2022-1751, 2022-1813 (Fed. Cir. Feb. 8, 2024), the PTAB sided with the patentee, but on appeal the Federal Circuit reversed — finding that Weber’s food slicer operating manuals was a printed publication.  The case shows that documents with quite limited distribution, such as operating manuals sent to ~10 customers, may still meet the public accessibility standard for prior art depending on the circumstances of disclosure and expectations around further dissemination.

Although this case involves pre-AIA 35 U.S.C. § 102(b), the same “printed publication” language is found in post-AIA 35 U.S.C. § 102(a).

The case involved a dispute between competitor food slicer manufacturers Weber and Provisur. Provisur sued Weber for infringing two of its patents relating to high-speed mechanical slicers used to slice and package meats and cheeses. U.S. Patent Nos. 10,639,812 and 10,625,436. Weber filed two inter partes review petitions asserting that the patents were invalid as obvious based on Weber’s own operating manuals for its commercial slicers, in combination with other prior art references. IPR2020-01556, IPR2020-01557.

The Board initially found in its institution decisions that Weber provided enough evidence to support the public availability of the manuals as printed publications. But in its final written decisions, the Board changed course and found that the manuals were not sufficiently publicly accessible due to limited dissemination and confidentiality restrictions.

On appeal, the Federal Circuit against the patentee. Writing for the panel, Judge Reyna explained that “[t]he touchstone of whether a reference constitutes a printed publication is public accessibility” and that “[t]he standard for public accessibility is whether interested members of the relevant public could locate the reference by reasonable diligence.”

The scope and content of the prior art is a question of fact. Thus, the Federal Circuit gave deference to the PTAB’s determination of inadequate public accessibility, but ultimately concluded that the Board’s decision was not supported by substantial evidence:

The record evidence shows that Weber’s operating manuals were accessible to interested members of the relevant public by reasonable diligence. For instance, Weber employees testified that the operating manuals could be obtained either upon purchase of the Weber food slicer or upon request directed to a Weber employee.

Id. The Board had relied heavily on the Federal Circuit’s decision in Cordis Corp. v. Boston Scientific Corp., 561 F.3d 1319 (Fed. Cir. 2009).  In Cordis, the court faced the question of whether two two academic monographs describing an inventor’s work
distributed to several university and hospital colleagues as well as two companies interested in commercializing the technology.  Although there was no express confidentiality agreement, the court found that “academic norms” included an expectation that the disclosures would remain confidential. With regard to the distribution to commercial entities, the court found found that the inventor had requested and expected confidentiality. The court noted the lack of evidence showing these types of entities typically made such documents publicly available or that they had incentives to do so. Dr. Palmaz also testified that confidentiality was requested and honored in practice.  The written agreement with one of the companies expressly disclaimed any confidentiality obligations, but the court still found that the document was kept within the company and that the expectation of confidentiality was reasonable.

On appeal, the Federal Circuit distinguished Cordis from the situation in Weber:

Weber’s operating manuals were created for dissemination to the interested public to provide instructions about how to assemble, use, clean, and maintain Weber’s slicer, as well as guidance for addressing malfunctions that users might encounter.

Id.  Somewhere between 10 and 40 entities received the manuals. But, the Federal Circuit concluded that “No minimum number of occasions of access is dispositive of the public accessibility inquiry in all cases.”  Accessibility does not actually require that it was accessed.

The commercial slicers were quite costly and so the manual was only distributed to this small number of companies. The manual also included a copyright notice that the Board found prevented substantial distribution.  On appeal, the Federal Circuit found these limits inadequate.  The purchasers were the interested public that obviously could “afford the high-cost slicers.” And, “Weber expressly instructed customers who were re-selling their slicers to transfer their operating manuals to purchasing third parties.”

I wonder how the court would have ruled if the manuals distributed to customers included a stronger confidentiality expectation.

Panel: Judges Reyna, Hughes, Stark. Opinion by Judge Reyna.
Arguing counsel: Richard Crudo (Sterne Kessler) for Weber, Inc. and Michael Babbitt (Willkie Farr) for Provisur Technologies, Inc.

AI and Patent Attorney Misconduct

Yesterday in my patent prosecution course, students turned to AI tools to help them draft patent claims.  None of the AI-proposed claims were ready for prime-time, but they served as a useful starting point as the students organized their thoughts.  More and more attorneys are turning to these same AI tools to help them be more productive and efficient while delivering a higher quality work product.  It is tough, for instance, to read all the prior art. AI tools can help mine the references for potential obviousness problems — and provide a pin cite to the key language in the art.

USPTO Director Vidal recently released a new memorandum concerning the use of artificial intelligence (AI) in patent office proceedings.  directorguidance-aiuse-legalproceedings. The memo recognizes that AI tools can be powerful both for applicants and for USPTO examiners.  But, AI tools cannot be used to avoid ethical duties.  The memo thus provides firm guidance that existing ethics rules on candor and misconduct apply even when AI tools are used to generate legal filings and evidence. This comes on the heels of several high-profile cases of “AI hallucination” outside of the PTO context, where language models like ChatGPT produced false information that lawyers presented as fact or law.

For example, submissions to the USPTO generally require a signature, and by affixing a signature, the signatory-who has to be a person-certifies, among other things, that “All statements made therein of the party’s own knowledge are true,” that “all statements made therein on information and belief are believed to be true,” that “after an inquiry reasonable under the circumstances” any “legal contentions are warranted by existing law” or “by a nonfrivolous argument for the extension … or reversal of existing law,” and that “factual contentions have evidentiary support” or likely will have evidentiary support after a reasonable opportunity for discovery.

Quoting from USPTO Rule 11.18.  This rule is based directly on the Federal Rule of Civil Procedure , Rule 11 that has been applied in the AI context.  Dir. Vidal goes on to highlight a few particular circumstances:

  • Simply assuming the accuracy of an AI tool is not a reasonable inquiry.  
  • A submission (including an AI-generated or Al-assisted submission) that misstates facts or law could also be construed as a paper presented for an improper purpose because it could “cause unnecessary delay or needless increase in the cost of any proceeding before the Office.”
  • Etc.

Be careful out there everyone!

 

Judicial Misconduct Sanction Against Judge Newman Affirmed

by Dennis Crouch

The Judicial Conduct and Disability Committee has denied Federal Circuit Judge Pauline Newman’s petition challenging the Federal Circuit Judicial Council’s misconduct finding against her. The Committee includes seven Federal Judges from around the country, chaired by Fourth Circuit Judge Traxler. The particular finding here is an affirming the Federal Circuit’s determination that Judge Newman committed serious misconduct by refusing to undergo a requested medical examination to assess whether she has a disability rendering her unable to discharge her judicial duties. In re Newman.

The complaint originated in March 2023 when the Federal Circuit Chief Judge Moore identified concerns about Judge Newman’s fitness for office based on incidents suggesting significant cognitive impairment. A Special Committee of Federal Circuit judges was appointed to investigate whether Judge Newman has a disability. The Committee ordered Judge Newman to undergo neurological and neuropsychological testing to make this determination. Judge Newman refused, arguing the special Committee lacked reasonable basis for the testing and her due process rights were violated.

The Special Committee and Judicial Council (consisting of all Federal Circuit judges except for Judge Newman) found Judge Newman’s refusal to comply constituted serious misconduct under the Rules for Judicial-Conduct and Judicial-Disability Proceedings. Her failure to cooperate meant that her “fitness” could not be determined.  As sanction, Judge Newman was barred from hearing cases for one year, subject to renewal if she continues refusing to comply.

In her petition to the Broader Committee, Judge Newman argued the Council abused discretion by not transferring her case to another circuit and that alleged due process violations established good cause for her noncompliance. She also challenged the sanction as exceeding the Council’s authority.

The Committee upheld the misconduct finding and sanction.  It found the Chief Judge and Judicial Council properly exercised discretion not to request a transfer per the Rules’ exceptional circumstances standard. Judge Newman’s due process arguments also failed since she received required procedures and access to evidence. The one-year case suspension comported with the Council’s responsibility to ensure effective court administration under the circumstances and was “not grossly in excess of other suspensions imposed under the Act.”

By unanimously affirming the finding against Judge Newman, the Committee reinforced judicial councils’ broad authority to investigate disability complaints and impose sanctions for noncompliance. However, its opinion indicates that a transfer may be warranted if, for instance, Judge Newman calls Judicial Council members as witnesses regarding her fitness in future Judicial Council proceedings.

Judge Newman’s lawsuit in the D.C. Circuit is ongoing, with the district court considering the motion to dismiss filed by her co-judges.  Newman v. Moore, et al., Docket No. 1:23-cv-01334 (D.D.C. Filed May 10, 2023).

 

Livestream of LKQ v. GM

The Federal Circuit is hearing oral arguments today in the design patent case of  LKQ Corporation v. GM Global Technology Operations LLC 21-2348.  Judge Stoll’s opinion in the case sides with the patentee GM on the issue of obviousness — affirming a PTAB decision in favor of the patentee.  LKQ’s appellate team led by Prof. Mark Lemley argues that Federal Circuit’s obviousness standard (known here as the Rosen-Durling test) makes it too difficult to actual reject or cancel design patent claims.  Lemley argues for a much more flexible and common sense approach as required by KSR.  The USPTO’s amicus agrees Federal Circuit law should be expanded, but not as far as suggested by LKQ.  GM argues for the status quo.

According to the listing, the en banc panel today consist of Chief Judge Moore,  and Circuit Court Judges Lourie, Dyk, Prost, Reyna, Taranto, Chen, Hughes, Stoll, and Stark.  Not listed is Judges Cunningham and Newman.  

Livestream below: (more…)

The US Constitution as an Interpretive Tool for Obviousness Law

by Dennis Crouch

LKQ’s brief for today’s en banc rehearing begins with the following interesting statement: “As with utility patents, the U.S. Constitution and the Patent Act prohibit design patents on ordinary innovations.” It is the Constitutional question that is most interesting and calls forth the concurring opinion by Justice Douglass in the Great A&P Case.

The attempts through the years to get a broader, looser conception of patents than the Constitution contemplates have been persistent. The Patent Office, like most administrative agencies, has looked with favor on the opportunity which the exercise of discretion affords to expand its own jurisdiction. And so it has placed a host of gadgets under the armour of patents—gadgets that obviously have had no place in the constitutional scheme of advancing scientific knowledge. . . . The fact that a patent as flimsy and as spurious as this one has to be brought all the way to this Court to be declared invalid dramatically illustrates how far our patent system frequently departs from the constitutional standards which are supposed to govern.

Great A&P Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147, 156 (1950). Although case applied pre-1952 law, the reminder here is poignant. Justice Douglas goes on:

It is worth emphasis that every patent case involving validity presents a question which requires reference to a standard written into the Constitution. . . .  The Congress does not have free reign, for example, to decide that patents should be easily or freely given. . . . Every patent is the grant of a privilege of exacting tolls from the public. The Framers plainly did not want those monopolies freely granted. The invention, to justify a patent, had to serve the ends of science—to push back the frontiers of chemistry, physics, and the like; to make a distinctive contribution to scientific knowledge. That is why through the years the opinions of the Court commonly have taken ‘inventive genius’ as the test. It is not enough that an article is new and useful. The Constitution never sanctioned the patenting of gadgets. Patents serve a higher end—the advancement of science.

The standard of patentability is a constitutional standard; and the question of validity of a patent is a question of law.

Id.   Later, in Deere, the Supreme Court suggests found that the newly written Section 103 was properly seen as statutory codification of the court’s standard “which exists in the law and has existed for more than 100 years, but only by reason of decisions of the courts.”  And, that standard is derived from the Court’s understanding of the U.S. Constitution’s requirement that the patent laws be designed to “promote the Progress of Science and useful Arts.”

The Congress in the exercise of the patent power may not overreach the restraints imposed by the stated constitutional purpose. Nor may it enlarge the patent monopoly without regard to the innovation, advancement or social benefit gained thereby. Moreover, Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available. Innovation, advancement, and things which add to the sum of useful knowledge are inherent requisites in a patent system which by constitutional command must ‘promote the Progress of * * * useful Arts.’ This is the standard expressed in the Constitution and it may not be ignored. And it is in this light that patent validity requires reference to a standard written into the Constitution.

Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 5–6 (1966).

Bringing this back to design patents and the LKQ case, the patent challenger here does not deeply engage with the constitutional question, but rather appears to use it as a constant interpretative reminder. GM’s brief does not mention the Constitution or its requirement to “promote the Progress.”  Likewise, none of the Federal Circuit’s obviousness decisions from the past year discussed the doctrine in light of the Constitutional requirement.

 

LKQ Corporation v. GM Global Tech: Design Patent En Banc

by Dennis Crouch

On Monday, February 5, 2024, the Federal Circuit will sit together for the first time in years to hear an en banc patent case.  In LKQ Corporation v. GM Global Technology Operations LLC, the court will consider whether to apply a more stringent obviousness test to design patents.  In a 2010 article, I concluded that “the current design patent examination system operates as a de facto registration system” with very little obviousness analysis except in cases of clear copying.  Although design patent examination has become more rigorous, obviousness rejections remain relatively rare in comparison to their utility patent brethren.

Oral arguments will include the 11 Federal Circuit judges (absent Judge Newman) along with Mark Lemley (arguing for the accused infringer and seeking a more rigorous obviousness test); Joe Herriges (arguing for the patentee GM largely seeking to preserve the status quo); and USPTO Acting Solicitor Farheena Rasheed (for amicus USPTO).  The case particularly focuses on whether the Supreme Court’s flexible test for obviousness from KSR v. Teleflex also applies to design patents.  In particular, the Federal Circuit’s Rosen-Durling test for design patent obviousness requires a primary reference as a starting point that is “basically the same” as the design being patented.  Lemley would throw out this approach entirely.  In its brief, the USPTO agrees that KSR requires more flexibility and that Rosen-Durling is “overly restrictive in several respects.” However, the USPTO suggests retaining the basic framework as a standard approach to obviousness, while permitting other approaches as necessitated by particular cases — allowing for both flexibility and the application of common sense.

On Feb 6 I am gathering online for a Suffolk Law School event to debate the case and its potential outcome and impact.  I will be joining Suffolk professor Sarah Burstein along with Meredith Lowry (Wright Lindsey); Darrell Mottley (Banner + Howard University); and Laura Sheridan (Google). See you there (REGISTRATION).

Two Mandamus Petitions: Transfer Granted, Improper Service Denied

by Dennis Crouch

A Federal Circuit panel recently released a pair of mandamus orders dealing with important civil procedure issues – one granting a petition to transfer venue under 28 USC 1404(a) , the other denying a petition challenging substitute service of process for a foreign defendant.

In the first case, In re Honeywell Int’l Inc., Honeywell was sued for patent infringement in the Western District of Texas. Lone Star SCM Systems, Ltd. v. Honeywell International Inc., Docket No. 6:21-cv-00843 (W.D. Tex., Filed Aug 12, 2021). Honeywell moved to transfer the case to the Western District of North Carolina under 28 U.S.C. § 1404(a), arguing that the bulk of the evidence and witnesses were located there — making that location much more convenient. The district court analyzed the private and public interest factors but denied transfer, mainly based on the plaintiff’s choice of forum and judicial economy.  In particular, Judge Albright has two other cases filed by the same plaintiff pending for several years in his courtroom and he has developed substantial understanding of the patents at issue.

Honeywell petitioned the Federal Circuit for a writ of mandamus directing the district court to transfer the case. The appellate panel of Judges Dyk, Bryson, and Taranto concluded that keeping the case in the Western District of Texas amounted to a “clear abuse of discretion leading to a patently erroneous result.” Several factors favored transfer, while nothing significant tied the case to Texas. The court held that the “incremental gains” in judicial economy were insufficient to justify the inconvenience of litigating in an improper venue.  The district court opinion is entirely under seal, and so we cannot know exactly how Judge Albright justified his decision not to transfer.

In contrast, in In re Aputure Imaging Industries Co., Ltd., the district court granted the plaintiff’s motion to serve the Chinese defendant Aputure by emailing the summons and complaint to Aputure’s attorney. Aputure petitioned for mandamus, arguing that the Hague Convention required the plaintiff to first attempt service in China.

The Federal Circuit denied Aputure’s petition. First, Aputure failed to show a post-judgment appeal would be inadequate. Second, Aputure did not establish a clear and undisputable right to relief.  Mandamus is seen as an extraordinary relief, and both of these must be shown in order for an appellate court to take action.  Ultimately, the appellate panel concluded that district court exercised reasonable discretion in permitting alternative service without requiring strict compliance with the Hague Convention.

The Federal Circuit recognized the district court’s broad discretion to authorize alternative means of serving foreign defendants under FRCP Rule 4(f)(3), which permits service by “other court-ordered means not prohibited by international agreement.”

If you had a stickler professor for civil procedure, you learned that service of process in the US is a really complicated mess of Constitutional principles, Federal Rules, State Laws, and common practices. FRCP Rule 4(f) sets out rules for serving “an Individual in a Foreign Country.”  It would thus not directly apply to serving the company (Aputure) defendant in this case. R.4(h) provides the additional guidance that a company can be served “at a place not within any judicial district of the United States, in any manner prescribed by Rule 4(f) for serving an individual, except personal delivery under (f)(2)(C)(i).” So, while personal hand delivery abroad is an option for serving an individual under 4(f), that specific provision does not extend to foreign companies. But the other subsections of Rule 4(f) detailing options for foreign service by court order, internationally agreed means, etc. can be utilized for companies.

Here, the patentee Rotolight made multiple attempts to serve Aputure at addresses linked to Aputure’s own website and business listings. When those efforts failed, Rotolight sought court approval to email the complaint and summons to Aputure’s US attorney. The district court reasonably found this would effectively provide notice and an opportunity for Aputure to respond. Given Rotolight’s documented service attempts and the court’s finding that email service would be effective, the Federal Circuit concluded it was not prepared to say allowing substitute service was a clear abuse of discretion warranting the extraordinary remedy of mandamus relief. The order permitting alternative service was within the district court’s broad latitude under Rule 4. Since service is proper, the infringement action will continue to move forward in the Eastern District of Texas.

Gogo Continues In-Flight Services as Federal Circuit Rejects SmartSky’s Preliminary Injunction Appeal

by Dennis Crouch

In SmartSky Networks, LLC v. Gogo Business Aviation, LLC, No. 2023-1058 (Fed. Cir. Jan. 31, 2024), the Federal Circuit has affirmed a lower court denial of a preliminary injunction sought by the patentee SmartSky against Gogo.  SmartSky sued Gogo in 2022 for patent infringement, alleging that Gogo’s 5G wireless network infringed several of SmartSky’s patents related to in-flight internet wireless connectivity.  See U.S. Patent Nos. 9,312,947, 11,223,417, 10,257,717, and 9,730,077.  Along with its complaint, SmartSky moved to preliminarily enjoin Gogo from providing its in-flight network.  SmartSky argued it had shown a likelihood of success on the merits and that it would suffer irreparable harm without an injunction, but the D.Del. district court Judge Gregory Williams disagreed.  A grant or denial of preliminary injunctive relief can be immediately appealed, but the patentee’s appeal has also failed.

The preliminary injunction motion was associated with a new 5G network that Gogo had announced in 2019.  That network is, according to Gogo, “still in a pre-launch phase.”  Although customers are not yet actively using the service, the network itself is actually complete and the final step is including the chipsets within the planes.  This aspect of the case was the most critical for the Federal Circuit who concluded that the current status of Gogo’s operation was not definite enough to create irreparable harm.

 

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Race to the Finish: Timing Battles in Parallel IPR and District Court Litigation

by Dennis Crouch

The new petition for certiorari filed by Liquidia raises some interesting questions about the ongoing race between inter partes review proceedings and district court litigation.  Liquidia Techs v. United Therapeutics Corp., 23-804 (US), on petition for writ of certiorari from United Therapeutics Corp. v. Liquidia Techs., Inc., 74 F.4th 1360 (Fed. Cir. 2023).

UTC won its infringement suit against Liquidia with a holding that its patent covering treprostinil administration by inhalation were valid and infringed. (US10716793).  While the appeal was pending, the PTAB sided against the patentee and found the claims unpatentable as obvious.  In the appeal, however, the Federal Circuit refused to give credence to the PTAB decision – finding that litigation was still “pending” and “non-final.” The claims had not actually been cancelled yet – since the Director only issues the certificate confirming unpatentability after any appeal. Further, the Federal Circuit concluded that IPR decisions do not have issue-preclusive (collateral estoppel) effect until the decision is affirmed on appeal, or the parties waive their right to appeal. Citing XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018).

Liquidia’s petition argues that the PTAB’s final-written decision should be given preclusive effect in parallel litigation even if an appeal is pending, just like would be done for a district court opinion. (more…)

Has Diehr been Overruled?; and How do you Prove Technological Advance

by Dennis Crouch

Ficep begins its petition for certiorari with a brilliant statement of how its patented steel manufacturing method has won numerous awards and complements for its innovative approach, been copied by competitors, and led to numerous successful sales. Despite these clear indicia of patentability, the Federal Circuit invalidated claims — affirming the lower court’s judgment on appeal.

That the invention was an important real-world manufacturing innovation was, as a factual matter, thoroughly established. The improvement was touted as enabling vastly more efficient and superior manufacture of components – not just by Petitioner’s experts, but also in the defendant’s advertising. There was industry recognition applauding the “innovation.” There was copying by competitors. There was successful litigation and licensing. And there was specific customer demand for the improvement to the manufacturing process. That is, every objective indicium of inventiveness that this Court has identified was present in the technological, traditionally patent-eligible, setting of manufacturing lines.

Ficep petition for certiorari.  But, in the Federal Circuit’s view, facts are confined to the obviousness analysis, and Ficep’s patent is invalid because it is directed to an abstract idea. Ficep Corp. v. Peddinghaus Corp., No. 2022-1590, 2023 WL 5346043 (Fed. Cir. Aug. 21, 2023).  The petition goes on to ask three questions:

  1. Does a claim directed to patent-eligible subject matter (here, manufacturing) nevertheless become ineligible as “abstract” if the process is improved using automation? (and should an “abstract-idea” behind a claim to a patent-eligible process be identified and, if so, how and at what level of abstraction?)
  2. What is the appropriate standard for determining whether a claim is “inventive,” conferring eligibility under Alice Step 2, including whether objective evidence of inventiveness and technological improvement is relevant?
  3. Is either what a claim is “directed to” and whether that is abstract, or whether a claim is “inventive” as articulated in Alice step 2, only for a judge to decide as a legal matter or does it include fact issues and, if the latter, are they for a jury?

SCT No. 23-796.  This case again highlights the need for clearer guidance from the Supreme Court on when a patent claim directed to an industrial process should be considered an abstract idea and therefore patent ineligible under 35 U.S.C. § 101.

For its part, the Federal Circuit applied the two-step test for patent eligibility established in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014). At step one, the court determines whether the patent is “directed to” a patent-ineligible concept like an abstract idea. If so, then at step two the court searches for an “inventive concept” beyond the ineligible concept.

Here, the Federal Circuit held Ficep’s patent claims to be directed to the abstract idea of “extracting and transferring information from a design file to a manufacturing machine.” The court characterized the focus of the claims as “automating a previously manual process” that a human operator used to perform. Further finding no inventive concept at step two, the Federal Circuit affirmed the district court’s ruling that the claims were patent ineligible under § 101.

In its cert petition, Ficep contends that the Federal Circuit misapplied Alice in a way that conflicts with precedent and casts doubt on patents for industrial innovations. Ficep argues that its claims are directed to an eligible manufacturing process under Diamond v. Diehr, 450 U.S. 175 (1981), which held that a rubber curing method did not become patent ineligible simply because one step used the Arrhenius equation to automate timing of when to open the presses. According to Ficep, the Federal Circuit improperly focused on one aspect of its claims—data extraction and transfer—rather than evaluating the claims as a whole, which require physical manufacture of components. Ficep also presented extensive evidence of its patented system’s superiority over prior manufacturing methods, which it contends demonstrates a technological advance under step two of Alice that the Federal Circuit wrongly dismissed.

Lets look at the claim at issue for just a moment. Claim 7 below claims an “apparatus for automatic manufacture of an object” and requires, among other things, “at least one manufacturing machine [that] manufactures the components” after receiving dimensions from a computing device.  Although the court agreed that the claim requires hardware, the court noted that the actual advance here is simply automating the previously manual process of transferring information from a CAD design model to a manufacturing machine.  The court found that, in a general sense, that automation process is an abstract idea.  And, that the patent claims offer no specific technological improvement that would transform the ineligible idea into a patent eligible.  But, the patentee here argues that the closest Supreme Court case on point is not Alice, but rather Diehr, which would favor eligibility.

7. An apparatus for automatic manufacture of an object, comprising:

a computing device adapted to create a design model of an object having multiple individual components, at least two of the individual components defining an intersection at which the two components are in contact with one another;

at least one programmable logic controller in communication with the computing device and with at least one manufacturing machine;

a receiver associated with the programmable logic controller for receiving the design model of the object;

a database unit adapted to store the design model received at the receiver;

a processor which is associated with the programmable logic controller and extracts from the design model a plurality of dimensions of components which define a plurality of components of the object;

wherein the processor identifies a plurality of intersection parameters which define the intersection of the two components;

wherein the processor extracts from the design model the intersection parameters;

a transmitter associated with the processor for transmitting the intersection and machining parameters and the component dimensions from the programmable logic controller to the at least one manufacturing machine; and

wherein the at least one manufacturing machine manufactures the components based at least in part on the transmitted component dimensions and on the transmitted intersection and manufacturing parameters.

In focusing on Diehr, the patentee here is raising a difficult issue that the the  Supreme Court’s landmark 1980 decision is effectively dead, even though it has not been rejected or repudiated by the Supreme Court. Rather, it was favorably cited in the Supreme Court’s recent trio of Bilksi, Mayo, and Alice.

Zombie Precedent: Ficep contends that its claims are analogous to the patent-eligible claims in Diamond v. Diehr for a rubber curing method that used the Arrhenius equation to calculate when to automatically open the presses. Ficep argues that like Diehr, its claims as a whole are directed to an eligible manufacturing process—namely manufacturing steel building components—even if one aspect involves automation based on extracting data like intersection parameters. But, the lower courts are not applying Diehr because they see that case as in conflict with the more recent trio. In its petition, Ficep asks the Supreme Court to make a statement on this issue — either confirm or overrule Diehr.

On the inventiveness issue that I started with in this post, the patentee here asks for guidance on Step-2 of Alice/Mayo and for a recognition that technological advance is a fact question for a jury to decide alongside parallel questions in obviousness and anticipation analysis.

= = =

The patentee-petitioner is represented by Matthew Lowrie and his team from Foley & Lardner.  Peddinghaus’s responsive brief is due Feb 23, 2024.  Their attorneys have not filed an appearance, but I expect they will still be represented by Nathaniel Love and his Sidley Austin team that includes Stephanie Koh and Leif Peterson.

Federal Circuit on TM Law’s Information Matter Doctrine

by Dennis Crouch

The Federal Circuit has just reissued this important trademark decision as precedential. In re GO & Associates, 22-1961 (Fed. Cir. 2023/2024)

In a non-precedential 2023 decision, the Federal Circuit affirmed a decision by the  Trademark Trial and Appeal Board (TTAB) refusing to register “Everybody vs Racism” as a trademark for apparel, tote bags, and services promoting racial justice advocacy. The court found substantial evidence supported the TTAB’s conclusion that the slogan fails to function as a source identifier for the applicant GO & Associates’ goods and services.  Although the outcome here supports the informational matter doctrine barring registration, the court is clear that political slogans and other informational matter can be protected as trademarks so long as the applicant shows that they actually function as a trademark. (more…)

Guest Post by Prof Burstein: Sanctions & Schedule A

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

Jiangsu Huari Webbing Leather Co., Ltd. v. Joes Identified in Schedule A, No. 1:23-cv-02605 (SDNY Jan. 2, 2024), ECF 76.

The Schedule A litigation phenomenon continues apace in the Northern District of Illinois, a court that has become, in the words of Judge Seeger, “an assembly line for TROs.” But Schedule A litigation is not confined to Chicago. It has spread, perhaps most notably to the Southern District of Florida and the Southern District of New York.

One recent decision out of New York merits closer attention. In this case, as in most Schedule A cases, the plaintiff was able to obtain an ex parte TRO that included an order instructing Amazon to freeze the defendants’ seller accounts. The order also required the plaintiff to post a bond of $20,000 “for the payment of any damages any person may be entitled to recover as a result of an improper or wrongful restraint ordered.”

The plaintiff sued 163 defendants, alleging that each was liable for infringing a utility patent directed towards “a rectangular-shaped buckle-and-belt mechanism” for “an outdoor exercise product.”

At the TRO stage, the plaintiff’s “infringement evidence chart” consisted of a series of screenshots (many of them low-resolution screenshots) of the accused products. Here’s an example of all of the evidence submitted in that chart with respect to one of the defendants:

As per usual in a Schedule A case, the defendants did not find out about the case until after their accounts were frozen. When the plaintiff moved to extend the TRO, multiple defendants appeared to object. Judge Rochon refused to extend the TRO and the plaintiff voluntarily dismissed the case.

Two of the defendants, Hyponix and NinjaSafe, moved for bond damages, sanctions, and fees. They argued that the plaintiff had filed to conduct a sufficient pre-suit investigation and had committed various acts of litigation misconduct. They further argued that they each suffered damages from being wrongfully enjoined.

Judge Rochon granted the defendants’ motions for bond damages but denied their motions for sanctions and fees. She agreed that the moving defendants had been wrongfully enjoined because “Hyponix has pointed to at least four elements of claim 1 of the ’673 patent that are not present in its product” and “Ninja Safe has also shown that its products may not infringe claim 1 and has raised questions of invalidity.” Accordingly, Judge Rochon granted each moving defendant bond damages, though less than they asked for: $3,682.28 for Hyponix and $14,641.51 for NinjaSafe.

But she refused to grant sanctions or fees, despite being “troubled by Plaintiff’s conduct in this case.” In particular, Judge Rochon noted the “‘clear discrepancies’ between the protected elements of the ’673 Patent and the products of many of the parties against which Plaintiff secured a TRO.” She also noted other instances of “possible misconduct,” including:

  • “Plaintiff represented that most of the 163 parties were difficult to find and contact. In practice, however, contact information for many of the parties was readily available. . . . Plaintiff does not indicate that it tried with any diligence to locate these parties before seeking a TRO.”
  • “The pace and prevalence of Plaintiff’s dismissals suggest to the Court that Plaintiff used Rule 41 as part of a broader strategy to freeze the accounts of its competitors, then withdraw its claim against any party that happened to object.”
  • “Plaintiff failed to provide Hyponix with documents necessary for its defense. . . . . Plaintiff claims, falsely, that Hyponix did not request these documents.”

(Emphasis added.) Despite all of this, Judge Rochon refused to sanction the plaintiff:

Despite these concerns, the Court does not lightly award sanctions and will not do so in this case. Plaintiff holds a valid patent for its Hanging Exercise Product, its claim was colorable against at least some of the parties, and it dismissed its lawsuit voluntarily at a very early stage in the litigation (presumably in light of the issues raised by the Court at the order to show cause hearing), before any of the defendants responded to the Amended Complaint. Defendants here were made whole for their losses under the bond. Although a close question, the Court exercises its discretion to deny Defendants’ request for sanctions under its inherent powers and 28 U.S.C. § 1927. . . . To the extent that Plaintiff and its counsel engage in similar misconduct in the future, however, the Court will not hesitate to impose sanctions.

As Professor Eric Goldman noted in this blog post, “it would not be lightly awarding sanction when a plaintiff has committed so many violations.” Two additional points stand out as well.

First, the fact that some of the infringement claims might be colorable does not change the fact that the plaintiff brought numerous claims that were not—including the claims brought against the moving defendants. If the plaintiff had sued Hyponix and NinjaSafe separately, would that have changed the court’s analysis? If so, why should the fact of mass joinder insulate the plaintiff from sanctions? Especially in light of the fact that it’s far from clear that any—let alone all—of the defendants were properly joined, as they sell different products and do not seem to be actually connected in any way. See 35 U.S.C. § 299. In any case, the fact remains that this plaintiff brought many claims that were not colorable and used the machinery of the federal judiciary to wrongfully enjoin competitors. That is what should matter in the sanctions calculus, not the fact that some of the other claims (against apparently unrelated defendants) might have potentially had merit.

Second, it is true that the plaintiff dismissed the case at what would be, in a regular case, “a very early stage in the litigation.” But in a Schedule A case, the TRO seems to be the whole game. The plaintiff gets a TRO with an asset freeze, then starts making settlement demands. At that point, the defendants generally either settle or default. It appears that these cases aren’t meant to proceed any further. And as the defendants’ submissions show, significant damage can be done in these cases, even in a short period of time. (One also wonders how much money the plaintiff may have been able to extract in settlements before dismissing the case.)

In the end, the decision to sanction and to award fees is left to the discretion of the judge. And while it is encouraging to see Judge Rochon recognize the damage caused by acts that have become common in Schedule A cases (e.g., using FRCP 41 to dismiss defendants who fight back), it is discouraging to see a result that will only serve to further disincentivize Schedule A defendants from fighting back.

Once a judge grants a TRO with an asset freeze, the deck is heavily stacked against the Schedule A defendants. Defendants have strong incentives to settle, even when the cases against them lack merit. In many cases, it’s just too expensive to fight back, especially when your assets have been frozen.

If judges were willing to sanction plaintiffs—or at least shift fees—when Schedule A defendants were wrongfully restrained, that would do a lot to help level the playing field and incentivize the plaintiffs to bring better claims.

Without fee shifting or sanctions, the cost of bringing a nonmeritorious claim in a Schedule A case is virtually zero, while the harms to defendants who are wrongfully restrained—even for a short time—can be devastating. As Judge Hunt has noted, “the extraordinary remedy of freezing all [the defendants’] assets without notice” can “potentially ruin[] a legitimate business.”

Plus, as Casey Hewitt noted on Mastodon, Schedule A “defendants have no choice but to litigate, have no option to meet and confer and avoid a lawsuit . . . They did not ignore demand letters or refuse to negotiate or discuss alleged infringement.” But once they find out that their assets have been frozen, they have to “hire expensive IP litigators or they will lose their businesses.” In these circumstances, it seems like fee shifting for wrongfully enjoined Schedule A defendants should be the norm, not the exception.

Yes, it’s true that a presumption in favor of fee shifting would be a departure from normal federal court practice. But courts routinely use their discretion to grant procedural departures to Schedule A plaintiffs—e.g., email service, ex parte asset freezes, mass joinder upon conclusory (and in many cases, dubious) allegations. Perhaps it is time for judges to start using their discretion to make routine departures for Schedule A defendants, too.

Additional observations:

  1. This case is a good example of why patent litigation is a poor fit for the Schedule A litigation model. I’ve written here before about how design patent infringement is ill-suited to ex parte adjudication; so too is utility patent adjudication. If judges are going to keep allowing the Schedule A model in patent cases (and they don’t have to do so, in these cases or in any others), they should consider making it a regular practice to special masters to help analyze the infringement evidence at the TRO stage. And they should, at a minimum, require an individualized claim chart for each and every defendant.
  2. It is far from clear that Judge Rochon actually had the power to freeze these defendants’ assets in the first place. As Judge Kendall noted in a recent order, 35 U.S.C. § 284 “does not provide for the equitable relief of accounting and profits,” which is seems to be the standard basis for asset freezes in other types of IP cases. Furthermore, as Judge Seeger has noted, “Schedule A plaintiffs typically don’t request and receive equitable monetary relief” at the end of their cases, even when equitable relief is available. Other judges might be well-advised to start questioning whether they should use their discretion to keep granting these types of asset freezes, even in cases where a remedy of equitable disgorgement is actually available.

For more on the Schedule A phenomenon, see:

Judge Pauline Newman: Evaluate For Yourself

David Lat has a great new podcast with Judge Pauline Newman and asks listeners to “evaluate the 96-year-old jurist’s mental acuity for yourself by listening to this podcast.”: https://davidlat.substack.com/p/integrity-an-interview-with-judge-pauline-newman

Lat also includes several video clips for those who would like to see Judge Newman as she speaks: https://davidlat.substack.com/p/6-video-clips-of-judge-pauline-newman

 

USPTO Granted Remand in Important Antibody Written Description Case

by Dennis Crouch

The Federal Circuit has remanded the Xencor appeal — allowing USPTO  leadership an opportunity to re-focus on the written description requirement for both Jepson claims and means-plus-function claims in the antibody art.  I have several prior posts about the case:

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Vanda Seeks Supreme Court Review on Lower Standard for Obviousness

Vanda Pharmaceuticals recently filed a petition for writ of certiorari, asking the Supreme Court to review a May 2023 decision by the Federal Circuit that invalidated claims from four Vanda patents covering methods of treating Non-24-Hour Sleep-Wake Disorder (“Non-24”) using the drug tasimelteon (Hetlioz). Vanda Pharmaceuticals Inc., v. Teva Pharmaceuticals USA, Inc., 23-768 (Supreme Court).  The district court held that all the asserted claims were invalid as obvious, and the Court of Appeals for the Federal Circuit affirmed this decision. Vanda.cert.petition

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See you Soon: Three Upcoming Events

I’m looking forward to participating in three really interesting upcoming events. Hope to see some of you there!

  1. Feb 6 12noon EST – Debating Design Patent Obviousness – Streaming via Suffolk – Free Event (REGISTER HERE): The Federal Circuit has not held an en banc rehearing in a patent case since before COVID.  The first one (and only one on the docket) is the important design patent obviousness case of LKQ v. GM, with oral arguments scheduled for February 5, 2024. In the case, the accused infringer LKQ argues that the standard for design patent obviousness is too lax and thus allows for protection of many obvious designs. The primary legal hook in the case is that the flexible standard of KSR v. Teleflex should apply in design patent cases. Oral arguments will include the 11 Federal Circuit judges (absent Judge Newman) along with Mark Lemley (for the accused infringer); Joe Herriges (for the patentee GM); and USPTO Acting Solicitor Farheena Rasheed (for amicus USPTO).  On Feb 6 we’ll gather online to debate the case and its potential outcome and impact.  I will be joining Suffolk professor Sarah Burstein along with Meredith Lowry (Wright Lindsey); Darrell Mottley (Banner + Howard University); and Laura Sheridan (Google).
  2. Feb 16 – Utah IP Summit at the University of Utah (REGISTER HERE). This event has a great set of speakers from the judiciary (led by Judge Reyna) as well as academics and practicing attorneys. Thanks to Sarah Jelsema & Phil Harris and the Utah Bar for organizing what looks to be a set of really interesting topics.  I’ll be skiing at Snowbasin on the 17th – see you there! ⛷️
  3. March 7-8 – University of Missouri: AI and Government
    (REGISTRATION COMING SOON). Along with my patent work, I have also been delving deeply into AI law issues. As part of this I am helping organizing our upcoming conference here at Mizzou in Columbia Mo that is co-sponsored by MU Law, the Missouri Law Review, and also the MU Truman School of Government and Public Affairs. We’ll be focusing on broad themes of the use of AI in Government, the impact of AI on Democracy, Government Regulation of AI, and the Role of Education in Creating an AI Ready Public Sector.

See you soon!