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Timing the Venue Inquiry in W.D. Texas

Patent

by Dennis Crouch

I wrote earlier about the Federal Circuit’s TracFone decision, calling-out W.D. Texas Judge Albright for his months long delay in deciding defendant’s motions to transfer/dismiss for improper/inconvenient venue. In its decision, the appellate court repeated a prior conclusion that Judge Albright’s approach represented “egregious delay and blatant disregard for precedent.”

Egregious Delay and Blatant Disregard for Precedent

The following day (March 11), Judge Albright complied with the order and issued a 17 page opinion denying TracFone’s motion to dismiss or transfer.

Proper Venue: Congress created a particular venue statute for patent infringement lawsuits (28 USC 1400(b)) that is substantially narrower than the general venue statute used in Federal Courts. (28 USC 1391).  For an out-of-state-defendant (such as TracFone), venue in W.D. Texas will be proper if the defendant “has a regular and established place of business” within the district and has also “committed acts of infringement” within the district.

Precis Group, LLC v. TracFone Wireless, Inc., Docket No. 6:20-cv-00303 (W.D. Tex. Filed Apr 21, 2020)

Regularly established place of business: In this case, the plaintiff Precis alleged that TracFone operates a store in San Antonio using its d/b/a name Total Wireless.  The address is 1825 SW Military Dr., San Antonio, TX 78221.  The photo below comes from a Google search and is dated May 2019. Google tells me that the store is now closed, but we don’t know the date when it closed.  [COULD someone drive by and snap a photo for me?].

Total Wireless Store Photo from 2019

In its briefing, TracFone (1) denied that this was its store — but rather was “an independently owned retailer of TracFone products” and (2) alleged that the store was already out of business “well before this action was filed” in April 2020.  To support its motion to dismiss, TracFone submitted an affidavit from a TracFone employee who stated that the referenced store above is a Click Mobile store and that “TracFone has no ownership or other interest in Click Mobile and no relationship with it other than its rights to sell TracFone products and services.”  In a later filing, the defendant did admit that the “store exclusively sold Total Wireless products and accordingly used that mark.”  From the pictures and the admission of exclusive dealing, it sure looks like the relationship must have gone a bit deeper than simply “rights to sell TracFone products.”

In its responsive briefing, Precis provided images from TracFone’s TotalWireless website showing that this was an exclusive Total Wireless store. Those have since been removed from the website.

Note here that Precis did not provide its own affidavits.  And, the normal rule of a venue motion to dismiss/transfer is that uncontroverted plausible allegations in plaintiff’s complaint must be taken as true. However, the court should take into account evidence presented by the defense (including affidavits).  Still, any conflicts between affidavits should be resolved in the plaintiff’s favor.

In my mind, there are two big issues (1) is the store attributable to TracFone? and (2) what about the timing issue — what result if it closed before the complaint was filed?

In his order, Judge Albright sided with the patentee — holding that allegations and evidence suggests enough link to conclude that the store a TracFone “place of business.” The court writes:

While TracFone disputes its ownership of the property, Precis alleges that the store belongs to TracFone’s corporation, doing business under the assumed business name “Total Wireless.” Additionally, Total Wireless’s terms and conditions agreement states that: “Total Wireless is a brand of TracFone Wireless, Inc. d/b/a Total Wireless.” Total Wireless holds itself out as a being owned by and essentially one and the same as TracFone. Furthermore, TracFone is the owner of the Total Wireless trademark.

[Precis_Group_LLC_v._Tracfone__53].  Judge Albright did not address the TracFone affidavit indicating only a distant relationship with the actual store owner. Although I believe that it could be distinguished based the seeming exclusive dealing and trademark linkage, the court should have walked through the process.

The Store Closing: The bigger failing of Judge Albright’s opinion is that he did not address the issue of the store closing prior to the complaint being filed.  Venue needs to be proper as of the filing of the complaint, and the defendant submitted uncontroverted evidence that the store had already closed.  Note here that there is some disagreement among the lower courts about whether timing for the place-of-business should focus on infringement or filing of the lawsuit.  In Raytheon Co. v. Cray, Inc., 258 F. Supp. 3d 781 (E.D. Tex. 2017), the court held that the appropriate timing was at the time of infringement. That decision was later vacated by the Federal Circuit, although the court did not address the timing issue. In Pers. Audio, LLC v. Google, Inc., 280 F. Supp. 3d 922 (E.D. Tex. 2017), the court held that the place of business must be in existence as of the filing of the complaint.  In any event, the Judge Albright did not even address the issue in his opinion.  I would recommend to Judge Albright that he draft up a new opinion tonight that also addresses the store-closing issue. Otherwise we’ll likely see a quick reversal from the Federal Circuit.

The court also denied the motion to transfer for on grounds of inconvenient forum (or that there is another more convenient forum) under 28 USC 1404.

The Court finds that the ease of access to relevant sources of proof and the court congestion factors weigh slightly in favor of transfer, the cost of attendance of willing witnesses weighs against transfer, and all other factors are neutral. The Court notes that the convenience of witnesses is the single most important factor in the transfer analysis and that the court congestion factor is the most speculative and cannot outweigh the other factors. As such, the Court finds that TracFone has not met its significant burden to demonstrate that the Southern District of Florida is “clearly more convenient.”

Id.

Stanford’s Abstract Idea: A Method for Resolving Haplotype Phase

Patent

In re Stanford University (Fed. Cir. 2021).

This case appears to potential be a good test case on patent eligibility for the U.S. Supreme Court. The Federal Circuit here held that Stanford’s bioinformatics innovation – “a method for resolving haplotype phase” – lacks eligibility under Section 101 because it is directed to an abstract idea under Alice Corp.

Gene inheritance is a super interesting biologic process.  Each person inherits a set of chromosomes from each parent.  At times, it is helpful to understand which genes came from which parent — especially if tracing disease patterns or researching various diseases.  The problem though is that the chromosomes are not labelled “dad” & “mom” (except potentially the sex linked one).

The general purpose of the invention is to provide a better method for figuring out which genes are associated with which parent.  The approach is to first obtain allele data from the subject as well as three other family members (two parents and a sibling).  The claims then use a statistical inference process (Hidden Markov Model) to identify the likely inheritance state.  The claims define key parameters of the model (the hidden states). In addition to HMM, the claims also require a series of error-reduction techniques that use population data as well as consideration of sequencing errors. The prior art includes other methods of resolving haplotype phase, and other would-be non-infringing methods have also been developed since then. [Read Claim 1].  Apparently, the prior-art method had ~80% accuracy while the invention here boosts accuracy to ~98% (for heterozygous positions).

Prosecution History: Stanford researchers filed a couple of provisional applications back in 2011 followed in 2012 by the non-provisional application at issue here (App. No. 13/445,925).  After two rejections, an RCE, and several claim amendments, the examiner eventually issued a notice of allowance in 2016. Stanford paid the issue fee and the patent issued on September 13, 2016.  The next day (on September 14, 2016), the USPTO withdrew the patent from issue on order of the Tech Center 1600 director, and the subsequently issued a new rejection focusing on patent eligibility.  That rejection was affirmed by the PTAB and how has been affirmed by the Federal Circuit.

Patenting Math: On appeal, the Federal Circuit found the claims directed to an abstract mathematical calculation. In its analysis, the court broke-down the claim into a three step process:

  1. Receive data
  2. Process data
  3. Store or output data.

This is an information processing claim, but it does not “DO” anything with the information. The court explains “claim 1 recites no concrete application for the haplotype phase beyond storing it and providing it upon request.”  Now, some data processing approaches have been patentable, but those have focused on improving computer functionality itself.  The distinguishing point here is that Stanford’s innovation simply provides a better data output.

With Alice Step 2, the court found no inventive concept beyond the abstract idea.  Rather, all of the innovative features were basically combining various mathematical algorithms to do a better job of processing data — but we already said that is an abstract idea.

That a specific or different combination of mathematical steps yields a greater number of haplotype predictions than previously achievable under the prior art is not enough to transform claim 1 into a patent eligible application.

Slip Op.

Some of the dependent claims include a “diagnosis” or providing a “drug treatment.” However, the court found that the generalized element was equivalent to saying “apply it.”  In other words, a specific application is required before a mathematical algorithm such as this will be deemed patent eligible.

What is the Level of Contribution for Joint Inventorship?

Patent,

Ono Pharmaceutical Co., Ltd., v. Dana-Farber Cancer Institute, Inc. (Supreme Court 2021)

The Federals Circuit issued an important decision in this case back in 2020 that, in my view, further lowered the bar for joint inventorship. Traditionally, we have thought that a joint inventor must do more than simply tell the other inventors about the current state-of-the-art. In Ono, some of the inventive contribution made by Dana Farber scientists was published and made part of the prior art before the complete conception of the invention as claimed.  On appeal though, the Federal Circuit found those contributions could still count toward joint inventorship:

[A] collaborative enterprise is not negated by a joint inventor disclosing ideas less than the total invention to others, especially when, as here, the collaborators had worked together for around one year prior to the disclosure, and the disclosure occurred just a few weeks prior to conception.

Fed. Cir. Opinion.  The end result in the case was that Dana Farber became co-owner of valuable patents to which Ono had previously claimed sole rights.

Now, Ono has petitioned the U.S. Supreme Court with the following question:

[35 USC 116] provides that “when an invention is made by two or more persons jointly, they shall apply for a patent jointly.” A person who claims to have been improperly omitted from the list of inventors on a patent may bring a cause of action for correction of inventorship under 35 U.S.C. § 256.

The Federal Circuit has held that “to be a joint inventor, an individual must make a contribution to the conception of the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention.” Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466, 1473 (Fed. Cir. 1997).

In this case, in conflict with this Court’s guidance and the Fourth Circuit, the Federal Circuit adopted a bright-line rule that the novelty and non-obviousness of an invention over alleged contributions that were already in the prior art are not probative of whether those alleged contributions were significant to conception. App. 13a.

The question presented is:

Whether the Federal Circuit erred in adopting a bright-line rule that the novelty and non obviousness of an invention over alleged contributions that were already in the prior art are “not probative” of whether those alleged contributions were significant to conception.

[Ono Petition for Writ of Certiorari].

Note here that the 4th Circuit decision referenced here is an Levin v. Septodont Inc., 34 Fed. Appx. 65 (4th Cir. 2002)(unpublished).  In that case, Levin sued Septodent for breach of contract associated with payments on a patent sale agreement. The district court, found no breach because the patent was invalid for failing to properly list Donald Kilday as an inventor. In its decision the 4th Circuit explained the “significant contribution” requirement of a joint inventor should focus on patentability — “asking whether the contribution helped to make the invention patentable.”  Note that in that case, 4th Circuit was purporting to follow the Federal Circuit’s decision in Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998).  Pannu remains good law and was extensively cited and quoted in the Federal Circuit’s Ono opinion.

The petition cites one 19th century case – O’Reilly v. Morse, 56 U.S. (15 How.) 62 (1853).  In its decision, the Supreme Court wrote that Morse should still be considered the inventor, even though he had received information and advice from various “men of science.”

Neither can the inquires he made, or the information or advice he received, from men of science in the course of his researches, impair his right to the character of an inventor. No invention can possibly be made, consisting of a combination of different elements of power, without a thorough knowledge of the properties of each of them, and the mode in which they operate on each other. And it can make no difference, in this respect, whether he derives his information from books, or from conversation with men skilled in the science. If it were otherwise, no patent, in which a combination of different elements is used, could ever be obtained. For no man ever made such an invention without having first obtained this information, unless it was discovered by some fortunate accident. And it is evident that such an invention as the Electro-Magnetic Telegraph could never have been brought into action without it. For a very high degree of scientific knowledge and the nicest skill in the mechanic arts are combined in it, and were both necessary to bring it into successful operation. And the fact that Morse sought and obtained the necessary information and counsel from the best sources, and acted upon it, neither impairs his rights as an inventor, nor detracts from his merits.

O’Reilly v. Morse, 56 U.S. 62, 111 (1853)

 

 

Patent Claims as Elements rather than Boundaries

Patent

By Jason Rantanen

I teach Introduction to Intellectual Property Law every spring semester, an experience that often causes me to reflect on some of the fundamental premises of intellectual property law in a way that advanced courses don’t necessarily always invite.  When you’re deep in the nuances of the effective date provision for post-AIA § 102, it’s easy to lose sight of some of the big questions.  This post is one of a few half-baked ideas from that return-to-basics reflection.

***

I grew up steeped in the world of property law.  My father’s law office was in rural New York, and his core practice involved representing farmers, villages, and small businesses on land transactions, estate planning, and probate matters.  Some of my first memories are of photocopying property abstracts: voluminous documents that contained the transaction history for a property, often going back a hundred years or more.  We’d copy these abstracts and then affix the new deed or mortgage associated with the transaction.  Later, I learned to type up property descriptions for deeds, writing out the metes and bounds of the land being transferred.  These descriptions  used points and lines to articulate the land for which the property rights applied.

For me, the language of patent claims as boundaries resonated early and easily.  After all, patent cases routinely refer to claims in boundary-like terms.  One example is the likening of claims to “metes and bounds,” as Judge Rich did in footnote 5 of In re Vamco Machine and Tool, Inc., 752 F.2d 1564, 1577 (Fed. Cir. 1985).

The function of claims is (a) to point out what the invention is in such a way as to distinguish it from what was previously known, i.e., from the prior art; and (b) to define the scope of protection afforded by the patent. In both of those aspects, claims are not technical descriptions of the disclosed inventions but are legal documents like the descriptions of lands by metes and bounds in a deed which define the area conveyed but do not describe the land.

Another example is this passage from Judge Michel’s opinion  in Halliburton Energy Services, Inc. v. M-I LLC, 514 F.3d 1244, 1249 (Fed. Cir. 2008):

Because claims delineate the patentee’s right to exclude, the patent statute requires that the scope of the claims be sufficiently definite to inform the public of the bounds of the protected invention, i.e., what subject matter is covered by the exclusive rights of the patent. Otherwise, competitors cannot avoid infringement, defeating the public notice function of patent claims.

Patent law scholarship, too, treats patent claims as if they are boundary-setting.  Books and articles refer to modern claiming practice as “peripheral claiming”– language that implies an area that is within and that which is without.  Even those scholars who have critiqued the idea of peripheral claiming nonetheless visualize patent claims as defining an area: signposts instead of fenceposts.  The idea is still that there is a zone set by the patent claim.

And yet, the more I’ve litigated, studied, and taught about patents, the more I’ve realized that conceptualizing patent claims as defining an area is fundamentally wrong.  Patent claims are not boundaries, and it’s confusing to those who are trying to grasp patent law when we talk about them that way.  There is no area that is “encompassed” within patent claims.  Patent claims don’t define a “boundary.”  And they are quite unlike the metes and bounds of a deed description.  Even if one could plot the components of a patent claim in some n-dimensional space, it would still not define a closed form.  Conceptualizing patent claims as if they define some “area” of technology isn’t how they actually work. One cannot draw a line from one claim element to another, except in the sense that claim elements can interrelate with one another–but that, too, is really just another element, albeit one that is implicit from the semantic structure of the claim rather than explicit in its words.

So how should patent claims be conceptualized, if not as establishing a boundary?  My first answer goes back to how litigants and courts often actually approach them: as discrete legal elements akin to the elements of any other legal claim.  The limitations in patent claims aren’t like the boundaries defined in a deed; instead, they are like the elements of a tort.  Each of these elements must be met in order for the claim to be infringed, invalidated, or adequately supported by the disclosure.

Consider, for example, patent law’s novelty requirement.  In order for a prior art reference to anticipate a patent claim, each and every element of the claim must be present in the prior art reference.  Or the analysis for infringement: for there to be infringement, each and every element of the claim must be present in the accused product or process, either literally or as an equivalent.  In both cases, patent claims are treated as if they are a series of elements–not as boundary lines that are crossed or not.  They are, in the words of Nolo’s Plain-English Law Dictionary, “the component parts of a legal claim.”

In the end, despite my initial attraction to the language of real property to describe patent claims, I’ve come to realize that this rhetorical device–enshrined in patent law judicial opinions and used in briefs and legal scholarship–is both misleading and wrong.  Patent claims are not boundaries, and we should stop referring to them that way.  Instead, they are elements in their legal sense: sets of individual legal requirements that must each be proven to achieve a particular legal status.

Perhaps this is so obvious that it doesn’t need to be said.  And yet, for those who are learning patent law for the first time, it is hardly obvious – particularly when the opinions that we read talk about patent claims in boundary-like terms.

***

Thoughtful, non-repetitive comments welcome.  Comments that I think are crud or junk, in my subjective opinion, will be deleted without further notice or comment.

 

Applicants who are the Obligated Assignee

Patent

About 10% of the patent applicants file their patent application as an “obligated assignee” rather than the actual “assignee.”   Those 10% have apparently not yet received a assignment of rights from the human inventors but are still allowed to walk through the patenting process under 37 CFR 1.46, which allows patent applications to be filed “by an assignee, an obligated assignee, or a person who otherwise shows sufficient proprietary interest in the matter.”

I picked a obligated-assignee patent application at random to see how this is working in practice. U.S. Patent Application No. 15/705,170 was filed back in 2017 as a continuation of previously filed applications.  The application data sheet (ADS) includes a section where the patent applicant indicates its source of authority for filing the patent application, with the following options:

  • Assignee
  • Person to whom the inventor is obligated to assign
  • Legal representative under Section 117 (for death or incapacity of the inventor)
  • Joint inventor
  • Person who shows sufficient proprietary interest.

To be clear, when the provision speaks of a “person” in this context, it includes corporations, governments, and other legal persons that have the right and ability to own private property rights, such as a patent.

For the ‘170 patent, the ADS marked the ‘obligated to assign’ category and moved forward.  The application published in 2018 and issued as a patent in 2019. US Patent No. 10,514,582. The named applicant is View, Inc., and the patent includes four listed inventors.  The prosecution history includes a declaration filed by the inventors claiming to be the joint inventors. View had also used the patent application to secure a loan, and that security interest (and its released) was filed with the USPTO?

What I couldn’t find — any actual assignment document showing that the inventors actually assigned their rights. Nothing in the file wrapper and also nothing in the assignment database.  That appears to be a violation of the requirements of 37 CFR 1.46(b)(1).  Perhaps I’m missing something here from the docket. ( https://patentcenter.uspto.gov/#!/applications/15705170 ).

[Update] Commenters below have shown me what I was missing. MPEP 306 indicates a situation involving a continuation application (such as this one) “a prior assignment recorded against the original application is applied (effective) to the division or continuation application because the assignment recorded against the original application gives the assignee rights to the subject matter common to both applications.”   Here, an assignment was filed in the parent case, but it was not filed before-hand, and so I would question whether it counts as a “prior assignment” and whether 37 C.F.R. 1.46 creates an additional obligation to make sure the assignment is associated with the new case.

 

 

 

Continued growth in the number of inventors per patent.

Patent

by Dennis Crouch

I created the chart above using files from recently published US patent applications. The chart shows the average number of inventors per published application. I have been awaiting the 3.0 inventors-per-patent threshold for a while, and that has now been crossed.  The average (and median) patent application publication now lists three or more inventors.  In general, there are fewer patent applications then ever that list only one inventor. The number of 2-inventor applications has also fallen, but not as dramatically.

Averages can be shifted by extreme outliers. In our sample there are a small number of applications with a large number of listed inventors.  Example, Ericsson’s Pub. Nos. 20200028745 and 20170331670 that each list 133 inventors haling from Sweden, Finland, Germany, USA, China, and Korea.

International Patent Law at the Supreme Court

Patent

U.S. cases rarely delve into international patent law issues.  Rather, US courts have largely refused to allow parallel proceedings or filings in foreign jurisdictions to impact their decision-making at home.

IBSA Institut Biochimique, v. Teva Pharmaceuticals offers an interesting perspective on this.  The patent at issue was ISBA’s U.S. Patent No. 7,723,390 that claimed priority back to an Italian patent application (MI2001A1401).  The patent here is directed to a “soft gel capsule formulation containing the active ingredient levothyroxine sodium.”

In its decision, the Federal Circuit affirmed a lower-court ruling that the claims were indefinite.  In particular, the claims require that the gel capsule contain “a liquid or half-liquid.” But, nobody knew the meaning of the term “half-liquid.”  Although the term was used in the specification, it was not defined in the specification.  And, the patentee could find no textbook or scientific journal that used the term “half liquid.”

IBSA had argued that the term should be interpreted as “semi-liquid — having a thick consistency between solid and liquid.” To support that conclusion, the patentee pointed to the Italian Application, which used the term “semiliquido” in the exact same places where the ‘390 patent uses “half-liquid.”  A certified translation during the litigation translated the term “semiliquido” as “semi-liquid.”  The suggestion here is that PHOSITA would understand the claim term “half-liquid” to be synonymous with “semi-liquid.”

In its claim construction, the district court gave no weight to the italian priority filing or its certified translation — concluding instead that the change in terminology was intentional.  On appeal, the Federal Circuit affirmed that finding and also the indefiniteness conclusion.

Now IBSA has petitioned to the U.S. Supreme Court, raising the issues as follows:

Patents are unique: the rights they confer are strictly territorial in nature, yet there exists an agreed-upon framework among the vast majority of countries for efficiently securing patent rights. This mutual arrangement permits both U.S. and foreign inventors to seek patent protection first in their home country and then, if they choose, to seek similar rights abroad. In both cases, the inventor can claim “priority” to their domestic application, a critical step for warding off the potentially preclusive effects of “prior art” that can bar patenting.

This efficient system would suffer, if not disappear, without international agreements like the Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”), which establishes a baseline for intellectual property protections among its 140 signatory countries. Amongst other protections, the TRIPS Agreement demands that foreign inventors, and foreign priority applications, be treated like their domestic counterparts. This “national treatment” is a critical protection for U.S. inventors abroad, and for the many foreign inventors who seek to pursue their patent rights in the United States. But the courts below rejected these treaty obligations by choosing to give no weight to a foreign patent application, resulting in a finding of indefiniteness.

Question:Whether, pursuant to the United States’ obligations under the TRIPS Agreement, codified at 19 U.S.C. § 3511, a court construing the claims of a U.S. patent may give no weight to a foreign priority patent application, despite its submission to the U.S. Patent & Trademark Office during prosecution of the patent-in-question, because it is written in a foreign language and exhibits minor differences from the U.S. patent resulting from a translator’s judgment.

[Petition for Writ of Certiorari] [Federal Circuit’s 2020 Decision]

 

Egregious Delay and Blatant Disregard for Precedent

Patent

In re TracFone Wireless, Inc. (Fed. Cir. 2021)

On mandamus, the Federal Circuit has again found that Judge Albright clearly abused his discretion in failing to rule on TracFone’s motion to transfer its case out of the Western District of Texas and to a more convenient venue.

Although Judge Albright has promised rapid progression of patent infringement cases to trial, he has been sitting on transfer motions and leaving them undecided.  Here, the appellate panel repeated its prior statement that Judge Albright’s approach “amount[s] to egregious delay and blatant disregard for precedent.”

We order the district court to stay all proceedings until such time that it issues a ruling on the motion to transfer that provides a basis for its decision that is capable of meaningful appellate review.

The court went on to particularly order that Judge Albright issue an order within 30 days. The court also ordered “that all proceedings in the case are stayed until further notice.”  Presumably, this means that the this panel of Federal Circuit judges (REYNA, CHEN, and HUGHES) will maintain supervisory authority over the case throughout this process.

Precis Group filed the original lawsuit back in April 2020 and TracFone submitted its motion to dismiss/transfer in June 2020. Since that time, the case has proceeded without any ruling on the motions. In December, the court held a Markman hearing and issued a claim construction order. (Note here, it is only a 2-page order).  In any event, the case is well underway and Judge Albright understands many of the issues at stake in the litigation.  Of course, this experience through delay appears to be strategic on Judge Albright’s part because his familiarity with the case is a reason to deny a transfer of Venue.  The Federal Circuit panel looked to avoid rewarding Judge Albright for his “bad” behavior. Thus, the court explained that “any familiarity that [Judge Albright] has gained with the underlying litigation due to the progress of the case since the filing of the complaint is irrelevant when considering the transfer motion and should not color its decision.”

= = =

TracFone’s motion is both for lack of proper venue under 28 U.S.C. §1400(b) and inconvenient venue under 28 U.S.C. §1404(a).  Regarding proper venue, TracFone does not reside in TX — it is a Delaware corporation headquartered in Miami, Florida.  In addition, TracFone argues that it “does not have any place of business” in the W.D. Texas.  TracFone does sell its products throughout the district using, but it appears to no longer have a branded store.  Rather, its products are sold within other outlets such as 7-11, Dollar General and Joyeria y Discoteca Diana.  These “independently owned and operated stores” may have franchise rights that allow them to use TracFone’s trademarks and create contractual rights on behalf of the company, but the defendant argues those agreements do not result in TracFone having a “place of business” within the district.

Neapco Vents to Federal Circuit in IPR Loss

Patent

Neapco Drivelines v. American Axle & Manufacturing (Fed. Cir. 2021)

This is a sister case to the one pending before the U.S. Supreme Court regarding eligibility of the claims of American Axle’s U.S. Patent No. 7,774,911. That case is at the petitions stage and is awaiting responsive briefing from Neapco.  

In this case, American Axle challenged Neapco’s vented slip-joint coupling Patent No. 5,772,520 via Inter Partes Review.  The PTAB found claim 11 anticipated and its depdendent claim 12 obvious in light of the prior art — primarily Burton (U.S. Patent No. 5,655,968).  On appeal, the Federal Circuit has affirmed.

Neapco’s ‘520 patent was originally owned by Ford Motor Co.  Ford sold the patent as part of an overall sale of Ford’s driveshaft unit to Neapco back in 2008.  The patent expired back in 2016, but Neapco still sued American Axle in 2017 seeking back damages. That case is stayed pending outcome of the IPR.

= = =

The claims at issue here are directed to what appears to be a method of assembling the vented slip-joint for a vehicle driveshaft, although it is expressly claimed as a “method of venting a slip joint assembly.”  The slip-joint looks like a hydraulic shock-absorber and is designed to allow some axial compression of the driveshaft while still transmitting torque.  Neapco’s patent just has air inside the assembly (not hydraulic fluid), and the “venting” innovation here allows for compressed air to escape while keeping-out debris.

The key debate in this case is whether the prior art discloses (Burton) venting.  The prior art shaft – shown in figure 3 above – includes a “passage 130” that allows fluid communication from inside the slip assembly’s two operational main parts (stud yok and slip yok) to a third chamber within the assembly.

The patentee first argued that its claim should be interpreted as requiring venting to the outside (not internal venting).  On appeal, the Federal Circuit found that the claim language did not support such a construction, and rejected the patentee’s argument to give effect to an implicit requirement found in the preamble.

Neapco also argued that the function of its valve was pressure relief — something not provided by Burton.  ON appeal again, the court found that the claims did not require pressure relief, only a venting out of the main operational chambers.

Affirmed.

IPR Joinder Estoppel (Sometimes)

Patent

Uniloc 2017 v. Facebook (Fed. Cir. 2021)

The PTAB sided with Facebook in this inter partes review proceeding.  Finding most of the claims in Uniloc’s US8995433 unpatentably obvious.  On appeal, Uniloc raised two main issues:

  1. Procedure: Whether Facebook, as well as WhatsApp and LG, should have been estopped from bringing the IPR challenges under 35 USC § 315(e)(1).  Inherent to this question is whether the estoppel question is barred by the “no appeal” provision of Section 314(d).
  2. Substance: Whether the PTAB erred in its determination that the claimed instant-voice-messaging system would have been obvious as of the 2003 priority filing date.

Estoppel: Under Section 315(e)(1), a petitioner “may not request or maintain” an inter partes review proceeding as to any ground that petitioner “raised or reasonably could have raised” in a prior IPR that resulted in a final written decision as to the same patent claim.   Basically, this provision is designed to prohibit a patent-challenger from making multiple successive attempts to challenge a patent in an IPR.

The procedure of this case is a bit confusing.  BASICALLY, Apple filed for IPR that was subsequently joined by FB;  FB filed its own IPR that was subsequently joined by LG.  The Apple case concluded first (with a Final Written Decision siding with Uniloc). The question then is the extent that FB and LG are estopped maintaining the FB IPR.

After deciding the Apple IPR, the PTAB gave effect to § 315(e)(1) estoppel — holding that FB could no longer pursue its own IPR challenges as to claims challenged in the Apple IPR.   Although FB was knocked-out as a party as to most claims (all but Claim 7), the PTAB continued the FB IPR with LG as the remaining party.  On appeal, Uniloc argued that LG should not have been permitted to continue the case because of the way it joined-cause with FB in the joinder motion.  The appellate panel rejected that argument and affirmed LG was not a RPI to FB’s IPR petition or privy of Facebook. “[J]ust because LG expressed an interest in challenging the ’433 patent’s patentability, through its filing of its own IPR petition and joinder motion, does not by itself make LG an RPI to Facebook’s IPR.”  The court also affirmed that 315(e)(1) estoppel only applied to claims challenged in the Apple IPR — thus FB was not estopped from maintaining a challenge to claim 7.  “Section 315 explicitly limits the estoppel to the claims previously challenged.”

Right to Appeal: Before delving into those merits, the court first determined that the case was appropriate for an appeal despite the no-appeal provision of Section 314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”).   Here, the appellate panel found no problem with hearing the appeal because the estoppel question at issue was triggered after institution.

Considering the strong presumption of reviewability of agency action, we see no indication that § 314(d) precludes judicial review of the Board’s application of § 315(e)(1)’s estoppel provision in this case, in which the alleged estoppel-triggering event occurred after institution.

Slip Op. (citing Credit Acceptance where a cause for termination arose after institution).

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On the merits of obviousness, the court also affirmed — finding that the Facebook expert’s testimony provided substantial evidence to support the PTAB’s obviousness factual findings.

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes, Patent

Recent Headlines in the IP World:

Commentary and Journal Articles:

New Job Postings on Patently-O:

Make Sure your Patent Application is “DIRECTED TO” a Specific Technological Solution

Patent

Enco Systems, Inc. v. DaVincia, LLC (Fed. Cir. 2021) [ENCO]

Judge Stephen Limbaugh (E.D. Mo.) sided with the accused infringer DaVincia– holding that the claims of ENCO’s U.S. Patent No. 7,047,191 are invalid under 35 U.S.C. § 101 as directed to an abstract idea.  On appeal, the Federal Circuit has affirmed.

U.S. Patent No. 7,047,191 claims a method of providing captioning in an audio-visual signal using speech-to-text processing.  Claim 1 includes a number of limitations:

  • Selecting the number of lines of caption data to be displayed (I have an image below showing how my phone does this).
  • Determining the caption encoder system being used
  • Training the system to on new words;
  • Using AV cues to time the captioning so that it displays at the appropriate time.

On motion to dismiss, the district court found the claims directed to the abstract idea of “automated stenography implemented on a computer.”  The court looked particularly to the claim limitations and found them written at a “high-level of generality” and using “broad form functional terminology.”  With regard to Alice step two, the court found the claim limitations lacked any particular or concrete configuration that could serve to ground the abstract idea.

To know whether a patent claim is improperly “directed to” an abstract idea, the court have been looking to the claims and specification in a search for objective suggestions of what the inventor thinks is the advance provided by the invention. What does the patent document assert as the “focus of the claimed advance over the prior art.” Slip Op, quoting Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253 (Fed. Cir. 2016).   Here, the court looked to the claims and the specification and concluded that the focus “is simply the abstract idea of automating the AV-captioning process.”  In this process, the court is typically looking for a “technical solution to a technical problem,” although that is not always required.  Here, the court noted that, although the invention involves computers it is not directed toward “any specific improved computer techniques for performing those functions—functions intrinsic to the concept of AV captioning.”  Rather, the benefit from the invention is simply automation of work previously done by humans.

Although the abstract idea test is not a novelty test, the courts repeatedly fall back on novelty in their explanation.  Here, the court writes:

The advance is only at the abstract level of computerization because claim 1 fails to set forth specific techniques for processing the data, instead reciting known computer techniques for automation of known processes.

Slip Op.  The court also found no help for the patentee under Alice step two. “The claims do not incorporate anything more beyond conventional computing hardware and software, which do not transform the subject matter into an eligible application of the abstract idea.”

In a recent “informative” opinion, the PTAB found speech-to-text patent claims eligible under Alice.  Ex parte Hannun, No. 2018-003323, 2019 WL 7407450 (P.T.A.B. Apr. 1, 2019).  On appeal the court gave no deference to the PTAB’s interpretation of eligibility doctrine and also distinguished the case — noting that Hannun recited a particular algorithm for measuring tailored parameters.

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I love figure 1 below with the bulky video camera and boxy computer equipment. The patent claims priority back to a 2000 filing date — before Apple rounded all the corners.

What Patent reforms are on the minds of IP Owners?

Patent

The Intellectual Property Owners Association (IPO) is hoping to help push through some patent law reforms and recently published a letter to Congressional leaders on IP reform reiterates suggestions already given to the White House.

What are the proposals:

  1. Legislation on subject matter eligibility to re-expand the scope of eligibility and clarify the law.
  2. Protecting Trade Secrets abroad — the US should make a global push to raise the level of trade secret protection and enforcement.
  3. Legislation to expand venue to sue in Hatch-Waxman / BPCIA cases and also for declaratory judgment cases.
  4. Ongoing oversight from Congress to ensure that PTAB proceedings are fair to the patent holder.
  5. Ongoing efforts to ensure high quality patent examination resulting in clear patents of the proper scope.
  6. Reject movements for compulsory licensing of patent or trade secret rights, both in the US and globally.

Read more here: IPO-to-IP-Subcmte-Leaders_Key-IP-Issues

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Federal Circuit on TM Licensing: We’re going to Enforce the Terms

Patent

Authentic Apparel v. US (Fed. Cir. 2021)

Authentic makes branded apparel, and had a non-exclusive license from the US Army to make Army branded items. (Signed back in Aug 2010).  One line of clothing was going to feature The Rock (Duane Johnson) with Army-Style clothing. (Seriously though, tie those shoes).

The license included a requirement that any sale/distribution must first receive the Army’s “advance written approval” subject to the Army’s “sole and absolute discretion.”

The Army refused an expansion of The Rock line of clothing; rejected other proposal; and also allegedly delayed in approving other initiatives. Eventually Authentic sued the Army for Breach in the Court of Federal Claims (CFC).

On appeal, the Federal Circuit has affirmed the CFC’s summary judgment favoring the Army — holding that the “sole and absolute discretion” provision controls.  The license agreement also included specific “exculpatory clauses” that indicated no remedy would be available for the Army’s refusal to approve proposals:

[Authentic] shall not have any rights against [the Army] for damages or other remedies by reason of [the Army]’s failure or refusal to grant any approval [of product line or] advertising.

Slip Op. (quoting the agreement).  Authentic argued that the Army has an obligation of good faith and fair dealing in its contracting, and that complete enforcement of these covenants would contravene those principles.  On appeal, the Federal Circuit agreed that it would be improper for the Army to act in an arbitrary or bad-faith manner when denying approval. That said, count found the provisions otherwise enforceable:

At bottom, Authentic agreed to give the Army broad approval discretion. . . . Authentic agreed to bear the risk that the Army would exercise that discretion to Authentic’s detriment, at least so long as the government did not act arbitrarily or in bad faith, a matter which we discuss below. Authentic’s allegation that the detriment has indeed come to pass is simply not a reason to uproot the parties’ bargain.

Id.

Who is the source of goods: One reason that the Army did not approve various advertisements was that the Army did not want to be recognized as the source of the licensed goods. Authentic argued that source identification is the key function of trademark law and is implicit in its license to use the Army mark “for trademark purposes.”

On appeal, the Federal Circuit disagreed noting that the licensee is the source of goods, and identifying the Army as the source would be factually erroneous:

Authentic’s argument is based on rights that Authentic did not have, namely, an alleged “right to identify [the Army] as the source/sponsor of the licensed goods.” Under the law, because Authentic was itself the source of the licensed goods, Authentic could not have had the right to mislead consumers to believe that the Army was the “source.”

The court then went on to hold that a decorative use of a Mark can still count as a trademark-use for licensing purposes.

In view of the clear shift in the law toward allowing trademark licenses, we do not agree with Authentic that a “decorative” use of a trademark is necessarily divorced from the goodwill associated with the trademark such that it cannot be considered a licensed use “for trademark purposes.” We recognize, of course, that a purely decorative design may not qualify for trademark protection in the first place. . . . But, again, this appeal does not involve a challenge to the validity of the Army’s trademarks, but rather a question of what limitations the Army may place on the use by a licensee of trademarks that the Army already owns.

Id.

Discretionary Transfer out of Waco

Patent

SynKloud Technologies, LLC v. Adobe, Inc. (Supreme Court 2021)

This petition for writ of certiorari fits nicely into my Civil Procedure teaching calendar because we are now arriving at the topic of discretionary transfer under 28 U.S.C. § 1404.

SynKloud sued Adobe for patent infringement in Waco (W.D. Tex.).  Adobe requested a transfer of venue to its home venue of N.D. Cal., but Judge Albright denied that motion.  The Federal Circuit granted mandamus and ordered the case transferred.  The court wrote:

In short, retaining this case in the Western District of Texas is not convenient for the parties and witnesses. It is not in the interest of justice or proper administration. And the district court’s contrary determination amounted to a clear abuse of discretion. We therefore grant Adobe’s petition for a writ of mandamus to direct transfer.

Slip Op. In the process of its decision, the Federal Circuit effectively rejected all of the lower court’s factual findings regarding convenience and justice.  The petition to the Supreme Court focuses on extraordinary error standard of review of the discretionary transfer denial on mandamus and argues that the appellate panel went to the other extreme of reweighing the evidence “to choose its preferred interpretation.” Rather, the patentee argues that mandamus should have only been granted if the lower court’s findings failed rational basis review.

Question presented:

1. Whether the Federal Circuit wrongly overruled a district court judge’s discretionary 1404(a) transfer decision when rational basis exists for all of the transfer factors and the “extraordinary error” standard was not met when multiple factors favored plaintiff’s chosen venue including the completion of third-party discovery in the current forum, the court congestion factor and the only evidence supporting transfer was set forth in self-serving declarations from defendant.

SynKloud Petition for Certiorari. The petition presents two additional questions:

2. Whether the equities lie considerably against granting mandamus, United States v. Dern, 289 U.S. 352 (1933), Zabel v. Tabb, 430 F.2d 199 (5th Cir. 1970) and In re Telular Corp., 319 F. App’x 909 (Fed. Cir. 2009), when defendant operates in, hires employees and transacts business in transferor forum; and in contrast (i) plaintiff is not subject to personal jurisdiction or venue in the transferee forum, (ii) a declaratory judgment action of patent non-infringement could not have been brought against plaintiff in the transferee forum, and (iii) a small business such as plaintiff would be forced to incur significant delays and significantly greater costs and expenses in the transferee forum.

3. Whether the district court’s lack of explanation requires the Federal Circuit to remand the case back for an explanation instead of drastically ruling that there was a clear abuse of discretion leading to a patently erroneous result, see In re Archer Directional Drilling Servs., L.L.C., 630 F. App’x 327 (5th Cir. 2016) (citing In re Volkswagen of Am., Inc., 545 F.3d 304, 310-11 (5th Cir. 2008)).

Id.  As the Supreme Court petition proceeds, the N.D. Cal. case is also moving forward. In one of the questions SynKloud notes the personal jurisdiction problem which was not addressed by the Federal Circuit mandamus judgment.  When the case is transferred, SynKloud remains the plaintiff and thus cannot directly challenge personal jurisdiction — other than by simply dismissing its case and forfeiting its patent rights.

Folks who read this petition will recognize that it was not drafted by traditional Supreme Court council.  I expect that its style may reduce its odds of being granted certiorari.  However, it is also setting up a potential follow-on petition in Uniloc v. Apple that will be coming soon.

Is it Hyperbole if it Accurately Describes an Absurd Reality

Patent

Wow, lots of new amicus in the patent eligibility case of American Axle v. Neapco, including a joint filing from Sen. Thom Tillis, Hon. Paul Michel, and Hon. David Kappos. The trio argue that the current state of patent eligibility doctrine is “an unintelligible hash” causing significant systemic problems. [Tillis Brief]  Kappos addition to the brief is symbolically important. His name is memorialized in Bilski v. Kappos, the case that seemingly re-started us down this pathway.  The brief offers an interesting approach — it is filled with quotes from policymakers about the problems created by the shift in patent eligibility laws.  Many of the quotes appear hyperbolic, but it is hard to tell in this situation whether they are simply reflecting reality.

Professors Lefstin (Hastings) and Menell (Berkeley) add their own hyperbole noting that in this case, the Federal Circuit has stretched “Section 101 to absurd lengths.”  A common law professor trope is to talk through the absurdity that ensues when a given rule is taken to an extreme.  Here, the professors are noting instead that absurdity has arrived. [Lefstin Mennell Brief]

American Axle filed its petition for writ of ceritorari back in December 2020.  Neapco initially waived its right to respond. However, the Supreme Court requested a response that is now due March 31, 2021.  Meanwhile, ten friend-of-the-court briefs have been filed supporting certiorari:

If the court has interest in the case, I would expect a call for the views of the Solicitor General (CVSG) sometime in April. Of course, a prior SG already provided views in a recent patent eligibility case: “The Court’s recent Section 101 decisions have fostered substantial uncertainty.” – U.S. Solicitor General, Noel J. Francisco (2019).

$2 billion verdict in Judge Albright’s Courtroom

Patent

VLSI Technology LLC v. Intel Corp. (W.D. Tex. 2021)

The jury just returned in Judge Albright’s first patent trial of 2021. The result: $2.18 Billion Dollars to VLSI for Intel’s infringement.  The patents were previously owned NPX Semiconductors, who obtained them by buying up Freescale Semiconductor and SigmaTel.  NPX will apparently still receive a cut of the revenue – if the decision withstands both the JMOL motions and appeals. [Intel Jury Verdict]

U.S. Patent Nos. 7,523,373 and 7,725,759.

In Claim Construction: Module Means Means

Patent,

by Dennis Crouch

Rain Computing, Inc. v. Samsung Electronics (Fed. Cir. 2021)

Rain and Samsung agree that this case comes down to claim construction.  And, as typical, the patentee is attempting to thread the needle with a construction that is broad enough to be infringed, but narrow and specific enough to avoid invalidation.  The district court construed one term narrowly — resulting in no infringement.  On appeal, the Federal Circuit focused on a separate term — and found its indefiniteness rendered the claim invalid.

Rain’s US Patent 9,805,349 covers a method for delivering apps via a computer network using a webstore and server authentication. The claim requires “a user identification module configured to control access of said one or more software application packages.”  If you have been following patent claim construction over the past decade: You know that the focus here will be whether this “module” limitation invokes 35 U.S.C. § 112 ¶ 6 as a means-plus-function term. And, if so, is it indefinite for failing to provide sufficient structural support in the specification.

Normally, patent claims are expected to spell out the actual structure of the invention — not just its function. However, § 112 ¶ 6 (now renamed § 112(f)) allows a patentee to avoid adding those specifics in combination claims by including an element “as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof.”  The statute goes on to include an important caveat, the element “shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”  The statute does not spell-out what happens when the specification lacks any corresponding structure — but the courts have filled the gap. A means-plus-function claim that lacks corresponding structural disclosure in the specification is deemed invalid as indefinite.

Means-plus-function claiming is fools gold — especially for anyone with a thin disclosure.  The claims appear broad, but are narrowly interpreted and regularly invalidated.  For years, patentees have moved away from using the term “MEANS” and replaced it with some other generalized word such as “MODULE” as used in this case.  By skirting the MPF trap, these newly styled claims were more broadly interpreted and rarely invalidated as indefinite.  However, that approach was collapsed by the case of Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015).  In Williamson, the Federal Circuit held that claim terms that “fails to recite sufficiently definite structure or else recites function without reciting sufficient structure for performing that function” will also be interpreted as a means-plus-function term.  Although the burden on invoking 112(f) is still on the patent-challenger, Williamson eliminated the heavy presumption that it doesn’t apply.

The further trick with Williamson: (a) If a particular term – such as “module” is structurally defined within the specification then it will typically not be interpreted as means-plus-function because it was particularly defined by the applicant.  (b) On the other hand, if the term is not structurally defined in the specification, then it will invoke 112(f) and also be found indefinite for lack of structural support.

Here, the court first noted that the word “MODULE” “is a well-known nonce word that can operate as a substitute for ‘means’.”  The Williamson case itself focused on the word module and found that it did not indicate any “structure.”  The court drew the same conclusion in Rain Computing— finding that the claimed “user identification module” has no commonly understood structure and the specification included no structural disclosure.

Here, the specification does not impart any structural significance to the term; in fact, it does not even mention a “user identification module.”

Slip Op.  So, we fall into the category (b) from above: Nonce word without structural support → therefore → Invoke 112(f) and invalidate. The court writes:

Nothing in the claim language or the written description provides an algorithm to achieve the “control access” function of the “user identification module.” When asked at oral argument to identify an algorithm in the written description, Rain could not do so. Without an algorithm to achieve the “control access” function, we hold the term “user identification module” lacks sufficient structure and renders the claims indefinite.

Slip Op. Thus, the claim is indefinite.  This rendered the separate non-infringement related claim construction moot.

During prosecution the patent examiner had expressly stated that the limitation “does not invoke 112, 6th paragraph, or 112(f).”  However, the examiner’s somewhat cryptic reasoning was that a 112(f) means limitation cannot exist within a method claim.  On appeal, the Federal Circuit noted the examiner’s error: “Applicants are free to invoke § 112 ¶ 6 for a claim term nested in a method claim.”

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Note: In Synchronoss Techs., Inc. v. Dropbox, Inc., 2019-2196, 2021 WL 520047 (Fed. Cir. Feb. 12, 2021), the Federal Circuit encountered a claim a quite similar limitation: “user identifier module.” In that case the court also found that the term invoked 112(f) but was indefinite from lack of structural support.

(Fed Cir Clerks – note that FN 1 in Rain Computing does not accurately reflect the language of the claims in Synchronoss).

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Above, I noted the draw of means-plus-function claim language for “thin disclosures.” In this case, the disclosure was actually quite extensive, but the patentee appears to have wanted to shift the scope of coverage away from the original focus of the invention disclosure.  This patent is one of nine US patent applications all within the same direct family and relying on the same original disclosure.