A few initial thoughts on Loper Bright and the end of Chevron Deference

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by Dennis Crouch

This is just a first look at how overturning Chevron may impact patent practice. 

In the past, both the USPTO and patent attorneys have largely ignored the larger scope of administrative law, but in recent years USPTO operations have been under tighter control from the White House, and courts have increasingly asked whether the agency is following the rules.  Administrative patent law was truly launched with  the American Invents Act of 2011 and the resulting administrative patent trials by the PTAB -- resulting in hundreds of appeals arguing that the USPTO's procedural approach is an abuse of administrative power.  Importantly, the Supreme Court in Cuozzo Speed Techs. v. Com. for Intell. Prop., 579 U.S. 261 (2016) provided the patent office with Chevron deference for its determinations regarding AIA trials, including issues such as its approach to claim construction.  But Chevron has now been overruled, and many are wanting the Federal Circuit to revisit the USPTO approach.

Although I expect that the outcome

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Pending IP Cert Petitions at the Supreme Court

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As the Supreme Court's 2023 year draws to a close, the court has denied certiorari in the vast majority of IP related cases, with the Dewberry trademark damages case left as the only IP case granted certiorari.  Seven petitions remain undecided and the court will pick them up again when it begins the 2024 term in late September.  This post briefly reviews these cases.

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Texas Startup Must Litigate Apple in California because of Convenience to the Tech Giant

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by Dennis Crouch

The Federal Circuit recently denied a petition for mandamus seeking to overturn a district court order transferring a patent case from the Western District of Texas to the Northern District of California. In re Haptic, Inc., No. 2024-121 (Fed. Cir. June 25, 2024). This case was filed in Austin and assigned to Judge Robert Pittman with Haptic alleging that Apple's "Back Tap" feature on iPhones infringes U.S. Patent No. 9,996,738 relating to gesture detection systems. Haptic is headquartered in Austin at the home of its longtime CEO and listed inventor Jake Boshernitzan.  The company was part of Techstars Austin Accelerator as it developed its product known as Knocki that allows users to tap on ordinary surfaces to control various actions on phones and other devices. Knock on wood. The patent and Knocki product are designed to expand touch interfaces beyond traditional touchscreens, potentially opening up new modes of interaction with smart devices and appliances. The '738 patent particularly issue covers systems and methods for detecting tapping or knocking gestures on surfaces to control electronic devices.

Apple also has a major presence in Austin, with about 10,000 Austin employees and a billion-dollar second headquarters campus in the city. Nevertheless, Judge Pitman

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Amarin v. Hikma: Federal Circuit reverses Inducement Dismissal in Skinny-Label Case

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by Dennis Crouch

Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA Inc., No. 2023-1169 (Fed. Cir. June 25, 2024).

This is another "skinny label" generic pharmaceutical patent case.  The basic setup involves a drug that has several different approved uses; with the branded manufacturer holding patents covering only some of the uses.  The generic company is then permitted to sell the drug, but is labelled only for non-patented uses. These labels are known as  carve-out or "skinny" labels under 21 U.S.C. § 355(j)(2)(A)(viii).

It is inevitable that people will purchase and use the generic drugs for the patented uses, and that the generic distributer will be accused accused of inducing  those infringing acts.  Although the generic typically makes a profit on these sales, it those profits pale in comparison to the profits lost by the branded company.

Amarin v. Hickma highlights some of the challenges that generics are facing when marketing drugs with these carved-out labels.  One difficulty is that the FDA severely limits what the generic can say about the drug and its uses, and the carve-out is generally based upon statements made by the patentee.  Here, the court follows a label-plus approach. The skinny label itself will not be enough to show inducement, but that evidence can be combined with other evidence (such as marketing) to prove liability.

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Dewberry Group: Structuring the Firm to Avoid Trademark Liability

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by Dennis Crouch

The U.S. Supreme Court has granted certiorari in Dewberry Group, Inc. v. Dewberry Engineers Inc., a trademark damages case focused on how corporate separateness principles apply to disgorgement remedies under the Lanham Act, 15 U.S.C. § 1117(a). The Fourth Circuit's decision affirmed a $43 million disgorgement award against petitioner Dewberry Group (DG) for trademark infringement, an amount that included profits earned by DG's "legally separate" corporate affiliates. Apparently, the affiliates were “single-purpose entities,” also privately owned by John Dewberry, whose sole function was to own commercial properties serviced by DG.

Pierce the Veil: In its literal sense, a veil is a delicate fabric that separates the visible from the concealed, a barrier that can be easily lifted or parted. However, the phrase has a history of extending beyond the material world, with a veil often serving as a boundary between the physical and spiritual realms in our universe. Many of us go through life, only occasionally glimpsing beyond this veil into the hidden spiritual dimensions that, according to story tellers, lie alongside our own. In the corporate world, the veil of corporate personhood serves to shield the owners from personal liability, creating a legal fiction that separates the actions of the company from those of its shareholders. This veil of protection is not impenetrable, however, and can be pierced by the courts in cases of serious misconduct or wrongdoing, exposing the owners to personal responsibility. Although the truth of owner identity may already be known, piercing the corporate veil removes the protection against responsibility  by attempting to holding accountable those who would misuse its protections. But, the legal doctrine of corporate separateness is quite strong and I might venture that it is easier to pierce the veil of our spiritual realms than the corporate analogue.

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Sitting By Designation, Judge Albright Pens First Federal Circuit Opinion Vacating PTAB Decision for Failing to Consider Petitioner’s Reply Brief Claim Construction Arguments

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by Dennis Crouch

The Federal Circuit's 2023 decision in Axonics, Inc. v. Medtronic, Inc. marked an important change in inter partes review procedure, ensuring petitioners have an opportunity to respond patentee's newly proposed arguments, with the hope of discouraging patent owners from holding-back ("sandbagging") at the institution stage.  Case-in-point is the Federal Circuit's recent Apple v. Omni MedSci decision authored by Judge Alan D. Albright sitting by designation.

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Does Justice Thomas Hate Invention or Just the Hubris of Inventors?

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by Dennis Crouch

The Supreme Court recently decided Moore v. United States, --- U.S. --- (June 20, 2024), a case focusing on the constitutionality of the Mandatory Repatriation Tax (MRT). While the majority opinion, authored by Justice Kavanaugh, upheld the MRT, Justice Thomas published a strong dissent relying upon an invention metaphor in a decidedly negative light, something that he has done in several other recent opinions. For Thomas, judicial invention is a synonym to judicial activism and antithetical to his approach that looks primarily to historic preservation, especially when interpreting the U.S. Constitution.

In Moore, the majority held that the MRT, which attributes the realized and undistributed income of an American-controlled foreign corporation to the entity's American shareholders and then taxes those shareholders, "falls squarely within Congress's constitutional authority to tax." The Court reached this holding by relying on its "longstanding precedents" that allow Congress to attribute the undistributed income of an entity to the entity's shareholders or partners for tax purposes.

Justice Thomas, joined by Justice Gorsuch, dissented. He argued that the Sixteenth Amendment requires realization for income to be taxed without apportionment.  His main complaint against the majority opinion is that it "invent[ed]" a new attribution doctrine to reach its conclusion.

Justice Thomas' negative invocation of "invention" in Moore is part of a broader trend in his recent opinions. Just a week before Moore, in FDA v. Alliance for Hippocratic Medicine, 602 U.S. --- (June 13, 2024), Justice Thomas refused to "invent a new doctrine of doctor standing," concluding that "there would be no principled way to cabin such a sweeping doctrinal change to doctors or other healthcare providers."  Similarly, in a recent concurring opinion, Justice Thomas argued that "Federal courts have the power to grant only the equitable relief 'traditionally accorded by courts of equity,' not the flexible power to invent whatever new remedies may seem useful at the time." Alexander v. S.C. State Conf. of the NAACP, 144 S. Ct. 1221 (2024) (Thomas, J., concurring).  And in his dissent in US v. Rahimi, 602 U.S. --- (June 21, 2024), Justice Thomas complained that "At argument, the Government invented yet another position."

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Patentees Out of Luck Again: CAFed Sides with DraftKings that Remote Gambling Patent Ineligible

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by Dennis Crouch

The Federal Circuit has affirmed a D.N.J. court's dismissal of patentee Beteiro's infringement complaints against DraftKings, et al., agreeing that the asserted claims are directed to patent ineligible subject matter under 35 U.S.C. § 101. Beteiro, LLC v. DraftKings Inc., No. 2022-2275 (Fed. Cir. June 21, 2024). The patents at issue were directed to methods of facilitating remote gambling activity using devises equipped with GPS. 

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Double Trouble: IPO asks for Supreme Court review of PTA/ODP Cellect dispute

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by Dennis Crouch

A second amicus brief has been filed - this one from the Intellectual Property Owners Association (IPO) - encouraging the Supreme Court to grant certiorari in Cellect, LLC v. Vidal, No. 23-1231. The case concerns the interplay between the Patent Term Adjustment (PTA) statute, 35 U.S.C. § 154(b), and the judicially-created doctrine of obviousness-type double patenting (ODP).

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Trade Secret Misappropriation Preliminary Injunction Reversed

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By Dennis Crouch

The Federal Circuit has reversed a preliminary injunction order in a trade secret misappropriation case, finding that the district court abused its discretion by failing to properly evaluate the likelihood of success on the merits and the balance of harms. Insulet Corp. v. EOFlow, Co., No. 2024-1137 (Fed. Cir. June 17, 2024). The appellate court held that the district court's analysis was deficient in several key respects, including not addressing the statute of limitations defense, defining trade secrets too broadly, and not sufficiently assessing irreparable harm and the public interest.

This classic trade secret case involves former employees left to join a competitor.  As free humans, they are permitted to take their skill and wisdom to the new jobs, but are forbidden from misappropriating trade secret knowledge.  That line drawing is particularly difficult, and one reason why many employers moved toward contractual non-compete agreements. The case is also complicated because the defendant here admit to reverse engineering that apparently lead to some substantial similarities between the products.

The decision highlights a high bar for obtaining a preliminary injunction, even in trade secret cases involving competitors where we previously may have assumed irreparable harm.  The Federal Circuit here explained that lower courts are required to individually evaluate each of the four injunction factors - likelihood of success on the merits, irreparable harm, balance of hardships, and public interest. Conclusory assertions of competitive harm are insufficient to show irreparable injury.  For trade secret claims in particular, the alleged trade secrets must be defined with specificity. But, this proof is often difficult at the preliminary injunction stage of a case when the particular knowledge used by the defendant has not been fully discovered.

The Federal Circuit has been seen as largely supporting strong trade secrecy rights. However, this decision may put a damper on forum shopping attempts.

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Democracy on Trial: Chestek and the Future of USPTO Accountability

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by Dennis Crouch

The pending petition for certiorari in Chestek v. Vidal focuses on the extend that the APA requires the USPTO to follow notice-and-comment requirements when promulgating regulations under 35 U.S.C. § 2(b)(2). In its decision below, the Federal Circuit held that the USPTO is exempt from these requirements because the types of rules it is authorized to issue under Section 2(b)(2) are procedural in nature, and the APA excuses "rules of agency ... procedure" from the requirements.  There are two ways that the Federal Circuit potentially erred:

  1. The TM applicant home-address requirement being challenged here is not the type of procedural rule exempted under the APA; and
  2. Even if it is procedural, the particular requirements of the Patent Act's section 2(b)(2) requires following the notice and comment requirements.

The Federal Circuit agreed that 35 U.S.C. § 2(b)(2) requires USPTO regulations to be "made in accordance with" the APA -- but disagreed that this requires notice-and-comment for all new regulations. The court concluded that the APA inherently includes an exception for procedural requirements and so the USPTO was not required to follow notice-and-comment rulemaking when promulgating the trademark applicant home-address rule, because the court deemed it to be a procedural rather than substantive rule exempt from those APA requirements.

Five amicus briefs were recently filed in support of the petitioner, arguing that Supreme Court review is warranted to correct the Federal Circuit's erroneous decision, arguing that the Federal Circuit's interpretation of Section 2(b)(2) is flawed and undermines important principles of administrative law.

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Federal Circuit Affirms Patent Rejection for Lack of Enablement in In re Pen

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by Dennis Crouch

The Federal Circuit (CAFC) recently affirmed a USPTO enablement rejection -- holding that the patentee did not enable the "full scope" of the claimed invention.  In re Pen, 23-2282 (Fed. Cir. 2024) (non-precedential).  As an aside, the listed inventor's legal name is "The Pen;" first and last name respectively, with no middle initial.  Based upon Pen's address, he is related to "The People's Email Network."  In the case, Pen represented himself pro se.

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Trump Too Small: Supreme Court Upholds Lanham Act’s Restriction on Registering Marks With Living Individual’s Names Without Consent

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by Dennis Crouch

In an important trademark law and free speech decision, the Supreme Court held in Vidal v. Elster, 602 U.S. ___ (2024), that the Lanham Act's "names clause" barring registration of a mark that "[c]onsists of or comprises a name . . . identifying a particular living individual except by his written consent", 15 U.S.C. § 1052(c), does not violate the First Amendment. Writing for the Court, Justice Thomas distinguished this case from the Court's prior decisions in Matal v. Tam, 582 U.S. 218 (2017) (disparaging marks) and Iancu v. Brunetti, 588 U.S. 388 (2019) (scandalous marks), which struck down other Lanham Act restrictions as unconstitutional viewpoint discrimination. Although content-based, the Court concluded that the names clause is viewpoint-neutral and consistent with the longstanding history and tradition of trademark law.

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Pending En Banc Petitions at the Federal Circuit

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by Dennis Crouch

The Federal Circuit recently decided the en banc design patent case of LKQ v. GM, but the court has not issued an en banc decision in a utility patent case since 2018.  There are currently four interesting petitions pending before the court.

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Design Patent Examination Updates

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Ten years ago - 2014 - the Supreme Court decided Alice Corp v. CLS Bank, holding that - yes indeed - the expansive language of Mayo v. Prometheus (2012) applies equally to software and technology patents.   A few weeks later, the USPTO began a dramatic transformation - pulling back notices of allowance and issuing thousands of supplemental office actions. The Federal Circuit's May 2024 en banc decision in LKQ v. GM is perhaps as dramatic a change for the design patent arena as Alice was for utility patents.  The old Rosen-Durling test made it almost impossible to reject a design patent as obvious except for extreme cases involving either direct copying or extremely broad claims.  The key difficulty was that precedent required the obviousness inquiry to begin with a single prior art reference that is "basically the same" as the claimed design - a roughly 1-to-1 relationship.  Further, any secondary references had to be ‘so related’ to the primary reference that features in one would suggest application of those features to the other." In LKQ, the court found those requirements "improperly rigid” under principles of KSR which require a flexible obviousness inquiry.  The overall effect is to make it easier to find a design patent obvious.

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Veterans’ Benefits at the Supreme Court: The Battle Over Benefit-of-the-Doubt

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by Dennis Crouch

In April 2024, the Supreme Court granted certiorari in the consolidated cases of Bufkin v. McDonough and Thornton v. McDonough, two veterans’ benefits cases on appeal from the Court of Appeals for the Federal Circuit. The cases involve the "benefit-of-the-doubt" rule, a longstanding principle that is codified in veterans law that requires the VA to resolve close or unclear issues in a veteran's favor when adjudicating benefits claims. [SCT Docket]

Both Bufkin and Thornton are veterans who were denied disability benefits by the VA.

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Mishandled Disclosures: A Greek Tragedy in IP Law

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by Dennis Crouch

Neuropublic S.A., a Greek technology company, has filed a federal lawsuit against the law firm Ladas & Parry LLP, with several claims stemming from the firm's alleged mishandling of Neuropublic's confidential invention disclosure -- sending it out to a third party ("PatentManiac") for a preliminary novelty search which then (again allegedly) further leaked the disclosure. Although the case does not involve submission to AI algorithms, some of the questions here are similar to those many  IP attorneys are considering when onboarding new AI tools.

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