by Dennis Crouch

The Biden Administration is seeking comment on its proposed framework for how how agencies should evaluate exercising “march-in rights” over federally funded inventions. For those familiar with march-in rights, this guidance has been a long time coming. While these powers have technically existed for years under the Bayh-Dole Act, the lack of clear procedures around their use has rendered them largely theoretical. This proposal could change that.

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Congratulations to Sharon Israel on her new leadership role at the USPTO.  I was happy to learn that Director Vidal has appointed Sharon Israel as its new Chief Policy Officer and Director for International Affairs. Ms. Israel has been a leader of the patent bar for many yeas and will bring tremendous expertise to this important role overseeing the USPTO’s policy and international programs.  For the past few years, she has been a partner at Shook Hardy focusing on patent litigation — primarily on the defense side. (more…)

Hsuanyeh Law Group v. Winston & Strawn, 23-cv-11193 (S.D.N.Y. 2024)

A recent copyright infringement lawsuit filed by small Boston intellectual property boutique Hsuanyeh Law Group PC (HLG) against international giant Winston & Strawn LLP focuses a dividing line that can highlight when copying the work of another firm is permissible.  I believe that Winston & Strawn will eventually prevail based upon a fair use defense, but it is still an embarrassing situation for the firm and attorneys involved.  I hope that they did not overbill the client.  The role of attribution is also receiving increasing focus as attorneys begin to rely more heavily on AI outputs for their legal documents.

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by Dennis Crouch

In PureCircle USA Inc. v. SweeGen, Inc., No. 22-1946 (Fed. Cir. Jan. 2, 2024) (non-precedential) [PureCircle Decision], the Federal Circuit affirmed a district court summary judgment siding against the patentee, PureCircle.  The court concluded that the stevia production method claims were all invalid, either for: (1) lack of written description for the genus claim or (2) lack of eligibility because the claims are directed to a natural phenomenon combined with an abstract idea.  Judge Dyk authored the opinion of the court that was joined by Judges Schall and Stark affirming the ruling of C.D.Cal Judge James Selna.

The written description portion of the opinion parallels the Supreme Court’s 2023 Amgen decision that focused on the sibling doctrine of enablement. Although non-precedential, the eligibility portion appears important because of the way it combines prohibited eligibility categories and rules that method claims requiring a particular purity level are themselves an abstract idea absent requirement of specific steps on how that purity level is achieved.

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by Dennis Crouch

The U.S. Court of Appeals for the Federal Circuit has begun 2024 [2023] with its first precedential patent decision in DexCom, Inc. v. Abbott Diabetes Care, Inc., 2023-1795 (Fed. Cir. January 3, 2024).  In an opinion by Judge Stoll, the court affirmed a district court decision denying DexCom’s motion for a preliminary injunction. The patentee had requested an order barring Abbott from pursuing its IPR challenges – based upon a forum selection clause that was part of a prior settlement between the parties. Judges Dyk and Hughes were also on the panel.

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by Dennis Crouch

The following is my patent law exam from this past semester. As in years past, the exam was worth less than half of the final grade because the students did other substantial work during the semester, including a major moot court competition.   Students were permitted access to their book/notes/internet, but were barred communications with another human during the exam.

This year’s exam is very loosely based upon an interesting patent that I found associated with the Tow Whee product created by Eric Landis.  See US11167164, US11731470, and US11724148.  But, the events described are entirely my creation.

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Guest Post by Jordan Duenckel. Jordan is a third-year law student at the University of Missouri and a registered patent agent. He has an extensive background in chemistry and food science.  

A recent Federal Circuit opinion, K-Fee v. Nespresso, 2022-2042, — F.4th — (Fed. Cir. Dec. 26, 2023), arises from an infringement suit filed by K-fee System GmbH against Nespresso USA, Inc. in the Central District of California and revives a coffee controversy. K-fee owns three related patents (the ‘176, ‘177, and ‘531 patents) concerning coffee capsules that display information via a “barcode” which is read by the coffee machine to control the beverage production process. The key dispute is over the meaning of “barcode” and whether there was any prosecution disclaimer.

The technology underlying the dispute is individual coffee pods that have a barcode located on the outer rim of the pod that the coffee machine can read to self-adjust temperature, water amount, and other characteristics to brew different types of coffee all without user input creating a “one touch” gourmet coffee maker. Depending on the pod, our Nespresso machine can make expresso, a double expresso for the wife, or just a cup of black coffee for me. 

K-fee owns U.S. Patent No. 10,858,176 and claim one reads in part:  

1. A method of making a coffee beverage comprising: 

providing an apparatus including a barcode reader; 

inserting a first portion capsule into the apparatus, the first portion capsule including . . . an opposing bottom side with a first barcode located on the bottom side, . . . ; 

reading the first barcode with the barcode reader; 

controlling a production process of a first coffee beverage based upon the reading of the first barcode; 

The initial issue is the plain and ordinary definition of a barcode as both parties agree that the plain and ordinary definition is appropriate but disagree about what that meaning is. The district court issued a claim construction order construing “barcode,” relying on statements K-fee made distinguishing certain prior art (Jarisch) during prosecution of a related European patent before the European Patent Office (EPO). Based on K-fee’s statements that Jarisch discloses a “bit code” rather than a barcode, the district court construed barcode to exclude the type of bit codes in Jarisch. The district court granted summary judgment of non-infringement to Nespresso, finding that its accused coffee capsules use a code identical to Jarisch’s bit codes.  

The Federal Circuit reviewed appeal of the claim construction de novo because the claim construction relied only on intrinsic evidence. The claims and specification did not define “barcode,” so the court looked to the prosecution history, specifically K-fee’s statements distinguishing the Jarisch reference before the European Patent Office. Specifically examined were what the statements would indicate to a person having ordinary skill in the art about the meaning of “barcode.” K-fee presented evidence consisting of quotes from technical publications describing “barcode” as a code with bars of varying widths. K-fee also explicitly stated “the [skilled artisan] at all times defines the term ‘barcode’ as a line code constructed of bars having variable widths.” Additional confirmation is in K-fee’s statement that standard UPC retail barcodes fall within the scope of its claims. Since K-fee did not describe anything about how retail barcodes encode data, this further indicates K-fee was focused only on the visual appearance of varying width bars when referring to “barcodes.” 

Judge Taranto concludes a skilled artisan would not understand K-fee’s statements as excluding all bit codes from the scope of “barcode.” He specifically points to K-fee explicitly stating that retail barcodes like UPC codes are barcodes, even though they contain binary code elements. Citing Phillips v. AWH Corp.,415 F.3d 1303, 1312-17 (Fed. Cir. 2005), Judge Taranto found that the ordinary meaning of “barcode” to a relevant artisan focuses on visual appearance – i.e. a linear sequence of visually non-uniform width bars and concluded that the district court erred in narrowing the ordinary meaning of “barcode” based on K-fee’s statements to the EPO.  

I am sympathetic to Nespresso’s concern that the focus on visual appearance as to ordinary meaning misses some of the nuance about what the barcodes actually represent and that a relevant artisan would consider their functional purpose. As construed by Judge Taranto, “varying-width visual appearance of the bars” is an extraordinarily broad claim construction that seems to expand the claim scope significantly compared to the more narrow district court construction.    

The corollary issue is whether K-fee’s statements to the EPO are disclaimer of claim scope. Nespresso alleges that K-fee’s statements to the EPO constitute surrender of claim scope that would include their Vertuo coffee pod product. The court notes disclaimer requires “clear and unmistakable” statements, unequivocally disavowing claim scope. Looking at K-fee’s EPO submissions, statements about bit codes being excluded from barcodes were ambiguous rather than clear. For example, K-fee said a barcode “can be, but is not necessarily, a bit code.” This directly contradicts disclaimer of all bit codes. 

Judge Taranto concludes that the prosecution history as a whole does not show K-fee clearly disclaimed any portion of the ordinary meaning of “barcode.” The only thing K-fee clearly distinguished was the Jarisch reference itself, which does not expressly disclose varying width bars. Multiple instances indicate some possible indicia that K-fee disclaimed some scope however, it was not “clear and unmistakeable” as required to find disclaimer.  Therefore, reversing the district court’s construction of “barcode” also necessitated reversing the summary judgment of non-infringement that was based entirely on the erroneous claim construction.

by Dennis Crouch

The US Patent and Trademark Office (USPTO) issued a total of 312,100 utility patents in the calendar year 2023. This marks the fourth consecutive year of decline in the number of issued patents. The 2022 figures show a 3% decrease from the previous year and a 12% decrease from the record-high numbers seen in 2019, as depicted in the chart below.  One of the biggest changes from 2022 to 2023 is that non-US patent applicants dropped from 51% of the total down to 48%. In fact, numbers from US-applicants increased over the past year.   There was a roughly parallel shift when looking at the % of patents naming a US inventor — up from 47% in 2022 to 50% in 2023.

It’s important to recognize that patent issuance in any given year is largely based on innovations and applications filed 2-5 years prior or more. For example, the 2023 decline reflects a drop in underlying patent filings, R&D, and new invention volume primarily from 2018 to 2020, with most applications pending examination for years before grant. Similarly, the 2022 and prior year patent volumes correlate most directly with late 2010s economic, policy and innovation landscapes. So this data is more of a backwards-looking snapshot. The drivers behind 2023’s applicant mix shift likely originated a few years back as well — established in the midst of the COVID pandemic. Though issuing patents now, the underlying applicant behaviors and investment decisions providing this US boost trace back to the 2020-2022 period or earlier based on typical application lag. Any analysis of the grant mix changes must recognize this context, and account for influencers at the time of filing rather than issuance to best understand the shift.

Rather than an economic indicator, the grant numbers and details surrounding them are (I believe) more reflective of the operation of the USPTO and the faith innovative companies have in the patent system.

by Dennis Crouch

I’m excited to head out to Snowmass in early January for the IP-SKI conference! Although we have the Ozarks here in mid-Missouri, there is nothing like the Rocky Mountains.  This year I’ll also have the opportunity once again to connect with other intellectual property lawyers and talk shop while enjoying some long runs. (LINK)

In the meantime, I came across an interesting lawsuit that Aspen Skiing Company (ASC) recently filed against ski apparel company Perfect Moment. ASC owns and operates the four famous ski resorts that make up Aspen Snowmass – Snowmass along with Aspen Mountain, Aspen Highlands, and Buttermilk, with a history stretching back to 1947. According to the complaint, ASC is suing Perfect Moment for trademark infringement, false association, unfair competition, and other claims. [Aspen Complaint]

The basic scoop here is that Perfect Moment conducted photo shoots on ASC properties to promote its skiwear, intentionally trading on ASC’s fame and reputation. Back in March 2021, Perfect Moment posted social media photos showing influencers posing in Perfect Moment apparel, with recognizable buildings, ski lifts, and trails of the ASC resorts in the background. ASC asserts such posts falsely imply an endorsement or sponsorship relationship. After a cease & desist letter, Perfect Moment removed some but not all of the photos.  More recently, Perfect Moment began selling jackets and pants bearing an image of people relaxing in at the Aspen “beach club,” complete with the signature red-and-white striped tents and lounge chairs on the mountain. The complaint seeks injunctive relief, destruction of the allegedly infringing apparel, and disgorgement of Perfect Moment’s profits.

Truthfully, the case here is a bit shaky, but courts have been known to strongly protect trademark holder rights. I expect that PM will quickly cave to the legal pressure, although I would suggest first sending in the influencers to the Federal Courthouse for a quick shoot with their winter attorney apparel.

Ian Saffer and Kate Bohmann from Quarles & Brady filed the lawsuit on behalf of Aspen. It does not appear that PM has been served yet.

by Dennis Crouch

Thus far US copyright and patent tribunals have refused to award rights for AI generated works.  China has begun its move in the opposite direction with the recent decision granting rights to an artist who created an image using the popular generative AI system Stable Diffusion.  The case of Li v. Liu was decided by the recently Beijing Internet Court.  The court decides internet related cases using online tools. Although the court uses AI judges in some cases, this one was decided by humans.

[Read an English translation created by GWU Law Students Yuqian Wang and Jiaying Zhang supervised by Prof. Robert Brauneis: Li v Liu Beijing Internet Court 20231127 with English Translation. More AI related decisions are available at the GWU AI Litigation Database.]

The plaintiff, Li, used Stable Diffusion to generate a photorealistic image of an Asian woman. He shared the work on Xiaohongshu, a Chinese platform similar to Instagram. Later, the defendant Liu, a blogger, published the image in a blog post without Li’s permission, removing his username and platform watermark.

Li sued for copyright infringement. The Beijing Internet Court ultimately ruled in his favor, ordering Liu to apologize publicly, pay ¥500 ($72) in damages, and cover ¥50 ($7) in court fees.

Crucially, the court recognized Li as the legal rights-holder, having contributed the necessary “intellectual input” through choices of models, prompts, parameters, and final image selection. Judges emphasized that copyright law aims to encourage human creativity.

In this case, from the moment the Plaintiff conceived the disputed image to the moment the Plaintiff finally selected the disputed image, it can be seen that the Plaintiff has carried out a certain amount of intellectual input, such as designing the presentation of the character, selecting the prompts, arranging the order of the prompts, setting the relevant parameters, selecting which picture meets their expectations, and so on. . . . Currently, a new generation of generative AI technology is increasingly being used for creation. As long as AI-generated images reflect the original intellectual input of a person, they should be identified as a work and protected under copyright law.

This court ruling signals China’s interest in extending copyright law to better account for AI-generated content and also potentially places the country in the forefront of protecting AI creations.  Still, the Beijing Internet Court itself emphasized the approach of judging AI copyright issues based on the specific facts.

Of course, this is one regional lower court decision and is not generally a policy statement of the PRC.  The judges here particularly noted that the level of creative expression requires a case-by-case analysis.  In an email, Berkeley IP scholar Yuan Hao (郝元) points out, there is still debate within China on this issue. A similar case decided by a court in Shenzhen came to the opposite conclusion, finding AI-generated output eligible for copyright protection as the “intellectual fruits” of the AI developer rather than the AI user. According to Hao, cases like Li v. Liu feature “experimentalist practice” with different local courts exploring the issue before final guidance from the Supreme People’s Court.  Hao also disputes depictions of the case as a political move to strategically assist China’s AI industry. While acknowledging that some “political” IP cases may occur, she has not seen evidence of that here.  In my view, the low-value of the case (less than $100) also serves as an indication that this was not intended as a landmark decision setting national policy, but rather resolving a minor copyright dispute between two individuals.

by Dennis Crouch

The patent battle between Masimo and Apple over pulse oximetry technology in the Apple Watch took a new turn on December 27th. Despite the recent import ban imposed by the U.S. International Trade Commission (ITC), Apple was granted a temporary stay by the U.S. Court of Appeals for the Federal Circuit. For now, this emergency ruling blocks the government from enforcing the exclusion order on certain Apple Watch models through at least mid-January. However, the legal fight is far from over. For Masimo, this short-term win for Apple weakens its bargaining position as the two companies continue their protracted patent dispute in courts and before regulatory agencies.

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by Dennis Crouch

In a non-precedential decision, the Federal Circuit has affirmed a set of PTAB decisions canceling the claims of four patents owned by Carucel Investments L.P. (“Carucel”) — finding them invalid as obvious under 35 U.S.C. § 103. See Carucel Invs. L.P. v. Vidal, Nos. 2021-1731 (Fed. Cir. Dec. 26, 2023). The affected Carucel patents include U.S. Patent Nos. 7,221,904; 7,848,701; 7,979,023; and 8,718,543, with priority back to a 1996 application filing. All four patents relate to mobile communication systems involving base stations that can be mounted on moving vehicles. Carucel v. Vidal Opinion.

The original focus of the invention involved a closed-loop rail system running alongside a highway and that carried mobile base stations moving in the direction of the flow of traffic. That focus of the invention was quickly scrapped – likely as impractical.  But, the disclosure was seen as sufficient to also cover movable base stations with no rail limitation — allowing mobile base stations that might be on the cars and other vehicles themselves.

Multiple petitioners, including Mercedes-Benz, Volkswagen, and Unified Patents filed petitions seeking inter partes review (“IPR”).  Relying on KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007), the Patent Trial and Appeal Board (“PTAB”) instituted review and ultimately issued final written decisions concluding that the petitioners had proven by a preponderance of evidence that all challenged claims were unpatentable as obvious.

On appeal, Carucel disputed the PTAB’s claim constructions, obviousness determinations, and post-institution procedures under the Administrative Procedure Act (“APA”).  The Federal Circuit rejected Carucel’s arguments on all fronts.

Claim Construction: During inter partes review proceedings, the patentee is typically seeking a narrow construction of various terms in order to distinguish itself from the prior art. This has to be a careful argument — if the patentee goes too narrow then the accused infringers can also escape liability.

Here, the patent specification suggests that the mobile base stations are connected directly via cellular-network.  However, the claims themselves only use the terms “mobile device” and “mobile unit.” The court explained that neither the claim language nor the specifications justified restricting the scope to only cellular networks or requiring the mobile devices to directly register or communicate with the network.  In its analysis the court concluded first that the words “mobile device” refers to the capability of movement of a physical object and does not suggest the narrow construction requested.

On the obviousness determination, the Federal Circuit made the factual determination that a person of ordinary skill in the art would have been motivated to combine the teachings of the prior art with a reasonable expectation of success.  That determination quickly led to the legal conclusion that the claims were obvious.  On appeal, the Federal Circuit gives deference to PTAB fact finding under the substantial evidence standard. And here, the court found more than iota to support the conclusions — especially after deferring to the PTAB’s credibility findings favoring petitioner’s expert testimony.  At oral arguments, Brian Bear (Spencer Fane) argued that the Board had simply adopted the opposing expert testimony ipse dixit without providing critical analysis and, in particularly without explaining how the prior art combination overcame the “massive barrier” of incorporating the TDMA systems in some references alongside the CDMA systems in other references.   As with the PTAB decision, the Federal circuit decision does not provide a direct response or analysis regarding the TDMA/CDMA incompatibility issue.

Finally, the Federal circuit rejected Carucel’s argument that the PTAB’s denials of requests for Director Review violated the APA.  The denial orders themselves were unsigned, but still sufficiently identified the Commissioner Hirshfeld as the presiding officer.   In addition, the Director Review does not need to separately explain reasons for denial.  Although this is an agency action, the PTAB written decisions are “reviewable final decisions of the agency” despite intervening director denial.

Brian Bear of Spencer Fane argued the case for the patentee with Debra McComas of Haynes & Boone for appellees.  Michael Tyler from the PTO’s solicitor’s office also defended the opinions.  Judge Stark authored the unanimous opinion that was joined by Judges Dyk and Schall.

by Dennis Crouch

December 25th, marked the deadline for President Biden to reject the U.S. International Trade Commission’s (USITC) ruling banning imports of certain Apple Watch models. With no action from the White House, Apple now faces a federal government order to halt imports and sales of Apple Watch Series 9 and Ultra 2 devices because it incorporates light-based pulse oximetry technology covered by the claims of Masimo’s U.S. Patent Nos. 10,945,648 (claims 24 and 30) and 10,912,502 (claim 22).

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By: Paul Gugliuzza is a Professor of Law at Temple University Beasley School of Law, Jordana R. Goodman is an Assistant Professor of Law at Chicago-Kent College of Law and an innovator in residence at the Massachusetts Institute of Technology, and Rachel Rebouché is the Dean and the Peter J. Liacouras Professor of Law at Temple University Beasley School of Law. This post is part of a series by the Diversity Pilots Initiative, which advances inclusive innovation through rigorous research. The first blog in the series is here and resources from the first conference of the initiative are available here.

The ongoing reckonings with systemic racism and sexism in the United States might seem, on first glance, to have little to do with patent law. Yet scholarship on racial and gender inequality in the patent system is growing. Recent research has, for example, shown that women and people of color are underrepresented among patent-seeking inventors and among lawyers and agents at the PTO. In addition, scholars have explored racist and sexist norms baked into the content of patent law itself.

In a new article, we empirically examine racial and gender inequality in what is perhaps the highest-stakes area of patent law practice: appellate oral argument at the Federal Circuit.

Unlike many prior studies of inequality in the patent system, which look at race or gender in isolation, our article looks at race and gender in combination. The intersectional approach we deploy leads to several new insights that, we think, highlight the importance of getting beyond “single-axis categorizations of identity”—a point Kimberlé Crenshaw made when introducing the concept of intersectionality three decades ago.

The dataset we hand built and hand coded for our study includes information about the race and gender of over 2,500 attorneys who presented oral argument in a Federal Circuit patent case from 2010 through 2019—roughly 6,000 arguments in total. Our dataset is unique not only because it contains information about both race and gender but also because it includes information about case outcomes, which allows us to assess whether certain cohorts of attorneys win or lose more frequently at the Federal Circuit.

Perhaps unsurprisingly, we find that the bar arguing patent appeals at the Federal Circuit is overwhelmingly white, male, and white + male, as indicated on the three figures below, which break down, in a variety of ways, the gender and race of the lawyers who argued Federal Circuit patent cases during the decade covered by our study. (Note that the figures report the total number of arguments delivered by lawyers in each demographic category. Note also that the number of arguments we were able to code for the race of the arguing lawyer was slightly smaller than the number of arguments we were able to code for the gender of the arguing lawyer, so the total number of arguments reported on the figures differ slightly.)

Federal Circuit Patent Case Oral Arguments, 2010-2019

What is surprising, however, is that the racial and gender disparities illustrated above dwindle when we look only at arguments by lawyers appearing on behalf of the government, as shown on the three figures below, which limit our data only to arguments by government lawyers. (About 75% of those government arguments were by lawyers from the PTO Solicitor’s Office; the others came from a variety of agencies, including the ITC and various components of the DOJ.)

Federal Circuit Patent Case Oral Arguments, 2010-2019 – Government Lawyers Only

In fact, among lawyers appearing on behalf of the government, the proportion of arguments by women, people of color, and women of color exceeded the proportion of women, people of color, and women of color in the total population of practicing lawyers—that is, all lawyers, not just patent lawyers. Among private sector patent lawyers, by contrast, the proportion of arguments by women, people of color, and women of color was much lower than the proportion of women, people of color, and women of color in the total population of lawyers, as shown on the table below.

To restate those findings in a slightly different fashion: we find that, among lawyers arguing patent cases at the Federal Circuit, a government lawyer is 2.3 times more likely than a private-sector lawyer to be a person of color, over 5 times more likely to be a woman, and over 10 times more likely to be a woman of color.

Remarkably, the racial and gender disparities we find—particularly among Federal Circuit lawyers from the private sector—bear no relation to attorney performance. As we explain at length in our article, appellants in Federal Circuit patent cases win about a quarter of the time and appellees win about three-quarters of the time—with no significant differences based on race, gender, or the intersection of the two.

There is, however, one group of lawyers who do win more frequently than all others: a small group of 65 private-sector lawyers who argue patent cases at the Federal Circuit more than anyone else—on average, at least once a year. When seeking to overturn a judgment of a district court, the PTO, or the ITC in a patent case, those frequent Federal Circuit advocates succeed 41% of the time, as compared to a 24% win rate for the other private-sector lawyers in our dataset. That finding adds a patent-law angle to a growing literature documenting the remarkable influence a small group of specialist appellate litigators (mostly white and male, and almost all at the wealthiest, most prestigious law firms in the world) have had on the U.S. legal system.

We conclude our article with some ideas about how to make the patent system, and high-level law practice generally, more diverse and inclusive. In the main, we think our findings about the large proportion of women, people of color, and women of color arguing patent appeals for the government undercuts the oft-mentioned “pipeline” explanation for a lack of diversity in patent law—that is, the idea that women and people of color are absent because they lack scientific or technical backgrounds.

Not only is that explanation based on outmoded conceptions of what patent practice entails—especially patent litigation—our data suggest there are women, people of color, and women of color arguing patent cases at the highest level—they are just not getting many opportunities to do so in law firm practice. Indeed, though the number of government arguments in our dataset (567) is less than one-tenth the number of arguments by private-sector lawyers (5825), the government had a greater number of arguments presented by women of color (65) than the private sector did (60).

The inequalities we find among private-sector patent lawyers, and the lack of correlation between those inequalities and case outcomes, suggest that entry into the upper echelon of patent practice is about more than winning and losing in the courtroom. As a recent ABA report on “interrupting bias” suggests, to really make progress with race and gender equity, we must focus on the structural causes of disadvantage and exclusion. For instance, law firms can use concrete, objective metrics to track the effects of diversity efforts, to ensure promoting diversity is rewarded in performance reviews, and to ensure no demographic group is being treated differently in assignments, evaluation, and compensation.

In short, broadening the population of lawyers who make it to very top of appellate practice will require a more deliberate approach than “add diversity and stir”; it will require disrupting the rules and norms that exclude and undermine outsiders to the status quo.

Three main takeaways:

1. Racial and Gender Disparities in Patent Law Practice: The study highlights that the demographic of attorneys arguing patent appeals at the Federal Circuit is predominantly white and male. This disparity is evident when compared to the total population of practicing lawyers. However, an interesting contrast is observed in government lawyers, where the proportion of arguments by women, people of color, and women of color exceeds their proportion in the overall lawyer population.
2. No Difference Between Attorney Demographics and Case Outcomes: Despite the noted disparities in racial and gender representation, these factors do not correlate with the success rates in court. The data indicates that appellants in Federal Circuit patent cases win roughly a quarter of the time and appellees three-quarters of the time, irrespective of the attorney’s race, gender, or their intersection.
3. Need for Structural Changes to Enhance Diversity: The post concludes that the disparities in private-sector patent law practice and the absence of correlation with case outcomes point to a need for more than just increasing diversity. There is a call for addressing structural causes of disadvantage and exclusion in the legal profession. This includes implementing concrete measures in law firms to track and promote diversity, ensuring fair treatment in assignments, evaluations, and compensation, and disrupting norms that perpetuate the status quo, thereby broadening the population of lawyers in top appellate practice.

If you find this insight compelling and want to stay informed on the latest developments, sign up for the DPI research updates today!

Guest post by: Davidson Heath, Assistant Professor of Finance, Nathan Seegert, Associate Professor of Finance, and Jeffrey Yang. All authors are with the University of Utah David Eccles School of Business. This post is part of a series by the Diversity Pilots Initiative, which advances inclusive innovation through rigorous research. The first blog in the series is here and resources from the first conference of the initiative are available here.)

Diversity in innovation is essential. Varied perspectives, experiences, and skills foster creativity and problem-solving. Diverse teams are more likely to challenge assumptions, leading to novel solutions and breakthroughs. Variety in tastes and background can help identify and serve a wide range of user needs.

Open-source software (OSS) is often praised for its ability to foster innovation. Part of the rationale is that OSS allows for open collaboration, enabling continuous improvement and adaptation by a diverse community. For example, a vast garden of open-source large language models such as Meta’s Llama 2 are flourishing and are projected to surpass closed-source AI in the near future.

Figure 1. Capabilities of Machine Learning Models: Open vs. Closed-Source

The open-source collaborative model has accelerated innovation in many fields. Yet to date, we know little about how these teams form, and how their diversity impacts productivity. How does the diversity of OSS teams compare to the overall contributor pool? And what are the productivity outcomes for OSS teams that increase their diversity compared to those that do not?

In our new paper, entitled “Team Production and the Homophily Trap: Evidence from Open-Source Software,” we examine the dynamics of diversity and productivity in the OSS setting. The key novel concept that we introduce is homophily – the tendency of individuals to associate with others who are similar. This tendency, while natural, has important implications for the diversity and productivity of OSS teams. By analyzing over 40,000 teams developing OSS projects over a ten-year period, we uncover two facts – (1) teams tend to be less diverse than the available pool of contributors, primarily due to homophily and (2) teams that add diversity have higher productivity, suggesting that other teams are “stuck” in an inefficient, low-diversity state. Strikingly, this pattern has been getting worse, not better, over time; as the coder population has expanded, average team diversity has actually fallen.

Figure 2. Trends over Time in Open-Source Coder Population and Team Diversity

This pattern, which we term the “homophily trap”, is detrimental to development and innovation. For those leaders working on software projects or within engineering, scientific and innovative teams, our study highlights the importance of the following questions: How can organizations avoid the homophily trap?  What specific strategies can be employed to attract and retain diverse team members? What gains can organizations expect to see from diversifying their teams?

Our study helps to answer some of these questions. First, we show that team diversity has large positive returns to productivity. We find that teams that do escape the homophily trap by increasing their diversity are more likely to continue to be actively developed; have more development activity, conditional on continuing; and attract a larger and more diverse userbase. These effects are especially strong for teams that start at lower levels of diversity, underlining the substantial untapped potential in diversifying team composition.

Second, our study provides suggestions and strategies for enhancing team diversity and escaping the homophily trap. Importantly, initiatives to increase the diversity of the overall pool of contributors can actually backfire because a more diverse pool gives teams more similar peers to assort with. To combat this tendency, teams need policies that directly encourage diversity at the team level. Such policies can break the cycle of homophily-based selection into homogeneous groups. To attract and retain diverse team members, it is important to implement inclusive recruitment practices and establish an environment that values diverse perspectives. Finally, educate your engineers. By promoting awareness of the benefits of diversity, it may be possible to avoid the homophily trap.

For engineers, scientists, and inventors, we believe the insights from our study highlight the crucial role of team diversity in driving innovation and productivity. Teams might prefer similar peers for ease of coordination and communication and might prefer to recruit known quantities from their social networks, but these benefits are smaller than the gains to productivity from a more diverse team.   And importantly, interventions targeted at increasing diversity on teams can yield improvements in both team diversity and project outcomes. This perspective is particularly relevant for organizations in settings where collaboration and innovation are paramount.

Three main takeaways:

1. Diversity Drives Innovation: Diversity in teams fosters creativity and problem-solving. It is a positive input into innovative breakthroughs and addressing a wide range of user needs.
2. The Homophily Trap: Our study uncovers a “homophily trap” in open-source software teams, where teams are less diverse due to a preference for similarity, limiting their potential. Quasi-experimental estimates suggest an increase in team diversity results in a 2.4 percentage point increase in the likelihood that a project remains active in the subsequent year. An increase in team diversity also leads to significant increases in the size and diversity of the project’s userbase.
3. Strategies to Enhance Diversity: To mitigate the homophily trap, our study suggests promoting diverse team formation, targeting low-diversity teams in particular, and creating supportive environments for diverse talent.

 If you find this insight compelling and want to stay informed on the latest developments, sign up for the DPI research updates today!

by Dennis Crouch

Thaler v. Comptroller-General of Patents, Designs and Trade Marks, [2023] UKSC 49. 

In a December 20, 2023 decision, the UK Supreme Court has agreed with American courts that an inventive machine is not deserving of patent rights.  The underlying case will be familiar to many with Dr. Stephen Thaler of St. Louis seeking to patent a thermal-mug designed by an artificial intelligence machine that he created.  Thaler has argued that the AI (called DABUS) conceived of the particular invention in question and also identified its practical utility.  The UK Supreme court based its holding upon the text of the UK Patents Act of 1977 as it reached the same ultimate conclusion as the Federal Circuit in Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022), cert. denied, 143 S. Ct. 1783 (2023).

These Thaler cases showcase that under the current patent law regime, autonomous AI systems cannot qualify as inventors entitled to patent rights, irrespective of their creativity. For AI-generated inventions to become patentable, intervention by policymakers to amend inventorship laws would likely be necessary. However, the arguably bigger questions of immediate importance surround collaborative human-AI inventions where both human and machine contribute in creation of a new invention. Thaler expressly disclaimed any human input into DABUS’s inventions, but going forward mixed human-AI inventor teams seem inevitable. Neither the UK Supreme Court’s decision nor the parallel US rulings provide direct guidance on the requisite threshold quality or quantity of human participation in such collaborative inventions to satisfy legal inventorship requirements. Thus, for instance, an open issue remains whether token perfunctory human approval of an AI-devised invention would suffice, or if substantive intellectual contribution is needed. And for primarily AI-driven inventions, are minor tweaks by a human collaborator enough? Or must the human contributor objectively supply the novel concept? (more…)

by Dennis Crouch

In a recent nonprecedential decision, the Federal Circuit dismissed Ontel’s appeal seeking to overturn the PTAB’s IPR decision upholding the patentability of Dafni’s hair straightening brush patents. Ontel Products Corp. v. Guy A. Shaked Invs. Ltd., No. 2022-1938 (Fed. Cir. Dec. 19, 2023). The court held that Ontel lacked standing to appeal because “the dispute between Ontel and Dafni over this patent is moot.” Under the mootness doctrine, “a case becomes moot ‘when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome.’” ABS Global, Inc. v. Cytonome/ST, LLC, 984 F.3d 1017, 1020 (Fed. Cir. 2021). At the same time, the panel refused to vacate the PTAB decision upholding the ‘562 patent claims, holding that the case “became moot through actions that are closer to joint settlement than to unilateral action” by Dafni.

In my earlier post, I noted my hope that the Federal Circuit would reach the substantive issues that focused on the role of secondary considerations in obviousness determinations and whether Dafni had established the required nexus between the evidence of industry praise and acceptance and the claimed invention. The mootness conclusion precludes that analysis.

Dafni had originally sued Ontel for infringing several different patents. Ontel successfully petitioned for Inter Partes Review (IPR) of one, US9877562, and the district court agreed to stay litigation pending outcome of the IPR.  Rather than waiting for that outcome, Dafni, with cooperation from Ontel, entered a stipulated dismiss of the ‘562 infringement allegations. The basic idea was that by removing that patent out of the queue, the case asserting US9578943 could move forward.  Dafni eventually won the IPR with a PTAB final written decision holding that the claims had not been proven invalid.  Ontel appealed, but the Federal Circuit has now dismissed the appeal as moot.

In explaining why Ontel lacked a concrete stake in the appeal, the court emphasized that “Dafni’s prior ’562 patent-infringement claim against Ontel is no longer pending” and that Dafni’s “disclaimer of any right to challenge the district court’s order dismissing the claim of infringing that patent (including by seeking to reinstate the ’562 patent-infringement claim), precludes any new assertion of that patent against Ontel.” Further, Ontel provided no “evidence of planned or likely future conduct that could risk potential-infringement liability” and identified no “relevant contractual rights” affected by the PTAB decision.

The court rejected Ontel’s assertion that it had an interest in preventing Dafni from relying on the PTAB decision regarding the ’562 patent in separate litigation involving Dafni’s ’943 patent. As the court explained, issue preclusion does not apply to unappealable PTAB decisions, and “the potential for collateral consequences” of the PTAB’s conclusions is insufficient to supply standing. Quoting Best Medical International, Inc. v. Elekta Inc., 46 F.4th 1346, 1353 (Fed. Cir. 2022)

Having found the dispute over the ’562 patent moot, the court next considered the proper disposition—whether to simply dismiss the appeal or also vacate the PTAB decision under United States v. Munsingwear, Inc., 340 U.S. 36 (1950). As the Supreme Court has made clear, “[v]acatur is in order when mootness occurs through happenstance—circumstances [either] not attributable to the parties [or attributable to] the ‘unilateral action of the party who prevailed in the lower court.” Arizonans for Official English v. Arizona, 520 U.S. 43 (1997). However, “mootness by reason of settlement does not justify vacatur.” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18 (1994).

Here, the court found Dafni did not unilaterally cause mootness but rather the case “became moot through actions that are closer to joint settlement than to unilateral action.”  The court highlighted a joint stipulation dismissing the ’562 patent claims, Ontel’s opposition to reinstating those claims, and Dafni’s ultimate disclaimer of any right to challenge that dismissal order. Exercising its “equitable discretion,” the Federal Circuit declined to also vacate the PTAB decision upholding the ’562 patent claims.