Tag Archives: Affirmed Without Opinion

The Federal Circuit decides a substantial number of its cases without opinion, but rather simply issues a judgment of “affirmed without opinion.” This procedure began in the late 1980’s and has been relatively noncontroversial. Lately, however, the patent statute has been reconsidered and the process appears to violate Section 144 of the Patent Act.

Pending Supreme Court Patent Cases 2016 (February 3 Update)

Patent, , , , , , , , , , , ,

by Dennis Crouch

With Washington DC snowed-in, action within the Supreme Court has also been somewhat slow.  Briefing is now complete in ePlus v. Lawson. In that case, a district court originally held an adjudged infringer in contempt-of-court for refusing to comply with its injunction order. Following the contempt order, the USPTO independently cancelled the patent claims and, at that point, the Federal Circuit vacated both the injunction and the contempt order. ePlus presents the following questions:

1. Whether civil contempt of a permanent injunction order that has been affirmed on appeal and is binding on the litigants under the law of judgments, may be set aside based on a legal development that came after both the permanent injunction and the contumacious conduct, and that did not call into question the correctness of the injunction when it was entered.
2. Whether, under Plaut v. Spendthrift Farm, 514 U.S. 211 (1995), the PTO, an administrative agency, may issue an order that retroactively overrides a federal court’s judgment on a question of law that is not subject to further judicial review, so long as some other part of the litigation is pending.

BIO/PhRMA filed a brief in support of the petition.  The ePlus case is one of several challenging the structure of administrative review proceedings running in parallel with court litigation.  William Jay (Goodwin Proctor) is representing ePlus with Mark Perry (Gibson Dunn)  on the other side.

Oral arguments for the parallel willfulness cases of Halo and Stryker are set for February 23, 2016.  The cases are consolidated to a single one-hour hearing. The attorneys for Halo/Stryker will chose a representative who gets 20-minutes; the US Department of Justice (who generally supports the Halo/Stryker position) will have 10-minutes of oral arguments; and Pulse/Zimmer will choose an attorney for a 30-minute opposition.  For those attending, the other case being heard that day is the criminal case of Taylor v. US involving the Hobbs Act that creates federal criminal liability for “interference with commerce by threats of violence.” 18 U.S.C. 1951.  The question is whether the required element of interstate commerce must be proven beyond a reasonable doubt in order to obtain a criminal conviction.

A new petition for certiorari has been filed in Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers).  The petition by Robert Greenspoon links itself with the Cuozzo challenge — noting that Cuozzo raises the “smaller issue” while Cooper raises “larger issues.”

Other new petitions include a filing from Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea) and Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations).  The Federal Circuit decided Joao Bock with a R.36 affirmance (without opinion affirming that claim 30, et. al, of U.S. Patent No. 7,096,003 are invalid as effectively claiming abstract ideas).  Regarding Nordock, although it is not as high profile, its simplicity may make it a better vehicle than Samsung v. Apple for challenging design patent damage calculations. In any event Nordock’s timing is good and I would expect that the court will at least withhold judgment until it decides whether to grant certiorari in Samsung v. Apple.

1. Petitions Granted:

2. Petitions Granted with immediate Vacatur and Remand (GVR)

3. Petitions for Writ of Certiorari Pending:

  • Post Grant Admin: Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers).
  • Post Grant Admin: Achates Reference Publishing, Inc. v. Apple, Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
  • Design Patents: Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations – similar issues as Samsung v. Apple).
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
  • Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Claim Construction: Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
  • Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
  • Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial)
  • Preclusion or Jurisdiction:
    ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Eligibility Challenges: Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea)
  • Claim Construction: Media Rights Technologies, Inc. v. Capital One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
  • Low Quality Brief: Morales v. Square, No. 15-896 (eligibility under Alice)

3. Petitions for Writ of Certiorari Denied:

  • Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567
  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381
  • Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
  • Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
  • Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
  • Kenneth Butler, Sr. v. Balkamp Inc., et al., No. 15-273
  • Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
  • Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
  • Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
  • Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
  • Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
  • I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
  • Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
  • Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
  • W.L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
  • NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
  • Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
  • MobileMedia Ideas LLC v. Apple Inc., No. 15-206
  • SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine)
  • Rodney K. Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602
  • Lakshmi Arunachalam v. JPMorgan Chase & Co., No. 15-691

4. Prior versions of this report:

On Appeal, Abuse-Deterrent OxyContin Patents are Invalid

Patent, , ,

By Dennis Crouch

Purdue Pharma v. Epic Pharma (Fed. Cir. 2016)[1]

In an important Hatch-Waxman related decision, the Federal Circuit has affirmed the lower court’s holding that Purdue Pharma’s abuse deterrent OxyContin patent claims are invalid as anticipated and/or obvious over the prior art.[2]

Of interest, it appears that the patentee was harmed here by the Patent Act’s objective approach to obviousness that, according to the statute, must be considered without regard to the actual “manner in which the invention was made.”  In particular, during the process of creating its low-ABUK oxycodone, the innovators first discovered an 8α impurity isomer created during drug manufacture that led to a problematic 14-hydroxy compound.  The claimed invention was a product having a reduced 14-hydroxy  level.  In the appeal, the Federal Circuit noted that, while the 8α impurity may have been a new discovery, it was not necessary to achieve the claimed low-ABUK results.  In particular, the court noted that reduction of both the 8α and 8β impurities would also achieve the same result without having to distinguish between the two — affirming that “a skilled artisan would recognize that hydrogenation could be used to remove the remaining 14-hydroxy, regardless of the source of the 14-hydroxy.”

Of course, the claims did expressly require that the impurity being reduced be “derived from 8α.”  That limitation, however, was deemed an illusory product-by-process limitation.

We also conclude that, because “derived from 8α[]” is a process limitation, the district court did not err in disregarding the limitation in its obviousness analysis. We have clearly stated that “‘[i]n determining validity of a product-by-process claim, the focus is on the product and not the process of making it.’” Greenliant Sys., Inc. v. Xicor LLC, 692 F.3d 1261 (Fed. Cir. 2012) (quoting Amgen Inc. v. F. Hoffman-La Roche Ltd., 580 F.3d 1340 (Fed. Cir. 2009)). “That is because of the . . . longstanding rule that an old product is not patentable even if it is made by a new process.” Id.; see also SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1317 (Fed. Cir. 2006) (“It has long been established that one cannot avoid anticipation by an earlier product disclosure by claiming . . . the product as produced by a particular process.”); In re Thorpe, 777 F.2d 695, 697 (Fed. Cir. 1985) (“If the product in a product-by-process claim is the same as or obvious from a product of the prior art, the claim is unpatentable even though the prior product was made by a different process.”).

In Amgen, the Federal Circuit did find that the particular claimed process will be relevant if it imparts distinguishing structural differences on the resulting product.  Here, however, the court found that the fact that the negative 14-hydroxy byproduct was derived from 8α “imparts no structural or functional differences” over the prior art that already included low-ABUK product achieved without focusing on the 8α isomer.

Generic OxyContin has been on the market for the past year – following the district court judgment that has now been affirmed – and so this decision should not have a major market impact.

This case here is one part of a complex web of battles that Purdue appears to be fighting to protect its exclusive rights to sell OxyContin – or at least delay competition. Although these asserted claims have been found invalid, Purdue is asserting a set of new patents, including U.S. Patent Nos. 8,309,060, 8,337,888, 8,808,741, 8,894,987, 8,894,988, 9,060,976, 9,034,376 and 9,073,933.

= = = = =

[1] App. No. 2014-1294 (Fed. Cir. 2016); on appeal from In re OxyContin Antitrust Litig., 994 F. Supp. 2d 367 (S.D.N.Y. 2014).

[2] Asserted patents include U.S. Patent No. 7,674,799 (“’799 patent”), U.S. Patent No. 7,674,800 (“’800 patent”), U.S. Patent No. 7,683,072 (“’072 patent”) (collectively, “the low-ABUK patents”), and U.S. Patent No. 8,114,383 patent (“’383 patent”).

Anonymous Loan Shopping — An Unpatentable Abstract Idea

Patent, , , , ,

By Dennis Crouch

On summary judgment, Judge Guilford (C.D.Cal) found Mortgage Grader’s asserted patents[1] ineligible under 35 U.S.C. § 101.[2]  On appeal, the Federal Circuit has affirmed this substantive holding as well as the district court’s procedural decision to allow the defendant (First Choice) to re-add its Section 101 contention after first dropping it.[3]  The appellate decision here was authored by Chief Judge Stark (D.Del) who was sitting by designation.  Judges O’Malley and Taranto joined the unanimous opinion.

A patent is not permitted to effectively claim an abstract idea.  In Mayo/Alice, the Supreme Court outlined a two-step process for determining whether this exception applies to Section 101’s otherwise broad eligibility principles: (1) is the claim at issue directed to a patent-ineligible concept and (2) if so, does the claim include an “inventive concept … sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”[4]

Here, the district court found that the claims-at-issue were generally directed to “anonymous loan shopping” which is an unpatentable abstract idea.[5]  According to the court and apart from the computerization claim limits, the “series of steps covered by the asserted claims—borrower applies for a loan, a third party calculates the borrower’s credit grading, lenders provide loan pricing information to the third party based on the borrower’s credit grading, and only thereafter (at the election of the borrower) the borrower discloses its identity to a lender—could all be performed by humans without a computer.”  These human-mind-potentials cannot be claimed in the abstract.  In step two of Mayo/Alice, the court considered the computerization elements of the claims, but found only “generic computer components such as an ‘interface,’ ‘network,’ and ‘database.’ These generic computer components do not satisfy the inventive concept requirement.”

In the appeal, the patentee argued a factual dispute regarding the history of loan processing in an attempt to show that the process here was not “old.”  The appellate panel, however, found the testimony essentially irrelevant to the legal question of whether claim is directed to an abstract idea.

====

On the procedural point, the defendant had dropped its eligibility defense from its contentions. However, following the Supreme Court’s Alice decision added the contention back into place – but well after the court appointed deadline.  On appeal, the appellate panel confirmed that the district court did not abuse its discretion in allowing that procedural anomaly because of the significance of the decision:

In Alice, the Supreme Court held that “merely requiring generic computer implementation fails to transform [an] abstract idea into a patent-eligible invention.” 134 S. Ct. at 2352. We recognized the significance of Alice in buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354–55 (Fed. Cir. 2014), in which we stated that Alice “made clear that a claim directed to an abstract idea does not move into § 101 eligibility territory by merely requiring generic computer implementation” (internal quotation marks omitted). The impact of Alice is also illustrated by our decision in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014) (“Ultramercial III”). Ultramercial had sued WildTangent for infringement of U.S. Patent No. 7,346,545, a patent directed to allowing consumers to view copyrighted media products on the Internet at no cost in exchange for viewing an advertisement. See id. at 712. When the case was first before us, in 2011, we reversed the district court’s grant of WildTangent’s Rule 12(b)(6) motion to dismiss, holding that “as a practical application of the general concept of advertising as currency and an improvement to prior art technology, the claimed invention is not so manifestly abstract as to override the statutory language of § 101.” Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323, 1330 (Fed. Cir. 2011) (“Ultramercial I”) (internal quotation marks omitted). The Supreme Court granted WildTangent’s petition for certiorari, vacated our order, and remanded for further consideration in light of Mayo. Ultramercial III, 772 F.3d at 713. On remand, we again reversed the district court, holding yet again that the claims were patent-eligible. Ultramercial v. Hulu, 722 F.3d 1335, 1354 (Fed. Cir. 2013) (“Ultramercial II”). Once more, the Supreme Court granted WildTangent’s petition for certiorari, vacated our order, and remanded, this time for further consideration in light of Alice. Id. On this further remand, with the “added benefit of the Supreme Court’s reasoning in Alice,” we affirmed the district court and found the claims to be not patent-eligible. Id. Our conclusion was expressly based on Alice’s holding that “adding a computer to otherwise conventional steps does not make an invention patent-eligible.” Id. at 713, 716–17.

Ultramercial III demonstrates that a § 101 defense previously lacking in merit may be meritorious after Alice. This scenario is most likely to occur with respect to patent claims that involve implementations of economic arrangements using generic computer technology, as the claims do here. For example, the asserted claims of the ’694 patent require use of a “computer system” or “computer network” for facilitating anonymous loan shopping and the asserted claim of the ’728 patent requires “programmatically generating” and uses a “network” for shopping for loans. In this context, it was not an abuse of discretion to allow Appellees to inject a § 101 defense into the case after Alice.

= = = = =

[1] U.S. Patent Nos. 7,366,694 (“’694 patent”) and 7,680,728 (“’728 patent”).

[2] Mortgage Grader, Inc. v. Costco Wholesale Corp., 89 F. Supp. 3d 1055, 1065 (C.D. Cal. 2015) (Costco was later dismissed as a party).

[3] Mortgage Grade, Inc. v. First Choice Loan Services, ___ F.3d ___, App. No. 15-1415 (Fed. Cir. 2016) available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1415.Opinion.1-15-2016.1.PDF.

[4] Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012) (as clarified by Alice).

[5] Claim 1 of the ‘694 patent, that the court found sufficiently representative is listed as follows:

1. A computer-implemented system for enabling borrowers to anonymously shop for loan packages offered by a plurality of lenders, the system comprising:

a database that stores loan package data specifying loan packages for home loans offered by the lenders, the loan package data specifying, for each of the loan packages, at least a loan type, an interest rate, and a required borrower credit grading; and

a computer system that provides:

a first interface that allows the lenders to securely upload at least some of the loan package data for their respective loan packages to the database over a computer network; and

a second interface that prompts a borrower to enter personal loan evaluation information, and invokes, on a computer, a borrower grading module which uses at least the entered personal loan evaluation information to calculate a credit grading for the borrower, said credit grading being distinct from a credit score of the borrower, and being based on underwriting criteria used by at least some of said lenders;

wherein the second interface provides functionality for the borrower to search the database to identify a set of loan packages for which the borrower qualifies based on the credit grading, and to compare the loan packages within the set, including loan type and interest rate, while remaining anonymous to each of the lenders and without having to post a request to any of the lenders, said second interface configured to display to the borrower an indication of a total cost of each loan package in the set, said total cost including costs of closing services not provided by corresponding lenders;

and wherein the computer-implemented system further enables the borrower to selectively expose at least the personal loan evaluation information to a lender corresponding to a selected loan package.

The Maling Decision from Massachusetts on Subject Matter Conflicts

Ethics, , ,

In late December, the high court of Massachusetts issued a decision in Maling v. Finnegan, Henderson.  The decision is accessible, if you search for “Maling,” here.

Boiled down, the court affirmed the grant of the firm’s Rule 12(b)(6) motion to dismiss a complaint that in broad terms alleged that the Finnegan firm had a conflict because it represented the plaintiff and another client in obtaining patents claiming screwless eyeglass hinge inventions.  There are two broad issues:  when is prosecution of patents for one client adverse to another, and when are two patent applications so close that prosecuting them creates a material limitation on the lawyer’s ability to represent either client.

With respect to adversity, this form of conflict is sometimes viewed as a “finite pie” conflict, where two clients are fighting for a resource that cannot meet both their demands.  In Maling, the court relied on a case that I’ve cited for two decades now that involved a firm representing two companies each pursuing a license to a radio channel.  The court reasoned there that so long as they were not fighting over the same channel, and there was no electrical interference between the two channels, there was no direct adversity and so no conflict.  By analogy, the court’s essential holding was that unless patent claims interfere or are to obvious variations of each other, there is no direct adversity.  (The court also noted that giving an infringement opinion to one client about another client’s patent would be adverse, but that was not alleged, apparently, here.)

With respect to material limitations, this form of conflict arises when a lawyer’s obligations to anyone (including himself) precludes him from competently representing a client.  The basic test is:  imagine what a lawyer without the “obligation” would do; and then ask whether the obligation the allegedly conflicted lawyer had would result in a material limitation.  Simple example:  if a lawyer represents a car wreck plaintiff, the lawyer generally cannot cross-examine that plaintiff even in an unrelated matter if it doing so would involve, say, exposing eyesight problems that could be used against the plaintiff in the car wreck. The court in Maling contrasted the allegations in the complaint to situations where firms have shaved claims for one client to avoid another client’s patent.  There was nothing like that here, and nothing like what the court suggested might otherwise be a material limitation.

The court ended with admonitions to lawyers to be sure to monitor for conflicts carefully.  I’ll end by noting that this is not the first, or last, word on this topic.

“Be careful out there,” as they said in Hill Street Blues.

 

IPR: Proving Patentability before Amendment

Patent, , , , , ,

By Dennis Crouch

In Prolitec, Inc. v. ScentAir Technologies,[1] the Federal Circuit has affirmed a USPTO inter partes review (IPR) decision cancelling Prolitec’s air-freshener diffuser claims.  The patent at issue[2] is the subject of a co-pending lawsuit between the parties that was stayed in 2013 — awaiting the IPR outcome.[3]

Here, the patent included a claim limitation requiring a diffusion head “mounted to” a reservoir.  The patentee wanted that term to be limited to require permanent joining of the head to the reservoir.

Too Clever Specification Drafting?: To achieve that permanent-joining result, the patentee first argued for a narrow claim construction of the “mounted term.”  That approach failed at the PTAB and has been affirmed on appeal.  The failure is to the ordinary patent drafting strategy, employed by the patentee, of using non-definite and non-limiting terms such as “may” to describe the role of various embodiments in the specification so as to not unduly limit claim scope. Here, in particular, the specification had indicated the possibility of a permanent joining in a disposable fashion, but, by clever specification drafting, had not foreclosed the potential for non-permanent mounting.  Thus, that narrowing argument was foreclosed by the patentee’s own prior actions.

No Amendment without Major Proof: As an alternative approach, the patentee also requested permission to amend its claims to replace “mounted” term with “permanently joined.”  As per its usual modus operandi, the Patent Trial and Appeal Board (PTAB) denied the motion to amend.  In particular, the PTAB found that Prolitec had failed to prove that its proposal was patentable over the prior art of record.  On appeal, the Federal Circuit affirmed – first reiterating its prior statement in Microsoft Corp. v. Proxyconn, Inc.[4] that the Board can require a patentee to establish patentability before allowing an amendment.  Here, the Federal Circuit extended that doctrine to affirm the PTAB rule that, prior to amendment, patentability must be established over all prior art of record (in both the IPR and prosecution history). That rule, according to the Federal Circuit, is not contrary to any statute and is also “reasonable.”  Further, the court held that the requirement of “establishing patentability” includes both novelty and nonobviousness.  On the merits, the court affirmed that the patentee had failed to show that its amended claims were non-obvious over the combination of references cited in the IPR petition and found in the prosecution history file.

The majority opinion was written by Chief Judge Prost and joined by Judge Taranto.

Writing in dissent, Judge Newman argued that the refusal to allow an amendment was “contrary to both the purpose and the text of the America Invents Act. . . . [E]ntry of a compliant amendment is [a] statutory right, and patentability of the amended claim is properly determined by the PTAB during the IPR trial, not for the first time at the Federal Circuit.”

= = = =

[1] Prolitec, Inc. v. ScentAir Technologies, App. No. 15-1020, (Fed. Cir. Dec. 4, 2015) (slip opinion available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1020.Opinion.12-1-2015.1.PDF)

[2] U.S. Patent No. 7,712,683.

[3] Prolitec, Inc. v. ScentAir Technologies, Civil Action #: 2:12-cv-00483-RTR, Docket No. 62 (E.D. Wisc., May 17, 2013).  The IPR petition was filed in May 2013 but not instituted until August 2013. See IPR2013-00179. The claims of a second patent in the lawsuit were also largely been cancelled and was the subject of a separate appeal. That PTAB decision was affirmed without opinion in June 2015. See Prolitec, Inc. v. ScentAir Technologies, App. No. 15-1017 (Fed. Cir. June 9, 2015) (R. 36 affirmance without opinion).

[4] 789 F.3d 1292 (Fed. Cir. 2015).

Federal Circuit Reluctantly Affirms Ariosa v. Sequenom and Denies En Banc Rehearing

Patent, , , ,

Ariosa v. Sequenom (Fed. Cir. 2015) (en banc petition denied)

The Federal Circuit has denied Sequenom’s petition for en banc rehearing – reconfirming the panel holding that the claimed “method of detecting paternally inherited nucleic acid” is unpatentable as a law of nature.  Patent No. 6,258,540.  Following this case, the USPTO may finally begin applying the law-of-nature exception in a major way. The decision also sets up a petition for writ of certiorari to the Supreme Court with several members of the Federal Circuit expressly calling for review.

As I previously wrote, the invention at issue here solves a very practical problem accessing fetal DNA without creating a major health risk for the unborn child.  The big idea was the hypothesis that fetal DNA might be floating around in the mother’s blood and that the fetal DNA could be selectively amplified by focusing on the paternally inherited portion of its DNA (rather than the maternally inherited).

The claim itself has two simple steps: (1) amplifying paternally inherited DNA from a plasma sample taken from a pregnant female and then (2) detecting the presence of the DNA. As I mentioned, the big idea was understanding where the baby-DNA could be found (in the mother’s blood plama) and that it could be separated from the mother’s DNA by linking it to the father’s sequence. The technology for amplifying and detecting was already well known at the time of the invention here.  Further, these two steps – amplifying and detecting – are the ones always almost used to detect particular DNA sequences.

The district court found the patent invalid under Section 101.  That decision was affirmed by a Federal Circuit panel in an opinion written by Judge Reyna and a concurrence by Judge Linn.  Now, in the 11-1 en banc denial, we add three more opinions – Judge Lourie (joined by Judge Moore) and Judge Dyk, both concurring in the denial as well as Judge Newman dissenting.

The basic controlling precedent in this case is Mayo v. Prometheus. In that case, the Supreme Court held that the discovered therapeutic efficacy and toxicity of a particular administered drug to be an unpatentable natural law and that the patented testing and dosage methods were also unpatentable as effectively claiming the same law of nature. In particular, the court noted that the claimed steps were not “genuine applications of those laws[, but] rather … drafting efforts designed to monopolize the [unpatentable] correlations.” As in Ariosa, the testing and determination steps were well known in the art and relied upon well-understood, routine, and conventional activity known to those in the field. As such, those additional steps were insufficient to transform the unpatentable law of nature into a patent eligible application of the natural law.  

In Ariosa, the Federal Circuit stands almost unanimously in the conclusion that Sequenom’s invention is not patent-eligible under the Mayo precedent (only Judge Newman disagrees).  There is, however, substantial disagreement about whether the Supreme Court was correct in its Mayo analysis.

Judge Dyk: I share the concerns of some of my colleagues that a too restrictive test for patent eligibility under 35 U.S.C. § 101 with respect to laws of nature (reflected in some of the language in Mayo) may discourage development and disclosure of new diagnostic and therapeutic methods in the life sciences, which are often driven by discovery of new natural laws and phenomena. This leads me to think that some further illumination as to the scope of Mayo would be beneficial in one limited aspect. At the same time I think that we are bound by the language of Mayo, and any further guidance must come from the Supreme Court, not this court.

Judge Lourie: [I]t is unsound to have a rule that takes inventions of this nature out of the realm of patent-eligibility on grounds that they only claim a natural phenomenon plus conventional steps, or that they claim abstract concepts. But I agree that the panel did not err in its conclusion that under Supreme Court precedent it had no option other than to affirm the district court.

Judge Linn:  In my view, the breadth of the second part of the test was unnecessary to the decision reached in Mayo. This case represents the consequence—perhaps unintended—of that broad language in excluding a meritorious invention from the patent protection it deserves and should have been entitled to retain.  (Note, Judge Linn participated in the original panel decision but could not dissent here because of his Senior Status).

It will be interesting to see how this proceeds, but my view is that the case has a low-chance for certiorari.  In Mayo, the Supreme Court indicated its understanding that the case would halt patenting of many diagnostics, but expressly called on Congress to “craft[] more finely tailored rules where necessary.”  In the 3 1/2 years since the Mayo decision, the diagnostic industry has not been able to get a bill even proposed in Congress that would so-tailor these rules (at least that I know of).

 

Federal Circuit: The IPR System is Constitutional

Patent, , , , ,

by Dennis Crouch

In a precedential opinion, the Federal Circuit has rejected MCM’s foundational challenges against the Inter Partes Review (IPR) system implemented as a result of the America Invents Act of 2011 (AIA).

MCM Portfolio v. HP (Fed. Cir. 2015) (MCM.decision)

In particular, the court held that the IPR system does not violate Article III of the U.S. Constitution nor does it violate the Seventh Amendment of the U.S. Constitution.  On the merits, the court then affirmed the PTAB’s decision cancelling MCM’s challenged claims as obvious.  The court writes:

The teachings of the Supreme Court in Thomas, Schor, and Stern compel the conclusion that assigning review of patent validity to the PTO is consistent with Article III. . . . . [Furthermore we] are bound by prior Federal Circuit precedent. . . . We see no basis to distinguish the reexamination proceeding in Patlex from inter partes review. . . .

Because patent rights are public rights, and their validity susceptible to review by an administrative agency, the Seventh Amendment poses no barrier to agency adjudication without a jury.

The decision here also essentially forecloses Carl Cooper’s parallel proceedings. However, both parties are likely to request rehearing en banc followed by petitions for writ of certiorari.

Federal Circuit: Prior Art Enabled by Applicant Admissions in his Patent Application

Patent, , ,

by Dennis Crouch

In re Steve Morsa (Fed. Cir. 2015) (Morsa II)

This is the return-appeal, a divided panel has now agreed with the patent office that its cited prior art is sufficiently enabling to serve as an anticipating reference.

In its 2013 Morsa decision (Morsa I) involving the same issues, the Federal Circuit ruled the PTO had applied the incorrect prior-art-enablement procedure and remanded.  The disclosure in question is a short press-release from Peter Martin Associates that announces a product known as “HelpWorks” that allows folks to “use the Web to screen themselves for benefits, services, health risks, or anything else an agency wishes to implement via its eligibility library.”  Morsa’s claim in question – Claim Number 271 – is directed toward a “benefit information match mechanism” that requires (1) storing benefit registrations; (2) receiving a benefit request; (3) determining whether the request matches a registration; and (4) providing a benefit results — all “at least in part via a computer compatible network.”

Enabling Prior Art: A prior art reference being used for anticipation must be enabling.  To be anticipating, the prior art must “teach a skilled artisan … to make or carry out what it discloses in relation to the claimed invention without undue experimentation.”  However, during patent prosecution prior art cited by the USPTO is presumed to be enabling unless that issue is directly challenged by the patent applicant.  In Morsa I, the Federal Circuit ruled that an applicant’s direct challenge shift’s the burden to the PTO if it is a “non-frivolous argument that cited prior art is not enabling.”

While an applicant must generally do more than state an unsupported belief that a reference is not enabling, and may proffer affidavits or declarations in support of his position, we see no reason to require such submissions in all cases. When a reference appears to not be enabling on its face, a challenge may be lodged without resort to expert assistance. Here, Morsa identified specific, concrete reasons why he believed the short press release at issue was not enabling, and the Board and the examiner failed to address these arguments.

On remand following Morsa I, the PTO particularly addressed Morsa’s enablement argument and ruled that the anticipating reference was enabled — finding that the reference taught everything that person with ordinary computing kills needed to know in order to make and use Morsa’s claimed invention.  Now on appeal, the Federal Circuit has affirmed.

In the process, the court made a set of important findings. First, the starting point of this analysis is the level of knowledge of a skilled artisan as of Morsa’s critical date — and the question is whether the prior art reference enables that skilled artisan to create Morsa’s invention.  Building upon this starting point, the court included a number of admissions from Morsa’s application. In particular, Morsa had indicated in his background section that several different aspects of the invention (processors, memory, search routines, etc.) were  “within the knowledge of those of ordinary skill in the art.”  The court next focused a bit on Morsa’s claimed invention — finding that in includes only four basic claim limitations and that “each of those limitations can be mapped directly onto the [prior art] reference.”

Writing in dissent, Judge Newman offers the following:

The Board recognized that some of the claim steps are not described in the press release. The Board solved this dilemma by taking what it called “Official Notice” of the missing subject matter. And my colleagues solve this dilemma by finding the missing subject matter in the Morsa specification by stating that since the specification states that a person skilled in the art would know how to “implement” the claimed system, that person would have “knowledge” to fill the gaps in the prior art. However, we are directed to no disclosure in the prior art of all the claim elements and steps. “Anticipation” is not established in accordance with law.

“Official Notice” is not anticipation. . . The applicant’s specification is not prior art . . . [Rather] Enablement of the prior art must come from prior art.

= = = = =

I have pasted below the entirety of the 1999 press release being used as prior art.

CHICAGO–(BUSINESS WIRE)–Sept. 28, 1999–

Peter Martin Associates is moving eligibility screening one step closer to public availability with the announcement that its expert screening solution, HelpWorks(TM) is now Web enabled.

The launch of HelpWorks Web Edition(TM) took place today at the APHSA-ISM (American Public Human Services Association – Information Systems Management Conference) in Columbus, Ohio. The talk at the conference was the Government’s migration to e-commerce empowering the public to avoid long lines and seemingly endless forms to secure government services.

HelpWorks(TM) is a state-of-the-art software program designed to help maximize the benefits and services that consumers receive from Government agencies. It can be configured to evaluate any or all benefits and programs required – Federal, State and/or local.

HelpWorks Web Edition(TM) supports both a professionally-directed deployment model – in which end users are professional caseworkers – or as stated above, a self-service model in which consumers use the Web to screen themselves for benefits, services, health risks, or anything else an agency wishes to implement via its eligibility library.

The power behind this unprecedented flexibility in application and access is PMA’s newly released Expert Eligibility Server(TM) (EES) technology. The EES engine allows an agency to utilize HelpWorks Web Edition(TM) as well as other applications that will leverage this dynamic technology. With EES as the backbone, agencies can rapidly deploy eligibility solutions for touch-screen kiosks, interactive voice response systems, the Web and many other platforms.

Peter Martin Associates is the premier provider of software designed to support public and private social service agencies, focusing on family centered case management, information and referral, and eligibility screening. Information about Peter Martin Associates may be found on the web at www.petermartin.com.

Federal Circuit Sends Bad-Faith-Patent-Assertion Case back to State Court

Patent, , , ,

Vermont v. MPHJ Tech (Fed. Cir. 2015)

In an interesting opinion, the Federal Circuit has rejected MPHJ’s plea to get into Federal Court. The State of Vermont sued the patent holder for violations of Vermont Consumer Protection Act (VCPA) stemming from MPHJ’s patent enforcement campaign. The letter campaign had three stages:

  1. Letter from the shell company stating that “we have identified your company as one that appears to be using the patented [scanner-to-email] technology” suggesting that “you should enter into a license agreement with us at this time.”
  2. Follow-up letter a few weeks later from the Farney Daniels firm stating that a prior-non response is considered “an admission of infringement” and implying that litigation would commence if the recipient did not enter into a license agreement.
  3. A third follow up following the pattern of the second.

These actions prompted the Vermont Attorney General to sue under the VCPA – alleging unfair and deceptive trade practices based upon MPHJ’s “threating litigation even though litigation was unlikely, targeting small businesses, placing the burden on the recipient to do the investigation, using shell corporations to minimize liability; and stating in its letters that it would bring suit immediately absent a license, the licensing program was successful with many businesses taking part, and the average license was $1000/employee.” The state demanded a permanent injunction requiring that MPHJ comply with state law.

After VT filed its original complaint (but before it filed its amended complaint), the state enacted the “Vermont Bad Faith Assertions of Patent Infringement Act” (BFAPIA) that creates a new Vermont cause of action for “bad faith assertion of patent infringement” based upon factors such as “the contents of the demand letter, the extent of any pre-assertion investigation, demands for payment of a license fee in an unreasonably short time, and deceptive assertions of infringement.”

MPHJ alleges that the proposed injunction would force it to comply with BFAPIA, but that law is preempted by the US patent laws and – as such – that the case should be removed to Federal Court.

The Federal District Court denied MPHJ’s first removal request (based upon the first complaint) and second removal request (based upon the VT amended complaint).  It is that second denial that was appealed and the Federal Circuit here has affirmed the denial – limiting the appeal question to the BFAPIA issue and finding that the VT injunction does not raise the BFAPIA enforcement issue – especially since Vermont stipulated during oral arguments that they were not seeking an injunction that would require compliance with that statute.

Federal Circuit Jurisdiction: The most interesting aspect of the decision is Judge O’Malley’s discussion of Federal Circuit jurisdiction post-AIA and post-Gunn.

The America Invents Act amended Title 28 to now grant Federal Circuit appellate jurisdiction “in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents.” 28 U.S.C. § 1295(a)(1). This change extends the Federal Circuit’s jurisdiction to include cases where the patent issues arise only in a compulsory counterclaim (formerly, the focus was only on the complaint). The new statute also added additional language that “no state court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents,” 28 U.S.C. § 1338(a), and a new removal statute indicating that “a civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents . . . may be removed to [federal] district court . . . .” 28 U.S.C. § 1454.

At the same time, in Gunn (2013) the Supreme Court contracted Federal Circuit jurisdiction to cases where (1) federal patent law creates the cause of action or (2) where, although the claim arises under state law, that a federal patent law issue is: (a) necessarily raised, (b) actually disputed, (c) substantial, and (d) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. Gunn (interpreting pre-AIA law).

Here, MPHJ asserts that the Federal Circuit has jurisdiction over the appeal because its Counterclaim (No. 5) raises a patent law issue. In particular, MPHJ asked for “a declaratory judgment that the VCPA is invalid or preempted by the First, Fifth, and Fourteenth Amendments, the Supremacy and Patent Clauses, and Title 35 of the U.S. Code.”

Walking through this morass, the Federal Circuit first ruled that the counterclaim is a compulsory counterclaim because of its close factual and logical relationship with the main claim found in the complaint. The next question under Section 1295(a)(1) then, also answered affirmatively here, is whether the counterclaim “arises under” federal patent law. Although not a cause of action, the federal circuit found that the preemption defense is an important and necessary federal patent question whose resolution will have a broad impact on the federal patent system as a whole.

Whether federal patent laws preempt or invalidate the VCPA as applied has considerable significance beyond the current case. A hypothetical finding that the VCPA is not invalid or preempted in state court would affect the development of a uniform body of patent law, as such a decision would be binding in Vermont, but would not be in other states with similar laws or in federal court. The facts of this case are fundamentally unlike Gunn, in which the Court recognized that the federal issue was a “backward-looking . . . legal malpractice claim” that would be unlikely to have any “preclusive effect” on future patent litigation and was, therefore, not substantial. As an “as applied” challenge, counterclaim 5 depends to a certain extent on the specific facts of this case, but the resolution of this case would assist in delineating the metes and bounds of patent law and clarifying the rights and privileges afforded to patentees in pursuing patent infringement claims.

With that, the Federal Circuit found that it does indeed have appellate jurisdiction to hear the appeal.

At this point, you may be seeing a disconnect between the ultimate holding that I first described (effectively denying removal) and the new statute permitting removal of cases “in which any party asserts a claim for relief arising under any Act of Congress relating to patents” (§ 1454) – especially since the court just decided that the court here decided that MPHJ had indeed asserted a claim for relief arising under federal patent law. The resolution of that seeming conflict is procedural – “MPHJ has not appealed the district court’s ruling pursuant to 28 U.S.C. § 1454 [and thus] we have no occasion to address … how that newly enacted provision should be interpreted.”

The complicating factor is that it looks like the State court will now need to dismiss MPHJ’s preemption counterclaim because it arises under the patent law. 1338(a) and, at that point, MPHJ would seemingly have standing to file a federal declaratory judgment action raising preemption.

Can the U.S. Government Infringe a U.S. Patent? (The U.S. Government Says it’s Impossible)

Patent, ,

Astornet Technologies Inc. v. BAE Systems, Inc., — F.3d —- (Fed. Cir. 2015)

Although a patentee can sue the U.S. government for unlicensed use of its invention, Congress requires that those cases be filed in the Court of Federal Claims (CFC) rather than in district court. No jury trial is available, and the only remedy is a reasonable royalty.

The statute also protects companies doing work for the U.S. – providing cover by limiting the cause of action.

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

28 U.S.C. § 1498. The common interpretation of this section is – when the U.S. government is using the invention – that the only action is “against the US.” Here, the patentee sued several private companies for inducing the TSA to infringe its airport vehicular gate control patent. US Patent No. 7,639,844. On appeal, the Federal Circuit confirmed that the inducement theory does not avoid the coverture of 1498.

[T]he statute protects government contractors against infringement liability and remedies where it applies. As indicated by the statute’s use of the definite article in providing “the owner’s remedy” and its statement that the remedy is for payment of the owner’s “entire compensation,” the statute, within its ambit, makes the remedy against the United States exclusive. . . .

The claim of use of the patented invention by the United States is squarely within the statutory terms. The language is not limited to claims that are filed against the United States or its government agencies. And it would cut a substantial hole in the provision, and its intended function, to read it to be limited in that way. Doing so would expose a significant range of government contractors to direct liability (and possible injunctive remedies), namely, those accused of indirect infringement of claims directly infringed by the government. There is no justification for departing from the clear meaning of the text to produce a result that runs counter to the evident, established statutory policy.

The government brief on this point is interesting. The government argues that the U.S. government should never be seen as an “infringer” but rather as a sovereign who has agreed to offer compensation for its use of someone else’s patents. The logical result for this case would be that there cannot be any inducement liability because there was no infringement.

Similarly, this Court need not resolve appellees’ argument that because the United States does not “infringe” when it uses a patented invention without authorization, no party can be liable for inducing or contributing to that use. . . . [T]he plain language of Section 1498(a) encompasses use of a patented invention by the United States. Where a patent owner alleges such use, either directly or indirectly, Section 1498(a) applies by its express terms. There is, consequently, no need for the Court to decide whether the unauthorized use of a patented invention by the United States constitutes “direct infringement” in the sense that would be necessary to support liability for induced or contributory infringement in the absence of Section 1498(a).

Government appellate brief.

The outcome here is that the dismissal is affirmed.

Dow v. Nova: “Nautilus changed the law of indefiniteness”

Patent, , , , , ,

By Jason Rantanen

The Dow Chemical Company v. Nova Chemicals Corporation (Fed. Cir. 2015) Download Opinion
Panel: Prost, Dyk (author), Wallach

Earlier this year in the opinion on remand in Biosig v. Nautilus, Judge Wallach rejected the argument that the Supreme Court’s opinion on the indefiniteness doctrine  “articulated a new, stricter standard.”  783 F.3d 1374, 1379 (Fed. Cir. 2015).  Instead, the Court  “modified the standard by which lower courts examine allegedly ambiguous claims; we may now steer by the bright star of ‘reasonable certainty,’ rather than the unreliable compass of ‘insoluble ambiguity.’”  Id. The thrust of Judge Wallach’s opinion was that the problem the Supreme Court saw with the Federal Circuit’s previous indefiniteness doctrine was not with the standard that the Federal Circuit was actually applying; it was that the words the Federal Circuit had been using could lead district courts astray.

Dow v. Nova presents a dramatic contrast, one that (in my view) goes a long way towards righting the boat.   Here, Judge Dyk reiterates in the strongest words since Nautilus that the Court’s opinion clearly changed the standard for indefiniteness.  There is no hint of mere Supreme clarification in this opinion, as the outcome turns entirely on whether the pre- or post-Nautilus standard applies.  Under the old standard, the result at the Federal Circuit was that the claims were definite; under the new standard, the result was that they are indefinite.  And given the purely nondeferential review applied in both cases, this pair of cases provides possibly one of the neatest examples of how a legal standard can be outcome determinative.

Background: In 2010, Dow obtained an infringement judgment against NOVA, with a jury rejecting NOVA’s indefiniteness argument.  The Federal Circuit affirmed in 2012, holding that the patents were not indefinite under its pre-Nautilus precedent.  On remand, the district court held a bench trial on supplemental damages for the period after the judgment through expiration of the patents (October 2011). While NOVA’s appeal was pending, the Supreme Court issued Nautilus.  NOVA argued that this intervening decision required the supplemental damages award to be vacated because the patents are invalid for indefiniteness.

Bars to re-litigation of indefiniteness: Nova’s challenge faced a substantial procedural hurdle, however.  Because it had litigated, and lost, its indefiniteness challenge, it would ordinarily be barred from re-litigating that issue under the doctrine of issue preclusion or law of the case.  (Claim preclusion does not apply under Federal Circuit precedent because a claim based on continuing conduct constitutes a separate claim.)     “[T]he doctrine [of law of the case] posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.”….Issue preclusion “bars ‘successive litigation of an issue of fact or law already litigated and resolved in a valid court determination essential to the prior judgment.’” Slip Op. at 11 (citations omitted).  However, “when governing law is changed by a later authoritative decision,” these two doctrines do not apply.  Id. at 12.

Nautilus and change in law: There are three requirements for the change in law exception to apply: (1) “the governing law must have been altered;” (2) “the decision sought to be reopened must have applied the old law;” and (3) “the change in law must compel a different result under the facts of the particular case.”  Slip Op. at 14-15.  Here, the court held, those requirements were met by the Nautilus opinion.  “First, there can be no serious question that Nautilus changed the law of indefiniteness. This was indeed the very purpose of the Nautilus decision.”  Slip Op. at 16.  Second, the earlier decision in Dow applied the old law:

Dow argues that our opinion in the previous appeal was not inconsistent with
Nautilus and that we did not apply the “amenable to construction” or “insolubly ambiguous standard.” But the fact that we did not include that particular language does not mean that we were not applying the prevailing legal standard. We cited Exxon, see Dow, 458 F. App’x at 917, which Nautilus specifically cited as exemplary of the rejected Federal Circuit standard…..We also explained that “the test for indefiniteness is not whether the scope of the patent claims is easy to
determine, but whether ‘the meaning of the claim is discernible, even though the task may be formidable and the conclusion may be one over which reasonable persons will disagree.’” Id. at 920 (quoting Exxon, 265 F.3d at 1375). This language corresponds exactly to the “amenable to construction” or “insolubly ambiguous” standard rejected in Nautilus.

Slip Op. at 17-18.

Third, the outcome was different under the Nautilus standard than under the pre-Nautilus caselaw.  Here, the issue was a measurement problem: which methodology should be applied to determine the “slope of strain hardening.”  “Three methods existed to determine the maximum slope, each providing, as Dow admits, “simply a different way of determining the maximum slope.”  Slip Op. at 21 (emphasis added).   None of these methods were taught in the patent, nor did it provide “any guidance as to which method should be used or even whether the possible universe of methods is limited to these four methods.”  Id. at 23.  And Dow’s expert used a fourth method, which he used after applying “only his judgment of what a person of ordinary skill would believe.”  He did not testify that one of ordinary skill in the art would choose his method over the three known methods.

Under the previous indefiniteness standard, the court observed, that Dr. Hsaio had developed a method for measuring maximum slope was sufficient.  But under the Nautilus standard, “this is no longer sufficient:

The question is whether the existence of multiple methods leading to different results without guidance in the patent or the prosecution history as to which method should be used renders the claims indefinite. Before Nautilus, a claim was not indefinite if someone skilled in the art could arrive at a method and practice that method. Exxon, 265 F.3d at 1379. In our previous opinion, relying on this standard, we held that the claims were not indefinite, holding that “the mere fact that the slope may be measured in more than one way does not make the claims of the patent invalid.” Dow, 458 F. App’x at 920. This was so because Dow’s expert Dr. Hsiao, a person skilled in the art, had developed a method for measuring maximum slope. See id. at 919–20.

Under Nautilus this is no longer sufficient.  “[A] patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” 134 S. Ct. at 2124; see also id. at 2129 (“[W]e read § 112, ¶ 2 to require that a patent’s claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty.”). Here the required guidance is not provided by the claims, specification, and prosecution history.

Slip Op. at 23-24. That an expert chooses to use a particular measurement technique is insufficient for meeting the requirements of indefiniteness.  “As we held in Interval Licensing, a claim term is indefinite if it “leave[s] the skilled artisan to consult the ‘unpredictable vagaries of any one person’s opinion.’”  Slip Op. at 25.  Perhaps this could have been satisfied by expert testimony as to which methodology a person of ordinary skill in the art would have used, but that will be a question for another day.

Some more thoughts on the opinion:

  • The opinion takes pains to distinguish Biosig v. Nautilus.  In Biosig, the question was how one of ordinary skill in the art would determine what “spaced relationship” meant.  There, “we held that the prosecution history, the language of the claims, and the knowledge of one skilled in the art demonstrated that “a skilled artisan would understand the inherent parameters of the invention as provided in the intrinsic evidence” and that the claim term at issue “informs a skilled artisan with reasonable certainty of the scope of the claim.”  Dow at 25, n. 10.   One way to think about Nautilus is that it’s really about figuring out the meaning of words in the claim, whereas this case and Teva are really about how to determine whether those words, with their meaning understood, are met.
  • The weird tension about indefiniteness being a question of law but involving factual determinations remains.  Here, the issue was originally tried to a jury (probably erroneously as the Federal Circuit implied in the original Dow opinion), and the Federal Circuit’s analysis here focuses less on interpreting the text of the claims and more on identifying which measurement methodology a PHOSITA would have picked (which sounds like a factual question to me).  Regardless of this tension, I’d expect that in future cases knowledgeable counsel will make sure that there’s good support for the particular measurement methodology used by their experts, with the experts also providing support for the proposition that their methodology is the one that a PHOSITA would have used.
  • Another way to think about this case is in tandem with Wiliamson v. Citrix, in which the Federal Circuit relaxed the difficulty of invoking § 112, para. 6 when the words “means” or “step” aren’t used in the claim.  The effect of that decision was to make it riskier to use functional language in a claim when no corresponding structure is disclosed in the specification.  Dow moves in a similar direction: when no measurement methodology is described or suggested in the specification, functional limitations such as the one here may render the claim indefinite, at least when a PHOSITA would not know which of several possible methods to use.
  • Lisa Larrimore Ouellette discusses the decision on the Written Description blog as well.

New Developments in ClearCorrect v. USITC

Patent, , , ,

Guest Post by Sapna Kumar.  Prof. Kumar is an Associate Professor at the University of Houston Law Center, where she teaches patents and administrative law. Her most recent article, Regulating Digital Trade, discusses the ClearCorrect decision at length and is available on SSRN.

Some interesting developments have arisen this past week regarding ClearCorrect Operating, LLC v. USITC. In this case, the Federal Circuit will decide whether the ITC has jurisdiction over digital information (see Patently-O Archives for my previous post about this case).

The Suprema En Banc Opinion

The first development is the Federal Circuit’s en banc decision in Suprema v. USITC. Both parties in ClearCorrect will file supplemental briefs to discuss what impact Suprema has on their case.

Back in 2011, I argued in a law review article that the ITC should be entitled to Chevron deference when it determines whether an article infringes a valid and enforceable patent.  Prior to Suprema, the Federal Circuit had never granted deference to the ITC for a patent-related decision outside of dicta. In Suprema, the Federal Circuit belatedly steps on the Chevron bandwagon, granting the ITC deference for its interpretation of “articles that infringe.”

Although the Suprema decision affirmed the ITC, it nevertheless supports a reversal in ClearCorrect. The Suprema majority treats the terms “articles” and “goods” as interchangeable throughout the opinion. Black’s Law Dictionary, both at the time the Tariff Act was passed and at present, shows that “goods” generally refers to tangible property.

The four-judge dissent in Suprema was even more explicit, maintaining that “articles” refers to physical objects. This is notable, given that dissenting judges Prost and O’Malley are both on the ClearCorrect panel. Nothing from the majority’s decision will prevent the ClearCorrect panel from holding that “articles” are limited to tangible property.

Another notable feature of the Suprema decision is how the court chose to apply the Chevron test. Chevron has two steps. First, the reviewing court asks whether Congress has directly spoken to the precise question at issue. If Congress hasn’t, the court moves to Step Two, where it asks whether the agency’s answer is based on a permissible interpretation of the statute.

In most circuits, Step Two is relatively toothless, with just about any answer being treated as reasonable. The only notable exception is in the D.C. Circuit, where Step Two is a searching standard that is analogous to hard-look review. In Suprema, the court adopted an approach that is close to the D.C. Circuit, conducting a detailed review of the statutory text, policy, and legislative history of § 337. If this robust Step Two is applied in ClearCorrect, the ITC’s decision will be struck down due to liberties that the agency takes with the legislative history.

ClearCorrect Oral Argument

Also this week, a three-judge panel (Prost, O’Malley, and Newman) heard oral arguments for ClearCorrect.  The panel expressed concern about where to draw the line for electronic transmissions. The ITC’s attorney conceded that not all imports of information are under its jurisdiction, but was unable to tell the panel where the ITC believes the line should be drawn. The panel observed that the digital models in this case were not bought and sold in commerce, but were instead used to create molds that were then used to create plastic aligners.

Prost and O’Malley also scrutinized the ITC’s statutory interpretation. They noted that dictionary definitions from the 1920s seemed to support a much narrower interpretation than what the ITC was seeking.

My article Regulating Digital Trade was also discussed by the panel. Prost raised my argument that the Commission Opinion misquoted a key 1922 Senate Report. The Senate Report states:

The provision relating to unfair methods of competition in the importation of goods is broad enough to prevent every type and form of unfair practice.

The Commission Opinion quoted this language without the limiting phrase “in the importation of goods,” and failed to use an ellipses. Both Prost and O’Malley questioned whether the ITC’s position was still valid given the narrower language.

To date, the Supreme Court has never granted certiorari on a § 337 case. Given that the Federal Circuit is now grappling with important issues of jurisdiction, it may be time for the Supreme Court to get involved.

Guest Post: In Rush to Invalidate Patents at Pleadings Stage, Are Courts Coloring Outside the Lines?

Patent, , , , , , , ,

Guest post by David Bohrer, Patent Trial Practice, Valorem Law Group.colored floppy

OIP Technologies v. Amazon.com and IPC v. Active Network are the most recent of a growing number of decisions dismissing software and business method patent lawsuits on the pleadings. In these decisions, the courts are finding that the invention alleged in the complaint is an abstract idea that is not eligible for patent protection.

While early resolution of patent litigation is laudable, motions directed to the pleadings generally may not consider matters outside what is pled in the complaint. Yet this is what courts are doing — they have been coloring outside the lines when deciding whether a patented software or business method is an ineligible abstraction.  They are looking beyond the allegations in the complaint to discern “fundamental economic concepts.”  Independent of anything pled in the complaint, they are making historical observations about alleged longstanding commercial practices and deciding whether the claimed invention is analogous to such practices.

Coloring outside the lines may not be acceptable.  The benefit of providing an early exit from otherwise expensive and burdensome patent litigation may be outweighed by the prejudice to all parties of eroding the rules regarding the matters that may be considered before throwing out a lawsuit. Perhaps there is a better solution. Perhaps pleading motions challenging patent subject matter eligibility should be converted to expedited and limited scope summary judgment motions, thereby allowing the parties to present declarations, testimony and other extrinsic evidence that better address whether a claimed economic practice is an unpatentable idea or a patentable invention.

Alice is being used to obtain early dismissal of lawsuits based on software and business method patents

Courts granting patent ineligible subject matter motions are using the Supreme Court’s 2014 Alice decision as an effective weapon to combat vexatious patent litigation brought by non-practicing entities (NPEs). See Curiouser and Curiouser Is Alice the Long Sought Troll Killer _ The Legal Intelligencer.  Alice provides relatively easy to satisfy requirements for demonstrating that an asserted software patent is claiming an “abstract idea” and therefore is not eligible for patent protection under section 101 of the patent statute.

Not only have courts found in Alice the tools necessary to dispose of vexatious patent lawsuits asserting software and business method patents, they also are willing to entertain an Alice challenge at the pleadings stage.  The procedural posture of a pleading motion is key to using Alice to “kill trolls.”  Defendants can challenge the merits of the patent lawsuit at the pleadings stage and before having to incur significant expenses associated with discovery, claim construction, experts and summary judgment. The nuisance value of the lawsuit goes way down.  Defendants are less likely to feel they have to pay a distasteful settlement or else bear the much greater expense of defending on the merits.

Recent Federal Circuit decisions continue the trend

On June 11, 2015 and again on June 23, 2015, the Federal Circuit affirmed decisions by the Northern District of California dismissing software patent lawsuits at the pleading stage. In each of these cases, OIP Technologies v. Amazon.com (underlying patent claimed offer-based price optimization) and IPC v. Active Network (retaining information lost in the navigation of online forms) the district courts granted Rule 12(b)(6) motions to dismiss on the grounds that the patents claimed abstract ideas ineligible for patent protection.

In each case, the Federal Circuit approved the resolution of 101 eligibility at the pleading stage with little to no analysis. In IPC, the Federal Circuit’s opinion includes one sentence in which the court states that claim construction (which had not yet occurred) is “not an inviolable concept.” In OIP, the lead opinion does not address how early in litigation alleged ineligibility may be resolved, but in a concurring opinion Judge Mayer supports addressing eligibility at the motion-to-dismiss stage.

Failure to recite statutory subject matter is the sort of “basic deficiency,” that can, and should, “be exposed at the point of minimum expenditure of time and money by the parties and the court,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007) (citations and internal quotation marks omitted). Addressing 35 U.S.C. § 101 at the outset not only conserves scarce judicial resources and spares litigants the staggering costs associated with discovery and protracted claim construction litigation, it also works to stem the tide of vexatious suits brought by the owners of vague and overbroad business method patents. Accordingly, where, as here, asserted claims are plainly directed to a patent ineligible abstract idea, we have repeatedly sanctioned a district court’s decision to dispose of them on the pleadings. See, e.g., Content Extraction & Transmission LLC v. Wells Fargo Bank, 776 F.3d 1343, 1349 (Fed. Cir. 2014); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 717 (Fed. Cir. 2014); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1352 (Fed. Cir. 2014). I commend the district court’s adherence to the Supreme Court’s instruction that patent eligibility is a “threshold” issue, Bilski v. Kappos, 561 U.S. 593, 602 (2010), by resolving it at the first opportunity.

Contrary to the suggestion made by Judge Mayer, the Supreme Court has not addressed whether it is appropriate to address a 101 challenge at the pleading stage. Bilski’s characterization of patent eligibility as a “threshold” issue was made with reference to the 102 and 103 invalidity defenses and did not address the procedural issue. Bilski also cites to extrinsic economic treatises and other evidence of economic practice in support of the decision reviewing the denial of a patent application. Alice did NOT address patent eligibility in the context of a pleadings motion, but instead reviewed a patent eligibility ruling that was made at summary judgment. Alice cites to the same extrinsic economic evidence relied upon in Bilski.

There is not supposed to be any coloring outside the lines on pleadings motions

The well-established general rule is that Rule 12(b)(6) motions to dismiss as well as Rule 12(c) motions for judgment on the pleadings are limited to the well-pled factual allegations made in the complaint. “A court generally cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits or discovery materials).” Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012); In re American Cont’l Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996) (As recognized in OIP and IPC, the Federal Circuit applies regional circuit law in deciding motions to dismiss.).

Yet this is what is happening

Notwithstanding these rules, OIP and IPC each looked beyond the complaint in determining whether the asserted claims are directed to ineligible abstract ideas. In OIP, the asserted price optimization claims were deemed “similar to other ‘fundamental economic concepts’ found to be abstract ideas.” In IPC, the asserted online information retention claims were deemed “well-understood, routine, conventional activities previously known.” In each instance, the court is looking at practices and activities outside of anything alleged in the complaint.

These Federal Circuit cases teach that it is acceptable to consider matters outside of the complaint, as confirmed by Affinity Labs of Texas v. Amazon.com (June 12, 2015 WD Tex.), in which the magistrate judge, applying 101 precedent from OIP and other Federal Circuit decisions, says that it is making “general historical observations that come to mind.” Based on such extrinsic “historical observations,” the court finds that the claimed invention of delivering selectable media content and subsequently playing the selected content on a portable devices is a “long-standing commercial practice and is therefore abstract.”

The Court notes that the first transistor radio, which delivers selectable audio media to a portable device, was developed in the late 1940s and was immensely popular in the succeeding decades. Similarly, the first portable televisions, another form of delivering “selectable” media content to a portable device, were introduced in the 1980s and 1990s. The above examples represent just a few of the many general historical observations that come to mind as evidence of the long-standing commercial practice of delivering selectable media content and subsequently playing the selected content on a portable device.

Reliance on extrinsic evidence of economic practices and concepts found in precedent

OIP and IPC support their abstract idea findings by equating the economic purpose of the asserted patent with the economic concepts successfully challenged in other cases. For example, in OIP, the Federal Circuit says offer-based price optimization (at issue in OIP) is analogous to using advertising as an exchange or currency (deemed an abstract idea in the earlier Federal Circuit decision Ultramercial v. Hulu). Likewise, in IPC, the Federal Circuit said that recent precedent illustrates the boundary between abstraction and patent eligible subject matter. But how is the court in a position to make the connection between the asserted claims and prior precedent on its own observation and independent of expert testimony or other relevant extrinsic evidence? Judge Mayer and many other respected judges might reply that it is acceptable to make this connection because it is “plain” or “obvious.” Yet this seems to invite the application of 20-20 hindsight and of the “I know it when I see it” standard.

Can’t take judicial notice of truth of findings made in other decisions

Furthermore, while a court may take judicial notice of another court’s opinion in ruling on a motion to dismiss, it may do so only as to the existence of the opinion and not for the truth of the facts recited therein. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). It appears that cases such as OIP and IPC are relying on the truth of factual findings made in other decisions regarding whether certain economic concepts are “conventional” or “well-known” – such matters appear outside the scope of what may be judicially noticed in a motion to dismiss.

Possible solution is expedited and limited scope summary judgment motions

A court’s consideration of information outside the four corners of the complaint, assuming it does not fall within exceptions such as judicial notice, converts a motion to dismiss into a summary judgment motion. Lee, 250 F.3d at 688. True enough, this raises the specter of time-consuming discovery and case development (see the criticism of ED Texas Judge Gilstrap’s requirement that the parties demonstrate that there is a good faith basis for such a motion). This said, district courts have the discretion to expedite such motions as well as limit their scope. They could, for example, specifically require the responding party to submit to expedited discovery on the issue whether the asserted patent claims eligible subject matter followed by expedited briefing and submission of evidence on both the question whether the purpose of the asserted claims is a conventional economic concept and therefore an ineligible abstract idea, and if so, whether there is an inventive concept that saves the claim from dismissal. They could stay other case development or discovery during the expedited resolution of the motion. It does not necessarily follow that the court would have to conduct claim construction as part of the process. The parties, as they do now, could brief whether claim construction is necessary, but would also have greater flexibility in terms of their ability to submit proofs in support of their claim construction arguments. Woe unto the party who purports without any reasonable basis to have compelling extrinsic evidence that they are not asserting a conventional economic concept or that their patent is directed to a protected inventive concept– the district courts have ample support in High Octane and its progeny for awarding fees under such circumstances.

If courts are going to color outside the lines, then let the parties do the same thing

Courts are willing to color outside the lines and consider extrinsic evidence upon addressing motions to dismiss challenging alleged ineligible patent subject matter. This contravenes well-established rules and policies regarding pleading challenges and may cause undue prejudice by denying a party the ability to submit extrinsic evidence in support of a well-pled claim. A possible solution is for the court to allow the parties to color outside the lines as well. The court has the discretion to impose time and scope limits on discovery and briefing without opening the door to prolonged, vexatious litigation.

Judge Newman: Functional Claim at Point of Novelty => Abstract Idea

Patent, , , ,

by Dennis Crouch

Internet Patents Corp. v. Active Networks (Fed. Cir. 2015)

In an opinion by Judge Newman, the Federal Circuit has affirmed the lower court dismissal of IPC’s infringement lawsuit — holding that the claims of U.S. Patent No 7,707,505 are invalid for lacking patent eligible subject matter under 35 U.S.C. 101 as interpreted by Alice Corp.

The claims are directed to a method of providing a multi-pane (tab) user interface with icons as follows:

1. A method of providing an intelligent user interface to an online application comprising the steps of:

furnishing a plurality of icons on a web page displayed to a user of a web browser, wherein each of said icons is a hyperlink to a dynamically generated online application form set, and wherein said web browser comprises Back and Forward navigation functionalities;

displaying said dynamically generated online application form set in response to the activation of said hyperlink, wherein said dynamically generated online application form set comprises a state determined by at least one user input; and

maintaining said state upon the activation of another of said icons, wherein said maintaining allows use of said Back and Forward navigation functionalities without loss of said state.

Walking through the two-step analysis of Alice Corp., Judge Newman first identified the gist of the invention or “the basic character of the subject matter.”   In reading the patent document, the court found that it described the “most important aspect” of the invention is that it “maintains data state across all [browser] panes.”  In other words, the basic function of the invention is “the idea of retaining information in the navigation of online forms.”  Without further analysis, Judge Newman identified this basic function as an unpatentable abstract idea and immediately moved to Alice/Mayo step-2.

In Step 2, the Supreme Court instructs us to seek-out an “inventive concept” within the claims that goes beyond the unpatentable abstract idea and that is more than “well-understood, routine, conventional activities previously known.”  In reviewing the claim, Judge Newman could find nothing beyond conventional browser elements and the claimed end-result of “maintaining [the] state.”  However, that final and admittedly critical element of the invention was not limited to any particular method or mechanism and thus remained abstract.

The mechanism for maintaining the state is not described, although this is stated to be the essential innovation. The court concluded that the claim is directed to the idea itself—the abstract idea of avoiding loss of data. IPC’s proposed interpretation of “maintaining state” describes the effect or result dissociated from any method by which maintaining the state is accomplished upon the activation of an icon. Thus we affirm that claim 1 is not directed to patent-eligible subject matter.

The court also invalidated parallel system and computer claims — noting that “the statement that the method is performed by computer does not satisfy the test of ‘inventive concept.'”  The court also held that dependent claim limitations requiring differing responses to ‘quasistatic’ and ‘dynamically generated’ content was insufficient to overcome the Section 101 hurdle because they merely represent “the siting the ineligible concept in a particular technological environment.”

= = = = =

Judges Moore and Reyna joined Judge Newman on the panel.

= = = = =

Major case here that again appears to coincide with the ongoing battles over functional claim limitations.  Here, Judge Newman focuses on the reality that the admittedly fundamental aspect of the invention was claimed in functional form without providing any limitations as to its particular mechanism of function.  Result: unpatentable as an abstract idea.

= = = = =

Mike Borella covers the case at Patent Docs. (“The general rule that many of us follow post-Alice is to draft rich, detailed, technical specifications, and undoubtedly we will double-down on that approach in light of this decision.”)

 

 

Bring Back the Means: “Voltage Source Means” Not a Means-Plus-Function Term

Patent, , ,

by Dennis Crouch

Lighting Ballast v. Philips Electronics (Fed. Cir. 2015)

In its 2014 en banc decision in Lighting Ballast, the Federal Circuit confirmed that all aspects of claim construction are reviewed de novo on appeal without giving any deference to findings made by the District Court in its original judgment.  While Lighting Ballast was pending certiorari, the Supreme Court decided Teva v. Sandoz that altered claim construction appeals by ruling that a district court’s factual conclusions regarding extrinsic evidence should be given deference on appeal. (All other aspects of claim construction decisions will continue to be reviewed de novo). Following Teva, the Supreme Court issued a G-V-R for the pending Lighting Ballast petition for certiorari with an order that the Federal Circuit reconsider its position based upon the outcome of Teva.

On remand to the original panel*, the Federal Circuit has flipped its original decision — now affirming the district court’s claim construction that was supported by its now undisturbed factual findings.

As with many recent cases, this one also focuses on the difficulty of defining the scope of a functionally claimed element. Here, the Lighting Ballast patent at issue claims a “voltage source means” and the question is whether that limitation should be deemed a means-plus-function element to be interpreted under 35 U.S.C. 112(6).  The problem for the patentee is that the specification does not spell-out any embodiments of a voltage-source-mean – and that resulted in the Federal Circuit originally holding that the claim term was indefinite and the claim invalid.

The district court had a different opinion. In particular, the district court heard expert testimony that one of skill in the art would easily understand a “voltage source means” to be an AC/DC rectifier or similar structure.  As such, the district court found that the term had sufficient structure to avoid the limits of Section 112(6).

In this new appeal of the same issue, the Federal Circuit has affirmed the lower court findings.  In particular, the Federal Circuit found no clear error with the district court’s conclusion that the “voltage source means” is “understood by persons of skill in the lighting ballast design art to connote a class of structures, namely a rectifier, or structure to rectify the AC power line into a DC voltage for the DC input terminals” because it was supported by the evidence of record.  Further the extrinsic evidence and resulting factual conclusions were allowed based upon the Federal Circuit’s de novo conclusion that and the conclusions were not contradicted by the intrinsic record. The court writes:

Under the circumstances, it was not legal error for the district court to rely on extrinsic evidence, because the extrinsic evidence was “not used to contradict claim meaning that is unambiguous in light of the intrinsic evidence.” Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005). For example, the district court determined that “while the ‘voltage source means’ term does not denote a specific structure, it is nevertheless understood by persons of skill in the lighting ballast design art to connote a class of structures, namely a rectifier, or structure to rectify the AC power line into a DC voltage for the DC input terminals.” The district court went on to note that the language following “voltage source means” in the claim—“providing a constant or variable magnitude DC voltage between the DC input terminals”—“when read by one familiar with the use and function of a lighting ballast, such as the one disclosed by the 529 Patent, [sic] would understand a rectifier is, at least in common uses, the only structure that would provide ‘a constant or variable magnitude DC voltage’”. The district court further noted that “[i]t is clear to one skilled in the art that to provide a DC voltage when the source is a power line, which provides an AC voltage, a structure to rectify the line is required and is clear from the language of the ‘voltage source means’ term.” We defer to these factual findings, absent a showing that they are clearly erroneous.

The district court’s factual findings are supported by the record. Specifically, these factual findings are supported by the testimony of Dr. Roberts and Mr. Bobel. Mr. Bobel testified in his deposition that the “voltage source means” limitation connotes a rectifier to one skilled in the art. Mr. Bobel further explained that a battery could likewise provide the necessary DC supply voltage described in the patent. Similarly, Dr. Roberts explained that the “voltage source means” limitation suggests to him a sufficient structure, or class of structures, namely a rectifier if converting AC from a “power line source” to DC for a “DC supply voltage” or a battery if providing the DC supply voltage directly to the DC input terminals. This expert testimony supports a conclusion that the limitations convey a defined structure to one of ordinary skill in the art. See Rembrandt Data Techs., LP v. AOL, LLC, 641 F.3d 1331 (Fed. Cir. 2011). Because the district court’s factual findings demonstrate that the claims convey sufficient structure, the district court was correct to conclude that the term “voltage source means” is not governed by § 112 ¶ 6. As such, we affirm the district court’s decision concerning “voltage source means.”

The analysis here is confusing on a number of levels.  How does the presumption of 112(6) applicability to ‘means’ elements fit in the analysis? What impact of Williamson? A factual finding is never the claim construction – thus how does the factual finding fit into the ultimate claim construction decision? . . .

This case does again raise the likelihood of testimony-intensive claim construction hearings as predicted post Teva.

= = = = =

This affirmance reinstates the $3 million in damage verdict going to Lighting Ballast. (Plus pre- and post- verdict interest).

Apple v. Samsung: Design Patents Win

Patent, , , , ,

By Jason Rantanen

Apple Inc. v. Samsung Electronics Co., Ltd. (Fed. Cir. 2015) Download Opinion
Panel: Prost (author), O’Malley, Chen

Apple prevailed at the district court on trade dress, design patent and utility patent claims, with a total award of almost a billion dollars.  On appeal, the Federal Circuit reversed on trade dress but affirmed on the design and utility patents.  The big winner in this case, though, are design patents: the Federal Circuit rejected Samsung’s attempt to exclude functional features from the infringement analysis and affirmed the district court’s award of Samsung’s total profits from the sale of the phones with the infringing design.

Trade Dress: Samsung challenged Apple’s unregistered and registered trade dresses on the ground that they were functional.  Applying the Ninth Circuit’s law on Lanham Act claims, the Federal Circuit agreed that Apple’s asserted trade dresses possessed utilitarian functionality.  In reaching this conclusion, it placed particular weight on the “product configuration” nature of the trade dress.    “[C]ourts have noted that it is, and should be, more difficult to claim product configuration trade dress than other forms of trade dress.” Slip Op. at 8, quoting Leatherman Tool Grp., Inc. v. Cooper Indus., Inc., 199 F.3d 1009, 1011-12 (9th Cir. 1999).  Here, all factors weighed in favor of the trade dresses being functional and thus unprotectable under trademark law.

Design Patents: A substantial portion of Apple’s billion dollar verdict were based on the infringement of its design patents and  Samsung attacked that issue with an array of arguments.  The Federal Circuit rejected all of them.

Functionality and infringement: Samsung argued that “the district court erred in failing to exclude the functional aspects of the design patents either in the claim construction or elsewhere in the infringement jury instructions.”  Slip Op. at 20.  “For example, Samsung contends that rectangular form and rounded corners are among such elements that should be ignored in the infringement analysis.”  Id.  But, the court held, the precedent cited by Samsung did not support a rule “to eliminate elements from the claim scope of a valid patent in analyzing infringement.”  Id. at 21  Nor did the district court err in its construction of the patent: the principle that “it is the non-functional, design aspects that are pertinent to determinations of infringement” was properly reflected in “the district court’s construction
of the design patents as claiming only ‘the ornamental design’ as shown in the patent figures.”  Id.

Actual deception not required and the role of prior art: In its instruction on infringement, the district court stated: “You do not need, however, to find that any purchasers actually were deceived or confused by the appearance of the accused Samsung products.”  Samsung argued that this instruction misled the jury; the Federal Circuit disagreed. “[T]he jury instruction simply clarified that actual deception was not required, which is an accurate reflection of the analysis in Gorham.”  Id. at 23.  Nor did the jury instructions reduce the consideration of the prior art to a mere option.

Samsung also argued that infringement was not supported by substantial evidence, but its substantive arguments were essentially the same as its challenges to the jury instructions.  The court rejected these and Samsung’s argument that the district court abused its discretion in precluding certain testimony.

Damages: This is the section of the opinion that will probably get the most attention.  The damages statute for design patent infringement, 35 U.S.C. § 289 states:

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement

In other words, “Section 289 explicitly authorizes the award of total profit from the article of manufacture bearing the patented design.”  Slip Op. at 25 (emphasis added).  That is, Samsung’s total profit from its sales of phones with the infringing designs.

Samsung raised two primary arguments.  First, it argued in favor of apportionment based on a causality theory; that is, that the only profits attributable to the infringement be allowable as damages.  But the statute says “total profit,” and the statutory history contained an express removal of a prior apportionment requirement in the Act of 1887.  Second, Samsung argued that the “article of manufacture” should be limited to the infringing “article of manufacture” and not the entire infringing product.  Again, the Federal Circuit disagreed, distinguishing Samsung’s citation to a 1957 Second Circuit case involving pianos and piano cases.  The Federal Circuit did not substantively engage with the statutory language on this issue.

The bottom line is that high damages claims for design patent infringement are going to be much more credible in the wake of Apple v. Samsung.  Under the court’s ruling, it would seem entirely possible, as a hypothetical example, for an automobile manufacturer to be liable for its entire profits from a particular car model if that model contained, say, an infringing tail light.  Given the publicity surrounding Apple v. Samsung, my expectation is that there will be explosion of design patent assertions and lawsuits.

Utility Patents: Samsung raised an indefiniteness argument based on the claim term “substantially centered;” unsurprisingly, the Federal Circuit rejected it.  There is one interesting little nugget, though: Samsung lost because it “points to no evidence showing that skilled artisans would find the element ‘substantially centered’ as lacking reasonable certainty in its scope.”  Slip Op. at 29.  This language is notable because it reflects the court’s waffling between indefiniteness as an evidentiary question and indefiniteness as question of law.  The former expressly involves testimony about what one of skill in the art would understand; the latter is a question for the court.

Utility Patent Damages: Lost profits for utility patent infringement does require a showing of causality and Samsung argued that there was an acceptable noninfringing substitute.  But “the ‘[m]ere existence of a competing device does not make that device an acceptable substitute.’” Id. at 31, quoting precedent.  All Samsung pointed to was the “mere existence” of a noninfringing phone.  This was not enough, and “there was substantial evidence to support the jury’s refusal to consider the two phones asserted by Samsung as non-infringing substitutes.”  Id. at 32.    The Federal Circuit also rejected Samsung’s challenges to the reasonable royalty award on the set of phones for which Apple was not entitled to lost profits.

Hat tip to Tom Cotter for being the first to alert me to the opinion, which initially appeared only on PACER.  His writeup of the damages discussion: http://comparativepatentremedies.blogspot.com/2015/05/federal-circuit-affirms-damages-awards.html.

Federal Circuit Finds Scope of Non-Amended Reissue Claims Improperly Broadened

Patent, , , ,

by Dennis Crouch

ArcelorMittal v. AK Steel (Fed. Cir. 2015)

This case provides an important discussion of the “law of the case” doctrine and “mandate rule” as they apply to ongoing parallel patent-office administrative proceedings and in-court infringement proceedings. In particular, the appellate panel holds that the district court is bound by a prior Fed.Cir. claim construction in the same case – despite intervening decisions by the USPTO that the Fed.Cir. construction was too narrow.

The case is also important because of its finding that a claim whose scope is expanded during reissue based upon prosecution history (rather than amendment) will be seen as broadened – and thus may be invalid if the broadening misses the two-year deadline.

= = = = =

Here, the patentee (ArcelorMittal) lost its first round of infringement litigation based upon a narrow claim construction of the claimed steel sheet having a “very high mechanical resistance.”  Meanwhile, the patentee filed a reissue application with the USPTO that added a set of new dependent claims, including one that would seemingly expand the scope of the previously defined term.  In particular, the Federal Circuit originally ruled that the “very high mechanical resistance” is defined as having a resistance >1500 MPa, but the reissue application added a new dependent claim stating that the resistance is “in excess of 1000 MPa.”  That amendment seems to have implicitly increased the scope of claim 1 without actually amending any of the language in claim 1.  As the court writes:

The only relevant change is the addition of a dependent claim which has the practical effect of expanding the scope of claim 1 to cover claim scope expressly rejected by a previous claim construction ruling.

With the original litigation was still pending in district court, the patentee added the Reissued patent to the infringement complaint.  Siding with the defendant, the district court found that the broadened scope was improper because the Reissue application had been filed more than two years after the original patent issuance. On appeal, the Federal Circuit has affirmed, finding that – at least for this case – that the reissue claims are invalid. Here is the court’s logic:

The law-of-the-case doctrine “posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” Banks v. U.S., 741 F.3d 1268, 1276 (Fed. Cir. 2014) (‘an inferior court has no power or authority to deviate from the mandate issued by an appellate court.’). Under the mandate rule and the broader law-of-the-case doctrine, a court may only deviate from a decision in a prior appeal if “extraordinary circumstances” exist. . . .

The successful prosecution of the [reissue] patent is not “new evidence” sufficient to trigger the extraordinary circumstances exception to the mandate rule and the law-of-the-case doctrine. Permitting a reissue patent to disturb a previous claim construction of the original claims would turn the [broadening] analysis under 35 U.S.C. § 251 on its head. . . . If the reissue claim itself could be used to redefine the scope of the original claim, this comparison would be meaningless.

Thus, the court found that the proper analysis for broadening reissue is whether the scope of claims in the reissued patent (as construed now) are broader than those same claims as found in the original patent (as previously construed).  I should note that the court did not particularly address the fact that the broadened claim was not amended. However, this practical approach to scope is in line with the Court’s prior decision in Marine Polymer Tech. v. Hemcon, Inc. (Fed. Cir. 2011) that created intervening rights (i.e., no past infringement) based upon a narrowed construction during reexamination.  [Update] Of course, that decision was reversed by the court sitting en banc.

= = = = =

The law-of-the-case doctrine was not necessary here because the court also found that, when considering whether scope was improperly broadenend, the reissue’s prosecution cannot impact the scope of the original claims.

Going forward, there will be substantial pressure on law-of-the-case doctrine; the mandate rule; and the final judgment rule in managing the new multi-venue reality of patent enforcement/challenge.

An important question not addressed here for reissue applications is whether the PTO erred allowing the reissue claims to issue in their non-amended but broadened form? Was the PTO also bound by the prior Federal Circuit judgment regarding claim construction? What would have happened if the reissue was asserted in a second lawsuit or against a different party? …

Eon v. AT&T and the role of “Pure Functional Claiming”

Patent, , , , ,

by Dennis Crouch

In a major 2014 decision, the Supreme Court raised the standard of definiteness under 35 U.S.C. 112(b) – now requiring that the scope of patent claims be “reasonably certain” to one of skill in the art. Nautilus v. Biosig. Historically, “reasonably certain” is a high standard and has been linked with the beyond-a-reasonable-doubt standard in criminal law. I.e., claim scope that is reasonably certain may also be seen as having its scope defined beyond a reasonable doubt.  The higher standard can also be contrasted with the prior Federal Circuit that only invalidated ambiguous claims that were both insolubly ambiguous and not amenable to construction.

Despite the dramatic potential of Nautilus, the Federal Circuit has largely muted its impact.

The one area where patent-challengers see continued success is when means-plus-function claims lack appropriate structural support in the underlying patent document.  35 U.S.C. 112(f) allows a patentee to claim a “means” for accomplishing a specified function without reciting the actual structure of the mechanism or material used to accomplish the function.  However, as a rule of construction, the statute indicates that the “means” will be construed to “cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”  The impact is that, although the claim appears to broadly cover a “function” it will be construed to be much more limited.  When an applicant follows this claiming approach, but fails to specify any corresponding structure within the specification then the claim is deemed invalid as indefinite.

In Eon Corp v. AT&T (Fed. Cir. 2015), the Federal Circuit has affirmed that Eon’s asserted patent claims are invalid for failing to specify the structure associated with a purely functional claim element.

Eon’s U.S. Patent No. 5,663,757 covers a data processing station that facilitates instant purchases while watching a television program.  The patent was written back when the wort “means” was still popular among patent drafters.  Here, the district court found that eight separate “means” claims were directed to “complex” computer software such as “causing selected themes to automatically display a second menu.”  Based upon that undisturbed complexity fact-finding, the appellate court found that a structure in the form of the software algorithm should have been disclosed.  Because no software algrithms were disclosed, the software means claims failed and were properly held invalid as indefinite.

Of interest here, the Federal Circuit reasoned that the algorithm is necessary to “avoid pure functional claiming.”  Quoting Aristocrat Techs. Austl. Pty Ltd. v. Int’l Game Tech., 521 F.3d 1328 (Fed. Cir. 2008).

A general purpose computer is flexible—it can do anything it is programmed to do. Therefore, the disclosure of a general purpose computer or a microprocessor as corresponding structure for a software function does nothing to limit the scope of the claim and “avoid pure functional claiming.” Aristocrat. As such, when a patentee invokes means-plus-function claiming to recite a software function, it accedes to the reciprocal obligation of disclosing a sufficient algorithm as corresponding structure.

Although the court here highlights the doctrinal point of “pure” functional claiming — claiming function with no limiting structure — the actual facts are that the disclosed microprocessor and does provide some amount of structure.  As with abstract-idea analysis, it seems here that the question is not so black-and-white, but rather whether some magical threshold has been crossed.

The case also offers some hints to the ongoing debate over subject matter eligibility of computer implemented inventions.  In particular, the court reiterated its prior statements that a “the general purpose computer becomes a special purpose computer when loaded with the special programming.”

Reexamined Patent Still Obvious According to the Court

Patent, , ,

by Dennis Crouch

Senju v. Lupin (Fed. Cir. 2015)

In a split decision, the Federal Circuit has affirmed a district court judgment that Senju’sU.S. Patent No. 6,333,045 is invalid as obvious. The patent covers an eye-drop formulation that is mixture gatifloxacin and EDTA (sold as Zymar) and has an interesting litigation history. In particular, this case represents the fourth time that the patent has been asserted in a lawsuit before Judge Sue Robinson (D.Del.). That history includes a prior finding by Judge Robinson that the claims were invalid as obvious. Following that original obviousness decision, Senju successfully shepherded the claims through an ex parte reexamination.  In that process, the PTO confirmed the patentability of the claims once amended to include a specified concentrations of the aforementioned ingredients (e.g., “about 0.3 to about 0.8 w/v%” of gatifloxacin and “about 0.01 w/v%” of EDTA).  Following reexamination, the court blocked Senju from asserting the reexamined claims against the same party (Apotex) who won the first obviousness decision — finding that claim to be precluded. However, the court did allow assertion of the new claims against new parties – here Lupin and Hi-Tech Pharma.  However, after considering the same prior art as the USPTO, Judge Robinson found the revised claims still obvious based upon -again – the same prior art.

On appeal, the Federal Circuit affirms – holding that the district court’s conclusion of obviousness was correct. In the process the Federal Circuit appeared to give no deference to the USPTO reexamination determinations other than to require clear and convincing proof of the factual underpinnings of the obviousness determination. See Sciele Pharma Inc. v. Lupin Ltd., 684 F.3d 1253, 1260 (Fed. Cir. 2012) (“Whether a reference was previously considered by the PTO, the burden is the same: clear and convincing evidence of invalidity.”). The appellate court did agree that the amendments during reexamination did refresh the patent claims so as to reestablish the presumption of validity in the face of the prior invalidity ruling.

Regarding the added concentration limitation of “0.01 w/v% EDTA,” the two sides fought over whether that concentration level was suggested by the prior art studies.  The court writes:

At bottom, the district court’s analysis rests largely on a determination that Lupin’s experts were more credible than Senju’s experts. Based on this determination, the district court found that [the Prior Art] Grass 1988-I, along with the other cited references, taught that 0.01 w/v% EDTA would be effective to increase corneal permeability. On the evidence before us, that determination by the district court falls well within the wide discretion the court has to weigh expert credibility. Ordinarily, and absent compelling reason otherwise, an appellate court defers to such credibility determinations.

With that (and some further analysis), the court affirmed the obviousness finding.

= = = = =

Judge Plager drafted the majority opinion that was joined by Judge Moore.  Writing in  dissent, Judge Newman argued that the courts should “give deference” to the PTO’s review of the narrowed claim scope and its conclusions regarding the unexpected results associated with the newly narrowed claims.  Judge Newman further writes:

The prior art is crowded. . . . However, no combination of prior art references shows or suggests the use of very low concentrations of EDTA to enhance the corneal permeability of antibiotic formulations of gatifloxacin, or of any other quinolone. . . . The panel majority relies on the unsupported opinion of Lupin’s expert witness, and gives that unsupported opinion greater weight than the experimental data.

= = = = =

Although PTO reexamination decisions are not given deference in this type of third-party challenge, there are some reasons to think that IPR/PGR decisions should be given deference under the APA.  However, it is unlikely that the Federal Circuit would come to that conclusion without first being led by either Congress or the Supreme Court.

Delano Farms v. California Table Grape Commission (Fed. Cir. 2015)

Patent, , ,

by Dennis Crouch

Like their utility and design patent brethren, plant patents must also satisfy the patentability requirements of Section 102 and 103 of the Patent Act. In Delano Farms v. California Table Grape Commission (Fed. Cir. 2015), the plant patents at issue relate to Scarlet Royal and Autumn King table grapes. Plant Patent Nos. PP16,229 and PP16,284.  The declaratory-judgment plaintiffs are grape growers seeking to invalidate the patents so that they can grow the grapes without continuing to pay a license fee.

Public Use: Under pre-AIA law, Section 102(b) renders patents invalid if the claimed invention was “in public use” more than one year before the application priority filing date and here, the question is whether certain proven third-party uses count under the law.

Interesting Factual Story: The patented grapes here were created through a USDA project and the patents are owned by the USDA. More than one year before filing the patent applications, the USDA held an open house where it displayed the two varieties.  At the event, a USDA employee (Klassen) gave some of the plants to a local grower (Ludy) but asked Ludy not to sell the grapes he might grow.  Ludy also apparently understood at the time that Klassen had no authority and should not have given out the plants.  Nevertheless, Ludy did grow the variety and also gave some buds to his cousin for him to grow.  However, Ludy testified that his cousin also understood that he should keep the variety secret until it was commercially released by the USDA.  (However, there was nothing written regarding the secrecy needed).   The cousin grew several hundred plants but did not sell any of the resulting grapes before the one-year critical 102(b) date.  Finally, Ludy also showed the plants to Sandrini who was an outside marketer of grapes for both Ludy and his cousin.

Public Use: In interpreting the public use prong of 102(b), the Federal Circuit has focused on whether the invention was either accessible to the public or commercially exploited.  Importantly, the court has previously held that “secret or confidential third-party uses do not invalidate later-filed patents.” Dey v. Sunovion.  But the Leading public use case continues to be Egbert v. Lippmann, 104 U.S. 333 (1881).  In that case, the inventor gave an under-garment corset to his love (who was not yet his wife) who wore it in various forms for 11 years before the patent application was filed.  Even though there was no evidence that anyone in the public saw the corset, the Supreme Court found an impermissible public use and the patent void writing:

If an inventor, having made his device, gives or sells it to another, to be used by the donee or vendee, without limitation or restriction, or injunction of secrecy, and it is so used, such use is public, even though the use and knowledge of the use may be confined to one person.

The challengers in the grape case here latched onto Egbert and argued that there was no real secrecy limitation here despite the fact that only a few individuals actually knew of the public use.

Siding with the USDA Patentee, the Federal Circuit affirmed the district court’s factual findings that the patentee did not authorize Klassen to facilitate third party use of the invention and that Ludy understood that he should keep the variety secret until publicly released by the USDA. “The findings of the district court clearly establish, therefore, that both Ludys knew that they were not authorized to have the plants and that they needed to conceal their possession of the plants.”

Distinguishing Egbert, the Federal Circuit noted that case turned on the inventor’s lack of effort to maintain secrecy.  Here, the USDA made attempts to keep secrecy and, to a large extent, was successful.  The tale here is interesting because of the way it softens the otherwise harsh limits under Section 102(b).

Impact of the AIA: This case was decided under pre-AIA law because the patent application was filed prior to March 2013.  The AIA rewrote much of the novelty provision of Section 102, but included the limit on patenting inventions already “in public use.”  I would expect that under the new law, these same activities would likewise not be seen as being in public use. One difference with the AIA is that the critical date for public use is no longer one-year prior to the application filing date, but instead is moved-forward the actual filing date itself.  In this case, that change would likely have made a difference because the third-parties were less private in the year leading up to the application filing, including commercial sales of the grapes.