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.

Promega v. Life Tech, pt. 2: Inducing Oneself

January 8, 2015PatentAffirmed Without Opinion, Claim Construction, EnablementJason Rantanen

By Jason Rantanen

Promega Corp. v. Life Tech. Corp. (Fed. Cir. 2014) Download Promega v. Life Tech
Panel: Prost (dissenting-in-part), Mayer, Chen (author)

Before the holidays, I wrote about the enablement issue in this case. Today I’ll talk about the inducement issue, which involves two significant—and probably erroneous—doctrinal developments. I say “probably erroneous” because in my view at least one, if not both, would likely be reversed by the Supreme Court were it to grant cert.

The short version is that the majority held that in 35 U.S.C. § 271(f)(1), “induce” means “specific intent to cause” and “a substantial portion of the components” includes “a single important or essential component.” The consequence of the former is that one can induce oneself; the consequence of the latter is that merely supplying a single “main” or “major” component of the claimed invention is sufficient for purposes to 271(f)(1). Judge Prost dissented as to “induce” and would not have reached the “substantial portion” issue.

The patent claim: The asserted claim, claim 42 of patent No. RE 37,984, is directed to “[a] kit for analyzing polymorphism in at least one locus in a DNA sample.” The claim limitations involve vessels containing a variety of materials: a mixture of primers, a “polymerizing enzyme suitable for performing a primer-directed polymerase chain reaction,” adenosine, guanine, cytosine and thymidine, a buffer solution, and template DNA.

LifeTech’s activities: LifeTech manufactured Taq polymerase in the United States and shipped it to its facility in the U.K. where it was combined with foreign-manufactured components to produce kits containing all the claimed elements. While some of the kits were sold in the United States, the main issue on appeal involved kits that never entered the United States. Taq is indisputably “a polymerizing enzyme suitable for performing a primer-directed polymerase chain reaction.”

Procedural History: At trial, the jury was instructed to consider liability for all “United States sales,” which included “all kits made, used, offered for sale, sold within the United States or imported in the United States as well as kits made outside the United States where a substantial portion of the components are supplied from the United States.” Id. at 11 (emphasis added). LifeTech preserved its challenge to the italicized language. The jury returned a verdict finding that “all of LifeTech’s worldwide sales were attributable to infringing acts in the United States.” Id. The district court subsequently granted JMOL in LifeTech’s favor.

On appeal, Promega challenged the court’s grant of JMOL as to both sales infringing under 271(a) and under 271(f)(1). The Federal Circuit focused primarily on the 271(f)(1) issue. 35 U.S.C. § 271(f)(1) states:

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

(emphasis added). LifeTech raised two legal grounds for affirming the district court’s grant of JMOL. First, it argued that 271(f)(1) requires inducement of another; one cannot induce oneself. Thus, it could not be liable under 271(f)(1) for exporting the Taq polymerase to itself to combine with the other components. Second, it argued that 271(f)(1) requires that a “substantial portion” of the components be exported; “one” component is not a “substantial portion” of the components.

For 271(f)(1), one can induce oneself: The majority first rejected LifeTech’s argument that 271(f)(1) should be interpreted as requiring another person to be induced. Rather, it means “merely the specific intent to cause the combination of the components of a patented invention outside the United States.” Slip Op. at 23. In reaching this conclusion, it first looked to the dictionary definition of “induce,” observing that it means “to bring about, to cause.” Id. From this, it concluded that “[t]he object of the transitive verb ‘induce’ can either be a person or a thing, such as an activity or result.” Id. Here, it is the activity that is being “induce[d]”: “The statute is written such that an activity—”the combination”—is the object of “induce,” not a person.” Id. Thus, no third party is necessary. Furthermore, “[h]ad Congress wanted to limit “induce” to actions contemplated by two separate parties, it could easily have done so by assigning liability only where one party actively induced another “to combine the [p]atented components.” Id. To bolster its conclusion, the majority drew upon its reading of the legislative history and what it divined as Congress’s intent in passing the statute. The result is to effectively turn the word “induce” into word “cause.”

The majority’s pseudo-textualist analysis: I’m thoroughly unconvinced by the majority’s analysis. Setting aside the majority’s reading of the legislative history, which Judge Prost criticizes in her dissent, its textual analysis is deeply flawed. Proper textualism involves the consideration of the ordinary meaning of words, evaluated in context, and an application of the canons of statutory construction. But just as in patent law, “ordinary meaning” doesn’t just mean “ordinary meaning.” Rather, terms with a legal meaning (such as “person”) are given their ordinary legal meaning. The problem with the majority’s analysis begins with its reliance on a general-purpose dictionary for a term that has a well-established legal meaning and goes downhill from there.

While “induce” might mean “to bring about, to cause” in the general-usage context, in the legal context—and particularly the patent law context—its meaning invariably involves a relationship between two separate persons. I am not aware of any instances (but would be interested to learn of them) where courts have interpreted “induce” as encompassing one’s own performance of the proscribed acts. This is especially true with respect to 271(b), where both the Federal Circuit and the Supreme Court have written extensively about the requirements for the relationship to rise to the level of inducement. One would not “induce” infringement of a patent by using a machine to carry out a claimed process; one would be liable for direct infringement. To treat the word as if it were necessary to start from first principles, looking it up in a general purpose dictionary, is to ignore all of this well-established legal meaning.

As part of my background reading for this post, I took a look at Bryan Garner’s Black’s Law Dictionary. Here’s his entry for “inducement” (there is no separate entry for “induce”), defining it as “The act or process of enticing or persuading another person to take a certain course of action”:

Congress did not have the benefit of Professor Garner’s text in 1984, when it passed 274(f); this definition comes from the 1999 version of Black’s.* But my sense is that Garner’s definition is a lot closer to the legal meaning of “actively inducement” than “http://www.merriam-webster.com/dictionary/induce.” Slip Op. at 23. And to the extent it is descriptive of the legal meaning, it unquestionably supports the interpretation as involving another person.

Edit to add a legal citation: “It is, however, well established that “[w]here Congress uses terms that have accumulated settled meaning under… the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.” CCNV v. Reid, 490 U.S. 730 (1989) (quoting NLRB v. Amax Coal Co., 453 U.S. 322, 329 (1981)).

“Congress knows how to say…”: In addition to its dictionary definition, the majority also observed that Congress could easily have included the word “another” in the statute. The main problem with this interpretative principle is that it only applies when it’s clear that Congress actually does know how to say something. Typically, the principle is invoked in the context of a parallel statute in which Congress actually said it. See, e.g., Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S. Ct. 2111, 2118 (2014) (“As this provision illustrates, when Congress wishes to impose liability for inducing activity that does not itself constitute direct infringement, it knows precisely how to do so.”) (emphasis added). Here, however, there is no such contrasting statute that contains that “something;” worse, the closest parallel—Section 271(b)—does not contain the word “another.” Rather, it says simply “Whoever actively induces infringement of a patent shall be liable as an infringer.”

Edit to add a citation: “Ordinarily, ‘Congress’ silence is just that—silence.” CCNV v. Reid (quoting Alaska Airlines, Inc. v. Brock, 480 U.C. 678, 686 (1987)).

Judge Prost’s Dissent: Judge Prost’s dissent identifies another problem with the majority’s interpretation: that interpretation is foreclosed by precedent. “[W]e have never before held—in the context of either § 271(f) or § 271(b)—that a party can induce itself to infringe. And for good reason: this conclusion runs counter to unambiguous Supreme Court precedent.” Dissent at 2.

Twice the Supreme Court has held that inducement liability requires a third party. In interpreting the phrase “induces infringement” in § 271(b), the Supreme Court wrote that it requires “that the inducer lead another” or “persuade another.” Global-Tech Appliances, Inc. v. SEB SA, 131 S. Ct. 2060, 2065 (2011) (emphases added). Additionally, in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., a case in the analogous copyright context, the Supreme Court stated that inducement is defined as “entic[ing] or persuad[ing] another” to infringe. 545 U.S. 913, 935 (2005) (emphasis added). The majority cannot point to a single case—from the Supreme Court or otherwise—that supports its contrary interpretation of inducement.

Id. at 2-3.

Judge Prost might go too far in arguing that the majority’s interpretation is foreclosed by precedent (As the majority points out, none of these cases directly confronted the question of whether one can “induce” oneself), but her underlying point is sound: these cases demonstrated that the meaning of “induce” is already well-established as requiring another person.

Multinational companies must be careful: As long as the accused party meets the “supplies…a substantial portion of the components” requirement, it will be liable for its own foreign combination of those elements.** This has particular importance for multinational companies that engage in distributed manufacturing. As a policy matter, the court’s decision pushes those companies towards one of two alternatives: purchasing their components from another (possibly US) supplier or simply making the components abroad. Perhaps the lack of liability in this situation was an oversight in the statute, a statutory loophole. But if so, the appropriate response would be—as was the case following Deepsouth—legislative action. (I’m not convinced that it’s necessarily a loophole, but need to think further on that point.)

Every “essential” component is a “substantial portion of the components.” The majority also interpreted the requirement that “all or a substantial portion of the components of a patented invention” be supplied, concluding that “substantial portion of the components” includes “a single important or essential component.” Slip Op. at 27. Here, that component was the Taq polymerase, a widely-used enzyme for polymerase chain reaction. The court concluded that supplying Taq was enough based on the following evidence: “Without Taq polymerase, the genetic testing kit recited in the Tautz patent would be inoperable because no PCR could occur. LifeTech’s own witness admitted that the Taq polymerase is one of the “main” and “major components of the accused kits.” Id. at 32. As the Taq example demonstrates, under the court’s interpretation any component of a patented invention is an essential component. If one removes Taq, the kit won’t work; if one removes the primers, the kit won’t work; if one removes the nucelotide bases, the kit won’t work. This has the potential to greatly expand liability under 271(f)(1).

Rendering 271(f)(2) superfluous: In my view, the majority’s textual analysis of “substantial portion” suffers from similar flaws as its analysis of “induce.” The deepest, however, is that by reading “substantial portion” as it does, the majority renders 271(f)(2) superfluous. That section states:

(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Under the majority’s interpretation of “substantial portion,” 271(f)(1) reads:

“Whoever without authority supplies or causes to be supplied in or from the United States an important or essential component of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”

The only differences between the two are that (f)(2) is limited to components that are “especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use;” a knowledge of infringement requirement in (f)(2); and the “intending that such component will be combined” language of (f)(2) versus the “in such manner as to actively induce the combination” language of (f)(1). The first two differences make (f)(2)’s scope narrower than that of (f)(1), and the third does not constitute a meaningful difference under the majority’s interpretation of “actively induces.”*** The result is that, under the majority’s interpretation, I can’t envision any conduct that would fall within (f)(2) that would not also fall within (f)(1).

—

*The older definition of “induce” from Black’s doesn’t provide much interpretative help in my view. See Black’s Law Dictionary, Fourth Edition (West 1951) (defining “induce” as “to bring on or about, to affect, cause, to influence to an act or course of conduct, lead by persuasion or reasoning, incite by motives, prevail on”) (this definition was carried forward through at least the 1990 version). Part of my ambivalence is that without looking at the source of the definition, it’s not clear that another party isn’t required. And once you look at the source of the definition, it’s apparent that the case wasn’t talking about the legal meaning of “induce” but it’s general purpose meaning. See State v. Stratford, 55 Idaho 65 (Idaho 1934).

**Nor does the argument that the majority’s interpretation still imposes an “intent” requirement change the analysis. The majority concludes that “actively induce the combination” means “merely the specific intent to cause the combination of the components of a patented invention outside the United States.” Slip Op. at 23. This is nothing more than a volitional conduct requirement: a person that combines the elements will necessarily have the “specific intent to cause the combination” except in very rare, very unusual circumstances. And the jury instruction discussed above did not mention any requirement of intent.

***If “actively induce” were interpreted as requiring the participation of a third party, then there might be a difference between the two in that a reasonable reading of 271(f)(2) is that it covers one’s own combination of the components.

Side note: This appeal is one of the two that were at the heart of In re Reines; Ed Reines represents LifeTech. In the other appeal, the district court’s judgment in favor of Promega was summarily affirmed in March.

Comments are welcome. My comment moderation policy is in effect.

Federal Circuit: A hole is not “water-permeable”

January 6, 2015PatentAffirmed Without Opinion, Claim ConstructionDennis Crouch

by Dennis Crouch

In Teashot v. Green Mountain Coffee, the Federal Circuit has affirmed the lower court determination that tea-filled K-Cups do not infringe T-Shot’s Patent No. 5,895,672.

K-Cups originally included only disposable coffee pods for use in Keurig machines, but now also include tea-pods for quickly brewing tea. T-shot’s patent covers a disposable tea-pod, but the asserted claims require that the pod be a “sealed body . . . constructed of a water-permeable material which allows flow of a fluid through said sealed body to produce a tea extract from said tea composition.” The figures from the patent look like the disposable coffee-pods that you might find in a hotel room – essentially tea wrapped and sealed within a coffee filter. One feature of the patent is that the pod include both tea leaves as well as some instant tea powder that allows for very quick brewing.

At first glance, K-Cups do not appear to be made of a water-permeable membrane but rather are constructed of a impermeable combination of plastic and metal foil. The Keurig machines operate by first puncturing a hole in both the top and bottom of the K-Cup and then sending water through the holes as shown in the schematic below.

T-shot’s infringement argument was that – once punctured – the K-cup also becomes water permeable. (Of course, the patentee couched this as a claim-construction issue in order to receive de novo review). On appeal, the Federal Circuit rejected the argument, finding that the claim requires the pod to simultaneously be a “sealed body” and “water permeable” and that the hole-puncturing scheme does not fit within that requirement.

Doctrine of Equivalents: In a move that is seemingly increasingly common, the Colorado district court refused to allow the patentee to amend its infringement contentions following the claim construction decision in order to include allegations of infringement under the doctrine of equivalents.

The proposed doctrine of equivalents claim was not disclosed in the patentee’s original or supplemental infringement contentions nor in response to any interrogatory. As a discovery sanction under Fed. R. Civ. Pro. 37, the district court refused to allow the new infringement theory to be presented — writing “Plaintiff
waived its right to raise the doctrine of equivalents by failing to timely disclose it as an infringement theory.” On appeal, the Federal Circuit affirmed that holding.

[As a side-note, the doctrine of equivalents theory here might have been viable given that the patent was issued without amendment.]

No Willful Infringement Since Infringer’s Litigation Arguments were “Not Without Reason”

December 19, 2014PatentAffirmed Without Opinion, Damages, Federal Circuit En BancDennis Crouch

by Dennis Crouch

Sryker v. Zimmer (Fed. Cir. 2014)

In 2010, Stryker sued its competitor Zimmer for infringing three patents covering pulsed lavage devices used for wound cleaning. U.S. Patent Nos. 6,022,329, 6,179,807, and 7,144,383. A jury sided with the patentee awarded $70 million in lost profits and also found that the infringement willful. Taking that verdict, the district court then awarded treble damages for willfulness, attorney fees based upon the exceptional case, and a permanent injunction against Zimmer. On appeal, the Federal Circuit has affirmed the underlying damage award, but reversed the district court’s judgment that the infringement was willful — finding that the noninfringement and invalidity defenses raised by Zimmer were “not unreasonable.”

Treble Clef

Treble Damages: The Patent Act sets up a two-step process for determining patent infringement damages. First, the court must award “damages adequate to compensate for the infringement” that are at least “a reasonable royalty.” 35 U.S.C. 284. Next, “the court may increase the damages up to three times the amount found or assessed.” Id. To add some mystique to the system, we term this ‘treble damages’ rather than ‘triple damages’ or – as the statute suggests – ‘three times.’

The statute itself offers no further limitations or guidance as to when triple damages are appropriate, only that a court “may increase the damages.”

Seagate vs the Statute: Despite the broad discretion seemingly offered by the statute, the Federal Circuit has held that increased damages are only available when a defendant is guilty of its complex willful infringement schema that requires clear and convincing evidence that (1) an adjudged infringer took its wrongful actions “despite an objectively high likelihood that its actions constituted infringement of a valid patent” and (2) that the objectively-defined risk was subjectively known (or should have been known) to the infringer. In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).

Ex Post Reasonableness: Because willfuness includes the objective inquiry, it turns out that an infringer who made the intentional decision to infringe, believing fully that the act was infringement, and that was that later judged to be infringing can still avoid being stuck with enhanced damages with a later-concocted (but ultimately incorrect) argument that the patent is invalid or not infringed – so long as that argument is “susceptible to a reasonable conclusion.” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011).

Although the jury decided the willfulness question in the Federal Circuit has held that insufficient under the Seagate test. Rather, a judge must determine at least the objective portion of the test (objectively reckless) and that determination is reviewed de novo on appeal. Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003, 1007 (Fed. Cir. 2012).

Here, reviewing the lower court’s decision de novo, the Federal Circuit found that the defendant had offered a construction that was “not unreasonable” or at least “not without reason.”

Obviousness: Analogous Art and Hindsight

December 11, 2014PatentAbstract Idea, Affirmed Without Opinion, anticipation, Claim Construction, obviousness, Subject Matter EligibilityDennis Crouch

by Dennis Crouch

In an interesting September 2014 decision, the Federal Circuit upheld a USPTO determination of obviousness. The majority decision (authored by Judge Newman) touches on both (1) analogous-art and (2) motivation to combine references. The problem-focused approach taken by the majority in determining analogous art is fascinatingly similar to parts of the abstract-idea analysis in Alice Corp. — looking generally to the problem-to-be-solved as the overarching focus of the invention. Writing in dissent, Judge Moore characterized the obviousness determination as “[h]indsight, hindsight, hindsight.” [Decision]

Scientific Plastic Products (SPP) holds a number of patents relating to cartridges for low pressure liquid chromatography (LPLC) with a resealable screw-on cap. See U.S. Patent Nos. 7,138,061, 7,381,327 and 7,410,571. When SPP sued Biotage for infringement, the defendant responded by filing an inter partes reexamination. Reexam Nos. 95/000,495, ‘496, and ‘497 (filed in 2009, pre-AIA). Based upon his consideration of the prior art, the patent examiner rejected all of the claims of each patent — finding them obvious under 35 U.S.C. 103. That decision was affirmed by the PTAB and is the subject of the appeal here. Meanwhile, the district court case has been stayed pending outcome of the reexamination. On appeal here, a split panel of the Federal Circuit has affirmed the USPTO rejection – with Judge Newman joined by Judge Wallach writing the majority and Judge Moore in dissent.

The primary obviousness reference in the case apparently discloses all of the elements of the patented LPLC cartridge except for one – a tapered lip of the cartridge that corresponds to a taper in the screw-on cap. The tapering helps create a better seal and avoid leakage when the cap is on. It turns out that the tapered lip feature is not new, and the USPTO identified two different patents from the soda-pop bottle industry that disclosed the approach. See for example, Strassheimer (Patent No. 5,100,013).

Obviousness: Section 103 of the Patent Act provides the basic test for obviousness — whether “differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious . . . to a person having ordinary skill in the art to which the claimed invention pertains.” The two primary interpretations of this decision are Graham v. John Deere Co., 383 U.S. 1 (1966)(outlining test) and KSR Int’l Co. v. Teleflex, Inc, 550 U.S. 398 (2007) (explaining that test should not be rigid but instead apply common sense).

Deere explained that there are four factual prerequisites to consider when determining the legal question of obviousness.

The level of ordinary skill in the art;
The scope and content of the prior art;
The differences between the claimed invention and the prior art;
Any objective indicia of nonobviousness.

Those who know Deere well will notice that I have re-arranged the order of the test by placing the level of ordinary skill in the art as the first step in the analysis. I do that because – as explained below – the scope-and-content of the prior art is impacted by the level of skill in the art.

In many obviousness cases, all of the elements of the invention are found within a limited set of prior art references. The argument then is that it would have been obvious for one skilled in the art to think of combining the elements from those references to create the claimed invention. In KSR, the Court held that the justification for such a combination can be based upon common sense or other evidence and does not require a particular teaching-suggestion-or-motivation found within the prior art itself.

Scope of the Prior Art: The scope and content of prior art is determined by several factors. First, evidence must fall within the prior art definitions for anticipatory references under 35 U.S. 102. Second, the prior art must also be seen as “analogous art.” The analogous art requirement is based upon the idea that someone working in a particular field would be unlikely to search through or know all possible prior art but rather would focus attention on what is known (1) in the same field of endeavor or (2) to be addressing the same problem. The general question is whether it would have been “reasonable” for a person of ordinary skill in the art to consider the given prior art in order to solve the problem confronting the inventor. In re Clay, 966 F.2d 656 (Fed. Cir. 1992).

Here, the problem identified by the inventor was to prevent leakage on a plastic screw-cap and everyone knows that the soda-pop bottles have solved that problem. From that framework this is an easy case. However, the patentee here argued that this analysis involves improper hindsight because the leakage problem was one identified by the inventor as part of the invention process and was not previously identified in the prior art.

The Federal Circuit implicitly agreed that it would be improper hindsight to rely upon the problem first identified by the inventor for determining analogous art. However, the court rejected that argument as applied to the facts here. In particular, the PTAB noted that the primary LPLC reference includes a particular o-ring seal that serves as an implicit recognition leakage could be a problem. On appeal, the Federal Circuit confirmed that the implicit concern was sufficient to avoid hindsight concerns. Affirmed.

= = = =

Writing in dissent, Judge Moore argues that majority opinion is hindsight of the worst kind, ‘wherein that which only the invention taught is used against its teacher.’ quoting W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540(Fed. Cir. 1983).

The patents do not indicate that leakage was a problem identified in the prior art or a problem known to those of skill in the art. Rather they indicate that the claimed design will avoid leakage. These inventors identified a design problem, articulated it, and solved it. There is absolutely no evidence of the existence of a known leakage problem that would have motivated skilled artisans to modify Yamada. The Board is taking the ingenuity of these inventors and, without any record basis, attributing that knowledge to all skilled artisans as the motivation to make the inventions at issue. Hindsight, hindsight, hindsight. . . .

I would reverse because I conclude that the Board’s cancellation of the claims at issue was based entirely on hindsight reconstruction—there is no record evidence that one of skill in the art would have been motivated to modify Yamada with soda pop bottle sealing closures.

An implicit suggestion from Judge Moore is that in hotly contested post-issuance cases invalidating evidence should be high quality:

These were inter partes reexamination proceedings between sophisticated parties. Both parties put on expert testimony regarding obviousness. Yet there is no evidence that the chromatography cartridges in Yamada had
a leakage problem that skilled artisans would have been motivated to address.

Judge Moore also challenged the PTAB’s failure to determine the level of ordinary skill in the art. “An ordinarily skilled chemist would have likely looked to a different body of prior art than an ordinarily skilled mechanical engineer with industrial design experience. . . We cannot answer the analogous art question without knowing who the person of ordinary skill is.”

Slicing the Bologna: Judge Chen Distinguishes this Business Method from those Found Ineligible in Alice, Bilski, and Ultramercial

December 8, 2014PatentAbstract Idea, Affirmed Without Opinion, anticipation, Federal Circuit En Banc, Subject Matter EligibilityDennis Crouch

By Dennis Crouch

Typically, Supreme Court patent cases alter Federal Circuit precedent, while – at the same time – leaving many open questions for the appellate court to address. That standard certainly fits the recent set of patent eligibility cases. In Alice Corp v. CLS Bank (2014) the Supreme Court outlined an eligibility test whose practical impact will vary greatly depending upon how it is implemented by the Patent Office and the court: broadly or narrowly?

In DDR Holdings v. Hotels.com, the Federal Circuit has affirmed the patent eligibility of DDR’s eCommerce patent. U.S. patent No. 7,818,399. Particularly, Judge Chen authored the majority opinion that was joined by Judge Wallach. Judge Mayer wrote in dissent. The case is close enough to the line that I expect a strong push for en banc review and certiorari. Although Judge Chen’s analysis is admirable, I cannot see it standing up to Supreme Court review and, the holding here is in dreadful tension with the Federal Circuit’s recent Ultramercial decision.

The basic idea behind DDR’s patent (as claimed) is to allow a website operator to include various pages within its website that each corresponds to a different merchant (such as a cruise line) with products being sold through a broker (such as a cruise broker). The various pages will have a look-and-feel that corresponds to the particular merchant (by including, for instance the cruise line logo). And, the system dynamically populates product options on the site by pinging the broker’s server. To accomplish all this, the invention uses computer networks in what appears to be standard form without what I would call “new technology.” Judge Chen writes that a major purpose of this setup is to be able to provide a diversity of stores while keeping customers on the same overall website. Representative claim 19 is posted below. The accused infringers summarize this as simply “syndicated commerce on the computer using the Internet.”

Patent Eligibility under Alice Corp: The two-step approach to eligibility decreed by Alice Corp first queries whether the invention is directed to an abstract idea. And, if so, then looks to whether the invention includes an “inventive concept” sufficient to “transform” that abstract idea into a patentable invention. In Alice, the Supreme Court particularly held that transformation is not satisfied by merely the recitation of generic computer limitations.

Here, Judge Chen finds that neither step of Alice Corp implicate the patent in question. In doing so, Judge Chen attempts to cabin-in the scope of ideas that qualify as “abstract ideas.”

Not An Abstract Idea: First, Judge Chen found the solution here to be internet-focused with no direct corresponding offline equivalence. That conclusion is important because it helps distinguish Alice Corp where the Supreme Court found the patented invention there abstract because it related to a longstanding business practice. Judge Chen writes:

[The asserted claims do not] recite a fundamental economic or longstanding commercial practice. Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet.

In the dissent, Judge Mayer challenges this conclusion by drawing an analogy to the pre-internet business of having kiosk within a mall or warehouse shore that sells third-party cruise vacation packages. Judge Chen rejects that analogy because it does not “account for the ephemeral nature of an Internet “location” or the near-instantaneous transport between these locations made possible by standard Internet communication protocols.” According to Judge Chen, those differences introduce new problems – and it is those problems that are particularly addressed by the patented invention.

In Ultramercial, the Federal Circuit found that even novel ideas can be abstract. Distinguishing from that case, Judge Chen writes that the claims here:

are different enough in substance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added activity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequenceof events ordinarily triggered by the click of a hyperlink.

Moving on, Judge Chen finds that – even if the claims are directed to an abstract idea – they do not preempt that idea but instead represent a “specific way” of creating a composite web page “in order to solve a problem faced by websites on the Internet.”

Writing in dissent, Judge Mayer argues that the patents at issue here are “long on obfuscation but short on substance. Indeed, much of what they disclose is so rudimentary that it borders on the comical.”

DDR’s claims … simply take a well-known and widely-applied business practice and apply it using a generic computer and the Internet. The idea of having a “store within a store” was in widespread use well before the dawn of eCommerce. For example, [NLG], one of the defendants here, previously “sold vacations at . . . BJ’s Wholesale Clubs through point of purchase displays.” . . . DDR’s patents are directed to the same concept. Just as visitors to [BJ’s] could purchase travel products from NLG without leaving the BJ’s warehouse, the claimed system permits a person to purchase goods from a third-party vendor, but still have the visual “impression that she is viewing pages served by the [original host merchant].” Indeed, any doubt as to whether the claimed system is merely an Internet iteration of an established business practice is laid to rest by the fact that one of the named inventors acknowledged that the innovative aspect of his claimed invention was “[t]aking something that worked in the real world and doing it on the Internet.” . . .

The solution offered by DDR’s claims, however, is not rooted in any new computer technology. Its patents address the problem of preventing online merchants from losing “hard-won visitor traffic,” and the solution they offer
is an entrepreneurial, rather than a technological, one. DDR has admitted that it did not invent any of the generic computer elements disclosed in its claims. There is no dispute, moreover, that at the time of the claimed invention the use of hyperlinks to divert consumers to particular web pages was a well-understood and widely-used technique. While DDR’s patents describe the potential advantages of making two web pages look alike, they do not disclose any non-conventional technology for capturing the “look and feel” of a host website or for giving two web pages a similar appearance.

In concluding that DDR’s claims meet the demands of section 101, the court focuses on the fact that “they recite a specific way to automate the creation of a composite web page . . . .” The Supreme Court, however, has emphatically rejected the idea that claims become patent eligible simply because they disclose a specific solution to a particular problem. . . . Indeed, although the claims at issue in Alice described a very specific method for conducting intermediated settlement, the Court nonetheless unanimously concluded that they fell outside section 101.

= = = = =

This case may end up again delaying the expected USPTO examiner guidance on abstract idea analysis.

= = = = =

The patent itself issued in 2006 but claims priority to a 1998 filing. Five inventors are listed including father-son pair: DD Ross, Sr. and Jr. – hence DDR Holdings.

= = = = =

Claim 19. A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:

(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages; (i) wherein each of the first web pages belongs to one of a plurality of web page owners; (ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and (iii) wherein the selected merchant, the outsource provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;

(b) a computer server at the outsource provider, which computer server is coupled to the computer store and programmed to: (i) receive from the web browser of a computer user a signal indicating activation of one of the links displayed by one of the first web pages; (ii) automatically identify as the source page the one of the first web pages on which the link has been activated; (iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and (iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) information associated with the commerce object associated with the link that has been activated, and (B) the plurality of visually perceptible elements visually corresponding to the source page.

The Vast Middle Ground of Hybrid Functional Claim Elements

October 20, 2014PatentAffirmed Without Opinion, Federal Circuit En Banc, Written DescriptionDennis Crouch

by Dennis Crouch

In Robert Bosch v. Snap-On (Fed. Cir. 2014), the Federal Circuit has held that two different claim elements “lack sufficiently definite structure” that must be interpreted under 35 U.S.C. 112(f) as means-plus-function elements and, because corresponding structures were not sufficiently disclosed in the patent document (as required by 112(f)), the associated claims were held invalid as indefinite. Here the claim elements in question are a ‘program recognition device’ that plugs into a car motor to see if its control software is out of date and also a ‘program loading device’ that updates the control software if necessary. U.S. Patent No. 6,782,313.

Functional claim limitations are in vogue. Part of the reason is that the current generation of computer-focused engineers have been trained in an object oriented approach that discusses solutions more in terms of results than in detailed algorithmic steps. That approach makes it easier to create new tools and devices by relying upon the building blocks created by others. But, the carryover to patent law remains somewhat tenuous.

Functional claim terms also offer a mechanism for achieving broader claim coverage and claim coverage that is more aligned with the scope of potential competitor activities and follow-on innovation. The use of functional language for that purpose has a century-long history in U.S. patent law and has been much debated at all levels, including the U.S. Supreme Court.

When the Supreme Court discussed the topic in its landmark 1946 decision of Halliburton v. Walker, the Court described functional claim terms as those that focus on results – “what it will do” – and not on the actual physical implementation. In Halliburton, the court held:

A claim which describes the most crucial element in a “new” combination in terms of what it will do, rather than in terms of its own physical characteristics or its arrangement in the new combination, is invalid.

Id. The result in Halliburton was that the claim was found invalid under as indefinite because the functional language there (an “echo receiving means”) did not provide sufficient notice of the scope of patent rights.

The Patent Act of 1952 left intact a strong definiteness requirement but overturned Halliburton by enacting what is now known as 35 U.S.C. 112(f). That provision expressly allows for an element to be claimed as a “means” for performing a “specified function” but without actually specifying the physical characteristics of how it works. However, 112(f) has an important and significant limitation that cabins-in the scope of any such means limitation to only cover corresponding embodiments described in the patent document, and their equivalents.

(f) Element in Claim for a Combination.— An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

A second limitation on 112(f) is the court interpretation that purely functional claim elements that are not physically described in the specification are deemed indefinite and the corresponding claim invalid.

US patent attorneys have taken notice of these legal limits on means-plus-function claiming and have largely abandoned the form. Twenty years ago, most patents included claim terms written in means-plus-function form. Today, that figure is under 5%. But the strategy for many does not eschew functional claim elements, but rather to integrate functional limitations together with structural limitations with the result being broadly defined claim elements that avoids the limitations of 112(f).

The Big Middle Ground

Partially Functional Elements: The rules are clear for claim elements written in purely functional terms such as a ‘means for communicating’ without any claimed physicality. However, there exists a vast middle-ground for claim limitations that include some functionality and some physicality. These might include a ‘circuit for communicating’ or – as in the recent Bosch Case – a ‘program recognition device.’

In Robert Bosch v. Snap-On (Fed. Cir. 2014), the Federal Circuit has affirmed a lower court determination that two different functional claim elements are indefinite and thus that the associated claims are invalid. The patents relate a motor vehicle software-update tool. The claims include a ‘program recognition device’ that plugs into the motor control unit to see if the software is out of date and also a ‘program loading device’ that plugs into the motor control unit to upload new software. Easy enough. But, the specification includes no diagrams and no real structural detail about these ‘devices.’

The Federal Circuit has a fairly straightforward algorithmic approach to functional claims elements. The first step it to determine whether the element qualifies as “functional” and, if so, interpret the limitation under the rubric of Section 112(f). For the court, a functional claim element is one recites a functional limitation without “reciting sufficient structure for performing that function” or that fails to “recite sufficiently definite structure.” EnOcean GmbH v. Face Int’l Corp., 742 F.3d 955 (Fed. Cir. 2014). The court also uses a linguistic shortcut — claim elements drafted in the form “means for [performing a specified function]” are also presumed to be functional. Similarly, elements that do not use the word “means” are presumed to be structural. Importantly, Federal Circuit precedent indicate that these presumptions are “strong.” See Lighting World, Inc. v. Birchwood Lighting, Inc., 382 F.3d 1354 (Fed. Cir. 2004).

Here, although the terms were not claimed in “means” form, the court found that they lacked structure and therefore were functional. In walking through its analysis, the court first looked at the claim words ‘program recognition device’ and ‘program loading device’ and found no structure other than the ‘nonce’ word device. Then, looking at the specification, the court found:

[The] ‘313 patent’s specification does not contain a single reference to the structure of the “program recognition device” itself; all of the proffered citations from the specification merely explain its function. For example, the statement that the external diagnostic tester is “equipped” with the “program recognition device” that “querie[s] and recognize[s]” program versions in the control unit is nothing more than a functional description. This passage is devoid of structure. Likewise, the passage that explains how the external diagnostic tester uses the “program recognition device” to automatically check which program version is currently on the control unit only describes the connection of the external diagnostic tester to the control unit in the vehicle. The specification is, therefore, also silent about any interaction between the “program recognition device” and other components of the system, including the external diagnostic tester. Contrary to what Bosch contends, the specification does not teach how the “program recognition device” receives and processes signals, as the words “signal” and “process” are not even in the specification. . . .

Because the claim terms lack structure, the court determined that they fall under the rules of 112(f) [112p].

The claim terms, construed in light of the specification, fail to provide sufficiently definite structure to one of skill in the art. The claim terms “program recognition device” and “program loading device” invoke § 112, ¶ 6.

The problem for Bosch in this case is that the same analysis of the specification above also supports the conclusion that the claimed function lacks structural description in the specification. And, as a result, the court found the claims invalid as indefinite.

Since we have concluded that both claim terms invoke § 112, ¶ 6, we now must attempt to construe the terms by identifying the “corresponding structure … described in the specification” to which the claim term will be limited. Welker Bearing Co., 550 F.3d at 1097. “If there is no structure in the specification corresponding to the means-plus-function limitation in the claims, the claim will be found invalid as indefinite.” Biomedino, LLC v. Waters Techs. Corp., 490 F.3d 946, 950 (Fed.Cir.2007). On this point, however, little needs to be said. Bosch did not argue to this court that, even if the claim language at issue is within § 112, ¶ 6, the language is definite because the specification sufficiently discloses corresponding structure. See Appellant’s Br. 51–52. And we also see no such disclosure.

Indeed, as already discussed in Part III.B, in the limited number of instances that the specification even mentions these claim terms, it offers no further guidance about their structures. Therefore, we conclude that “program recognition device” and “program loading device” are indefinite. Since these terms are found in the only independent claim of the ‘313 patent, we conclude that all claims in the ‘313 patent are invalid.

An important element of the court’s analysis here is that it is all seen as a question of law reviewed de novo on appeal. Thus, although the appellate panel largely agreed with the lower court’s original decision in this case, that decision was given no deference in the analysis. Further, the strong presumption of validity requiring clear and convincing evidence was also entirely ignored here because that evidentiary requirement is directed toward questions of fact not questions of law.

A second important and interesting element of the court’s decision here is that it does not cite the Supreme Court’s most recent foray into indefiniteness – Nautilus v. BioSig (2014) (requiring reasonable certainty). Likewise, the court did not cite Halliburton. In fact, the court has not cited Halliburton for almost 20 years and it has never cited the case other than to criticize the decision or indicate that it has been legislatively overruled by 112(f).

The case here is also in tension with those cited above: EnOcean, Lighting World, and Inventio. however, the court here took steps to distinguish those cases based upon the ‘fact’ that Bosch’s patent application failed to provide structure in the specification to guide one skilled in the art in understanding the ‘device’ limitation. In the other cited cases, the specification included examples and diagrams sufficient to transform the seeming ‘nonce’ words into ones with structural meaning.

What will be interesting here will be to see whether this case is the beginning of a movement in a new direction. This case’s path to the Supreme Court is most likely if the Federal Circuit first grants an en banc rehearing request.

Doctrine of Equivalents: What Elements Are you Narrowing?

September 30, 2014PatentAffirmed Without Opinion, Claim Construction, First to InventDennis Crouch

Millipore v. AllPure (Fed. Cir. 2014)

Patent cases are incredibly expensive to litigate. However, in a series of recent cases courts have appeared more willing to dismiss cases on summary judgment or even on the pleadings. This case follows that trend with a holding that the defendant does not infringe the asserted patent claims — neither directly nor under the doctrine of equivalents. In a prior generation patentees could typically get to a jury with an allegation of infringement doctrine of equivalents. However, the court has simultaneously tightened the rules for DOE infringement and loosened the rules summary judgment — result being that infringement under the doctrine of equivalents is now regularly a summary judgment issue.

Millipore’s U.S. Patent No. 6,032,543 covers an aseptic system designed to add & remove fluid from a container without contamination. The asserted claims require, inter alia, a “removable, replaceable transfer member . . . comprising a holder, a seal for sealing said aperture, a hypodermic needle . . . wherein the seal has a first [bellows-shaped] end . . . and a second [self sealing membrane] end.” Now, it turns out that the accused AllPure TAKEone industrial aseptic sampling system has all these elements – a holder, a seal with the bellow and membrane ends, and the needle. In addition all of these parts are removable and replaceable.

AllPure’s key difference from the patented claim is that the collection of these parts are not removable as a unit but rather may only be removed by dis-assembly. In construing the claims, the district court wrote: ““the [remove] implies movement or separation of something as a whole, whereas [disassemble] implies deconstruction. . . What Millipore characterizes as removal of a transfer member from the magazine part is, in fact, disassembly of a transfer member.” Based upon that characterization of the patent and the accused device, District Court Judge Woodlock (D. Mass) found that the claims were not infringed.

On appeal, the Federal Circuit has affirmed — finding that the claimed “removable” transfer member requires that the transfer member be removable as a unit.

We agree with AllPure and the district court. If a transfer member does not exist when the device is disassembled, as even Millipore’s counsel admitted, then there is no genuine issue of material fact over whether the TAKEONE device contains a “removable, replaceable transfer member” as is literally required by claim 1.

Doctrine of Equivalents: Section 271 of the patent act identifies an infringer as someone who “without authority makes, uses, offers to sell, or sells any patented invention.” Although the “patented invention” is defined by patent claims, courts have long allowed patentees to enforce their exclusive rights to stop activity that is just-outside the literal scope of the claims. This doctrine of equivalents (DOE) has been with us for over 150 years See Winans v. Denmead, 56 U.S. 330 (1853)(‘The exclusive right to the thing patented is not secured, if the public are at liberty to make substantial copies of it, varying its form or proportions.’). However, the doctrine has been substantially limited by the all-elements-rule, Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17 (1997), prosecution history estoppel, Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002), and the doctrine of vitiation. see Wright Medical Technology, Inc. v. Osteonics Corp., 122 F.3d 1440 (Fed. Cir. 1997).

Narrowing Amendment Estoppel: In this case (as in most patents), the applicant had amended its claims during prosecution following a rejection by the patent office examiner to specify the portions of the seal (bellow-shaped and membrane ends). Although at the time the applicant also made a broadening amendment, this particular amendment was seen as narrowing and designed to recite limitations not found in the prior art. In particular, following the amendment the patentee argued that “none of the references show or disclose a seal formed like the present one.” A narrowing amendment is seen as a no-no for the doctrine of equivalents since allowing DOE would essentially allow the patentee to regain patent scope that had been given-up during the prosecution process. Under Festo, a narrowing amendment during prosecution creates a rebuttable presumption of prosecution history estoppel (PHE) with the result of estopping the patentee from claiming equivalents (DOE) to recapture the narrowed scope. Here, the appellate panel found that presumption had not been overcome and thus that the patentee was estopped from claiming equivalents.

Narrowing of Sub-Assembly = Narrowing of Whole Assembly: A problem with the defendant’s argument here (and what Judge Prost failed to explain) is the linkage between the narrowing amendment and the asserted equivalents. In particular, the narrowing amendment added limitations to the definition of the seal sub-assembly but the claimed equivalent was focused on the nature of the whole accused assembly as being disassemblable rather than removable as claimed. The only clue offered by the court is one phrase indicating that the amendment “narrows the seal limitation, which in turn narrows the transfer member limitation.”

Hierarchy of Elements: The battle over a hierarchy of limitations is common in modern doctrine of equivalents. Typically, the battle plays out in terms of the all-elements rule that requires the accused infringer practice each element of the asserted claim either literally or by equivalent. For patentees, this type of equivalents is typically easier to prove when each “element” is seen as a grouping of limitations – such as the “removable, replaceable transfer member” – and defendants typically look to further granularize the invention so that the “removable” limitation itself would be an element that must satisfy the function-way-result test. In this case – involving prosecution history estoppel – the patentee would have been better off with the more granularized framework in order to logically separate the “removable” limitation from the narrowed seal limitations. However, the appellate court glosses-over all of this analysis in its short decision with the unfortunate result of leaving district courts to do the same.

Data Structure Patent Ineligible

July 23, 2014PatentAbstract Idea, Affirmed Without Opinion, Claim Construction, First to Invent, Subject Matter EligibilityDennis Crouch

By Dennis Crouch

Digitech Image v. Electronics for Imaging (Fed. Cir. 2014)

Digitech sued dozens of companies for infringing its U.S. Patent No. 6,128,415. As I wrote back in April 2014, basic idea behind the invention is to tag digital images with particular information about the camera and its color/spatial image qualities in a form that is device-independent. The patent includes claims directed to both a “device profile” and a “method of generating a device profile.” The profile is simply a set of data elements regarding the camera qualities discussed above and the method simply involves generating and combining those data elements. This sort of tagging of digital images has become ubiquitous and so the patent could be quite valuable – except that the Federal Circuit has held the patent invalid as lacking subject matter eligibility under 35 U.S.C. §101.

Claim 1 is drafted as follows:

1. A device profile for describing properties of a device in a digital image reproduction system to capture, transform or render an image, said device profile comprising:

first data for describing a device dependent transformation of color information content of the image to a device independent color space; and

second data for describing a device dependent transformation of spatial information content of the image in said device independent color space.

The District Court found the claims invalid and that decision has been affirmed by the Federal Circuit. Decision by Judge Reyna, joined by Judges Moore and Hughes. Because subject matter eligibility is a question of law, the Federal Circuit reviews that issue de novo without giving deference to the district court analysis.

Most subject matter eligibility cases rely upon the non-statutory limitations on eligibility (abstract idea, law of nature, natural phenomenon). However, the court here begins with the statute:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

35 U.S.C. §101. The statute identifies four categories of patent eligible inventions: processes, machines, manufactures, and compositions of matter. In considering the “device profile” claim, the appellate panel concluded that the claim did not properly fit within any category and is therefore not eligible for patenting. The court writes:

Data in its ethereal, non-physical form is simply information that does not fall under any of the categories of eligible subject matter under section 101.

At the Federal Circuit, the patentee argued that one of skill in the art would understand that the claims required hardware or software within a digital image processing system. However, in an implicit claim construction, the appellate panel rejected that argument – finding that the claims are not so limited. “The claims encompass all embodiments of the information contained in the device profile, regardless of the process through which this information is obtained or the physical medium in which it is stored.” The underlying problem with this analysis is the reality that data is always stored in a physical form lest it disappear.

This first portion of the opinion has the important resulting holding that patent eligible subject matter must be in “a physical or tangible form.” Quoting Burr v. Duryee (1863) (“a concrete thing, consisting of parts, or of certain devices and combination of devices”). The court declined to discuss how it would hold if the claimed data structure had been linked to a physical item such as some sort of computer hardware. Of course, this physicality test as an absolute rule was seemingly rejected by the Supreme Court in Bilski.

In the second part of the short opinion, the Federal Circuit addressed the method claims. Those claims clearly passed the statutory category test as being drawn to processes. For the method claims then, the court turned to the abstract idea limitation recently discussed by the Supreme Court in Alice Corp. v. CLS Bank Int’l, 573 U.S. ___ (2014).

Alice Corp. offers a two-step process for determining patent eligibility of a claimed invention:

Building Block: First, determine whether the claim recites or is directed to a patent-ineligible concept such as an abstract idea, law of nature, or product of nature.
Something More: Second, determine whether the claim recites sufficient additional inventive features such that the claim does not solely capture the abstract idea.

As the Court wrote in Alice:

At some level, “all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Mayo. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. See Diamond v. Diehr, 450 U. S. 175, 187 (1981). “[A]pplication[s]” of such concepts “‘to a new and useful end,'” we have said, remain eligible for patent protection. Gottschalk v. Benson, 409 U. S. 63, 67 (1972).

Accordingly, in applying the §101 exception, we must distinguish between patents that claim the “‘buildin[g] block[s]'” of human ingenuity and those that integrate the building blocks into something more, Mayo, 566 U. S., at ___ (slip op., at 20), thereby “transform[ing]” them into a patent-eligible invention, id., at ___ (slip op., at 3). The former “would risk disproportionately tying up the use of the underlying” ideas, id., at ___ (slip op., at 4), and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.

Although the Supreme Court provided this two-step framework, it left some gaps for lower courts to discern, such as the meaning of “abstract idea” and “something more.”

The process claim at issue here is directed to a method of generating a device profile and includes three steps:

[Transform First Data] generating first data for describing a device dependent transformation of color information content of the image to a device independent color space through use of measured chromatic stimuli and device response characteristic functions;

[Transform Second Data] generating second data for describing a device dependent transformation of spatial information content of the image in said device independent color space through use of spatial stimuli and device response characteristic functions; and

[Combine Data] combining said first and second data into the device profile.

In reading these steps, the Federal Circuit identified what it sees as the abstract idea:

The two data sets are generated by taking existing information—i.e., measured chromatic stimuli, spatial stimuli, and device response characteristic functions—and organizing this information into a new form. The above claim thus recites an ineligible abstract process of gathering and combining data that does not require input from a physical device.

According to the court, the reason this result is abstract is that it is simply a “process that employs mathematical algorithms to manipulate existing information to generate additional information.” As the Supreme Court wrote in Flook,

If a claim is directed essentially to a method of calculating, using a mathematical formula, even if the solution is for a specific purpose, the claimed method is nonstatutory.

Parker v. Flook, 437 U.S. 584 (1978).

After identifying the abstract idea, the Court considered and rejected the notion that the patent provided “something more” that would be sufficient to transform the result into something patentable.

The Federal Circuit did not raise or discuss the presumption of validity afforded patents under 35 U.S.C. §282. In i4i, the Supreme Court ruled that invalidity for missing the §102(b) statutory-bar date must be proven with clear and convincing evidence. However, that defense is a question of fact. As discussed above, subject matter eligibility is a question of law and such questions are generally not controlled by the same evidentiary standards.

= = = = =

A major difficulty in abstract idea cases is defining the “abstract idea.” Here, the court’s description of the abstract idea at issue is somewhat confusing. Its clearest statement is that it is the “abstract process of gathering and combining data that does not require input from a physical device.” That statement has the qualities of (1) being well known and old; (2) being totally divorced from any physical device or technology; and (3) focused on information transformation rather than the transformation of anything in the physical realm. These clues here closely follow the machine-or-transformation test that the Federal Circuit implemented in its Bilski decision. Later, the Supreme Court rejected the reasoning that the MoT test was the absolute test, but agreed that it served as an important clue of subject matter eligibility.

Indefiniteness “Can Be” Difficult under Nautilus

June 17, 2014PatentAffirmed Without Opinion, Broadest Reasonable Interpretation, Claim Construction, EnablementDennis Crouch

Ex parte Breed, Appeal No. 2012-003990 (PTAB 2014)

On June 2, 2014, the Supreme Court decided Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014) lowering the standard for negating patentability due to indefiniteness. The new test requires that the claim scope be “reasonably certain” to one skilled in the art at the time of the patent.

On June 4, 2014, the Patent Trial and Appeal Board (PTAB) issued its first decision interpreting Nautilus. David Breed is a prolific inventor and is named on more than 300 patents and is one of the inventors of the airbag. More recently, Breed has collaborated with Acacia Research Corp to enforce his patents.

The application at issue in this case is part of a large family of at least seven issued patents that claim priority back to a 2000 provisional application and is directed to a highway monitoring system that provides reports and information on road conditions. Application No. 12/020,684.

Claim 1 is a system claim that includes a whereby clause indicating that “whereby roadway conditions from multiple roadways can be obtained and processed at the remote facility.” The examiner rejected the claim as indefinite based upon the “can be” limitation and the PTAB has now affirmed that finding:

Patent applicants face powerful incentives to inject ambiguity into their claims, a temptation that needs to be mitigated by the courts. See Nautilus, Inc. v. Biosig Instr., Inc., 2014 WL 2440536 at *7, __ U.S. __ (June 2, 2014). Patent drafters are in the best position to resolve ambiguities in their claims. See Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1255 (Fed. Cir. 2008). Section 112 places the burden of precise claim drafting on the applicant. See In re Morris, 127 F.3d 1048, 1056-57 (Fed. Cir. 1997).

. . .

Claim 1 recites that roadway conditions from multiple roadways “can be” obtained and processed at the remote facility and “can be” directed from the remote facility to other vehicles. The Examiner rejected claim 1 as indefinite. The Examiner stated that it is not clear if Appellants intended the “can be” claim limitation to be optional or that the phrase should be interpreted as a definite statement. . . .

Appellants now argue that the features following the “can be” phrases should be interpreted as optional and, as such, the claim is not indefinite. The verb form of the word “can” carries multiple meanings in the English language. It can be used to indicate a physical ability or some other specified capability. It can also be used to indicate a possibility or probability.

During examination of a patent application, pending claims are given their broadest reasonable construction consistent with the specification. In re Am. Acad. of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). In the instant case, Appellants have not directed us to any language in the Specification that supports a construction of “can be” that yields a particular and distinct meaning in claim 1. Instead, Appellants merely urge us to adopt one of two plausible interpretations. . . .

We agree with the Examiner that “can be” is indefinite, because it is susceptible to more than one plausible construction. It is unclear whether the limitation refers to a capability that is required to be present in the invention or whether it refers to a system capability that is a mere possibility that is not required. In other words, it is unclear whether a vehicle monitoring system can practice the invention of claim 1 by satisfying all of the other limitations of claim 1, without necessarily being required to possess the capability to obtain and process roadway conditions at a remote facility or to direct information from a remote facility to other vehicles on a roadway.

During prosecution, a claim is properly rejected as indefinite if it is “amenable to two or more plausible claim constructions.” Ex parte Miyazaki, 2008 WL 5105055 at *5 (BPAI Nov. 19, 2008) (precedential). The Miyazaki standard for indefinite rejection is justified, at least in part, because the applicant has the opportunity and the obligation to define his or her invention precisely during prosecution before the PTO.

Here, Appellants’ use of the phrase “can be” renders claim 1 indefinite and we sustain the Examiner’s rejection of claim 1 under 35 U.S.C. § 112(b).

The PTAB also quoted the Supreme Court’s nose-of-wax statement from its 1886 decision:

Some persons seem to suppose that a claim in a patent is like a nose of wax which may be turned and twisted in any direction, by merely referring to the specification, so as to make it include something more than, or something different from, what its words express. The context may, undoubtedly, be resorted to, and often is resorted to, for the purpose of better understanding the meaning of the claim; but not for the purpose of changing it, and making it different from what it is. The claim is a statutory requirement, prescribed for the very purpose of making the patentee define precisely what his invention is; and it is unjust to the public, as well as an evasion of the law, to construe it in a manner different from the plain import of its terms. This has been so often expressed in the opinions of this court that it is unnecessary to pursue the subject further.

White v. Dunbar, 119 U.S. 47, 51-52 (1886) (emphasis added by PTAB).

I think that the decision here is correct and the USPTO is right to force the patent applicant to nail-down the particular scope of the invention being claimed. One interesting counter-point comes from the Supreme Court’s notion that definiteness requires examination of the prosecution history – here Breed argued that the term meant “optional,” but the PTAB here indicates that it is not sufficient to merely indicate which of two possible interpretations is the correct – rather a claim amendment is in order to solidify and provide express notice of that applicant decision.

Judge Chen and Nonobviousness

June 12, 2014PatentAffirmed Without Opinion, anticipation, Claim Construction, obviousnessJason Rantanen

By Jason Rantanen

The past two weeks have seen a substantial number of nonobviousness opinions emerge from the Federal Circuit. These decisions are particularly interesting because they contain pairs of opinions with opposite outcomes. Judge Lourie, the second longest-tenured active judge on the court, wrote two of them while Judge Chen, the second-newest member of the court, wrote a third and a dissent in the fourth. Each found (or would have found) the patents in question to be obvious in one opinion and nonobvious in the other. For those interested in the jurisprudential views of Judge Chen, especially, the pairing may provide some useful insights.

Allergan, Inc. v. Apotex Inc. (Fed. Cir. 2014) Download Allergan v. Apotex
Panel: Prost (author), Reyna, and Chen (dissenting in part)

Allergan and Duke University hold a pair of patents relating to an ophthalmic solution used as a treatment for eyebrow hair loss. Allergan sells LATISSE a 0.03% bimatoprost ophthalmic solution as a topical treatment for eyebrow hair loss. After Apotex and other manufacturers submitted Abbreviated New Drug Applications to the FDA seeking to market generic versions of LATISSE, Allergan and Duke sued for infringement. Following a bench trial, the district court rejected the generic manufacturers’ invalidity arguments, found infringement, and entered an injunction. The manufacturers appealed.

On appeal, the Federal Circuit addressed claim construction, anticipation and obviousness, affirming the district court’s contested claim construction of “treating hair loss” and its determination that the patents were not anticipated, but reversing the finding of nonobviousness. I could write a lengthy post on the majority opinion alone, but this passage particularly caught my eye since it relates specifically to the issue of what subjects the Federal Circuit considers to be issues of law versus fact in the nonobviousness inquiry:

In sum, even if the district court did not commit clear error in its findings of fact, failure to consider the appropriate scope of the ’029 patent’s claimed invention in evaluating the reasonable expectation of success and secondary considerations constitutes a legal error that we review without deference.

Slip Op. at 23 (emphasis added). The substantial breadth of the asserted claims of the ‘029 patent was particularly troubling to the majority, both in assessing the Graham factors and the nexus for secondary considerations.

Writing in dissent, Judge Chen would have found the ‘029 patent to be nonobvious. In reaching this conclusion, he placed much more weight on the determination of the examiner during prosecution:

To begin with, issued patents enjoy a presumption of validity, which can only be rebutted by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2245–46 (2011). A party challenging a patent’s validity must do so with “evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions are highly probable.” Buildex Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (citing Colorado v. New Mexico, 467 U.S. 310, 316 (1984)). This is not a burden that is easily satisfied.

Dissent at 2. Particularly persuasive to Judge Chen was the fact that examiner considered the key reference during examination and allowed the claims over it following an amendment by the patentee:

In light of the particularly heavy burden to show obviousness over a reference disclosed during prosecution and discussed by the examiner, Appellants have
not shown that Johnstone now somehow teaches or suggests the very structural feature that the patentee claimed to distinguish the Johnstone compounds.

Id. at 4. On his part, Judge Chen found the disclosure Johnstone reference to be meaninglessly broad and generic:

This is not a situation in which there are a finite number of identified, predictable solutions. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007). Rather, the
single sentence in Johnstone actually proposes hundreds of thousands, or even millions, of variations on the alpha chain. [] The compound in Johnstone
could have a saturated bond at any position on the alpha chain, an unsaturated bond at any position, a triple bond at any position, or even a combination of any of these bonds. As a result, a person of ordinary skill in the art was not faced with a “small or easily traversed” number of options based on Johnstone. [] In this instance, covering everything effectively tells us nothing.

Id. at 5-6 (internal citations omitted).

Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2014) Download BMS v Teva
Panel: Prost, Plager, Chen (author)

Bristol-Myers Squibb (BMS) owns Patent No. 5,206,244, which relates to certain antiviral compounds. At issue was claim 8, which covers entecavir, a treatment for hepatitis B that BMS markets under the name BARACLUDE. Teva submitted an ANDA seeking to market a generic version of entecavir; BMS sued for infringement. After trial, the district court held claim 8 to be obvious based on the selection of 2’CDG as a lead compound from the prior and a finding that a skilled artisan would have been motivated to make the necessary modification with a reasonable expectation of success at creating a compound with beneficial antiviral properties. BMS appealed.

Unlike the Allergan case, the analytic framework presented by the parties for the question of obviousness was the lead-compound approach. BMS contended that the district court had erred in selecting 2′-CDG as a lead compound, a particular legal framework that is frequently used in chemical compound cases. The Federal Circuit disagreed, agreeing with the district judge’s conclusion that “those of ordinary skill in the art would have selected 2′-CDG, a carbocyclic analog, as a lead compound for
further development efforts before BMS applied for the 244 patent in October 1990.” Slip Op. at 10-11. The appellate court also rejected BMS’s argument on motivation to modify the lead compound to make the patented compound, pointing to detailed evidence and testimony on why the modification would have been obvious.

Nor was the presence of unexpected results sufficient to establish nonobviousness on their own.

Contrary to BMS’s argument, unexpected results do not per se defeat, or prevent, the finding that a modification to a lead compound will yield expected, beneficial
properties. Rather, as secondary considerations of nonobviousness, they come into play in determining “the ultimate question of patentability.”

…

Secondary considerations of nonobviousness “must always when present be considered,” and can serve as an important check against hindsight bias. See Cyclobenzaprine, 676 F.3d at 1075-76, 1079 (quoting Stratoflex, Inc. v. Aeroquip Corp, 713 F.2d 1530, 1538-39 (Fed. Cir. 1983)). While secondary considerations must be taken into account, they do not necessarily control the obviousness
determination.

Slip Op. at 15-16. Here, the district court did not commit error in its factual findings that the unexpected properties did not compel a finding of nonobviousness, and the two legal errors that it committed (“(1) comparing entecavir to another hepatitis B drug on the market instead of the closest prior art, 2′-CDG; and (2) inappropriately look[ing] to what the inventor knew at the time of the invention—instead of one of ordinary skill in the art—to determine what was expected.” Slip Op. at 18) were harmless.

First Impressions: My reading of Judge Chen’s majority opinion is that it reflects a careful, thorough review of the district court’s opinion (which itself is helpfully quite detailed and Magistrate Judge Burke should be commended for his own thoughtful analysis). Conclusions are supported by detailed discussions and even if one disagrees with the overall conclusion of obviousness here, that disagreement seems less likely due to the carefulness of his approach and more likely due to some of the core difficulties inherent in pharmaceutical innovation such as the challenge of ascertaining marketable in vivo efficacy and the high value our society places on large-scale data-driven safety and efficacy determinations, determinations that can be quite costly yet have little if any direct role in substantive patent law questions.

Another possible reading of these two opinions is that they reflect a fair amount of deference to the decision making of others more familiar withe the specific facts. In Allergan, in addition expressly referencing the examiner’s decision to allow the patent, Judge Chen’s view would also have affirmed the district court’s ruling of nonobviousness. And in BMS, Judge Chen drew heavily on the district court’s findings. (That said, one reason why these opinions aren’t in as much tension as they might be is because the district court’s analysis of obviousness in Allergan was at least an order of magnitude thinner than that of the judge in BMS). At this point, this is merely an observation, and we’ll have to wait for future opinions from Judge Chen.

A Risk of Moonlighting

May 28, 2014Inventors, Ownership, Patent, Trade SecretAffirmed Without Opinion, First to Invent, Trade SecretsDennis Crouch

by Dennis Crouch

Despite California’s policies limiting non-compete agreements, the law still lays an implicit powerful fiduciary duty on employees. The (proposed) Restatement (Third) of Employment Law indicates that competition by current managerial employees violates the duty of loyalty but that a manager has the right to “prepare to compete.” One question that arises from the facts of the case below is whether an employee who obtains patents on-the-side in preparation to compete is somehow violating his fiduciary duty.

Robert Kulakowski v. Verimatrix, Inc. (Cal. Appellate Ct. 2014) Decision Text

Back in 2000, Kulakowski helped to found Verimatrix – acting as the company’s chief technology officer (CTO) and directing product development. The company makes video encryption security systems known as Conditional Access Systems or CAS.

In his last year with the company, Kulakowski began working on side projects. As part of that process, he was able to modify his IP and non-compete agreement with Verimatrix to clarify that he did not need to disclose to Verimatrix any inventions “conceived, reduced to practiced or developed by [Kulakowski] in [his] own time; without using the Company’s equipment, facilities, or trade secret information; and which is not the result of work performed by me for the Company.” Meanwhile, Kulakowski founded a new company (Secure TV) in May 2010 also operating in the CAS market but then expressly denied to his Verimatrix boss that the new company was in the CAS market. In September 2010 Kulakowski left Verimatrix and then filed a patent application known as Dynamic Obfuscation Processing.

This case arose when Kulakowski filed a declaratory judgment action in California state court asking for a ruling that Verimatrix held no right to title or interest in the new patents.

Following a bench trial, the lower court ruled in favor of Verimatrix — holding (1) that declaratory relief is not called for at this time because the patent applications are pending and may still be amended; and, alternatively, (2) that Kulakowski’s claim for equitable relief should fail because of his unclean hands based upon his breach of fiduciary and contractual duties owed to the company while he was still employed.

Seeing some of the logic of the lower court, Kulakowski accepted that the DJ action was not ripe appeal. However, he appealed the unclean portion of the opinion — arguing particularly that the lower court’s DJ decision was effectively jurisdictional with the consequence that the court lacked jurisdiction to then decide the unclean hands defense. That conclusion follows from the notion that a court who lacks subject matter jurisdiction has no power to make any findings on the merits of a proceeding.

On appeal, the California appellate court rejected Kulakowski’s arguments and affirmed the lower court ruling. Here, the appellate court found that the lower court’s first ruling on the DJ action for practical reasons, not for jurisdictional reasons.

If a court decides for practical reasons it is not necessary or proper to grant declaratory relief, there is no jurisdictional prohibition to the court making alternate findings based on the evidence before it.

The case may be revived once the patents issue or a more concrete dispute arises at that point the court will need to address whether the unclean hands decision here has a preclusive effect. The appellate court expressly refused to “offer any opinion on the extent to which the court’s alternative findings are binding on either party under res judicata or collateral estoppel doctrines.”

SmartGene v. Advanced Biological Laboratories

May 26, 2014PatentAbstract Idea, Affirmed Without Opinion, Federal Circuit En Banc, Subject Matter EligibilityJason Rantanen

By Jason Rantanen

Earlier this month, I posed a question relating to the patent eligibility of the following claim:

A method for guiding the selection of a therapeutic treatment regimen for a patient with a known disease or medical condition, said method comprising:

(a) providing patient information to a computing device comprising:

a first knowledge base comprising a plurality of different therapeutic treatment regimens for said disease or medical condition;

a second knowledge base comprising a plurality of expert rules for evaluating and selecting a therapeutic treatment regimen for said disease or medical condition;

a third knowledge base comprising advisory information useful for the treatment of a patient with different constituents of said different therapeutic treatment regimens; and

(b) generating in said computing device a ranked listing of available therapeutic treatment regimens for said patient; and

(c) generating in said computing device advisory information for one or more therapeutic treatment regimens in said ranked listing based on said patient information and said expert rules.

This claim was a real one, from a real case. It’s Claim 1 from U.S. Patent No. 6,081,786, and in a January 2014 nonprecedential opinion the Federal Circuit affirmed a district court’s ruling that it and claims from related patent No. 6,188,988 were ineligible for patent protection under 35 U.S.C. § 101. Here’s the core of the court’s reasoning:

The district court correctly held that the claim 1 method falls outside the eligibility standards of section 101 as that provision has been construed. This conclusion follows from CyberSource Corp. v. Retail Decisions, Inc., where, based on earlier precedents, this court held that section 101 did not embrace a process defined simply as using a computer to perform a series of mental steps that people, aware of each step, can and regularly do perform in their heads. 654 F.3d 1366, 1373 (Fed. Cir. 2011); see also In re Grams, 888 F.2d 835, 840-41 (Fed. Cir. 1989); In re Meyer, 688 F.2d 789, 794-95 (C.C.P.A. 1982). As CyberSource explains, those precedents rest on Supreme Court decisions indicating that section 101 covers neither “mental processes”—associated with or as part of a category of “abstract ideas”—nor processes that merely invoke a computer and its basic functionality for implementing such mental processes, without specifying even arguably new physical components or specifying processes defined other than by the mentally performable steps. See Gottschalk v. Benson, 409 U.S. 63, 67-68 (1972); Parker v. Flook, 437 U.S. 584, 589 (1978).

***

The Supreme Court’s post-CyberSource decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012), reinforces the application of Cyber-Source to decide the present case. The Supreme Court in Mayo, though addressing a case involving the “law of nature” exclusion from section 101, recognized that “mental processes” and “abstract ideas” (whatever may be the precise definition and relation of those concepts) are excluded from section 101. See 132 S. Ct. at 1289, 1293, 1297-98 (quotation marks omitted). Whatever the boundaries of the “abstract ideas” category, the claim at issue here involves a mental process excluded from section 101: the mental steps of comparing new and stored information and using rules to identify medical options. Mayo demanded that, when a claim involves an abstract idea (or, in Mayo itself, a law of nature), eligibility under section 101 requires that the claim involve “enough” else—applying the idea in the realm of tangible physical objects (for product claims) or physical actions (for process claims)—that is beyond “well-understood, routine, conventional activity.” 132 S. Ct. at 1294, 1298, 1299. The claim here does not do so. It calls on a computer to do nothing that is even arguably an advance in physical implementations of routine mental information comparison and rule-application processes. In this context, the concern about preempting public use of certain kinds of knowledge, emphasized in Mayo, is a grave one. See id. at 1301-02.

Our decisions since Mayo do not undermine Cyber-Source or its application here…..

You can read the entire opinion here: SmartGene v ABL.

ABL has since filed a petition for certiorari, as well as an amicus brief in Alice v. CLS. Its position is that SmartGene should be GVR’d regardless of the outcome in Alice v. CLS (which might issue as soon as tomorrow). From the introduction:

Judge Pauline Newman recently characterized the Federal Circuit as being in a state of jurisprudential “deadlock,” making patent eligibility under 35 U.S.C. § 101 a question “whose result will depend on the random selection of the panel.” CLS Bank Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269, 1280 (Fed. Cir. 2013) (hereinafter CLS Bank) (en banc) (Newman, J., dissenting), cert granted, Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 734 (2013) (hereinafter Alice). No better case illustrates the panel-dependent crapshoot that Section 101 jurisprudence has become than this one. Although it is impossible to predict the Court’s forthcoming opinion in Alice, there is little doubt that it will significantly impact the law in this area and break the deadlock in the Federal Circuit.

The decision below is a prime example of the
current dysfunctional state of the law in the Federal Circuit.

You can read the petition here: ABL v. SmartGene petition for writ of certiorari.

Patent Rights are a Marital Asset and Non-Inventing Spouse is a Co-Owner

May 9, 2014PatentAffirmed Without OpinionDennis Crouch

By Dennis Crouch

James Taylor v Taylor Made Plastics (Fed. Cir. 2014)

I should note here that this case is neither about the musician or the golf club company. Rather, it is about the now fractured Taylor family and their patented pipe plugs. I discussed the district court decision earlier here.

Several years ago James T. invented storm drain equipment and obtained a patent in his name only. U.S. Patent No. 5,806,566. When he and his wife Mary T. later divorced, the divorce court ordered “equitable distribution of marital property” with Mary T. receiving 60% of proceeds from the patent and James T. receiving 40%. The divorce court seemingly only dealt with equitable title in the form of rights-to-proceeds and not with legal title to the patent itself. And, in particular, the divorce court did not identify who held the exclusive rights associated with the patent.

Following the divorce, James T. seems to have lost control of the Taylor Made Plastics company that sells the devices he invented and the company also stopped paying on the patent. Mary T., however, is on much better terms with the company that continues to be family run. So, when James T. filed his infringement lawsuit against Taylor Made Plastics, Mary T. sided with the company and the district court dismissed the case – finding that title to the patent was divided between the two former spouses and, as a consequence, any infringement lawsuit must be filed by both co-owners acting in concert.

On appeal, the Federal Circuit has affirmed – finding that Mary T. was properly considered a co-owner and therefor a necessary party for any infringement lawsuit to consider.

The appellate panel began by highlighting the rule that equitable title is not the type of ownership we are talking about. Thus, the fact that Mary T. is owed 60% of the distribution is irrelevant. Rather the correct question is whether Mary T. has at least partial power to wield the rights-of-exclusivity inherent to the patent.

The long-established rule is that a suit for patent infringement must join all co-owners of the patent as plaintiffs. Waterman v. Mackenzie, 138 U.S. 252 (1891). If any co-owner should refuse to join as a co-plaintiff, the suit must be dismissed for lack of standing. But a party is not co-owner of a patent for standing purposes merely because he or she holds an equitable interest in the patent. Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574 (Fed. Cir. 1991). Rather, a co-owner must hold legal title to the patent. Id. (citing Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24 (1923)). Legal title vests initially in the inventor, and passes to others only through assignment or other effective legal transfer.

As in most states, assets acquired by either spouse during a Florida marriage are presumed to be marital assets subject to equitable distribution on divorce. It is through that process that Mary T. became a co-owner. In the appeal, James T. represented himself pro se and seemingly did a poor job by offering number of arguments “only in a cursory fashion without any supporting facts.” At the Federal Circuit, James T. argued (but failed to provide any evidence) that Mary T. had signed a contractual agreement to enforce the patent against Taylor Made. If that contract exists and is enforceable then James T. should be able to re-file the lawsuit and force her to participate in the next go-round.

= = = = =

Professor Hricik provides his thoughts here: https://patentlyo.com/hricik/2014/05/spouses-inventors-owners.html

Gone Fishing: 25 year old patent application rejected again

March 17, 2014PatentAbstract Idea, Affirmed Without Opinion, obviousness, Subject Matter EligibilityDennis Crouch

By Dennis Crouch

In re Rudy (Fed. Cir. 2014)

Back in 1988, Christopher Rudy filed a patent application for a fishing hook that is both colored and translucent. An illustrative pending claim is as follows:

21. In an article of manufacture, which is a fishing hook, which is disintegrated from but is otherwise connectable to a fishing lure or other tackle and has a shaft portion, a bend portion connected to the shaft portion, and a barb or point at the terminus of the bend portion, thus itself not being a fishing lure to include a fishing lure in imitation of an insect or part of an insect to include an insect body, and which is made of suitable material, the improvement comprising where the hook is made of a suitable material, which permits transmittance of light therethrough and is colored a color, selected from the group consisting of red, orange, yellow, green, blue and purple, in nature.

In reading the claims, you might think that this is an abstract idea case since the invention is based upon the law of nature or abstract idea that the translucence and color of a fishing hook correlate with a fish’s proclivity to bite and, although the patent does claim a physical hook, that application merely uses well known technology in a way that basically occupies the same space as the abstraction itself.

However, the PTO rejected the claim under 35 U.S.C. § 103 as obvious in light of the prior art. The prior art apparently teaches transparent fishing hooks as well as fishing hooks that are both translucent and colored but that are shaped like insects. Although neither of those references teach all of the elements of the claim, the USPTO found that it would have been obvious back in 1988 to combine the references to form Rudy’s invention. Rudy submitted a number of affidavits explaining the invention’s importance. However, the USPTO found those statements from the inventor and his “friends and family” to be insufficiently anecdotal to overcome the rejection. On appeal, the Federal Circuit has affirmed the rejection without opinion.

The only interesting part of the oral arguments came when the court asked the USPTO to explain why the case was still alive and pending after 26 years. The USPTO placed full blame on Mr. Rudy. Explaining that “Mr. Rudy is a very zealous advocate on his own behalf.” In particular, during this time Mr. Rudy has apparently filed thirteen amendments to the claims; seven petitions; eight extensions of time; twenty nine miscellaneous letters; enjoyed three appeals; and has abandoned his action only to later revive it to be considered again.

On remand, I expect that Rudy will amend his claims and try again.

Federal Circuit: Enablement More Difficult When Invention Faces Skepticism

February 26, 2014Enablement, PatentAffirmed Without Opinion, Enablement, obviousnessDennis Crouch

By Dennis Crouch In re Hoffman (Fed. Cir. 2014) (non-precedential decision) Gene Hoffman and David Lund’s patent application is directed to method of weakening the strength of tropical cyclones by delivering super-coolant from an aircraft into the eye of the hurricane. The inventors here have never tested their method, but did provide some preliminary calculations that – they argue – suggest success. The USPTO rejected the application for failing to enable the claimed invention under 35 U.S.C. 112(a). In particular, the examiner identified three failures: (1) the preliminary calculations contained unexplained assumptions and mathematical errors; (2) the specification noted a need for experimentation to determine the proper amount of coolant to add and the optimal strike time; and (3) a number of weather scientists have expressed doubt as to whether similar approaches would work. In reviewing the rejection, the PTAB affirmed and that decision (rejecting the application) has now been affirmed on appeal. Pending claim 36 is identified as representative and claims:

A process for disrupting a formed or forming tropical cyclone eye wall or eye or center of lowest pressure comprising:

Introduction of a super coolant chemical agent sprayed with force (the super coolant is stored in a vessel under pressure) and or released from pre-measured containers from an appropriate number of large aircraft to reduce the temperature within the eye wall (top to bottom at sea level),

thereby circulating the super coolant throughout the eye wall by the centrifugal force of the eye wall, alternatively into the eye or center of lowest pressure to reduce the temperature in the eye or center of lowest pressure and the water beneath,

[t]hereby reducing the wind and storm surge of the eye wall or raising the pressure in the eye or center of lowest pressure and converting it back to a tropical rainstorm.

The claim form here does not really follow the standard ordinarily used by professional patent drafters. Here, it appears that claim drafting and prosecution were handled pro-se by the inventors. For more than 150 years, patent law has been seen as an arcane area of law full of traps for non-experts. In some ways, this decision confirms that tradition. The first sub-section of 35 U.S.C. § 112 requires that the patent document disclose enough about the invention so as to enable an artisan skilled in the particular area of science and technology to make and use the invention. The statute reads:

[The patent must disclose] the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same.

35 U.S.C. §112(a). The court has added some gloss to the statute in that precedent allows missing elements from the specification so long as the skilled artisan could fill-in those gaps without undue experimentation. The court also uses the “Wands factors” to help determine whether the disclosure meets the enablement standard. These factors include:

The quantity of experimentation necessary,
The amount of direction or guidance presented,
The presence or absence of working examples,
The nature of the invention,
The state of the prior art,
The relative skill of those in the art,
The predictability or unpredictability of the art, and
The breadth of the claims.

In re Wands, 858 F.2d 731 (Fed. Cir. 1988). In applying these, the Federal Circuit found that there was no doubt that the USPTO’s decision was correct. Although the court did not go into depth in its analysis, one interesting aspect of the decision is that the Federal Circuit identifies skepticism in the scientific community as the most important factor here. The court writes:

And perhaps most significantly, the very efficacy of the method itself is subject to considerable doubt in the scientific community.

In other words, the enablement burden is more difficult to meet when the invention is surprising or when it goes against conventional wisdom. Of course, those same inventions will more easily surpass the central patentability test of non-obviousness. My point here, though, is that patentees with clearly groundbreaking inventions should take extra pause to ensure that the surprising result has been properly enabled.

Nazomi v. Nokia

January 16, 2014PatentAffirmed Without Opinion, Claim Construction, EnablementJason Rantanen

By Jason Rantanen

Nazomi Communications, Inc. v. Nokia Corp. (Fed. Cir. 2014) Download 13-1165.Opinion.1-8-2014.1
Panel: Lourie (concurring), Dyk (author), Wallach

Nazomi is a small software and semiconductor development company that sued a set of large technology companies for patent infringement in a series of lawsuits. This appeal involved the district court's initial claim construction order in one of these suits and its grant of summary judgment of noninfringement in favor of Western Digital and Sling Media.

Two of Nazomi's patents were at issue in this appeal: Nos. 7,225,436 and 7,080,362. During the district court proceeding, the defendants moved for a "preliminary" construction of the asserted claims, arguing that all the claims "require that the processor of the claimed apparatus, when operated, will perform the recited functions related to the processing of stack-based instructions without modification." The court analyzed the issue in the context of representative claim 48 of the '362 patent

48. A central processing unit (CPU) capable of executing a plurality of instruction sets comprising:

an execution unit and associated register file, the execution unit to execute instructions of a plurality of instruction sets, including a stack based and a register-based instruction set;

a mechanism to maintain at least some data for the plurality of instruction sets in the register file, including maintaining an operand stack for the stack-based instructions in the register file and an indication of a depth of the operand stack;

a stack control mechanism that includes at least one of an overflow and underflow mechanism, wherein at least some of the operands are moved between the register file and memory; and

a mechanism to generate an exception in respect of selected stack-based instructions.

Nazomi contended that the claim required only hardware that was capable of performing the claimed functionalities (here, indicated by italics). The district court concluded, however, that the asserted claims required a combination of hardware and software capable of performing the functional limitations.

To understand why this distinction matters, some background in the defendants' products is useful. Western Digital and Sling Media use a processor designed by another company, ARM. In 2000, ARM developed a design involving a hardware component called "Jazelle." However, recognizing that not every product would use every circuitry feature in its processors, ARM also designed its processors so that unused functionality would remain dormant unless activated (and thus not unnecessarily drain resources). In order to activate the Jazelle circuitry, it is necessary to first install a software package called "JTEK." In both the accused Western Digital and Sling Media products, Jazelle is dormant and there was no evidence that any end user had installed JTEK. Nazomi's argument, however, was that Jazelle's presence in the accused products was sufficient sufficient for a finding of infringement (i.e.: hardware "capable").

On appeal, the Federal Circuit agreed with the district court's construction as requiring both hardware and software. It reasoned that because hardware cannot meet the functional limitations in the absence of enabling software, "the claims are properly construed as claiming an apparatus comprising a combination of hardware and software capable of practicing the claim limitations." (my emphasis). In reaching this conclusion, it distinguished cases involving "programmable" language, such as Intel Corporation v. U.S. International Trade Commission, 946 F.2d 821, 832 (Fed. Cir. 1991). Here, the claims did not merely cover hardware that could be programmed to perform the claimed functionality; they required that the processor be capable of executing the stated instruction sets. Since hardware alone cannot do that in the absence of enabling software, the only possibility was that the claims required both hardware and software.

The panel also affirmed the district court's grant of summary judgment of noninfringement (Judge Lourie agreed with outcome, but did not join as to the bulk of the court's reasoning), drawing on precedent that "“an apparatus claim directed to a computer that is claimed in functional terms is nonetheless infringed so long as the product is designed in such a way as to enable the user of that [product] to utilize the function without having to modify the product.” Silicon Graphics, Inc. v. ATI Technologies, Inc., 607 F.3d 784, 794 (Fed. Cir. 2010). The critical issue was thus whether the installation of the JTEK software would constitute a "modification" of the accused product.

The Federal Circuit concluded that installation of the software would constitute a modification because in the asserted claims the software is part of the claimed structure. In other words, this is not a case where the software component already resided on the hardware and could be unlocked by using a key, or where the claims recited programable software that also resided on the hardware. Rather, the software was a necessary structural component of the claimed invention and its addition would constitute the addition of functionality that is not currently present.

Further thoughts on Fee-Shifting from Judges Rader and O’Malley

December 28, 2013Attorney Fees, Fee Shifting, PatentAffirmed Without Opinion, obviousnessDennis Crouch

By Dennis Crouch

Kilopass Tech v. Sidense Corp. (Fed. Cir. 2013)

In a 2012 decision, the district court ruled that Sidense did not infringe any of the claims of Kilopass’s three asserted memory-cell patents and that decision was affirmed on appeal (without opinion). However, the district court denied an exceptional-case attorney-fee award because Sidense had failed to provide clear and convincing evidence that the infringement action was brought or prosecuted in bad faith. In a decision calling for broader awards of exceptional-case attorney-fees, the Federal Circuit has vacated and remanded. Judge O’Malley penned court’s opinion with a concurring opinion filed by Chief Judge Rader.

35 U.S.C. § 285 provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” Over the past several years, Exceptional-case awards have been few-and-far-between and the perception is that those awards are particularly rare for prevailing defendants who successfully avoid liability for infringement. In Brooks Furniture, the Federal Circuit ruled that a prevailing accused infringer can receive fees under Section 285 based upon either (1) objectively baseless litigation brought in subject bad faith or (2) other misconduct during the litigation.

The attorney-fee issue is hot right now. The Supreme Court will hear two pending cases on the interpretation of Section 285 later this term and Congress is considering several bills that would make it easier for a prevailing party to also get its fees paid-for. These actions are primarily focuses ways to push-back against patentees who raise unsuccessful infringement claims.

Here, Sidense argued that the case should be found exceptional because the lawsuit was objectively baseless and brought in bad faith. The district court rejected that argument, and, in vacating that decision, the Federal Circuit made several important findings:

A case can still be brought in bad faith even if the plaintiff-patentee did not have actual knowledge of its baselessness. Rather, the knowledge requirement can be met when a lack of objective foundation for a claim was either known or obvious. Thus, a plaintiff with a misguided belief in its case can still be found to have brought the case in bad faith if the baselessness of the claim would have been obvious to someone more reasonable.
Subjective knowledge of bad faith can be proven through a variety of direct and circumstantial evidentiary proofs and should be based on the “totality of the circumstances.” Thus, even though clear-and-convincing evidence is required to prove bad faith, courts can still “infer[] bad faith from circumstantial evidence.”
A “smoking gun” that reveals “that a patentee knew that he had no chance of winning a lawsuit” is sufficient to show subjective bad faith despite other evidence to the contrary (such as an opinion of counsel that the case is a good one).
“Factors such as the failure to conduct an adequate pre-suit investigation, vexatious or unduly burdensome litigation tactics, misconduct in procuring the patent, or an oppressive purpose are factors which can be indicative of bad faith.”

Judge O’Malley also discussed, but rejected, the defendant’s arguments that (1) subjective bad faith be eliminated as an element of an exceptional case finding and that (2) fees should be awarded in cases where a patentee loses a week but reasonable case.

In light of patentees’ First Amendment right to petition the government (by, for instance, filing a lawsuit seeking relief in the courts), we do not think Congress intended to discourage patentees from bringing reasonable claims of infringement by raising the specter of fee shifting—even when the patentee’s legitimate claims are on less than the firmest ground.

. . . Patent owners possess presumptively valid property rights which convey the right to exclude others from practicing the claims in their patents. The property right conveyed by a patent has constitutional underpinnings. . . . And, patentees have a constitutional right to petition the government to enforce or otherwise vindicate those rights. Thus, where there is no basis upon with to predicate exceptionality other than the viability of the claims asserted, we conclude that § 285 fees should not be awarded as long as the patentee had an objectively reasonable basis for its claims [or] if an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome.”

Instead, when a plaintiff presses reasonable, but weak, claims of infringement, a prevailing defendant must look to the many other bases for fee shifting under § 285.

Writing in concurrence, Chief Judge Rader argued that the rule for fee-shifting should be more liberal and generally allowed whenever the circumstances require fee shifting in order to prevent a gross injustice. See Eltech Sys. Corp. v. PPG Indus., Inc., 903 F.2d 805 (Fed. Cir. 1990).

CBT Flint v. Return Path: Applying 28 U.S.C. 1920(4) to E-Discovery Costs

December 17, 2013PatentAffirmed Without Opinion, Claim ConstructionJason Rantanen

By Jason Rantanen

CBT Flint Partners, LLC v. Return Path, Inc. (Fed. Cir. 2013)
Panel: Dyk, O'Malley (concurring-in-part and dissenting-in-part), Taranto (author)

This is an important pair of opinions that anyone interested in the fee-shifting proposals currently pending before Congress should read. Two aspects are worth noting. First, the court rejects the argument that Congress's 2008 amendment to section 1920(4) implemented a dramatic change in terms of e-discovery costs. Second, it implements a granular framework for analyzing e-discovery cost requests that requires complex and careful line-drawing. In addition, both the majority and dissent address the policy concerns implicated in this area.

CBT sued Cisco Ironport Systems and Return Path (who I'll refer to collectively as Cisco, since most of the costs incurred here were sought by Cicso) for patent infringement. Following claim construction, CBT stipulated to noninfringement and Cisco obtained summary judgment of indefiniteness on one asserted claim. Cisco moved to recover its costs under 28 U.S.C. § 1920, including $243,453.02 in fees it paid to a company that handled electronic discovery. The district court granted Cisco's request. On appeal, the Federal Circuit reversed summary judgment of indefiniteness, construed the claim in question, and remanded for further proceedings. The district court subsequently granted summary judgment of noninfringement to Cisco, which the Federal Circuit summarily affirmed.

After granting Cisco's motion for summary judgment of noninfringement, the district court again awarded Cisco the fees it paid to an e-discovery vendor.

The district court's reasoning: The district court's award of costs was implicitly based on 28 U.S.C. § 1920(4), which states:

A judge or clerk of any court of the United States may tax as costs the following:

…

(4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;

The Federal Circuit described the district court's reasoning as follows:

Based on a “careful review” of the vendor’s invoices to Cisco, the court characterized the services rendered as “highly technical” and “not the type of services that attorneys or paralegals are trained for or are capable of providing.” The court concluded that the fees Cisco sought to recover were “the 21st Century equivalent of making copies” (although Cisco had not categorized them as such) and held them to be recoverable….In awarding Cisco the requested amounts, the court said that the “enormous burden and expense of electronic discovery are well known” and that “[t]axation of these costs will encourage litigants to exercise restraint in burdening the opposing party with the huge cost of unlimited demands for electronic discovery.”

Slip Op. at 3 (internal citations omitted). On appeal, the Federal Circuit reversed in part, vacated in part, and remanded the matter to the district court for further proceedings.

The Narrow Scope of Section 1920: In 2008, Congress amended section 1920(4) to remove a specific reference to "papers." While the Eleventh Circuit (whose law applied in this case) has not addressed section 1920(4) as amended, its prior caselaw had interpreted section 1920 as being limited to the "reasonable costs of actually duplicating documents, not [] the costs of gathering those documents as a prelude to duplication." The Federal Circuit concluded that the amendment did not change that interpretation:

[W]e conclude that recoverable costs under section 1920(4) are those costs necessary to duplicate an electronic document in as faithful and complete a manner as required by rule, by court order, by agreement of the parties, or otherwise. To the extent that a party is obligated to produce (or obligated to accept) electronic documents in a particular format or with particular characteristics intact (such asmetadata, color, motion, or manipulability), the costs to make duplicates in such a format or with such characteristics preserved are recoverable as “the costs of making copies . . . necessarily obtained for use in the case.” 28 U.S.C. § 1920(4). But only the costs of creating the produced duplicates are included, not a number of preparatory or ancillary costs commonly incurred leading up to, in conjunction with, or after duplication.

Slip Op. at 10.

Three stages of e-discovery: To analyze whether the costs fell into the category of producing duplicates versus preparatory or ancillary activites, the court divided the e-discovery process into three stages: imaging and extraction (where source media is copied as a whole and individual documents are extracted), database creation and document identification (where extracted documents are organized into a database and searched), and production copying (where the documents selected for production are copied onto memory media).

Comment: The opinion specifically refers to this as "the document production process used in this case." However, these stages are common enough that the court's framework can be applied to most cases involving e-discovery.

However, while they provide a framework, these categories do not answer the question of whether costs may be awarded for the respective activies. Rather, the court's opinion envisions a careful line-drawing process, in which the specific activities and their context plays a substantial role in determining whether individual costs may be awarded. For example, in some circumstances, costs for extraction can be recoverable under section 1920 "where they are, in fact, necessary to make copies of information required to be produced and not incurred just to make copies for the convenience of the producing party." Slip Op. at 13. However, "if metadata can be preserved without first using imaging and extraction techniques, then those steps are outside section 1920(4)." Id. at 13-14. The opinion contains numerous examples of hypotheticals and considerations to take into account, while noting that it is "an inquiry that the district court should perform in the first instance." Id. at 15.

Comment: One thing to keep in mind with this opinion: the flexibility that the majority perceived in Eleventh Circuit law here is not uniform across the circuits. The court's opinion specifically recognizes that its approach to stage one costs is at odds with the Third and Fourth Circuits. This variation should be kept in mind when applying this opinion.

Judge O'Malley's Separate Opinion: Writing separately, Judge O'Malley agreed with most of the majority's discussion but disagreed with respect to one category: the pre-duplication expenses that the majority described as "stage one costs." In her view, the majority's approach, which allows some of these costs to be awarded, improperly broadens the scope of section 1920(4), is inconsistent with the Eleventh Circuit's prior approach to section 1920(4), and creates an unnecessary circuit split.

References to the Sedona Conference: The opinion references the The Sedona Conference Glossary: E-Discovery & Digital Information Management (Sherry B. Harris et al. eds., 3rd ed. 2010) numerous times. As I've written before, this is a worthwhile program to consider becoming involved in.

In addition, the Sedona Conference has put together an all-star program on patent litigation reform called "Patent Litigation Best Practices: A Matter for Congress or for Bench and Bar?" that will be held on January 22, 2014. The scheduled panelists include Judge O'Malley.

Supreme Court: The Right to a Jury Trial on Obviousness

December 10, 2013Obviousness, PatentAffirmed Without Opinion, anticipation, Claim Construction, Damages, obviousness, Supreme CourtDennis Crouch

By Dennis Crouch

Soverain v. Newegg (on petition for writ of certiorari)

After a trial on the merits, Judge Davis (E.D.Tex.) found that the accused infringer (Newegg) had presented insufficient evidence of obviousness and refused to let that issue go to the jury. Instead, the judge awarded a directed verdict for the patentee (Soverain) that the asserted claims were not invalid as obvious. The jury went on to find Newegg liable for infringement and awarded $2.5 million in damages and also found the patent not anticipated. Following trial, the district court denied Newegg's motion for new trial on obviousness grounds. On appeal, the Federal Circuit took the almost unprecedented stance of reversing the non-obviousness decision. One reason for the rarity of a full-reversal (rather than vacatur) is largely explained by the substantial factual foundation that serves as the basis of an obviousness decision. In its opinion, the Federal Circuit couched its discussion in terms of questions of law – following the Supreme Court's lead from KSR International Co., v. Teleflex, Inc., 550 U.S. 398 (2007). In that case, the Supreme Court was able to make the legal conclusion that the asserted claims were obvious because the factual underpinnings of obviousness were seemingly not in material dispute.

In its petition for writ of certiorari, Soverain focuses on the Seventh Amendment right to a jury trial and argues that the Federal Circuit's approach effectively and improperly redefines obviousness as a pure question of law.

Question Presented:

Whether the Federal Circuit's effective redefinition of obviousness as a pure question of law, allowing it to resolve disputed factual questions in the first instance on appeal, violates the Seventh Amendment and this Court's precedent.

Here, Sovarain points to a number of factual issues that the Federal Circuit identified as questions of law, including assessing credibility of the witnesses, resolving conflict between witness testimony resolving the teaching of prior art references.

The Seventh Amendment provides that:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved…

The Seventh Amendment "preserve[s]" the "common law" right to jury trial and, as a consequence, presents an oddball test that roughly asks whether the cause of action at issue was (or is analogous to) a common law cause of action that was tried before an English jury back in in 1791 and then whether the particular trial decision in question is one that was (or would have been) decided by a jury. See Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

The Supreme Court has indicated that patent infringement lawsuits where the patentee is seeking damages are cases at law protected by the Seventh Amendment right to a jury trial. However, as far as I know, the Supreme Court has never held that the right to a jury particularly to an obviousness challenge or to the underlying factual conclusions that serve as the basis for an obviousness decision. 1800's cases do suggest that the factual underpinnings to the "invention" requirement are subject to a jury determination. See, for example, Battin v. Taggert, 58 U.S. (17 How.) 74 (1854); and Turrill v. Michigan S. & N. Ind. R.R. Co., 68 U.S. (1 Wall.) 491 (1864) ("[T]here was an important question of fact which should have been left to the jury, whether … any of the prior movable pressblocks … were substantially the same as the machine of the patentee."). However, the 1952 Patent Act expressly eliminated the doctrine of invention in favor of the new doctrine of obviousness. In its last foray into this area, the Supreme Court recognized in Markman that claim construction included both questions of fact and questions of law, but ultimately determined that no fundamental right to a jury trial existed for that doctrine.

An interesting inside issue here is that Judge Newman has been a strong proponent of the right to a jury trial on obviousness. See Newell Cos. v. Kenney Manufacturing Co., 864 F.2d 757 (Fed.Cir. 1988) (J. Newman dissenting from holding that ultimate question of obviousness may be decided by judge over party's objection). However, it was Newman who found Soverain's patent obvious in the present case. In the 1988 Newell case, the majority held that the patentee has no right to a jury trial on obviousness unless the factual underpinnings are in dispute.

The defendant was, of course, entitled to have a jury summoned in this case, but that right was subject to the condition, fundamental in the conduct of civil actions, that the court may withdraw a case from the jury and direct a verdict, according to the law if the evidence is uncontradicted and raises only a question of law.

Of course, Judge Nies did not walk through the weeds of history (as required by the Supreme Court) to arrive at this answer but instead only looked to the "fundamental notion" that there is no right to a jury decision regarding a question of law. See also, In re Lockwood, 50 F.3d 966 (Fed. Cir. 1995) (Nies, C.J. writing in dissent) (arguing that a patent is a public right created by Congress and "[a] constitutional jury right to determine validity of a patent does not attach to this public grant") (mandamus vacated without opinion by the Supreme Court).

Focusing back, the Soverain petition does not ask the Supreme Court to overrule Newell, but rather to merely limit courts ability to unilaterally expand take would-be factual question and then make those factual conclusions under the guise of legal determinations. Soverain writes:

The Federal Circuit's decision to take for itself questions this Court has reserved for the trier of fact has significant consequences that threaten the stability and predictability of the patent system. This decision shifts the boundary between the ultimate legal question of obviousness and the underlying factual questions. It thus paves the way for district courts and other panels to decide factual questions and undermines the role that the jury and procedural safeguards play in ensuring that hindsight bias does not skew the analysis of obviousness. By downplaying the factual component of obviousness, the Federal Circuit's decision also erodes the clear and convincing evidence standard for proving invalidity, which this Court reaffirmed in Microsoft Corp. v. i4i Limited Partnership, 131 S. Ct. 2238 (2011).

I also see this case as asking for clarification of the KSR decision in terms of what elements of the "common sense" analysis should be considered determinations rightfully before a jury. I suspect that the brief strategically avoided that issue because the Federal Circuit is a much riper target for review than a recent unanimous and popular Supreme Court opinions.

In an amicus brief supporting the petition, Professor Eileen Herlihy argues that the Federal Circuit systematically gets Seventh Amendment questions wrong and needs to be set straight by the Supreme Court. Herlihy has written two articles on how the Seventh Amendment should be applied to patent cases.

Enforcing Injunctions: Perhaps Not so Powerful

October 16, 2013PatentAffirmed Without Opinion, Federal Circuit En Banc, VenueDennis Crouch

By Dennis Crouch

NCube (ARRIS Gp) v. SeaChange (Fed. Cir. 2013)

Injunctive relief is a powerful mechanism for stopping ongoing patent infringement and for forcing settlement by placing large hold-up costs on adjudged infringers who are locked-into maintaining their technology profile. In the area of multi-component systems, many accused-infringers and academics argue that the hold-up costs of injunctive relief sets-up an imbalance of power that results in a windfall settlement for minor-component patentees. The prototypical case is where an injunction is ordered to stop sales of a complex product based upon the finding that one of the many components infringes a patent.

The decision here offers a counterbalance based upon the recognition that product specifications and production methods are continually updated and modified. Major modifications may result in a new product version, but more minor changes regularly implemented without direct customer notification.

Here, the ARRIS patent covers a system of delivering streamed video that have been purchased online. Patent No. 5,805,804. A jury found that SeaChange’s ITV product was infringing and the district court entered a permanent injunction – enjoining SeaChange from using or selling the ITV product or “any devices not more than colorably different therefrom that clearly infringe the Adjudicated Claims of the ‘804 patent.” Although stated within the same paragraph here, it actually took four years for the court to order the permanent injunction following the jury verdict. The delay took into account post-verdict motions and briefing and then an appeal to the Federal Circuit where the verdict was affirmed.

By the time the injunction order became effective, SeaChange had modified its ITV system in order to avoid infringement. This approach is common. In essence, when an injunction issues regarding a minor component of a product, the outcome is normally not to cease manufacturing and sales but rather to modify or “patch” the product design and thus avoid the injunction. It’s also common that the work-around is – from the patentee’s point of view – still within the coverage of the patent.

After a failed settlement attempt, ARRIS filed a contempt motion asking the district court to stop the sales. However, the district court refused and that refusal has been affirmed on appeal the Federal Circuit. Rather, in order to stop the new product ARRIS would need to file an entirely new federal lawsuit.

Contempt motions are actually difficult to win. The basic rule is that the party seeking to enforce the injunction must provide clear and convincing evidence that the accused activity falls within the injunction. For new product designs, the courts only allow contempt when the new product is “no more than colorably different” than the one found to be infringing. See TiVo v. EchoStar (Fed. Cir. 2011) (en banc).

Here, the modification was to basically take a ClientID out of a particular table stored on the system and instead stored elsewhere on the system. Although the ClientID still performs the same function, the change “is a significant change to the system.”

The result then is that ARRIS only avenue for enforcement is to file a new infringement lawsuit.