Tag Archives: AIA Trials

The America Invents Act (AIA) of 2011 authorized the creation of a set of administrative trials (AIA Trials), including Inter Partes Review (IPR) proceedings, Post Grant Review (PGR) proceedings and transitional Covered Business Method Review (CBM) proceedings. In each of these proceedings, anyone can file a petition to challenge an issued patent, and, after instituting the trial, the Patent Trial and Appeal Board (PTAB) will decide whether the challenged claims should be confirmed or cancelled.

Samsung v. Apple: A view from inside the courtroom

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By Sarah Burstein, Associate Professor of Law at the University of Oklahoma College of Law

Samsung Elecs. Am., Inc. v. Apple Inc., No. 15-777 (argued Oct. 11, 2016) Transcript

On Tuesday, I attended the oral arguments in Samsung v. Apple.  As mentioned in a previous Patently-O post, the Court granted cert on a single issue, namely:

Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?

The relevant statute is 35 U.S.C. § 289, which provides a special additional remedy for certain acts of design patent infringement. Section 289 states:

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

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

In Apple and a case decided briefly after it, Nordock v. Systems, the Federal Circuit ruled that § 289 requires a court to award the total profit from the entire infringing product to a successful design patentee—even when the design patent claims a small portion of the overall product design.

In its cert petition and merits brief, Samsung argued that the “article of manufacture” in § 289 could be something less than the entire infringing product. In its brief opposing cert, Apple defended the Federal Circuit’s interpretation. Yet, in its merits brief, Apple agreed with Samsung (and the United States) that the relevant “article of manufacture” could be something less than the entire infringing product.

At oral argument, Samsung informed the Court that it was dropping its “causation argument” (i.e., that § 289 must be read in light of background causation principles from general tort law) and wanted to focus on its “article of manufacture” argument (i.e., its argument that a successful design patentee should be entitled to the “total profit” from the “article of manufacture” but that the relevant article should be determined mainly by looking at whether the patent claims a whole design or only part).

Unsurprisingly, the bulk of the oral argument was spent discussing how factfinders should  determine what constitutes the relevant “article of manufacture” for the purposes of § 289. The Justices seemed particularly interested in how a jury could be instructed to perform this determination. The Justices spent a lot of time pressing the parties about the desirability of the four-part test proposed by the United States, asking if they thought that approach was appropriate and if there were any factors they would add.

It was also very clear during the argument that Apple really wanted to focus on its new waiver argument. In its merits brief (though not in its brief opposing cert), Apple argued that Samsung failed to preserve the “article of manufacture” argument for appeal. After a few questions, however, the Justices’ patience for this line of argument waned and the Chief Justice rather pointedly told Apple’s counsel to move on. The clear message conveyed was that the Justices didn’t need to be told what was in the record; they were perfectly capable of reviewing it for themselves.

On the whole, and based solely on the arguments, it seemed like the Justices were leaning toward adopting some form of multi-factor test to determine what constitutes the relevant “article of manufacture.” What that test might look like was far from clear. At some points, the Justices seemed visibly frustrated by the prospect of coming up with a workable test; whether they were convinced that any of the proposed tests would, indeed, be workable remains to be seen.

In this observer’s opinion, the real problem is the attempt to add a qualitative element to this test, instead of focusing on what the patentee actually claims. Also, it’s no wonder that the Justices and parties had difficulty trying to identify the relevant article of manufacture for the D’305 patent, which claims a design for a single screenshot of the iPhone graphical user interface (“GUI”). Like other GUI designs, the D’305 patent claims a design for software, not a design for a screen (no matter what the PTO says).

In any case, there was no indication that any of the Justices were seriously considering upholding the Federal Circuit’s whole-product rule, which a couple of justices derided as clearly absurd. Justice Breyer did express some concern, at the end, about subverting the original congressional intent. However, he seemed more concerned about creating/affirming a rule with “absurd results.”

One thought: The phrase “article of manufacture” doesn’t just appear in § 289. It also appears in § 171, which defines design-patentable subject matter. Although the Federal Circuit wasn’t asked to construe that phrase in § 289 until Apple, it has issued a number of decisions on what constitutes an “article of manufacture” in the context of § 171. The Federal Circuit didn’t mention any of those cases in its decision in Apple and the parties haven’t relied on them to make their points before the Supreme Court. However, under normal principles of statutory construction, this phrase should mean the same thing in both of these key design patent provisions. It seems fairly clear that the Federal Circuit expanded the definition of “article of manufacture” in § 171 without thinking of the potential consequences for § 289 (arguably leading to the worst of the “absurd results” created by the Federal Circuit’s Apple/Nordock rule). And it seems likely that the reverse might happen here—the Justices might redefine the “article of manufacture” in § 289 without considering any potential consequences for § 171. Of course, those issues weren’t briefed. But it’s still an issue worth keeping an eye on.

It is Improper to Consider Extra-Record Claim Construction Evidence On Appeal

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Apple v. Samsung (Fed. Cir. 2016) (En banc)

Note: This SamsApple case is not the design patent damages case now before the US Supreme Court. Rather, this case involves Apple’s patents covering slide-to-unlock; phone number recognition; and auto spell correction. At the district court, the jury found that three of Apple’s touch-screen patents infringed by Samsung devices (resulting in $119.6 million in damages).  The jury also found one Samsung patent  infringed by Apple, but only awarded less than $200,000 in damages.  In a February 2016 opinion authored by Judge Dyk, the Federal Circuit reversed the jury verdicts – finding two of Apple’s patents invalid as obvious and the other not-infringed.

Now, in a surprise en banc ruling Friday, the Federal Circuit has chastised the that original panel in this case – writing to:

[A]ffirm our understanding of the appellate function as limited to deciding the issues raised in the appeal by the parties, deciding these issues only on the basis of the record below, and as requiring appropriate deference be applied to review of fact finding.

Zeroing in here, the en banc found that the original panel had improperly considered “extra-record extrinsic evidence to construe a patent claim term.”

Prior to Teva v. Sandoz (and especially prior to Phillips v. AWH) Federal Circuit panels regularly relied upon extra-record evidence such as dictionary definitions in reaching appellate decisions.  In Phillips, the court shifted focus away from dictionary definition toward intrinsic evidence such as the patent document and prosecution history.   Then, in Teva, the Supreme Court held that extrinsic factual conclusions of a district court must be given deference on appeal.  According to the en banc panel here – “After Teva, such fact findings are indisputably the province of the district court.”  With this framework, the en banc majority then offered its holdings:

(1)  the appellate court cannot rely on extra-record extrinsic evidence in the first instance or make factual findings about what such extrinsic evidence suggests about the plain meaning of a claim term in the art at the relevant time or how such extra record evidence may inform our understanding of how the accused device operates

(2) the appellate court is not permitted to reverse fact findings that were not appealed; and

(3) the appellate court is required to review jury fact findings when they are appealed for substantial evidence.

In discussing the obviousness determination, the en banc majority noted that the panel (and en banc dissents) raise important questions, but found those questions must wait for a different case since “no party—at the panel or the petition for rehearing en banc stage—invited this court to consider changing the existing law of obviousness.”

After chastising the original panel, the en banc majority then reaffirmed the jury verdicts – finding them supported by substantial evidence and thus reinstated the verdict for Apple.

The en banc opinion judgment here was 8-4 8-3 with Judge Moore authoring the 7-member majority opinion; Judge Hughes concurring in judgment but without authoring any opinion whatsoever; The original panel members, Chief Judge Prost, Judge Dyk, and Judge Reyna each dissented and each authored their own opinions; and Judge Taranto not participating.

Judge Dyk’s is the most interesting in the way that it reveals some inner-court-workings:

 For the first time in 26 years, this court has taken an obviousness case en banc. See In re Dillon, 919 F.2d 688 (Fed. Cir. 1990) (en banc). Remarkably, the majority has done so without further briefing and argument from the parties, amici, or the government, as has been our almost uniform practice in this court’s en banc decisions. . . .

The present en banc decision will have a significant and immediate impact on the future resolution of obviousness issues. While purporting to apply established circuit law, the majority is in fact making significant changes to the law as articulated by the Supreme Court. Indeed, as Judge Reyna convincingly points out, it is difficult to understand how this case would satisfy the requirements for en banc review if the majority’s purpose were not to clarify the law.

The majority states that it takes this case en banc to correct the original panel’s reliance on extra-record evidence. This could hardly be the reason the majority has granted en banc review, since the panel has continuingly expressed willingness, and indeed desire, to eliminate references to any extra-record evidence because of concerns raised in Apple’s petition for rehearing and because they were unnecessary to the panel opinion. . . . [T]he principles that the majority announces are inconsistent with the Supreme Court’s decisions in KSR, Graham v. John Deere, as well as earlier Supreme Court cases, and will make proof of obviousness far more difficult.

Judge’s Prost and Reyna also agreed that the majority’s application of the law in this case is inconsistent with Supreme Court precedent.

If you made it here, then you you see that there is substantially more to discuss – save that for the next post.

 

Fees Rising: USPTO Proposes New Fees in Search of New Revenue

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The USPTO has issued a notice of proposed rulemaking (NPRM) on patent and PTAB fees with the goal of raising revenue in order to improve patent quality and examination timeliness. Public comments are due by December 2, 2016.

The proposal includes:

  • Major increase in inter partes review fees – from $23,000 to $30,500 (petition + institution).  Similar increases for PGR and CBM.
  • Large fee increase for patent applications with > 3 independent claims or > 20 dependent claims
  • Large fee increase for design patent search, examination, and issue fees — hopefully the PTO will increase its quality on that front.
  • New fee for sequence listing submissions of > 300 MB ($1000) and > 800 MB ($10,000).
  • Ex parte appeals +25% (up to $3,500)
  • Standard fees for utility applications are relatively steady => only about 10% increase.

 

Read More and Comment:

Patentlyo Bits and Bytes by Anthony McCain

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Get a Job doing Patent Law                  

Lee v. Tam: Supreme Court Takes on the Slants

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by Dennis Crouch

In its decision in this trademark registration case, the Federal Circuit found the statutory prohibition against registering “disparaging marks” an unconstitutional governmental regulation of speech in violation of the First Amendment. (En banc decision).  I noted in my December 2015 post that “there would be a good chance for Supreme Court review of the case if the government presses its position.”

The Supreme Court has now granted the USPTO’s petition for writ of certiorari asking:

Whether the disparagement provision of the Lanham Act, 15 U.S.C. 1052(a), which provides that no trademark shall be refused registration on account of its nature unless, inter alia, it “[c]onsists of . . . matter which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute” is facially invalid under the Free Speech Clause of the First Amendment.

In the case, Simon Tam is seeking to register a mark on his band name “The Slants.” The USPTO refused after finding that the mark is disparaging toward individuals of Asian ancestry.

Tam’s responsive brief was unusual in that he agreed that Certiorari should be granted.  The brief also restated and expanded the question presented as follows:

1. Whether the disparagement clause bars the registration of respondent’s trademark.
2. Whether the disparagement clause is contrary to the First Amendment.
3. Whether the disparagement clause is unconstitutionally vague under the First and Fifth Amendments.

While the Federal Circuit majority opinion had agreed that the disparagement clause was contrary to the First Amendment, only a two-judge concurring opinion indicated that the clause is unconstitutionally vague.  Thus, the reframing of the question presented here appears an attempt to offer alternative reasons for affirmance.  The Supreme Court offered no indication as to which question is proper.

Congratulations to Ron Colemen for shepherding this case and Profs Volokh and Banner who apparently wrote the petition response.

Supreme Court Patent Cases – September 28 Update

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by Dennis Crouch

Cooper v. Lee and Cooper v. Square are both ask the same question: whether 35 U.S.C. §318(b) violates Article III of the United States Constitution, to the extent that it empowers an executive agency tribunal to assert judicial power canceling private property rights amongst private parties embroiled in a private federal dispute of a type known in the common law courts of 1789, rather than merely issue an advisory opinion as an adjunct to a trial court.”  The issues here are also parallel to those raised in MCM Portfolio v. HP (“Does IPR violate Article III of the Constitution?”).  The cases received a boost this month with the Court’s call for response (CFR) in Cooper v. Square.  Square had previously waived its right to respond, but its response is now expected by October 11, 2016.  Under Supreme Court R. 37, the Call for Response reopens the period for filing of an amicus curiae brief in support of petitioner. (~ due October 8, 2016).  Eight Amici Curiae briefs were filed in MCM and two in Cooper v. Lee.  In general, each brief additional brief incrementally increases the odds of certiorari.  Statistical analysis also suggests that a call for response significantly increases the odds of certiorari being granted.

I wrote earlier this week about the new IPR process challenge in Ethicon where the patentee has challenged Director Lee’s delegation of institution decision authority to the PTAB.  The case is one of statutory interpretation but uses the separation-of-function doctrine as an interpretive guide. The same question is also presented in LifeScan Scotland, Ltd. v. Pharmatech Solutions, Inc.  Both petitioners (Ethicon and LifeScan) are owned by J&J.

The final new petition is a personal jurisdiction case: Mylan v. Acorda.  The Hatch-Waxman setup involved Mylan preparing and filing its abbreviated new drug application that created a cause of action for infringement under 35 U.S.C. 271(e)(2). Although the ANDA preparation occurred in West Virginia and the filing in Maryland, the infringement lawsuit was filed by Acorda in Delaware.  Mylan asks: “Whether the mere filing of an abbreviated new drug application by a generic pharmaceutical manufacturer is sufficient to subject the manufacturer to specific personal jurisdiction in any state where it might someday market the drug.”  The argument builds on the non-patent decision Daimler AG v. Bauman, 134 S. Ct. 746 (2014). In the pro-business case of Daimler, the Supreme Court reduced the scope of general personal jurisdiction to states where the defendant company is incorporated or has its personal place of business.

 

In the claim construction front, the Supreme Court also called for a response in Google v. Cioffi. In that case Google suggests an interpretative principle of “strictly construing” amended claim language against the patentee. [GoogleCioffiPetition]

On the merits side – we have three patent cases pending oral arguments.  First-up is the design patent damages case of Apple v. Samsung.   Although not a party, the Solicitor General has requested to been granted leave to participate in oral arguments.   Its brief, the SJ argued (1) Section 289 does not permit apportionment but rather requires award of the infringers profits on the relevant article of manufacture; but (2) the article of manufacture can be a “component” rather than a finished product sold to end-users.  In the end, the SJ argues that the jury should have been tasked with determining the appropriate article-of-manufacture and that the case should be remanded to determine whether a new trial is warranted.  Briefing continues in both SCA Hygiene (laches) and Life Tech (Component Export liability).

 

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Ethicon v. Covidien: Delegation of Institution Decisions to the PTAB

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Ethicon has filed its expected petition for writ of certiorari challenging the USPTO’s delegation of IPR Institution Decisions to the Patent Trial and Appeal Board.  I wrote about the case earlier:

The newly filed petition argues pure statutory interpretation:

Whether the [AIA] permits the Patent Trial and Appeal Board instead of the Director to make inter partes review institution decisions.

The setup: The statute requires “The Director” to “determine whether to institute.” 35 U.S.C. § 314(b).  Under the statute, the PTAB picks up its role after institution in order to “conduct each inter partes review instituted under this chapter,” § 316(c).  Rather than making the determinations herself, the PTO issued a rule that the PTAB makes the institution decisions “on behalf of the Director.” 37 C.F.R. § 42.4(a).

Although the statute does not expressly prevent the Director from delegating her authority, Ethicon argues that the statute should be interpreted in light of the “longstanding policy of separation-of-functions whereby adjudicatory officers inside an agency (such as administrative law judges or, here, administrative patent judges) are insulated from discretionary executive functions.”  Of course, the Director does not have to personally do all the work – The idea here though is that it is impermissible to delegate policy issues to the administrative patent judges.  And, the AIA is clear that the institution decision is at least partially based upon policy and institutional competency determinations.

Read the Petition: Ethicon Petition for Certiorari 

In the background, patentees see the separation of institution from trial as a mechanism for getting two-bites at the apple.

 

RMail: Is Eligibility a Proper Litigation Defense?

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Thus far, the Federal Circuit has successfully ducked any direct holding on whether eligibility under 35 U.S.C. 101 is a “condition of patentability” or a proper invalidity defenes.  Professor Hricik and I raised these issues in a number of posts back in 2012.

Following Hricik’s proposal, patentee and DJ Defendant RMail raised the issue in district court.  [LINK]  The district court followed tradition and held that ineligibility is a defense that can be raised in a district court challenge to patent infringement. After losing on the merits (summary judgment) the case is now on appeal and RMail again argues that “Ineligibility is not a litigation defense under §282(b).”  In its brief, RMail writes:

Patent defenses are statutory. If a patent defense is not denominated within the Patent Act, then the Court lacks jurisdiction to address it. See Aristocrat Tech. Section 282(b) . . . enumerates the defenses that may be raised in a patent infringement action. . . . [T]he
plain language of §282(b)(2) does not authorize ineligibility as a defense.

A stumbling block for the patentee here is the Versata decision which held that the PTAB has authority to decide Section 101 challenges in a CBM review.  The newly filed brief distinguishes that case, however, by arguing that “Versata relies on the legislative history of the AIA . . . not the legislative history of the 1952 Patent Act, which enacted §282(b)(2).”

In the end, I expect that history and tradition are strong enough to overcome the statutory gap, but it would be nice to see an explanation from the Court.

Read the brief: RMAIL 101 Challenge.

 

Update: If Alice was always the law, why did you get so many “invalid” patents for your clients?

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I blogged about this case — Encylopaedia Britannica, Inc. v. Dickstein Shapiro LLP (D. D.C. Aug. 26, 2015) — way back when it came out.  The case was summarily affirmed in June.  A cert petition has been filed, and it’s worth reviewing this case again.  If the law stays the way it is, then maybe clients should start suing lawyers to get their fees back for patents that the lawyers “should have known” were “invalid” years before Alice came out…

The Dickstein Shapiro firm had been retained by Encyclopaedia Britannica, Inc. (EB) in 1993 to file a patent application. The patent issued, and in 2006 EB sued several companies for infringing it. The patent was held invalid due to “an unnoticed defect” in the 1993 application.  The basis for invalidity was not 101, and is not clearly stated in the opinion, but seems to have been a break in the chain for priority.

EB then sued the law firm for malpractice in prosecuting the 1993 application.  EB contended that, but for the firm’s negligence, it would have made a lot of money in the infringement suit.

After the malpractice suit was filed, Alice was decided.  The defendant law firm then argued that — had the defendants in the 2006 case not prevailed on the “unnoticed defect” defense (the break in the chain for priority) — they would have prevailed because the patents were “invalid” under 101.  Because the claims would have been “invalid” in the 2006 litigation under 101, there was no harm caused by the actual basis for invalidity — the priority problem.

To put this in context:  Because of a 2014 Supreme Court decision, the 2006 infringement case would have been lost in 2009 anyway because the court in 2009 would have applied Alice’s standard and found the claims ineligible.

And the argument worked.  The district court granted a motion to dismiss for failure to state a claim (actually, for judgment on the pleadings under 12(c), but same standard), finding (holding?) the subject matter ineligible on the face of the patent.

What is interesting is the court’s approach to retroactive application of Alice.  The issue was whether in the 2006 litigation asserting the patent, even had the firm’s alleged malpractice not caused the invalidity of the patent because of the break in priority, the claims were “invalid” under 101 in 2006 — years before Alice was decided.  The district court held that Alice did not change the law, but merely stated what it had always been.    Specifically, the district court stated:

When the Supreme Court construes a federal statute… that construction is an authoritative statement of what the statute has always meant that applies retroactively.  Alice represents the Supreme Court’s definitive statement on what 101 means — and always meant.  Because the underlying case is governed by 101, it is appropriate for this Court to apply the Supreme Court’s construction of 101 as set forth in Alice.

(Citations omitted).

For this and other reasons, the court reasoned that “the only rule that makes sense in this context is to apply the objectively correct legal standard as enunciated by the Supreme Court in Alice, rather than an incorrect legal standard that the [district court in the 2006 infringement case] may have applied prior to July 2015 [when the court was deciding the motion.]”  The court then applied Alice and found the claims “invalid” under 101.  Thus, the firm’s failure to maintain priority did not cause harm — the “invalidity” under 101 did.

There’s a lot to unpack here.

Let’s start with a basic statutory interpretation principle: as a matter of statutory construction the retroactivity principle relied upon by the district court is correct in that retroactivity does not ordinarily apply when an interpretation is changed.  (This perhaps explains why the Supreme Court is careful to avoid saying it is changing an interpretation, because changes to interpretations of a statute are prospective, only, as a general rule.  In that regard, think about Therasense for a moment.) So, if Alice changed the law, then the district court was likely wrong to apply it retroactively.

Let’s be real:  the Supreme Court will never say that Alice changed the law.  We all know it did, or I guess a better way of putting it is:  we were wrong about what the pre-Alice law meant — despite reading the cases as best we could, and so was the USPTO (which is why it issued all those bad patents, and had to put in place, post-Alice, all of those new guidelines, etc.).  So, we were all wrong and Alice merely said what we all were not smart enough to understand the law always was and had been.

Shame on us.

But now let’s look at Dickstein Shapiro’s conduct through that lens: if the law was that clear — that you could 12(b)(6) or summary judgment this patent for “invalidity” under Section 101, why did you get the for the client in the first place?    If the law about 101 “always” was this way, why did you advise EB to spend so much money on a patent so clearly invalid that a judge could decide it by looking at it?

If cert is not granted, patent prosecutors should be ready to disgorge a lot of fees, I guess is what I’m saying.  Remember:  fee disgorgment doesn’t require damages — it requires (usually) a clear and serious breach of duty.  How can this not be?

So now let’s say prospective litigation counsel looks at a patent and in evaluating it, says to the patentee “no, this one’s bad under Alice.  It’s worthless.”  If the client then sues the lawyer who prosecute the patented, you’d think the client would have an easy case: “Lawyer, the law was always the way Alice says it was, and yet you got me this stupid patent, and charged me $25,000 to get it. Give that money back.”

Now, we can get into what is called judgmental immunity — but if the law was settled and clear, how can that help?  We could also argue the law changed — but it didn’t, or so the courts tell us.

But we can’t obviously do this: Allow lawyers to escape liability for bad patents because the law was “clear” back then, and so the client would never have prevailed in an infringement suit, but then allow lawyers to say “the law was unclear” and allow them to avoid disgorging fees.

Someone got any ideas?  The intellectually honest way to approach it is to say that the EB case was wrongly decided:  whether the patent would have been “invalid” under 101 in the 2006 litigation should be decided under the law at the time of trial, not the law in 2014, just as the decision to seek the patent in 1993 should turn on 101 law in 1993, not the law in 2014.  More to that point, we all know that certain claim formats have fallen out of favor (e.g., means-plus-function). If the law was favorable to them in, say, 1993, and a lawyer picked them, why should we use standards developed in 2014 to judge the lawyer’s conduct, even though the “change” is more subtle than occurred in Alice?

And now one more wrinkle.  Suppose a firm represents the client, and sues.  Suppose the judge shifts fees onto the client under 285.  Unless the court holds that those fees are the responsibility of the lawyer bringing the suit, not the client, then the client’ going to be responsible for having sued on an “invalid” patent. Is it going to sue the prosecution firm and say: the law was clear back then, why did you get this patent for me? Look at the damages you caused…?

Stay tuned.

 

Traditional equitable defenses do not apply to IPR proceedings

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Husky Injection Molding v. Athena Automation (Fed. Cir. 2016)

Referring to the headline. The PTAB (acting on behalf of the PTO Director) held that traditional equitable defenses do not apply to IPR proceedings.  Because this holding was made as part of an IPR institution decision, the appeal was dismissed for lack of jurisdiction. 

The case here is interesting because Husky’s former owner (Schad) is the founder of competitor Athena.  Schad is also co-inventor of Husky’s U.S. Patent No. 7,670,536 – that Schad’s company challenged in an IPR proceedings.  The PTAB ultimately found some of the challenged claims valid and cancelled others.

On appeal Husky argues that assignor estoppel bars the IPR proceeding.  The PTAB rejected that contention – holding that traditional equitable defenses do not apply to IPR proceedings.  Athena v. Husky, IPR No. 2013-00290 (P.T.A.B. Oct. 25, 2013) (Institution Decision on behalf of the Director).    On appeal, the Federal Circuit dismissed — holding that the institution decision is not appealable. 35 U.S.C. 314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”); Although the Supreme Court in Cuozzo suggested that some appeals of institution decisions may be available.  Here, however, the court rejected the idea of venturing into that abyss:

[Prior cases] establish a two-part inquiry for determining whether we may review a particular challenge to the decision whether to institute. First, we must determine whether the challenge at issue is “closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review,” or if it instead “implicate[s] constitutional questions,” “depend[s] on other less closely related statutes,” or “present[s] other questions of interpretation that reach, in terms of scope and impact,” “well beyond ‘this section.’” Cuozzo.  If the latter, our authority to review the decision to institute appears unfettered. But if the former, § 314(d) forbids our review. One further exception remains, however. At the second step of the inquiry, we must ask if, despite the challenge being grounded in a “statute closely related to that decision to institute,” it is nevertheless directed to the Board’s ultimate invalidation authority with respect to a specific patent. Id.; see also Versata; and Achates. If so, we may review the challenge.

After rejecting Husky’s challenge of the institution decision, the Federal Circuit moved to Athena’s appeal.

Incorporation by Reference: Athena challenged the portion of the Board’s opinion finding some of the claims not anticipated.  The basic issue is that the prior art (Glaesener – U.S. Patent Pub. No. 2004-0208950) did not itself disclose all of the claimed elements.  However Glaesener referred particularly to a prior patent (Choi): noting that Choi described “pineapple and toothed-ring mechanism” and in a separate paragraph stating that “All cross-referenced patents and application[s] referred to in this specification are hereby incorporated by reference.”  The combination of Choi and Glaesener do (arguably) teach all of the claim element but the Board refused to treat them as a single document despite the incorporation by reference. On appeal, the Federal Circuit has vacated that holding.

The standard:

A host document incorporates material by reference if it “identif[ies] with detailed particularity what specific material it incorporates and clearly indicate[s] where that material is found in the various documents.” Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272 (Fed. Cir. 2000). . . .  In making such a determination, we assess whether a skilled artisan would understand the host document to describe with sufficient particularity the material to be incorporated [giving no deference on appeal].  . . . [Thus t]he incorporation standard relies only on the reasonably skilled artisan and his or her ability to deduce from language, however imprecise, what a host document aims to incorporate

Here, the court found sufficient particularity to incorporate Choi by reference – noting that PHOSITA would “appreciate Glaesener’s reference of ‘pineapple and toothed-ring’ to describe, with sufficient particularity” the securing assemblies in Choi. “To find otherwise would be to undervalue the knowledge of a skilled artisan.”  On remand, the Board will need to re-evaluate anticipation based upon Glaesener now expanded by Choi.

Obviousness does not Require Prior Art to Fit Together Exactly

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ClassCo v. Apple (Fed. Cir. 2016)

In response to being sued for patent infringement, Apple filed for inter partes reexamination of ClassCo’s Patent No. 6,970,695. That litigation (originally filed in 2011) has been stayed pending the resolution here.  Although the patent had survived a prior reexamination, this time the Examiner rejected the majority of the patent claims as obvious; the PTAB affirmed those rejections; and the Federal Circuit has now re-affirmed.

The patent relates to a “caller announcement” system that uses a phone’s speaker (rather than screen or separate speaker) to announce caller identity information.  The system includes a “memory storage” that stores identify information being announced.

The examiner identified the prior art as U.S. Patent No. 4,894,861 (Fujioka) that teaches all of the claimed elements (of representative claim 2) except for use of the phone’s regular audio speaker (rather than a separate speaker) to announce a caller’s identity (claimed as the “audio transducer”).  A second prior art reference was then identified as U.S. Patent No. 5,199,064 (Gulick) that taught the use of the audio transducer for providing a variety of call related alerts.

On appeal, ClassCo argued that the combination of Fujioka and Gulick was unreasonable because it would involve changing the function of the known elements.  The Federal Circuit disagreed writing that:

KSR does not require that a combination only unite old elements without changing their respective functions. . . . Instead, KSR teaches that ‘[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.’ And it explains that the ordinary artisan recognizes ‘that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle.

Slip opinion at 8 (quoting KSR).  The court goes on to explain that a combination of known elements can be obvious even the elements don’t fit perfectly together like puzzle pieces.  Rather, the approach is “flexible” in its pursuit of determining whether the combination would have been “predictable” – i.e., obvious.

Although KSR rejected a strict application of a motivation-to-combine, the court consistently required at least an explanation of that motivation.  Here, the court found that “substantial evidence” supports the PTO conclusions since some of the benefits were suggested by both prior art references.

Secondary Indicia: During reexamination, ClassCo had also presented evidence of industry praise for its products covered by the patent.  That evidence was disregarded by the PTO as, inter alia, not commiserate commensurate with the scope of the claims. 🙂 In particular, the Board noted that the industry praised particular embodiments but did not praise other potential embodiments. On appeal, the Federal Circuit rejected those conclusions.  The court found that some of the evidence praised ClassCo features that were not available in the prior art and that were “within the scope” of the representative claims.

[T]he Board found the evidence not commensurate in scope with these claims on the ground that they are too broad, encompassing other embodiments. But “we do not require a patentee to produce objective evidence of nonobviousness for every potential embodiment of the claim.” Rambus. Rather, “we have consistently held that a patent applicant ‘need not sell every conceivable embodiment of the claims in order to rely upon evidence of [objective indicia of nonobviousness].’” In re Glatt Air Techniques, 630 F.3d 1026 (Fed. Cir. 2011) (quoting In re DBC, 545 F.3d 1373 (Fed. Cir. 2008)).

Although the Board erred in its approach to objective indica, that was harmless error since the prior art evidence was strong. “We nonetheless agree that the value this evidence possesses in establishing nonobviousness is not strong in comparison to the findings and evidence regarding the prior art under the first three Graham factors.”  Obviousness affirmed.

Although a different product, the following ClassCo video review is a fun throw-back:

Supreme Court Patent Cases: Malpractice, Obviousness, and Venue

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by Dennis Crouch

The Supreme Court will begin granting and denying petitions in early October.  Meanwhile, several new petitions are now on file.  Last week I wrote about the TC Heartland case as a mechanism for limiting venue. Without any good reason, the Federal Circuit overruled a 1957 Supreme Court case that had strictly limited patent venue as spelled out in the patent venue statute 1400(b).  See VE Holdings (explaining its overruling of Fourco Glass). A result of VE Holdings is the expansive venue availability that facilitated the rise of E.D. Texas as the most popular patent venue. TC Heartland simply asks the Supreme Court reassert its Fourco holding – something that could almost be done with a one-line opinion: “REVERSED. See Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).”  The best arguments for the Federal Circuit’s approach are (1) the reasoning of Fourco itself is a bit dodgy; and (2) VE Holdings is well settled doctrine (decided 26 years ago) and Congress has revised the statutory provisions several times without amending.  As a side note, several members of Congress have suggested they will act legislatively if SCOTUS fails to act.

Two new petitions (Grunenthal v. Teva and Purdue v. Epic) stem from the same Federal Circuit OxyContin case and focus on anticipation and obviousness respectively.  Grunenthal v. Teva questions how ‘inherently’ operates for anticipation purposes.   Purdue suggests that – despite the final sentence of Section 103, that the actual circumstances of the invention should be available to help prove non-obviousness (but still not be available to prove obviousness).   Another new petition includes the BPCIA case Apotex v. Amgen that serves as a complement to the pending Sandoz case questioning the requirements and benefits of providing notice of commercial marketing.

Finally – Encyclopedia Britannica v. Dickstein Shapiro is a patent prosecution malpractice action.  The lower court held the lawyers harmless since Alice would have invalidated the patents even if drafted to perfection. The petition asks whether Alice Corp can excuse patent prosecutors from alleged prosecution errors made well prior to that decision.

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Federal Circuit on PTAB Initiation Decisions: Still No Appeal …

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Wi-Fi One v. Broadcom (Fed. Cir. 2016)

Wi-Fi One is the new owner of Ericcson’s U.S. Patent No. 6,772,215 that covers a method for encoding and sending packet-receipt error messages over the internet. In 2013, Broadcom brought this IPR challenge and the Board eventually found many of the claims anticipated.

On appeal here Wi-Fi challenges Broadcom’s standing to bring the IPR challenge under 35 U.S.C. § 315(b).  Section 315(b) indicates that an IPR proceeding may not be instituted if the petitioner (or its privy) had been served with an infringement complaint more than one year prior.

315(b) Patent Owner’s Action.— An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.

Although Broadcom had not been previously sued on the patent, Wi-Fi argues that its privies had been previously sued.  The PTAB rejected that argument – finding that Broadcom was not a “privy” of the prior litigants because Wi-Fi did not prove that Broadcom had power to control the prior district court litigation or that Broadcom would be bound by the outcome of that prior litigation. The Board also refused Wi-Fi’s request for further discovery on the matter.

On appeal, the Federal Circuit affirmed — holding that the question of proper institution is unreviewable based upon the statutory statement that “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. § 314(d).  Although I have not quite found the line in the decision, is appears that the court also held that even the denial of discovery is unreviewable.

The Supreme Court extended the preclusion of judicial review to statutes related to the decision to institute; it did not limit the rule of preclusion to substantive patentability determinations made at the institution stage, as the facts of Cuozzo itself make clear.

Slip Opinion at 8.  The decision here essentially follows the Federal Circuit’s prior ruling in Achates.

The court also sided with the Board on Wi-Fi’s substantive argument – affirming the Board decision that the prior art anticipates.

 

 

 

Santa Clara – Duke Law Patent Quality Conference: Patent Quality – It’s Time

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Guest Post from Professors Arti Rai and Colleen Chien.

“I know well the difficulty of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.“ – Thomas Jefferson, 1813

Santa Clara –Duke Law Patent Quality Conference: Patent Quality – It’s Time

At 1 pm today, USPTO Director Michelle Lee will be testifying before the House Judiciary Committee at a USPTO Oversight Hearing.  The hearing will focus on questions of patent quality raised by two recent GAO reports (here and here) as well as the issue of examiner reporting of time raised by a  report by the Department of Commerce’s Office of the Inspector General (here).

As we have discussed, the two of us are following closely the USPTO’s efforts to address issues of patent quality through its Enhanced Patent Quality Initiative (EPQI) – an urgent but also enduring challenge that one of our nation’s first patent examiners, Thomas Jefferson, struggled with.  Our institutions, the Duke Law Center for Innovation Policy and the Santa Clara High Tech Law Institute, are also co-sponsoring two conferences on EPQI and other levers for improving patent quality.

On Friday, September 9, we held the first of these conferences at Santa Clara Law School.  The conference brought together Deputy Commissioner for Patent Quality Valencia Martin-Wallace, Deputy Commissioner for Patents Andy Faile, former PTO Director David Kappos, EPO Director of Quality Support Alfred Spigarelli, GAO officials, industry representatives, and legal academics.  Here we provide a brief summary of the event.  Video and links to the presentations and related papers will be available here (a uncut version of the video is here). Several of the commentators will be publishing op-ed versions of their remarks with IPLaw360 from now until the December 13, 2016 conference, and the Berkeley Technology Law Journal has published short commentaries from a number of the speakers on their topics.

Valencia Martin-Wallace began by highlighting 6 aspects of the EPQI: case studies the USPTO is implementing in response to stakeholder requests; the Master Review Form (MRF), which is now being used as the exclusive review form by the Office of Patent Quality Assurance; other quality metrics; USPTO study of post-grant outcomes for purposes of improving ex ante patent examination, both in child applications of parents there are the subject of a post-grant review and more generally; a post-prosecution pilot; and a clarity of the record pilot.

Martin-Wallace’s comprehensive discussion of the MRF and quality metrics honed in on the difficult question of what quality means and how the PTO should measure it.  According to the USPTO, the MRF’s focus on clarity and correctness of the examination is a key aspect of how the agency measures product quality. The agency is also very interested in process quality, by which it means a focus on reducing rework and ensuring consistency.  The USPTO will also continue to monitor perceptions of quality through internal and external quality surveys. USPTO Case studies on 101 – the compliance of rejections with 35 U.S.C. 101 Official Guidance and the consistency of the application of 101 across art units/technology centers – will be issued on September 30 and December 9 respectively.  They will be followed by case studies on other types of rejections.

Martin-Wallace’s presentation was followed by a panel discussion of claim clarity and examination consistency.  Peter Menell discussed how claim clarity could be improved through a claim template [link] and the importance of putting all interactions with the examiner into the record.  Charles Duan also highlighted the importance of a clear prosecution record, particularly for purposes of allowing courts to find claim scope disavowal.  Jay Kesan focused on the lack of standardized claim language in software and suggested mechanisms for improving standardization.  Finally, Xavier Jaravel of Stanford presented his research with Josh Feng of Harvard showing that NPEs tend to purchase patents granted by lenient examiners that are incremental and vaguely worded; they estimate that a one-standard deviation change in the “examiner effect” could lower the rate of litigation and NPE purchased patents by 50%.

The conference then turned to issue of examiner time allocation, and in particular ensuring adequate time for search.  Deputy Commissioner for Patent Operations Andy Faile outlined the count system and the time that examiners are given to achieve each count.  On the first round of examination, examiners receive 1.25 counts for the first office action; 0.25 counts for the final rejection in that round; 0.75 counts for an allowance disposal: and 0.5 counts for termination of the first round of examination (“abandonment”).  The time allocated to achieve each count is a function of the area of technology – for example, while 16.6 hours are allocated per disposal in fishing lures, examiners are given almost double that, 27.7 hours per satellite communications disposal. It is also a function of GS-level of the examiner – as in the EPO, senior examiners at the USPTO are expected to produce more work than junior examiners.

Assistant GAO director Robert Marek next discussed highlights from the agency’s studies of patent quality and prior art search.  These studies relied heavily on a survey that produced 2669 USPTO examiner respondents.  The survey found that 70% of examiners reported having insufficient time to examine applications; the majority reported wanting more time for prior art search; and the majority also reported encountering vague and indefinite claims.  Examiners also reported conducting only limited searches for non-patent literature (NPL).  On the issue of search, the GAO recommends that the PTO develop guidance of what constitutes a good prior art search; identify key sources of NPL; monitor search quality; and assess the time examiners need for search.  On claim clarity, GAO recommends the PTO consider requiring patent applicants to include term glossaries or claim charts.

The morning concluded with a panel discussion of prior art search and time.  Colleen Chien discussed the findings of a recently released study that suggests that the EPO is much more likely to cite NPL in its search reports than PTO examiners are to rely upon NPL in their examination, despite that the PTO’s examiners are more likely to receive NPL, through IDS’. The paper argues that that the greater amount of time that EPO examiners spend on search (8-12 hours per app, vs. 4-5 hours at the PTO), contributes to this difference. However, the PTAB, which intensely reviews challenged patents, appears to cite NPL even more than EPO examiners do. Michael Frakes and Melissa Wasserman then summarized their empirical research on 1.4 million utility patent applications initiated after March 2001 and disposed of by July 2012.  Their research suggests that tightening of examiner time constraints as they move up GS-levels appears to lead to more grants, less examiner citation of prior art, and fewer time-intensive non-obviousness rejections.  Their analysis, which follows examiners as they rise up GS-levels within art units, capitalizes on the essentially random assignment of applications within an art unit and employs an examiner fixed-effect design. Moderator Karen Wong called the After Final Consideration Pilot 2.0 one of the PTO’s best inventions, and Steven Reid and others noted that the Post-Prosecution Pilot (P3) examination was also a valuable option for achieving resolution without the need for a full request for continued examination (RCE).

Jay Kesan and Colleen Chien kicked off the afternoon with a discussion of the differences between EPO and USPTO processes (the former bifurcates search and examination, doesn’t allow for continuations (but does tolerate divisionals), and charges higher fees, earlier), perceptions of the two institutions (based on a recent survey of ~650 practitioners), and outcomes. Drawing upon matched pair analysis, Kesan’s research suggests that on average EPO patents have fewer claims, and the claims are longer and have greater pendency. Chien’s paper suggests that the lower EPO allowance rate isn’t driven by a higher rejection rate but more applicant withdrawals.

EPO Patent Quality Director Alfred Spigarelli’s presentation was titled: “Patent Quality: Get it Right the First Time.” He emphasized the human resources component of the patent quality equation, from the hiring standards the EPO applies (e.g. examiners must be able to actively work in three languages), to the training each EPO examiner receives, to the low turnover rate. Search is viewed as the cornerstone of the patent examination process, with 60% of time dedicated to search.

On the panel that followed (“Once and Done” and Differentiating Between Patents), Laura Sheridan outlined a proposal to increase quality and predictability by introducing greater finality into the patent application process.  Under Sheridan’s proposal, examination would terminate after a predetermined maximum number of office actions, and the application would be then adjudicated by a panel.  Steven Yelderman discussed the dynamic effects on RCE practice of recent changes to fees as well as mechanisms by which post-grant review could feed information back into initial patent examination. Sandy Swain discussed steps that could be taken by applicants now, without any policy changes, stressing the importance of open communication and clear documentation. Alan Marco presented a study in progress of litigated patents, suggesting that small entities are more likely to litigate and finding that (with the exception of continuations) applicant characteristics are more likely to be predictive of litigation than examination characteristics.

Studies have shown that delays in patent examination are detrimental to startup firms. For these firms, long pendency could be considered a sign of poor examination quality.  Building on this work, Arti Rai discussed her ongoing research on accelerated examination through the Track 1 program.  She finds that the program is in fact disproportionately used by small and micro entities. However, the top filers in the program are large entities, and she is studying whether their applications show signs of poor quality. Josh Makower, an investor, inventor, and entrepreneur in the biotechnology and medical device industry, said that all his startups used TrackOne, underscoring the importance of patents to them. According to Oskar Liivak’s interpretation, 35 USC 115 makes it a felony for a patent applicant to claim more broadly than the actual invention. Brian Love noted that the EPQI had two important gaps – already granted patents and the flexing of the USPTO’s fee-setting authority. He recommended raising maintenance fees to cull low-value, low-quality patents and decreasing PTAB fees.  Love’s proposals generated vigorous discussion.

Dave Kappos provided the final keynote of the day, noting that patent quality has been a focus for as long as we’ve had a patent commissioner. He noted that many efforts he oversaw during his administration to increase quality – giving examiner 2.5 more hours of time, redesigning the IT system, creating the Edison Scholar program, ensuring Examiner received training from industry experts, and many more. What didn’t work, he noted, was working with the AIPLA to devise a set of quality indicia for applicant filings that all agreed upon and that could be applied to applications. What he would work on, were he still in office, would include Track 3 (some version of deferred examination) and allocation of more time, not across the board, but as appropriate.

How will we know if the EPQI has been successful in two years? When this question was posed to them, closing panelists Faile, Martin-Wallace, and PTO Silicon Valley Director John Cabeca mentioned a few milestones: greater transparency and engagement of all members of the patent community, creative rethinking of the count system, more time for certain applications, and the leveraging of state of the art examination processes and resources.

* * * * *

Arti Rai is the Elvin R. Latty Professor of Law at Duke Law School and co-Director, Duke Law Center for Innovation Policy.  Colleen Chien is Associate Professor of Law at Santa Clara University School of Law.

Stryker v. Zimmer: Federal Circuit Remands Enhancement Determination for Enhancement Determination

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By Jason Rantanen

Stryker Corp. v. Zimmer, Inc. (Fed. Cir. 2016) Download opinion
Panel: Prost (author), Newman, Hughes

Stryker prevailed in a patent infringement suit against Zimmer, obtaining partial summary judgment of infringement as to some claims, a jury verdict of infringement as to another claim, and a jury finding that the claims were valid.  The jury awarded Striker $70 million in lost profits, further finding that Zimmer’s infringement was willful.  In a post-trial order, the district judge awarded treble damages, found the case exceptional and awarded Stryker its attorneys’ fees.

On appeal, the Federal Circuit affirmed as to infringement, validity and damages.  Applying In re Seagate, however, it reversed as to willful infringement and the enhancement of damages.  Based on that reversal, it also vacated the award of treble damages and attorneys’ fees.  Styrker sought, and obtained, review by the Supreme Court in a case that was consolidated with Halo Electronics., Inc. v. Pulse Electronics., Inc.  In Halo v. Pulse, the Supreme Court held that the the Federal Circuit’s two-part Seagate “test for determining when a district court may increase damages pursuant to § 284” was not consistent with § 284.  Both Halo and Stryker were remanded to the Federal Circuit for further proceedings.  Last month, the Federal Circuit issued its revised opinion in Halo.  Today, the court released the  revised Stryker opinion.

Most of the new Stryker opinion involves a recitation of the Federal Circuit’s previous opinion affirming the district court as to infringement and validity.  The last three pages, however, deal with the § 284 enhancement issue on remand.  What’s interesting is that the Federal Circuit is maintaining its bifurcated approach to enhancement of damages, first requiring a predicate willfulness determination followed by the judge’s discretionary determination of whether and how much to enhance damages.  This is essentially the same process as before.   See i4i Ltd. Partnership v. Microsoft Corp., 598 F.3d 831 (2010).  Pre-Halo, the second step of the process (the district judge’s determination of whether and how much to enhance damages) was a totality-of-the circumstances analysis that was reviewed for abuse of discretion (i.e.: basically the same as the court required in Halo).  Id. The Federal Circuit’s post-Halo approach to enhancement involves the same two steps, with the exception that the willfulness determination itself is guided by the holding in Halo rather than requiring the two-element objective/subjective determination of Halo. (The enhancement determination is too, but it’s hard to see much difference there.)  Under Halo, the subjective component alone can be enough to establish willfulness.

Here, Zimmer did not challenge the subjective component so the Federal Circuit affirmed willfulness on remand.  However, it then remanded the case back to the district court for a further determination as to whether and how much damages should be enhanced. In Halo, this remand made sense, as the district judge had relied on the Seagate test to grant JMOL of no willful infringement over a jury verdict of willful infringement.  Here, however, after the jury found willful infringement and the district judge denied JMOL of no willful infringement, the district judge exercised his discretion to treble damages.  The consequence is that a remand in this case is somewhat odd given that the district judge has already made a discretionary determination to award the maximum amount of enhancement.  In any event, the Federal Circuit decided that the better course of action was to ask the district judge to re-make the discretionary determination:

“As Halo makes clear, the decision to enhance damages is a discretionary one that the district court should make based on the circumstances of the case, ‘in light of the longstanding considerations . . . as having guided both Congress and the courts.’ Id. at 1934. Thus, it is for the district court to determine whether, in its discretion, enhancement is appropriate here. We therefore vacate the district court’s award of enhanced damages and remand to the district court so that it may exercise its discretion.”

Based on a similar rationale (although relying instead on Octane Fitness v. ICON), the Federal Circuit also remanded on the issue of attorney’s fees.

Disclosure: I co-authored an amicus brief in support of neither party in Halo v. Pulse.

Supreme Court Patent Cases: Previewing the October Term 2016

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by Dennis Crouch

When the Supreme Court’s October 2016 Term begins in a few weeks, its first patent hearing will be the design patent damages case of Samsung v. Apple. In Samsung, the Court asks: Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?  The statute at issue – 35 U.S.C. § 289 – indicates that, someone who (without license) “applies” the patented design (or colorable imitation thereof) to an article of manufacture, “shall be liable to the owner to the extent of his total profit.”  Up to now, courts have repeatedly held that the “profits” are profits associated with the product (i.e., the article of manufacture) being sold, but Samsung is asking that the profits be limited only to components of the product closely associated with the patented design.  Although Apple’s position is supported by both the text and history and is the approach easiest to calculate, I expect that many on the Court will be drawn to the potential unjust outcomes of that approach.  Apple wins in a 4-4 split.  Oral arguments are set for October 11, 2016.

The court has granted certiorari in two other cases for this October 2016 term with briefing ongoing. In Life Tech v. Promega, the court again takes up the issue of exporting components of a patented invention and the extraterritorial application of US law.  35 U.S.C. § 271(f)(2). The question here is whether export of one component can legally constitute the “substantial portion of the components” required by statute for liability to attach.  In the case, the component (Taq) is a commodity but is also an admitted critical aspect of the invention. In SCA Hygiene v. First Quality, the Court asks whether the equitable defense of laches applies in patent cases.  The case is a follow-on to the Supreme Court’s 2014 holding in Petrella v. MGM that laches does not apply in copyright cases.  In its decision, the Federal Circuit distinguished Petrella based both upon statutory and policy arguments. Oral arguments in SCA are set for November 1, 2016.

The three pending petitions most likely to be granted certiorari are Impression Products (exhaustion); Amgen (BPCIA); and GlaxoSmithKline (antitrust reverse payments)   However, these cases are awaiting views of the Solicitor General — which likely will not be filed until well after the presidential election.

A substantial number of cases are set for the Supreme Court’s September 26 conference.  These include the constitutional challenges to IPR coming in MCM and Carl Cooper as well as the interesting eligibility case of Genetic Tech v. Merial.

It looks to be an interesting term.

The big list:

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Denial of PTAB Amendment: Arbitrary and Capricious

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Veritas Tech v. Veeam Software (Fed. Cir. 2016)

In an important decision, the Federal Circuit issued a limited rejection of Inter Partes Review amendment procedure — holding that the PTAB acted in an arbitrary and capricious manner by denying the patentee’s motion to amend its challenged claims.

Although claim amendments are officially allowed in IPR proceedings, the Patent Trial & Appeal board has a practice of only approving amendments after the patentee shows that the claims as amended are patentable over the references at issue in the case.  As part of this process, the PTAB requires that the patentee discuss each feature added to the claim and “whether the feature was previously known anywhere, in whatever setting, and whether or not the feature was known in combination with any of the other elements in the claim.” Toyota Motor Corp. v. American Vehicular Sciences LLC, IPR2013-00419, slip op. at 4–5 (Paper 32) (PTAB March 7, 2014).

Here, the patentee did not discuss each new feature individually but rather merely stated that the combination of new features were not described in the prior art. And, because the patentee failed to discuss each added feature separately, the PTAB found that the patentee “failed to meet its burden of showing that it is entitled to an award of a patent on a system having those features.”

On appeal, however, the Federal Circuit rejected that analysis — finding it “arbitrary and capricious.” In particular, the court wrote that the discussion of the combination  was not “meaningfully different” from the PTAB’s proposal.

In this case, we fail to see how describing the combination is meaningfully different from describing what is new about the proposed claims, even in comparison to the unamended claims.

This case may have some impact on the pending en banc appeal In re Aqua Products. That appeal addresses the following two questions:

(a) When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?

(b) When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?

The Veritas court writes that the PTAB decision here is erroneous regardless of the outcome of Aqua.

 

DuPont v. MacDermid Printing: The importance of a Patentee’s Pre-Filing Statements

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by Dennis Crouch

A skilled patent attorney working with a qualified searcher could cobble together a colorable obviousness argument against the vast majority of issued patent claims.  Part of the difficulty for patentees stem from the the billions of prior art references available via increasingly effective search tools. Even when an invention results from a ‘flash of genius,’ patent law typically back-fills extensive knowledge for the obviousness analysis – even when that knowledge was not actually available at the time of the invention.  The larger difficulty though is likely the large number of hard-to-pin-down facts such as the motivations, common sense, and level of creativity of a person having ordinary skill in the art.

The “expansive and flexible” approach to nonobviousness is frustrating to many, but it is seen as a feature of the system fully supported by the Supreme Court.  In KSR, the court wrote:

Throughout this Court’s engagement with the question of obviousness, our cases have set forth an expansive and flexible approach. . . . Rigid preventive rules that deny fact finders recourse to common sense… are neither necessary under our case law nor consistent with it.

KSR v. Teleflex (2007) [04-1350].  Conventional wisdom post-1980 has been that the factual inquiry makes summary judgment of obviousness difficult for a patent challenger.  Rather, obviousness goes to the jury.  Since KSR, that attitude has shifted somewhat.  (The even newer model is that obviousness goes to the PTO in an IPR proceeding – save that for a different essay).

= = = = =

Summary Judgment of Obviousness: In DuPont v. MacDermid Printing (Fed. Cir. 2016) [15-1777], the NJ district court granted summary judgment of obviousness against the patentee DuPont – holding that the asserted claims of DuPont’s U.S. Patent 6,773,859 invalid under 35 U.S.C. 103.   The ‘859 patent relates to the manufacture of  a flexo plate for digital printing — a plate used to print digital images on flexible materials.   The claimed advance involves heating-up the plate to remove unpolymerized material (rather than using a harsh solvent).

The obviousness case combines two prior art references: “Martens [a 3M patent] teaches a process for developing an analog plate using heat” and “Fan [DuPont patent] teaches developing a digital plate using solvents.”   The inventor (Roxy Fan) is also the first named inventor of DuPont’s ‘859 patent being challenged in this case. The Fan prior-art patent, however, was filed a decade prior.  Reviewing these two references, the court found that the ‘859 patent uses “the same technology and processes pertaining to digital imaging” previously disclosed by Fan and the same thermal development process disclosed in Martens.  In finding a motivation-to-combine these references, the district court walked through several factors.

  • Limited set of potential combinations: The prior art only had two imaging styles (digital and analog) and four development techniques (thermal, etc.) – this makes the ‘859 combination more likely obvious to try.
  • Benefits of Moving to Digital: The prior art taught benefits of switching to digital (thus suggesting the substitution), including an article published by DuPont
  • Market Incentive: DuPont marketing material suggest a “strong incentive” to combine the thermal process with digital plates.

The district court also rejected DuPont’s evidence of commercial success, longfelt need, and industry praise – finding them insufficient to overcome the “strong showing of obviousness.”

On appeal of this summary judgment finding, DuPont focused on the standard-of-review – noting that the district court had failed to “draw reasonable inferences” in its favor.  In the process, DuPont pointed to a long list of factual disputes between the parties where it would be reasonable to draw different conclusions from the evidences.

The Federal Circuit affirmed – finding that the strong undisputed evidence of prior art and motivation to combine fully supported the summary judgment finding.

[T]he record contains strong evidence that a skilled artisan would have had a reason to combine two known technologies and would have had a reasonable expectation of success in doing so. Indeed, DuPont itself promoted the digital and thermal technologies as technological breakthroughs in prior art publications. Thus, in view of the record as a whole, even drawing all justifiable inferences in favor of DuPont, the objective evidence is insufficient to preclude summary judgment on the ultimate legal conclusion of obviousness.

Doomed by Its Own Prior Statements: The obviousness case against DuPont here is interesting because (1) one of the core prior art references was a DuPont reference and (2) DuPont’s own statements regarding its prior inventions led to the motivation-to-combine finding.  DuPont’s private case study will likely walk through and consider whether it should have taken a different pathway regarding the public disclosures.

Caveat: Although the patentee’s pre-filing disclosures are important – it is also important to remember that the question of obviousness is an objective analysis focusing on the hypothetical mind of a person having ordinary skill in the art.  What this means is that the patentee’s disclosures are should not be treated as “party admissions” and given special treatment in the obviousness analysis.  Rather, the disclosures are simply added to the body of knowledge available to the artisan.  Here, the Federal Circuit came dangerously close to crossing the line into giving information actually available to and created by DuPont special weight in the obviousness analysis.

 

USPTO Launches Cancer Moonshot Challenge

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The following was originally published on the USPTO Director’s Blog and is a guest post by USPTO Chief of Staff Vikrum Aiyer and Senior Advisor Thomas A. Beach

The USPTO is playing an important role in the National Cancer Moonshot, a Presidential initiative we blogged about earlier this summer, to speed up cancer advances, make more therapies available to more patients, and improve the ability to prevent cancer and detect it at an early stage. Today, we are launching the USPTO Cancer Moonshot Challenge to enlist the public’s help to leverage our intellectual property data, often an early indicator of meaningful research and development (R&D), and combine it with other economic and funding data (ie. U.S. Securities and Exchange Commission filings, Food and Drug Administration reporting, National Science Foundation grants vs. philanthropic investments, venture capital funding, etc.). This comes on the heels of our Patents 4 Patients program, which was launched in July and aims to cut in half the time it takes to review patent applications in cancer therapy.

The USPTO Cancer Moonshot Challenge will conclude on September 12 and winners will be announced on September 26. Learn more about the prizes.

Participants will have the opportunity to leverage USPTO Cancer Moonshot patent data to reveal new insights into investments around cancer therapy research and treatments. Some questions to address include: What are the peaks and valleys in the landscape of cancer treatment technologies? What new insights can be revealed by correlating R&D spending/funding to breakthrough technologies? What would trace studies of commercially successful treatments from patent to product tell us? With the data sets released through the USPTO Developer Hub, users will be able to use analytic tools, processes and complimentary data sets to build rich visualizations of intellectual property data, which will help illuminate trend lines for new treatments. During the three week challenge, the USPTO will hold a USPTO Cancer Moonshot Workshop to assist participants, on Thursday August 25.

After the challenge has concluded, the USPTO, in tandem with other Moonshot Task Force partners, will look at further ways to use the findings. By bringing together cancer experts, policymakers, and data scientists, we can explore and identify how intellectual property data can be better leveraged and combined with other data sets to support cancer research and the development of new commercialized therapies. This will empower the federal government—as well as the medical, research, and data communities—to make more precise funding and policy decisions based on the commercialization lifecycle of the most promising treatments, and maximize U.S. competitiveness in cancer investments.

 We recognize that by enlisting the public’s assistance through our USPTO Cancer Moonshot Challenge, we can identify new and creative ways to fight cancer and work towards breakthroughs in treatment.  And by harnessing the power of patent data, and accelerating the process for protecting the intellectual property undergirding cancer immunotherapy breakthroughs, the USPTO is standing up and doing its part to help bring potentially life-saving treatments to patients, faster. Are you up to the challenge?

Expanding the Scope of Ex Parte Reexaminations MidStream

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by Dennis Crouch

A new petition by Pactiv (a Reynolds Co.) asks the Supreme Court to consider whether the PTO can expand the scope of an ex parte reexamination beyond the “substantial new question of patentability” identified in the Director’s order granting the reexamination.   Basically, can the reexamination examiner rely upon prior art different from that in the petition.

Question as presented to the Supreme Court:

Whether, because [35 U.S.C. §] 304 requires the Director to issue an order for a reexamination “for resolution of the question,” the “substantial new question of patentability” included in the Director’s order delineates the scope of the ex parte reexamination.

[Pactiv v. Lee petition]  Pactiv argues that the scope of reexaminations were intended to be limited to avoid becoming an “unbridled review system [that] could impose enormous burden and undue harassment on patentees.” (Petition).

Section 304 explains that the PTO Director can order ex parte reexamination after finding that “a substantial new question of patentability affecting . . . is raised.”  The statute goes on to state flatly that the reexamination order should be “for resolution of the question” — i.e., for resolution of the substantial new question raised in the petition.  That part of the statute is clear, however, the statute does not flatly bar modification of the question during the substantive reexamination.

The PTO’s position that allows for shifting rejections appears to stem from Belkin Intl Inc. v. Kappos, 696 F.3d 1379 (Fed. Cir. 2012), a decision involving inter partes reexamination.  Belkin is something of a mixed-bag.  In its decision, the Federal Circuit wrote that the inter partes challenger could not raise new questions of patentability beyond those in the SNQ order.  At the same time, the court also wrote (in dicta) that the PTO may, on its own, raise other issues. The court wrote:

Inter partes reexamination is not totally limited to those issues suggested by the requester that present a substantial new question of patentability. Indeed, the PTO may make any new rejection, as long as that rejection also meets the substantial new question of patentability requirement. See 35 U.S.C. § 303(a) (“On his own initiative, and any time, the Director may determine whether a substantial new question of patentability is raised by patents and publications discovered by him . . . .”). Thus, the scope of reexamination may encompass those issues that raise a substantial new question of patentability, whether proposed by the requester or the Director. . .

Belkin.  Pactiv challenges this dicta portion of Belkin – arguing that it is a misinterpretation of the statute and, in any event, does not apply to ex parte reexamination.  I would agree with Pactiv in its reading of this portion of the statute – if the USPTO wants to raise a new question on its own, the statute provides for a process of ordering reexamination rather than the implicit addition as done here.  At the same time, the availability of amendments and addition of new claims mean that new searches must be available in some form.  See 35 U.S.C. § 305.

For its part in the case, the Federal Circuit affirmed the PTAB determination without opinion (R.36 Affirmance).

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The patents at issue in the case are U.S. Patent No. 6,315,921 and U.S. Patent No. 6,395,195.  They relate to an oxygen absorber used in meat packaging.

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