Tag Archives: anticipation

Chicken?: Test your Patent Test Taking Skills 2017

Introduction: Although not a poultry expert, Prof Crunch recently designed and built his own back-yard chicken coop (Coop) (started and completed in August 2016).  Among its special features, the coop includes a translucent roof to allow additional winter light, a hinged trap-door in the floor for removing waste, and a vertically sliding door opening to the chicken-run.  The vertically sliding door is operated by a pulley system and can be controlled while standing next-to the nesting box door.   Thus, a user can provide access to the chicken-run at the same time as collecting eggs. The coop is also designed to be long-and-narrow in order to fit through a 40-inch wide gate while also providing at least 21 square feet of floor area.  While Crunch expects that many of these features are not unique, he believes that the combination is unique.  Crunch is an idea-man. Rather than production is looking to sell plans and instructions for making his Coop.

Crunch drafts the following two patent claims in his patent application filed December 5, 2016:

I claim:

1.     A poultry coop having a length, width, and height, said poultry coop comprising:

a roof made of a translucent material with at least 50% light transmission;

a floor having a hinged trap door and having an area of at least 21 square feet;

a first side wall that includes a nesting box with an externally hinged door; and

a second side wall that includes a vertically sliding door operated via a pulley system; wherein said pulley system is operable by a user standing near said nesting box and wherein said coop is configured with a width of less than 40-inches.

2.     A set of instructions comprising: instructions for making the poultry coop of claim 1.

Question 1. (120 words).  Crunch had considered adding an additional limitation that precisely defines the configuration of the pulley system and its components.  What are major pros and cons of adding these additional limitations to claim 1 (considering primarily the doctrines of patentability and infringement)?

Question 2. (200 words) Are these claims patent eligible subject matter?

Question 3. (60 words) Provide a concise argument that claim 1 fails for lack of definiteness.

Question 4. (80 words) Should Crunch be concerned that his back-yard prototype constitutes prior art that could be used against his own patent application?

Question 5. (240 words) Assume the following for this question: (a) the back-yard prototype is not prior art; and (b) Crunch’s expectations are correct that while many of the patented elements are known in the prior art, the combination as a whole is unique.  What can we say about the novelty/nonobviousness of the claims.

Question 6. (25 words) Assuming claim 1 is patented but not claim 2. Does Crunch have an infringement claim against a third party who begins teaching others how to make the coop?

Power Integrations v. Fairchild Semiconductor

By Jason Rantanen

Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. (Fed. Cir. 2016) 15-1329.Opinion.12-8-2016.1
Panel: Prost, Schall, Chen (author)

This appeal is the latest in a long-running patent saga between Power Integrations and Fairchild.  Each asserted patents against the other; each won as to liability against the other. The most interesting aspect of this opinion is its discussion of inducement, in which the court rejects a jury instruction on inducement that expressly stated that the third party’s direct infringement “need not have been actually caused by the [accused inducer’s] actions.”

Background:  The complexity of this appeal is illustrated by the opinion’s 8 bullet-point summary of its holdings.   The jury found that Power Integrations’ Patent Nos. 6,107,851 and 6,249,876 were not anticipated and were directly and indirectly infringed by Fairchild and that Fairchild’s Patent No. 7,259,972 was not obvious and was infringed by Power Integrations under the doctrine of equivalents (but was not literally infringed or indirectly infringed by Power Integrations).  The jury also found Power Integrations’ Patent No. 7,834,605 neither anticipated nor obvious.  Following trial, the district court granted judgment as a matter of law that Fairchild directly infringed this patent.  The district court granted a permanent injunction against Fairchild and declined to grant an inunction against Power Integrations.

Fairchild appealed and Power Integrations cross-appealed.

Inducement: The indirect infringement issue involved 35 U.S.C. § 271(b), a one sentence provision at the heart of several significant opinions over the last few years.  Section 271(b) reads “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”  Basic elements of an inducement claim include some type of action by the alleged inducer to encourage acts by a third party, an awareness that the third party’s acts would infringe a patent, and actual direct infringement by a third party.

The full jury instruction takes up almost a page and a half of the opinion.  The critical passage on appeal reads:

In order to establish active inducement of infringement, it is not sufficient that others directly infringe the claim. Nor is it sufficient that the party accused of infringement was aware of the acts by others that directly infringe. Rather, in order to find inducement, you must find that the party accused of infringement intended others to use its products in at least some ways that would infringe the asserted claims of the patent. However, that infringement need not have been actually caused by the party’s actions. All that is required is that the party took steps to encourage or assist that infringement, regardless of whether that encouragement succeeded, or was even received.

Slip Op. at 22 (emphasis in opinion).  The problem, in the court’s words, was that “[t]his instruction left the jury with the incorrect understanding that a party may be liable for induced infringement even where it does not successfully communicate with and induce a third-party direct infringer.”  Id. at 23.  Rather, inducement “requires successful communication between the alleged inducer and the third-party direct infringer.”  Id.  Quoting from Dynacore Holdings Corp. v. U.S. Philips Corp., 363, F.3d 1263, 1274 (Fed. Cir. 2004), the court observed “[w]e have further held that “[t]o prevail under a theory of indirect infringement, [plaintiff] must first prove that the defendants’ actions led to direct infringement of the [patent-in-suit].”  Id. at 24.  Thus, “a finding of induced infringement requires actual inducement.”  Id.  In terms of doctrine, the court situates this inquiry in the requirement of inducement itself.

Although the court does not come right out and say it, this is fundamentally a theory of causality in inducement.  In other words, it is not enough that the alleged inducer engage in acts intended to result in direct infringement by a third party and that the third party directly infringes.  At a minimum, there must be a successful communication between the two.  Attempted inducement is not enough; there must be “actual inducement.”  This interpretation  is further bolstered by the court’s rejection of the language in the jury instruction stating that “infringement need not have been actually caused by the party’s actions.”   That said, despite the invitation to address causality presented by the jury instruction, the court conspicuously avoids describing its holding in those terms.  Nowhere outside of the jury instruction and a few unrelated places does a permutation of “caus” appear.

Even as it recognized a requirement that there be some link between the acts of the alleged inducer and the directly infringing acts,  however, the Federal Circuit was not willing to go so far as to say that Fairchild did not induce infringement  as a matter of law.  After rejecting Fairchild’s argument on the lack of sufficiency of the evidence generally, the Federal Circuit dismissed its argument on nexus between Fairchild’s acts and the ultimate direct infringement.  Fairchild contended

that Power Integrations introduced evidence of only three acts of direct infringement—sales of an HP printer, Acer notebook computer, and Samsung notebook computer containing infringing Fairchild controller chips—and that Power Integrations was required to present evidence that Fairchild specifically induced HP, Acer, Samsung, or the retailers from which Power Integrations purchased the infringing products to incorporate the infringing controller chips into products bound for the United States.

Id. at 30.  The Federal Circuit rejected the argument that such specificity was required in the nexus.  “While none of [Power Integrations’  evidence can be directly linked to the particular HP printer, Acer notebook computer, or Samsung notebook computer Power Integrations
introduced at trial as representative acts of direct infringement, it was sufficient to allow the jury to find that Fairchild had induced its customers (including HP, Acer, and Samsung) to infringe as a class. This is all that we require.”  Id. at 31.  “Indeed, we have affirmed induced infringement verdicts based on circumstantial evidence of inducement (e.g., advertisements, user manuals) directed to a class of direct infringers (e.g., customers, end users) without
requiring hard proof that any individual third-party direct infringer was actually persuaded to infringe by that material.”  Id.

Thus, although some evidence of a link between inducer’s acts and the directly infringing acts is required, it need not be with the level of specificity that might need to be shown in other contexts.  Absolute precision of proof as to the machine in the courtroom is not necessary.  And yet, some proof of a link must be present.  Here, the court concluded, there was sufficient evidence for a reasonable jury to find that necessary link.

At this point you might be asking why all of this mattered, given that Fairchild did not appeal the jury verdict that it directly infringed the patents.  The reason is because the finding of inducement greatly expanded the scope of Fairchild’s liability beyond its direct infringement in the United States.  Based on its decision on inducement, the Federal Circuit vacated the district court’s grant of Power Integrations’ motion for a permanent injunction against Fairchild.  Of course, given that these issues are being remanded to the district court, it is conceivable that the outcomes of both could ultimately be the same.

Practice commentary: The opinion contains a simple articulation of the requirements of an inducement claim that rearranges the conventional elements.  Near the beginning of its discussion of the jury verdict, the court describes the elements as follows:

In other words, Power Integrations was required to prove that: (1) a third party directly infringed the asserted claims of the ’851 and ’876 patents; (2) Fairchild induced those infringing acts; and (3) Fairchild knew the acts it induced constituted infringement.

In my view, this version is much easier to understand than the usual way inducement is articulated.

Anticipation: The court’s review on anticipation of the ‘605 patent is also interesting as an example of a jury verdict of no anticipation being overturned on appeal.   Here, Fairchild bore a double-burden on Power Integrations ‘605 patent: not only did it bear the burden of proving that the presumptively-valid claims were anticipated, but it also had to convince the Federal Circuit on appeal that the jury’s finding to the contrary was unsupported by substantial evidence.  Fairchild was helped on appeal by the relative narrowness of the disputed evidentiary issue.  On that particular issue, the court concluded that Power Integrations’ own expert had testified that the critical element required by the claims was disclosed by the prior art reference.

Doctrine of equivalents: The main point here is Power Integrations’ successful claim vitiation argument.

Edit: Added the opinion itself.

Microsoft v. Enfish: Turns Out the Claims Are Obvious

This is a discussion of the new Federal Circuit Decision Microsoft v. Enfish appealing a PTAB final decision.

In the prior parallel decision – Enfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016), the Federal Circuit reversed a district court ruling that Enfish’s asserted software claims were ineligible under § 101 and also vacated the lower court’s holding that some of the claims were invalid as anticipated. U.S. Patent Nos. 6,151,604 and 6,163,775 (inventions relating to a “self-referential” database).

Enfish sued Microsoft for infringement in 2012. In addition to its litigation defenses, Microsoft marshaled a collateral attack on the patents with five petitions with the US Patent Office for inter partes review of the ’604 and ’775 patents.

After instituting review, the Patent Trial and Appeal Board found some of the patent claims invalid as anticipated/obvious.  On appeal, PTAB factual findings are generally given deference but legal conclusions are reviewed without deference.  After reviewing the claim construction and rejections, the Federal Circuit affirmed in a non-precedential decision.

Collateral Attacks: These collateral attacks work well to cancel patent claims with obviousness arguments that would have been unlikely to be accepted by a trial court or jury.  This is a pointed example here since the previously rejected district court’s judgment was based upon a more simplistic Section 101 analysis that is easier for the Federal Circuit to overturn.

Not Amenable to Construction:  The most interesting aspect of the decision is hidden in a single sentence statement:  “As to claims 1–26 and 30 of both patents—which are not at issue before us—the Board terminated proceedings after concluding that those claims were not amenable to construction.”

In its final judgment, the Board explained that those claims include a means-plus-function element (“means for configuring said memory according to a logical table“) but that no embodiments of the element were provided in the specification.  And, although a person of skill in the art may know how to construct the element, our 112(f) jurisprudence requires embodiments in the specification and does not allow a patentee to “rely on the knowledge of one skilled in the art to address the deficiencies” See Function Media, LLC v. Google Inc., 708 F.3d 1310 (Fed. Cir. 2013).  The statute states permits means-plus-function claims but also provides a guide for narrowly construing those claims.

35 U.S.C. 112(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.

In both patent prosecution and district court litigation, failure to properly disclose structural embodiments for a means-plus-function limitation results in the claim being held invalid as indefinite since the limitation’s scope cannot be properly construed.  In the inter partes review situation, however, the Board’s power is limited to cancelling patents on novelty or obviousness grounds.  As such, the Board simply terminated the IPR trial with respect to these non-construable claims. The Board writes:

In the circumstance when the specification of the challenged patent lacks sufficient disclosure of structure under 35 U.S.C. § 112, sixth paragraph, the scope of the claims cannot be determined without speculation and, consequently, the differences between the claimed invention and the prior art cannot be ascertained. For the reasons given, we determine that independent claims 1, 11, and 15 are not amenable to construction and, thus, we terminate this proceeding with respect to claims 1, 11, and 15 under 37 C.F.R. § 42.72.

[PTAB Final Decision].

No Appeal of Termination: Neither party appealed the termination, although the Federal Circuit previously held that its appellate jurisdiction over these cases is limited to appeals of “final written decision[s] with respect to the patentability of any patent claim challenged by the petitioner …”  A termination decision was seen as essentially an extension of the institution decision that is not itself appealable.


Of course, the original Federal Enfish decision mentioned above also addressed this indefiniteness issue and held that the claims were not indefinite because sufficient structure was disclosed — holding that the scant description was adequate because “the sufficiency of the structure is viewed through the lens of a person of skill in the art and without need to ‘disclose structures well known in the art.’  I guess that this means that those claims are OK.

Federal Circuit Orders PTO to limit business method review trials (CBM) to “financial products or services” since that is the law

by Dennis Crouch

In Unwired Planet v. Google, the Federal Circuit has vacated a PTAB covered business method decision – holding that the PTO’s definition of a “covered business method” was unduly broad.

The America Invents Act created a powerful set of post-issuance administrative review procedures known generally as AIA trials, including the covered business method (CBM) review. CBM is designed as a transitional proceeding that will sunset in the year 2020 barring congressional action. The most popular form of AIA trial is inter partes review (IPR) that allows for review of any issued patent but is limited to only novelty and obviousness challenges based upon prior art.  CBM review applies to a much narrower set of patents – only “covered business methods” – but those patents can be challenged on almost any patentability ground, including eligibility.  Here, the Board found the challenged claims unpatentable subject matter under section 101.

The term covered business method is particularly defined to include any patent “that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” AIA § 18(d)(1).  In its implementing rules, the PTO did not further define or explain the CBM definition within its official rules – although the PTO did propose the “incidental” or “complementary” language in its official responses to comments on its proposed rules.  On appeal, the Federal Circuit has rejected the more expansive definition as contrary to the statute.

Here Unwired’s Patent No. 7,203,752 claims a method of using privacy preferences to configure when various applications are permitted to access a wireless device’s location information.  PTAB found CBM claims by noting that businesses may want “to know a wireless device is in its area so relevant advertising may be transmitted.” The PTAB’s finding here was not conjecture but instead came from the patent’s written description.  On appeal, however, the Federal Circuit found the required “financial product or service” link too tenuous.  The court explains:

The Board’s application of the “incidental to” and “complementary to” language from the PTO policy statement instead of the statutory definition renders superfluous the limits Congress placed on the definition of a CBM patent.

The court then provides a few analogies:

The patent for a novel lightbulb that is found to work particularly well in bank vaults does not become a CBM patent because of its incidental or complementary use in banks. Likewise, it cannot be the case that a patent covering a method and corresponding apparatuses becomes a CBM patent because its practice could involve a potential sale of a good or service. All patents, at some level, relate to potential sale of a good or service. Take, for example, a patent for an apparatus for digging ditches. Does the sale of the dirt that results from use of the ditch digger render the patent a CBM patent? No, because the claims of the ditch-digging method or apparatus are not directed to “performing data processing or other operations” or “used in the practice, administration, or management of a financial product or service,” as required by the statute. It is not enough that a sale has occurred or may occur, or even that the specification speculates such a potential sale might occur.

The decision here thus appears to eliminate any chance that the patent will be considered a CBM and thus the Section 101 decision by the PTAB goes away.

No Appeal? Like IPR proceedings, CBM proceedings begin with an initiation decision followed by a trial decision.  And, like IPR proceedings, the decision to initiate a CBM is not appealable.  In Versata, however, the Federal Circuit held that the initiation question of whether a patent is a CBM patent may be reviewed on appeal.  Despite the statutory language and the intervening Supreme Court decision in Cuozzo, the court here held that it still has jurisdiction to review the CBM initiation question on appeal.

Deference: In reviewing the PTAB determination, the court gave no deference to the Board’s interpretation of the law. “We review the Board’s statutory interpretation de novo.”  The Court also gave no deference to the PTO’s “policy statement” made in its notice of final rules.  The court does implicitly suggest – as it did in Versata – that implementation of a more thorough definition in the CFR rules would be given deference. However, the PTO has not taken that approach.

I do not know yet whether Google will push this case to the Supreme Court.  The strongest argument is that Cuozzo implicitly overruled Versata. That is the holding suggested by Alito’s dissenting interpretation of the Cuozzo majority.


Director Lee: IP is a Necessary Key Piece of President-Elect Trump’s Promised Economic Growth and Job Creation

Today, USPTO Director provided her first Post-Election speech that includes some thoughts on IP policy after Obama.

I believe the incoming administration must and will continue our effort to promote innovation fueled by a strong and robust IP system. Support for IP in the United States has a long history of bipartisanship, and there’s no reason to imagine that changing with a new president and a new Congress, both of whom have economic growth as a top priority. . . .

I’m optimistic the incoming administration will share our appreciation of the importance of intellectual property as a driver of economic growth. As I look ahead, I foresee legislative patent reform changes will continue to be discussed in Congress, though those conversations will likely occur later in the term after some of the other priorities including filling a Supreme Court vacancy, immigration and tax reform are addressed, and any legislative patent reform will likely be more targeted, rather than the comprehensive reforms we’ve seen in prior Congresses. I would hope any legislative proposal will take into account the numerous positive changes that have occurred recently in the patent system including: through the courts, including on attorneys fees, pleading requirements and discovery limits, and at the USPTO through the PTAB and the agency’s efforts to improve the quality of patents in our system. As far as issues, I predict legislative discussions may include venue reform and possibly changes to Section 101 and PTAB. On venue, with nearly half of the patent cases filed in 2015 filed in a single district out of 94 federal judicial districts, it is easy for critics to contend that plaintiffs seek out this district preferentially for the wrong reasons. And the mere perception that there are advantages to be gained by forum-shopping challenges the public’s faith in the patent system. So there will be continuing pressure for legislative (and likely judicial) action on the issue of venue. The scope of any legislative reform remains is to be determined, but I predict that the focus will be on more targeted, rather than comprehensive reform as we saw these past couple Congresses. Further, I anticipate that the USPTO’s work across the globe to ensure that other countries have strong IP protections adequate enforcement mechanisms and remedies, and appropriate technology transfer (or licensing and competition) policies, will continue in the next Administration particularly in such countries as China and others. This is a President-elect that has promised economic growth and job creation in our country, and IP will necessarily be a key piece to achieving that goal. . . .

I firmly believe that the USPTO is healthy, well-functioning and poised to successfully handle whatever challenges and opportunities lie ahead.  . . . When President Obama was inaugurated in 2009, his focus was on leading this nation’s recovery from the Great Recession. One of his first acts was to ask the Smithsonian to provide for display in the Oval Office some patent models that demonstrated past American innovation that led to new jobs and new industries. The president said that throughout our history, Americans solved problems through innovation and IP. He wanted to see reminders of that every day as he encountered the challenges he faced. The Smithsonian provided him with three models: Samuel Morse’s telegraph (1849),  John Peer’s gear cutter (1874), and Henry Williams’ steamboat wheel (1877). As I stood behind the President in the Oval Office earlier this year when he signed the Defend Trade Secrets Act, I couldn’t help but notice those three models along the wall to my left—still there almost eight years later—and feel extraordinarily humbled and honored. I feel that same honor and humility today standing before all of you and reflecting on just how much we have accomplished under this administration.  I’ve been fortunate to lead the USPTO at a time when intellectual property issues have been front and center on the consciousness of the American public and President and to have had the opportunity to help guide the direction in a small way. My hope is that the President-elect keeps the patent models from Morse, Peer and Williams in his office as a reminder of the importance of intellectual property to the economic prosperity that I know he wants for our country.

Read the full remarks here.

No Common Interest Privilege in NY Without Anticipated Litigation

This case is going to cause some problems.

Normally, if Client A and Lawyer A have a confidential communication, disclosure of it to a third party waives any privilege.  However, if Client A and the third party have a “common interest,” there is no waiver.  So, for example, if a licensor communicates with patent prosecution counsel for the licensee about prosecution of a foreign counterpart of the licensed patent, there might be a privilege.

But not under New York law.  The Court of Appeals, inaptly named highest court of New York, held that only if there is pending or anticipated litigation is the common interest exception to waiver available.  Ambac Assurance Corp. v. Countrywide Home Loans, Inc., (June 9, 2016).

Supreme Court Patent Cases: Post Sale Exhaustion

by Dennis Crouch

Substantive Patent Law: Newly filed petition in Merck & Cie v. Watson Labs raises a core substantive patent issue – does the on sale bar apply to secret sales? The defendant asks:

Whether the “on sale” bar found in § 102(b) applies only to sales or offers of sale made available to the public, as Congress, this Court, and the United States have all made clear, or whether it also applies to non-public sales or offers of sale, as the Federal Circuit has held.

The Merck petition is focused on pre-AIA patents.  The PTO (and patentees) are arguing more forcefully that the AIA certainly intended to exclude secret sales from the scope of prior art in cases now pending before the Federal Circuit.

The second new substantive patent law case is Google v. Arendi that challenge’s the Federal Circuit’s limitations on the use of common sense in the obviousness analysis.  In its decision, the Federal Circuit limited KSR to combination patents and held that “common sense” cannot be used to supply missing limitations.  Google argues that the Federal Circuit’s approach is contrary to the broad and flexible obviousness analysis required by KSR.  Patentees bristle term “common sense” – they see an overly flexible analysis as providing opportunities to invalidate patents without evidence.  The question: “Did the Federal Circuit err in restricting the Board’s ability to rely on the common sense and common knowledge of skilled artisans to establish the obviousness of patent claims?”

As these new petitions were being filed, the Supreme Court has also denied the pending obviousness, anticipation, and eligibility petitions.  In addition, Cooper v. Square has also been denied.

Civil Procedure: In J&J v. Rembrandt, the defendant J&J won at trial. However, Rembrandt later learned that J&J’s expert had testified falsely and the Federal Circuit ordered the case re-opened under R.60(b)(3) that empowers district courts to revisit final judgments after a showing of “fraud …, misrepresentation, or misconduct by the opposing party.”  The various circuits follow different standards and procedures for analyzing process and J&J has asked the Supreme Court to reconcile these (in its favor).  Another CivPro petition was also filed by Eon Corp that questions whether an appellee needed to file a R.50 JMOL motion to overturn a jury verdict that was based upon a faulty legal conclusion by the district court (here claim construction).  The Question Presented is:

Whether the Federal Circuit erred in ordering entry of judgment as a matter of law on a ground not presented in a Rule 50 motion in the district court, even though the ground presented a purely legal question.

Both J&J and Eon are only marginally patent cases, the core procedure case now pending is TC Heartland that would substantially upset the status quo of patent lawsuit concentration in E.D. Texas. Briefing continues in TC Heartland. In recent weeks a set of seven amici briefs were filed on the top side.

Next week Supreme Court conference includes review of the most likely-to-be-granted petition of Impression Products, Inc. v. Lexmark International, Inc. that focuses on important questions of post-sale exhaustion of patent rights.  The setup – If I buy a used product that was made and sold by the patentee, do I still need to worry that I might get sued for patent infringement?  The Federal Circuit says yes. The Supreme Court is likely to add some caveats to that.  The US Government (Obama Administration via DOJ) has argued that the case should be reviewed and that the Federal Circuit’s position should be rejected. Both parties then filed supplemental responsive briefs.  Lexmark’s best argument here is that these principles are well settled and that Congress can take on the role of tweaking them if needed.

Upcoming Supreme Court Oral Argument: Life Tech (export of components) set for December 6, 2016.


Federal Circuit’s Internal Debate of Eligibility Continues

Amdocs v. Openet (Fed. Cir. 2016)

In the end, I don’t know how important Amdocs will be, but it offers an interesting split decision on the eligibility of software patent claims.  Senior Judge Plager and Judge Newman were in the majority — finding the claims eligible — with Judge Reyna in dissent.  One takeaway is that the Federal Circuit continues to be divided on the issues.  By luck-of-the-panel in this case, the minority on the court as a whole were the majority on the panel (pushing against Alice & Mayo).  Going forward, the split can be reconciled by another Supreme Court opinion, a forceful Federal Circuit en banc decision, or perhaps by future judicial appointments by President Trump.  I expect 2-3 vacancies on the court during Trump’s first term.

In a 2014 post I described the Amdocs district court decision invalidating the claims.  The four patents at issue all stem from the same original application relating to a software and network structure for computing the bill for network communications usage.   One benefit imparted by the invention is associated with its physically distributed architecture that “minimizes the impact on network and system resources” by allowing “data to reside close to the information sources.” According to the majority opinion, “each patent explains that this is an advantage over prior art systems that stored information in one location, which made it difficult to keep up with massive record flows from the network devices and which required huge databases.”  The nexus with the tated benefit is difficult to find in many of the claims themselve.  See Claim 1 below, which was taken as representative of the asserted claims of Amdocs ‘065 patent:

1. A computer program product embodied on a computer readable storage medium for processing network accounting information comprising:

computer code for receiving from a first source a first network accounting record;

computer code for correlating the first network accounting record with accounting information available from a second source; and

computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.

You’ll note that the claim is an almost pure software claim — requiring “computer code” “embodied on a computer readable storage medium.”  The code has three functions: (1) receiving a network accounting record; (2) correlating the record with additional accounting information; and (3) using the accounting information to “enhance” the original network accounting record.  The claim term “enhance” is construed narrowly than you might imagine as the addition of one or more fields to the record.  An example of an added field would be a user’s name that might be added to the accounting record that previously used a numeric identifier.   The court also found that the term “enhance” should be interpreted as requiring that – and doing so in a “a distributed fashion … close to their sources” rather than at a centralized location.  This narrow interpretation of the term “enhance” do not flow naturally from the claim language, but do turn out to be crucial to the outcome.

In reviewing the claim, the court noted that “somewhat facially-similar claims” have been alternatively invalidated as abstract ideas and found eligible.  Compare, for example, Digitech with Enfish and DDR.   Here, the court wrote that the claims are “much closer” to the ones found eligible.  I might rewrite their opinion to say that the judges in the majority prefer the decisions finding eligibility over those invalidating software patent claims.

The two recent Supreme Court cases of Alice and Mayo spell out the court’s two-step framework for determining whether a patent is improperly directed to one of the excluded categories of abstract ideas, natural phenomena, and laws of nature.  Briefly, the court first determines whether “the claims at issue are directed to one of those patent-ineligible concepts.”  If so, the decision-maker must then determine whether any particular elements in the claim “transform the nature of the claim into a patent-eligible application.”  This second step requires consideration of additional elements both individually and in combination in search for an “inventive concept . . . sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” [Quoting Mayo and Alice throughout].

In making its eligibility conclusion in Amdocs, the appellate majority focused on the claim requirement (as construed) that processing be done in a distributed fashion.  According to the court, “enhancing data in a distributed fashion” is “an unconventional technological solution . . . to a technological problem (massive record flows which previously required massive databases).”  Remember here though that we are not talking about patenting a distributed system, but rather patenting a “computer program product embodied on a computer readable storage medium” used to implement the features.

Rather than taking Alice/Mayo steps in turn, the majority accepted “for argument’s sake” that the claims were directed to abstract ideas. However, the claim adds “something more” beyond an abstract idea.  Here, the court notes that the claims require “distributed architecture—an architecture providing a technological solution to a technological problem. This provides the requisite ‘something more’ than the performance of “well-understood, routine, [and] conventional activities previously known to the industry.”

Despite being the stated “unconventional” idea of using a distributed architecture, the court noted that the patent may still fail on anticipation or obviousnesss grounds.

Writing in dissent, Judge Reyna offered several different arguments. First, Reyna argue that the court’s skipping of Alice/Mayo Step 1 helped lead to an incorrect result. If you do not define the abstract idea at issue, how do you know whether the claim includes something more?  Reyna also argued that the “distribution architecture … is insufficient to satisfy Alice step two” because the limitation is not actually found in the claims and, even as interpreted provide only a functional result.  Reyna does note that the specification provides sufficient description of a distributed architecture, but that the claims themselves lack the requisite detail.

The specifications disclose a distributed system architecture comprising special-purpose components configured to cooperate with one another according to defined protocols in a user-configurable manner for the purpose of deriving useful accounting records in a more scalable and efficient manner than previously possible. The disclosed system improves upon prior art systems by creating a specific “distributed filtering and aggregation system . . . [that] eliminates capacity bottlenecks” through distributed processing. ’ The disclosed system is patent eligible. But the inquiry is not whether the specifications disclose a patent-eligible system, but whether the claims are directed to a patent ineligible concept.

[Read the opinion here]

Results of the Clarity of the Record Pilot

The following is reprinted from USPTO Director Michelle K. Lee’s “Director’s Blog.”  On December 13, 2016, the USPTO is hosting its next patent quality conference.

= = = =

by Michelle Lee

I’m pleased to report that we have completed the Clarity of the Record Pilot launched earlier this year as part of our Enhanced Patent Quality Initiative. We’ve achieved our goal of identifying some best practices for enhancing the clarity of various aspects of the prosecution record. These include best practices for documenting the USPTO’s positions with respect to claim interpretation, reasons for allowance, and interview summaries as well as encouraging examiners to initiate pre-search interviews when needed to gain a better understanding of the claimed invention. I would like to fill you in on some of our findings, and also encourage you to attend our day-long patent quality conference on December 13, where we will report in detail on the progress of the dozen or so programs in the Enhanced Patent Quality Initiative.

Through this pilot, we identified the following best practices as key drivers for clarity and trained our examiners on these practices:

For interview summaries, providing:

  • the substance of the examiner’s position
  • details of any agreement reached
  • a description of the next steps that will follow the interview

For reasons for allowance:

  • addressing each independent claim separately
  • particularly identifying the applicant’s persuasive arguments (wherever they may be in the record)
  • identifying allowable subject matter of the claim rather than merely reciting the entire claim as the basis for allowance

For claim interpretation:

  • putting all 35 USC 112(f) presumptions on the record
  • explaining how the presumptions were overcome
  • identifying on the record the structure in the specification that performs the function
  • when a prior reference is used to reject multiple claims, clearly addressing specific limitations in each claim that is anticipated by the art

As a result of this pilot, we found there is progress to be made in the treatment of 35 USC 112(f) limitations, interview summaries, and reasons for allowance, while our highest clarity was in the area of 35 USC 102 and 103 rejections. Going forward, we plan to continue increasing clarity in all aspects of our practice.

Overall, we measured 68 unique data points, each data point representing a different best practice for achieving clarity. We found that on average, pilot examiners used 14% more of these best practices in pilot cases as compared to control cases, and this increased use of best practices contributed to an increase in overall clarity in pilot cases. Notably, we found that in pilot cases examiners employed:

  • 38% more best practices as compared to control cases for 35 USC 102 rejections and
  • 140% more best practices as compared to control cases for assessments of 35 USC 112(f) limitations.

Also, we found that pilot participants carried on using the best practices they learned in the pilot, even to applications not in the pilot program.  This is a strong indication that the examiners embraced the training.  We also had anecdotal evidence that pilot participants encouraged fellow, non-pilot examiners to use the best practices during the prosecution of their own cases.  Clearly the pilot participants saw a value to using these best practices when examining applications.

The Clarity of the Record Pilot ran from March 6 to August 20 of this year. To ensure a diverse pool of examiners, we invited randomly selected utility patent examiners with at least two years of patent examining experience to participate. All told, 125 examiners representing all utility technology centers participated, and roughly two-thirds of these participants were primary examiners.

The pilot kicked off with initial training in the form of four different modules – an initial module to provide participants with an overview of the pilot and three modules to provide identified best practices to enhance clarity with respect to the pilot’s three focus areas – claim interpretation, reasons for allowance and interview summaries. All of the modules started with a discussion about the goals of the pilot and the importance of clarity of the record.

Pilot participants were expected to use identified best practices when drafting office actions for a select number of cases.  In addition, throughout the pilot, participants attended meetings (called “quality enhancement meetings”) to discuss interesting takeaways with fellow pilot participants. The quality enhancement meetings were typically held with examiners working within similar technologies; however, there were also pilot-wide meetings involving invited speakers, including a judge from the Patent Trial and Appeal Board and the Commissioner for Patents, who shared their perspective on the importance of clarifying the prosecution record. Participants also met biweekly with a pilot manager to receive one-on-one training and to consult on lessons learned.

To evaluate the pilot, the Office of Patent Quality Assurance reviewed the clarity of approximately 2,600 cases for a statistical assessment of whether the best practices of the pilot improved the clarity of office actions.  In addition, we analyzed feedback from the quality enhancement meetings and training sessions, including a list of best practices developed by the pilot participants. Using this information, we identified the best practices that were key drivers of overall clarity. Based on the results from the pilot program, we are analyzing the data to provide recommendations on implementation of the pilot’s best practices across the patent examining corps.


Supreme Court Update: Extending the ITC’s Reach Beyond US Borders

by Dennis Crouch

Constitutional Challenge to Inter Partes Review: Although the Constitutional issues in Cooper v. Lee and MCM v. HP were law-professor-interesting, they were not substantial enough for certiorari.  The Supreme Court has now denied the Cooper and MCM petitions — leaving the IPR regime unchanged.  Although Cooper v. Square is still pending, its chances are slight. The Supreme Court has also denied certiorari in Encyclopaedia Britannica (malpractice), Gnosis (appellate review), and GeoTag (case-or-controversy).

A new 101 Challenge: In its first conference of the term, the Supreme Court denied all of the pending petitions regarding patent eligibility.  However, Trading Technologies has filed a new petition asking whether a new card game is categorically unpatentable so long as it uses a standard deck (rather than a novel deck) of cards.  My post on the case asks: Does the Patent Statute Cabin-in the Abstract Idea Exception?  That question references Section 100 of the Patent Act that expressly allows for the patenting of new use of a known manufacture.

Extra Territoriality of Trade Secrecy Law: On the trade secrecy front, Sino Legend has petitioned to review the Federal Circuit’s affirmance of the International Trade Commision’s ban on Legend’s importation of rubber resins used for tire production. The underlying bad-act was a trade secret misappropriation that occurred in China and the question on appeal asks: Whether Section 337(a)(1)(A) permits the ITC to adjudicate claims regarding trade secret misappropriation alleged to have occurred outside the United States.  A Chinese court looked at the same case and found no misappropriation.

Design Patent Damages: Oral arguments were held earlier this week in Samsung v. Apple. During the arguments, all parties agreed that (1) the statute does not allow for apportionment of damages but rather requires profit disgorgement; (2) the article-of-manufacture from which profits can be calculated may be a component of the product sold to consumers; and (3) the determination of what counts as the article-of-manufacture is a question of fact to be determined by the jury.   The only dispute then was on the factors that a jury should be considered and when the “inside gears” of a product should ever be included in the calculation.

Upcoming Supreme Court Oral Argument: SCA Hygiene (laches) on November 1; Star Athletica (copyright of cheerleader outfit) on October 31.


First Amendment Finally Reaches Patent Law

The big news from Intellectual Ventures v. Symantec (Fed. Cir. 2016) is not that the court found IV’s content identification system patents invalid as claiming ineligible subject matter.  (Although that did happen). Rather, the big event is Judge Mayer’s concurring opinion that makes “make two points: (1) patents constricting the essential channels of online communication run afoul of the First Amendment; and (2) claims directed to software implemented on a generic computer are categorically not eligible for patent.”

Read Judge Mayer’s opinion in full:

MAYER, Circuit Judge, concurring.

I agree that all claims on appeal fall outside of 35 U.S.C. § 101. I write separately, however, to make two points: (1) patents constricting the essential channels of online communication run afoul of the First Amendment; and (2) claims directed to software implemented on a generic computer are categorically not eligible for patent.


Supreme Court Patent Cases – September 28 Update

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).



Traditional equitable defenses do not apply to IPR proceedings

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.

Point of Novelty Returns to Indefiniteness Analysis

Cox Communications v. Sprint (Fed. Cir. 2016)

The district court found all of Sprint’s asserted claims invalid as indefinite under 35 U.S.C. § 112, ¶ 2.  The term “processing system” was common to the claims of all six asserted patents, and the lower court found it “functionally” described and claimed in a manner that did not provide the reasonable certainty of claim scope required under Nautilus.  U.S. Patent Nos. 6,452,932; 6,463,052; 6,633,561; 7,286,561; 6,298,064; and 6,473,429.  On appeal, the Federal Circuit has reversed.

Section 112, ¶ 2 requires claims “particularly pointing out and distinctly claiming” the invention and is seen as the textual source of the definiteness requirement.  In Nautilus, the Supreme Court held that “a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.”

More Definiteness Leeway For Terms Outside the Point of Novelty: In thinking through its analysis, the Federal Circuit started with an interesting issue: Point of Novelty.  The appellate panel noted that the claimed “processing system” was did not provide newness to the claim but was “merely the locus at which the steps are being performed.”  To drive this point home, the court walks through a representative set of claims to show how “processing system” does almost no work in the claims.

Of course, “point of novelty” analysis has a history in indefiniteness cases – most famously in the pre-1952 Supreme Court cases of Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946) and Gen. Elec. Co. v. Wabash Appliance Corp., 304 U.S. 364 (1938) that heightened the definiteness burden at the point of novelty.  Those cases particularly on functional claim language:

The vice of a functional claim exists not only when a claim is ‘wholly’ functional, if that is ever true, but also when the inventor is painstaking when he recites what has already been seen, and then uses conveniently functional language at the exact point of novelty.

Gen Elec. I’ll note here that the Federal Circuit’s Sprint opinion does not cite to either of these older cases. The court does, however, refer to the Post Nautilus decision in Eidos Display, LLC v. AU Optronics Corp., 779 F.3d 1360 (Fed. Cir. 2015). In that case, the court found the term “contact hole” sufficiently definite since the specification referred to well-established practice in the industry and the limitation was not itself offering a point of novelty.

Coming back to Sprint’s claims, the court writes

If “processing system” does not discernably alter the scope of the claims, it is difficult to see how this term would prevent the claims … from serving their notice function under § 112, ¶ 2.

Here, the court notes that the indefiniteness test focuses on each “claim” not “claim terms” themselves.  And, although we have a common practice of focusing on individual terms — that approach is merely a helpful tool.

Particularly focusing on the functional nature of the “processing system” claim term – the court first held that functional claim language is permissible and at times quite helpful in providing definite scope limits.

As Nautilus instructs, the dispositive question in an indefiniteness inquiry is whether the “claims,” not particular claim terms, “read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.”

The Sprint majority opinion here was authored by Judge Prost and joined by Judge Bryson. Judge Newman wrote a concurring opinion, protesting the majority’s approach to determining the term’s importance by removing the challenged term from the claim and then determining whether the removal changes the claim meaning.


“Inherent Disclosure” in Priority Document is Sufficient to Satisfy Written Description Requirement

Yeda Research v. Abbott (Fed. Cir. 2016)

Abbott’s patent broadly covers Tumor Necrosis Factor α binding protein (TBP-II). U.S. Patent No. 5,344,915.  The U.S. application was filed in 1990, but claims priority to two German applications filed in 1989. A would-be anticipatory prior art reference (Engelmann) was published after the priority applications but before the U.S. application – and the parties have agreed that dispute turns on whether the claims get to rely upon the early priority date.

In the preceding interference proceeding, the Board sided with Abbott as did the district court – finding that one of the German applications sufficiently disclosed the invention.  (Yeda’s application was filed nine days after Abbott’s.)

A priority filing is only effective if the claimed invention was sufficiently described in the original filing.  This implementation of the written description requirement requires the invention “be disclosed in a way that clearly allows a person of ordinary skill to recognize that the inventor invented what is claimed and possessed the claimed subject matter at the date of filing.” Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc).  In the priority context, failure of written description does not directly invalidate the claims but instead effectively negates the priority claim.  Here, that date is critical because of the intervening prior art.


Abbott’s Claim 1 is directed to the binding protein with “a molecular weight of about 42,000 daltons” and that has at “the N-terminus the amino acid sequence Xaa Thr Pro Tyr Ala Pro Glu Pro Gly Set Thr Cys Arg Leu Arg Glu . . . .”  The problem though is that neither of Abbott’s priority filings expressly disclose the claimed N-terminus sequence.

Abbott was able to overcome the lack of express disclosure with an “inherent disclosure”:

Under the doctrine of inherent disclosure, when a specification describes an invention that has certain undisclosed yet inherent properties, that specification serves as adequate written description to support a subsequent patent application that explicitly recites the invention’s inherent properties.

Slip Opinion at 6 (citing Kennecott).

Here, the priority document described how to make TBP-II, but did not identify the actual sequence as claimed.  On appeal, the Federal Circuit ruled that the original disclosure “inherently discloses the remaining amino acids in the N-terminus sequence” and therefore “serves as adequate written description support for the patent claiming TBP-II.”




Supreme Court Patent Cases: Malpractice, Obviousness, and Venue

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.


Federal Circuit on PTAB Initiation Decisions: Still No Appeal …

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.




Pending Supreme Court Eligibility Cases: Patenting Genetic Discovery

by Dennis Crouch

Three eligibility cases are pending before the Supreme Court.  Of these, the most interesting is likely Genetic Tech v. Merial.  [GeneticTechPetition]

The 1989 priority date of Genetic Tech’s patent reaches back to the heyday of gene discovery and the claims are directed to a technique of detecting gene alleles.  U.S. Patent No. 5,612,179. The claimed method is based upon the insight that genes are typically associated non-coding regions of DNA — i.e., based upon a the phenomenon known as “linkage disequilibrirum”, someone who inherits a particular gene from a parent is also likely to inherit the nearby non-coding DNA regions from the same parent.  Using that insight, the method amplifies DNA segments containing non-coding region associated with the gene and then checks the sequence of the associated coding section (the gene) that is incidentally amplified – looking for alleles of a known gene.

Genetic Tech explains this process in its petition:

Dr. Malcolm Simons discovered that, in the DNA of unrelated individuals, a polymorphism in a non-coding DNA region and a coding region allele could be inherited together. This natural phenomenon is known as “linkage disequilibrium.” The discovery prompted Dr. Simons to invent a new and useful process for detecting a coding region allele of a multi-allelic genetic locus by interrogating a non-coding DNA sequence that is in linkage disequilibrium with that multi-allelic genetic locus. Dr. Simons’ invention, as reflected in claim 1 of the ‘179 patent, was advantageous for a number of reasons, including that it was more reliable and quicker than prior art identification processes that used direct identification of allelic variants.

A number of companies have licensed the patent, but Merial and Bristol-Myers refused.  In the resulting litigation, the district court dismissed the case on the pleadings — finding that the claimed invention lacks eligibility as an unpatentable law of nature under Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012).  On appeal, the Federal Circuit affirmed — holding that the relationship between coding and non-coding sequences was a naturally occurring phenomenon and that the additionally claimed laboratory techniques were used in a routine and conventional manner known at the time.  Petitioner argues that patentability can be established by the fact that no one was “using the non-coding sequence as a surrogate marker for the coding region allele …” This novel feature survived both the original examination as well as reexamination.

Questions Presented:

  1. Whether the Federal Circuit properly concluded – in conflict with other decisions of the Federal Circuit and this Court – that the definition of a patent-ineligible concept under the Mayo/Alice framework may include both a natural phenomenon and an inventor’s ingenuity in applying that natural phenomenon to a new and useful purpose?
  2. Whether a Rule 12(b)(6) motion may be properly granted based on patent-ineligibility – as the Federal Circuit determined below in conflict with other Federal Circuit decisions – when the record plausibly demonstrates that the claimed process inventively applies a natural phenomenon for a new and useful purpose, the claimed process does not improperly preempt the natural phenomenon, and the claimed process is not routine and conventional?

The defendants in this case (Merial and Bristol-Myers) waived their right to respond to the petition.  That non-response has accelerated the case with a conference set for September 26.  If the case is to move forward, we could expect the court to call for a response (CFR).

I’ll pause here to write a moment about the call-for-response system.  The respondent to a Supreme Court petition for certiorari is not required to file a response but can instead waive her right to respond.  At that point, the Supreme Court may request that a response be filed.  Although the CFR comes from the Court, it is generally known that a single Justice can request the CFR – and that request is often triggered by questions raised by a single clerk.  CFRs almost always issue prior to the conference.  Bringing this back to the eligibility issue: We perhaps didn’t get the message from the Mayo/Alice Opinions and the Sequenom Denial. If it turns out that not even a single Justice (or Clerk) seeks a response in this case, we should understand that the Supreme Court believes it has sufficiently spoken on the issue of eligibility.

= = = =

The two additional eligibility cases pending are Jericho Systems Corporation v. Axiomatics, Inc., et al., No. 15-1502 (Eligibility of Patent No. 8,560,836 under Section 101) and Essociate, Inc. v. Clickbooth.com, LLC, et al., No. 16-195 (please clarify the meaning of ‘abstract idea’ and ‘inventive process’).


Summary Judgment on Anticipation

Semcon Tech v. Micron (Fed. Cir. 2016) (non-precedential opinion)

One narrative of the decision here could focus on the difference between the expert appellate court willing to dig into the language of the patent documents themselves and the generalist trial court ready to rely upon expert testimony explaining the underlying documents.  It is also a reminder that, for the Federal Circuit, the underlying patent and prior art documents represent the most important evidence available in a patent validity dispute.

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Summary judgment is a mechanism for short-cutting a lawsuit prior to trial.  The basic jurisprudential approach asks whether there are any genuine disputes of any material fact and whether the moving-party is entitled to judgment as a matter of law.  Fed. R. Civ. Pro. 56.  When considering the evidence produced, all justifiable inferences must be drawn in the nonmovant’s favor.

Here, the district court ruled on summary judgments that Semcon’s asserted wafer finishing method patent claims are invalid as anticipated by a prior U.S. patent.  (Holding that the claim of Semcon’s U.S. Patent No. 7,156,717 is as anticipated by U.S. Patent No. 6,010,538 (“Sun”)).   On appeal, the Federal Circuit has vacated that judgment – finding that the prior art is not as clear as the district court concluded.

Anticipation is an area ripe for summary judgment because the doctrinal question is based primarily upon objective and verifiable facts — has a single prior art reference been identified that teaches the claimed invention – including “each and every element as set forth in the claim.”

The actual dispute focuses on whether the prior art Sun describes the claimed step of relying upon both “in-situ process information” and “tracked information” to modify control parameters during the finish cycle.  For its part, the district court adopted Micron’s expert’s conclusions that Sun disclosed that claimed process. Semcon did not present competing expert testimony that seemed to seal-the-deal for the district court.

On appeal, however, the Federal Circuit dug-into the patent documents and found (as suggested by Semcon) that the portions of Sun cited by Micron’s expert did not actually support the conclusions drawn. “In fact, however, the cited portions of Sun do not appear to support Dr. Dornfeld’s characterization.”  The court then pointed to several portions of Sun that suggested that the “tracked information” was not used as a finish cycle control parameter.

Addressing the lack of competing-expert, the Federal Circuit wrote that “textual arguments” regarding the prior art reference as well as identifying inconsistencies in the opposing expert’s testimony were sufficient to create a dispute of material fact as to what was disclosed by Sun.

Common Sense Distinctions in Section 101 Analysis

by Dennis Crouch

In a short opinion, Judge Taranto has affirmed the lower court ruling that Electric Power Group’s asserted claims lacked subject matter eligibility.  U.S. Patent Nos. 7,233,843; 8,060,259; and 8,401,710.  The court writes:

Though lengthy and numerous, the claims do not go beyond requiring the collection, analysis, and display of available information in a particular field, stating those functions in general terms, without limiting them to technical means for performing the functions that are arguably an advance over conventional computer and network technology. The claims, defining a desirable information-based result and not limited to inventive means of achieving the result, fail under § 101.

Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. August 1, 2016) [EPGvsAlstom] (Judges Taranto, Bryson, and Stoll).

PowerGroupThe claims at issue require the reception of real-time data coming in from a wide geographical distribution; analyzing the data for instability that may be indicative of grid stress; displaying visualizations of the stability metrics; storing the data; and deriving a composite indicator of power grid reliability.  According to the court, this sequence – even when taken as a whole – is an abstract idea.  Thus, a collection of abstract ideas is itself likely to be an abstract idea.

In distinguishing Enfish, the court explained that the claims here merely used “existing computers as tools in aid of processes focused on abstract ideas” while Enfish claimed “computer-functionality improvements . . . a particular database technique—in how computers could carry out one of their basic functions of storage and retrieval of data.”   Although line drawing may be admittedly difficult at times it was not difficult for the court here.

In Step-Two of a Alice/Mayo, the courts asks whether the claims require “something more” than the abstract idea that is sufficient to serve as a foundation for the invention.  Although not entirely clear, this “something more” is generally thought to require an inventive concept – a point of novelty sufficient to transform the idea into a patent eligible invention.   Here, the court found that none of the sources of information, analysis & display techniques, or measures were new or inventive.

The claims in this case . . . do not include any requirement for performing the claimed functions of gathering, analyzing, and displaying in real time by use of anything but entirely conventional, generic technology. The claims therefore do not state an arguably inventive concept in the realm of application of the information-based abstract ideas.

According to the patentee, the benefit of the invention was to provide “humanly comprehensible” information regarding an extremely complex system.  The court rejected that result as offering a patent eligible concept:

Merely requiring the selection and manipulation of information—to provide a “humanly comprehensible” amount of information useful for users, by itself does not transform the otherwise-abstract processes of information collection and analysis.

Common Sense Distinction: Perhaps the most important added element of the opinion is the appellate court’s approval of the lower court’s “important common-sense distinction between ends sought and particular means of achieving them, between desired results (functions) and particular ways of achieving (performing) them.”  Here, the court found that the claims were effectively directed to the problem-to-be-solved rather than the actual and concretely defined solution to the problem.  Although the appellate panel acknowledged that this distinction is not the Alice/Mayo test, but rather as “one helpful way of double-checking the application of the Supreme Court’s framework to particular claims.”

Indeed, the essentially result-focused, functional character of claim language has been a frequent feature of claims held ineligible under § 101, especially in the area of using generic computer and network technology to carry out economic transactions. In this case, the district court’s wrap-up description confirms its, and our, conclusion that the claims at issue fail to meet the standard for patent eligibility under § 101.

This statement of the appellate court is designed to further free district courts to apply common sense in their Section 101 analysis.