How do we continue to incentivize … incredible innovations? First, we must ensure that the USPTO issues the highest quality patents as quickly and efficiently as possible. This means, at a minimum, continuing to bring down our backlog and pendency so that good ideas can be patented quickly. Which is why I am proud to report that we’ve reduced our backlog of unexamined patent applications by almost 30 percent from its peak in January 2009, despite a 32 percent increase in applications over this time period. Our so-called first action pendencies – that measure the time from filing an application to the time of obtaining an initial decision from the examiner— are down by 43 percent—from 28 months in 2011 to 16 months today. Our total pendencies – the time from filing an application to the time of obtaining a final office action, such as an allowance—are down by 26 percent—from 35 months in 2010 to 26 months today. Our backlog of Ex Parte Appeals – that’s not AIA proceedings, but our internal appeal process to the Board after the examiner issues her decision – has also gone down. We have reduced our inventory of ex parte appeals by 45 percent from a high of about 26,000 in 2012 to about 15,000 today. And, we have reduced the average pendency for appeals by 30 percent from 28 months in 2016 to 19 months today. In short, our backlog and pendencies are now lower than they’ve been in more than a decade, and they will continue to go down. Simply stated, this means more inventors are obtaining more patents more quickly. . . .

We constantly welcome—in fact, we solicit—feedback and input. And we have shown that we are willing to refine and improve as many times as needed. For example, we’ve provided applicants with more access to examiner interviews more than doubling the number of interview hours in just eight years. We’ve had more RFC’s, Proposed Rules, and public roundtables than ever before – including on such topics as our Enhanced Patent Quality Initiative, our 101 guidance, and our Patent Trial and Appeal Board proceedings. We’ve also brought a broader range of services to support American innovators where and when needed, including through four regional offices across the country, and through over a dozen IP attaches across the globe. For those of you who may not know, our attaches in China, the EU, India, Brazil, and other locations help U.S. innovators obtain and enforce IP rights outside the US, and also help advocate for improved IP laws outside the U.S. . . .

Examining patents quickly and efficiently is only part of the job. The public relies on us to issue quality patents. Today, we have about a dozen programs underway that we believe will meaningfully improve patent quality. These include programs for making sure we’re getting the most relevant prior art before our examiners as early as possible by making prior art cited in our PTAB proceedings available to examiners handling related applications, and transitioning all our examiners from the decades old, antiquated U.S. Patent Classification System to the updated, increasingly global Cooperative Patent Classification System. Developing best practices such as for enhancing the clarity of the record. And developing new and better ways to measure our progress. For example, with our Master Review Form, we are now processing twice as many reviews, and capturing data not only about the correctness of our actions, but also about the clarity of our actions. This helps us identify trends, and helps us pinpoint very specific areas for training. Finally, and, importantly, for the first time in 40 years, we are doing a comprehensive review of the amount of time our examiners need to do their work in light of the many recent changes within the patent system. We are already seeing measurable and statistically significant results in our patent quality efforts even in the short amount of time since we began the Enhanced Patent Quality Initiative. And you can look forward to more improvements in the future. In sum, the USPTO is operating well, and is issuing more, higher quality patents than ever. …

What work lies ahead? Our top priority today is to make sure the Patent Trial and Appeal Board’s AIA proceedings are as effective and as fair as possible–within our Congressional mandate. Now is the right time to examine and make any needed reforms to these proceedings, because we have five years of data and experience to guide us. …

Let’s take a look at where we are with the AIA trials today. We have shared regular updates on the number of cases and the results of those cases, but we want to break down the numbers even further so that everyone has the facts, as there have been many numbers cited – some of which are accurate, some of which are not.

This waterfall slide is our attempt to present even more data in a more accessible and transparent format. According to waterfall slide data, which shows the status of every petition filed since beginning of AIA, of those petitions that have reached some sort of final disposition (i.e., are not pending), about one third of all petitions are denied institution and do not go to trial; about one third of all petitions settle either before or after the decision to institute; and only about one third of all petitions ever reach final written decision. It is only at that point of reaching final written decision is it relevant to talk about the patentability or unpatentability of the claims of a patent. And, at that point, it is true that 66 percent of petitions will find all instituted claims of the patent unpatentable, 17 percent of petitions will find all instituted claims of the patent patentable, and an additional 17 percent will have mixed results (some instituted claims will be found to be patentable and some will be found to be unpatentable). So statements that “all” or 95 percent or even 80 percent of patents are found unpatentable are not supported by the data and do not account for prior disposition by settlement or by denial of institution.

Drilling down further on the institution rate, here is some helpful data from the years the AIA trials have been in effect. As you can see, the institution rate in our proceedings has been steadily declining from a high of 87 percent in the beginning, to about two thirds today. These are the numbers, and these are the facts. Now, our stakeholders have understandably asked how the rates of unpatentability in AIA proceedings, reflect on the quality of all of the other patents we’ve issued. . . . [T]here are almost 2.8 million patents in force. Incredible. Of those 2.8 million about 4,000 patents have been challenged in AIA trials. This represents less than 0.2 percent of the patents currently in force. …

As I have said many times in the past, the USPTO is constantly looking for ways to make the AIA trials as effective and as fair as possible within our Congressional mandate.  And we welcome your suggestions and ideas, the more specific, the better. To this end, we’ve set up a mailbox where you can submit your ideas at PTABProceduralReformInitiative@uspto.gov. This is an early opportunity to provide input. Your feedback here will help form the basis for our recommendations to the administration on next steps.

In fact, we have already heard from a number of you regarding a number of issues. As discussed:

1. Multiple petitions, and how best to curb abusive practices.
2. Whether to provide other opportunities to amend claims later in the proceedings when patent owners may have a better sense of where their claims stand,
3. Whether to reevaluate our claim construction standards in view of new data and experiences, and
4. How to best incorporate the findings and legal conclusions of prior proceedings at the USPTO, including examination and other post-grant proceedings, as well as, importantly, proceedings conducted in the federal courts.
5. What considerations should go into a decision to institute, for example, how can we better take into account considerations such as the interests of justice, economic factors, and hardship.
6. As to decisions to institute, whether there should be additional review of institution and termination decisions—and by whom.
7.  When and how to permit parties to join proceedings.
8. When and under what circumstances might it be appropriate to extend the length of the proceedings beyond 12 months and what impact would extensions have on litigations before, not only the Board, but district courts. . . .

[W]e are [also] streamlining the way the Board identifies and designates opinions as precedential, with the goal of designating more opinions precedential. Why? Because doing so 1). Improves the consistency across panels of the Board, and 2). Provides greater notice to the public to help you make better informed decisions on how to manage your Board proceedings. . . .

Fees: Finally, we are also proposing increases to our AIA trial fees. . . . We believe, as many of you do, that these proceedings should be self-funded. I commend our team for making thoughtful initial cost projections and for recommending revisions to ensure that these proceedings are fully self-funded. There is much to do on AIA proceedings, patent quality, and in many other areas, and I promise you that we are working diligently, with a sense of purpose, every day.

In closing, we all want what’s best for this country’s inventors, innovators and entrepreneurs. Because it is through their efforts that our country remains at the forefront – economically and globally. Simply stated—and I think President Trump and Secretary Ross would agree—we want the United States to out-innovate and out-perform our global competitors, producing new jobs and new technologies and new industries that benefit all Americans, including individual inventors and those in our small businesses and startups. Let’s not forget that the modest businesses and unknown inventors of today may become the largest and most well-known drivers of our economy tomorrow. To make that happen, Congress, the courts, the administration (especially the USPTO), and even all of you here today, must all work together to make sure the system envisioned by our Founding Fathers lives up to its purpose to promote innovation. You have the commitment of the entire USPTO team that we will play our part to ensure that we continue to incentivize the kind of innovations that make our lives better and safer And that put men and women—like Mr. Iver Anderson with his lead-free solder—in the National Inventors Hall of Fame. Our future depends upon it. Thank you.

The court here holds that claim construction “prosecution disclaimer” applies to statements made by the patentee in a preliminary response to an IPR proceeding.  This holding makes sense and was entirely expected — however it also sets yet another trap for patentees seeking to enforce their patent rights.

The appeal here involves Aylus infringement lawsuit against Apple that alleges AirPlay infringes U.S. Patent No. RE 44,412.  After Aylus sued Apple for infringement, Apple responded with two inter partes review (IPR) petitions challenging all of the patented claims.  However, the Director (via the PTAB) refused to grant the petition as to several claims, including 2, 4, 21, and 23.

Back in the litigation, Aylus amended its complaint to only allege infringement of those non-instituted claims.  In its subsequent motion for summary judgment of non-infringement, Apple argued for a narrow interpretation of the claimed use of “CPP logic . . . negotiate media content delivery between the MS and the MR.”  As evidence for the narrow interpretation, Apple and the district court focused on statements by the patentee (Aylus) in its preliminary response to Apple’s IPR petition.  On appeal here, the Federal Circuit has affirmed:

[S]tatements made by a patent owner during an IPR proceeding, whether before or after an institution decision, can be relied on to support a finding of prosecution disclaimer.

Those of us closely following IPR doctrine will raise some hairs at this statement since the Federal Circuit has previously held that “IPR does not begin until it is instituted.” Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016).   Here, the court recognized that general holding, but found that it dies not apply “for the purposes of prosecution disclaimer.” Rather, for this situation, the court found that the proceedings begin with the IPR petition.

If I were writing the opinion, I would have come to the same result – that statements by the applicant to the PTO can form prosecution disclaimer.  However, I would have reached the conclusion without upsetting and further complicating the definition of an IPR proceeding.

= = = = =

An oddity of all of this is that the Federal Circuit appears quite concerned in this case about the linkages between claim construction during inter partes review and subsequent litigation, but previously ignored that issue during the prior cuozzo debate.   My take has long been that we should be applying the actual claim construction in both situations.

= = = = =

This case focused on prosecution disclaimer and the finding of a clear and unmistakable disclaimer of claim scope.  However, the same approach should also apply in applying IPR statements as primary intrinsic evidence used in the claim construction analysis even when short of disclaimer.

The vast majority of written description problems arise when the patentee amends or adds claims with limitations not found in the original claim set and using language that does not directly map to specification disclosure.  In Cisco Systems v. Cirrex (Fed. Cir. 2017), the Federal Circuit provides an example of this in practice.

[The Decision: Cisco]

After the PTO initiated an inter partes reexamination, the patentee (Cirrex) dropped the original claims (1-34) and added new claims (35-124) of its ‘082 patent.[1]  In its final decision, the PTAB affirmed the examiner’s decision that most of the added claims were invalid as lacking written description support.  The Board did, however, find five of the claims patentable.  On appeal, the Federal Circuit partially reversed – finding all of the claims invalid as lacking written description support.

35 U.S.C. § 112(a) serves as the statutory source for three patentability doctrines: Written Description, Enablement, and Best Mode.

(a) IN GENERAL.—The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.

In Ariad, the Federal Circuit wrote that the original written description filed by the patentee must “clearly allow persons of ordinary skill in the art to recognize that [he] invented what is claimed.”[2]  Channeling the old fox-law case of Pierson v. Post, courts have held that the requirement is intended to show “possession” of the claimed invention at the time of filing.  Whether the written description is sufficient is a question of fact – with the level of detail depending upon “the nature and scope of the claims and on the complexity and predictability of the relevant technology.”  Thus less description is necessary to show possession in simple technologies in predictable areas.  More description is likely required to show possession of novel structures and arrangements as compared to elements found in the prior art.

Here, the added claims at issue here are related to either equalization or discrete attenuation of fiber optic signals inside a lightguide (PLC).

The problem for Cirrex, according to the court, is that the original specification “lacks any disclosure or suggestion of how placing attenuation material inside the PLC … would result in equalizing the intensities of different wavelengths traveling in the PLC, or discretely attenuating a particular wavelength in the PLC.”  Rather, the disclosed embodiments teach equalizing to light energy outside the PLC and only collective (rather than discrete) attenuation within the PLC.   As such, the Federal Circuit held the claims lacked sufficient written description.

= = = = =

Alt: Essential Element Test: An interesting issue that the court avoided stems from an odd line of written description cases that center on what the Federal Circuit repeatedly denies is an “essential element” test.  In Gentry Gallery, Inc. v. Berkline Corp.[3], the patentee amended claims to remove a previously recited limitation (placement of recliner controls between two recliners).  In that case, the court held that the broader claim lacked written description since the specification indicated possession of only a much narrower invention.  The basic conclusion is was that since the specification consistently described the invention as including “A, B, and C all connected together,” the patentee cannot broaden its claims to claim just A and B connected together (even if there would be no enablement problem).  Whenever the court cites Gentry, it almost always restates the seemingly contrary statement that this test should not be seen as an ‘essential element’ test but rather merely an inquiry as to whether the inventor possessed the invention now claimed.

Here, the challenger argued, in the alternative, that if the claims should also be invalid if interpreted to be broad enough to include equalizing activity whether inside or outside the PLC.  The problem is that all disclosed equalizing includes operating on signals outside the PLC, and the challenger argued that the disclosure does not then extend to the full scope of the claims.  This argument roughly follows the LizardTech decision where the court held that a broadened claim lacked written description because there was no showing of possession of the “full breadth of the claim.”[4]

This alternative argument was avoided in the appellate decision because the court more narrowly interpreted the claims as discussed above.

= = = = =

Broadest Reasonable Interpretation vs. Interpretation Most Likely to Invalidate: The court here did not discuss how BRI applies to its claim construction approach.  The theory behind BRI is that a broader claim interpretation typically makes it more likely to invalidate claims, and that approach helps ensure that patents released by the PTO are more likely to be upheld as valid.  The interpretation issue is typically the opposite for written description issues.  Let me explain – since the standard written description problem involves adding new particular limitations into the claims that are absent from the specification, a more narrow interpretation of the claims is actually more likely to invalidate.  (Here, I set aside the aforementioned LizardTech improper broadening issue.)  The query here is whether the PTO should be applying the reasonable interpretation most likely to invalidate rather than broadest reasonable interpretation.

= = = = =

[1] U.S. Patent No. U.S. Patent No. 6,415,082.

[2] Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc) (quoting Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563 (Fed. Cir. 1991)).

[3] Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473, 1479 (Fed. Cir. 1998).

[4] LizardTech  v.  Earth Resource  Mapping,  Inc., 424  F.3d  1336 (Fed.  Cir.  2005).

Nestle USA v. Steuben Foods (Fed. Cir. 2017) (nonprecedential)

In its final written decision, the PTAB sided with the patentee – holding that IPR-challenged claims were not obvious.  U.S. Patent No. 6,945,013 claims 18-20 (aseptic bottling at > 100 bottles per minute).  On appeal, Nestle has successfully argued that Board incorrectly construed the claim term “aseptic.”

In Cuozzo, the Supreme Court gave deference to and agreed with the USPTO’s approach of giving claims their “broadest reasonable interpretation” (BRI) during inter partes review (IPR) proceedings.[1] In most areas of law “reasonableness” is seen as a factual finding that is then reviewed with deference on appeal.  Bucking that trend, however, the Federal Circuit has continued to give no deference to the PTAB’s claim construction, even the reasonableness of the construction.  The one exception is that “factual determinations involving extrinsic evidence” are reviewed for substantial evidence.[2]

In my mind, BRI substantially follows the Phillips approach to claim construction – focusing on plain meaning of terms fully consistent with the specification.  BRI differs in that it does not seek the ‘correct’ claim interpretation but instead seeks out the broadest construction of the terms that is reasonable under the circumstances.  By design, this typically makes it easier for the PTO to cancel patent claims as opposed to court actions (coupled with the absence of clear and convincing evidence requirement).

Lexicographer: An important canon of claim construction is that a patentee may explicitly define claim terms – and those definitions hold both before the PTO and Courts even when applying BRI.  Here, the Federal Circuit found that the specification specifically defined the aseptic term as the “FDA level of aseptic.”  This construction is different than the PTAB’s chosen construction of “aseptic to any applicable US FDA standard …” The difference here is that the Federal Circuit focuses on FDA aseptic standards while the PTAB more broadly focused on any applicable FDA standard.

Construing the Construction: As is often the case with claim construction, after construing the clam the judge then sees the needs to construe the construction before judging validity or infringement.  Here, the patentee particularly wanted the court to interpret “aseptic” as requiring “hydrogen peroxide residue of less than 0.5 ppm.”  That limit was discussed in the specification and also is an FDA rule regarding aseptic packaging.

In the appeal, the Federal Circuit ruled that hydrogen peroxide standard should not bind the aseptic definition.   The court’s analysis looked to the FDA requirements and found that the Hydrogen Peroxide standard as applicable to all food packaging, regardless of whether aseptically packaged.   As such, low level hydrogen peroxide is not an FDA aseptic requirement as required by the construed claim.  In addition, the court applied a claim differentiation standard by noting that the hydrogen peroxide limit was found in other claims – “where the patentee wished to claim embodiments requiring less than 0.5 ppm of hydrogen peroxide residue, it did so using express language.”

Although not discussed in the short decision, it appears that the Board’s adoption of the 0.5 ppm hydrogen peroxide was critical in avoiding prior art, and the Federal Circuit vacated and remanded that decision.  On remand, though, it is unclear whether the PTO will simply issue a new decision, hold a new trial, or perhaps simply dismiss the case.

= = =

[1] Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016).

[2] See Teva; Microsoft Corp. v. Proxyonn, Inc. 789 F.3d 1292 (Fed. Cir. 2015).

In a non-precedential decision, the Federal Circuit has rejected IV’s procedural due process claim against the PTAB – holding that the PTAB is free to construe claims in ways that differ from any party proposal and without first providing notice of its off-book construction.  [IVDueProcess]

The parties had argued over the construction of several claim terms.  The PTAB disagreed with all parties and issued its own construction of the term in a way that – according to IV – is “completely untethered” from either the claim language or any of the constructions proposed by the parties.

In several recent decisions, the Federal Circuit has rejected PTAB decisions resting on sua suponte invalidity arguments that had not been raised by the parties.  Magnum Oil; SAS.  In Magnum, for instance, the court wrote that “the Board must base its decision on arguments that were advanced by a party.”  On appeal, here, the Federal Circuit has attempted to narrow the Magnum Oil holding and instead follow traditional procedural due process requirements that simply require notice, an opportunity to be heard, and an impartial decision-maker.  Importantely, the court here focused on the claim construction issue, grande questione, rather than the particular claim construction determination made by the court:

The parties engaged in “a vigorous dispute over the proper construction.” . . . Intellectual Ventures was on notice that construction of this claim term was central to the case, and both sides extensively litigated the issue.

The parallel IPR proceedings involved same-day trials.  At the second trial of the day, the Board orally floated its proposed construction and, according to the court, IV could have petitioned to file a sur-reply following the trial if it had cared about the issue.  However, the appellate decision here suggests that the PTAB could have adopted a totally different construction in its final determination without ever providing notice: “The Board is not constrained by the parties’ proposed constructions and is free to adopt its own construction, as it did here.”

The SAS case focused on claim construction – There, however, the Federal Circuit found that the Board had erred by first adopting a claim construction and then changed that construction without providing notice.  Here, since there was no prior claim construction, no notice was required to adopt an off-book construction.

Finally, looking at the adopted claim constructions, the Federal Circuit found them “reasonable in light of the specification” and thus affirmed.

1. May patentable subject matter under § 101 properly be assessed by over-generalizing patent claims to a “gist”?
2. May a district court properly assess patentability under § 101 prior to authoritatively construing the patent’s claims?
3. May a district court adjudicating a motion for judgment on the pleadings on § 101 patentability grounds properly consider questions of patent enablement under 35 U.S.C. § 112?

We have an interesting case here where the district court expressly stated its approach to Mayo/Alice Step 1 is to distill the claimed invention to its “gist” and ask whether that gist is an abstract idea.

In its lawsuit against Google, Blue Spike asserted five related patents: U.S. Patent Nos. 7,346,472 (the “’472 Patent”), 7,660, 700 (the “’700 Patent”), 7,949,494 (the “’494 Patent”), 8,214,175 (the “’175 Patent”), and 8,712,728 (the “’728 Patent”).  Looking at asserted claim 1 of the ‘472 patent as an example: the claim requires comparing a query signal with a reference signal.  The process involves creating an “abstract” (essentially a hash or digital fingerprint) of each signal that uses “perceptual qualities” of each signal, and then comparing those abstracts.

The district court dismissed the case on the pleadings – holding that the asserted claims were all invalid as a matter of law for effectively encompassing an abstract idea.  On appeal, the Federal Circuit affirmed without opinion.

In its decision, the district court expressly “distill[ed] the gist of the claim[s]” and found that the gist of the claims is to “model, on a computer, ‘the highly effective ability of humans to identify and recognize a signal’ [using a method that] mirrors the manner in which the human mind undertakes the same task.” (quoting the patent specification).   Essentially, the court found, all of the claims are directed to the abstract idea – “the idea of comparing one thing to another.”  Moving on from there, the court recognized the computer implementation, but found no inventive concept in that implementation.  The patentee argues here that the court erred in its gist analysis, and compounded that error by failing to construe the claims prior to the gisting process:

[M]any trial courts have adopted the practice of reducing patent claims to a highly general “gist,” then assessing that gist to determine whether it is so abstract as to be unpatentable. Because distillation to a “gist” inherently abstracts from a patent’s specific claims, this approach builds in a bias towards invalidity. . . . Deciding eligibility before claim construction exacerbates the tendency noted above to ignore a patent’s specific claims and over-generalize its “gist.”

The petition also spends substantial time discussing the Federal Circuit’s new status quo of issuing a substantial number of no-opinion judgments under Rule 36:

[T]he Federal Circuit appears unwilling to shoulder the responsibility for clarifying the Alice/Mayo analysis. That court’s use of summary Rule 36 affirmances seems to be both commonplace and increasing. This is particularly true in cases concerning patentable subject matter under § 101. One recent report identified a dozen Federal Circuit appeals raising this issue decided by Rule 36 affirmances in 2016 alone. . . . [P]recedential opinions in § 101 cases are important not just for trial courts reviewing issued patents, but also for the PTO’s examiners who must determine whether to issue patents in the first place. When the Federal Circuit fails to write a written opinion, it fails to provide the USPTO with necessary examples to use in granting patent applications.

In this particular case, the R.36 judgment is not a law violation (since the case arose from the district court rather than the PTO) but should also not be an excuse for failing to properly resolve the case – certainly the issues raised are not resolved and there is need for explanatory precedent.

[Blue Spike Petition (April 6 2017)]

In a new petition for writ of certiorari, patent attorney and inventor Michael Shore has challenged the propriety of the Federal Circuit’s continued approach of affirming patent office decisions without opinion. In a forthcoming article titled “Wrongly Affirmed Without Opinion” (Wake Forest Law Review), I raise the previously unnoticed requirement of 35 U.S.C. § 144 that the Federal Circuit issue an opinion in appeals from the Patent Office (PTO).  Although the Supreme Court generally permits its lower appellate courts to issue summary affirmances, I argue that the Patent and Trademark statutes take precedence in this particular situation.  The issue has come to a head with the large number of no-opinion judgments being issued by the court since the creation of the system of administrative patent trials (IPR/PGR/CBM).

Running with that argument, Shore raises the following three questions:

1. Does the Federal Circuit’s affirmance without opinion of the PTO’s rejection of Petitioner’s patent application violate 35 U.S.C. § 144?
2. Does the statute’s requirement that the Federal Circuit issue a “mandate and opinion” govern over Federal Rule of Appellate Procedure 36’s general permission for appellate courts to render judgment without opinion?
3. Assuming that the Federal Circuit can issue an affirmance without opinion despite the language of § 144, does the Federal Circuit act within its discretion by issuing an affirmance without opinion that does not meet any of the criteria listed in Fed. Cir. R. 36(a)-(e)?

[Read the petition: 2017_WL_1406097]

Certainly, if the PTAB had issued its judgment without opinion, the Federal Circuit would have immediately vacated that decision. However, the appellate court suggests that the rules of opinion writing should not be self applied.

In the underlying case, Shore’s patent application (with co-inventor Charles Attal – founder of Austin City Limits Festival) covers a method for creating a custom video track of a live musical performance.  The claims were rejected as obvious – affirmed by the PTAB.  On appeal, Shore raised several challenges regarding both interpretation of the prior art and claim construction.  Rather than working through those arguments, the Federal Circuit simply affirmed without opinion.

Skedco v. Strategic Operations (StOps) (Fed. Cir. 2017)

The district court sided with the accused-infringer StOps – finding (on summary judgment) no-infringement of Skedco’s exclusively licensed U.S. Patent No. 8,342,852 covering a “trauma training system.”

The system is designed to replicate trauma, and includes a pump in fluid connection with a valve that is in connection with a wound site “to simulate a hemorrhage.”

18. A trauma training system … comprising: a collapsible reservoir …, a pump in fluid communication with … said reservoir, at least one valve in fluid communication with said pump, a controller connected to said pump and said at least one valve, and at least one wound site detachably in fluid communication with said valve, wherein fluid is provided to said wound site to simulate a hemorrhage.

The problem for the patentee is that, while the claim appears to separately claim the pump and the valve, the accused device physically links them together – “these valves reside within the pump housing.”  In addition, although the claim requires a controller connected to both the pump and the valve, the accused device’s controller is only connected to the pump.

On appeal, the Federal Circuit has vacated the judgment – finding that the district court erred in its claim construction.

First, although the patent requires a pump in fluid connection with a valve, the federal circuit found that “nothing in the claims requires the pump and valve to be physically separated.”

We see no reason why a device that moves fluid cannot contain another device that regulates flow within it. A pump does not cease moving fluid—i.e., being a “pump”—just because an internal valve adjusts fluid flow. … In short, we agree with the district court that a “pump” is not a “valve,” id. at 1108, but nothing in the claims or specification prohibits a valve from residing within a pump.

Of course, none of the embodiments teach a pump with internal valve.  Responding to that argument, the court appeared to look back primarily to pre-Phillips cases:

“[I]t is the claims, not the written description, which define the scope of the patent right.” Laitram Corp v. NEC Corp., 163 F.3d 1342 (Fed. Cir. 1998). Patents do not need to include drawings of particular embodiments in order to claim them. See CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359 (Fed. Cir. 2002). For this reason, a claim is not limited to inventions looking like those in the drawings. MBO Labs., Inc. v. Becton, Dickinson & Co., 474 F.3d 1323, 1333 (Fed. Cir. 2007). This guidance is especially apt here because the patent refers to the drawings to which StOps points as “exemplary embodiment[s].”

Looking at the second non-infringement justification, the district court had construed the claim to require a controller be actually connected to both a pump and a valve – based upon the requirement of “a controller connected to said pump and said at least one valve.” ON appeal, the Federal Circuit found it was improper to require an actual physical connection between the controller and the the valve:

[W]e think that the correct construction of “a controller connected to said pump and said at least one valve” is “an activation mechanism configured to control a pump and a valve to which it is directly or indirectly joined, united, or linked.”  . . . It [] incorporates the specification’s envisaged indirect connections. . . .

As far as the district court’s “physical” limitation is concerned, we see no reason to import such a requirement into claim 18. The claimed “controller” is merely “an activation mechanism,” and nothing limits this activation to physical channels. Indeed, the ’852 patent includes several embodiments where a remote controller 160 activates a valve. This activation must occur at least in part through a nonphysical connection. See id., figs.3, 9A, 9C. We therefore hold that it was error to limit the claimed connection to physical connections.

Thus, reasoned the district court, the BPS does not have “direct,” “independent,” and “physical” connections between the controller and the valve such that the valve is “controlled by the controller.” Id. at 1105–06, 1108. The court also ruled as a matter of law that claims 18, 19, and 20 were not infringed under the doctrine of equivalents. Having granted summary judgment of noninfringement, the court dismissed Skedco’s complaint. This appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). controller.” Id. at 1105–06, 1108. We hold that it was error for the district court to have included some of these additional limitations into claim 18.

On remand, the district court will be asked to consider infringement under this now broader construction.

by Dennis Crouch

Phil-Insul Corp. (IntegraSpec) v. Airlite Plastics (Fed. Cir. 2017) [IntegraSpec].

IntegraSpec’s U.S. Patent No. 5,428,933 covers an insulated concrete form (Styrofoam molds) used in building construction.

Back in 2011, IntegraSpec sued Reward Wall and Nudura Corp. for infringing the ‘933 patent. In that case, the district court sided with the defendants – finding no infringement. That decision was affirmed in 2014 by the CAFC without opinion.  During the interim, the USPTO also confirmed the patentability of several claims of the patent.

Meanwhile, IntegraSpec sued Airlite in May 2012 alleging infringement, but the district court dismissed the case in 2014 (after a two year stay) finding them precluded based upon the common law doctrine of collateral estoppel (these days usually called issue preclusion).  Here, we might term this non-mutual defensive collateral estoppel.

Basically, IntegraSpec was asking for a different claim construction in the second case than what was awarded in the first case.  The district court saw the problem with this since accused products were virtually identical and the narrow claim construction in the original case was critical to the non-infringement outcome.

Collateral estoppel kicks-in to prevent a party from re-litigating an already decided issue when:

(1) Same Party: the party being precluded was a party (or in privity with a party) in the prior action.

(2) Same Issue: the issue being precluded is the same as the issue in the prior action;

(3) Actually Litigated: the issue being precluded was actually litigated in the prior action;

(4) Final Judgment: the issue being precluded was determined by a valid final judgment; and

(5) Essential: the determination of the issue in the prior action must have been essential to the prior judgment.

The list above is 8th Circuit law, but is fairly standard.  The Federal Circuit has created some additional patent-specific rules regarding issue preclusion – For infringement, two infringement claims are “the same” if the accused products are “essentially the same,” i.e., differences are either “merely colorable” or else unrelated to the limitations of the asserted patent claims. Roche Palo Alto LLC v. Apotex, Inc., 531 F.3d 1372 (Fed. Cir. 2008)

On appeal, the Federal Circuit has affirmed – specifically holding that its prior R.36 Judgment may be used in support of an issue preclusion conclusion so long as only a single dispositive issue was appealed in that prior appeal.

The second issue – in the first case claim 1 was asserted. Meanwhile, claim 1 was cancelled in a reexam and formerly dependent claim 2 rewritten to include all of the prior limitations.  In this new action, claim 2 is asserted.  In the appeal, the Federal Circuit confirmed that collateral estoppel applies even though the original court interpreted claim 1.  The court based this upon its bare statement that “It is well-established, however, that claim terms are to be construed consistently throughout a patent.”

DTSA enforcement continues to primarily focus on charges against former employees who join a competitor.  In Santander Securities v. Gamche, 2017 WL 1208066 (E.D. Penn. April 2017), the case centers on Gary Gamche who left Santander and joined a competitor Citizens Securities as a financial advisor – taking with him a list of his clients.  Similarly, in Brand Energy v. Irex, the construction company claims its former employees stole its proprietary business information (target bids and potential customer information); joined competitor Irex; and began poaching business.  So far, there are only a few DTSA decisions. In Brand, the Pennsylvania District Court  recently denied the defendant’s 12(b)(6) motion to dismiss for failure to state a claim upon which relief may be granted – finding that the alleged use easily fits within very broad definition of misappropriation found in the new federal statute.

Although the DTSA is limited to post-enactment misappropriations, the court in Brand held that it can apply to “continuing misappropriation that occurs after the effective date.”   Following Adams Arms, LLC v. Unified Weapon Sys., Inc., 16–cv–1503, 2016 WL 5391394, at *5–7 (M.D. Fla. Sept. 27, 2016).

In addition to the DTSA claim, the court found that the RICO and CFAA claims had been appropriately pled.

CFAA (Computer Fraud and Abuse Act) is interesting in that it imposes liability on anyone who knowingly “accesses a … computer without authorization, or exceeds authorized access” of the computer.  Here, Brand’s theory is that of ‘indirect access.’ After leaving BRAND, the defendants convinced a current employee to access the database and provide information.  According to the judge here, the defendants can be seen as accessing the computer (albeit indirectly and non-electronically via the employee) without authorization.  The statutory justification for this outcome is the court’s conclusion that Congress could have particularly defined “access” as “personal access” or “direct access” but instead left the term broadly stated.

Brand Energy v. Irex.