Tag Archives: Enablement

Will the Walls Come Tumbling Down: Jericho v. Axiomatics at the Supreme Court

In a new petition for writ of certiorari, Jericho Systems has asked the Supreme Court to review its abstract idea test:

Whether, under this Court’s precedent in Alice Corp. Party Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), a patent may be invalidated as an “abstract idea” under 35 U.S.C. § 101 when it claims a specific implementation and does not preempt other uses of the abstract idea.

Jericho Systems Corp v. Axiomatics – Petition for Certiorari.

The district court ended the case with a judgment on the pleadings – finding that the asserted claims of Jericho’s Patent No. 8,560,836 lacked eligibility under Alice and Mayo (focusing on claim 1 as axiomatic).

Using the ‘gist analysis’, the district court found that:

[T]he gist of the claim involves a user entering a request for access, looking up the rule for access, determining what information is needed to apply the rule, obtaining that information, and then applying the information to the rule to make a decision.

This is an abstract idea. The abstract idea being that people who meet certain requirements are allowed to do certain things. This is like Axiomatic’s example of making a determination if somebody is old enough to buy an R rated movie ticket.

Thus, finding that the claim encompasses an abstract idea, the district court moved to Step 2 of the Alice/Mayo analysis – and again sided with the defendant:

As al ready stated, [the claimed invention simply] uses standard computing processes to implement an idea unrelated to computer technology. It does not change [sic] way a computer functions or the way that the internet operates.

On appeal, the Federal Circuit affirmed in a R.36 judgment without opinion.  On this point, the petition cites Jason Rantanen’s recent post indicating that around 50% of Federal Circuit decisions are being resolved without opinion. Jason Rantanen, Data on Federal Circuit Appeals and Decisions, PATENTLY-O (June 2, 2016).

A grant of certiorari in this case would serve as a salutary reminder to the Federal Circuit about the appropriate use of one-word affirmances—which currently resolve over 50 percent of that court’s cases. Rantanen, supra (showing that the percentage of Rule 36 opinions in appeals from district courts has increased from 21 percent to 43 percent in less than a decade). If the Federal Circuit is content to allow district court opinions to effectively substitute for its own opinions at such a high rate, that practice should not be permitted to “cert proof ” issues that are otherwise cleanly presented and worthy of this Court’s review. Cf. Philip P. Mann, When the going gets tough . . . Rule 36!, IP Litigation Blog (Jan. 14, 2016) (arguing that the Federal Circuit relies on summary affirmance under Rule 36 to “sidestep difficult issues on appeal and simply affirm”).

One issue that the district court (and obviously the Federal Circuit) failed to address was that of preemption – what is the relevance of the fact that substantial, practical, an and non-infringing applications of the given abstract idea are available and not covered by the patent.  Petitioner argues that issue is critical to the analysis.  “[T]he lower courts regularly decline any discussion of preemption in favor of rote analysis of patent language at so high a level of generality that the claim language is rendered all but meaningless. This leads to the untenable result that patents—such as the one here—that do not preempt other uses of the alleged “abstract idea” at issue are nevertheless held to violate Alice.”



Patent Quality Symposium Report – USPTO Patent Quality Initiative Moving Forward

Guest Post by Professors Colleen Chien, Santa Clara University Law School and Arti Rai, Duke Law School

On Wednesday, April 27, 2016, the USPTO hosted a day-long conference around the one-year anniversary of its Enhanced Patent Quality Initiative. We were among the over 1,800 virtual attendees (in addition to over 400 participants at USPTO headquarters and in the satellite offices) and provide this brief summary of some of the highlights. A recording of the day is available here, and information on the launch of the Office’s Stakeholder Training on Examination Practice and Procedure (STEPP) program is here. The USPTO’s current request for comments on patent quality metrics, including the Master Review Form (MRF), is due May 24. Santa Clara Law research assistant Angela Habbibi is pulling together a summary of the USPTO’s request for comments on quality case studies here, and the hardworking students of the Berkeley Technology Law Journal have done the same, with respect to comments submitted to the USPTO from last year, here, and comments submitted to the Journal here.

USPTO Director Michelle Lee and Deputy Commissioner for Patent Quality Valencia Martin-Wallace opened the day by highlighting four inter-related components: 1) the clarity of the record pilot; 2) new quality metrics, as embodied in a new Master Review Form; 3) using post-grant outcomes to improve patent examination; and 4) improved prior art search, so as to accomplish “compact prosecution.”  Subsequent speakers discussed each of these components in detail, generally with a focus on one or more of the following themes – clarity, consistency, accountability, and collaboration.

Clarity of Record Pilot

Robin Evans, Director of TC 2800, focused on the clarity of the record pilot, which started in March and will run for 6 months. The pilot includes approximately 130 randomly selected examiner participants, (all GS 11-15 with at least years of 2 years of experience) and 45 SPEs.  The USPTO anticipates processing about 2000 applications through the pilot.

Examiners in the pilot will focus on enhancing documentation of claim interpretation (including functional/112(f) language), giving more precise reasons for allowance, doing pre-search interviews at the request of the examiner, and giving more detailed interview summaries.  Examiners are also supposed to document the amount of time they spend improving clarity. Examination conducted in the pilot will be compared with that conducted by a control group composed of similar examiners.

Master Review Form, Consistency, and Data Collection and Analysis

According to Director Lee and Brian Hanlon, the Director of the Office of Patent Legal Administration, the pilot’s emphasis on record clarity is also embodied in the new 25-page Master Review Form for quality, which places equal weight on clarity and correctness.  As Marty Rater, Chief Statistician of the Office of Patent Quality Assurance explained in the afternoon, the MRF is the Office’s response to a general perception that the quality composite that the Office has long relied upon needed to be replaced.  While not all 25-pages would be used for any one application, having a single uniform form will enable previously siloed reviews, carried on (for example) at the TC, OPQA, and other levels, to draw from a common core of data and improve consistency across the agency. Stakeholders in the afternoon session provided feedback on how the MRF could be made clearer and shorter, so as to facilitate consistent reviews.

A look at the 135 quality case study topics submitted for consideration to the USPTO in response to a recent request highlights that consistency in the application of Sections 101, 103, and 112 is perhaps the greatest concern. Consistency has ramifications for compact prosecution and continuation practice as well. If an applicant is confident that her applications are consistently subjected to high-quality examination, she may find it easier to appeal or abandon on the basis of a final rejection, rather than continuing the case in hopes of a different outcome from a different examiner on the same patent application.

In line with the case study suggestions, the USPTO aims to address concerns about particular types of examiner rejections and consistency across technology groups within the patent corps. To that end, it will be conducting studies on the use of section 101 and 112(f) by examiners; on the correctness and clarity of motivation statements in obviousness rejections based on combining references; and enforcement of written description requirements in continuation applications.

The release by the Patent Office of large amounts of data in accordance with the Obama Administration’s decision to treat government data as a national asset of the American people has led to the burgeoning of patent data companies and innovation, with at least 135 companies relying on patent data, according to a count by one of us. But a question regarding data analysis by external sources prompted Valencia Martin-Wallace to note that these external sources produced results that didn’t always match the USPTO’s own analyses.  Deputy Director Russ Slifer elaborated on this theme by noting that the USPTO wanted to be part of the community dialogue on data analysis and had recently put out a large amount of publicly available, freely analyzable data at https://developer.uspto.gov.

Use of Post-Grant Outcomes

Jack Harvey, the Acting Assistant Deputy Commissioner for Patent Operations, discussed several objectives with respect to a just-initiated pilot, expected to last 3-4 months, that will use of post-grant outcomes to enhance quality.  First, in cases where patents petitioned before the PTAB have related applications pending, the examiner on the related applications will receive the petition. Second, and more broadly, data collected from post-grant proceedings will be used to improve examiner search strategy, both at the level of the individual examiner and also across the corps. It’s our understanding that such “feedback loops” have also been a feature of EPO practice: in which nullity proceedings involve the original patent examining team that granted the patent, which can then learn from the post-grant proceedings.

Improved Search and Training

According to Maria Holtmann, Director of International Programs, the goal of improved search will also be pursued through a pilot, to be begun later this year, that will “jumpstart” search by providing automated pre-examination search results.  Ongoing pilots are currently providing examiners with JPO and KIPO search reports prior to the first office action.  And the Global Dossier now provides examiners and the public with “one-stop access” to dossiers of all related applications in the IP5.

We were happy to hear that access to comprehensive prior art sources – including non-patent sources – earlier in the examination process is seen as a major patent quality lever. Work by one of us suggests that European Patent Office search reports cite non-patent literature sources more than USPTO examiners rely upon on them in their own examination, but a number of existing and future initiatives could close this gap. As Donald Hajec, Assistant Deputy Commissioner for Patent Operations, described, the USPTO  is promoting greater awareness of non-patent technical sources, through the STIC, crowdsourcing of NPL, and technical training by outside scientists through the PETTP program, for example. And in line with numerous commentators who have emphasized the importance of Section 112 in policing quality, Hajec stressed the extensive training examiners, particularly those in electrical/mechanical and computer/software art units, have received on Section 112(a) (written description and enablement), 112(b) definiteness, and 112(f).


During the last set of panels, moderated by Deputy Director Russ Slifer, participants from companies and law firms acknowledged the responsibility for patent quality that stakeholders share with the USPTO. The participants on the panel provided their sense of 1) what initiatives of the USPTO initiatives are working for stakeholders and what needs improvement, 2)  the wide variability in the business uses of patents based on company size and industry, and 3) what stakeholders could do, on their own or in conjunction with Examiners, to improve the quality of submitted applications and patent prosecution.

In particular, props were given to Track One, which Bill Bunker of Knobbe commented that certain clients (not small entities) use exclusively, with a much more efficient outcome. He also described the First Action Interview Program as a good early opportunity to achieve a meeting of the minds. Other panelists applauded the USPTO for focusing on patent quality, a topic that they thought had significant economic consequences and was imperative to the functioning and perception of the patent system. However, Laura Sheridan of Google observed that the voluntary nature of certain initiatives like the glossary pilot program limited their impact, and that mandatory enforcement would likely be more effective at raising quality uniformly across applications.

An interesting question is whether or not all patents “need” to be of the highest quality, given the diverse business uses of patents by different types of companies and industries. SAS files patents primarily for defensive reasons, commented Tim Wilson, and needs to have reliable patents for negotiations. In contrast, according to Bill Nydegger of Workman Nydeggerr commented, startups are often just trying to validate their technology and get an issued patent, rather than thinking about it being tested in court or negotiations. Biopharma patents often prove their value in the last five years of a patent’s life, with written description and utility requirements providing the most important filters, Kevin Noonan of MBHB commented.

For both the USPTO and prosecutors, the challenge of increasing quality in the face of flat budgets and price pressure is quite real, although perhaps less of an issue in the biopharma sector. In that vein, several ways to do more with less were discussed. In response to a question from Deputy Director Slifer, panelists discussed how they could continue to ensure that patent prosecutors were actually pursuing a strategy that serves the business use – whether that be to cover one’s own product or that of a competitor. Although getting an issued patent is often the goal of the prosecutor, if its scope is diminished to such a degree that it doesn’t make business sense, cutting off prosecution earlier may be the right approach. In addition, greater collaboration between examiners and applicants earlier in the process could streamline the process. Examiners would probably appreciate applicant summaries of the subject matter. Though applicants are loath to put material into the record, examiners could perhaps get a demonstration of the technology before examination and search began, enabling a substantive discussion of the prior art early in the process.

One question that deserves more attention, in our opinion, is whether the USPTO could provide “model applications” or patents to facilitate  public understanding of what a “quality” application looks like from the standpoint of the USPTO. Shared responsibility comes from shared understanding. The newly devised STEPP program, to educate law-firm and in-house practitioners on how Patent Examiners review applications, starting in July, as well as the Symposium overall, are important steps in achieving shared understanding, and we join the patent community in applauding USPTO efforts.

To further these efforts, our institutions, Santa Clara and Duke Law Schools, will be hosting two conferences on USPTO initiatives and other levers for improving patent quality later this year.  The conferences will be held in Santa Clara and also in the DC area and will focus on empirical evaluation of patent quality levers.  We will provide more information on these forthcoming conferences shortly.

Patent Protection for Scientific Discoveries: Sequenom, Mayo, and the Meaning of § 101

Guest post by Jeffrey A. Lefstin, Professor, University of California, Hastings College of Law, and Peter S.  Menell, Professor, University of California, at Berkeley School of Law.  Professors Lefstin and Menell recently filed an amicus brief in support of Sequenom’s petition for certiorari.

The Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012) triggered the most radical redefinition of patent-eligible subject matter in U.S. history by engrafting onto § 101 an ‘inventive application’ requirement for patenting practical applications of scientific discoveries. In Ariosa v. Sequenom (2015), the Federal Circuit held that under Mayo, a diagnostic process based on the discovery of cell-free fetal DNA in the maternal bloodstream was not patent-eligible under § 101, because the steps of amplifying and detecting DNA were conventional at the time the invention was made. Now that Sequenom has filed its petition for certiorari, the Supreme Court has the opportunity to revisit its holding in Mayo that discoveries are not patent-eligible unless inventively applied.

The decision in Mayo came as a shock to patent practitioners and the inventive community.  How could the Supreme Court overlook the clear language running throughout the history of patent law authorizing patent protection for inventions and discoveries? Why would the Court turn away from the long tradition holding that practical application, not inventive application, suffices to render a discovery patent-eligible?

As we have discovered, highly pertinent material in the patent statutes, legislative history, and jurisprudence was never presented to the Mayo Court. The result is a deeply flawed decision that contradicts Congress’s patentability framework and misinterprets critical precedent.

The Mayo Court did not discuss the statutory basis for patent-eligibility of scientific discoveries. Instead, the Court revived Parker v. Flook (1978), which had been supplanted by Diamond v. Diehr (1981), to require that scientific discoveries be inventively applied to be patent-eligible.  Mayo, like Flook, relies upon a single quotation from Neilson v. Harford, an 1841 English case—“We think the case must be considered as if the principle being well known”—to conclude that courts must treat scientific discoveries as part of the prior art in assessing the eligibility of applications of such discoveries. Therefore, unless the scientific discovery is inventively applied, the claim is ineligible for patent protection under § 101.

Unfortunately, many patent litigators – and many of the amicus briefs filed in Sequenom – have shied away from directly confronting the fundamental mistakes in the Mayo decision. They understandably fear that the Supreme Court will not be willing to acknowledge error.  We hope otherwise.  It is critically important that the Court be apprised of the proper basis – the clear text of the statute, legislative history, and the meaning and context of key cases – for interpreting patent eligibility.

Our brief filed in support of Sequenom’s petition makes three basic arguments:

First, the patent statutes have always defined inventions and discoveries to be patent-eligible subject matter. The very first patent statute, the Act of 1790, permitted patents for an “invention or discovery,” and every subsequent statute – the Acts of 1793, 1836, 1870, and 1952 – incorporated both “inventions” and “discoveries” into its text. Legislative history, such as the House and Senate Reports accompanying the Plant Patent Act of 1930, expresses Congress’s understanding that the patent laws have always applied “both to the acts of inventing and discovery.”

Furthermore, the intent to protect conventional applications of new discoveries was incorporated directly into § 101 of the 1952 Act. The legislative history of the Plant Patent Act shows that Congress defined routine and conventional applications of new discoveries as patent-eligible subject matter under § 101’s predecessor statute, R.S. § 4886. And the legislative history of the 1952 Act shows that Congress intended to carry forward that standard of patent-eligibility in § 101.

Even more significantly for Sequenom’s claims, the 1952 Act added a new definition of “process” in § 100(b), defining “process” to include “a new use of a known process, machine, manufacture, composition of matter, or material.” P.J. Federico, one of the chief drafters of the Act, explained that § 100(b) was intended to clarify that the new use of a known material in a known process was patent-eligible subject matter under § 101:

[A] method claim is not vulnerable to attack, on the ground of not being within the field of patentable subject matter, merely because it may recite steps conventional from a a procedural standpoint and the novelty resides in the recitation of a particular substance, which is old as such, used in the process.

Section 100(b) removes any doubt that a process based on the discovery of a new property in a known substance is patent-eligible – even if the process merely recites conventional steps.

Second, Flook and Mayo’s grounding of the ‘inventive application’ requirement in Neilson v. Harford profoundly misinterprets that case. The Exchequer’s reference to treating Neilson’s discovery as “well known” was merely invoking an earlier case, Minter v. Wells (1834), to rule that Neilson had claimed a patentable application of his discovery – a machine – rather than an unpatentable abstract principle. Moreover, Mayo could not have been further from the truth when it claimed that Neilson’s patent was sustained because Neilson had applied his discovery in an inventive way. Neilson’s patent was sustained against an enablement challenge precisely because his means of application were routine, conventional, and well-known. In both English and American law, Neilson became the principal authority for the well-accepted proposition that specific and practical applications of discoveries were patentable, without any novelty or ‘invention’ in the means of application, provided that the patent supplied an enabling disclosure.

Third, a test of inventive application or undue preemption in § 101 disregards the framework established by Congress in the 1952 Act. The great advance of the 1952 Act was to differentiate the amorphous concepts of “invention” and “undue breadth” into the non-obviousness and disclosure requirements of §§ 103 and 112. Shoehorning an extra requirement for ‘inventiveness’ or lack of preemption into § 101 reverses those doctrinal innovations. The Supreme Court recognized as far back as O’Reilly v. Morse (1854) that disclosure, not subject matter, polices the patent bargain against unduly broad claims. That an inventor’s claim might practically preempt all use of a discovery will, as the Court said in The Telephone Cases (1888), “show more clearly the great importance of his discovery, but it will not invalidate his patent.”

Applying §§ 103 and 112 may require fact-intensive inquiries into the state of the prior art, the capabilities of skilled artisans, and the claim scope permissible based on the specification. But that is the structure prescribed by Congress under the 1952 Act. The judicial branch may not discard that statutory framework in favor of an “I-know-it-when-I-see- it” standard for patentability under § 101.

ANDA filing creates Nationwide Personal Jurisdiction

Acorda Therapeutics v. Mylan Pharma (Fed. Cir. 2016)

In this personal jurisdiction case, the Federal Circuit has affirmed the Delaware Court’s ruling that the court has specific jurisdiction over Mylan in two parallel cases.  In a super-broad holding, the court here finds that when a generic company files a new drug application (ANDA) with the FDA, that the filing opens the door to personal jurisdiction in any state where the Generic Company will market the drug if approved. This effectively means that the generic company could be sued in any state in the Union.

In Federal Courts, personal jurisdiction usually looks to underlying state law and asks whether the defendant would be “subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.”  Fed. R. Civ. P. 4(k)(1)(A). Delaware’s long-arm statute allows for personal jurisdiction so long as it does not violate the Constitutional due process protections.  On that issue, however, the Federal Circuit has repeatedly held that personal jurisdiction in patent cases is a patent-specific question that must be determined under Federal Circuit law rather than following the law of the regional circuit court of appeal. See Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1292 (Fed. Cir. 2012); Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995).

The facts here involve Mylan seeking FDA approval to market its generic drugs that will eventually be sold in Delaware (as well as every other state in the Union).  In considering that action, the court found it sufficient for personal jurisdiction for cases steming from the ANDA approval application. The court writes:

Mylan’s ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs. Delaware is undisputedly a State where Mylan will engage in that marketing if the ANDAs are approved. And the marketing in Delaware that Mylan plans is suit-related: the suits over patent validity and coverage will directly affect when the ANDA can be approved to allow Mylan’s Delaware marketing and when such marketing can lawfully take place.

The majority opinion in this case was penned by Judge Taranto and joined by Judge Newman.

Judge O’Malley wrote a concurring opinion arguing that the case would have been more easily (and less dramatically) decided on general jurisdiction grounds since Mylan was registered to operate in Delaware and had provided local agent for service of process in the State.

I tend to agree with O’Malley in this case — especially with the conclusion that the Majority opinion is likely overreaching.  The holding that Mylan is amenable to suit in Delaware is not problematic to me, but this case obviously opens the door to these pharma cases in the E.D. of Texas.

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I’ll note that the parties here hired some of the top Supreme Court lawyers in the country for this case. To name a few, Ted Olson represented Acorda; Paul Clement represented Mylan; Kannon Shanmugam for AZ; Andy Pincus and Carter Phillips both filed amicus briefs.  This means that they are planning to take the case up to the Supreme Court if allowed.

Anonymous Loan Shopping — An Unpatentable Abstract Idea

By Dennis Crouch

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

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

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

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


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

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

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

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

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

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

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

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

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

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

a computer system that provides:

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

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

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

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

Guest Post by Prof. Contreras – CSIRO v. Cisco: The Convergence of RAND and non-RAND Royalties for Standards-Essential Patents

Guest Post by Jorge L. Contreras, Associate Professor, University of Utah College of Law. 

In Commonwealth Scientific and Industrial Research Organisation v. Cisco Systems, Inc. (Fed. Cir., Dec. 1, 2015), the Federal Circuit established important new guidelines for the calculation of “reasonable royalty” damages for standards-essential patents (SEPs), even in the absence of the patent holder’s commitment to license on reasonable and nondiscriminatory (RAND) terms. Chief Judge Prost, writing for a panel that also included Judges Dyk and Hughes, found that Chief Judge Leonard Davis of the Eastern District of Texas erred by failing, among other things, to account for the “standard-essential status” of a Commonwealth Scientific (CSIRO) patent infringed by Cisco. The decision signals another important step toward the convergence of “reasonable royalty” damages in RAND and other patent cases.


CSIRO is a leading Australian governmental research organization. In 1996 CSIRO obtained U.S. Patent 5,487,069, claiming techniques for addressing “multipath” problems in wireless signal processing. These techniques were later incorporated into IEEE’s 802.11a (“Wi-Fi”) standard, first published in 1999. In connection with the approval of 802.11a, IEEE requested, and CSIRO provided, a Letter of Assurance under which CSIRO committed to license the ‘069 patent to manufacturers of 802.11a-compliant products on “reasonable and nondiscriminatory” (RAND) terms. When later versions of 802.11 were developed, IEEE again requested that CSIRO commit to license the ‘069 patent on RAND terms. CSIRO, however, refused to issue such additional assurances.

In 2001, Cisco acquired Radiata, Inc., a company founded by a former CSIRO scientist to manufacture wireless chips. Radiata had entered into a Technology License Agreement (TLA) with CSIRO in 1998, under which Radiata paid CSIRO royalties for use of the ‘069 patent based on a percentage of Radiata’s chip sale prices. These royalties ranged from 1% to 5% of the chip price, depending on sales volume. When Cisco acquired Radiata, it inherited the TLA and paid CSIRO approximately $900,000 in royalties over the next several years. Cisco stopped paying royalties under the TLA in 2007, when it discontinued the use of Radiata chips in its products. Cisco and CSIRO negotiated for several years regarding an ongoing license for the ‘069 patent, but could not reach agreement and CSIRO sued Cisco for infringement in 2011.

After a four-day bench trial, the District Court determined that the “reasonable” range for royalties for the ‘069 patent was between $0.90 (based on an “informal suggestion” made by Cisco’s chief patent counsel during negotiations in 2005) and $1.90 (based on the maximum rate that CSIRO offered to potential licensees in 2003). CSIRO v. Cisco, 2014 WL 3805817 (E.D. Tex. 2014). (The Court made a slightly different calculation with respect to products sold by Cisco’s Linksys subsidiary, but we will not consider that here). With these ranges in mind, the District Court developed a volume-based royalty table and assessed damages of approximately $16 million against Cisco. Cisco appealed, arguing that the District Court erred in three major regards: (1) by failing to begin its royalty analysis with the price of a Wi-Fi enabled chip, representing the smallest salable patent-practicing unit (SSPPU) in Cisco’s Wi-Fi enabled products, (2) by failing to adjust its reasonable royalty analysis to account for the essentiality of the ‘069 patent to the 802.11 standard, and (3) by basing its royalty determination on the parties’ negotiation positions rather than the TLA. The Federal Circuit found that the District Court erred as to points (2) and (3), vacating the decision below and remanding for recalculation of the damages award.

Apportionment and the Smallest Saleable Patent-Practicing Unit (SSPPU)

In CSIRO, the Federal Circuit reiterated the century-old rule, now embodied in Section 284 of the Patent Act, that patent infringement damages “must reflect the value attributable to the infringing features of the product, and no more.” Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014). It went on to explain that “[t]his principle—apportionment—is the governing rule where multi-component products are involved” (slip op. at 10, internal quotations omitted). The Court noted, however, that the rule of apportionment may be supplemented by additional tools to help determine the incremental value of the patented invention. One of these tools is the SSPPU model: when “a damages model apportions from a royalty base, the model should use the smallest salable patent-practicing unit as the base” (slip op. at 12).

Cisco argued that the District Court erred by beginning its reasonable royalty analysis using rates derived from inter-party negotiations rather than the SSPPU. The Federal Circuit disagreed, holding that the SSPPU model was inapplicable in the case, as the District Court did not determine a royalty “base” (i.e., the price that is multiplied by a royalty expressed in percentage terms) at all. Instead, the Court used so-called per-unit royalties (i.e., a specific dollar amount per end product). As such, there was no call for use of the SSPPU model, and the District Court did not err by avoiding its use.

Comparable Licenses

As noted above, the District Court determined the applicable range of royalties on the ‘069 patent to be between $0.90 and $1.90 based on figures introduced by the parties at different stages during their licensing negotiations. Cisco argued, however, that the appropriate royalty range should be based on the rates set forth in the TLA entered into by Radiata and CSIRO, as to which Cisco later succeeded. Under the TLA, the royalty rates for Cisco products would have been $0.03 to $0.33 (rates for Linksys products would have been slightly different, but I will disregard these for the sake of simplicity).

The District Court rejected any application of the TLA in its reasonable royalty analysis, reasoning, among other things, that (a) the TLA was a related-party agreement between CSIRO and one of its former scientists, rendering it not comparable to the proposed arm’s length agreement between Cisco and CSIRO, (b) the TLA was entered in 1998, long before any hypothetical negotiation between Cisco and CSIRO, and (c) the TLA royalty rates were based on the price of chips sold by Radiata rather than the value of the invention embodied by the ‘069 patent. To this last point, the District Court reasoned that “[b]asing a royalty solely on chip price is like valuing a copyrighted book based only on the costs of the binding, paper, and ink needed to actually produce the physical product. While such a calculation captures the cost of the physical product, it provides no indication of its actual value” (CSIRO, 2014 WL 3805817 at *11).

The Federal Circuit rejected most of the District Court’s reasoning regarding the TLA, largely because Cisco and CSIRO renegotiated numerous terms of the TLA following Cisco’s acquisition of Radiata. This renegotiation demonstrated both that the TLA did not embody a “special relationship” between CSIRO and the licensee (as Cisco presumably negotiated at arm’s length) and the timing of the amendments coincided with any hypothetical negotiation that would have been conducted between Cisco and CSIRO. As for the District Court’s discomfort with the TLA’s use of chip prices as the base upon which royalties would be calculated, the Federal Circuit quoted its recent decision in Ericsson, 773 F.3d at 1228,

in which it held that a comparable license may not be excluded from the fact finder’s consideration “solely because of its chosen royalty base.” Given this reasoning, the Federal Circuit held that the District Court erred by excluding the TLA from its analysis and directed the Court on remand to “reevaluate the relevance of the as-amended TLA in its damages analysis” (slip op. at 22).

Interestingly, this case represents the second appellate decision this year in which the admissibility of comparable license agreements has been challenged in RAND royalty determinations. In the prior case, Microsoft v. Motorola, 795 F.3d 1024 (9th Cir. 2015), the Ninth Circuit was more deferential to the District Court’s exclusion of potentially comparable license agreements. In Microsoft, the Circuit Court upheld the District Court’s exclusion of three arm’s length license agreements to which Motorola was a party for reasons including the fact that some agreements were entered into to settle or forestall litigation, they included patents other than the patents at issue, they included cross-licenses and they included royalty caps. It will be interesting to see how the Circuits reconcile their interpretations of this key evidentiary standard in future cases.

Impact of Standardization

Perhaps the most far-reaching implication of CSIRO arises from the Federal Circuit’s holding regarding the impact of standardization on a patent. In the case, the District Court determined a “reasonable royalty” using the well-known framework established in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). Cisco argued that the District Court erred by failing to modify the Georgia-Pacific factors to account for the fact that the ‘069 patent was essential to the 802.11 standard. In particular, the Court failed to disregard any additional compensation that CSIRO might have been able to extract in a hypothetical negotiation solely as a result of the ‘069 patent’s essentiality to the 802.11 standard. This additional compensation, Cisco argued, is not indicative of the incremental value of the patented technology, but of the significant costs that manufacturers would have to incur if forced to switch to an alternative technology (so-called “switching costs”). For this reason, such adjustments to the Georgia-Pacific factors were made by prior courts determining reasonable royalty rates for standards-essential patents (e.g., Microsoft, Ericsson, and In re Innovatio IP Ventures, LLC, 956 F.Supp.2d 925 (N.D.Ill. 2013)).

But CSIRO pointed to a significant distinction with these prior cases. As noted above, CSIRO agreed to license the ‘069 patent on RAND terms to manufacturers of 802.11a-compliant products. But by the time of CSIRO’s suit, 802.11a was largely obsolete and represented only 0.03% of Cisco’s accused products (slip op. at 8). Thus, CSIRO argued and the District Court agreed that CSIRO had no obligation to offer RAND terms to Cisco with respect to its products implementing later versions of 802.11. And because no RAND obligation was implicated, no adjustment to the Georgia-Pacific factors was warranted.

The Federal Circuit disagreed, holding that the incremental value of a standard-essential patent (SEP) should be determined independently of manufacturer switching costs, whether or not the SEP was RAND-encumbered (slip op. at 17). Citing Ericsson, the Court reasoned that “damages awards for SEPs must be premised on methodologies that attempt to capture the asserted patent’s value resulting not from the value added by the standard’s widespread adoption, but only from the technology’s superiority” (id.) The Federal Circuit thus found that the District Court erred by failing to consider the extent to which the value of standardization may have impacted the calculated compensation range for the ‘069 patent, and remanded for further consideration of this issue.

Implications for RAND and Standards

The Federal Circuit’s analysis of the third factor in CSIRO is sensible, but does raise some interesting questions about standards and SEPs. In rejecting CSIRO’s argument that the royalty damages analysis should not be adjusted because the ‘069 patent was not RAND-encumbered, the Federal Circuit noted first that Ericsson distinguished between RAND-encumbered SEPs and SEPs generally (slip op. at 17). On this basis, the court reasoned that even though the ‘069 patent might not be encumbered by a RAND commitment, the court’s reasonable royalty analysis must take into account the fact that the patent was a SEP (and thus correct for excess compensation that could be extracted based on broad industry adoption of the standard).

If this is the case, then what is the difference in the royalty payable with respect to a RAND-encumbered SEP and the royalty payable with respect to an unencumbered SEP? The result in CSIRO suggests that there is no difference at all. In the case of RAND-encumbered SEPs, the patent holder agrees to charge a “reasonable royalty”, which the courts have calculated using a modified version of the Georgia-Pacific framework. But Section 284 of the Patent Act establishes a “reasonable royalty” as the baseline measure of damages for all patents. Accordingly, a similar reasonable royalty calculation, also using the Georgia-Pacific framework should be used for unencumbered SEPs. And, as held by the Federal Circuit in CSIRO, that calculation must avoid the inclusion of switching costs in the “reasonable” royalty.

In a recent paper, A Unified Framework for RAND and other Reasonable Royalties, 30 Berkeley Tech. L.J. 1447-1499 (2015), Richard Gilbert and I predict this result: namely, the convergence of reasonable royalty damages for RAND-encumbered and unencumbered patents. As we have written, and as the Federal Circuit has repeatedly confirmed, the appropriate measure of damages in patent cases, whether or not involving SEPs, is the incremental value of the patented invention to the product in which it is incorporated.

But if royalty rates for RAND-encumbered SEPs are no lower than royalty rates for unencumbered SEPs, then what is the point of making a RAND commitment? Does it have any effect at all? Professor Gilbert and I argue that RAND commitments are meaningful even without this royalty differential. Most importantly, a SEP holder that makes a RAND commitment severely limits its ability to obtain an injunction to prevent infringement by manufacturers of standardized products. Holders of unencumbered SEPs, on the other hand, have not committed to license their patents, and may not face the same hurdles to obtaining injunctive relief. Then, as predicted by Farrell, Lemley, Shapiro and others, they could use the leverage conferred by the threat of an injunction to extract a higher (unreasonable?) royalty from manufacturers of standardized products without having to resort to a judicial damages determination (which, as we have seen, will be limited to a “reasonable” royalty). This possibility has significant implications, particularly given the increasing acquisition and assertion of SEPs by patent assertion entities that do not make RAND commitments, a complex topic well beyond the scope of this note, but which I have written about here. For these and other reasons, RAND commitments, and the encouragement of RAND commitments by SSOs and market participants, will continue to play an important role in fostering standardization and innovation.

Nautilus Surfaces Again at the Supreme Court

Nautilus v. Biosig (Supreme Court 2015) (SCOTUS ROUND II)

In Nautilus (2014), the Supreme Court significantly heightened the standard for definiteness in patent cases – now requiring that claim scope be delineated with “reasonable certainty.” Previously, the Federal Circuit had only invalidated claims that were both “insolubly ambiguous” and not amenable to construction.

On remand, the Federal Circuit took-in the new standard, but again ruled that the “spaced relationship” limitation in Biosig’s patent was not problematic. That decision (and a series of others) have suggested that, despite the Supreme Court decision, indefiniteness is still a very tough-sell in infringement litigation.

Now, the case again has been petitioned to the Supreme Court. Nautilus asks two questions:

… To perform [its] public-notice function, a patent claim must be clear the day it issues. This Court accordingly rejected the Federal Circuit’s post hoc “amenable to construction” standard: “It cannot be sufficient that a court can ascribe some meaning to a patent’s claims; the definiteness inquiry trains on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post hoc.” But, the remand panel again did the opposite. It copied and pasted much of its opinion this Court had vacated. It did not even mention the original prosecution history. Instead, it again viewed the claim post hoc in view of statements made in Patent Office proceedings 15 years after the patent issued. And, it again relied upon a purely functional distinction over a structurally identical prior-art design as supposedly providing sufficient clarity. The questions presented are:

1. Is a patent claim invalid for indefiniteness if its scope is not reasonably certain the day the patent issues, even if statements in later Patent Office proceedings clarify it?

2. Is a patent claim invalid for indefiniteness if its scope is distinguished from prior art solely by a functional requirement, rather than by any structural difference?

The petition has been supported by two amici filings. The first filed by a group of operating companies – including Garmin and SAS – all of whom have been accused of infringing what they allege are indefinite patents. The second amicus brief was filed by a joint effort of the Electronic Frontier Foundation (EFF) and Public Knowledge.


Welcome Back from Thanksgiving Break – Don’t Do This

Dr. Arunachalam has no chance of winning her now pro se patent case against J.P. Morgan Chase – but the sentiments that she puts forth in her petition for writ of certiorari are felt by many who are sidelined by the complexity and expense of the U.S. patent system.

She asks:

  1. Is the Court of Appeals for the Federal Circuit (“CAFC”) permitted to create a new protected class – a giant corporation – to take private property for public use without any compensation to the inventor, … by denying the inventor the protections of the Bill of Rights and 35 U.S.C § 282 of the Patent Act, thereby voiding the judgment?
  2. Whether the CAFC erred in not honoring the law, after abridging liberty rights of a citizen, arbitrarily dismissing the appeal without a hearing or an opening brief or clear and convincing evidence from a giant corporation, depriving the citizen of patent property rights, was the citizen deprived of the protections of 35 U.S.C. § 282 of the Patent Act and the Bill of Rights, thereby voiding the judgment?
  3. Whether the CAFC erred in not relieving a citizen of a final judgment for misrepresentation by a giant corporation or for any reason that justifies relief for a judge denying the citizen a hearing according to law, depriving the citizen of patent property rights, was Petitioner deprived of the protections of FRCP Rule 60(b)? . . .

At the district court level, Judge Robinson (D.Del.) ruled on summary judgment that the asserted claims were invalid for failing either the definiteness, written description, or enablement requirement of the Patent Act. In addition, Judge Robinson found the claims not infringed. U.S. Patent Nos. 5,987,500; 8,037,158; and 8,108,492. As part of a pattern, Arunchalam partially relied upon patent counsel but at some point there was a disagreement and she moved pro se.

Dr. Arunachalam has been previously sanctioned by the PTAB for, inter alia, creating a website with PTAB Judge McNamara’s picture super-imposed on a background of shooting-targets and crossbones in (what the PTAB calls) an attempt to intimidate. Arunachalam sued dozens of defendants for infringing the above listed patents – and eventually also sued her litigation counsel for “legal malpractice in patent infringement, personal injury, fraud, intentional misrepresentation, breach of contract, sexual harassment, blackmail, elder abuse, terrorizing, duress, financial damage, and negligence.”

As another interesting trick – to get around the word-count at the Federal Circuit, Dr. Arunchalam just jammed words together Germanstyle. E.g., instead of citing to Thorner v. Sony Computer, Arunchalam used the following space-free string: Thorner.v.SonyComputerEntm’tAm.LLC,669F3d1362,1365(Fed.Cir.2012). (Volokh).

Director Michelle Lee: Moving toward Patent Clarity

The following is a post from Under Secretary of Commerce for Intellectual Property and Director of the USPTO Michelle K. Lee and was published on the PTO Director’s blog

Patent quality is central to fulfilling a core mission of the USPTO, which as stated in the Constitution, is to “promote the Progress of Science and useful Arts.” It is critically important that the USPTO issue patents that are both correct and clear. Historically, our primary focus has been on correctness, but the evolving patent landscape has challenged us to increase our focus on clarity.

 Patents of the highest quality can help to stimulate and promote efficient licensing, research and development, and future innovation without resorting to needless high-cost court proceedings. Through correctness and clarity, such patents better enable potential users of patented technologies to make informed decisions on how to avoid infringement, whether to seek a license, and/or when to settle or litigate a patent dispute. Patent owners also benefit from having clear notice on the boundaries of their patent rights. After and after successfully reducing the backlog of unexamined patent applications, our agency is redoubling its focus on quality. 

 We asked for your help on how we can best improve quality—and you responded. Since announcing the Enhanced Patent Quality Initiative earlier this year, we received over 1,200 comments and extensive feedback during our first-ever Patent Quality Summit and roadshows, as well as invaluable direct feedback from our examining corps. This feedback has been tremendously helpful in shaping the direction of our efforts. And with this background, I’m pleased to highlight some of our initial programs under the Enhanced Patent Quality Initiative. 

 First, we are preparing to launch a Clarity of the Record Pilot, under which examiners will include as part of the prosecution record definitions of key terms, important claim constructions, and more detailed reasons for the allowance and rejection of claims. Based on the information we learn from this pilot, we plan to develop best examiner and applicant practices for enhancing the clarity of the record.

 We also will be launching a new wave of Clarity of the Record Training in the coming months emphasizing the benefits and importance of making the record clear and how to achieve greater clarity. Recently, we provided examiners with training on functional claiming and putting statements in the record when the examiner invokes 35 U.S.C. 112(f), which interprets claims under the broadest reasonable interpretation standard and secures a complete and enabled disclosure for a claimed invention. Training for the upcoming year includes an assessment of a fully described invention under 35 U.S.C. 112(a) and best practices for explaining indefiniteness rejections under 35 U.S.C. 112(b).

 Second, we are Transforming Our Review Data Capture Process to ensure that reviews of an examiner’s work product by someone in the USPTO will follow the same process and access the same facets of examination. Historically, we have had many different types of quality reviews including supervisory patent examiner reviews of junior examiners and quality assurance team reviews of randomly selected examiner work product. Sometimes the factors reviewed by each differed, and the degree to which the review results were recorded. With only a portion of these review results recorded and different criteria captured in those recordings, the data gathered was not as complete, useful, or voluminous as it could have been. As a result, the USPTO has been able to identify statistically significant trends only on a corps-wide basis, but not at the technology center, art unit, or examiner levels. We are working to unify the review process for all reviewers and systematically record the same and all review results through an online form, called the “master review form,” which we intend to share with the public. 

 What are the implications of this new process and new form? This new process will give us the ability to collect and analyze a much greater volume of data from reviews that we were already doing, but that were not previously captured in a centralized, unified way. As we roll out this new review process the amount of data we collect will significantly increase anywhere from three to five times. This will allow us to use big data analytic techniques to identify more detailed trends across the agency based upon statistically significant data including at the technology center, art unit, and even examiner levels. Also, this new process will give us better insight into not just whether the law was applied correctly, but whether the reasons for an examiner’s actions were spelled out in the record clearly and whether there is an omission of a certain type of rejection. For example, for an obvious rejection we are considering not only whether a proper obvious rejection was made, but whether the elements identified in the prior art were mapped onto the claims, whether there are statements in the record explaining the rejection, and whether those statements are clear.

 The end result will be the (1) ability to provide more targeted and relevant training to our examiners with much greater precision, (2) increased consistency in work product across the entire examination corps, and (3) greater transparency in how the USPTO evaluates examiners’ work product. You can read more about these and our many other initiatives, such as our Automated Pre-examination Search pilot and Post Grant Outcomes, which incorporates insight from our Patent Trial and Appeal Board and other proceedings back into the examination process on our new Enhanced Patent Quality Initiative page on our website.

 Finally, let me close by emphasizing that our Enhanced Patent Quality Initiative is not a “one-and-done” effort. Coming from the private sector, I know that any company that produces a truly top quality product has focused on quality for years, if not decades. The USPTO is committed to no less. The programs presented here are just a start. My goal in establishing a brand new department within the USPTO was to focus exclusively on patent quality and the newly created executive level position of Deputy Commissioner for Patent Quality will ensure enhanced quality now, and into the future. With your input we intend to identify additional ways we can enhance patent quality as defined by our patent quality pillars of excellence in work products, excellence in measuring patent quality, and excellence in customer service.

 To that end, we will continue our stakeholder outreach and feedback collection efforts in various ways, such as our monthly Patent Quality Chat webinars. The next Patent Quality Chat webinar on November 10 will focus on the programs presented in this blog and our other quality initiatives. I encourage you to join in regularly to our Patent Quality Chats and visit the Enhanced Patent Quality Initiative page on our website for more information.  The website provides recordings of previous Quality Chats as well as upcoming topics for discussion. We are eager to hear from you about our Enhanced Patent Quality Initiative, so please continue to provide your feedback to WorldClassPatentQuality@uspto.gov(link sends e-mail).  Thank you for collaborating with us on this exciting and important initiative!


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

by Dennis Crouch

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

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

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

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

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

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

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

Writing in dissent, Judge Newman offers the following:

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

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

= = = = =

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


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

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

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

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

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

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

Guest Post: A Small Practice Note on Patent Family Licensing with a Billion Dollar Effect?

By François deVilliers, Chief IP Counsel, Plantronics, Inc.

When negotiating a patent license, the family of patents may not have matured fully yet. The “Licensed Patents” are thus normally expressly defined to be “anything related” to the original patents (typically continuing applications and foreign counterparts) and are listed in an exhibit that may be updated during the term of the agreement as additional patents issue or are filed. The term of the license agreement is then usually defined as ending upon “the expiry date of the last to expire of the Licensed Patents.”

There may only be one or two relevant patents but the Licensee is typically amenable to a broader definition of Licensed Patents because this could reduce the likelihood that the Licensor will come knocking again and there is a perception that more licensed patents equals more value. If the license is fully paid up then there is no real problem – a broader definition of Licensed Patents may in fact be better and the expiry date is irrelevant except perhaps for amortization by the accountants.

If there are ongoing royalties then there are a number of concerns.

Firstly, if there is no defined end date when the contract details are entered into the relevant legal and financial systems, there might be no flag to cease royalty payments when the license finally expires. Don’t expect the licensor to notify the licensee of the end date either when it becomes determinable or when it arrives. Do an audit right now of patent license agreements and payments, determine the expiry dates if possible or docket a reminder if not possible and investigate whether any post-expiry license payments have been made and if they can be recovered.

Secondly, licensors have been known to add later-expiring, irrelevant but ostensibly “related” patents to updates of their exhibits. While the US twenty year patent term has alleviated this problem somewhat, all it takes is one “related” patent with a significant patent term adjustment for a licensee to be on the hook for another year or two. Review any updates to exhibits and reject any that add later-expiring irrelevant patents. Be mindful though of the language of the agreement – there may be a risk of a breach of contract claim.

Thirdly, foreign counterparts may expire a year later than their local counterparts. A first-filed US patent without a term extension will expire twenty years from its filing date, while a corresponding UK patent filed up to a year later claiming priority from the US filing will expire twenty years from its filing date. If the license agreement does not comprehend geographic differences in the royalties due, the licensor may end up paying post-expiration royalties in its biggest market as a result of the existence of a later-expiring patent in an irrelevant market.

Of course the best time to deal with these issues is at the time the agreement is negotiated. If at all possible, specify or negotiate a specific date when the license terminates based on the expiry date of a representative and relevant patent. Provide that the license becomes fully paid up on this expiry date with respect to all related or “Licensed Patents” to avoid the possibility of a post-expiry claim based on an extended or later-expiring related patent. If it is not possible to specify an explicit expiry date, include “relevant” in the definition of related patents and require that the licensor motivate any update to the exhibit listing the Licensed Patents. Alternatively (or in addition), provide for breach-free rejection of an updated schedule by the licensor even if the added patent(s) fall within the strict definition of “related patents.” Further, make sure that patents in lesser jurisdictions don’t extend payments in the most important jurisdictions. Finally, the recent Kimble v. Marvel Entertainment ruling reaffirming the bar on post-expiry royalties may be of assistance in any negotiation.

Guest Post: The Blurring Of §§ 101 and 103—A Double-Edged Sword that Cuts the Other Way

Guest post by Ben Roxborough.  Mr. Roxborough is one of a few dual citizens who have completed federal court clerkships in both the United States and Australia. He has clerked in the U.S. for three years and practiced in Australia for five years, writing articles on how Australian courts developed a workable doctrine for patentable subject matter. He earned an LL.M. degree at Stanford Law School, specializing in intellectual property. This is not legal advice, and he welcomes any comments or criticisms: ben.roxborough@gmail.com

To say that the sands have been shifting with respect to Section 101 jurisprudence would severely understate the seismic change that it has experienced in recent years; ever more so in recent months. The consequence is that the lines between sections 101, 102 and 103 have been blurred. This consequence appears to stem from statements in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1304 (2012), where Justice Breyer suggested that the inquiries “overlap.” Indeed, three years later, the Federal Circuit panel in Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1347 (2015), went as far as saying that a “pragmatic analysis of § 101 is facilitated by considerations analogous to those of §§ 102 and 103.”

Because the lines have blurred, defendants have been able to rely on 102/103 arguments to invalidate patents on 101 grounds. These arguments, which defendants tend to advance at the second step of the Mayo/Alice framework, generally state that the additional steps—beyond the putative ineligible subject matter—are conventional because they can be found in the specification or are so ubiquitous that the court can treat them as routine and well understood by those in the scientific community. In Mayo, 132 S. Ct. at 1298, for example, Justice Breyer cited admissions in the specification that the processes for determining the level of metabolites in a patient’s blood were “well known in the art.” The patent lacked inventive concept because of this. Relying on Mayo, among other cases, defendants now make a simple argument. The argument may be summed up as: “Your Honor, if you combine what’s described in the specification and prior art with the ineligible subject matter, you’ll find that the patent claims are routine and conventional and do not meet the 101 threshold.”

In effect, the 101 ineligibility defense has become a de facto 103 defense, targeting primarily combination patents. But putting aside the fact that this de facto argument reflects a conclusion (rather than any real analysis), the argument is extraordinary because prior art in the specification is used against the patentee. No evidence other than the specification is being proffered to support the defendant’s position (which may mean that the prior art in the specification is an admission, but no patentee would say that the combination of the prior art elements were well known in the art at the time of the invention). And although some district courts have acknowledged this paradox, the argument tends to be successful as it was in McRO, Inc. v. Namco Bandai Games Am., Inc., No. CV 12-10327-GW, 2014 WL 4749601, at *11 (C.D. Cal. Sept. 22, 2014).

But it doesn’t end there: the patentee’s perilous position is only compounded further when the defendant seeks dismissal of the claim pursuant to Federal Rule of Civil Procedure 12(b)(6) because the patentee generally cannot proffer evidence outside the four corners of the complaint (and patent) that could undercut the defendant’s position. This seems unfair from not only a procedural perspective, but also a substantive one. When looking at a combination patent, what courts most want to know (or should want to know) is: “Who would have thought to combine the elements of the invention in the first place, and why?”

These basic concerns are central in the 103 context. But they should be equally relevant in the 101 context. Defendants have had a field day eviscerating patent after patent since Alice using ‘obviousness-like’ arguments to show that the patent lacks inventive concept. What is required in response to these developments is judicial recognition of ‘obviousness-like’ arguments that cut the other way. The article I am writing seeks to develop these themes, so to place plaintiffs and defendants on equal footing under Section 101. They are summarized here (and, admittedly, are far from fully developed):

  1. THE SKILLED ARTISAN: To provide the 101 analysis with an objective baseline, courts need to define who the skilled artisan is—and what she knew at the time of the invention. Sometimes a plaintiff is precluded from presenting such evidence because courts now decide a significant number of 101 cases at the Rule 12(b)(6) stage. To guard against early Rule 12(b)(6) motions, the skilled artisan’s background should be described in the complaint (or even the patent itself). Or, the Defendant should be required to show ineligibility within the confines of Rule 12(b)(6). This is less of a problem at the Rule 56(a) stage because the patentee has a chance to present skilled artisan’s common general knowledge. Critically, however, in those cases now on appeal—where the district court has not properly articulated the skilled artisan’s background—the Federal Circuit should be remanding such decisions for further factual development of the record. Placing greater emphasis on the skilled artisan can only make the 101 analysis a more balanced one.
  1. SOLVE THE PROBLEM: Defendants are using the specification against the patentee. But what is referenced in the specification can actually help the patentee demonstrate that the additional steps beyond the ineligible subject matter constitute inventive concept. Specifically, plaintiffs should turn the tables and point to the specification to demonstrate the problems faced by those in the field—and why the invention provides a “new and useful” solution. 35 U.S.C. § 101. Taking a problem-solution approach to define what is “new and useful” is precisely the type of analysis that Judge Chen applied in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), though it has its roots in Diamond v. Diehr, 450 U.S. 175, 188 (1981) and the Supreme Court’s more recent holding in Alice also reflects this approach.
  1. TEACHING AWAY: This analysis typically applies in the 103 context. But what stops it from being relevant in the 101 context? To this point, the recent BRCA1 decision has opened the door for its application. In re BRCA1- & BRCA2-Based Hereditary Cancer Test Patent Litig., 774 F.3d 755, 764 (Fed. Cir. 2014). Just as Justice Breyer tethered the notion of what was “well known in the art” by referring to the specification for 101 purposes, the Federal Circuit in BRCA1 has tethered that same notion to “techniques that a scientist would have thought” to use when deciding to engage in experiments that were directed to the invention. But if inventors engage in activities that run counter to scientific thought, those activities can hardly be considered routine and conventional in a 101 sense, correct? While some may say that teaching away analysis should be reserved for § 103 (and to do so would otherwise conflate § 101 with §103), several reasons militate against this position. First, as stated above, the Supreme Court and Federal Circuit have said that § 101 is facilitated by considerations analogous to those of § 103. Second, teaching away analysis should not be monopolized by § 103. In fact, evidence that teaches away is already relevant to enablement (§ 112) to show that “a significant amount of experimentation would have been necessary to practice the claimed invention.” Liebel-Flarsheim Co. v. Medrad, Inc., 481 F.3d 1371, 1379-79 (Fed. Cir. 2007). Because teaching away analysis is transferable between different sections in the statute, there would seem no reason why it could not be extended to § 101 to determine whether a combination of steps is routine and conventional.
  1. HINDSIGHT: Given that Alice requires that courts look at patented elements as a whole, the concern of hindsight bias should have as much relevance to a § 101 challenge as it does a § 103 challenge. For when each of the elements of a claimed invention do not exist in the prior art, or even the ordered combination, how can a defendant rationally argue that the combination is routine and conventional without some degree of hindsight bias kicking in? Princeton Biochemicals, Inc. v. Beckman Coulter, Inc., 411 F.3d 1332, 1337 (2005). Indeed, in Mayo, 132 S. Ct. at 1298-99, Justice Breyer explained that the invention in Diehr was patentable because the “ordered combination” of the steps of the claimed invention as a whole were “nowhere suggested” to be “in context obvious, already in use, or purely conventional.” And while the Supreme Court made no express mention of hindsight in its 101 holdings, it was, at the very least, an underlying rationale in Diehr. Footnote 12 of that opinion is exemplary. Alice, too, reinforces this point when it spoke of looking at combination patents as “whole.”
  1. PREEMPTION & PIONEER PATENTS: Plaintiffs do appear to be pressing preemption arguments more heavily in recent months. The Sequenom case illustrates this: Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (2015) But, sadly, the Federal Circuit panel got it wrong when it was not prepared to consider evidence that demonstrated that the invention did not foreclose the use of the discovery. The saying what’s good for the goose is good for the gander seems apt. Because of this, it will be left to the Federal Circuit en banc, or other panels to address how preemption should factor into the 101 calculus. In any case, those decisions should take a liberal approach to Mayo’s dicta and allow preemption to play a tie-breaking fact role in close cases—e., a role similar to that of secondary indicia in the 103 calculus as evidence providing a tipping point in favor of a non-obviousness determination. To this end, and in the preemption context, the patentee should be entitled to show that there are different ways of achieving the goal to which the patent is directed—not just one (preemptive) way.

In addition, the Mayo decision also spoke of “how much future innovation is foreclosed relative to the contribution of the inventor.” Mayo, 132 S. Ct. at 1303. Does this mean that a pioneer patent should be given more latitude in a 101 context than a patent that provides a mere incremental improvement? I think it does. But a workable doctrine must emerge—much like one emerged with respect to the doctrine of equivalents in the infringement context. The article will address this.

  1. DRAFT JURY 101 INSTRUCTION: Given that some 101 cases are predicated on underlying factual findings, much like 103, the article will conclude with an appendix that includes a draft jury instruction. That will be addressed in more detail later.

Guest Post: To File a CON? Empirical Popularity and Prosecution Outcomes

Guest Post by Kate S. Gaudry, Ph.D and Thomas D. Franklin, Kilpatrick Townsend & Stockton LLP.  The opinions expressed in this article are those of the authors and do not necessarily reflect the views of Kilpatrick Townsend & Stockton LLP or its clients. This article is not intended to be and should not be viewed as legal advice.

An increasing number of statistics are available on trends in patent application filings and prosecution outcomes. However, it is uncommon to see the data segregated based on type of application. Specifically, how frequently are continuation applications filed? And does previous prosecution experience with a parent application result in favorable prosecution outcomes?

Answers to these questions may be pertinent when developing strategies as to whether to file a continuation application. Frequent continuation filings may indicate that competitors consider it important to have the claiming flexibility of keeping a family alive or a trend toward filing omnibus applications (disclosing multiple ideas or idea aspects per specification). Meanwhile, any advantage of a continuation must be considered in view of its cost, which depend in part on prosecution expectations.

Accordingly, we requested data from the USPTO that identified, for each fiscal year and technology center (TC), the number of new applications filed (excluding RCEs) that were: (1) a continuation application; (2) a divisional application; (3) a continuation-in-part application; or (4) none of the above. Further, we requested, for each of these application types: (1) the number of patents issued and number of abandonments between July 1, 2014 and July 8, 2015 (to generate a final-disposal allowance rate for this time period); and (2) the average number of office actions issued for each application that received a notice of allowance during this time.

Continuation Applications: Increasingly Common

Overall, in fiscal year 2015, 20% of the filed applications were continuation applications. Divisionals comprised 6% of the data set, and continuation-in-part applications accounted for 3% of the applications. The remaining 72% lacked a priority claim to another non-provisional U.S. application. (FIG. 1)

FIG. 1

FIG. 1

FIGs. 2A and 2B respectively show the unnormalized and normalized distributions of filing types per fiscal year. The percentage of applications that were continuations doubled from 9% in 2005 to 18% in 2015.

Patently-O App-Type FIG 2

FIG. 2

The increased popularity of continuation applications is observed across all TCs. (FIG. 3.) The most substantial increases is observed in TCs 2100 (Computer Architecture, Software, and Information Security) and 2600 (Communications), where the contribution of continuation applications to total filings increased by 142% and 132%, respectively, between 2005 and 2015.

Patently-O App-Type FIG 3

FIG. 3

Continuation applications were most common in TCs 1600 (Biotechnology and Organic Chemistry), 2100 (Computer Architecture, Software, and Information Security) and 2400 (Computer Networks, Multiplex Communication, Video Distribution and Security), where continuation applications accounted for 29%, 28% and 30% of the applications, respectively. Continuation applications were least common in TC 3600 (Transportation, Construction, Electronic Commerce, Agriculture, National Security and License & Review), accounting for only 14% of the applications. The infrequency of TC 3600 continuation applications may be due, in part, to the rarity of allowances in the business-method art units.[1]

Continuation and Original Applications have Similar Prosecution Statistics

Potentially, experience with a parent application (and, typically, a same examiner) may guide claiming strategy for a continuation. Thus, perhaps, continuations represent a two-fold cost-savings opportunity: a savings in drafting and in prosecution costs. Assessing the latter potential savings requires evaluating allowance rates and office-action counts of continuation applications. Accordingly, we evaluated prosecution statistics from a recent time period (July 2014-July 2015) for each of the application types.

Overall, the final-disposal allowance rate for continuations is slightly higher than that for original applications (80% versus 74%). (FIG. 4A.) The average office-action count per patent is slightly lower for continuation applications (1.85 versus 1.96). (FIG. 4B.)

FIG. 44

FIG. 4

Discussion: Why and How to File Continuations

Continuation applications provide a variety of advantages, including an opportunity to seek a new scope of protection in view of business priorities and to strategically draft claims in view of ongoing or threatened challenges to a patent. This latter upside is becoming increasingly significant as the number of post-grant challenges continues to grow.

Should an applicant decide that the advantages of keeping a family alive are sufficiently important, claiming strategy for the child application must then be identified. Slightly tweaking an allowed claim may result in minimal prosecution costs. However, a fast allowance will lead to an overall cost of the family exploding (assuming repeated continuation filings). Seeking substantially broader protection, meanwhile, may lead to extended and frustrating prosecution. Our data showing that continuation and original applications have similar prosecution statistics suggest that applicants are not consistently choosing an easy or hard continuation-claiming path, though it may be explained by split uses of these types of claim-drafting techniques.

Another approach to continuations is to seek protection of a completely different idea in the specification. This could allow a resulting patent family to provide diverse protections towards different elements of an applicant’s technology. However, a new focus requires that the new idea be supported and enabled by the original specification. In an era where flat fees and legal bidding wars are common, it is our hypothesis that few applicants are willing to pay the higher drafting fees for preparation of such enhanced applications. However, we believe that this is a strategic approach and should be more frequently used.

Consider a case where an applicant is seeking patent protection of two ideas. A traditional approach is that separate patent applications be drafted for each idea. Another approach is to draft a single “omnibus” patent application that describes both ideas. One idea can be the focus of an original filing, and another the focus of a continuation filing. Then, by investing in keeping a single family alive (via the original and continuation filings and/or additional continuation applications), claiming flexibility for each idea is preserved. Further, if ideas within an omnibus application are related, drafting fees may be less than preparing two independent applications. The application may also illuminate synergies and interactions between the ideas, which may further expand claiming possibilities.

Concluding Thoughts

Our data shows that continuation-application filings are becoming increasingly common. Filing continuation applications offers many advantages, particularly now that patents are frequently challenged. However, blindly filing continuation applications will lead to an explosion in costs. Strategic filing of omnibus continuation applications, however, will offer long-term cost savings and prosecution advantages. Therefore, applicants should consider intelligently identifying and organizing sets of ideas into omnibus applications.

[1] Gaudry KS. 2015. Post-Alice, Allowances are a Rare Sighting in Business-Method Art Units. IPWatchDog. <http://www.ipwatchdog.com/2014/12/16/post-alice-allowances-rare-in-business-method/id=52675/>

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

By Jason Rantanen

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

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

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

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

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

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

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

Slip Op. at 17-18.

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

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

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

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

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

Some more thoughts on the opinion:

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

Kyle Bass’s Response to Motions about Abuse of IPR in IPR2015-01092 

The response in Coalition for Affordable Drugs v. Celgene (IPR2015-01092) is here.

Here’s the introduction:

Celgene’s motion is littered with references to the Petitioner’s and Real Parties-in-Interest’s (collectively, “CFAD”) “admitted profit motive,” and makes the curious argument that filing IPR petitions with a profit motive constitutes an “abuse of process.” Yet at the heart of nearly every patent and nearly every IPR, the motivation is profit. Celgene files for and acquires patents to profit from the higher drug prices that patents enable. Generic pharmaceutical companies challenge patents to profit from generic sales. Celgene’s argument is in conflict with Supreme Court precedent expressly finding it in the public’s interest for economically motivated actors to challenge patents. See Lear v. Adkins, 395 U.S. 653, 670 (1969) (holding public interest requires permitting licensees to challenge validity because they “may often be the only individuals with enough economic incentive to challenge the patentability” and “[i]f they are muzzled, the public may continually be required to pay tribute to would-be monopolists”). Having an economic motive for petitioning the government simply does not turn the petition into an abuse of process.

CFAD anticipates that fees and costs to complete an IPR for a single drug is approximately $1 million dollars. There are a limited number of entities capable of making that financial commitment. And fewer can make such a commitment without the prospect of profiting from their efforts. The fact is CFAD’s motivations do not change the social value of its activities. Poor quality patents enable pharmaceutical companies to maintain artificially high drug prices and reap unjust monopoly profits paid for by consumers and taxpayers.

Celgene accuses CFAD of motives that are not entirely “altruistic.” That is a truthful irrelevancy. The U.S. economy is based largely on the notion that individual self-interest, properly directed, benefits society writ large. Celgene’s motive is to profit from consumers and taxpayers from drug sales. Celgene’s patent-conferred monopoly results in Revlimid prices that exceed $580 per pill—creating costs in excess of $200,000 per patient year. (See Exs. 1021-23, showing prices for three Celgene drugs protected by challenged patents.) Revlimid sales were nearly $5 billion in 2014. Celgene is not giving Revlimid or its profits away.

CFAD’s IPRs are part of its investment strategy, and it will only succeed by invalidating patents, which would serve the socially valuable purpose of reducing drug prices artificially priced above the socially optimum level. And even if, despite its best efforts, it does not profit—each petition that knocks down a barrier to generic entry benefits the public. It should be axiomatic that people do not undertake socially valuable activity for free—not Celgene, not generics, not shareholders, and not investment funds. Low drug prices will not simply materialize. They must be brought about by agents who will invest significant capital and do the hard work of identifying and challenging weak patents. Generics sometimes serve this function. But the law does not render it “abuse” for others, including CFAD, to also play this important societal role.

Guest Post: Keys to Success of the Florida Patent Pro Bono Program

Guest Post by Jennifer McDowell, USPTO Pro Bono Program Coordinator and Courtney Caliendo, Florida Patent Pro Bono Program Manager

Florida may have been among the last states to offer Patent Pro Bono services to qualified inventors and small businesses, but it was also among the quickest to launch. The United States Patent and Trademark Office (USPTO) identified the Institute for Commercialization of Public Research (Florida Institute) as a potential statewide program coordinator in January 2015, finalized a partnership agreement in March, and Florida Patent Pro Bono (FloBonoSM) officially launched statewide with a series of activities during the first week of May.

Formed by the Florida Legislature in 2007, the Florida Institute is a nonprofit organization that supports new company and job creation based on publicly-funded research. Working collaboratively with Florida’s many universities and private research institutions, the Florida Institute helps uncover commercially viable startup company opportunities, and provides both company building support and seed funding to help them grow.  The organization maintains extensive relationships with the service provider, business, and investment communities, and as a catalyst for innovation, capital attraction and economic development the Institute is an ideal administrator of the Florida Patent Pro Bono Program.

“This Program aligns well with the Florida Institute’s mission to create new companies and jobs in industries that are driving the global economy,” said Jamie Grooms, Florida Institute Chief Executive Officer. “We are pleased to be administering this important Program for Florida inventors with the support of the USPTO, and to expand our programming in support of entrepreneurship, job growth, and innovation-based economic development across the state.”

Like entrepreneurs who know all too well the importance of time to market, the Florida Institute realized it had to design and begin delivering the Program quickly to meet the needs of Florida’s vast, diverse, and widespread innovation community who collectively submit approximately 10,000 patent applications each year to the USPTO, making it one of the leading sources of patent application filings in the nation.[1] The Florida Program expands the national Patent Pro Bono Program that started in 2011 when the U.S. Congress passed the Leahy-Smith America Invents Act (AIA), encouraging the USPTO to support intellectual property law associations across the country to establish pro bono programs that assist financially under-resourced independent inventors and small businesses. Florida’s engagement also represents the successful outcome of one of President Obama’s seven Executive Actions for the USPTO to assist innovators by expanding the pro bono programs in all 50 states and increasing accessibility to legal assistance from registered patent professionals.

Between 2011 and early 2015, 46 states had entered into partnership agreements with the USPTO. As the 47th state to come on board, Florida was tasked with developing a program quickly in order to process not only new applicants, but to also deal with a backlog of approximately 50 inventor applications received before the Patent Pro Bono Program became available in Florida. As the third most populous state in the country with nearly 20 million residents, Florida is so large it spans two time zones and includes multiple metropolitan centers as well as vast rural areas.[2] The state is ethnically diverse as well, with over 27% of its residents, over the age of 5, speaking languages other than English in Florida households.[3]  Significantly, in Fiscal Year 2014, inventors in the state of Florida ranked tenth in the country in the number of patent application filed at USPTO.[4]

In order to meet the unique challenges posed by such a large and culturally-diverse state, the Florida Institute, with support from the USPTO, worked quickly to understand best practices put into place by states that had launched earlier, and referred often to the Patent Pro Bono Program Handbook created in Minnesota by the original pilot program team and to the USPTO itself. With a keen sense of urgency, coupled with the freedom to develop a program uniquely suited to meet the needs of Florida inventors, the Florida Institute embarked on community outreach to build a statewide coalition, and took the following key steps to expedite program launch in under 90 days:

  • Identified intellectual property lawyers who would assist early on with program guideline development;
  • Developed a database of registered intellectual property lawyers and agents who would be instrumental in providing patent pro bono services;
  • Identified law school faculty and administration for guidance and preliminary formation of a Steering Committee;
  • Created and filled the Program Manager position with an attorney;
  • Established eligibility criteria;
  • Contacted numerous legal and intellectual property associations;
  • Developed necessary applications, forms, and policy documents;
  • Created a website with program information, inventor application, and patent attorney and agent volunteer information and registration forms;
  • Assessed a backlog of program inquiries;
  • Planned two launch events, one in Miami and one in Tampa Bay, to provide program information as broadly as possible; and
  • Collected and began responding to new and previously submitted applications.

Critical to the early success of the Florida Patent Pro Bono Program was the Florida Institute’s decision to hire an attorney with experience practicing in the field of intellectual property law as its Program Manager. Before joining the Florida Institute, Courtney Caliendo practiced law at a boutique intellectual property law firm based in Fort Lauderdale, Florida; and is the current Vice President of the Intellectual Property Law Association of Florida (“IPLAF”). “Ms. Caliendo’s knowledge of the intellectual property system, combined with her ties to various legal and intellectual property organizations, facilitates activities such as patent attorney outreach, document drafting, and liaising between inventors and attorneys,”  Jane Teague, Florida Institute Chief Operating Officer.

Support from intellectual property organizations such as the American Intellectual Property Law Association (AIPLA), the Intellectual Property Law Association of Florida (IPLAF), the Florida Bar Business Law Section Intellectual Property Committee and the American Bar Association (ABA) was also a key to the expedient start of the Florida program.  Working with the USPTO and the FloBonoSM team, these organizations publicized the existence of the program and the launch events.  Through the AIPLA’s IP Law Associations and the IP Law Association of Florida, the USPTO facilitated key connections with local contacts in Florida, targeting audiences in the most efficient way.  Working in synchronization with these groups enabled the program to grow rapidly the number of volunteer attorneys on its roster, so that it could deliver the much-requested services to inventors in a timely manner.

The first event, held in Miami, put the Florida Institute (literally) on Center Stage at the widely-attended eMerge Americas Conference, to announce the Program’s debut. The session featured technology and social entrepreneur Traver Kennedy, who was ranked by NetworkWorld magazine as one of the “25 Most Powerful People” in computing, and has worked on special projects with the World Intellectual Property Organization (WIPO), a division of the United Nations. eMerge Americas was attended by over 10,000 people, and provided broad exposure to print and network media outlets as well as members of the business and academic communities. The second event was held in Tampa and featured T. David Petite, a prolific inventor in the field of computer networking, and founder of the Native American Intellectual Property Enterprise Council, a non-profit organization helping Native American inventors and communities.

The FloBonoSM team conducted extensive media outreach both before and during the events, and associated press releases were posted in over 180 publications in 25 states and 35 countries worldwide. At last count, well over 2,000 people had viewed the FloBonoSM press release. Both the media outreach and the launch events succeeded in promoting the Program and resulted in increases in inquiries and applications from both inventors and patent attorneys. Since its inception, the Florida Patent Pro Bono Program has received over approximately 72 inventor applications as well as numerous inquiries from inventors and commitments from patent attorneys and agents interested in providing program support.[5]

The newly-minted USPTO-Florida Institute collaboration is now providing under-resourced inventors with improved access to the patent system, streamlining the patent application process and supporting the submission of higher quality patent applications.  By matching qualified inventors to patent professionals around the state who provide pro bono legal assistance on specific aspects of the patent process, inventors and small businesses may avoid common pit falls and errors often seen in pro se patent applications. This Program ultimately fosters the growth of Florida’s innovation economy by supporting the protection and commercialization of new technologies.

If “necessity is the mother of invention”[6] then the Patent Pro Bono Program is its greatest champion.


[1] USPTO Patent Application Locating and Monitoring System 2015

[2] Census Data retrieved from: http://quickfacts.census.gov/qfd/states/12000.html  on May 20, 2015.

[3] Id.

[4] USPTO Patent Application Locating and Monitoring System 2015

[5] Data taken as of June 11, 2015.

[6] Quote attributed to Plato.

Supreme Court Declines to Overrule Brulotte

By Jason Rantanen

Kimble v. Marvel Entertainment, LLC (2015) Download Opinion

Opinion by Justice Kagan.  Justice Alito filed a dissenting opinion joined by Chief Justice Roberts and Justice Thomas.

Drawing heavily on stare decisis, the  Supreme Court has declined to overrule the rule in Brulotte v. Thys that a patentee cannot continue to receive royalties for sales made after the expiration of the patent based on principles of stare decisis.  However, the Court leaves open the possibility of creative license drafting.  From the opinion:

Patents endow their holders with certain superpowers, but only for a limited time. In crafting the patent laws, Congress struck a balance between fostering innovation and ensuring public access to discoveries. While a patent lasts, the patentee possesses exclusive rights to the patented article—rights he may sell or license for royalty payments if he so chooses. See 35 U. S. C. §154(a)(1). But a patent typically expires 20 years from the day the application for it was filed. See §154(a)(2). And when the patent expires, the patentee’s prerogatives expire too, and the right to make or use the article, free from all restriction, passes to the public. See Sears, Roebuck & Co. v. Stiffel Co., 376 U. S. 225, 230 (1964).  This Court has carefully guarded that cut-off date, just as it has the patent laws’ subject-matter limits: In case after case, the Court has construed those laws to preclude measures that restrict free access to formerly patented, as well as unpatentable, inventions.


Brulotte was brewed in the same barrel. There, an inventor licensed his patented hop-picking machine to farmers in exchange for royalties from hop crops harvested both before and after his patents’ expiration dates. The Court (by an 8-1 vote) held the agreement unenforceable—“unlawful per se”—to the extent it provided for the payment of royalties “accru[ing] after the last of the patents incorporated into the machines had expired.” 379 U. S., at 30, 32. To arrive at that conclusion, the Court began with the statutory provision setting the length of a patent term. See id., at 30 (quoting the then-current version of §154). Emphasizing that a patented invention “become[s] public property once [that term] expires,” the Court then quoted from Scott Paper: Any attempt to limit a licensee’s post-expiration use of the invention, “whatever the legal device employed, runs counter to the policy and purpose of the patent laws.” 379 U. S., at 31 (quoting 326 U. S., at 256).


As against this superpowered form of stare decisis, we would need a superspecial justification to warrant reversing Brulotte. But the kinds of reasons we have most often held sufficient in the past do not help Kimble here. If anything, they reinforce our unwillingness to do what he asks.

Slip Op. at 3-4, 6, 10.  Nonetheless, wary license drafters can work around Brulotte:

Yet parties can often find ways around Brulotte, enabling them to achieve those same ends. To start, Brulotte allows a licensee to defer payments for pre-expiration use of a patent into the post-expiration period; all the decision bars are royalties for using an invention after it has moved into the public domain. See 379 U. S., at 31; Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U. S. 100, 136 (1969). A licensee could agree, for example, to pay the licensor a sum equal to 10% of sales during the 20-yearpatent term, but to amortize that amount over 40 years.That arrangement would at least bring down early outlays, even if it would not do everything the parties might want to allocate risk over a long time frame. And parties have still more options when a licensing agreement covers either multiple patents or additional non-patent rights. Under Brulotte, royalties may run until the latest-running patent covered in the parties’ agreement expires. See 379 U. S., at 30. Too, post-expiration royalties are allowable so long as tied to a non-patent right—even when closely related to a patent. See, e.g., 3 Milgrim on Licensing §18.07, at 18–16 to 18–17. That means, for example, thata license involving both a patent and a trade secret can set a 5% royalty during the patent period (as compensation for the two combined) and a 4% royalty afterward (as payment for the trade secret alone). Finally and most broadly, Brulotte poses no bar to business arrangements other than royalties—all kinds of joint ventures, for example—that enable parties to share the risks and rewards of commercializing an invention.

Slip Op. at 6. Tom Cotter has already provided his own insightful commentary on the opinion over on ComparativePatentRemedies.

Side note: this may be the only judicial opinion ever to quote both my colleague Herb Hovenkamp and Stan Lee & Steve Ditko.

Federal Circuit: Software is not Patent Eligible unless Claimed as a Process or Physical Object

In an interesting – though non-precedential – opinion, the Federal Circuit has ruled that a “speech-recognition interface” software lacks subject matter eligibility “because [the claims] are not directed to one of the four statutory categories of inventions identified in 35 U.S.C. § 101. The court writes: “[s]oftware may be patent eligible, but when a claim is not directed towards a process, the subject matter must exist in tangible form. Here, the disputed claims merely claim software instructions without any hardware limitations.”

AllVoice Developments v. Microsoft (Fed. Cir. 2015)

Recent action in patent eligibility doctrine has primarily focused on the judicial prohibitions against patenting abstract ideas, laws of nature, and natural phenomena.  However the statute does have some meat of its own.  In particular, Section 101 particularly creates eligibility for four categories of inventions: processes, machines, manufactures, and compositions of matter.  Inventions that cannot fit within the four statutory categories are not patent eligible.

Machine, Manufacture, Composition of Matter: These terms go back to the 1793 patent act and have been interpreted in dozens of cases.  Here, the court summarizes:

Except for process claims, “the eligible subject matter must exist in some physical or tangible form.” Digitech, 758 F.3d 1344 (Fed. Cir. 2014). To be considered a machine under section 101, “the claimed invention must be a ‘concrete thing, consisting of parts, or of certain devices and combination of devices.’” Id. (quoting Burr v. Duryee, 68 U.S. 531 (1863)). Similarly, “[t]o qualify as a manufacture, the invention must be a tangible article that is given a new form, quality, property, or combination through man-made or artificial means. Likewise, a composition of matter requires the combination of two or more substances and includes all composite articles.” Id.

The question in this case is whether Claim 60 of AllVoice’s U.S. Patent No. 5,799,273 fits within any of the four categories.  The claim reads as follows:

60. A universal speech-recognition interface that enables operative coupling of a speech-recognition engine to at least any one of a plurality of different computer-related applications, the universal speech-recognition interface comprising:

input means for receiving speech-recognition data including recognised words;

output means for outputting the recognised words into at least any one of the plurality of different computer-related applications to allow processing of the recognised words as input text; and

audio playback means for playing audio data associated with the recognised words.

In considering the claim, the court found that no tangible or physical object claimed.  Rather, the patentee admitted that the claim elements are all software elements that do not expressly require hardware elements.  Without any actual “machine” or “composition of matter”, the claim failed for lack of subject matter eligibility.

Copyrighting Your Patent?

by Dennis Crouch

Although it sounds of a malformed naive question, at times patent applicants do want to copyright their patent.  The patent application may, for instance, include software code, prose, or particular schematics that would seemingly be amenable to copyright protection.

In 1987, the USPTO created an official policy allowing patentees to include a “Copyright or Mask Work Notice in Patents” in order to “protect the various intellectual property rights of the author or inventor.”  Those instructions were then codified in 37 C.F.R. 1.71(d)-(e)(1988).  The rule requires that a copyright notice be accompanied with with a grant of permission to make certain copies:

A portion of the disclosure of this patent document contains material which is subject to (copyright or mask work) protection. The (copyright or mask work) owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the Patent and Trademark Office patent file or records, but otherwise reserves all (copyright or mask work) rights whatsoever.

See also, MPEP 608(w).

Unfortunately, neither the rule nor statute provide any indication of the impact of a notice failure.

Published works are no longer required to include any copyright notice, and the PTO has never indicated (AFAIK) that submission without the copyright notice constitutes a waiver or abandonment of copyright protections.  However, the failure to include a (c) notice could potentially be relevant to fair-use analysis.

Santa Clara Copyright Law Professor Tyler Ochoa pointed me to Korzybski v. Underwood & Underwood, 36 F.2d 727 (2d Cir. 1929).  In that 75 year old case, the appellate panel held that a patent filing served as a dedication of all rights in the disclosure to the public domain.

When Korzybski filed his application and received his patent, he . . . dedicated it to the public, save for the right to make, use, and vend it during the period for which the patent gave him that monopoly. The public had the right to the information disclosed in his patent and the right to use and copy the text and diagrams. . . . Everything disclosed in the patent became a part of the public domain.

. . . The defendant has done no more than photograph the [patented] anthropometer. This we hold it had a right to do, because the anthropometer was an embodiment of the drawings of the patent. The copyright was invalid, because the subject-matter had become a part of the public domain when complainant filed the prior application which resulted in the grant of his patent.

An inventor who has applied for and obtained a patent cannot extend his monopoly by taking out a copyright.

The Korzybski decision is based two distinct doctrines: (1) failure of formalities (no longer the law) and (2) the traditional judge-made public policy that copyrights should not be used to extent patent rights (likely still the law).

I wanted to look at the number of patents that actually include the copyright notice and how that number has changed over time.  The first chart shows the number of patents issued each year containing the copyright notice and the second chart provides charts the numbers as a percentage relative to the total patents issued each year.


Although the relative percentage has changed over time, it has always remained under 1%.  My basic explanation for the percentage being so low is that the copyright notice requires an express waiver of certain rights – why do that without some justifiable gains?

Federal Circuit Chooses Quantity over Quality in Fight over Electro-Mechanical Stimulation Device Patent

by Dennis Crouch

A discussion of Lelo v. USITC and Standard Innovation Corp. (Fed. Cir. 2015):

The US International Trade Commission (USITC) provides an alternate/additional forum for asserting patent rights. Unlike district court, the USITC is not empowered to award damages for past infringement but can only enjoin future importation of infringing articles through what is known as an exclusion order.  Although limited, these exclusion orders can carry substantial power – simply because so many high-tech products sold in the U.S. are manufactured abroad.

The Congressionally designated purpose of the USITC is to protect U.S. industry.  In the IP context, this purpose has been implemented as a requirement that USITC patent assertions be associated with a domestic industry.  Under Section 337(a) of the Tariff Act of 1930 (as substantially amended), “with respect to the articles protected by the patent,” the patentee must show that there is, within the U.S.:  “(A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in its exploitation, including engineering, research and development, or licensing.” 19 U.S.C. § 1337(a)(3).  To be clear, although the USITC requires a domestic industry related to products covered by the patent, there is not requirement that the patentee be a U.S. company.

StandardInnovationCorpHere, the owner of the asserted U.S. patent No. 7,931,605 is the Canadian company Standard Innovation Corporation.  The invention covers an “electro-mechanical sexual stimulation device to be worn during intercourse.” The Federal Circuit euphemistically identifies this as a “kinesiotherapy device.”

Standard Innovation has its products manufactured in China, although the company does use some U.S. sourced components (such as the backbone material, rubber, pigment, and control-chip wafer). The manufactured product is then shipped worldwide, including to the U.S. where a wholly-owned U.S. subsidiary distributes the product.

The question on appeal is whether a domestic industry exists under the law.  The ALJ first deciding the case found “no,” but the Commission disagreed. On appeal, the Federal Circuit has sided with the ALJ that no domestic industry exists.

In reviewing USITC decisions, the Federal Circuit generally reviews questions of law de novo but gives substantial deference to factual conclusions (substantial evidence standard).

The court’s reasoning here is somewhat odd — that the statute requires a quantitative analysis of the amount of domestic industry that was not provided by the USITC.

Quantitative Analysis: As mentioned, the domestic industry requirement requires more than an iota of domestic industry – rather  the statute requires “signficant” or “substantial” industry.  According to the court – those heightened requirements are properly interpreted as requiring a quantitative analysis:

All of the foregoing requires a quantitative analysis in order to determine whether there is a “significant” increase or attribution by virtue of the claimant’s asserted commercial activity in the United States.

Rather than conducting a full analysis of domestic industry investment, the USITC simply found that some of the component products were “critical” aspects of the final product.  For example, “the backbone material specifically allowed for beneficial flexibility and resilience, [and] the microcontrollers enabled the devices to function as a vibrator [with multiple modes]”.

On appeal, the Federal Circuit rejected these “qualitative elements” – finding that the statute requires a quantitative analysis of the impact on domestic investment and employment.

= = = =

The USITC argued that its qualitative analysis was in parallel to that done in the prior case of Certain Male Prophylactic Devices, Inv. No. 337-TA- 546, USITC Pub. 4005 (June 21, 2007) (patent at issue).  However, the court found that it didn’t fit. That is, the prior decision was appropriately characterized as quantitative in nature.