Chief Judge Randall Rader has announced that he is stepping down from his position as Chief Judge – effective May 30, 2014. According to the Federal Circuit’s rules of succession, Judge Sharon Prost will succeed Judge Rader as the next Chief.
Judge Rader is a longtime member of the court and has been a gregarious Chief Judge. His willingness to have frank and open discussions on a variety of patent law issues has been welcomed by the bar as has his work to build ties with patent law authorities from around the globe. Those connections will continue to serve the court well into the future. However, this outgoing approach has also been criticized as contrary to the traditions of judicial detachment and seclusion. Judge Rader is eligible to take senior status (and thus retain his full salary of approximately $170k). However, he has indicated that he will remain in active service for now. Although it is unclear whether related, Judge Rader’s transition comes amidst a potential brewing mini-scandal involving a public endorsement for veteran Federal Circuit litigator Ed Reines. There were three years remaining in his seven-year term as Chief.
Judge Prost has been on the court since 2001. During that time she has authored hundreds of patent law opinions, including the recent en banc decision in Bosch v. Pylon and a dissent in Apple v. Motorola. Prior to joining the court, she worked as the Senate Judiciary Chief Counsel under Orrin Hatch and has worked in the Federal Government since her graduation from Cornell in 1973. She was appointed to the court by President George W. Bush. Judge Prost is also known as a litigant – her early 1990’s custody battle resulted in a D.C. Court of Appeals opinion that continues to be taught in law schools. Link.
Moving forward, Chief Judge Prost’s history in government will be instrumental in considering the new administrative-law battles arising from the USPTO’s Patent Trial & Appeal Board.
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Succession: According to the rules of succession, the next Chief Judge is designated as the most senior judge on the court who is in regular active service but who is also not yet aged 65 and who has not previously served as Chief Judge.
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Update: Judge Rader has distributed an open letter that provides an explanation and appears to fully confirm the story that regarding his recent recusals and vacatur of his position as Chief Judge.
In particular, Judge Rader confirms that he previously emailed noted attorney Ed Reines of the Weil firm praising his advocacy and suggesting that the email could be used as a client development tool. The letter then became public as Reines was arguing before the court. Judge Rader now writes:
I have come to realize that I have engaged in conduct that crossed lines established for the purpose of maintaining the judicial process whose integrity must be beyond question. It is important to emphasize that I did not and would never compromise my impartiality in judging any case before me. But avoiding even teh appearance of partiality is a vital interest of our court, and I compromised that interest by transgressing limits on judges’ interaction with attorneys who appear before the court. I was inexcusably careless, and I sincerely apologize.
As I highlighted above, Judge Rader’s demeanor is gregarious and he is open with his praise. I have seen him publicly praise many different attorneys. In fact, I remember a couple of times where he praised my work — suggesting to me that his praises should generally be taken with a grain of salt. I also don’t believe that this activity warrants him stepping down from his position as chief, but it appears he is going the extra mile to ensure that the court’s integrity is above question.
I should also add that I also believe Ed Reines is a great appellate advocate. (Yes, you may show this to your potential clients.)
Frank Petrella wrote a screenplay back in 1963 based on the life of Jake LaMotta and assigned rights to UA/MGM who made the movie Raging Bull. Under the old renewal system, renewal rights went to Petrella’s heir, Paula Petrella, who renewed the copyright in 1991 in a fashion that (seemingly) eliminates the prior license. In 1998 she informed MGM that its continued exploitation of the Raging Bull movie violated her copyright. Finally, in 2009, she did sue – alleging copyright infringement.
Copyright infringement has a three-year statute of limitations indicating that “No civil action shall be maintained under the [Act] unless it is commenced within three years after the claim accrued.” 17 U.S.C. §507(b). However, as in patent law, copyright follows a “separate-accrual rule” that sees each successive violation of a copyright as a new infringing act with its own statute of limitations. Thus, under the statute of limitations, MGM could be liable for its post-2006 actions such as copying and distributing the work.
In the lawsuit, MGM separately asserted the equitable defense of laches based upon the long and unreasonable delay in bringing suit.
In a 6-3 decision, the Supreme Court has sided with Petrella – finding that the statute of limitations does all the work on the question of liability – leaving latches only to potentially shape the remedy.
Laches, we hold, cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window. As to equitable relief, in extraordinary circumstances, laches may bar at the very threshold the particular relief requested by the plaintiff. And a plaintiff’s delay can always be brought to bear at the remedial stage.
The court was clear that equitable estoppel may also apply, but that generally requires some affirmative act by the rights-holder (that leads to
In a footnote, the court draws some parallels with the six-year statute of limitations for collecting back-damages in patent law. 35 U.S.C. § 286. In a 1992 en banc decision, the Federal Circuit held that laches can be an additional bar to collecting back-damages even within the six-year limit. A. C. Aukerman Co. v. R. L. Chaides Constr. Co., 960 F. 2d 1020 (Fed. Cir. 1992) (en banc). Noting that decision, the Supreme Court here only remarked that “We have not had occasion to review the Federal Circuit’s position.”
One interesting aspect of the decision was the unusual split between the majority and dissent. Justice Ginsburg penned the majority opinion that was joined by Justices Scalia, Thomas, Alito, Sotomayor, and Kagen. Justice Breyer dissented and was joined by Chief Justice Roberts and Justice Kennedy.
Suprema, Inc. and Mentalix v. US International Trade Commission and Cross Match Tech (Fed. Cir. 2013/2014)
Although the USITC handles plenty of patent cases, it actually derives its power from the Tariff Act, 19 U.S.C. § 1337(a)(1)(B). That provision indicates that the government agency can prohibit the import or sale-after-import of “articles . . . that (i) infringe a valid and enforceable United States patent” The Tariff Act does not further define patent infringement and so the ITC has generally referred to Section 271 of the Patent Act for guidance. As with district court patent litigation, ITC merits decisions are also appealed to the Court of Appeals for the Federal Circuit.
Here, Cross Match’s asserted patent covers a fingerprint-scan methodology that includes both hardware and software components. The hardware is manufactured abroad and imported by Suprema and then, once in the US, combined by Mentalix with the software to make a product used to infringe. Of importance, the imported hardware does not – by itself – directly infringe the patent. However, the USITC found that Suprema was liable for inducing infringement under 35 U.S.C. 271(b).
On appeal, the Federal Circuit reversed that judgment — holding instead that the USITC’s power only extends to block articles that are themselves infringing at the point of importation. The result for this case is that the inducement theory of infringement could not stand because it requires both additional steps to complete the infringement as well as a particular mens rea. Oddly, however, the majority did find that the USITC may still have power when the cause of action is contributory infringement rather than inducement. This distinction was based upon the notion that inducement is focused on the “conduct of the inducer” and “is untied to an article.” Judge O’Malley penned the Federal Circuit opinion and was joined by Judge Prost. Judge Reyna wrote in dissent.
The ITC and Patentee both filed petitions for re hearing en banc and the Federal Circuit has now granted those petitions. The questions presented are as follows
Cross Match asks:
Whether the United States International Trade Commission (“ITC”) has authority to find a Section 337 violation—and issue an exclusion or cease and desist order—where it finds that an importer actively induced infringement of a patented invention using its imported articles but the direct infringement occurred post-importation.
Cross Match argues that the question is largely answered by Young Eng’rs, Inc. v. ITC, 721 F.2d 1305 (Fed. Cir. 1983); Vizio, Inc. v. ITC, 605 F.3d 1330 (Fed. Cir. 2010); and Disabled Am. Veterans v. Sec’y of Veterans Affairs, 419 F.3d 1317 (Fed. Cir. 2005).
The USITC asks:
(1) Did the panel contradict Supreme Court precedent in Grokster and precedents of this Court when it held that infringement under 35 U.S.C. § 271(b) “is untied to an article”?
(2) Did the panel contradict Supreme Court precedent in Grokster and this Court’s precedent in Standard Oil when it held that there can be no liability for induced infringement under 35 U.S.C. § 271(b) at the time a product is imported because direct infringement does not occur until a later time?
(3) When the panel determined the phrase “articles that . . . infringe” in 19 U.S.C. § 1337(a)(1)(B)(i) does not extend to articles that infringe under 35 U.S.C. § 271(b), did the panel err by contradicting decades of precedent and by failing to give required deference to the U.S. International Trade Commission (“the Commission”) in its interpretation of its own statute?
(4) Did the panel misinterpret the Commission’s order as a “ban [on the] importation of articles which may or may not later give rise to direct infringement” when the order was issued to remedy inducement of infringement and when the order permits U.S. Customs and Border Protection to allow importation upon certification that the articles are not covered by the order?
The USITC argues that these questions are fully answered (in its favor) by Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 940 n.13 (2005); Standard Oil Co. v. Nippon Shokubai Kagaku Kogyo Co., 754 F.2d 345, 348 (Fed. Cir. 1985) (Rich, J.); Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc., 246 F.3d 1336, 1351 (Fed. Cir. 2001); Vizio, Inc. v. Int’l Trade Comm’n, 605 F.3d 1330, 1343-44 (Fed. Cir. 2010); The Young Engineers, Inc. v. U.S. Int’l Trade Comm’n, 721 F.2d 1305, 1310, 1317 (Fed. Cir. 1983); Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843 (1984); and Enercon GmbH v. Int’l Trade Comm’n, 151 F.3d 1376, 1381 (Fed. Cir. 1998).
The accused infringers here argued that the fingerprint scanning hardware they are importing are simple staple goods that cannot themselves infringe even if their intended use is infringing.
In many ways, this is another divided infringement inducement case. The Supreme Court is currently deciding that issue in Akamai and a decision is expected within the next four weeks. The Federal Circuit may do well to delay its briefing in this case until Akamai is decided.
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Parallel Process: Despite its “international” name, the USITC is actually a branch of the U.S. government charged with protecting U.S. industry and U.S. goals in international trade. The USITC’s jurisdiction focuses solely on border-crossing issues and, in the patent context, investigates infringing imports. It turns out that district courts can also block the importation of infringing goods. There are some differences in remedy and process, but the basic patent policy question is whether the additional parallel procedure offered by the USITC fills an important gap in district court adjudication. And, if so, why does that gap exist?
Administrative Law: Moving from patent policy, the issues here also focus on a continued power struggle between the various branches of government. One question here is the level of deference that should be given to the USITC in carrying out its mandate.
Last month I wrote aboutMicrosoft Corporation v. DataTern, Inc., in which the Federal Circuit addressed the issue of subject matter jurisdiction over a declaratory judgment action brought by manufacturers where the patent holder had filed infringement suits only against the manufacturers’ customers, and had not directly threatened the manufacturers themselves. (I.e.: the reverse of a typical contributory infringement or inducement claim).
In that opinion, the Federal Circuit affirmed the district judge’s ruling that there was jurisdiction in three out of four scenarios on the basis that these sets of facts raised the issue of inducement of infringement and contributory infringement by Microsoft and SAP. However, the majority (Judges Moore and Prost) reversed as to the fourth scenario, in which DataTern’s infringement charts referenced only third-party documentation for key claim limitations. Judge Rader dissented as to this final category, expressing concern that the majority’s holding provides “a roadmap to allow DataTern and its successors to keep Microsoft on the sidelines while running up wins against customers, who are often smaller and less-equipped to defend themselves.”
Yesterday, the Federal Circuit vacated the original opinion in Microsoft v. DataTern and issued a new opinion that contains only the majority’s opinion. Judge Rader is now recused. The order vacating the original opinion is here: Microsoft Order and the new opinion is here: New Opinion. A comparison of the two opinions reveals that there are no other substantive differences. No reason for the recusal is given, and neither party appears to have requested that Judge Rader be recused. While recusals are not unheard of, this one is unusual because it occurred after the opinion issued and involved the vacation of a dissent.
One issue that this raises is whether there is a violation of Federal Circuit Rule 47.2, which states that “(a) Panels. Cases and controversies will be heard and determined by a panel consisting of an odd number of at least three judges, two of whom may be senior judges of the court.” Prof. Tim Holbrook thinks not, pointing to Fed. Cir. Rule 47.11, which contemplates recusals after argument:
A quorum is a simple majority of a panel of the court or of the court en banc. In determining whether a quorum exists for en banc purposes, more than half of all circuit judges in regular active service, including recused or disqualified judges, must be eligible to participate in the en banc process. If a judge of a panel that has heard oral argument or taken under sub-mission any appeal, petition, or motion is unable to continue with consideration of the matter because of death, illness, resignation, incapacity, or recusal, the remaining judges will determine the matter if they are in agreement and no remaining judge requests the designation of another judge.
Note: Thanks to Dennis and Tim for contributions to this post.
The Supreme Court heard oral arguments today in Limelight Networks Inc. v. Akamai Technologies, Inc. Limelight is best seen as part of a series of cases considering what it means to be an infringer. In particular, the court has struggled to determine what to do when one party performs a portion of a patented invention and then another party performs the remaining portion. In this setup, the parties are able to collectively benefit from the invention without being labelled infringers under the Federal Circuit’s strict single-entity-infringer rule. See BMC v. Paymentech (Fed. Cir. 2007). The BMC line of cases creates an avenue for avoiding infringement by properly dividing the corporate structure. That pathway is further solidified by our current age of distributed computing that allows for servers and systems to closely interoperate even though controlled by different parties. In this case, the invention is focused on a mechanism for quickly delivering video streams to lots of people over the internet by distributing servers. The patent spells out the entire method and system for accomplishing this result, but the defendant here each only practice a portion of the whole invention but expressly encourages its customers to perform the rest. In an admittedly biased way, the patentee’s attorney Seth Waxman explained the setup as follows:
Mr. Waxman: This case is not complicated. This case involves a four or fivestep method in which Limelight performs all but one or two of the steps and tells its customers, if you want to use our service, you have to perform the other step. Here’s exactly how you do it. We have somebody 24 hours a day, seven days a week assigned to you to help make sure you do it the right way.
In Limelight, the Federal Circuit (sitting en banc) offered one outlet to limit avenues-of-infringement. Here, the appellate court held that an entity can be liable for inducing infringement if that party induces performance of the entire invention, even if no single party performed all of the elements. That holding is a shift in thinking – prior case law required evidence of underlying single-actor direct infringement as a pre-requisite to an inducement finding. The statute for inducement indicates simply that “whoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b). An interesting element of this case is that the Limelight originally indicated that it would reconsider the BMC doctrine regarding direct infringement. However, the en banc panel decided to limit its analysis only to the inducement theory. If Limelight is successful on appeal, the Federal Circuit may then have an opportunity to reconsider the single-actor rule for direct infringement under Section 271(a). More particularly, the Federal Circuit has applied a fairly strict agency doctrine rule, but other areas of law have allowed for a more liberal agency doctrine that would potentially capture the type of joint infringement alleged in this case.
The question presented is:
Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under Section 271(a).
Aaron Panner argued on behalf of the petitioner Limelight (the accused infringer) and shared time with Assistant Solicitor Ginger Anders who filed a brief in support of the petitioner. Seth Waxman argued on behalf of the respondent-patentee Akamai. In the case, the US government took the middle-ground position that the patentee has the best policy argument but that the statute clearly supports reversal.
Focusing first on the policy issues, the court asked whether Limelight is asking for a rule that allows patentees to skirt infringement simply by altering its corporate structure:
CHIEF JUSTICE ROBERTS: Your position makes it pretty easy to to get around patent protection, doesn’t it? All you’ve got to do is find one step in the process and essentially outsource it or make it attractive for someone else to perform that particular step and you’ve essentially invalidated the patent.
MR. PANNER: I don’t think so, Your Honor. In the two following senses.
First of all, empirically speaking, there have not been very many cases in which this has proven to be a problem. It has been a long understood principle of patent claim drafting that method claims should be drafted from the point of view of a potential infringer so that all of the steps can be carried out by that potential infringer. And prospectively, certainly and given that this rule has been clearly articulated by the Federal Circuit now for many years, or at least several years, prospectively, the patent applicant has every incentive to draft claims from the point of view of a single potential infringer.
This the claim that’s at issue here, there’s no dispute. It could have been written in such a way that the steps would have been carried out by a single infringer and, indeed, that may have been the intent. . . .
JUSTICE SCALIA: I’m just arguing about whether the safe haven you have given us for patentees really exists. It doesn’t seem to me you can avoid the problem by simply requiring all the steps to be conducted by one person.
MR. PANNER: Well, Your Honor, in in my experience in in terms of dealing with patents that are written to technologies that do involve interaction, for example, between cellular phones and networks and content providers who are sending content to a phone, for example, it is very common to draft claims from the point of view of someone who’s participating in that process so that all of the steps will be carried out in that by that person. . . .
JUSTICE KAGAN: [N]otwithstanding what you said about 10 of 11 judges, it was clear that the judges thought that there was a real problem here in terms of an end run, and that they looked at this and said, well we could do it under 271(a) or we could do it under 271(b), and 271(b) seems a lot more natural and better for various reasons. But your sense in reading the opinion that all those judges who did it under 271(b) are just going to go back and do the exact same thing under 271(a).
Panner’s argument here does not seem like one that the judges would truly support – that the patentee wins or loses here based upon whether it correctly followed the proper claim-drafting trick.
Responding to the same issues, the US Government lawyer (Anders) recognized the “end run” problem as legitimate.
MS. ANDERS: I think the Federal Circuit was understandably concerned about allowing inducers to perform some stops of a process themselves to escape liability, but this Court has twice held in both Microsoft v. AT&T and before that Deep South v. Laitram that judicial concerns about gaps in 271’s coverage should not drive the Court’s interpretation of that provision. That is because any time that you close a gap in 271, expanding patent rights, you are invariably implicating competing concerns and it’s for Congress to resolve those concerns.
When his turn to speak, Waxman hit home the policy concerns:
MR. WAXMAN: Please make no mistake about what Limelight is asking you to do. Under Limelight’s theory, two or more people can divide up and perform the steps of any method claim, however drafted, without liability. . . . Let’s assume that there is disclosure and patenting of a cure for cancer or a novel treatment for cancer that involves, as they often do, the administration of different drugs sequentially. And two parties get together and say, I’ll administer Drug 1, you administer Drug 2, and we can take advantage of this marvelous patented process without paying anything giving anything whatsoever to the company that spent a billion dollars and 25 years developing.
Several of the Justices rightly recognized the potential notice problems of joint liability in a strict liability scenario. However, those fears are greatly reduced in the inducement context because liability requires knowledge that the acts being induced would constitute infringement. Waxman attempted to also allay those fears by referencing a common law knowledge requirement implied into joint-concert liability.
When the Federal Circuit decided this case, it appeared to be a new rule regarding inducement liability. In his appealing way, Waxman argued that it is not really new but rather it is a return to the common law notions that were disrupted by the Federal Circuit’s unnatural limitations on 271(a) joint liability that began in 2008.
JUSTICE SOTOMAYOR: [Is] this is a new rule by the Federal Circuit?
MR. WAXMAN: The answer is no. What is new is the 2008 beginning in 2008 jurisprudence in the Federal Circuit on 271(a) that unnaturally limited the common law attribution rules.
Very little time was spent on statutory construction – what is meant by the term “infringement” in 271(b)? Waxman does lay out his textual argument that infringement in 271(b) is not limited to “direct infringement under 271(a).” but rather offers the following notion:
MR. WAXMAN: A patentholder has the exclusive right to make, 15 sell, use, or offer to sell his invention during the term of the patent. That’s what sets out the metes and bounds of the property right. And any encroachment on that property right is an infringement. . . .
JUSTICE GINSBURG: An infringement without an infringer?
MR. WAXMAN: You can certainly have infringement without an actionable infringer, absolutely. Under anybody’s rule you can do that. The whole debate we have with the other side on the (a) question is how what attribution rules do or don’t apply. . . . .
JUSTICE SCALIA: What does what does (b) require? Does it require inducing an infringement or inducing an infringer?
MR. WAXMAN: Inducing an infringement. And I’ll give you a concrete example. Let’s say that there’s a fivestep patented method that I know about, and I convince I induce Mr. Panner to do steps 1, 2, and 3 and Ms. Anders to do steps 4 and 5. If I’m doing that because I know about the patent and I want to take advantage of their otherwise innocent performance collectively of the steps, at common law and at patent law, it was uncontroversial that I was liable. I was responsible.
Overall the oral arguments here are difficult to follow and thus the outcome is difficult to predict. The justices are rightly concerned that the their decision on 271(b) is dependent upon the meaning of joint infringement 271(a), but that may only be decided on remand.
JUSTICE ALITO: It’s it’s a good reason to think that the question before us really has no significance that I can think of unless the the Court of Appeals unless the Federal Circuit is right about [the limited scope of 271](a). . . . So you’re asking us to decide a question to assume the answer to the question on (a) and then decide a question on (b) that is of no value no significant maybe I don’t understand some other I don’t see some other situations where it would apply, and no significance unless the ruling on (a) stands, unless Muniauction is correct?
Waxman expressly suggested that the court go ahead and rule on the 271(a) issue (as it had suggested in a cross petition for certiorari) or simply remand the case to the Federal Circuit to decide the underlying 271(a) issue.
Since its 2008 TS Tech decision, the Federal Circuit has repeatedly received Mandamus requests to force transfer of patent infringement lawsuits – usually out of the Eastern District of Texas and – into other, more convenient, districts. The statute, 28 U.S.C. § 1404(a), provides district court with discretion to transfer a lawsuit to another district “for the convenience of parties and witnesses [and] in the interest of justice.” Although the transfer decision is within the district court’s discretion, TS Tech and its progeny have indicated that a court abuses that discretion by unreasonably refusing to transfer a case. Because transfer of venue is not a question of patent law, the Federal Circuit purports to follow regional circuit law – primarily that of the 5th Circuit. See In re Microsoft Corp., 630 F.3d 1361 (Fed. Cir. 2011); In re Nintendo, Co. Ltd., 589 F.3d 1194 (Fed. Cir. 2009); In re Genentech Inc., 566 F.3d 1338 (Fed. Cir. 2009); In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008); accord In re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008) (en banc). A key element for successful motions to transfer is that the movant needs to show both that the current venue is poor that the proposed venue is much better.
The Federal Circuit just released three additional mandamus decisions, denying two and granting one. In re Altair Engineering (Fed. Cir. 2014) (mandamus motion to transfer denied); In re Groupon (Fed. Cir. 2014) (mandamus motion to transfer denied); In re WMS Gaming (Fed. Cir. 2014) (mandamus motion to transfer granted). In the past, venue transfer motions have seemed quite formalistic without really reaching the issues of justice and convenience. These opinions suggest to me that the court has improved its jurisprudence on this point:
In Altair, the petitioner asked the court to move the case against Uniloc from Texas to Michigan. In denying the petition, the Federal Circuit found it relevant that the Texas court had seen the same patent in two other cases – creating significant judicial economies. In addition, some of the relevant witnesses were also located near the Texas court. Thus, although more relevant evidence was sited in Michigan, the district court did not abuse its discretion in denying the transfer motion.
In Groupon, the court also refused to order transfer out of the Eastern District of Texas. In this case, the patentee – Blue Calypso is located in Texas and that was the site of the invention and the home of the key inventor along with all of its documents. The fact that Groupon is based in Illinois does not mean that the case should be transferred to Illinois.
Finally, in WMS Gaming, the Federal Circuit ordered the case moved from the Southern District of Mississippi to Northern District of Illinois. In the case, the patentee (MTG Gaming) sued WMS and another gambling-machine manufacturer as well as several casinos that operate in Mississippi, including MGM Resorts and Caesar’s Entertainment. The district court stayed the casino lawsuits and severed the suit involving the other manufacturer. With WMS standing alone, the Illinois venue appeared much better since it was the base of operations of the accused infringer and the patentee has no connections on its own to the Southern District of Mississippi. In addition, the Federal Circuit found that no relevant evidence or witnesses were located in Mississippi.
Guest Post by Prof. Ted Sichelman, University of San Diego, School of Law
Recently, Hal Wegner has been circulating and commenting upon the qualifications of patent law professors. For example, he lists whether patent law professors at the Top Ten IP programs as ranked by US News & World Report are licensed to practice at the USPTO, have an “understanding” of international/comparative patent law, or clerked at the Federal Circuit (see below). According to Wegner, these “credentials” are “particularly” and “uniquely” valuable (in some cases, “essential”) for professors to make “optimum” patent policy reform proposals, especially those concerning PTO practice and international harmonization.
(To provide some background, I provided Wegner a list of names of all professors in the U.S. who currently teach and write about patent law at US News ranked and unranked IP programs, with the understanding that he would circulate the list to his readers. After I sent Wegner my list, without my input, he annotated it (along with other names) with various credentials and provided commentary and alternative lists, such as the one reproduced below. Because I believe Wegner’s analysis is flawed—and given my initial participation—I feel personally obligated to respond.)
Notably absent on Wegner’s list above are any professors from Stanford, Berkeley, and George Washington (GW), the top ranked IP programs in the nation. (The same holds true for many other schools, both in and outside of the top 10. I focus on the top three schools to underscore the problems with Wegner’s approach.) Rather than effectively denigrate these programs, Wegner should have recognized the transformative role that these schools have played historically (for GW) and more recently (for all three schools) in elevating patent law to a prominent place in the academy and developing unparalleled educational opportunities for future patent professionals and scholars.
Importantly, an unintended implication of Wegner’s discussion is that patent law professors without the stated qualifications—particularly, a patent bar registration number—are unfit to teach and write about patent law more generally. For instance, on his e-mail blog, Greg Aharonian recently circulated the comments of an anonymous patent lawyer who referred to Stanford’s Mark Lemley as “one of a small army of law school academics that have built very successful . . . careers studying intellectual property law, especially patent law, albeit without ever actually having practiced before a patent office, done research, or even studied science or engineering.”
These sorts of criticisms are misguided. First, many patent law professors have extensive patent litigation experience, including on-going experience as “of counsel” lawyers, experts, and consultants. Although having patent prosecution experience is clearly beneficial for teaching and writing about patent law, patent litigation is as well and should not have been disregarded. For instance, Wegner and Aharonian presumably know well that Mark Lemley is a partner at a top-tier IP litigation boutique, Durie Tangri, and spends numerous hours on real-world matters. In fact, he has argued or is scheduled to argue three Federal Circuit patent cases so far this year, has argued before the Federal Circuit eleven times (in addition to four arguments in the regional circuits), and has represented another ten parties on briefs in the court. Additionally, he has been counsel for a party in the Supreme Court twice in patent cases (both patentees, incidentally). Lemley has been the lead author or co-author on 40 amicus briefs in the Supreme Court and the courts of appeals. And if that were not enough, his articles have been cited nine times in Supreme Court opinions and 145 times by courts overall. Finally, he’s conducted extensive empirical analyses of USPTO and judicial practice in many academic papers. (Ah, I forgot to mention that he’s represented parties in 85 cases in the district courts, too.)
So Lemley clearly is highly qualified (in fact, uniquely qualified) to write about and teach patent law. Nonetheless, Lemley often is maligned by practitioners because of a proposal he made (along with now Federal Circuit Judge Kimberly Moore) about a decade ago to restrict continuation practice. Yet, regardless of whether you agree with his views—and I often disagree with him—he’s clearly well-situated to write about and suggest reforms concerning PTO practice, the Federal Circuit, the Supreme Court, and the Patent Act more generally. In this regard, Lemley has written over 125 articles, many of them offering outstanding suggestions to reform the patent system, such as his idea for “gold-plated” patents. Lemley should not be unfairly singled out for one unpopular proposal or simplistic mischaracterizations of his views.
In a response to e-mails Wegner received asking why patent litigation was not listed in his chart, including one of my own, he responded that while patent litigation “may well be the best practice background for a patent academic . . . . no patent faculty seeking to make an optimum contribution to patent policy or harmonization can do so without someone on the faculty having expertise in international/comparative and Agency practice.” Wegner’s position is too sweeping. Although it is certainly useful to have faculty members who have prosecution experience—and Wegner’s criterion of simply having a patent bar number is in any event not too indicative of such experience—it isn’t necessary to have such experience to make outstanding policy proposals, even when it comes to PTO practice. Indeed, only a few judges at the Federal Circuit itself would meet such criteria. It seems hard to fathom that Wegner believes that the Federal Circuit cannot make an “optimum” contribution to patent policy, including practices at the PTO, given their lack of such credentials. The same should hold true for academics. And to go one step further—as does the anonymous lawyer’s blanket assertion on Aharonian’s e-mail blog that a professor cannot sucessfully “study,” write about, or presumably teach patent law without having worked as a patent prosecutor or an engineer—is simply preposterous.
Second, many patent law professors, such as UC Berkeley’s Peter Menell and Rob Merges (also absent on Wegner’s chart)—in addition to having extensive prior and on-going experience as experts and consultants in patent litigation matters—have spent numerous hours writing casebooks and patent law practice guides. Rob Merges and John Duffy’s Patent Law and Policy is the leading patent law casebook, and contains extensive commentary from its authors. Merges is also co-founder and Senior Policy Advisor of Ovidian LLC, a Berkeley-based consulting and informatics company specializing in assessing and valuing patent portfolios. That experience is invaluable for the next generation of patent law professionals working in the emerging patent “marketplace.” Finally, because Berkeley—like GW and Stanford—offers separate courses in patent prosecution and patent litigation taught by prominent practitioners, it is hard to see how its students are not getting broad, deep, and practical exposure to patent law.
After co-founding the Berkeley Center for Law & Technology (BCLT) in 1995, Peter Menell soon began working with a team of top patent and other IP litigators to provide an annual four-day intensive training program on IP law and case management for federal judges, as well as numerous other national and regional events. That work led to the development of the Patent Case Management Judicial Guide, a comprehensive treatise that has been referred to as “the bible” for judges and litigators. Menell has also worked with district courts on the development and revision of patent local rules and filed amicus briefs in important IP cases. He also served as one of the PTO’s inaugural Edison scholars. His empirical research on patent claim construction with Jonas Anderson, a former BCLT Fellow—in which they reviewed every claim construction order issued by the Federal Circuit since 2000—was cited numerous times in the Federal Circuit’s recent en banc Lighting Ballast decision. Any comprehensive evaluation of patent law programs would value these qualifications.
The same holds true for professors who write about specific topics in patent law, but do not teach it. For instance, Berkeley’s Pam Samuelson is a world-renowned copyright expert and a winner of the “genius” grant from the John D. & Catherine T. MacArthur Foundation. She occasionally writes about software patents, including for her column in the Communications for the Association for Computing Machinery (ACM) journal, which is mainly read by software and computer science professionals. As Professor Samuelson’s work shows, one need not be an expert on every nuance of the patent system, especially the nitty-gritty of prosecution, to make sound reform proposals.
Other academics are permanent and full-time but not on the “tenure-track.” For example, BCLT Executive Director Robert Barr—who directs the Berkeley IP program and organizes numerous IP events there—is former chief patent counsel at Cisco, is licensed to practice before the PTO, and has long been a leader in the Silicon Valley and national patent law community. Along with John Whealan—former Solicitor at the PTO and another highly-regarded national leader in patent law who directs GW’s IP program—Wegner left Barr off the list.
Finally, many patent law professors have significant industry experience. For example, blog commenters on a recent Patently-O post of mine referred to me as “ivory tower” and as having “a lack of ‘real world’ experience.” In fact, before becoming a law professor, in addition to practicing patent litigation for four years, I founded three tech companies, raising nearly $5 million in financing, including being CEO of Unified Dispatch, a software company that makes innovative speech recognition systems for ground transportation companies. At Unified Dispatch, I designed and oversaw most of the company’s software products, which included writing detailed specifications and managing programmers and other engineers, and was the lead inventor on several patent applications and one patent. As part of that process, I also managed our outside patent counsel for several years during prosecution. Before attending law school, I earned an M.S. in Physics. Since becoming a patent law professor, I’ve consulted and served as an expert on an-going basis in patent litigation matters and related projects. So not only is the “ivory tower” label is inaccurate, it also misapprehends the often close ties between academia and practice.
The same sorts of backgrounds and relevant experience hold true for many other academics who teach and write about patent law. For example, Donald Chisum—yes, the author of the leading patent law treatise—is not registered to practice before the USPTO (he majored in philosophy). Granted, practicing before the PTO is helpful to writing about PTO practice, but would anyone doubt that Chisum is sufficiently knowledgeable to do as much?
I commend Hal Wegner’s efforts in calling attention to the patent law programs and scholars (which is why I assisted him in the process). There are clearly limitations to the US News ranking system, and I agree it’s valuable to see the credentials of those teaching at patent law programs across the country. However, it was irresponsible for him to omit the founders and leaders of many of the most important IP programs on his list of academics with “practical experience” in “key areas” merely because they don’t have a patent bar reg #, don’t have a deep understanding of comparative patent law, didn’t clerk for the Federal Circuit, or aren’t technically “tenure-track.” Patent litigation, industry experience, and other credentials are just as relevant.
Even more troubling is Wegner’s assertion that having someone on the faculty with one of his criteria is “essential” for making “optimum” policy proposals. And most troubling is that Wegner provides fodder for commenters such as those on Aharonian’s e-mail blog that professors without such credentials cannot successfully write about or apparently teach patent law more generally, not to mention commenters on this blog calling professors like me “ivory tower,” when it is simply not the case. Wegner and the commenters should do their homework. Otherwise, their “analysis” remains at best misguided and at worst scapegoating.
Berkeley and Stanford serve—and, historically, GW has served (and soon again will serve)—as model programs for training patent practitioners, scholars, and judges. The same holds true for many law schools I have omitted in this short blog post. Rather than denigrate these schools, Wegner would have done better to highlight the tremendous value offered to students and the patent law community more generally from this talented andhighly qualified group of scholars.
Suprema, Inc. and Mentalix v. US International Trade Commission and Cross Match Tech. (Fed. Cir. 2013/2014)
The US International Trade Commission (USITC) is a branch of the US Government that offers an alternative forum for patent enforcement. There are a number of benefits to pursuing an action in the USITC as well as a number of quirks. Importantly, the USITC has no authority to award damages for patent infringement — rather, the sole available award is an exclusion order that would block infringing imports.
Here, Cross Match’s asserted patent covers a fingerprint-scan methodology that includes both hardware and software. In this case, the hardware is manufactured abroad and imported by Suprema and then, once in the US, combined by Mentalix with the software to make a product used to infringe. Of importance, the imported hardware does not – by itself – directly infringe the patent. However, the USITC found that Suprema was liable for inducing infringement under 35 U.S.C. 271(b).
On appeal, the Federal Circuit reversed – holding instead that the USITC’s power only extends to block articles that are themselves infringing at the point of importation. The result for this case is that the inducement theory of infringement could not stand because the direct infringement that is predicate for an inducement holding was not occurring until after importation. Oddly, however, the majority did find that the USITC may still have power when the cause of action is contributory infringement rather than inducement. This distinction was based upon the notion that inducement is focused on the “conduct of the inducer” and “is untied to an article.” Judge O’Malley penned the Federal Circuit opinion and was joined by Judge Prost.
Writing in dissent, Judge Reyna argued that the majority opinion “overlooks the Congressional purpose of Section 337, the long established agency practice … of conducting unfair trade investigations based on induced patent infringement, and related precedent by [the Federal Circuit] confirming this practice.” Judge Reyna provided a full-page long string citation of decisions where the USITC issued exclusion orders based upon an inducement theory where the direct infringement occurred post-importation.
Now, both the USITC and the patentee Cross Match have petitioned the Federal Circuit for a rehearing en banc and the Court has offered some signal that it is interested in the case (requesting briefing from the accused infringers).
In the en banc request, the US Government makes an interesting argument that the Federal Circuit precedent is contradicted by the Supreme Court’s decision in MGM v. Grokster, 545 U.S. 913 (2005) as well as the Federal Circuit’s decision in Standard Oil v. Nippon Shokubai Kagaku Kogyo, 754 F.2d 345, 348 (Fed. Cir. 1985). The Grokster case is a copyright case, but is directly applicable for a number of reasons, including the fact that the USITC statute at issue also provides jurisdiction over cases involving imports that infringe US copyrights.
The basic notion from Grokster is that inducement is infringement, and that culpability can attach well before the later direct infringement by another. In Standard Oil, Judge Rich wrote that inducement attaches “as of the time the [inducing] acts were committed, not at some future date.” Of course, the inducement doctrine has been significantly tightened since Judge Rich’s time. And the language of Grokster is not as direct and on-point as the US ITC suggests. Still, the government and Suprema (as discussed below) make a strong case that the original panel decision is wrong.
Suprema similarly argues that the decision is contrary to the statutory text. In particular, (1) the statute does not require a full cause-of-action for infringement at the time of importation and (2) the notion that inducement is “untied” from the actual infringing article “is fundamentally flawed.” The first of these arguments seems to be a clear winner – since the statute particularly provides authority against “the sale within the United States after importation.”
I suspect this case will be moving forward. It will be interesting to see whether the original panel retracts its opinion or whether the en banc court is forced to act.
The Federal Circuit today granted the US Government’s petition for en banc rehearing of a case stemming from the United States Court of International Trade. The USCIT is an Article III court formerly known as the US Customs Court that hears cases involving customs, duties, and anti-dumping rules. Appeals from the USCIT are heard by the Federal Circuit Court of Appeals – about fifty per year.
Although the meat of this case is the statutory interpretation of 19 U.S.C. § 1592, patent professionals (and corporate attorneys in general) will likely be interested in the veil piercing aspects of the case. The case is also an important reminder that someone’s status as a director or owner of a limited liability entity does not immunize that person from individual tort liability. See, e.g., Frances T. v. Village Green Owners Assn., 42 Cal.3d 490 (1986).
Briefly, Trek Leather’s president and majority owner, Mr. Harish Shadadpuri submitted false entry documents to Customs & Border Patrol (CPB) that undervalued the men’s suits being imported with the result being an under-collection of customs duties owed. The money-owed was later paid, but the US Government also filed suit under section 1592 – asking that Mr. Shadadpuri be personally fined for the misrepresentation. The USITC court awarded summary judgment to the US Government based upon a finding that Shadadpuri had been grossly negligent in his statements. On appeal, the Federal Circuit reversed – finding that the statute did not permit veil piercing of this sort. In particular, the appellate panel held that section 1592 penalties could not be imposed upon a person who was acting in his capacity as officer of a corporate “importer of record” for negligently filling out entry papers required of the corporation, absent a piercing of the corporate veil or a showing of fraud. (Opinion by Judge O’Malley). Judge Dyk dissented and argued that both the plain language of the statute and its legislative history would permit this action even absent veil piercing or fraud.
Here, the statute is fairly clear: “no person, by fraud, gross negligence, or negligence—(A) may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States by means of (i) any document … which is material and false.” 19 U.S.C. § 1592(a)(1). The statute seems to suggest that, since Shadadpuri is a person, then he would be liable for the submission. This result would also comply with the traditional notions of common law tort liability that would find the individual actor liable for negligence (even if someone else is also liable under an agency or joint tortfeaser doctrine). The majority opinion of the Federal Circuit recognized the section 1592 argument, but looked to other sections of Title 19 that discussed only the “importer of record” being the party who submits the entry documents – the result being that (by construction of law) the submission by Shadadpuri should be seen as coming only from his company Trek Leather and not from Shadadpuri personally.
The en banc rehearing will focus on the following set of questions:
A) 19 U.S.C. § 1592(a) imposes liability on any “person” who “enter[s], introduce[s], or attempt[s] to enter or introduce” merchandise into US commerce by means of fraud, gross negligence, or negligence by the means described in § 1592(a). What is the meaning of “person” within this statutory provision? How do other statutory provisions of Title 19 affect this inquiry?
B) If corporate officers or shareholders qualify as “persons” under § 1592(a), can they be held personally liable for duties and penalties imposed under § 1592(c)(2) and (3) when, while acting within the course and scope of their employment on behalf of the corporation by which they are employed, they provide inaccurate information relating to the entry or introduction of merchandise into the United States by their corporation? If so, under what circumstances?
C) What is the scope of “gross negligence” and “negligence” in 19 U.S.C. § 1592(a) and what is the relevant duty? How do other statutory provisions in Title 19 affect this inquiry?
Amicus briefs may be filed without leave in the case.
In Lighting Ballast, the en banc Federal Circuit once again held that claim construction should be seen as a question of law that is reviewed de novo on appeal. In the end, this is probably a good result for the patent system – but not for any of the reasons given by the court.
Over the years, the high-rate of claim construction reversal has repeatedly been highlighted as a symbolic of problems with the patent system. Some thought that the problem lay in district court failures to conduct proper analyses, but over time, most of us have come to reject that explanation. Rather, my view is that claim construction is a difficult task and it is not surprising that, out of the myriad possible definitions that a term could be given, two courts would disagree on which definition is best. I actually see this issue pointing a spotlight toward a major problem with the patent system – perhaps the largest problem – that patents often fail to provide clear notice of what is and what is not covered by the various claims.
Deference would have only masked the problem. The reversal rate would have gone down and from that high level that traditional off-kilter signal would be missing. The real difference with deference would be that patent scope would be understood as of the district court decision rather than having to wait for an appeal. That may help some litigants, but still it is a fairly ridiculous patent system where the scope of claims are not well understood until determined by a judge.
Rather, the problem has to be addressed by the US Patent Office with a renewed focus on clarity of claim scope. President Obama’s administration has recognized this with their call to “ensure claims are clear and can be consistently enforced.” The rub is that the administration’s approach of (1) encouraging glossaries and (2) providing additional examiner training are unlikely to have any meaningful impact. The good thing then is that the Federal Circuit’s continued power means that these systemic problems won’t be buried.
Lighting Ballast Control LLC v. Philips Electronics N.A. Corp. (Fed. Cir. 2014) (En banc)
In a long awaited decision, an en banc Federal Circuit has reconfirmed the longstanding rule that claim construction is an issue of law reviewed de novo on appeal.
Writing for the majority, Judge Newman summarizes:
For the reasons we shall discuss, we apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law. After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of Markman II, and that the criteria for departure from stare decisis are not met.
Because of the importance of this issue and the divided court, Supreme Court review is fairly likely. The decision also guarantees that the Court will continue to be the central patent law authority.
The majority decision filed by Judge Newman was joined by five other judges (Judges Lourie, Dyk, Prost, Moore, and Taranto). Judge Lourie wrote a concurring opinion providing “additional reasons” for confirming Cybor. Judge O’Malley filed a dissenting opinion that was joined by Chief Judge Rader and Judges Reyna and Wallach. The six-member opinion carried the day as majority because Judges Hughes and Chen chose not to participate. Even then, a 6-6 tie would have confirmed Cybor but without any clear further precedent.
The majority opinion takes a Socratic approach of poking holes in every argument for changing the rule and in the end concluded that “deferential review does not promise either improved consistency or increased clarity.” And, without some clear reason to change, the default in law should be stare decisis – follow longstanding precedent that, in this case, involves hundreds of appellate claim construction decisions over the past 15 years creating a large body of precedent. The majority writes:
We have been offered no argument of public policy, or changed circumstances, or unworkability or intolerability, or any other justification for changing the Cybor methodology and abandoning de novo review of claim construction. The proponents of overruling Cybor have not met the demanding standards of the doctrine of stare decisis. They have not shown that Cybor is inconsistent with any law or precedent, or that greater deference will produce any greater public or private benefit. We conclude that there is neither “grave necessity” nor “special justification” for departing from Cybor.
The court also walked through post-Cybor policymaking by Congress as well as Supreme Court decisions and found nothing that would undermine Cybor.
[W]e have reviewed the arguments for changing the Cybor procedure of de novo review of claim construction. First, we have looked for post- Cybor developments, whether from the Supreme Court, from Congress, or from this court, that may have undermined the reasoning of Cybor. None has been found, or brought to our attention. There has been no legislative adjustment of the Cybor procedure, despite extensive patent-related legislative activity during the entire period of Cybor‘s existence.
In the end, the Court did not address the particular facts of the case – whether the “voltage source means” should be interpreted under §112p6. The district court said no but the original appellate panel said yes (on de novo review). That appellate panel will carry the day here and the plaintiff loses because the specification did not disclose sufficient structural embodiments of the claimed voltage source means.
Butamax is a joint venture between BP and DuPont that focuses on creating butanol from corn and sugarcane. The company’s Patent No. 7,993,889 covers isobutanol production using a recombinant yeast. The claims particularly call-out the “engineered” pathway beginning with the raw biologic, passing through the various intermediaries, and resulting in butanol.
Now, the claims are interesting. Claim 1 is directed to a “method for producing isobutanol” that uses the “recombinant yeast microorganism.” Claim 12 is directed to “The recombinant yeast microorganism of claim 1.” Patent professionals will recognize the unusuality of this claim structure. Usually, a dependent claim is narrower than its referenced independent parentage. However, Butamax’s dependent claim 12 here is broader (in some ways) than the referenced claim 1. That is clear here since infringement of claim 1 (a method claim) requires practicing the method, but infringement of claim 12 (a composition claim) can be infringed merely by possession or potentially any use of that microorganism. In the software context, this type of claim structure is somewhat common and typically involves an independent algorithmic method claim followed by a dependent claim directed to a non-transitory computer readable memory storing instructions for causing a processor to complete
Dependent claims are authorized by the Patent Act. 35 U.S.C. § 112(d) states that:
(d) Reference in Dependent Forms. — [A] claim in dependent form shall contain a reference to a claim previously set forth and then specify a further limitation of the subject matter claimed. A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers.
In my mind, the Butamax claim structure does not fit within the structure authorized by §112(d) because the full effect of the “method” limitation is not included in the dependent composition claim. The result then, could be invalidity either as indefinite or for failure to comply with §112(d). See Pfizer, Inc. v. Ranbaxy Laboratories Ltd., 457 F.3d 1284 (Fed. Cir. 2006) (claim invalid for failure to properly structure the dependent claim).
Now, this claim form is similar to that used in product-by-process claims where a dependent product-by-process claim references the process described in a process claim. That type of claim has been accepted by the Federal Circuit on several occasions See Scripps Clinic & Research Found. v. Genentec, Inc. (Fed. Cir. 1991) (“product by process claims are not limited to product prepared by the process set forth in the claims”), overruled by Abbott Labs v. Sandoz (Fed. Cir. 2009) (en banc)
Here, the Butamax claim is not directed to a resulting process but instead to a component used in the method, but perhaps that is not a worthwhile distinction. The appeal here arises from a district court finding that the claims were invalid on other grounds. On appeal, the Federal Circuit vacated that decision and remanded for reconsideration by the district court. Perhaps we’ll see the 112(d) issue briefed next time around.
Once an independent claim is found patentable, examiners often give short consideration to the subsequent dependent claims. That time-saving measure makes follows some logic since the dependent claims are supposed to be narrower than the allowed claim and thus should also be patentable over the prior art. Of course, this is one situation where that logic fails.
Normally, a denial of a petition for rehearing and rehearing en banc would be a non-event. As Hal Wegner pointed out in his email newsletter, however, Judge Plager’s dissent from the rehearing in Middleton v. Shinseki is worth noting. (Link: 13-7014.Order.1-31-2014.1)
Background: Judge Plager was a member of the three-judge panel that decided the original opinion (he dissented there as well). Under Federal Circuit rules, he may participate in the panel rehearing and on the court sitting en banc if en banc review is granted, but may not participate in the vote whether to grant en banc review. (You may have noticed that at the bottom of denials of petitions for rehearing and rehearing en banc there is sometimes the language “Senior Judge X, who was on the original panel, participated only in decision on the petition for panel rehearing.”).
Judge Plager’s words express his own views most directly. In a footnote to his brief dissent to the panel rehearing, Judge Plager wrote:
The Chief Judge advises that the rule in this circuit, recently pronounced by a majority of the judges of the court in regular active service, is that judges in senior status, of which I am one, are prohibited from joining another judge’s dissent from a denial of en banc, or authoring their own dissent expressing on record a criticism of the judges in regular active service for the failure to take a case en banc. This apparently is the rule even in this case, though as a member of the original panel I am expressly authorized by law to have sat on the en banc panel if the court had agreed to have one, see 28 U.S.C. § 46(c), so that the failure to take the case en banc has denied me an opportunity to try to correct what I consider to be a miscarriage of justice. However, my compliance with this rule, prohibiting circuit judges, because they are in senior status, from expressing an opinion on this aspect of the decisional work of the court, should not be taken as agreement with this rule, its purpose, effect, or for that matter its constitutionality.
Why this matters: Practically speaking, as Hal Wegner notes this is a non-issue in this case, since Judge Plager can express his reasons for disagreeing in his dissent to the panel rehearing. However, that Judge Plager chose to write about this minor internal procedural disagreement suggests that there are tensions within the court.
Surging Dissents: Lee Petherbridge and I recently revised our study of Federal Circuit dissents based on many of the comments we received on PatentlyO. Below are some figures that did not make it into the revision but which are nonetheless quite striking.
The first is a graph that combines data from Table II of Professor Jeffrey Lefstin’s 2005 study of Federal Circuit dissents with our own data. The usual caveats about cross study comparisons apply (although the data should be pretty comparable as it ultimately came from the same source). These are absolute numbers of dissents, not frequencies; the frequency chart indicates an even more striking difference.
The second item is a pair of pie charts showing the numbers of alternate writings (mainly dissents and concurrences) for each judge for the first and second parts of our period, using January 1, 2011 as a break point. While Judge Newman is the most frequent author of alternate writings, she only accounted for about a quarter of the alternate writings for the first period, and since 2011 her relative frequency of alternate writings declined. In other words, these alternate writings aren’t simply the work of a single judge; they’re being written by a significant number of judges on the court.
The legends in the above figures identify the judges with more than 5% of the total share of alternate writings for that period. I haven’t yet broken out dissents alone, but my suspicion is that they aren’t going to be meaningfully different.
This interference appeal is focused on interpreting the “functional” claim term “receiver” and relates directly to recent Patently-O discussions on the topic of means-plus-function claim terms compared with bare non-MPF functional claim terms. See Crouch, Functional Claim Language in Issued Patents (2014). Here, the court finds, roughly, that a claim term with a smidgen of structure should be seen as a structural limitation rather than one governed by 35 U.S.C. §112¶6. The case is also relevant to the still pending en banc case of Lighting Ballast where the Federal Circuit is set to decide whether a “voltage source means” limitation should be considered a means-plus-function limitation.
= = =
Inter Partes Reviews have quickly taken-on the procedural appearance and nature of their PTO-trial predecessor interference proceedings. This interference case involves a competition between EnOcean and Face Int’l over a “self-powered light switch” that can be used to remotely trigger a relay using a piezoelectric element. Many think of an interference as a fight over who gets the patent. Some cases follow that model, but many others (such as this one) are really just one party trying to block the other’s patent. Interferences also have a tradition of being quite messy and I expect that tradition to continue in the Board’s new review and derivation proceedings.
Here, EnOcean’s patent application claims priority back to a May 2000 German application with later filed PCT and US national stage applications. Face’s priority only goes to 2001, but Face’s patent issued in 2006 while EnOcean has been battling with the PTO this whole time. After Face’s patent was issued, EnOcean amended its claims to match those of Face and requested an interference.
In the interference, EnOcean identified a set of prior art (other than its own application) that, in combination invalidated Face’s patent. Considering that evidence, the PTO Board found Face’s patent claims invalid as obvious. The Board also found that EnOcean’s amended claims were not sufficiently disclosed in the 2000 priority document and that EnOcean’s claims were therefore invalid as obvious (since they didn’t have an early priority date).
The case against priority was interesting. Many of EnOcean’s patent claims include the term “receiver” as follows:
Claim 37: “a signal receiver for receiving a first electromagnetic signal transmitted by said first signal transmitter;”
Claim 38: “a receiver for receiving a first radiofrequency signal transmitted by said first signal transmitter;”
Claim 43: “a receiver adapted to receiving a radiofrequency telegram transmitted by said radio frequency transmission stage;”
Claim 45: “a receiver adapted to receiving a radiofrequency telegram transmitted by said first radio frequency transmission stage;”
But, the German priority document’s only reference to a receiver came from a single sentence, as translated:
[A] typical scenario is that all the switches … upon actuation, emit one or a plurality of radio frequency telegrams which are received by a single receiver and the latter initiates the corresponding actions (lamp on/off, dimming of lamp, etc.).
(In German, the original application uses the term “empfänger.”)
In interpreting the “receiver” limitation, the Board found that it was purely functional and thus should be interpreted as a means-plus function element governed by 35 U.S.C. §112¶6. In other claims found in the patent, EnOcean had used the phrases “signal receiving means” and “means for receiving” and the PTO Board found those terms synonymous with “receiver.” Under the statute, a means-plus-function claim term must have corresponding structure described in the specification. Since, the original German application did not include any structural discussion of a receiver or how it might work, the Board held that the US patent could not properly claim priority to the German application.
In the Appeal, the Federal Circuit has vacated – agreeing with EnOcean that its claim term “receiver” is not so functional as to be a means-plus-function claim. The court began its analysis with the black-letter precedent that “means” is a magical word. When it is used, courts should presume that the applicant intended for the term to be interpreted under 112¶6, and that the opposite presumption should be made (not 112¶6) if the magic word “means” is absent. Here, because the receiver term is not accompanied by the magical word “means,” we begin with a presumption that it is not to be interpreted under 112¶6.
After finding its beginning presumption, the court then determined that one of skill in the art would see sufficient structure from the term.
Indeed, the record indicates that the term “receiver” conveys structure to one of skill in the art—the Board itself made a factual finding that that the “skilled worker would have been familiar with the design and principles of the types of components utilized in the claimed invention, including . . . receivers.”
We also come to this conclusion, in part, because EnOcean has provided extensive evidence demonstrating that the term “receiver” conveys known structure to the skilled person. . . . Further, we are not persuaded by Face’s arguments that the term “receiver” is simply too broad to recite sufficiently definite structure. We have stated previously that just because “the disputed term is not limited to a single structure does not disqualify it as a corresponding structure, as long as the class of structures is identifiable by a person of ordinary skill in the art. Linear Tech. Corp. v. Impala Linear Corp., 379 F.3d 1311, 1322 (Fed. Cir. 2004).
What the court didn’t do here was describe what a receiver is structurally (or how has that changed over the past three decades). As part of its analysis, the court rejected the Board’s conclusion that “that there is no distinction in meaning between ‘receiver’ and ‘signal receiving means,'” since “the receiver of the EnOcean claims is defined in the claims solely in terms of functional language.”
Connecting all the dots, the court then found that the one-liner original receiver disclosure provided sufficient structure to support both the means-plus-function claim elements (receiving means) and the non-MPF receiver.
The decision here is not overly surprising and follows a number of other Federal Circuit decisions where a smidgen of structural understanding was sufficient to remove a claim term from 112¶6 analysis. Notably amongst these is the Linear Tech decision cited above where the court found the claimed “circuit for monitoring a signal” recited sufficient structure to avoid 112¶6 analysis.
Courts have often identified patent rights as a form of monopoly. Perhaps this stretches back to the 17th century Statute of Monopolies that ended all letters patents and other government granted monopolies except for those covering novel inventions. Economists typically reject the categorization because modern patent rights by themselves do not create market power nor even the right to sell or use the invention. (Patent rights only grant the right to exclude others).
Interesting aspect of the Supreme Court’s decision in Medtronic v. Mirowski (U.S. 2014), is the way that the court subtly revives this prior form of thinking by quoting older precedent:
The public interest, of course, favors the maintenance of a well-functioning patent system. But the “public” also has a “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 816 (1945). A patentee “should not be . . . allowed to exact royalties for the use of an idea . . . that is beyond the scope of the patent monopoly granted.” Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U. S. 313, 349-350 (1971).
Now, the use of the monopoly term here does not appear carelessly placed but instead intentionally designed to link patent rights with the monopoly problem. This connotation is important for the Court’s policy argument that, like monopolies, patent rights need to be controlled. This follows Thomas Jefferson’s famous thoughts against monopolies but eventual support for patent rights that were limited in both scope and duration.
In a recent article addressing this issue from a European perspective, Sven Bostyn and Nicolas Petit argue that continued rhetoric linkage of patents with monopolies is problematic and may well serve “a hidden bureaucratic agenda, that of limiting patent protection through the backdoor, by using ex post antitrust remedies to alter the protective – and innovation-incentivising – patent statutes adopted ex ante by elected democratic organs.” See Bostyn & Petit, Patent=Monopoly: A Legal Fiction (December 31, 2013). The Bostyn-Petit characterization is likely relevant to US policymakers as well. I looked through the few years of Federal Circuit cases that mentioned “patent monopoly.” Time and again the court used the phrase as part of its explanation why patent rights should be limited with the excepting being cases that quote the Georgia Pacific factors. See, e.g., LifeScan Scotland, Ltd. v. Shasta Technologies, LLC, 734 F.3d 1361 (Fed. Cir 2013) (Judge Dyk); CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013) (en banc; Judge Lourie opinion); Brooks v. Dunlop Mfg. Inc., 702 F.3d 624 (Fed. Cir. 2012) (Judge Prost); Ritz Camera & Image, LLC v. SanDisk Corp., 700 F.3d 503 (Fed. Cir. 2012); SanDisk Corp. v. Kingston Technology Co., Inc., 695 F.3d 1348 (Fed. Cir. 2012) (Judge Reyna in Dissent); Akamai Technologies, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (Judge Linn in Dissent); Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (Judge Bryson in Dissent); Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) (Judge Gajarsa in Dissent).
35 U.S.C. 101 is a foundational patent law statute that defines the scope of patent eligibility. The statute states that:
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
Section 101 is written in broad and open terms and has been seen as providing notice that patent law is not intended to be limited to any particular forms of technology.
In interpreting the statute, the Supreme Court has added an additional set of subject matter eligibility restrictions only nominally grounded in the statute. Most notable, these include proscriptions against the patenting of abstract ideas, natural phenomenon, and products of nature. Also excluded from eligibility are “mental processes.” It is somewhat unclear from precedent whether these mental processes are whole included within the abstract idea construct or whether instead there are some mental processes that would be excluded even though not considered abstract ideas.
Here, ABL’s patents cover a diagnostic method that basically pulls information from three separate knowledge bases, ranks the results and provides advisory information related to those results. As claimed these steps use a “computing device” to generate and provide the results. The patents also include computerized “system” claims; computer program claims; and sorage-medium claims that are all designed to facilitate the practice of the method. See U.S. Patent Nos. 6,081,786 and 6,188,988.
In 2008, SmartGene filed for declaratory judgment of invalidity and also filed a reexamination request with the USPTO. The PTO considered the prior art and confirmed patentability. However, the District Court ruled that all of the patented claims were invalid as ineligible under Section 101. Rather than walking through each claim of each patent, the District Court (1) first held that, for eligibility purposes, Claim 1 of the ‘786 patent (the method claim) was representative of all claims in the patents and (2) then found that claim ineligible under § 101. The district court wrote that the claim does “no more than describe . . . an abstract mental process engaged in routinely, either entirely within a physician’s mind, or potentially aided by other resources in the treatment of patients.”
On appeal, the Federal Circuit has affirmed in a non-precedential decision written by Judge Taranto and joined by Judges Lourie and Dyk. Famed eligibility defender Robert Sachs of Fenwick represented the Patentee whkle Fred Samuels (Cahn & Samuels) represented the DJ Plaintiff.
The Federal Circuit first considered the district court’s process in holding all claims from both patents ineligible based only upon consideration of one claim from one patent. The court affirmed the district court finding based upon a waiver principle.
On to the meat of the 101 analysis, the Federal Circuit began with a citation to CyberSource:
This conclusion [of ineligibility] follows from CyberSource Corp. v. Retail Decisions, Inc., where, based on earlier precedents, this court held that section 101 did not embrace a process defined simply as using a computer to perform a series of mental steps that people, aware of each step, can and regularly do perform in their heads.
The court went on to write that mental processes are not eligible nor are processes that use basic computer functionality to implement mental processes unless the invention specifies “new physical components” or other steps “defined other than by the mentally performable steps.”
For these princples, the court relied heavily on Supreme Court precedent of Benson, Flook, and Mayo as well as the appellate decisions of CyberSource as well as In re Grams, 888 F.2d 835, 840-41 (Fed. Cir. 1989) and In re Meyer, 688 F.2d 789, 794-95 (C.C.P.A. 1982).
The discussion of Mayo in the decision is interesting in the way that the court draws close parallels between the way laws of nature and abstract ideas should be interpreted:
Mayo demanded that, when a claim involves an abstract idea (or, in Mayo itself, a law of nature), eligibility under section 101 requires that the claim involve “enough” else—applying the idea in the realm of tangible physical objects (for product claims) or physical actions (for process claims)—that is beyond “well-understood, routine, conventional activity.” 132 S. Ct. at 1294, 1298, 1299. The claim here does not do so. It calls on a computer to do nothing that is even arguably an advance in physical implementations of routine mental information-comparison and rule-application processes. In this context, the concern about preempting public use of certain kinds of knowledge, emphasized in Mayo, is a grave one.
It appears from Myriad, that the process for determining the product-of-nature exclusion is somewhat different since there, the court allowed the patentee to obtain protection for a DNA sequence whose physical differences from the naturally occurring sequence were due to well-understood, routine, and then conventional laboratory processes.
Is a mental step an abstract idea?: The court punts on this question and instead writing that:
[M]ental processes and abstract ideas (whatever may be the precise definition and relation of those concepts) are excluded from section 101. Whatever the boundaries of the abstract ideas category, the claim at issue here involves a mental process excluded from section 101: the mental steps of comparing new and stored information and using rules to identify medical options.
The analysis here pessimistically fits the approach leading abstract idea jurisprudence that traditionally fails to explain the scope and bounds of the abstract idea category but finds that the particular invention in question fits within the category.
Judge Taranto: This decision is important because it was written by Judge Taranto. Although there was not tremendous doubt in his position, Judge Taranto did not participate in the CLS Bank en banc fiasco that resulted in no majority opinion. Judge Taranto’s participation would have likely shifted the balance in favor of a majority opinion ruling strongly against subject matter eligibility of software claims that do not add new “technology.”
Judge Taranto is also important because, of all the Federal Circuit judges, he likely best understands the pulse of the Supreme Court and I will not be surprised when the Supreme Court decision in CLS Bank parallels this one.
In a prior post, I included a chart showing a recent rise in the use of the functional claim phrase “configured to.” See Crouch, What Does it Mean for a Device to be “Configured To” Perform a Particular Function, Patently-O (2014). Here, I have updated the data to also add information regarding claims that include the term “means” (the traditional primary trigger for §112(f) analysis) and those that include the phrase “for …ing” (such as “for calculating”) without reciting the term “means.” I see these chosen categories as indicia of the existence of functional claim elements. However, I recognize that my rigid automated approach is both somewhat under and over inclusive. However, the results (below) are so dramatic that it is difficult to argue that nothing is going on here. Complicating this, a legal definition of functional claim language (outside the scope of §112(6)) is difficult to nail down. Working a bit on this definition, the Supreme Court in 1946 wrote that a “claim which describes the most crucial element in a ‘new’ combination in terms of what it will do, rather than in terms of its own physical characteristics or its arrangement in the new combination, is invalid as a violation of [the indefiniteness requirement].” Halliburton v. Walker, 329 U.S. 1 (1946).
For the analysis here, I first downloaded the text of all U.S. utility patents issued between 1976 and 2014. I then wrote a script that parses through the independent claims of each patent to determine whether any of the aforementioned phrases are found within those claims. Because the worry with functional claim elements tend to be their over breadth, I looked only at independent claims rather than the naturally more narrow dependent claims. With those results in-hand, I then calculated the frequency-of-appearance in a week-by-week time series. The chart is slightly smoothed by reporting a 10-week moving average – that smoothing largely imperceptible because the time series encompasses almost 2,000 weeks of data). A nice element of using the entire population of utility patents is that there is no need to include significance levels or confidence intervals.
The basic results are apparent from the chart below. The use of traditional Means-Plus-Function (MPF) language in patent claims has dropped dramatically since the early 1990’s and continues to drop. (Blue data series). In the 1980’s most patents included an independent claim written in MPF form. Today, that frequency is less than 10%. The decline in the use of MPF claim language corresponds roughly with a set of cases that cabined-in the construed scope of MPF elements and also bolstered the doctrine that an MPF claim is invalid if the patent document lacks an affirmative statement showing a structure that performs the claimed function. See In re Donaldson Co., 16 F.3d 1189 (Fed. Cir. 1994) (en banc). Although patentees have eschewed the statutory sanctioned MPF format, they have not given up the use of functional claim limitations. In the chart below, I pick up on two particular common approach. One approach has been to replace the term “means for” with a more structural noun such as “circuit for” or “instructions for.” Those types of claim elements are shown in the green data series below and show a rise in that claim format in the 1990s that matches the decline in MPF usage. The red data series shows the use of “configured to/for” language in independent claims as discussed in the prior essay.
As patentees moved away from the use of means-plus-function claim language, they could have conceivably chosen either to focus more particularly on structural elements or instead to continue with an approach of claiming according to the function of the unspecified structure. The chart above graphically suggests that patentees have chosen the latter – replacing means-plus-function claim elements with functional claim elements carefully designed to avoid the statutory trap of §112(6).
The sheer number of patents at issue here is impressive. To be clear, we are talking about millions of patents that are caught-up in this transition. Thus, if we think that it’s a problem to have functional claim limits written outside of the safeguards of §112(6), then what we have here is a big problem.
By Dennis Crouch Chief Judge Rader recently argued that no patentable weight should be given to claim terms focusing on how a device is “configured to” perform a particular task. See Superior Industries v. Masaba (Fed. Cir. 2014) (concurring opinion). The Chief writes:
A system claim generally covers what the system is, not what the system does. Hewlett–Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464 (Fed.Cir.1990). Thus, it is usually improper to construe non-functional claim terms in system claims in a way that makes infringement or validity turn on their function. Paragon Solutions, LLC v. Timex Corp., 566 F.3d 1075 (Fed. Cir. 2009).
In Superior Industries, the patentee had claimed a dump truck with a “support frame . . . configured to support an end of an earthen ramp.” On remand, the district court will need to determine again whether that language should be interpreted as a positive claim limitation.
One problem with Judge Rader’s opinion is that other judges do not uniformly agree with his perspective. The diversity of court opinion compounds an already difficult process of understanding what potential structures are covered by function-focused claim terms. A third compounding difficulty is the rapid rise in the use of functional claim terms.
The Patent Act expressly provides for the use of functional claim language — written in means-plus-function format. 35 U.S.C. §112(f). The statutory requirements of §112(f) began being more strictly enforced in the mid-1990s and, as a consequence, means-plus-function limitations have fallen from favor. Meanwhile, patentees have caught-on to using “configured to” language as a rough equivalent of a means-plus-function claim term but carefully drafted in order to avoid actually falling under the ambit of that provision. The benefit then for patentees is that the functional language is broad and not limited to particular structural embodiments.
The chart below shows the percentage of issued patents that include at least one “configured to” claim limitation within an independent claim. This dramatic transformation of claiming strategy raises the importance of cases such as Nautilus v. Biosig Instruments (pending Supreme Court case on the proper standard for indefiniteness) and Lighting Ballast (pending en banc decision on claim construction deference with a focus on functional claim terms should be interpreted as falling within 112(f)).
In Ex Parte Miyazaki, 89 USPQ2d 1207 (B.P.A.I. 2008), the Board of Patent Appeals revived the old precedent of Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946) in holding that purely functional claim language is not allowable unless done within the scope of 112(f).
This general prohibition against the use of “purely functional claim language” (and the more specific Halliburton rule) has not been completely eliminated. Rather, “purely functional claim language” is now permissible but only under the conditions of 35 U.S.C. § 112, sixth paragraph, i.e., if its scope is limited to the corresponding structure, material, or act disclosed in the specification and equivalents thereof.
In Miyazaki, the problematic claim language was “a sheet feeding area operable to feed at least one roll of paper, at least one sheet of paper and at least one stiff carton toward a printing unit.” In Halliburton, the problematic claim language was “a tuned acoustical means which performs the functions of a sound filter.” In each case, the claims were found indefinite.
First, thank you for all the terrific comments I received in response to the Top 10 Patent Cases post. There were some great ideas there and after substantial reflection I decided that my final list this year will be:
Bowman v. Monsanto, 133 S.Ct. 1761 (2012) O’Reilly v. Morse, 56 U.S. 62 (1853) Diamond v. Chakrabarty, 447 U.S. 303 (1980) Egbert v. Lippmann, 104 U.S. 333 (1881); City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (1878) Graham v. John Deere, 383 U.S. 1 (1966); KSR v. Teleflex, 550 U.S. 398 (2007) The Incandescent Lamp Patent case, 159 U.S. 465 (1895) Phillips v. AWH, 415 F.3d 1303 (Fed. Cir. 2005) (en banc) Graver Tank v. Linde Air Products, 339 U.S. 605 (1950) Gorham v. White, 81 U.S 511 (1871) Bonito Boats v. Thunder Craft Boats, 489 U.S. 141 (1989)
While it's hard to do justice to patent law with just 10 or 12 cases, because this is an Introduction to Intellectual Property class the amount of classroom discussion that can be devoted to individual cases is limited. Additional cases are discussed in the mini-treatise the students read and I'll cover them in the lecture component as well. Fortunately, I also teach Patent Law which allows a much more substantive exploration of specific issues in patent law. Also, the above list is a combination of importance and teaching value: some cases are on there more because they're both reasonably significant and useful teaching tools.
Second, for those of you who are interested in textualism and claim construction, Landslide recently published my review of Justice Antonin Scalia and Professor Bryan A. Garner's Reading Law: The Interpretation of Legal Texts from a patent law perspective. A copy of the review is available on Landslide's website and I've archived a copy on ssrn.
I'll also note that Professor Tun-Jeng Chiang wrote to me yesterday to share that his recently published article The Interpretation-Construction Distinction in Patent Law, 123 Yale Law Journal 530 (with Lawrence B. Solum) relates to many of the issues that I discuss in the review, taking on in particular the "argument that the high reversal rate belies the certainty of textualism or suggests that claim interpretation typically involves hard cases from a linguistic standpoint." While I ultimately don't agree with many of Professor Chiang's arguments, his work is always insightful and worth reading. His article is available here.
