Tag Archives: Federal Circuit En Banc

IPR Challenge Moves Forward with One Step Back

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by Dennis Crouch

In a non-precedential order, the Federal Circuit has rejected Carl Cooper’s challenge to constitutional propriety of the inter partes review (IPR) system as implemented by the USPTO.  The identical issues had already been decided in MCM v. HP (Fed. Cir. 2015). In that case, the Federal Circuit held that the IPR system does not violate Article III of the U.S. Constitution nor does it violate the Seventh Amendment of the U.S. Constitution.  As I wrote in December, the MCM decision “essentially forecloses Carl Cooper’s parallel proceedings.”

Cooper had originally filed his appeal in the 4th Circuit Court of Appeals, but that court bumped the case to the Federal Circuit.

Of interest, Cooper himself motioned for summary affirmance, but has reserved his right to raise the appeal. In his filing on Cooper’s behalf, Rob Greenspoon wrote:

While Appellants strongly disagree with the Court’s decision in MCM Portfolio that IPR proceedings are constitutional, Appellants concede that because the issues in this appeal are closely related to those in MCM Portfolio, summary affirmance is appropriate. See United States v. Fortner, 455 F.3d 752, 754 (7th Cir. 2006) (“[S]ummary affirmance may be appropriate when a recent appellate decision directly resolves the appeal.”) (citing United States v. Young, 115 F.3d 834, 836 (11th Cir.1997) (per curiam)). In the interests of preserving the Court’s and the parties’ resources, Appellants respectfully request that this Court grant summary affirmance of the district court’s judgment. In making this request, Appellants preserve all rights to subsequent review.

Next stop appears to be en banc petition or petition for writ of certiorari.

Documents:

Pending Supreme Court Patent Cases 2016 (January 12 Update)

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by Dennis Crouch

As of January 12, the Supreme Court has granted two petitions for certiorari for this term. Both Halo and Stryker cover the same topic of enhanced damages, a.k.a. willfulness. Another 17 petitions remain pending. Following its latest conference, the Court denied two low-quality petitions (Arunachalam and Morgan) and also the SpeedTrack case which had focused on interesting but esoteric preclusion issues involving the “Kessler doctrine.”

The important inter partes review case Cuozzo survived its first conference and is up on the blocks for a second round this week. This type of immediate “relisting” occurs in almost all cases where certiorari is granted and raises the odds of grant to >50%. Because the US Patent Office is a party in the case, there would be no call for the views of the Solicitor General before granting / denying certiorari. Nine amici briefs were also filed at the petition stage – a factor that also raises the likelihood that certiorari will be granted.

1. Petitions Granted:

2. Petitions for Writ of Certiorari Pending:

  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
  • Inducement: Medtronic Sofamor Danek USA, Inc., et al. v. NuVasive, Inc., No. 15-85 (Commil re-hash – mens rea requirement for inducement)
  • Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Post Grant Admin: Cuozzo Speed Technologies, LLC v. Michelle K. Lee, No. 15-446 (BRI construction in IPRs; institution decisions unreviewable)
  • Post Grant Admin: Achates Reference Publishing, Inc. v. Apple, Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
  • Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial) (New Petition)
  • Preclusion or Jurisdiction:
    ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Preclusion or Jurisdiction: Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567 (If patent ownership is fixed after the filing of a complaint, can jurisdiction be cured by a supplemental complaint)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Claim Construction: Media Rights Technologies, Inc. v. Capitol One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on)

3. Petitions for Writ of Certiorari Denied:

  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381
  • Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
  • Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
  • Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
  • Kenneth Butler, Sr. v. Balkamp Inc., et al., No. 15-273    
  • Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
  • Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
  • Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
  • Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
  • Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
  • I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
  • Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
  • Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
  • W.L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
  • NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
  • Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
  • MobileMedia Ideas LLC v. Apple Inc., No. 15-206
  • SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine)
  • Rodney K. Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602
  • Lakshmi Arunachalam v. JPMorgan Chase & Co., No. 15-691

4. Prior versions of this report:

 

Apple, Samsung & Design Patent Claim Construction

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

Samsung Electronics Co., Ltd. v. Apple Inc. (on petition for a writ of certiorari)

In its recently-filed cert petition, Samsung makes some particularly interesting arguments about design patent claim construction. Specifically, Samsung argues “that district courts have a duty to construe [design] patent claims and eliminate unprotected features” under Markman and that the Federal Circuit has erred in “allow[ing] district courts . . . to decline to provide any meaningful claim construction.” To put these arguments in context, a bit of background is in order.

Twenty years ago, the Federal Circuit held that Markman applies to design patents. Since then, it has struggled to decide and describe how, exactly, it applies in the design context. This difficulty isn’t particularly surprising. Markman (and later Supreme Court cases about claim construction) only dealt with utility patent claims. And utility patent claims are fundamentally different from design patent claims. Unlike utility patents, design patents can contain only one claim. The verbal portion of this claim must (in general) read as follows: “The ornamental design for [the article which embodies the design or to which it is applied] as shown.” The phrase “as shown” refers to the drawings or photographs submitted by the applicant. Therefore, design patent claims consist mainly of images, not words.

The Federal revisited the issue of Markman and design patents in 2007. When it granted en banc review in Egyptian Goddess, the court asked for briefing on the issue of whether claim construction should apply to design patents and, if so, what role that construction should play in the infringement analysis. The court received numerous amicus briefs on this issue, expressing a wide range of opinions. When the court issued its decision in 2008, it ruled that district courts do not have to—and ordinarily, should not—construe a design patent claim by providing a detailed verbal description of the design. It suggested that district courts could, nonetheless, “usefully guide the finder of fact by addressing a number of other issues that bear on the scope of the claim” by, for example, describing any relevant drawing conventions, describing the effect of any relevant matters in the prosecution history, and “distinguishing between those features of the claimed design that are ornamental and those that are purely functional.”

Then, in its 2010 decision in Richardson, the Federal Circuit indicated that district courts should “factor out” functional elements in construing design patent claims. This “factoring out” approach proved to be both unworkable and unnecessary, as Chris Carani explained in this recent LANDSLIDE article. (I think of this whole line of cases as the “FUBAR cases,” in reference to the product at issue in that case.)

When Apple v. Samsung was before the Federal Circuit, Samsung argued the district court erred in “fail[ing] to instruct the jury to ‘factor out’ the unprotectable structural and functional elements of Apple’s designs,” relying on Richardson and related cases. The Federal Circuit disagreed. In its May 2015 decision in Apple v. Samsung, the court ruled that its case law did not support Samsung’s “structural” argument. It also seemed to back away from Richardson, insisting that case “did not establish a rule to eliminate entire elements from the claim scope.” A few months later, the Federal Circuit backed even further away from Richardson in Ethicon.

In its cert petition, Samsung does not rely on—or even mention—Richardson. Instead, Samsung advocates a new approach to design patent claim construction.

Samsung’s approach is based in requirement that a patentable design be “ornamental.” Samsung argues that certain features (or aspects) of a design cannot be “ornamental” as a matter of law and that district courts must “eliminate” these “unprotected features” during claim construction.

So what are the “unprotected features” that Samsung wants courts to “eliminate”? Samsung argues that an ornamental design “cannot include ‘functional’ features, for those are the proper domain of utility patent law,” citing Bonito Boats. In this respect, Samsung’s approach sounds similar to one taken in the FUBAR cases. But Samsung would apparently go further, arguing that an ornamental design “cannot include concepts, shapes or colors,” likening them to “abstract ideas” or “physical phenomenon” under Bilski.

Samsung argues that “[a] district court can easily . . . identify to a jury a design patent’s conceptual, functional and ornamental aspects, and instruct a jury not to find infringement based on conceptual or functional similarities.” Whether or not this would actually be easy may be a matter of some debate, especially in light of past experience with the FUBAR cases. It’s also not clear what would qualify as a “conceptual” aspect (or feature) of a design.

And as a larger policy issue, it’s questionable whether verbal claim dissection is either desirable or appropriate in the context of design patents. The better approach may be, as Chris Carani argued in the LANDSLIDE article mentioned above, to simply instruct juries “that design patents only protect the appearance of the overall design depicted in the drawings, and not any functional attributes, purposes or characteristics embodied in the claimed design.”

It’s also worth noting that under Egyptian Goddess, the prior art may be used to narrow the scope of a claimed design—not through formal claim construction but as part of the infringement analysis. But in Apple v. Samsung, prior art that could have been used to narrow the scope of the claimed designs was not admitted at trial. So, if anything, this case represents a failure to make full use of the Egyptian Goddess framework, not a failure of the framework itself.

Pending Supreme Court Patent Cases for 2016

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by Dennis Crouch

Welcome to 2016! As of January 1, only two petitions for certiorari have been granted this term — both covering the same topic of enhanced damages, a.k.a. willfulness. Another 20 petitions remain pending, a few of which may have legs.

New petitions from the past fortnight include Achates v. Apple (reviewability of IPR institution decision) and Vermont v. MPHJ (federal court jurisdiction in anti-troll consumer protection case).

1. Petitions Granted:

2. Petitions for Writ of Certiorari Pending:

  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
  • Inducement: Medtronic Sofamor Danek USA, Inc., et al. v. NuVasive, Inc., No. 15-85 (Commil re-hash – mens rea requirement for inducement)
  • Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Post Grant Admin: Cuozzo Speed Technologies, LLC v. Michelle K. Lee, No. 15-446 (BRI construction in IPRs; institution decisions unreviewable)
  • Post Grant Admin: Achates Reference Publishing, Inc. v. Apple, Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
  • Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial) (New Petition)
  • Preclusion or Jurisdiction: SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kesslerdoctrine – enhanced preclusion)
  • Preclusion or Jurisdiction:
    ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Preclusion or Jurisdiction: Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567 (If patent ownership is fixed after the filing of a complaint, can jurisdiction be cured by a supplemental complaint)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Claim Construction: Media Rights Technologies, Inc. v. Capitol One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on)
  • Soon to be Denied: Arunachalam v. JPMorgan Chase & Co., No. 15-691 (unclear)
  • Soon to be Denied: Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602 (unclear)

3. Petitions for Writ of Certiorari Denied:

  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381
  • Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
  • Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
  • Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
  • Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
  • Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
  • Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
  • Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
  • Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
  • I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
  • Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
  • Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
  • W.L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
  • NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
  • Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
  • MobileMedia Ideas LLC v. Apple Inc., No. 15-206

Shukh Signals Petition for Certiorari in Futures-Assignment Case

Patent

In a new filing, Alexander Shukh has asked the Federal Circuit to stay its mandate pending Mr. Shukh’s Petition for Writ of Certiorari. In his unsuccessful petition for en banc rehearing, Shukh asked the following question:

Whether, in a Section 256 Correction of Inventor action, does the common interest doctrine of attorney-client privilege entitle an inventor to access and use his own invention records and communications?

The Federal rules of appellate procedure do not require stay of mandate in the situation but permitted in cases where “the certiorari petition would present a substantial question and that there is good cause for a stay.” Here, I would expect that standard has been met. In particular, in the Stanford v. Roche case, the Supreme Court openly questioned the illogic of FilmTec. I have included an excerpt on-point from the Stanford oral arguments.

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JUSTICE GINSBURG: The whole thing that was wrong here is that Stanford, instead of drafting the agreement “I agree to assign,” should have said “I hereby assign” and then there would be no case. Is that — the Cetus agreement said “I hereby assign,” and the Federal Circuit said for that reason, even though it was second in time, it takes precedence. Stanford just said “I will assign.”

So if Stanford had instead used exactly the formula that Cetus used — “I agree to assign and hereby do assign” — would you have any case?

MR. FLEMING: …But Justice Ginsburg, your question is — is sound, which is that there is this distinction between an agreement to assign and a present assignment of future expected interests. That has been the law for decades. There are plenty of settled expectations based on that. That has not been challenged, not in the petition for certiorari, not in the opening brief of Stanford, and it only comes up in a footnote on the penultimate page of the reply brief. . . .

JUSTICE GINSBURG: We have a number of sample clauses in this record, and some say “I will assign.” Some say “I hereby do assign.” The notion that the — that answer, who is it who loses, should turn on whether one drafter says “I agree to assign” and the other says “I hereby assign” does seem very odd.

MR. FLEMING: That’s a distinction, Justice Ginsburg, that goes back to the Federal Circuit decision in Arachnid by Judge Giles Rich, who is a notable authority on the patent act. He relied on the Curtis treatise from 1873. But if that were an issue that the Court wished to reconsider, I think –

JUSTICE SCALIA: Is that patent law or is it regular contract law? Doesn’t it apply in other fields as well? I mean, I’m — I’m not aware that this is a peculiar doctrine applicable to patent law.

MR. FLEMING: No, not in particular. An agreement to assign is specifically that. It’s an agreement to do an assignment in the future.

JUSTICE SCALIA: To do it in the future. If somebody else gets an assignment before that agreement is — is executed, the assignment prevails.

JUSTICE GINSBURG: Then we’re talking about nonexistent property; property that may never, in fact, exist?

MR. FLEMING: That comes from the FilmTec decision, which relied on Justice Storey’s decision in Mitchell, and it’s used, again, by universities like Caltech and MIT that rely on the validity of a present assignment of future expected interest. I mean, I know that the issue of the interpretation of agreements to assign was addressed in the cert petition in ProStar v. IP Venture, which this Court denied cert on three terms ago. But if this Court were to wish to reconsider that doctrine, I would submit it can be done in an appropriate case where there is an amicus briefing on that issue. That’s not been considered here at all.

JUSTICE GINSBURG: So in the future, the universities would be protected against a third party simply by changing the form of contract with their employees to say “I hereby assign,” so we would have no continuing problem?

MR. FLEMING: I — they — they would be protected from this particular constellation of facts that came up in this case. There might be other problems –

JUSTICE BREYER: Yes, and then your clients would be out there arguing, oh, but you, see you can’t assign a future interests in the fruits from black acre; I mean, you can promise to do it, but black acre isn’t even around yet. And so when somebody ran in and got those fruits, well, then now we have a fight; and in law the second person wins, and in equity maybe the first person can get an injunction. I don’t know. But I guess people would raise that kind of argument, wouldn’t they?

MR. FLEMING: The point, Justice Breyer, is that all these questions are resolved in the exactly same way when we’re not talking about a federally funded invention.

Free Speech: Prohibition on Registering Disparaging Marks is Unconstitutional, Federal Circuit Rules

Patent

By Dennis Crouch

In re Tam (Federal Circuit 2015) (en banc)

Big trademark case from the Federal Circuit. Judge Kimberly Moore filed the majority opinion holding that the statutory prohibition against registration of “disparaging marks” is an unconstitutional governmental regulation of speech. This issue has been coming to a head for many years, and this decision will likely impact the parallel Washington Redskins dispute. There would be a good chance for Supreme Court review of the case if the government presses its position. However, it is not clear to me that the government will do so.

The majority writes:

The government cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks. It cannot refuse to register marks because it concludes that such marks will be disparaging to others. The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional. Because the government has offered no legitimate interests justifying § 2(a), we conclude that it would also be unconstitutional under the intermediate scrutiny traditionally applied to regulation of the commercial aspects of speech.

Nine members of the court signed the majority opinion filed by Judge Moore. In addition to signing the majority opinion Judge O’Malley filed a concurring opinion (joined by Judge Wallach). Judges Dyke, Lourie, and Reyna each field dissenting opinions.

Judge O’Malley’s concurrence argues that, in addition to serving as an unconstitutional speech limitation, section 2A is also “unconstitutionally vague, rendering it unconstitutional under the Fifth Amendment of the United States Constitution.”

Judge Dyk’s partial dissent argues that the statute itself is not “facially unconstitutional”, but has been applied in an unconstitutional manner in this particular case. Judge Dyk’s approach would leave intact the prohibition on registering marks that “disparage . . . or bring into contempt, or disrepute,” but would block the government from refusing registration based upon whether or not the government disagrees with a mark’s message.

Judge Lourie’s dissent first questions “why a statute that dates back nearly seventy years—one that has been continuously applied—is suddenly unconstitutional as violating the First Amendment. Is there no such thing as settled law, normally referred to as stare decisis?” On the merits, he argues that denial of a registration does not impact the freedom of speech. Rather, Mr. Tam can continue to use his “slants” mark even without registration. “The argument, therefore, that a trademark applicant’s right of free speech has been impaired by the failure of the USPTO to grant a federal registration is unconvincing.” Judge Lourie also questions whether a mark’s protection should count as even commercial speech.

Finally, Judge Reyna argues in dissent that “the refusal to register disparaging marks under § 2(a) of the Lanham Act is an appropriate regulation that directly advances the government’s substantial interest in the orderly flow of commerce.” As such, he argues, regulation satisfies the intermediate standard of scrutiny should be applied in the commercial speech category.

Assigning Future Interests: Federal Circuit Denies Review of FilmTec

Patent

by Dennis Crouch

When I taught licensing, I turned to Ray Nimmer’s text.  Nimmer & Jeff Dodd are also authors of the treatise Modern Licensing Law. Although a number of patent transfer issues are straightforward, one that continues to lay confusion is the purported assignment of ownership of patent rights covering a yet-to-be-concieved invention.

In his case against Seagate, Alexander Shukh had asked the Federal Circuit to revisit the automatic-assignment rule of FilmTec.  However, that en banc request has now been denied.

Nimmer & Dodd had filed an amicus brief supporting Shukh’s now failed petition for en banc rehearing on this question of whether FilmTec remains good law and the extent that federal law (instead of state law) governs patent rights transfers. The Nimmer brief does not expressly argue for a particular answer, but does ask the courts to settle the matter.

[C]onfusion arises when dealing with agreements and assignments for inventions yet to be created. The precise issue is whether an “assignment” of future inventions, i.e., either an actual assignment or an agreement to assign, will create mere equitable property rights or will effect actual transfer of legal title, once the invention comes into existence.

Prior to FilmTec… the general rule was that, while “an agreement to assign in the future inventions not yet developed may vest the promisee with equitable rights in those inventions once made, such an agreement does not by itself vest legal title to patents on the inventions in the promisee.” Arachnid (Fed. Cir. 1991). This rule was of apparent long pedigree. . . .

In FilmTec, however, the Court held that, “[i]f an assignment of rights in an invention is made prior to the existence of the invention, this may be viewed as an assignment of an expectant interest,” and that “[o]nce the invention is made and an application for patent is filed, however, legal title to the rights accruing thereunder would be in the assignee.” Under this “automatic assignment” rule, equitable title to a future invention automatically ripens into legal ownership in an assignee, even though the “assignor” was no longer employed by the assignee when the patent application for the invention had been filed.

FilmTec has been widely criticized. In Stanford, Justice Breyer argued in dissent that the “Federal Circuit provided no explanation for what seems a significant change in the law” and that the FilmTec rule “undercuts the objectives of the Bayh-Dole Act.” Concurring with the majority, Justice Sotomayor nonetheless shared Justice Breyer’s concerns and noted that she understood “the majority opinion to permit consideration of these arguments in a future case.”

Read the brief: NimmerBrief; Shukh Petition; and Seagate Response.

Next Stop SCOTUS?: It is unclear whether Shukh will push this to the Supreme Court, but the Court has at least acknowledged that the issue exists and potentially problematic.  The problem with Shukh’s case is that we have not seen a clear explanation of the controvery – how a shift in the law gives Shukh the win.

 

 

Federal Circuit denies en banc request

Patent

by Dennis Crouch

In yet another set of Apple v. Samsung decisions, the Federal Circuit has denied en banc rehearing on the permanent injunction decision with the minor tweaks of the original decision shown in the markup below:

Apple did not establish that these features were the exclusive or significant driver of customer demand, which certainly would have weighed more heavily in its favor. Apple did, however, show that “a patented feature is one of several features that cause consumers to make their purchasing decisions.” Apple III, 735 F.3d at 1364. We conclude that this factor weighs in favor of granting Apple’s injunction.[1]

The amendment of the original amendment was agreed to by the original majority panel (Judges Moore and Reyna).[2]  Chief Judge Prost also substantially amended Part-B of her dissent.

In the panel opinion (whose holding still stands), the Federal Circuit rejected Judge Koh’s opinion that Apple had not shown irreparable harm absent injunctive relief.  In particular, the appellate panel deemed that Judge Koh’s nexus standard was too high.  The court wrote:

Thus, in a case involving phones with hundreds of thousands of available features, it was legal error for the district court to effectively require Apple to prove that the infringement was the sole cause of the lost downstream sales. The district court should have determined whether the record established that a smartphone feature impacts customers’ purchasing decisions. Though the fact that the infringing features are not the only cause of the lost sales may well lessen the weight of any alleged irreparable harm, it does not eliminate it entirely.

Panel opinion.

On remand, Judge Koh will now re-determine whether injunctive relief is proper.

We are all a bit confused about all of the Apple v. Samsung decisions flying around.  This particular opinion stems from N.D. California Docket No 12-cv-0630-LHK and involves a judgment of infringement of U.S. Patent Nos. 5,946,647; 8,046,721; and 8,074,172.  The design patent case petitioned to the Supreme Court is different and stems from N.D. California Docket No 11-cv- 01846 –LHK[3]

= = = =

[1] Apple Inc. v. Samsung Electronics Co., App. No. 14-1802 (Fed. Cir. December 16 2015) (order on petition for rehearing en banc); original decision here; see also Crouch, Federal Circuit Pushes Court to Stop Samsung’s Infringing Sales, Patently-O (September 17, 2015).

[2] Apple Inc. v. Samsung Electronics Co., App. No. 14-1802 (Fed. Cir. December 16 2015) (new panel opinion).

[3] Samsung Electronics Co. v. Apple Inc., No 15-___ (on petition for writ of certiorari).

 

Pending Supreme Court Patent Cases (Update)

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by Dennis Crouch

As of December 14, two petitions for certiorari have been granted — both covering the same topic of enhanced damages, a.k.a. willfulness. Another 17 petitions remain pending, a few of which have potential.

  1. Petition Granted:
  1. Petition for Writ of Certiorari Pending:
  • Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-___ (design patent scope and damages calculation)(New Petition)
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG)
  • Inducement: Medtronic Sofamor Danek USA, Inc., et al. v. NuVasive, Inc., No. 15-85 (Commilre-hash – mens rea requirement for inducement)
  • Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commilre-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Post Grant Admin: Cuozzo Speed Technologies, LLC v. Michelle K. Lee, No. 15-446 (BRI construction in IPRs; institution decisions unreviewable)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial) (New Petition)
  • Preclusion or Jurisdiction: SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kesslerdoctrine – enhanced preclusion)
  • Preclusion or Jurisdiction: ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Preclusion or Jurisdiction: Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567 (If patent ownership is fixed after the filing of a complaint, can jurisdiction be cured by a supplemental complaint)
  • Preclusion or Jurisdiction: Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Claim Construction: Media Rights Technologies, Inc. v. Capitol One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Patent Term Adjustment Dispute: Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Damages: STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on)
  • Soon to be Denied: Arunachalam v. JPMorgan Chase & Co., No. 15-691 (unclear)
  • Soon to be Denied: Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602 (unclear)

Pending Supreme Court Patent Cases

Patent, , , , , , ,

by Dennis Crouch

1.   Petition Granted:

2.   Petition for Writ of Certiorari Pending:

  • Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (Can an entity “induce itself” under 271(f)(1)?)(CVSG)
  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538 (“Do patent claims addressed directly to software that is inherently in a computer-readable medium qualify as a ‘manufacture’ under 35 U.S.C. § 101 without express recitation of the medium?”)
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642 (Do the rules of civil procedure apply when defendant raises a Section 101 eligibility “defense” in a motion-to-dismiss for failure to state a claim upon which relief can be granted?)
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381 (What is the proper role of intrinsic evidence in claim construction?)
  • Medtronic Sofamor Danek USA, Inc., et al. v. NuVasive, Inc., No. 15-85 (Commil re-hash – mens rea requirement for inducement)
  • SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine – enhanced preclusion)
  • Cuozzo Speed Technologies, LLC v. Michelle K. Lee, No. 15-446 (BRI construction in IPRs; institution decisions unreviewable).
  • Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567 (If patent ownership is fixed after the filing of a complaint, can jurisdiction be cured by a supplemental complaint)
  • STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Media Rights Technologies, Inc. v. Capitol One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies)
  • Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on)
  • Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602 (unclear)
  • Arunachalam v. JPMorgan Chase & Co., No. 15-691 (unclear)

Petition of the Day: Does the Statute Allow Section 101 Challenges in CBM/PGR proceedings?

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Retirement Capital Access Mgm’t Co. v. U.S. Bancorp and Michelle Lee, on petition for writ of certiorari 2015.

The question presented here stems directly from the posts that Prof Hricik and I wrote back in 2012 and 2013.

RCAM presents the following question:

The AIA limits the [PTAB’s] jurisdiction with respect to CBM review to challenges based on any ground that could be raised under paragraph (2) or (3) of 35 U.S.C. § 282(b). Paragraph 2 provides that a party may seek to invalidate a patent or claim on any ground specified in part II of Title 35 as a condition for patentability.

The questions presented arise from the Federal Circuit affirming, without comment, the Board’s holding that 35 U.S.C. § 101 is a ground specified in part II of Title 35 as a condition for patentability and therefore constitutes a proper basis for review in a CBM proceeding, and from the Federal Circuit affirming the Board’s application of § 101 to the patent claims at issue.

They are:

1. Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2).

2. Whether the Board errs when it invalidates issued patent claims posing no risk of pre-emption under the abstract idea exception to patent eligibility.

Read the petition: Petition101.

Federal Circuit Reluctantly Affirms Ariosa v. Sequenom and Denies En Banc Rehearing

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Ariosa v. Sequenom (Fed. Cir. 2015) (en banc petition denied)

The Federal Circuit has denied Sequenom’s petition for en banc rehearing – reconfirming the panel holding that the claimed “method of detecting paternally inherited nucleic acid” is unpatentable as a law of nature.  Patent No. 6,258,540.  Following this case, the USPTO may finally begin applying the law-of-nature exception in a major way. The decision also sets up a petition for writ of certiorari to the Supreme Court with several members of the Federal Circuit expressly calling for review.

As I previously wrote, the invention at issue here solves a very practical problem accessing fetal DNA without creating a major health risk for the unborn child.  The big idea was the hypothesis that fetal DNA might be floating around in the mother’s blood and that the fetal DNA could be selectively amplified by focusing on the paternally inherited portion of its DNA (rather than the maternally inherited).

The claim itself has two simple steps: (1) amplifying paternally inherited DNA from a plasma sample taken from a pregnant female and then (2) detecting the presence of the DNA. As I mentioned, the big idea was understanding where the baby-DNA could be found (in the mother’s blood plama) and that it could be separated from the mother’s DNA by linking it to the father’s sequence. The technology for amplifying and detecting was already well known at the time of the invention here.  Further, these two steps – amplifying and detecting – are the ones always almost used to detect particular DNA sequences.

The district court found the patent invalid under Section 101.  That decision was affirmed by a Federal Circuit panel in an opinion written by Judge Reyna and a concurrence by Judge Linn.  Now, in the 11-1 en banc denial, we add three more opinions – Judge Lourie (joined by Judge Moore) and Judge Dyk, both concurring in the denial as well as Judge Newman dissenting.

The basic controlling precedent in this case is Mayo v. Prometheus. In that case, the Supreme Court held that the discovered therapeutic efficacy and toxicity of a particular administered drug to be an unpatentable natural law and that the patented testing and dosage methods were also unpatentable as effectively claiming the same law of nature. In particular, the court noted that the claimed steps were not “genuine applications of those laws[, but] rather … drafting efforts designed to monopolize the [unpatentable] correlations.” As in Ariosa, the testing and determination steps were well known in the art and relied upon well-understood, routine, and conventional activity known to those in the field. As such, those additional steps were insufficient to transform the unpatentable law of nature into a patent eligible application of the natural law.  

In Ariosa, the Federal Circuit stands almost unanimously in the conclusion that Sequenom’s invention is not patent-eligible under the Mayo precedent (only Judge Newman disagrees).  There is, however, substantial disagreement about whether the Supreme Court was correct in its Mayo analysis.

Judge Dyk: I share the concerns of some of my colleagues that a too restrictive test for patent eligibility under 35 U.S.C. § 101 with respect to laws of nature (reflected in some of the language in Mayo) may discourage development and disclosure of new diagnostic and therapeutic methods in the life sciences, which are often driven by discovery of new natural laws and phenomena. This leads me to think that some further illumination as to the scope of Mayo would be beneficial in one limited aspect. At the same time I think that we are bound by the language of Mayo, and any further guidance must come from the Supreme Court, not this court.

Judge Lourie: [I]t is unsound to have a rule that takes inventions of this nature out of the realm of patent-eligibility on grounds that they only claim a natural phenomenon plus conventional steps, or that they claim abstract concepts. But I agree that the panel did not err in its conclusion that under Supreme Court precedent it had no option other than to affirm the district court.

Judge Linn:  In my view, the breadth of the second part of the test was unnecessary to the decision reached in Mayo. This case represents the consequence—perhaps unintended—of that broad language in excluding a meritorious invention from the patent protection it deserves and should have been entitled to retain.  (Note, Judge Linn participated in the original panel decision but could not dissent here because of his Senior Status).

It will be interesting to see how this proceeds, but my view is that the case has a low-chance for certiorari.  In Mayo, the Supreme Court indicated its understanding that the case would halt patenting of many diagnostics, but expressly called on Congress to “craft[] more finely tailored rules where necessary.”  In the 3 1/2 years since the Mayo decision, the diagnostic industry has not been able to get a bill even proposed in Congress that would so-tailor these rules (at least that I know of).

 

Federal Circuit: The IPR System is Constitutional

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by Dennis Crouch

In a precedential opinion, the Federal Circuit has rejected MCM’s foundational challenges against the Inter Partes Review (IPR) system implemented as a result of the America Invents Act of 2011 (AIA).

MCM Portfolio v. HP (Fed. Cir. 2015) (MCM.decision)

In particular, the court held that the IPR system does not violate Article III of the U.S. Constitution nor does it violate the Seventh Amendment of the U.S. Constitution.  On the merits, the court then affirmed the PTAB’s decision cancelling MCM’s challenged claims as obvious.  The court writes:

The teachings of the Supreme Court in Thomas, Schor, and Stern compel the conclusion that assigning review of patent validity to the PTO is consistent with Article III. . . . . [Furthermore we] are bound by prior Federal Circuit precedent. . . . We see no basis to distinguish the reexamination proceeding in Patlex from inter partes review. . . .

Because patent rights are public rights, and their validity susceptible to review by an administrative agency, the Seventh Amendment poses no barrier to agency adjudication without a jury.

The decision here also essentially forecloses Carl Cooper’s parallel proceedings. However, both parties are likely to request rehearing en banc followed by petitions for writ of certiorari.

Apple v. Samsung – Appeal Number XXXIII

Patent

by Dennis Crouch

Without substantive opinion or dissent, the Federal Circuit has denied Samsung’s en banc request — setting up a last-ditch and low-probability effort for Supreme Court review.   Decision: SamsungEnBancDenial.

In its latest decision (October 2015) the appellate court summarily dismissed Samsung’s appeal — refusing to even hear Samsung’s collateral estoppel arguments associated with the PTO’s final decision in a parallel ex parte reexamination.  According my LexisNexis search, this is at least the 33rd Federal Circuit opinion stemming from the Apple-Samsung Patent Wars — all within the past four years.

 

Claim Construction Moot Court: Mizzou’s Fifth Annual Patent Law Moot Court Competition

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Later today here at the University of Missouri School of Law, we are hosting the Fifth Annual Patent Law Moot Court sponsored by McKool Smith and part of the activities of our Center for Intellectual Property and Entrepreneurship (CIPE).  (Tonight’s winner gets $1,000).

The setup this year is a revival of the LightingBallast case that we argued a few years ago.  Earlier this year, the Federal Circuit again changed course in that case — finding that the patentee’s claimed “voltage source means” connotes structure to one skilled in the art (based upon expert testimony) and therefore is not interpreted under 112(f) [112,p6] (and therefore is not automatically invalid for failing to provide any structure description of the claimed means in the written description).

In the moot-court world, the Federal Circuit has granted en banc rehearing by the defendant on the following three questions:

  1. Should claim limitations using the term “means” be presumed to fall under the purview of 35 U.S.C. Section 112¶6 and, if so, what level of presumption should apply?
  2. Should a district court’s fact finding regarding commonly understood terms be entitled to deference on appeal?
  3. Did the district court correctly construe “voltage source means” as used in claim 1 of U.S. Patent No. 5,436,529?

What do you think?

 

Federal Circuit to Wait on Carnegie Mellon Willfulness Case until the Supreme Court Decides Halo and Stryker

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Carnegie Mellon University v. Marvell Tech (Fed. Cir. 2015) [CMUMarvellEnBanc]

The Federal Circuit has issued an interesting en banc order in this billion-dollar-case between the university patentee and the storage/chip maker Marvell. The Pennsylvania district court had originally awarded $1.5 billion to the university based upon a judgment of willful infringement. On appeal, however, the Federal Circuit panel reduced that award to a still-healthy but much smaller $278 million. The reduction was based upon (1) elimination of punitive damages for willfulness since Marvell had an objectively reasonable argument of invalidity; and (2) potential elimination of foreign sales from the award calculation – sales contracts were apparently “inked” in the US but then manufactured and delivered abroad. Regarding this cross-border infringement, the panel did not fully deny the availability of damages but instead remanded for further development as to whether the chips made and used outside of the U.S. could be considered “sold” in the U.S. based upon the contracting location.

After cross en banc petitions by Carnegie Mellon and Marvell, the court now writes:

Carnegie Mellon’s petition for rehearing en banc is denied in part and held in abeyance in part. The court will hold in abeyance any decision on the request for rehearing en banc with respect to the first issue raised in Carnegie Mellon’s petition, which seeks review of the panel’s ruling on the enhancement of damages issue. The court will hold Carnegie Mellon’s petition as to that issue pending the Supreme Court’s decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 769 F.3d 1371 (Fed. Cir. 2014) cert. granted, No. 14-1513, 2015 WL 3883472 (U.S. Oct. 19, 2015) and Stryker Corp. v. Zimmer, Inc., 782 F.3d 649 (Fed. Cir. 2015) cert. granted, No. 14-1520, 2015 WL 3883499 (U.S. Oct. 19, 2015).

Carnegie Mellon’s petition for rehearing en banc is otherwise denied. Marvell’s petition for rehearing and rehearing en banc is denied.

A partial mandate will issue returning the case to the district court, which shall have discretion to determine how and when best to handle the proceedings on remand.

Willfulness at the Supreme Court: In my view, there is a good chance that the Supreme Court will dramatically change course on willfulness doctrine. The history of patent law had given broad discretion to district courts to determine the appropriate circumstances for awarding punitive damages. And, that history fits well with other areas of law as well as with the Patent Act that broadly and simply states that “the court may increase the damages up to three times the amount found or assessed.” 35 U.S.C. §284. Note here, that the statute does not even require willful infringement as a prerequisite and certainly does not delve into the layered subjective/objective approach currently required by the Federal Circuit. Rather, the only statutory limitation on enhanced damages is that they
“shall not apply to provisional rights under §154 (d).”

In Carnegie Mellon’s case, the enhanced damages were about 20% of the total $1.5 billion (updated by 1000x).

= = = = =

Generally, the Federal Circuit’s strategy here is interesting and overall I like it. In the past there have been times where the Federal Circuit silently delayed its decision making. This case is also big-money, I wonder wither the Federal Circuit will be willing to delay all of its willfulness cases pending the outcome of Halo and Stryker. And, is this a suggestion to district courts to also delay? An important element of the decision here is that there is a parallel remand and so the willfulness issue is not the last remaining issue in the case and so the court’s delay is likely not delaying the final outcome.

Federal Circuit Finally Sends Akamai Back to District Court with Orders to Finish It

Patent

Akamai v. Limelight (Fed. Cir. 2015) (AkamaiV)

When it sat en banc in this case, the Federal Circuit found sufficient evidence to find Limelight liable as a direct infringer under 35 U.S.C. § 271(a). The noted that an entity can be held liability as a direct infringer based upon another’s actions “in two sets of circumstances: (1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise.” The court held that “liability under § 271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”

In Akamai, the accused infringement – Limelight – performed the bulk of the steps of Akamai’s patented method, and then provided instructions to its customers on how to complete the remaining steps. Completion of those steps are a necessary element of obtaining Limelight’s services. The en banc panel found “In sum, Limelight’s customers do not merely take Limelight’s guidance and act independently on their own. Rather, Limelight establishes the manner and timing of its customers’ performance so that customers can only avail themselves of the service upon their performance of the method steps.” That relationship thus constituted being “directed and controlled” by the accused infringer.

Because some potential issues remained, the en banc court then remanded the case back to the original Federal Circuit panel for clean-up. On remand, the panel has rejected a set of arguments brought by Limelight in a cross-appeal – finding them to “have no merit.”

On remand, the district court has thus been ordered to reinstate the 2008 jury verdict of infringement and the $40 million+ lost profit award. Its hard to believe that this case has been pending since 2006!

En Banc: Should there be a Supplier Exception to the On Sale Bar?

Patent,

The Federal Circuit has granted a petition for en banc rehearing in The Medicines Co. v. Hospira and requested briefing on the following questions:

(a) Do the circumstances presented here constitute a commercial sale under the on-sale bar of 35 U.S.C. § 102(b)? (i) Was there a sale for the purposes of § 102(b) despite the absence of a transfer of title? (ii) Was the sale commercial in nature for the purposes of § 102(b) or an experimental use?

(b) Should this court overrule or revise the principle in Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001), that there is no “supplier exception” to the on-sale bar of 35 U.S.C. § 102(b)?

En banc Order.

In the original opinion, penned by Judge Hughes and joined by Judges Dyk and Wallach, the Federal Circuit reversed a district validity determination — holding on appeal that the “district court clearly erred in finding that the bivalirudin batches prepared by Ben Venue Laboratories before the critical date were not sold to The Medicines Company and were prepared primarily for an experimental purpose.”  This is one of a series of cases where the patent has been invalidated based upon a private supplier arrangement that counts as a “sale” or being “on sale” even though there is no public notice of the sales activities.

Although the “on sale” language in Section 102  is identical post-AIA, many believe that the structure of the first-to-file provisions of the AIA should be interpreted to narrow the definition of the term to only include sales and offers to sale that are themselves available to the public.  In that situation, the sale that seemingly occurred here would likely not be seen a prior art.

—

There are a number of ways that large companies benefit from the patent system (apart from having more money).  In a addition, the laws negate a substantial amount of what would otherwise be prior art if it was created within the company.  Larger companies have more activity going on within their company and thus benefit from this network effect.  In this case, the patentee went outside its company to order supplies for further testing and ran afoul — there would have been no problem if it had first purchased the supplier and then obtained the supplies.  The court is considering a supplier-exception that would eliminate this as prior art — that probably works post-AIA, but not pre-AIA.

 

Federal Circuit: Denies En Banc Rehearing on Lost Profit Sales for Component Export

Patent,

In a split opinion, the Federal Circuit has denied WesternGeco’s en banc petition on the issue of whether a patentee can collect lost profit damages stemming from foreign sales that constitute infringement under 35 U.S.C. § 271(f).   The question presented:

When there has been a finding of infringement under 35 U.S.C. § 271(f) for supplying components of a patented system to be combined outside the United States, is a patentee, in effect, categorically barred from recovering proven lost profits that occurred outside the United States, which were the direct and foreseeable result of the infringement under § 271(f)?

In its original panel decision, the Federal Circuit indicated that its tradition of avoiding extraterritorial application of U.S. patent law led it to apply Section 271(f) in a restrictive rather than expansive way.

 

WesternGeco cannot recover lost profits resulting from its failure to win foreign service contracts, the failure of which allegedly resulted from ION’s supplying infringing products to WesternGeco’s competitors. . . . Section 271(f) does not eliminate the presumption against extraterritoriality. Instead, it creates a limited exception. . . . It is the act of exporting the components from the United States which creates the liability. . . . Just as the United States seller or exporter of a final product cannot be liable for use abroad, so too the United States exporter of the component parts cannot be liable for use of the infringing article abroad.

Of course, the fact that WesternGeco is not entitled under United States patent law to lost profits from the foreign uses of its patented invention does not mean that it is entitled to no compensation. Patentees are still entitled to a reasonable royalty, and WesternGeco received such a royalty here. . . .

As he did in the original panel decision, Judge Wallach also dissented here – joined by Judges Newman and Reyna.  In the original opinion, Judge Wallach wrote:

[T]he limited geographic reach of United States patent law does not mean activities occurring outside the United States are categorically disregarded when determining issues of patent infringement. . . . [In 271(f)] Congress imposed liability on those supplying from the United States components of a patented invention “in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.” . . .

In general, a patentee is entitled to full compensatory damages where infringement is found. . . . . The[] general principles of full compensation, of course, do not directly address the question of whether foreign activities may be considered when calculating such compensation. The Supreme Court, however, has answered this question in the affirmative, looking to noninfringing foreign sales to calculate lost profits where the patented product is manufactured in the United States. For example, [see] Goulds’ Manufacturing Co. v. Cowing.

There is a strong chance that WesternGeco will petition for a writ of certiorari and this type of international patent law case has some background before the court. See, Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007) and Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 531 (1972).

= = = = =

As a comment, I should mention here that the question petitioned is somewhat disingenuous in that the lost-profits would be available associated with foreign component sales, just not those tied to sale of the would-be-infringing-product. The problem for the patentee is that the real profits are in the final product not the underlying components.

Federal Circuit Looks for Briefing on Automatic Assignment En Banc Challenge

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Following up on the Shukh v. Seagate petition for en banc rehearing, the Federal Circuit has now taken an important first step of asking Seagate for its response to the petition, due by November 13, 2015.

The issue here is the construction of an employment agreement where the patentee “hereby assigns” all future inventions (created within the scope of the employment).  The Federal Circuit rule is that the agreement serves as an effective property right transfer such that, at the moment* of invention, rights to the invention automatically transfer to the employer.

One reason why the issues in the case are interesting to me is because the current Federal Circuit rule is contrary to the traditional property law notion expounded in the UCC that  “a purported present sale of future goods or of any interest therein operates as a contract to sell.”  Although relatively new, these same limits on property transfer stretch back hundreds of years in our common law history. In the background of the case is the notion that the Federal Circuit has created a federal law of assignment agreements that seemingly operates worldwide — again going against the norm that in the patents are to be treated as personal property in the exchange context, and personal property exchanges are normally governed by local state or foreign law.

In the patent context the question the Federal Circuit’s rule serves as an important and additional thumb on the side of employers rather than their employee inventors. In addition questions of legal tradition noted above, the the case raises important innovation policy questions and questions of inventor/employee rights.  The issues here can be thought of as in parallel to other areas where the law places limits on how far employment contracts can go to strip an employee of her rights. Consider, for example, covenants-not-to-compete, inventions outside of the scope of employment, and post-employment secrecy requirements limiting what someone can do with learned skills and knowledge.  In those contexts, the courts (and legislatures) have found that it doesn’t make sense to enforce overreaching employment contracts except when very particularly bargained for.

Employers obviously prefer the current rule because it so strongly favors them.  Thus, I expect that any IPO/AIPLA (and probably PTO) commentary on this front will support the current automatic-assignment rule.

****

* I included the asterisk next to “moment” of invention because of the reality that invention is typically a process distributed over time.  As the courts have repeatedly written, invention begins with a full and complete conception of the invention remains inchoate until the invention is reduced to practice (either actually or constructively). Updated for spelling.