Wi-Fi One is the new owner of Ericcson’s U.S. Patent No. 6,772,215 that covers a method for encoding and sending packet-receipt error messages over the internet. In 2013, Broadcom brought this IPR challenge and the Board eventually found many of the claims anticipated.
On appeal here Wi-Fi challenges Broadcom’s standing to bring the IPR challenge under 35 U.S.C. § 315(b). Section 315(b) indicates that an IPR proceeding may not be instituted if the petitioner (or its privy) had been served with an infringement complaint more than one year prior.
315(b) Patent Owner’s Action.— An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.
Although Broadcom had not been previously sued on the patent, Wi-Fi argues that its privies had been previously sued. The PTAB rejected that argument – finding that Broadcom was not a “privy” of the prior litigants because Wi-Fi did not prove that Broadcom had power to control the prior district court litigation or that Broadcom would be bound by the outcome of that prior litigation. The Board also refused Wi-Fi’s request for further discovery on the matter.
On appeal, the Federal Circuit affirmed — holding that the question of proper institution is unreviewable based upon the statutory statement that “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. § 314(d). Although I have not quite found the line in the decision, is appears that the court also held that even the denial of discovery is unreviewable.
The Supreme Court extended the preclusion of judicial review to statutes related to the decision to institute; it did not limit the rule of preclusion to substantive patentability determinations made at the institution stage, as the facts of Cuozzo itself make clear.
Slip Opinion at 8. The decision here essentially follows the Federal Circuit’s prior ruling in Achates.
The court also sided with the Board on Wi-Fi’s substantive argument – affirming the Board decision that the prior art anticipates.
In an important decision, the Federal Circuit issued a limited rejection of Inter Partes Review amendment procedure — holding that the PTAB acted in an arbitrary and capricious manner by denying the patentee’s motion to amend its challenged claims.
Although claim amendments are officially allowed in IPR proceedings, the Patent Trial & Appeal board has a practice of only approving amendments after the patentee shows that the claims as amended are patentable over the references at issue in the case. As part of this process, the PTAB requires that the patentee discuss each feature added to the claim and “whether the feature was previously known anywhere, in whatever setting, and whether or not the feature was known in combination with any of the other elements in the claim.” Toyota Motor Corp. v. American Vehicular Sciences LLC, IPR2013-00419, slip op. at 4–5 (Paper 32) (PTAB March 7, 2014).
Here, the patentee did not discuss each new feature individually but rather merely stated that the combination of new features were not described in the prior art. And, because the patentee failed to discuss each added feature separately, the PTAB found that the patentee “failed to meet its burden of showing that it is entitled to an award of a patent on a system having those features.”
On appeal, however, the Federal Circuit rejected that analysis — finding it “arbitrary and capricious.” In particular, the court wrote that the discussion of the combination was not “meaningfully different” from the PTAB’s proposal.
In this case, we fail to see how describing the combination is meaningfully different from describing what is new about the proposed claims, even in comparison to the unamended claims.
This case may have some impact on the pending en banc appeal In re Aqua Products. That appeal addresses the following two questions:
(a) When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?
(b) When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?
The Veritas court writes that the PTAB decision here is erroneous regardless of the outcome of Aqua.
A new petition by Pactiv (a Reynolds Co.) asks the Supreme Court to consider whether the PTO can expand the scope of an ex parte reexamination beyond the “substantial new question of patentability” identified in the Director’s order granting the reexamination. Basically, can the reexamination examiner rely upon prior art different from that in the petition.
Question as presented to the Supreme Court:
Whether, because [35 U.S.C. §] 304 requires the Director to issue an order for a reexamination “for resolution of the question,” the “substantial new question of patentability” included in the Director’s order delineates the scope of the ex parte reexamination.
[Pactiv v. Lee petition] Pactiv argues that the scope of reexaminations were intended to be limited to avoid becoming an “unbridled review system [that] could impose enormous burden and undue harassment on patentees.” (Petition).
Section 304 explains that the PTO Director can order ex parte reexamination after finding that “a substantial new question of patentability affecting . . . is raised.” The statute goes on to state flatly that the reexamination order should be “for resolution of the question” — i.e., for resolution of the substantial new question raised in the petition. That part of the statute is clear, however, the statute does not flatly bar modification of the question during the substantive reexamination.
The PTO’s position that allows for shifting rejections appears to stem from Belkin Intl Inc. v. Kappos, 696 F.3d 1379 (Fed. Cir. 2012), a decision involving inter partes reexamination. Belkin is something of a mixed-bag. In its decision, the Federal Circuit wrote that the inter partes challenger could not raise new questions of patentability beyond those in the SNQ order. At the same time, the court also wrote (in dicta) that the PTO may, on its own, raise other issues. The court wrote:
Inter partes reexamination is not totally limited to those issues suggested by the requester that present a substantial new question of patentability. Indeed, the PTO may make any new rejection, as long as that rejection also meets the substantial new question of patentability requirement. See 35 U.S.C. § 303(a) (“On his own initiative, and any time, the Director may determine whether a substantial new question of patentability is raised by patents and publications discovered by him . . . .”). Thus, the scope of reexamination may encompass those issues that raise a substantial new question of patentability, whether proposed by the requester or the Director. . .
Belkin. Pactiv challenges this dicta portion of Belkin – arguing that it is a misinterpretation of the statute and, in any event, does not apply to ex parte reexamination. I would agree with Pactiv in its reading of this portion of the statute – if the USPTO wants to raise a new question on its own, the statute provides for a process of ordering reexamination rather than the implicit addition as done here. At the same time, the availability of amendments and addition of new claims mean that new searches must be available in some form. See 35 U.S.C. § 305.
For its part in the case, the Federal Circuit affirmed the PTAB determination without opinion (R.36 Affirmance).
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The patents at issue in the case are U.S. Patent No. 6,315,921 and U.S. Patent No. 6,395,195. They relate to an oxygen absorber used in meat packaging.
Apotex v. Wyeth is a relatively simple and straightforward nonobviousness decision in the pharma space (albeit non-precedential). The Wyeth patent at issue here claims the compound that includes tigecycline mixed together with an acid as well as lactose. Although not claimed, the specification indicates that the mixture is beneficial because it helps tigecycline avoid degradation. At the time of the invention (2005) tigecycline was a known tetracycline known to act as a broad spectrum antibiotic that degrades rapidly at a neutral PH.
The key prior art in the obviousness case was a Chinese patent publication that discloses minocycline mixed with both lactose and an acid in order to avoid degradation. Minocycline is a closely related tetracycline that is both structurally similar and operates by similar action. (Tigecycline is a derivative of minocycline).
In both the Inter Partes Review proceedings and the appeal, the courts found insufficient motivation to combine the cited references by substituting the tigecycline into the minocycline compound. Importantly here, the courts made this determination as a factual finding that “a skilled artisan would [not] have had a reason to combine the references.”
Apotex (the challenger) argued that the similarity between the two forms of tetracycline and the fact that tigecycline was “known to work where other antibiotics have failed” both pushed toward a finding of a motivation to combine. The courts however rejected this argument – finding that the structural similarities did not create “a potential motivating factor for a skilled artisan to substitute tigecycline for minocycline.”
[W]hile tigecycline is closely related to minocycline structurally and in terms of benefit, the Board did not err in concluding that there was insufficient basis in the record to show that it would have been obvious to a skilled artisan to substitute tigecycline in the prior art minocycline composition.
Although not mentioned by the courts, I would think it would also be important motivation to consider that – at the time of the invention here – tigecycline was not just some random minocycline derivative – rather tigecycline was being considered as an important last-resort MRSA treatment and under consideration for fast-track FDA approval.
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A first thought that comes to my head in this case is whether the outcome here stems from the fact that this is a pharmaceutical case rather than one focusing on electronics or mechanical engineering. Perhaps not, the court does explain here the lack of assurances (pre-invention) that the claimed mixture would substantially reduce degredation. That factual-setup can be distinguished from a case like KSR where a good engineer could give pre-assurances that they could get the combination to work.
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One aspect of the decision involves underlying distinctions between the ultimate question of obviousness (an issue of law) and the factual underpinnings (such as motivation to combine references). Here, of course, once the facts were determined, the question of law was instantly answered.
Following Cuozzo, I largely wrote-off GEA Process (“GPNA”) v. Steuben as having any chance for certiorari. However, the petitioner’s newly filed reply brief offers an opportunity for revival.
In its decision on an IPR appeal, the Federal Circuit held that it lacked jurisdiction to review claims that the PTAB exceeded the PTO’s statutory authority by “terminating and vacating ﬁve instituted and near-ﬁnal IPR proceedings, without determining patentability vel non as Congress had intended.” Thus, the question presented is:
Whether the Federal Circuit erred in holding that, even if the Patent Trial and Appeal Board exceeded its statutory authority by terminating an instituted IPR proceeding with a ﬁnal written decision, the PTAB’s ﬁnal decision is judicially non-reviewable.
Following the original petition filing, the Supreme Court decided Cuozzo v. Lee and held that the PTO’s decision to institute an inter partes review is not appealable.
GPNA distinguishes its petition from Cuozzo on the grounds that it “is seeking to appeal is a final written decision terminating GPNA’s IPR proceedings without deciding patentability, nine months after granting institution (“Termination Decision”).”
GPNA is not appealing or seeking to change those institution decisions. . . . The Termination Decision was based upon the panel’s legal error in assuming that 35 U.S.C. § 312(a)(2) stated a jurisdictional requirement, the failure of which nullified the validity of the proceeding. . .
[T]his Petition addresses an agency action that is not barred from review by § 314(d) and it presents a legal issue as to which the salutary “presumption of reviewability” should apply. The Federal Circuit erred in summarily refusing jurisdiction, both by appeal and writ of mandamus, and this Petition should be granted.
The uphill battle for certiorari here begins with the fact that the PTAB has now changed its approach now interprets § 312(a)(2) as suggested by GPNA. Going to the merits, the question is whether termination of an IPR because it never should-have-instituted is effectively a decision regarding institution.
The Supreme Court has scheduled its first conference on the case for September 26, 2016.
(a)Regulations.—The Director shall prescribe regulations—
(1) providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall, if accompanied by a motion to seal, be treated as sealed pending the outcome of the ruling on the motion;
(2) setting forth the standards for the showing of sufficient grounds to institute a review under section 314(a);
(3) establishing procedures for the submission of supplemental information after the petition is filed;
(4) establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title;
(5) setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to—
(A) the deposition of witnesses submitting affidavits or declarations; and
(B) what is otherwise necessary in the interest of justice;
(6) prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;
(7) providing for protective orders governing the exchange and submission of confidential information;
(8) providing for the filing by the patent owner of a response to the petition under section 313 after an inter partes review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;
(9) setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;
(10) providing either party with the right to an oral hearing as part of the proceeding;
(11) requiring that the final determination in an inter partes review be issued not later than 1 year after the date on which the Director notices the institution of a review under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section 315(c);
(12) setting a time period for requesting joinder under section 315(c); and
(13) providing the petitioner with at least 1 opportunity to file written comments within a time period established by the Director.
In prescribing regulations under this section, the Director shall consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter.
(c)Patent Trial and Appeal Board.—
The Patent Trial and Appeal Board shall, in accordance with section 6, conduct each inter partes review instituted under this chapter.
(d) Amendment of the Patent.—
(1)In general.—During an inter partes review instituted under this chapter, the patent owner may file 1 motion to amend the patent in 1 or more of the following ways:
(A) Cancel any challenged patent claim.
(B) For each challenged claim, propose a reasonable number of substitute claims.
Additional motions to amend may be permitted upon the joint request of the petitioner and the patent owner to materially advance the settlement of a proceeding under section 317, or as permitted by regulations prescribed by the Director.
(3)Scope of claims.—
An amendment under this subsection may not enlarge the scope of the claims of the patent or introduce new matter.
In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.
This post summarizes data on inter partes review proceedings and appeals from the Patent Office. Although the office publishes a monthly Patent Trial and Appeal Board Statistics packet, the narratives contained within that packet can create confusion as discussed in Michael Sander’s guest post earlier this year. Below are some of the charts that I’ve developed based on the publicly available information to attempt to get a better handle on what’s going on in terms of case flow and outcome.
As you look at these charts, keep in mind the temporal issues associated with IPR proceedings. Once a petition is filed, it typically takes about six months before an institution decision is made.* If a petition is instituted, it will be about a year (and sometimes more) before the trial decision. Thus, very few petitions filed in the last four months or so will have reached the point of institution decisions, and nearly all trial decisions issued in the last few months relate to petitions filed over a year (and probably around 18 months) ago. Appeals of trial outcomes will be filed within 2-3 months depending on whether a rehearing is requested.
The consequence of this is that each successive piece of information relates to an earlier time period. The institution rates shown in the first graph relate to the petitions filed about 5-7 months earlier; the trial outcomes shown in the second graph relate to petitions filed about 18 months earlier (and instituted about 12 months earlier), and the appeal numbers relate to trial outcomes from about 2-3 months earlier (with the additional caveat that these are all appeals from the Patent Office, not just appeals from IPRs). These sequences are approximations, but they’re important in understanding the relationship between filed petitions, institution rates, trial outcomes and appeals.
Finally, note that at each stage, some percentage of the cases continuing on after the earlier stage will drop out due to settlement or for other reasons (such as joinders at the institution stage). Thinking of the data as an inverted pyramid might be helpful.
Petitions Filed and Institution Decisions
Petition filing and institution rate data indicates that both the rate of filing and rate of institution have plateaued. Since June of 2014, the number of new petitions filed each month has ranged between 96 and 184, with most quarters falling between about 400 and 450 new filings. The fourth quarter of 2015 and the first quarter of 2016 did see a drop, though, so perhaps we’ve seen the peak of IPR petition filings.
The most interesting thing to note about the above graph of trial outcomes, which I created based on the differences reported in the monthly statistical reports issued by the PTO, might be that recent months have seen a fall in the percentage of trials in which all claims were held unpatentable. In March 2016, for example, while 40 trials resulted in all claims held unpatentable, twenty-one resulted in no claims held unpatentable. And in May and June, only a bit over 50% of the trials resulted in all claims held unpatentable.
The below chart depicts the numbers of appeals docketed at the Federal Circuit arising from the PTO, the District Courts, and the International Trade Commission. It illustrates a dramatic rise in the number of appeals from the PTO, with the number projected to surpass the number of appeals arising from the district courts this year. It’s use in assessing IPR proceedings is limited due to the fact that the data does not differentiate between appeals from IPR proceedings and other appeals from the PTO. I’d be interested in hearing from anyone who’s done the detailed breakdown of these appeals to know whether the standard hypothesis–that this rise is mainly due to appeals from IPR proceedings–is correct.
*These numbers are based on the PTO’s own timeline, see 77 Fed. Reg. 48757 (Aug. 14, 2012), and data from LexMachina indicating the median time to institution decision is currently 185 days, and the median time to final decision is currently 540 days.
The Supreme Court has completed its patent law business for the 2015 term and will re-open decision making in September 2016. Briefing and new filings will, however, continue throughout the summer.
Two Decisions: The Supreme Court has decided its two major patent cases – Halo/Stryker and Cuozzo. In Halo, the court re-opened the door to more treble-damage awards for willful patent infringement. The decision rejects the objective-recklessness standard of Seagate (Fed. Cir. 2007)(en banc) and instead places substantial discretion in the hands of district court judges for determining the appropriate sactions “egregious infringement behavior.” In Cuozzo, the court affirmed the Federal Circuit’s pro-PTO decision. The decisions confirms the PTO’s authority construe claims according to their broadest-reasonable-construction (BRI) even during post-issuance review proceedings and also confirms the Federal Circuit ruling that the PTO’s initiation of an inter partes review (IPR) proceeding is not appealable (even after final decision). A major caveat of this appealability issue is that the court limited its holding to run-of-the-mill IPR patent issues. The court did not determine when other issues arising from institution, such as constitutional due process challenges, might be appealable.
Both decisions are important. Halo adds at least a gentle breeze to the would-be patent infringement armada. I heard many discussions of pendulum’s swinging in the days following the case, although I would not go quite so far. Cuozzo was a full affirmance of the PTO position and will operate to continue to raise the statute and importance of the agency.
Three Pending Cases Set the Stage for Next Term: With the certiorari writ grant in Life Tech v. Promega, we now have three patent cases set for review and judgment next term. The issue in Life Tech is fairly narrow and involves export of of a component of a patented invention for combination in a would-be-infringing manner abroad. The statute requires export of a “substantial portion of the components” and the question in the case is whether export of one component can legally constitute that “substantial portion.” In the case, the component (Taq) is a commodity but is also an admitted critical aspect of the invention. Life Tech may be most interesting for those generally interested in international U.S. law (i.e., extraterritorial application of U.S. law). The other two pending cases are Samsung v. Apple (special damages in design patent cases) and SCA Hygiene (laches defense in patent cases).
None of these three pending cases are overwhelmingly important in the grand scheme of the patent system, although Samsung is fundamental to the sub-genre of design patents. This week, the Supreme Court denied certiorari in Sequenom v. Ariosa – a case that some thought might serve to rationalize patent eligibility doctrine in a way that favors patentees. For now, the Mayo, Alice, _____ trilogy remains open-ended. This leaves the Federal Circuit in its nadir.
Following Cuozzo, the only AIA post-issue review cases still ongoing are Cooper and MCM. These cases raise US Constitutional issues that were expressly not decided in Cuozzo. Briefing is ongoing in MCM and one scenario is that the court will sit on Cooper and then grant/deny the pair together. A new petition was filed by Trading Technologies just before Cuozzo was released – the case focuses on a mandamus (rather than appeal) of a CBM institution decision for a patent covering a GUI tool. (Full disclosure – while in practice I represented TT and litigated the patent at issue). Of minor interest, the court issued a GVR order (Grant-Vacate-Remand) in Click-to-Call Tech. v. Oracle Corp (15-1014) with instructions to the Federal Circuit to reconsider its prior decision in light of the recently decided Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ___ (2016). It will be interesting to see whether the patentee can develop a new hook for the Federal Circuit.
The end-of-term clean sweep leaves only two-more briefed-cases with potential for certiorari: Impression Prod. v. Lexmark Int’l. (post-sale restrictions); and Sandoz v. Amgen (BPCIA patent dance). In both cases the court called for the views of the Solicitor General (CVSG). DOJ briefs should be filed around the end of the year – although the election may shift some of the timing. SG Donald Verrilli has stepped down with former deputy Ian Gershengorn now serving as Acting SG.
In a 10-1 decision, the Federal Circuit has rejected Ethicon’s petition for en banc rehearing on the question of whether the USPTO Director improperly delegated IPR institution decisionmaking. Ethicon will likely petition the Supreme Court for its views. The case raises interesting, but ones that I expect will ultimately fail. Chief Judge Prost likely held the decision release to await the Cuozzo affirmance that implicitly supports the court’s ruling here.
Inter Partes Reviews (IPRs) can be broken down into a two step process. At the institution stage, the Patent Office Director is tasked with determining whether to institute the proceeding. 35 U.S.C. § 314. Once instituted, the Patent Trial and Appeal Board (PTAB) holds trial and makes a final determination of merits. 35 U.S.C. § 316(c). Despite the statutory separation, the Director has delegated the entire procedure to the PTAB – including the institution decision. In its failed petition, Ethicon questioned this delegation – asking: “Does the Patent Act permit the [PTAB] to make inter partes review institution decisions?”
The decision in Cuozzo does not directly address the challenge issues here, but the court’s loose language does suggest that it would side with the Federal Circuit. In particular, the court repeatedly refers to actions by the “Patent Office” regarding institution and other decision rather than using the statutory language “Director.” Although not as consistent, the court also repeatedly refers to actions by the PTAB as by the “Patent Office.” In his dissent, Judge Alito addresses the issue directly and without criticism, although failing to note that Director Lee is a woman:
The Director of the Patent Office has delegated his authority to institute inter partes review to the Patent Trial and Appeal Board (Board), which also conducts and decides the inter partes review. See 37 CFR §§42.4(a), 42.108 (2015); 35 U. S. C. §§316(c), 318(a). I therefore use the term “Patent Office” to refer to the Director, the Board, and the Patent Office generally, as the case may be.
The Supreme Court has upheld the AIA provision barring challenges to the Patent Office’s decision to institute inter partes review. 35 U. S. C. §314(d). In addition, Justice Breyer’s majority opinion approved of the Patent Office’s approach of applying the broadest reasonable construction (BRI) standard to interpret patent claims – finding it a “reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.”
The Court was unanimous as to the BRI standard however, Justices Alito and Sotomayor dissented from the no-appeal ruling – they would have interpreted the statute as limiting interlocutory appeals but still allowing review of the decision to institute within the context of an appellate review of the PTO’s final decision on the merits.
No Appeal: The court began with the express language of the statute which expressly states that the decision of “whether to institute an inter partes review . . . shall be final and non-appealable.” The provision is plain on its face and indicates congressional purpose of delegating authority to the Patent Office. The dissenting opinion offered by Justice Alito offered to limit the statute as preventing only interlocutory appeals, but the majority rejected that interpretation as lacking textual support and being ‘unnecessary’ since the APA “already limits review to final agency decisions.” The Supreme Court also analogized the PTO’s initiation decision to that of a grand jury – which is likewise unreviewable. “The grand jury gets to say— without any review, oversight, or second-guessing— whether probable cause exists to think that a person committed a crime” (quoting Kaley v. United States, 571 U. S. ___ (2014)).
If you remember, Cuozzo did not present a Constitutional challenge to the AIA regime and the majority opinion offered a glimmer of limitation in that regard. Notably, the Court suggested that challenges to the decision to institute might be appealable if based upon a Constitutional issue or some other issue outside “well beyond” the post issuance review proceeding statutory provisions.
We conclude that the first provision, though it may not bar consideration of a constitutional question, for example, does bar judicial review of the kind of mine-run claim at issue here, involving the Patent Office’s decision to institute inter partes review.
The opinion here includes a number of nuances that will be interesting to tease-out, but the bottom line is that IPR remains a powerful tool for challenging patents.
Claim Construction during Inter Partes Review: Regarding the Broadest-Reasonable-Interpretation being applied to patent claims, the court was unanimous in siding with the USPTO. The court began by noting that Congress granted rulemaking authority to the USPTO to create regulations governing inter partes review and that this authority empowered the USPTO to enact rules both substantive and procedural that are reasonable in light of the statutory text. Since the statute was “not unambiguous” as to the appropriate claim construction standard, and therefore that the USPTO must be given leeway in determining its administrative approach.
Cuozzo had argued that IPR proceedings were like trials in many ways and therefore the claim construction should be parallel to that of trial proceedings. The Supreme Court rejected that analogy – finding that IPR proceedings serve a purpose much broader than merely “helping resolve concrete patent-related disputes among parties.”
[I]nter partes review helps protect the public’s “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 (1945); see H. R. Rep., at 39–40 (Inter partes review is an “efficient system for challenging patents that should not have issued”).
In finding BRI reasonable, the court followed this public-interest pathway and found that BRI helps to provide stronger bounds on patent scope:
We conclude that the regulation represents a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office. For one thing, construing a patent claim according to its broadest reasonable construction helps to protect the public. A reasonable, yet unlawfully broad claim might discourage the use of the invention by a member of the public. Because an examiner’s (or reexaminer’s) use of the broadest reasonable construction standard increases the possibility that the examiner will find the claim too broad (and deny it), use of that standard encourages the applicant to draft narrowly. This helps ensure precision while avoiding overly broad claims, and thereby helps prevent a patent from tying up too much knowledge, while helping members of the public draw useful information from the disclosed invention and better understand the lawful limits of the claim. See §112(a); Nautilus, Inc. v. Biosig Instruments, Inc., 572 U. S. ___ (2014).
Most of the IPR-related petitions for writ of certiorari that are still pending are likely to fall-away at this point. However, the major caveats in the majority opinion (noted above) offer some light for both Cooper v. Lee and MCM v. HP since those petitions challeng the system on US Constitutional grounds.
USPTO Director Michelle Lee offered the following statement in reaction to the Cuozzo decision:
The USPTO appreciates the Supreme Court’s decision which will allow the Patent Trial and Appeal Board (PTAB) to maintain its vital mission of effectively and efficiently resolving patentability disputes while providing faster, less expensive alternatives to district court litigation.
Director Lee will likely step-down as the Obama Administration moves out. A portion of her legacy will remain as the named respondent.
MCM-Petition-and-Appendix: (1) Whether inter partes review (IPR) violates Article III of the Constitution; and (2) whether IPR violates the Seventh Amendment to the Constitution.
Response Due June 30, 2016.
Amici in Support of Grant
MCM_INTERDIGITAL_TESSERA (“Characterizing something as a public right comes with certain consequences. By incorrectly holding that patents are public rights, the Federal Circuit’s decision has far-reaching and wholly implausible consequences that the Federal Circuit never grappled with and that have ‘nothing to do with the text or tradition of Article III.'”)
MCM_NYIPLA (“The public rights doctrine is a complex issue that requires this court’s resolution.”)
MCM_Mossoff (“[T]his Court has long recognized and secured the constitutional protection of patents as private property rights reaching back to the early American Republic.”) (Signed by Profs Mossoff (Scalia Law), Cahoy (Penn State), Claeys (Scalia Law), Dolin (Baltimore), Ely (Vandy), Epstein (NYU & Chicago), Harrington (Montreal), Holte (SIU), Hurwitz (Nebraska), Manta (Hofstra), O’Connor (UW), Osenga (Richmond), Schultz (SIU)).
MCM_UNM (“[T]he threat of IPR devalues university patents.”)
MCM_LAUDER (“Amici agree with Petitioner that the IPR procedure was beyond Congress’s power to impose, and its underpinning rationale—that patents are a matter of administrative largesse, rather than a constitutionally protected property right—is constitutionally infirm.”)
MCM_HoustonInvestors (“Congress has exceeded its authority to undermine patents to give “patent pirates” encouragement to infringe patents in the well supported historical expectation that the IPR is likely to invalidate the patents.”
MCM_SECURITYPEOPLE (“As noted in McCormick Harvesting Co. v. Aultman, 169 U.S. 606 (1898), once a patent is issued, it can only be cancelled or invalidated by an Article III court, not the executive branch. Similarly, as taught in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989), Congress cannot conjure away the Seventh Amendment fact-finding process employed in Article III courts by mandating that traditional legal claims be tried to an administrative tribunal.”)
MCM_IEEE-USA (“This bizarre state of affairs merits the close scrutiny of this Court. All issued U.S. patents deserve the same constitutional protections and legal standards in invalidation proceedings as those available in Article III courts.”) * UPDATE: The brief was filed by IEEE-USA (a division of IEEE).
In a short opinion, the Federal Circuit has reaffirmed the USPTO’s tightly restrictive approach to amendment practice in Inter Partes Review (IPR) proceedings. Under the rules, a patentee has one opportunity to propose amendments or substitute claims. However, the motion to amend will only be granted if the patentee also demonstrates in the motion that the proposed amendments would make the claims patentable over the known prior art. See Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2012–00027, 2013 WL 5947697 (PTAB June 11, 2013).
That approach has been upheld in several Federal Circuit cases, including Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1307−08 (Fed. Cir. 2015). As such, the panel here held that its power was restricted:
Given our precedent, this panel cannot revisit the question of whether the Board may require the patentee to demonstrate the patentability of substitute claims over the art of record.
As such, the Federal Circuit found no abuse of discretion in thte PTAB’s denial of amendment.
We conclude that the Board did not abuse its discretion by denying Aqua’s motion to amend. The Board rebutted Aqua’s sole argument that the vector limitation made the substitute claims patentable over the combination of Henkin and Myers. Because Aqua’s arguments with respect to that combination rested exclusively on the vector limitation, the Board had no obligation to address the other amendments or to consider the issue of objective indicia of non-obviousness, which Aqua did not raise in connection with the Henkin/Myers combination. We affirm.
The case is being handled by Finnegan’s top appellate lawyer James Barney and is now set-up for en banc review.
Guest post by Michael E. Sander, Founder and CEO of Docket Alarm, Inc.
The Patent Office routinely publishes statistics on IPR and CBM proceedings, but their methodology suggests that the petition institution rate is lower than it really is.
Inter partes review and covered business method review have undoubtedly changed patent litigation. No patent assertion campaign or defense strategy is complete without considering the implications of these AIA procedures.
The Patent Office publishes statistics on these new AIA trials roughly once a month. Practitioners can easily see how many petitions are filed in various technology areas, as well as how often claims survive or are canceled. They say that a picture is worth a thousand words, and this visual and easy-to-read resource gives stakeholders a quick sense of how the new tribunal is affecting patent law.
But as Mark Twain once said, “[f]acts are stubborn things, but statistics are more pliable.” In publishing these statistics, the PTO has made choices in methodology that may underreport the institution rate of IPR and CBM proceedings.
Background on AIA Trial Procedure
For those unfamiliar with PTAB trial practice, a PTAB proceeding starts with a petitioner filing a petition for inter partes review or covered business method review.See Figure 1 (below). The petition lays out reasons why a claim or set of claims is invalid.
About six months after a petition is filed, the PTAB issues an Institution Decision. See 35 U.S.C. 314(b). In the Institution Decision, the PTAB decides whether or not “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” See 35 U.S.C. 314(a). If the PTAB decides that the petitioner is unlikely to prevail, the proceeding is terminated, and the case is disposed of.
If the PTAB determines that the petitioner may prevail, a trial is instituted. During this stage, evidence and testimony is presented, along with additional briefing. Within one year of institution, the PTAB issues a Final Written Decision, in which they decide whether or not claims should be canceled. See 35 U.S.C. 316(a)(11).
Figure 1: IPR and CBM Process
Statistics on AIA Trial Proceedings
The PTO has been regularly publishing statistics on a variety of aspects of AIA proceedings. One important piece of information to patent owners and petitioners alike is the average rate in which the PTAB institutes a petition for IPR or CBM, i.e., the Institution Rate. Fortunately, the Patent Office publishes exactly these figures.
Depicted in Figure 2 below is one page from the PTO’s published statistics. Their statistics depict a snapshot of every IPR petition filed as of February 29, 2016. The PTO depicts the number of IPR petitions that have proceeded to each stage, including whether a proceeding was instituted or not, whether the case settled, and whether the instituted proceeding resulted in all instituted claims being canceled, some claims canceled, or no claims canceled.
This figure is deceptively simple. The figure states that out of 2731 total petitions, 1372 trials were not instituted while 1359 petitions were instituted. Of the non-instituted cases, 540 were terminated due to non-substantive reasons.
Therefore, of the institution decisions decided on the merits, the PTAB’s reported Petition Institution rate is 62%.
When I first studied the PTO’s chart and saw that the Petition Institution rate was 62%, I was puzzled. Docket Alarm, compiles statistics like these and more, and found that petitions were instituted in 71% percent of proceedings. See Figure 3. This nearly 10-point difference was too large to be explained.
As it turns out, deriving the overall institution rate from the chart provided by the PTO can be misleading.
The understand why the PTO’s reported Institution Rate is lower than expected, one must understand the PTO’s methodology, and the implications of the dataset that they used. Right at the top of the page, their figure states that only proceedings “Completed To Date” are considered in their statistics. See Figure 2. This seemingly benign statement has profound implications on the result: If a trial is not instituted, it is included in their statistics immediately when the institution decision is published. However, if a trial is instituted, the decision will not be included in the dataset until the case is disposed, up to a year later. Petition denials are necessarily included at an earlier point in time than the decisions to institute. This methodology skews the reported institution rate downward, suggesting that the PTAB is instituting far fewer trials than they are.
The effect is significant, consider the following hypothetical. Suppose PTAB judges flip a coin to determine whether to institute: 50% of the time they decide to institute, and 50% of the time they decide to not institute. Further suppose in our hypo that on January 1, 2013, 100 petitions are filed, and no further petitions are filed for the rest of the year.
Given this hypothetical, one would assume that the reported Institution Rate should be 50%, but let’s see how it plays out.
After the first 6 months, on July 1, 2013, the PTAB flips a hundred coins, and 50 petitions are instituted, while 50 are denied. The proceedings that are not instituted are terminated. The instituted proceedings continue onwards. Using the PTO’s methodology, only the denied petitions are included in the statistics.
Using the PTO’s methodology in the hypothetical above, the institution rate would be 0%. The 50 petitions that were denied are included in their statistics, while the 50 instituted decisions are not because they are not completed.
Taking the hypothetical to the following year, on Jan. 1, 2014, 100 additional petitions are filed. Again, on July 1, 2014, 50 petitions are instituted and 50 denied. In addition, the 50 instituted petitions that were filed on Jan. 1, 2013, come to completion. Using the PTO’s methodology, the institution rate calculated in the second year would be 25%, closer to reality but still a far cry from the “real” institution rate of 50%.
One can continue this hypothetical forward, and while the gap between the reported rate and reality narrows, after five years, the difference between what is reported and the expected institution rate is still 10%. See Table 1 (below).
Table 1: Calculating the Institution Rate Using PTO’s Methodology on Hypothetical Data
Obviously, Administrative Patent Judges do not flip a coin to decide whether to institute, more than 100 petitions are filed in a year, and petitions are not all filed on the first of the year. However, the basic point holds true: if one only includes “completed” cases in their statistics, non-instituted cases will be over-counted, and instituted cases will be proportionally under-counted.
Because the PTO clearly states at the top of the chart that they are only including completed cases, technically, their statistics are not incorrect. However, as shown above, their methodology can lead one who is not bringing a critical eye to the statistics to believe that the Institution Rate is 10% lower than it actually is. Mark Twain would feel right at home.
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 There are several other types of AIA trial proceedings, such as Post Grant Review and Derivation proceedings, but they are not nearly as popular as IPRs and CBMs.
 Six months is typical, but it can be earlier at the discretion of the court, or later if the petition is not quickly accorded a filing date.
 We additionally assume that no parties settle, and that petitions are afforded a filing date on the same day they are filed. These assumptions are immaterial to the substantive point, but make the numbers easier to deal with.
Guest post by Saurabh Vishnubhakat, Associate Professor of Law at the Texas A&M University School of Law. Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, although his arguments here should not be imputed to the USPTO or to any other organization.
On May 9, the USPTO Patent Trial and Appeal Board (PTAB) designated five opinions as “precedential”—the most significant of the four labels that the agency attaches to its administrative decisions. This action is itself a milestone, as the USPTO has designated only three other opinions as precedential over the last 22 months. So this is a useful moment to examine the process by which PTAB opinions become precedential and to consider what this new body of administrative precedent means for the patent validity review procedures created by the AIA.
What the Current Precedential Opinions Say
The eight PTAB precedential opinions themselves are as follow:
PTAB opinions come in four varieties—until recently, it was three—and each serves a different function. The most difficult to designate and so the rarest are precedential opinions, which are binding in all future cases before the PTAB unless and until they are superseded by later binding authority. Two particularly strong motivations for designating an opinion as precedential is to resolve a conflict among multiple PTAB decisions and to address novel questions.
By contrast, the largest and least significant set of opinions are routine; all opinions are routine by default, and some further action is necessary to elevate an opinion’s status. Routine opinions are still binding as to the particular case, but should generally not be cited as persuasive authority except as to their particular facts.
In the middle are two more types of non-binding opinions: informative and representative. Informative opinions articulate the PTAB’s norms on recurring issues and offer guidance both on issues of first impression and on PTAB rules and practices. Representative opinions offer a sample of typical decisional outcomes on a given matter. Until recently, the only middle category was informative opinions, which presented guidance on the rules and practices of the PTAB, representative samples of opinion types, or representative samples of outcomes. On September 22, 2014, the PTAB created a new category for representative opinions—ranked below informative opinions.
In short, representative opinions are a descriptive curation of routine opinions. Informative opinions go beyond merely surveying an issue and synthesize some further normative guidance. Precedential opinions go further still and make the synthesis binding.
How the PTAB Designates Opinions
The process for designating opinions resides in the PTAB’s Standard Operating Procedure No. 2 (Rev. 9, Sept. 22, 2014). Any member of the PTAB may nominate an opinion to be designated as representative, informative, or precedential. This includes the Director and Deputy Director of the USPTO and the Commissioners for Patents and Trademarks as ex officio members. Interested parties and members of the public may nominate an opinion within 60 days of its issuance to be designated as precedential. Nominations are received and referred by the Chief Judge of the PTAB.
Upon a nomination to make an opinion precedential, members of the PTAB discuss the proposal for a prescribed period (usually 10 business days) and then vote. Approval by a majority sends the opinion to the Director, whose approval is also necessary. Upon approval by the Director, the opinion is designated as precedential and published (with appropriate notice and opportunity for written objection where confidentiality applies under 37 C.F.R. § 1.14).
For opinions already designated as precedential, any member of the PTAB may suggest that later authority has overcome the opinion’s precedential value. If first the Chief Judge and then the Director both agree, then the opinion loses its precedential force, and a notice of the change is posted in its place among the list of precedential PTAB opinions.
The Chief Judge of the PTAB may designate any opinion as informative or representative so long as it is not already precedential.
Why the PTAB’s Precedents (and Process) Matter
Both the content of the PTAB’s body of precedential opinions and the PTAB’s process have important implications for ex post administrative review of patent validity.
As to content, it is telling that all eight precedential opinions pertain to the procedural structure of IPR and CBM proceedings, particularly insofar as that procedural structure interacts with the structure of patent litigation in the federal courts. The separation of patent powers between the executive and the judiciary is now before the Supreme Court in multiple cases, and this body of precedential opinions should be understood as a signal of the USPTO’s strong interest in shoring up its regime of administrative adjudication.
The opinions in SecureBuy, LG Electronics, and Oracle address when earlier civil actions do and do not bar a petition for PTAB review. Westlake Services addresses estoppel in future CBM review, and there is good reason to expect that the same reasoning will apply to the parallel statutory language that governs IPR estoppel. Lumentum Holdings rejects a jurisdictional view of certain procedural requirements, preserving the PTAB’s broad authority to choose its cases. MasterImage 3D frames a patent owner’s ability to amend claims during review. And Bloomberg and Garmin Int’l address limits on trial-type discovery in both the IPR and the CBM/PGR contexts. Making these procedural and structural decisions into binding authority is, by definition, intended to bring uniformity to the PTAB’s large and increasing body of case law.
The need for such uniformity is particularly strong right now. The Supreme Court in Cuozzo v. Lee is evaluating whether the PTAB’s authority in instituting petitions is truly nonreviewable. The Court in Cuozzo is also considering whether the PTAB’s claim construction standard can properly remain unaligned with federal court standards, a question that turns significantly on the ability of patent owners to amend their claims during review. The trial-like nature of PTAB proceedings is more generally under attack as to whether IPR and CBM review violate the separation of powers doctrine and the Seventh Amendment jury trial right, as the recent cert petition in MCM Portfolio LLC, Petitioner v. Hewlett-Packard Company (No. 15-1330) suggests. In this environment of Supreme Court scrutiny, a persuasive argument that PTAB practice is proceeding with institutional coherence may do much to influence the USPTO’s autonomy in administering the validity and scope of patent rights.
Gregory Dolin and Irina Manta argue in a forthcoming article that the Leahy-Smith America Invents Act (AIA) effectuated a Fifth Amendment “taking” by enhancing the mechanisms for challenging issued patents in administrative proceedings. Initial data do indicate that patents are more likely to be found invalid in the new inter partes review (IPR) and covered business method review (CBMR) proceedings than in district court actions or through the IPR and CBMR’s administrative predecessors. Patentees’ have even complained that the filing of individual IPR petitions has affected their stock prices.
Has the AIA made it too easy to invalidate a patent? Have patentees been treated unfairly? Maybe. Maybe not. But one things is clear: Dolin and Manta’s argument that the AIA is a taking faces serious legal hurdles.
First, Dolin and Manta’s premise that patents are property rights protected by the Takings Clause is far less clear than they contend. While the Supreme Court has recently suggested that patents, like land, “cannot be appropriated or used by the government itself, without just compensation,” seeHorne v. Department of Agriculture, 135 S. Ct. 2419 (2015) (quoting James v. Campbell, 104 U.S. 356, 358 (1882)), both that statement, and the statement it quotes, are dicta. More recent decisions express greater ambivalence regarding patents’ status under the Takings Clause.
In contrast with trade secrets, the Supreme Court has never held that patents are property under the Takings Clause. In Florida Prepaid Postsecondary EducationExpense Board v. College Savings Bank, 527 U.S. 627 (1999), the Court held that Congress can’t abrogate states’ sovereign immunity from patent infringement claims. In reaching this conclusion, the Court stated that patents are “surely included within the ‘property’ of which no person may be deprived by a State without due process of law.” Id. at 642. But the Court declined to rule on patents’ status under the Takings Clause. See id. at 642.
Most recently, in Zoltek Corp. v. United States, 442 F.3d 1345 (Fed. Cir. 2006) (per curiam), vacated on other grounds, 672 F.3d 1309, 1314–22 (Fed. Cir. 2012) (en banc), the Federal Circuit held (rightly or wrongly) that 28 U.S.C. § 1498 is the only means of recovery for patentees whose patents are infringed by the U.S. government. Patentees can’t bring claims for compensation under the Takings Clause. Although the court eventually vacated that decision, the court never repudiated the reasoning behind its constitutional holding.
Dolin and Manta try to get around Zoltek by arguing that, unlike government infringement—which is like a forced permit and leaves all the rights of a patent intact—the AIA “changed the scope of patent rights themselves” by subjecting issued patents to more stringent post-issuance review. However, courts have not endorsed that argument, and analogs are difficult to find.
Second, even if we accept the argument that government can potentially take patents by altering their scope retroactively, courts are unlikely to view post-issuance review proceedings as the kinds of government actions regulated by the Takings Clause. Courts assessing constitutional challenges under the Fifth or Fourteenth Amendment tend to distinguish actions intended to “cure” defects in government administrative systems from incursions on property rights. In Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985), the Federal Circuit rejected a very similar challenge to IPR’s predecessor based partly on this distinction, noting that reexamination statute belonged to “the class of ‘curative’ statutes, designed to cure defects in an administrative system[,]” and that such statutes are treated more favorably for Fifth Amendment purposes even when they devalue property rights. We see little reason that a court would reach a different conclusion today.
Lastly, even if a court decides it is possible for the government to take patents by subjecting them to more stringent post-issuance review, Dolin and Manta’s argument almost certainly loses as a matter of takings doctrine. To determine whether a particular governmental action effectuates a taking, courts assess “the character of the governmental action, its economic impact, and its interference with reasonable investment-backed expectations.” See Penn. Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978). Thus, even assuming we accept that the AIA significantly devalued all patents (a big “if”), whether this constitutes a taking depends on whether patentees should have anticipated that Congress would amp up administrative review, given the existing regulatory background.
Dolin and Manta argue the AIA’s enhanced IPR and CBMR proceedings interfered with patentees’ “reasonable investment-backed expectations” by increasing the likelihood that their patents would be found invalid in administrative proceedings utilizing patentee-unfriendly rules such as “preponderance of the evidence” standard for invalidation and “broadest reasonable construction” with limited opportunity to amend. But, as Dolin and Manta concede, the AIA was enacted against a background of federal statutes and regulations that authorize challenges to patent validity. IPR and CBMR review are only the latest in a series of administrative procedures authorizing parties to offensively challenge the validity of issued patents. To us, it seems highly unlikely that the question of whether the Takings Clause applies to the creation of new IPR and CBMR review could turn on such small differences as whether or not patentees have a full opportunity to amend their claims during review.
Also, it is worth noting that beyond third party challenges to patent validity, numerous federal regulatory statutes limit patentees’ ability to exploit their inventions for purposes of health and safety. For example, various regulatory review statutes, such as the Food, Drug, and Cosmetic Act (FDCA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Toxic Substances Control Act (TSCA), practically reduce effective patent lifetimes by prohibiting patentees from commercially marketing or using protected products prior to regulatory approval. Yet none of these statutes fully compensate patentees for their losses.
Are these actions all takings as well? This conclusion has troubling consequences. Does Congress really need to compensate patentees every time it passes a statute that significantly affects the value of issued patents? Could Congress pass regulations for the purpose of restraining bad-faith enforcement of patents that have already been granted? What about judicial actions that reduce the value of patents? Do they intend for Congress to compensate patentees in these cases or to take fewer actions limiting patent rights, simply due to the fear of effectuating a taking? This seems like a dangerous basis on which to formulate patent policy.
In any case, we think that, given this regulatory backdrop and the existence of administrative review proceedings for over thirty years, patentees could foresee—or reasonably should have foreseen—that the government would continue to actively regulate patent rights without “just compensation.”
Together, these arguments persuade us that the AIA is not a taking. Nevertheless, the authors’ article is a thought-provoking and educational analysis of the constitutional implications of Congress’s recent efforts to reform the patent system. We thank them for reopening the door on this area of scholarship.
Laches: The Supreme Court granted SCA’s writ of certiorari on the question of whether laches defense applies to block back-damages in patent cases. The Federal Circuit says “yes” while the Supreme Court recently said “no” in a parallel copyright case (Patrella). The Supreme Court decided Patrella 6-3 with Justice Scalia in the majority offering the potential of a tight-split in this case. The court looks to be sitting-on the parallel case of Medinol v. Cordis until SCA is decided.
Copyright on Useful Articles: Although not a patent case, the court also decided to hear a “useful article” copyright case. Star Athletica v. Varsity Brands. The case asks whether the stripes and chevrons found in a cheerleader uniform are sufficiently “separable” from the uniform in order to be copyrightable. The useful article doctrine is generally considered to be setting up a boundary line between the domains of copyright and patent.
More Challenges to USPTO Authority: MCM filed its petition for writ of certiorari directly challenging USPTO authority to conduct inter partes review proceedings with two easy questions:
Does IPR violate Article III of the Constitution?
Does IPR violate the Seventh Amendment to the Constitution?
[MCM Petition and Appendix] MCM’s brief was filed Tom Goldstein along with Ned Heller. The question for the Supreme Court is whether to extend or contract from its position in Stern v. Marshall, 131 S. Ct. 2594 (2011) where the court held that Article III of the U.S. Constitution prohibits Congress from withdrawing “from judicial
cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.” Quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272 (1856)).
The brief raises a set of interesting old cases focusing both on the separation of powers and the tradition that patent-revocation for invalidity requires a jury to decide disputed facts.
Ex Parte Wood & Brundage, 22 U.S. 603 (1824)
McCormick Harvesting Mach. Co. v. C. Aultman & Co., 169 U.S. 606 (1898)
Mowry v. Whitney, 81 U.S. 434 (1871)
Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272 (1856)
Neilson v. Harford, Webster’s Patent Cases 295 (1841)
Pennock v. Dialogue, 27 U.S. 1 (1829)
United States v. Am. Bell Tel. Co., 128 U.S. 315 (1888)
Cooper v. Lee raises some parallel issues. Its petition will be considered by the Court in its May 12. [Update: The court has “rescheduled” consideration of Cooper’s brief – perhaps awaiting its own determination in Cuozzo.]
Hereby Assign Future Inventions: In Shukh v. Seagate, the petitioner raises the long-brewing question involving the Federal Circuit’s interpretation of patent assignments. In particular, the Federal Circuit has ruled – as a matter of federal patent law – that patent rights are assignable before their invention is even contemplated. The petition asks:
[W]hether FilmTec’s “automatic assignment” rule should be overruled because it extinguishes inventors’ constitutional and statutory rights to inventorship and ownership.
In Stanford v. Roche, Justices Breyer, Ginsburg and Sotomayor criticized the Federal Circuit’s rule and suggested that the issue should be presented in a future case. The majority expressly noted that its opinion did not decide the issue. [Shukh v. Seagate – Redacted Public Petition]
Disparaging Trademarks: A pair of disparaging trademark cases have also been petitioned: Lee v. Tam (“Slants”) and Pro-Football v. Blackhorse (“Redskins”). The Federal Circuit previously held the limit on registering disparaging marks to be an unconstitutional abrogation of the freedom of speech.
The Federal Circuit has denied en banc review of decisions in four inter partes review proceedings brought by Gnosis. Federal Circuit had previously affirmed the Patent Trial and Appeal Board’s IPR determination that the challenged Merck and SAMSF patent claims were invalid as obvious.
The petitions focused on the standard-for-review of factual findings made by the PTAB. The appellate panel applied the “substantial evidence” standard that requires affirmance of challenged factual findings when those conclusions are based upon “more than a mere scintilla” of evidence. The Supreme Court has restated this standard only requiring that “a reasonable mind might accept [the evidence] as adequate to support [the] conclusion.” In the appeal, the patentees agreed it is appropriate that PTAB factual conclusions be given deference. However, the patentees argued that the standard should be “clear error” – a lower level of deference. A way to think about the difference between the two of these is to consider that factual findings by a jury are generally reviewed for substantial evidence (higher deference) while a judge’s factual findings are reviewed for clear error (lower deference).
In most administrative law areas, agency factual determinations are reviewed for substantial evidence. However, the patentees here argued that the litigation-like setup in this case calls for a litigation-like standard of review, i.e., clear error. Thus, the primary question presented:
Should PTAB factual findings be reviewed for “clear error” or “substantial evidence” in an appeal of a final written decision in an inter partes review?
In an 11-1 split, the Federal Circuit has denied en banc rehearing on this issue. Judge O’Malley (joined by Judges Wallach and Stoll) offered her opinion explaining the denial. Judge Newman dissented.
Judge O’Malley’s opinion appears to be designed to set-up Supreme Court review (if Cuozzo wins its case) or Congressional action. She writes:
I agree that application of the substantial evidence standard of review is seemingly inconsistent with the purpose and content of the AIA. This court is bound by binding Supreme Court precedent—Dickinson v. Zurko, 527 U.S. 150 (1999)—and this court’s own—In re Gartside, 203 F.3d 1305 (Fed. Cir. 2000)—to apply the substantial evidence standard of review to factual findings by the Board, however. Because Congress failed to expressly change the standard of review employed by this court in reviewing Board decisions when it created IPR proceedings via the AIA, we are not free to do so now. I, thus, concur in the denial of en banc rehearing in this case because there is nothing that could come of our en banc consideration of the question posed. I write separately, however, because I agree with the dissent to the extent it argues that a substantial evidence standard of review makes little sense in the context of an appeal from an IPR proceeding. But the question is one for Congress.
Judge Newman argues that the trial-like setup of the AIA proceedings allows for an important distinction from the Zurko and Gartside decision that requires a full reconsideration of the standards applied to PTAB determinations.
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 Merck owns U.S. Patent No. 6,011,040; and SAMSF owns U.S. Patent Nos. 5,997,915, 6,673,381, and 7,172,778 that are licensed to Merck. The patents relate to methods of using folate to lower a patent’s homocysteine level.
Cuozzo: Prof Mann provides his preview of the April 25 oral arguments in Cuozzo v. Lee; and Cuozzo has filed its reply brief. Neither document address my the mootness concern regarding Cuozzo’s demand for an ordinary construction of claim terms rather than their broadest reasonable interpretation. As far as I have seen, nothing in the record suggests that a change in claim interpretation standard would alter the PTO’s determination.
Following its April 15 Conference, the Supreme Court denied certiorari in a set of cases, including Vermont v. MPHJ; Limelight v. Akamai; Hemopet v. Hill’s Pet Nutrition; and Tas v. Beachy. In its April 1 Conference, the Court denied cert in Retirement Capital v. US Bancorp. That case had questioned 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).
The only patent cases surviving the April 15 conference are (1)Interval Licensing v. Lee that asks the same question as Cuozzo: Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?; and (2)Medinol v. Cordis that focuses on whether “the equitable defense of laches [may be used to] bar legal claims for damages that are timely under the express terms of the Patent Act.” Medinol is conceptually linked to the SCA Hygiene case that also raises the laches issue. The court will consider both cases in its April 22 conference and may likely couple the decision to grant/deny. The court is also scheduled to consider Cloud Satchel (abstract idea eligibility) and Globus Medical (appellate jurisdiction) at Friday’s conference. Neither of these cases offer much hope for the respective petitioner.
In Cooper v. Lee, the US Government filed its brief opposing certiorari. The government argues that Cooper’s Article III challenge to the IPR system “lack’s merit.”
[P]atents are quintessential “public rights” whose issuance and cancellation Congress may permissible entrust to a non-Article III tribunal. . . . Pursuant to its constitutional authority to “promote the Progress of Science and useful Arts” by establishing a patent system, Congress created the PTO – an agency with “special expertise in evaluating patent applications.” Kappos v. Hyatt, 132 S. Ct. 1690 (2012). It directed that agency to issue a patent if “it appears that the applicant is entitled to a patent” under standards set by federal law, 35 U.S.C. 131. Patents are accordingly rights that “exist only by virtue of statute.” Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 n.5 (1964). They “dispose of public rights held by the government on behalf of the people.” Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 849 n.2 (2015) (Thomas, J., dissenting).
The government also argues that the posture of the case lacks merits – in particular that Cooper’s collateral challenge to the procedures doesn’t work. Cooper has argued that “inter partes review violates Article III of the Constitution by authorizing an Executive Branch agency, rather than a court, to invalidate a previously issued patent.”
Daniel Bohnen has filed a brief on behalf of UK’s Chartered Institute of Patent Attorneys (CIPA) in support of the Sequenom v. Ariosa petition. The brief argues that the court should look to “maintain international harmonisation in the law of patent-eligibility.”[AriosaCIPA]. More briefs in support of the petitioner are expected this week as is Ariosa’s opposition brief (if any).
Finally, Nova has filed its opposition in Dow v. Nova and is attempting to refocus attention on the merits of the indefiniteness decision rather than the procedure for reaching that decision. The difference in question presented is interesting:
Dow: Whether factual findings underlying a district court’s determination on the definiteness of a patent claim under the Patent Act, 35 U.S.C. 112, like a district court’s factual findings underlying construction of a patent claim, are subject to appellate review only for clear error or substantial evidence rather than de novo review.
Nova: Whether the court of appeals correctly invalidated Dow’s patent claims as indefinite under 35 U.S.C. § 112.
Explaining its shift of the question, Nova argues that “Dow’s petition rests on a false premise that the Federal Circuit refuses to give deference to factual findings” that underlie the definiteness determination. Nova is correct as to the Federal Circuit’s position — the only question here is whether the Supreme Court will order the appellate court to follow its own law in this case. [DowPetition][NovaOpposition]
Over the past few years, MPHJ has raised the ire of many with its enforcement campaign of U.S. Patent No. 6,771,381. The claims seemingly cover HP’s multi-function scanner-printers that can be configured to email the scanned documents. However, rather than suing HP for infringement, MPHJ sent letters to tens of thousands of businesses who HP printers seeking royalties. A number of states took direct action against MPHJ, including Vermont and Nebraska.
HP’s response to this was to file an inter partes review proceeding challenging all 15 claims of the ‘381 patent. IPR2013-00309. The PTAB largely sided with HP – finding 14 of the claims unpatentable, but confirmed the patentability of claim 13. HP appealed on claim 13, but the Federal Circuit has affirmed the Board ruling.
HP challenged claim 13 on both obviousness and anticipation grounds. However, the Board refused to institute review on the obviousness grounds — seeing that ground a ‘redundant’ to the two counts of anticipation. The unique aspect of claim 13 is that it requires a “list of available module means for maintaining a registry” (e.g., “input, output, and process modules”). This list was not found in either of the two separate anticipation references (Cotte or SJ5) as such, the Board found no anticipation.
As a question of fact, an anticipation conclusion by the Board is given substantial deference on appeal and will be affirmed if “a reasonable mind might accept the evidence presented as sufficient to support the finding.” Here, the appellate panel agreed that at least some evidence supported the conclusion that the element was missing from the prior art since HP was “unable to specify” how the required list was disclosed in the prior art.
HP also challenged the Board’s refusal to institute on obviousness grounds and its failure to explain its redundancy conclusion. On appeal, the Federal Circuit refused to address that issue — finding that appellate review of the institution decision is barred by statute.
Allowing an APA challenge to the Board’s decision to institute on the basis that the Board had insufficiently articulated its reasoning would eviscerate § 314(d) by allowing substantive review of the institution decision. Although there is a strong presumption of judicial review of administrative action, that presumption may be overcome where “there is persuasive reason to believe that such was the purpose of Congress.” Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667 (1986). Congress, through § 314(d), has explicitly stated that the Board’s institution decision “shall be final and nonappealable.” Thus, that specific statutory language precludes our review.
It is unclear to me at this point whether Claim 13 is valuable – i.e., do the current HP models infringe? I guess that we’ll see.
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MPHJ’s case against Vermont is still pending before the U.S. Supreme Court.
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The court here did not address how HP had standing to appeal, from the briefs neither party addressed that issue as well.
Design Patent Damages: The Supreme Court has granted Samsung’s petition for writ of certiorari on the issue of design patent damages under 35 U.S.C. 289. The statute allows for disgorgment of the infringer’s “total profit,” but the question is total-profit-as-to-what? Certainly not the entire company. The Federal Circuit has ruled that the total profit applies to the article of manufacture (here a mobile phone) while Samsung argues that the profit should be reduced to the profits associated with the component at issue (the screen). The Supreme Court rejected the second proposed issue of design patent scope.
No Standing for Cuozzo?: I wrote some about the standing and appellate jurisdiction issue in Cuozzo earlier this week. [Link]. Up to now, Cuozzo has not explained how a Phillips claim construction would impact the outcome of its inter partes review. Cuozzo’s reply brief may address that issue – either way they almost have to come-up at oral arguments under questioning from Justice Breyer or Justice Sotomayor.
Post Sale Restraints: A key new petition was filed in Impression Products v. Lexmark on the issue of patent exhaustion and the extent that a manufacturer can rely upon patent rights to create post-sale use requirements and restrictions and limits on international trade. [Link]. In Sequenom, v. Ariosa, the court is subtly asked to reconsider and scale-back the language of Mayo v. Prometheus. The petition actually asks the court to stop mis-interpreting Mayo. [Link]. Vehicle Intelligence and Safety as well as Cloud Satchel also raise Section 101 challenges, but those cases are battling long odds.
Reviewing a Jury Verdict of Definiteness: New petition Dow v. Nova raises the interesting question regarding the standard for appellate review of factual findings that serve as the underlying basis for a definiteness determination. Based upon a logical extension of Teva v. Sandoz, those factual findings should be given deference even though the ultimate determination of definiteness is a question of law. An important distinction from pure claim construction is that (as here) juries may be tasked with the job of ruling whether a claim is indefinite. In that situation, the juries do not separate their factual conclusions from legal conclusions creating some amount of confusion. The original Federal Circuit opinion cited to Teva, but not for its holding regarding deference. I would not be surprised by a GVR order from the Supreme Court asking the Federal Circuit to reconsider based upon that holding. [DowPetition].
Flexible Obviousness Test Does Not Apply to Secondary Indicia of Nonobviousness: In Cubist Pharma v. Hospira, the petitioner-patentee challenges the Federal Circuit’s increasingly bright line limits on secondary indicia of nonobviousness. How do those limits mesh with the flexible doctrine outlined in Section 103 and explained by Deere and KSR. [CubistPetition].
Did the AIA Shrink Federal Circuit Appellate Jurisdiction?: Finally, in Globus Medical, the question focuses on Federal Circuit jurisdiction over appeals in former-patent-cases, but where the only issue appealed is a non-patent issue. This same issue was previously decided in favor of Federal Circuit jurisdiction. However, the AIA modified the language of the Federal Circuit appellate jurisdiction statute and opened the door to a re-visitation. 28 U.S.C. 1292. However, the argument barely carries the weight of its linguistics if that.
Previously, the Federal Circuit had appellate jurisdiction over cases if the district court’s jurisdiction could at least in-part be traced to 28 U.S.C. 1338 (giving district court’s jurisdiction over patent cases). The AIA amended the statute to give appellate jurisdiction to the Federal Circuit in any “civil action arising under” the patent laws. Since appellate jurisdiction ordinarily attaches at the notice-of-appeal filing stage, Globus Medical argues that former patent cases no longer “arise under” the patent laws once final judgment is issued and no patent questions are appealed.
Denials: Cert was denied in Daiichi Sankyo v Lee (term adjustment); ParkerVision (standard for setting aside jury verdict based upon errors in expert testimony); Biogen (district court jurisdiction over interferences post-AIA); Morales v. Square (eligibility); Joao Bock v. Jack Henry (eligibility); and BriarTek v. DeLorme (USITC preclusion issue).
Indefiniteness: The Dow Chemical Company v. Nova Chemicals Corporation (Canada), et al., No. 15-1160 (standard for appellate review of jury verdict of definiteness that is inherently based upon the jury’s factual findings) [DowPetition]
Post Grant Admin: Versata v. SAP, No. 15-1145 (scope of CBM review)
Post Grant Admin: Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers; two amici now filed in support)
Post Grant Admin: Click-to-Call Tech, LP v. Oracale Corp., No. 15-1014 (Same questions as Cuozzo and now-dismissed Achates v. Apple)
Post Grant Admin:GEA Process Engineering, Inc. v. Steuben Foods, Inc., No. 15-1075 (Flip-side of Cuozzo: Can there be no appeal when the PTAB exceeds its authority by terminating an instituted IPR proceeding?)
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?)
Post Grant Admin: Stephenson v. Game Show Network, LLC, et al., No. 15-1187 (is BRI proper for IPR validity challenges?; Same as Cuozzo) [GameShowNetworkPetition]
Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998
Biologics Notice of Commercial Marketing: Sandoz Inc. v. Amgen Inc., et al., No. 15-1039 (Does the notice requirement of the BPCIA create an effective six-month exclusivity post-FDA approval?) (cross-petition asks for recourse on failure to dance).
Design Patents: Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations – similar issues as Samsung v. Apple)
Eligibility Challenges: Hemopet v. Hill’s Pet Nutrition, Inc., No. 15-1062 (natural phenom case of tailoring a diet to a pet’s genomic characteristics)
Eligibility Challenges: Cloud Satchel, LLC v. Barnes & Noble, Inc., et al., No. 15-1161 (abstract idea eligibility) [CloudSatchelPetition]
Eligibility Challenges: Vehicle Intelligence and Safety LLC v. Mercedes-Benz USA, LLC, et al., No. 15-1201 (abstract idea eligibility) [VehicleIntelligencePetition]
Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
Damages: WesternGeco LLC v. ION Geophysical Corporation, No. 15-1085 (consequential lost-profit damages for infringement under Section 271(f))
Written Description: Tas v. Beach, No. 15-1089 (written description requirement for new drug treatments)
4. Petitions for Writ of Certiorari Denied or Dismissed:
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)
Parkervision, Inc. v. Qualcomm Incorporated, No. 15-1092 (“Whether and under what circumstances an inconsistency in expert testimony permits a court to set aside a jury verdict and grant the losing party judgment as a matter of law.”)
Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea)
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.)
BriarTek IP, Inc. v. DeLorme Publishing Company, Inc., et al., No. 15-1025 (Preclusive impact of ITC consent judgment).
Morales v. Square, No. 15-896 (eligibility under Alice)
Media Rights Technologies, Inc. v. Capital 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.”)
Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial)
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.)
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) [Note – This case was dismissed after being settled by the parties]
Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567
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
Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
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
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