Tag Archives: IPR

Cuozzo v. Lee: The Problem of Standing

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The AIA-Trial claim construction issue is important and many of us would like to see the Supreme Court address it in Cuozzo. However, there is one legal matter that has been an elephant-in-the-room since the Cuozzo appeals began several years ago: Standing.

As a general matter, parties do not have standing to raise issues on appeal that have no impact on the underlying dispute.  Likewise, a court has no jurisdiction over issues when the parties have no standing. An important feature of standing is that it is generally non-waivable.  Rather, a court must dismiss a case when one or more parties lack standing — even if (as here) neither party raise the issue.

The standard theory of claim construction is that the USPTO’s “Broadest Reasonable Construction” is broader than the standard Phillips construction used by courts in infringement litigation.  The theory behind this change in standard is that it allows the PTO to serve a gatekeeping role to better in sure that issued patents are valid patents. The particular oddity of the underlying case is that Cuozzo is asking for the Phillips standard to be applied in order to receive a broader claim construction of the term “Integrally Attached.”   Here, on its way to finding the disputed claims obvious, the PTAB construed the term in a way that excluded a described embodiment of the invention and Cuozzo has argued that the proper construction includes that embodiment.  To be clear here, a more broadly construed claim would encompass more prior art and thus are more likely to be invalid as obvious.  Although not strictly impossible, it would indeed be a rare case where the narrower claim is obvious while the broader is nonobvious.  [edited this] Point here is that if Cuozzo gets what it wants from this question on appeal (a broader claim scope), it is no closer to overturning the decision that the claim is obvious – in fact, Cuozzo will be further from that goal.

Although only spending a few pages on the issue, the newly filed Public Knowledge amicus brief roughly outlines case:

[I]n this case, Cuozzo’s patent received a narrow interpretation, and Cuozzo seeks to have the patent read to encompass more subject matter, not less. In other words, Cuozzo is asking for a narrower claim construction standard in order to obtain a broader claim construction. . . . This backwards fact pattern is not just puzzling; it potentially means that Cuozzo has no standing to raise the question, such that this Court lacks jurisdiction over the case.”

[Read the Brief: CuozzoPKAmicus.]

Cuozzo is not run by idiots. Rather, Cuozzo appears to be taking a broader strategy — it wants the term broadly construed in this case so that it will help the enforcement of parallel claims in other cases.  PK explains again:

Why, then, does Cuozzo pursue this case? It cannot be to alter the outcome of the inter partes review, as the district court standard will leave Cuozzo’s patent claims equally invalid—a broader reading of a claim cannot be valid when a narrower one is invalid for obviousness. Instead, the record reveals that Cuozzo seeks a broader claim construction in order to facilitate its infringement arguments in unrelated litigation—a manipulative attempt to commandeer inter partes review to ends
external to the proceeding.

Apart from PK’s snide “manipulative” remark, I am on-board with this analysis.

At this point, it may make the most sense for the Supreme Court to dismiss the claim construction issue as improvidently granted but retain question two regarding the appeal of institution decisions.

 

 

PTO Brief – Looking for Supreme Support for its AIA Trial Regime

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Oral arguments in Cuozzo v. Lee are set for April 25, 2016 addressing two particular questions:

  1. Whether the PTO may require that, during an inter partes review, the claims in a patent will be given the “broadest reasonable construction” consistent with the patent’s specification [as opposed to the standard construction for issued patents].
  2. Whether a party may seek to overturn the PTO’s final decision in an inter partes review based on an alleged error in the PTO’s threshold decision to institute the review, which Congress provided “shall be final and nonappealable,” 35 U.S.C. 314(d).

The briefs are available now on ScotusBlog.

The U.S. Government has also filed its responsive merits brief.  The brief appears to be a joint effort of the Solicitor General (DOJ) and the USPTO and does a solid job of justifying its positions:

On BRI:

  1. Historical: The PTO has “long applied the broadest reasonable-construction standard in all agency proceedings in which patent claims may still be amended.”
  2. Statutory: Here, although claim amendments have allowed in only exceedingly rare cases, the IPR statute does suggest that amendments are possible.  (Of course, once the motion to amend is denied, then claims cannot ‘still be amended.’
  3. Deference: The USPTO was given rulemaking authority in this area (AIA procedures) and the BRI standard is a exercise of that delegated authority.  (It is unclear what happens if the court would find this ‘substantive’ rather than ‘procedural’ and what level of deference should apply in either case).

On Appeal of Decision to Institute:

  1. Statutory: “The statute bars all judicial review, not just interlocutory appeals, of the PTO’s decision whether to institute an inter partes review.”  Rather, judicial review is limited to the Agency’s final decision on patentability.
  2. Policy: The no-review approach fits the AIA-Trial purpose of being “an efficient non-judicial alternative for testing the patentability of issued claims.”

The PTO is looking for a strong decision in this case to effectively shut-down the myriad challenges it is currently facing.

 

Federal Circuit: No Opinion Serves as the Basis for Our Opinion

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By Dennis Crouch

Chicago Board of Options Exchange v. International Securities Exchange (Fed. Cir. March 25, 2016)[1] and International Securities Exchange v. Chicago Board of Options Exchange (Fed. Cir. March 25, 2016) (Appeal No. 2015-1743)[2]

These appeals involve three CBOE patents directed to automated trading exchange systems. All three patents (all claims) were challenged in covered business method reviews and found by the PTAB to be ineligible under Section 101 (abstract ideas).  In addition, two of the same patents (a subset of claims) were challenged in inter partes review proceedings, but in those cases the PTAB sided with the patentee and found the ISE had failed to prove invalidity (either obvious or anticipated).

The CBOE appealed the 101 invalidations, and ISE separately appealed the inter partes review denials.  In an odd set of judgments, the Federal Circuit affirmed the PTAB 101 rejections in a Rule 36 Judgment (no opinion issued).  At the same time, the Federal Circuit also dismissed the IPR appeal as moot. However, in this second case the court did issue an opinion to explain the mootness following from the original no-opinion judgment. The court writes:

In this appeal, International Securities Exchange, LLC (“ISE”) challenges the determination of the Patent Trial and Appeal Board (the “Board”) in inter partes review proceedings involving U.S. Patent Nos. 7,356,498 (“the ’498 patent”) (IPR2014-00097) and 7,980,457 (“the ’457 patent”) (IPR2014-00098). The Board found that ISE failed to show by a preponderance of the evidence that the challenged claims of the ’498 and ’457 patents are unpatentable as either anticipated, obvious, or both, under 35 U.S.C. § 102(e) and 35 U.S.C. § 103(a). In light of our decision in Chicago Bd. Options Exch., Inc. v. Int’l Secs. Exch., Case Nos. 2015-1728, -1729, and -1730, issued contemporaneously herewith, affirming the Board’s conclusion that both patents address unpatentable subject matter under 35 U.S.C. § 101, we find this companion case moot. We dismiss the appeal and vacate the Board’s decisions.

The Federal Circuit’s use of R.36 No Judgement opinions is on the rise even while wringing its hands over the USPTO’s failure to explain its judgments to institute AIA trials.[3]

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[1] Appeal Nos. 2015-1728, 2015-1729, and 2015-1730. These cases are on appeal from three Covered Business Method Post Grant Review Proceedings. CBM2013-00049 (Pat. No. 7,356,498), CBM2013-00050 (Pat. No. 7,980,457), and CBM2013-00051 (Pat. No. 8,266,044).

[2] Appeal Nos. 2015-1743 and 2015-1744.  These cases are on appeal from two inter partes review proceedings. IPR2014-00097, IPR2014-00098.

[3] See, Dennis Crouch, Federal Circuit: Our Muscles are Not Working, Patently-O (March 23, 2016)

Federal Circuit: Our Muscles Are Not Working :{}

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by Dennis Crouch

Shaw Industries v Automated Creel Systems[1] involves several interesting issues involving inter partes review proceedings.

One Year Filing Bar: The first involves the one-year deadline for inter partes review petitions following the service of a complaint to the future-petitioner.[2]  “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.”

Here, the patentee ACS had filed an infringement lawsuit and served Shaw more than one year before the IPR filing.  However, the parties voluntarily dismissed the lawsuit without prejudice in a joint filing.  In considering the issue, the Board determined that the voluntary dismissal “nullifie[d] the effect of the alleged service of the complaint on Petitioner.” As such, the Board was free to institute the inter partes review proceeding.

On appeal the Federal Circuit followed its prior ruling Achates[3] that the appellate court lacks jurisdiction to the Board’s decision on whether the time-bar of Section 315 applies.  The panel[4] did not support the PTO’s decision and noted that the Supreme Court’s decision in Cuozzo[5] “may affect this court’s holding regarding the reviewability of the decision to institute in Achates.”

As an aside, a petition for writ of certiorari had been filed in Achates, that case, however, has settled. We’ll see if ACS takes the case up here.

The Non-Doctrine of Redundancy: The second issue involves the PTAB’s non-doctrine of redundancy.  Shaw filed two IPR petitions and in each petition the Board implemented the IPR on one ground for each claim, but declined to implement IPR on the additional grounds because they were ‘redundant’ without further explanation of that redundancy. The redundant arguments included anticipation grounds found redundant to obviousness grounds. Oddly, the PTO has stated repeatedly in the case that “there is no redundancy doctrine.”

In the appeal, the Federal Circuit again stated that it has no authority to review the Board’s decision to institute an IPR.

In the case, Judge Reyna joined the court’s opinion but also penned a judgment “concurring specially” to reflect his “deep[] concern[] about the broader impact that the Redundancy Doctrine may have on the integrity of the patent system.”  Here, the doctrine’s existence is expressly denied by those applying it. The PTO argues that it need not explain what’s happening because “the Director has complete discretion to deny institution . . . and [does] not even have to state in our institution decisions why were choosing not to go forward.”[6] Judge Reyna responds:

The PTO’s claim to unchecked discretionary authority is unprecedented. It bases this claim on the statute that makes institution or denial of inter partes review “final and nonappealable.” See 35 U.S.C. § 314(a), (d). Regardless of appealability, administrative discretion is not and never can be “complete” because it is always bounded by the requirement that an agency act within the law and not violate constitutional safeguards. See 35 U.S.C. § 2(b)(2) (PTO “may establish regulations, not inconsistent with law”). There is good reason for this. “Expert discretion is the lifeblood of the administrative process, but unless we make the requirements for administrative action strict and demanding, expertise, the strength of modern government, can become a monster which rules with no practical limits on its discretion.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167 (1962) (internal quotation marks omitted).

Indeed, regardless of whether the Board’s institution decisions can be appealed, the Board cannot create a black box decisionmaking process. Conclusory statements are antithetical to the requirements of the Administrative Procedures Act (“APA”), which the PTO and its Board are subject to. 35 U.S.C. § 2(b)(2)(B); see also Dickinson v. Zurko, 527 U.S. 150, 154 (1999). The APA requires “reasoned decisionmaking” for both agency rulemaking and adjudications because it “promotes sound results, and unreasoned decisionmaking the opposite.” Allentown Mack Sales & Serv., Inc. v. N.L.R.B., 522 U.S. 359, 374– 75 (1998) (citation omitted). The APA requires that Board decisions evince both its authority to render the decision and a reasoned basis for rendering that decision. Id. at 372 (“Not only must an agency’s decreed result be within the scope of its lawful authority, but the process by which it reaches that result must be logical and rational.”). The problem here is not that the Board’s reasoning is illogical or irrational; the problem is that there is no reasoning at all.

Judge Reyna pushes further by highlighting the impact of the PTO’s non-decision on the eventual estoppel issues. The PTO suggested in the case that estoppel would not attach to the non-instituted redundant grounds since they were not instituted, but that argument makes little sense to me.[7]   And, as Judge Reyna points out, “[w]hether estoppel applies, however, is not for the Board or the PTO to decide. . . . These tribunals should not have to parse cryptic statements or search out uncited [and denied] doctrines to make this determination.”

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Notes

[1] Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., Appeal No. 2015-1116 (Fed. Cir. March 23, 2016), on appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. IPR2013-00132, IPR2013-00584 challenging validity of U.S. Patent No. 7,806,360.

[2] 35 U.S.C. §  315(b).

[3] Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015).

[4] Opinion authored by Judge Moore and joined by Judges Reyna and Wallach.

[5] Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 890 (2016).

[6] Quoting PTO brief and oral arguments.

[7] The PTO’s argument does have some logical merit. The statute creates estoppel for arguments “raised or reasonably could have [been] raised during that inter partes review.”  Although the denied arguments were actually raised, there were raised during the institution proceeding and not the actual review.  And, since the PTO denied institution on those grounds, the party was then prohibited from raising those grounds during the review itself.

After Multiple Failures: Apple Finds its Way Around the One Year Statute of Limitations for IPR Filings

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by Dennis Crouch

The Federal Circuit has ordered further briefing on VirnetX’s recently filed petition for writ of mandamus stemming from two pending inter partes review petitions filed by Mangrove Partners against the patentee.[1]  The case involves the statute-of-limitations that bars a third party petitioner from filing an inter partes review petition more than one year after that petitioner (or a privy) was “served with a complaint alleging infringement of the patent”[2]; the IPR joinder provision[3]; and, of course, the prohibition against appealing the Director’s decision to grant or deny a petition.

According to the VirnetX’s petition, prior to the filing of these inter partes review proceedings: “Apple previously filed (directly or through a proxy) seven inter partes review petitions against the same patents, in addition to having challenged their validity in two reexamination proceedings and (unsuccessfully) in district court litigation and on appeal before this [Appellate] Court.”  The Board previously dismissed Apple’s petitions as well as those of its proxy (RPX) as time barred by the statute of limitations since Apple had previously been served an infringement complaint.

These two latest IPRs were filed by the hedge fund Mangrove Partners who had apparently shorted VirnetX stock just prior to the filing and is also an investor in RPX.   Following the IPRs filed by Mangrove, Apple again filed its own set of IPR petitions[4] that were obviously time barred, but also simultaneously requested joinder with the Mangrove petitions.  This final posturing worked and the Board granted the Apple Petitions and the Joinder request – after reading Section 315(b)’s statement that the statute of limitations noted above “shall not apply to a request for joinder.”

35 U.S.C. §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. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).

35 U.S.C. §315(c) Joinder.—

If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.

In the mandamus action, VirnetX argues that the Board misinterpreted the statute.  Rather, according to the petition, the statute-of-limitations applies to all petitions and may not be waived by the Director.  According to the argument, the exception for joinder is only relevant to indicate that joinder of properly instituted proceedings can be requested even beyond the one-year deadline.  “The timing exemption … mak[es] clear that the one-year time limitation shall not apply to a joinder request.”

[T]he Board treated the terms “petition” and “request for joinder” as interchangeable. But there is no basis for such a reading. Section 315(b), as well as the overall statute, carefully distinguishes between the terms “petition” and “request for joinder.” When Congress uses a particular statutory term, it does so advisedly, and an agency impermissibly departs from the statute when it disregards Congress’ intentional use of different statutory terms. . . . Section 315(b) imposes a mandatory one-year time bar on any “petition requesting the [inter partes] proceeding.” 35 U.S.C. § 315(b). It then exempts “a request for joinder” made under section 315(c)—and only such a request— from that timing prohibition. But section 315(b) does not extend that exemption to “a petition,” even though Congress clearly knew how to apply such an exemption to a petition, as demonstrated elsewhere in the statute. The Board’s interpretation of section 315(b) effectively re-writes the statute by expanding the statutory exemption for joinder requests from a mandatory time bar to petitions.

VirnetX explains the prejudice caused by the joinder:

The joinder has already prejudiced VirnetX in concrete ways. VirnetX now has to defend itself against new issues and evidence introduced by Apple—issues and evidence that were not presented by Mangrove in the original proceedings. VirnetX is also being systematically disadvantaged because it is limited to a single response of a constrained length, while Apple, Mangrove, and Black Swamp submitted three separate petitions each presenting unique issues. Thus, VirnetX has to prepare its Patent Owner’s Responses to invalidity issues raised in three separate petitions, yet the Board denied VirnetX’s request for extra pages in order to be able to fully address all these multiple arguments.

It will be interesting to See how Apple responds.  The court asked for responses from Apple, Mangrove, and Director Lee to be filed next week.

= = = = =

[1] IPR2015-01046 & IPR2015-01047 covering U.S. Patent No. 6,502,135 (“the ’135 patent”) and U.S. Patent No. 7,490,151 (“the ’151 patent”).

[2] 35 U.S.C. § 315(b).

[3] 35 U.S.C. § 315(c).

[4] IPR2016-00062 and IPR2016-00063.

Federal Circuit Now Receiving More Appeals Arising from the PTO than the District Courts

Patent,

By Jason Rantanen

Appeals arising from district court patent infringement cases have historically made up about a third of the court’s docket.  In 2011, for example, appeals from the district courts constituted 33% of appeals filed, while appeals from the PTO were about 9%.

Caseload by Category - 2011

(Graph from http://www.cafc.uscourts.gov/the-court/statistics)

That distribution no longer holds.  During Fiscal Year 2015 (which ended on September 30, 2015), appeals from the PTO exploded, to about a quarter of all appeals filed.  Appeals from the district courts also rose, but at a slower pace.

Caseload by Category - 2015

(Graph from http://www.cafc.uscourts.gov/the-court/statistics)

That trend has continued, with appeals from the PTO now overtaking appeals from the district courts.  The below chart shows the annual number of appeals filed from 1997 to the end of January 2016.  As of January 29, the court had docketed more appeals arising from the PTO than the district courts.  If this filing rate holds true for the rest of the year, we can expect almost as many appeals from the PTO to be filed as there were appeals from the district court last year.

Appeals docketed through Jan 2016

(Data source: http://www.cafc.uscourts.gov/the-court/statistics)

My primary hypothesis for this dramatic rise is relatively simple.  Since the implementation of the America Invents Act, there has been an explosion of inter partes review proceedings at the PTO.  In inter partes review proceedings, there is inevitably a winner—and a loser.  Given the relatively small cost of filing an appeal, and the current uncertainty as to outcomes on appeal, parties that are losing on IPR are filing those appeals.  There are other things going on, particularly the increased thoroughput of the PTAB, but I suspect that many of the appeals from the PTO are of IPR proceedings.

Whatever the cause, the ramifications of this increase in appeals from the PTO are quite significant.  If I’m right that most of these appeals from IPR proceedings, they’re likely to be hotly contested by both parties.  In addition, each of these cases involves its own invention and technology.  So I see this as a substantial workload increase for the Federal Circuit judges and their clerks.  One thing to take a look at going forward is how the Federal Circuit is going to be handling these appeals.

(I don’t have an explanation for the drop in appeals from the district courts, other than possibly the decline in patent cases filed and pending that occurred in late 2014 and early 2015. It could also be due to more cases being resolved through the IPR proceedings—although as others have observed, only a fraction of patents involved in infringement litigation are also involved in IPR proceedings)..

Inter Partes Review: Comingling Adjudicative and Executive Roles within an Agency

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By Dennis Crouch

In its challenge of the USPTO’s implementation of the Inter Partes Review system, Ethicon has now requested an en banc rehearing with the following simple question presented:

Does the Patent Act permit the Patent Trial and Appeal Board to make inter partes review institution decisions?

Outside reading:

The basic issue here involves the two step inter partes review proceeding that begins with a decision on whether to institute the review and then, once instituted, ends with a final determination by the Patent Trial and Appeal Board (the Board).  Under the statute, the USPTO Director (the Director) is tasked with making the initial determination before passing the baton to the Board to make the final determination of patentability.  However, the USPTO’s implementation rules changed the game by also giving the Board authority to make the institution decision.  The USPTO argues that the rules were a proper delegation of the Director’s authority, but Ethicon argues that the USPTO’s procedure is an improper comingling of executive and adjudicative functions.

In creating the IPR process, Congress intended to replace the prior administrative inter partes reexamination procedure with a new adjudicative procedure that would “take place in a court-like proceeding.” H.R. REP. NO. 112-98, pt. 1 (2011). Congress did not need to, and did not, change the institution procedure used in inter partes reexamination, where the Director—through her executive delegate (typically an examiner)—would decide whether to institute. Accordingly, the AIA expressly assigns the institution duty for IPRs to the Director, sets forth a necessary (but not sufficient) substantive threshold for the Director to institute, and identifies a variety of other discretionary criteria that the Director may use to deny institution—whether or not the substantive threshold has been met. As with inter partes reexamination institution decisions, the AIA specifies that the Director’s discretionary institution decisions are not appealable. 35 U.S.C. § 314(d).

The panel nevertheless upheld a PTO regulation commingling the institution and adjudication stages of IPRs by delegating the Director’s institution power to the PTAB. 37 C.F.R. § 42.4(a). That delegation lacks statutory authorization and upends longstanding principles, articulated in both Supreme Court precedent and the Administrative Procedure Act (APA), prohibiting the combination of executive and adjudicative functions below the level of the agency head. . . . [B]y delegating the institution function to the PTAB for the sake of efficiency, the Director has repudiated her statutory duty to exercise executive discretion—including the additional procedural and policy factors specified in the AIA. . . . Congress did not intend for PTAB panels to exercise this gatekeeping function, and as purely adjudicative bodies they are neither inclined nor equipped to apply executive discretion or systemic considerations in deciding whether to institute review. En banc review is warranted to ensure the fairness of the IPR system and its compliance with Congress’s bifurcated decision-making procedure.

In the original panel opinion, Judges Dyk and Taranto joined together to reject Ethicon’s argument – finding that the statute permitted delegation of the institution decision. Judge Newman wrote in dissent.  The difficulty for Ethicon is counting heads – I struggle to find seven votes out of the twelve Federal Circuit judges that would be needed for Ethicon to win.

Amicus support is due by March 14.  Supreme Court and appellate practitioner Pratik Shah filed the brief on behalf Ethicon.  Shah’s involvement strongly suggests to me that a Supreme Court petition will follow if this en banc attempt fails.

 

USPTO Stadium Tours (PTAB/TTAB Hearings)

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The USPTO has partnered with four law schools with a “stadium tour” of both the Patent Trial & Appeal Board as well as the Trademark Trial & Appeal Board.

Here at Mizzou, we will begin at 9:00 a.m. March 1, we will host two panels that will focus on strategy issues and policy concerns, and the experience will be capped by live hearings by the Patent and Trademark Trial and Appeal Boards.  Various board members will be speaking along with other experts in the field.  Following their tradition, the Boards have asked that we not video-stream the hearing.  However, other content during the day will be streamed online.

The events are free, but we ask that you pre-register if you would also like free lunch.

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The central importance of the Patent Trial & Appeal Board (PTAB) has risen greatly since passage of the America Invents Act of 2011 and creation of the new inter partes and post-grant review procedures. These review proceedings provide an alternative forum for third-parties (usually accused infringers) to challenge patent validity. The review trials are handled by three-member tribunals of administrative patent judges who have been appointed by the U.S. Secretary of Commerce after consideration of their training in both technology and the law. The review proceedings are now being challenged on a variety of procedural and constitutional grounds – with one case, Cuozzo v. Lee, to be heard by the U.S. Supreme Court this term.

The Trademark Trial and Appeal Board (TTAB) hears trademark challenges, including opposition proceedings and appeals. Their hearings often focus on questions of whether a mark is generic, amoral or confusingly similar to existing marks. A set of cases pending in federal courts challenge the constitutional propriety of the TTAB’s statutory authority to cancel marks that “disparage” persons, institutions, beliefs or national symbols. Like the PTAB, administrative trademark judges are appointed by the U.S. Secretary of Commerce.

Ethicon: What Powers Can the Director Delegate to the Patent Trial & Appeal Board?

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By Dennis Crouch

This is my second post[1] on the Federal Circuit’s 2016 decision Ethicon.[2]  The case focuses on the institution and later proceedings of inter partes reviews (IPRs).  The first stage is known as institution that, according to the statute, is within the purview of the “Director” of the USPTO.  Once instituted, the case moves to the second stage where the Patent Trial and Appeal Board (PTAB) is tasked the trial and the final decision.  Despite the statutory separation, the USPTO has created a process where the PTAB (rather than the Director) makes both the institution and final decision.  In its panel decision, the Federal Circuit has agreed that the statute provides the Director with authority to make the institution decision, but found that she had properly delegated that authority to the PTAB.

Developing an Efficient Process: After the IPR statute was enacted as part of the 2011 AIA, the USPTO implementation team concerned itself with the practicalities of implementation.  A major concern whose impact is apparent throughout the IPR implementation rules stems from the statutory one-year deadline for issuing a final written decision.  That one-year deadline placed efficiency and timeliness as top USPTO priorities.  The Director saw one way to create efficiencies was to link the institution with the trial and final decision.  The setup then was (and is) to have PTAB judges decide the institution stage and then have those same judges handle the trial and final determination of patentability.  This structure gives a head-start on the one-year timeline and avoids any waste-of-resources involved requiring multiple individuals to get-up-to-speed on the issues for a particular case.  The majority agrees with this assessment: “The PTO has determined that, in the interest of efficiency, the decision to institute and the final decision should be made by the same Board panel.”  I buy into this efficiency argument – the question though is (1) whether it violates the decision-maker-separation written into the statute or (2) leads to unfair results.

Delegation by the Director: The Patent Act includes a number of roles of the USPTO Director, including issuing and rejecting patents[3], making copies of patent documents, classifying patents, etc.  The Director does not personally make these decisions, but delegates them to the Commissioner for Patents and other PTO employees.  That structure is usual for administrative agencies and also highlighted by the statutory structure.[4]  Both the commissioner and the “other employees” are – by statute – placed into the role of general management and duties.

The Patent Trial and Appeal Board and its associated Administrative Patent Judges are different.  Their authority is particularly spelled out as follows: The Patent Trial and Appeal Board shall—

  • on written appeal of an applicant, review adverse decisions of examiners upon applications for patents pursuant to section 134(a);
  • review appeals of reexaminations pursuant to section 134(b);
  • conduct derivation proceedings pursuant to section 135; and
  • conduct inter partes reviews and post-grant reviews pursuant to chapters 31 and 32.[5]

With regard to IPR proceedings, note here that the PTAB authority is to “conduct” IPR proceedings and not “institute” those proceedings.  As the Federal Circuit has previously held, those are distinct activities under the statute.  The Administrative Patent Judges are also somewhat different than ordinary PTO employees – they are judges and they are deemed Officers under the U.S. Constitution appointed by the Secretary of Commerce (rather than PTO director).[6]  Certainly, it would have been improper to take-away statutory authority from PTAB, the question though is whether it was proper for the Director to add these new duties.

The Statutory Structure Separating Institution from Proceedings: I described above how Section 6 of the Patent Act seems to limit the authority of the PTAB to IPR proceedings (rather than institutions).  The statute goes further into this: the Director determines whether an IPR review is to be instituted. 35 U.S.C. § 314(a).  If instituted by the Director, the Board then conducts the trial. 35 U.S.C. § 316(c).  The separation here, is further emphasized by the fact that the institution proceeding is not appealable while the final decision is appealable.  The idea that these are separate roles fit within the history and structure of the agency where no decision-making roles (beyond that authorized by Section 6) have been given to the PTAB other than this institution decision. Thus, the PTAB does not decide petitions (other than those directly related to PTAB operations), reissues, or reexaminations (except on appeal).

The majority opinion in this case was penned by Judge Dyk and joined by Judge Taranto glosses-over all of these arguments, writing:

There is nothing in the statute or legislative history of the statute indicating a concern with separating the functions of initiation and final decision. Ethicon ignores the longstanding rule that agency heads have implied authority to delegate to officials within the agency, even without explicit statutory authority and even when agency officials have other statutory duties.

The court particularly fails to consider the role of the PTAB and of its Judges and whether those bodies should be considered separate and distinct from other USPTO employees.  A request for rehearing is almost certainly coming that may well be followed by a petition for writ of certiorari.

I wonder if the court would have changed direction if the statutory structure of the IPR process had begun with a determination by the Director followed by a right of appeal to the PTAB (rather than institution followed by final decision). In that situation, would the Director be permitted to delegate the initial decision to the PTAB?

The decision here is not in a vacuum.  Rather, most believe that a separation-of-roles would reduce the likelihood of cancelling claims in IPRs.  This result will help to divide the parties doing the arguing according to whether they are enforcing patents or challenging patents.

= = = = =

[1] Read the first post: Crouch, Due Process and Separating Powers within an Agency, Patently-O (January 13, 2016) at https://patentlyo.com/patent/2016/01/process-separating-within.html.

[2] Ethicon Endo-Surgery v. Covidien, — F.3d —, 2016 WL 145576, (Fed. Cir. 2016) http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1771.Opinion.1-8-2016.1.PDF.

[3] 35 U.S.C. §§ 131 and 132.

[4] 35 U.S.C. § 3(b).

[5] 35 U.S.C. § 6(b).

[6] Following professor John Duffy’s 2007 article on-point, these roles have been tightened-up. https://patentlyo.com/media/docs/2011/10/Duffy.BPAI.pdf.

Federal Circuit: Board Must Explain its Decisions

Patent, ,

by Dennis Crouch

In the non-precedential Cutsforth v. MotivePower decision, the Federal Circuit has vacated a PTAB inter partes review (IPR) final decision — holding that “the Board did not adequately describe its reasoning for finding the claims obvious.”

The patent at issue is directed to a brush-assembly used to maintain an electric current with a rotating mechanism. US Patent No. 7,990,018. 

The Federal Circuit requires that the PTAB “articulate articulate its reasoning for making its decision.” See In re Sang-Su Lee, 277 F.3d 1338 (Fed. Cir. 2002).  Along these lines, the board must explain the factual bases for its findings and must go well beyond “conclusory statements.”  Most PTAB decisions are related to the question of obviousness and the Federal Circuit particularly requires the Board to “explain why a person of ordinary skill in the art would modify the prior art references to create the claimed invention.” See In re Kotzab, 217 F.3d 1365, 1369 (Fed. Cir. 2000) and In re Rouffet, 149 F.3d 1350 (Fed. Cir. 1998).

Here, the Board apparently recited the challenger’s (MotivePower’s) arguments and the ultimate conclusion of obviousness, but did not “formally” adopt the arguments as its own conclusions. See MotivePower, Inc. v. Cutsforth, Inc., IPR2013-00274.  On appeal, the Federal Circuit rejected this approach. Some key quotes:

The Board’s decision appears to assume this combination is obvious. It offers no explanation for why a person of ordinary skill in the art would adjust Bissett and Kartman to create the claimed mounting block of the ’018 patent. The Board only states that MotivePower argued it was obvious to do so. Merely reciting MotivePower’s argument does not satisfy the Board’s responsibility to explain its own reasoning. The decision must explain why a person of ordinary skill in the art would find it obvious. The Board gives no such explanation. . . .

For claim 5, which requires that the mounting block include a spring, the Board explains that the placement of the spring on the mounting block is simply a design choice. . . . This statement alone is not enough to explain why the Board found claim 5 obvious. Merely stating that a particular placement of an element is a design choice does not make it obvious. The Board must offer a reason for why a person of ordinary skill in the art would have made the specific design choice to locate the spring on the mounting block. Here, it does not.

On remand, I expect that the Board will simply rewrite its 33-page decision – better explaining its holdings – but we shall see. [PTAB Final Decision: final decision-31].

To be clear, although the PTAB is held to this high standard, patent examiners are not.  Rather, examiners are only required to provide notice of their rejection/objection rather than a full-bodied explanation.  Update: I just looked at the comment section and note that a number of folks raise the important point that my off-the-cuff statement an examiner’s notice burden is limited to the introductory rejection and establishing a prima facie case as the Federal Circuit explained in Packard.  Once a prima facie case is established, the patent applicant has the opportunity to rebut that case. And, once rebutted, the examiner’s burden is then raised actually prove the case if possible.

Inter Partes Review: An Unconstitutional Delegation of Judical Power

Patent, ,

Carl Cooper has now filed his constitutional challenge to the Inter Partes Review (IPR) system — arguing that the system is an unconstitutional delegation of judicial power to an administrative agency. [Petition: Cooper v. Lee]

Question presented:

Whether 35 U.S.C. §318(b) violates Article III of the United States Constitution, to the extent that it empowers an executive agency tribunal to assert judicial power canceling private property rights amongst private parties embroiled in a private federal dispute of a type known in the common law courts of 1789, rather than merely issue an advisory opinion as an adjunct to a trial court.

The brief here is well-written because it focuses on the tight issue of parallel court/proceedings and the history:

No previous court has ever approved delegating validity-determination authority over common-law-adjudicated property rights to a non-Article III decisionmaker.

And, the petition suggests a way-out via an advisory opinion from the PTAB:

[T]his Court may make the process constitutionally sound by doing what it has always done under these circumstances: make the outcome of inter partes review advisory and subject to de novo treatment in an Article III trial court. So corrected, inter partes review may still identify and appropriately target “junk patents,” though an Article III trial court will need to perform the final act of invalidation.

 

Cooper also suggests that the court link this case to Cuozzo:

This Court may thus hear the two cases together, the one raising smaller issues (Cuozzo) alongside the one raising larger issues (this case). That would secure a more complete vetting of administrative agency authority.

Obviously, a favorable decision here could render Cuozzo completely moot, and wouldn’t that be quite interesting.

 

Pending Supreme Court Patent Cases 2016 (January 20 Update)

Patent, , , , , , , , ,

by Dennis Crouch

This week, the Supreme Court granted certiorari in the administrative patent review case of Cuozzo v. Lee. Cuozzo raises the following two questions: (1) Whether the court of appeals erred in holding that, in inter partes review (IPR) proceedings, the Patent Trial and Appeal Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning; and (2) whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable. The petitioner (Cuozzo) now has forty-five days to file its opening merits brief with amici briefs due one week later.

The other major patent issue before the court this term involves the enhanced damages questions raised in the parallel cases of Halo and Stryker. Oral arguments are set for those cases for February 23, 2016. Although not a party, the Solicitor General has requested permission to participate in oral argument as amicus curiae and for divided argument filed. The US Government generally supported the petitioners’ position that the Federal Circuit has unduly limited the availability of enhanced damages for willful infringement and other egregious acts by an adjudged infringer.

This week, the Supreme Court also issued a GVR in Medtronic v. NuVasive – ordering the Federal Circuit to reconsider whether the mens rea evidence presented was sufficient to prove active inducement under Commil.

1. Petitions Granted:

2. Petitions Granted with immediate Vacatur and Remand (GVR)

3. 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: 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: 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?)
  • Claim Construction: Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
  • 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: 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. 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.”)
  • 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 – potential wait-and-see)

3. Petitions for Writ of Certiorari Denied:

  • 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
  • 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:

 
 

Supreme Court grants Certiorari in Challenge of Inter Partes Review Proceedings

Patent, , , , ,

by Dennis Crouch

The Supreme Court has granted writ of certiorari in the pending Inter Partes Review challenge of Cuozzo Speed Tech v. Lee, Docket No. 15-446. 

Questions Presented:

  1. Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.
  2. Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable.

Nine briefs amici were filed at the petitions stage. I expect that number will double for the merits stage.

More from Patently-O on the case: https://patentlyo.com/?s=cuozzo

= = = = =

The court also granted certiorari for a second time Kirtsaeng v. John Wiley. This time, the focus is on the award of attorney fees to the prevailing party in copyright cases.

Question Presented:

What constitutes the appropriate standard for awarding attorneys’ fees to a prevailing party under section 505 of the Copyright Act.

Section 505 (17 U.S.C. 505) states that: “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.”  However, there is a circuit split as to when it should be awarded. According to the petition:

The Ninth and Eleventh Circuits award attorneys’ fees when the prevailing party’s successful claim or defense advanced the purposes of the Copyright Act. The Fifth and Seventh Circuits employ a presumption in favor of attorneys’ fees for a prevailing party that the losing party must overcome. Other courts of appeals primarily employ the several “nonexclusive factors” this Court identified in dicta in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994). And the Second Circuit, as it did in this case, places “substantial weight” on whether the losing party’s claim or defense was “objectively unreasonable.” Matthew Bender & Co. v. W. Publ’g Co., 240 F.3d 116, 122 (2d Cir. 2001).

 As a reminder, in Kirtsaeng I, the Supreme Court ruled that copyright exhaustion (first sale doctrine) applies to international sales of the copyrighted work that were lawfully made abroad.  This rule is opposite to that in patent cases (Jazz Photo), but the issue is core to the pending en banc Lexmark case. A decision is expected any day in Lexmark.

IPR Challenge Moves Forward with One Step Back

Patent, ,

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:

Due Process and Separating Powers Within an Agency

Patent, , , , , ,

by Dennis Crouch

In this decision, the Federal Circuit has affirmed that the IPR procedure allowing the same PTAB panel to both institute an IPR and issue the final decision cancelling the claims is proper. In the process, the divided court rejected both a constitutional and statutory challenge. 

In Ethicon Endo-Surgery v. Covidien (Fed. Cir. 2016)[1], a divided Federal Circuit has affirmed the PTAB’s final judgment that all of Ethicon’s challenged patent claims are invalid as obvious.  The court also confirmed that the PTAB’s procedure of having the same panel decide both the IPR initiation petition and the final decision is proper. “Neither the statute nor the Constitution precludes the same panel of the Board that made the decision to institute inter partes review from making the final determination.”

Ethicon’s U.S. Patent No. 8,317,070 is directed to a surgical stapling device used in endoscopic surgery.  The purported novelty of the stapler is that it uses (a) two sets of staples (with different heights) and (b) staples with non-parallel legs.  The prior art included surgical staplers with each of these features, but no prior art teaches the combination of the two. “Thus, the purported inventive aspect of the ’070 patent is the combination of these two features in a surgical stapler.”

From the majority’s perspective, the case involves a straightforward application of KSR’s holding that a “combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.”  Here, the court noted that the patent itself “discloses no particular synergy resulting from the combination.”  Ethicon did present evidence of commercial success of Covidien’s infringing product. However, that argument failed because, according to the court, Ethicon provided no evidence of nexus between the particular inventive combination of features and the proven commercial success.

Nowhere does Ethicon demonstrate, or even argue, that the commercial success of the Covidien products is attributable to the combination of the two prior art features—varied staple heights and non-parallel staple legs—that is the purportedly inventive aspect of the ’070 patent.

I’ll pause here to note that that the court’s nexus requirement here appears to be doctrinally different than the more traditional requirement that the commercial-success be linked to the claimed invention (as a whole) rather than the clearly more stringent inventive features of the claimed invention.  See Wyers v. Master Lock Co., 616 F.3d 1231, 1246 (Fed. Cir. 2010) (“the patentee must establish a nexus between the evidence of commercial success and the patented invention.”).

= = = = =

Ethicon also argued (unsuccessfully) that the PTAB’s procedure violated Ethicon’s procedural due process rights. In particular, Ethicon argued that the final decision was invalid because it was “made by the same panel that instituted the inter partes review.”   The appellate panel rejected that argument- finding that “[t]he inter partes review procedure is directly analogous to a district court determining whether there is ‘a likelihood of success on the merits’ and then later deciding the merits of a case” and that the initial decision to grant a petition did not create any presumption of prejudice or bias against the patentee.

Ethicon’s best (but still weak) argument was that the AIA does not permit the PTAB to make the institution determination.  In particular, the statute gives the PTAB power and authority to make final determinations regarding an IPR, but assigns the USPTO Director the power to institute IPRs.  The statutory scheme, according to Ethicon, requires separation of these two functions.   On appeal, the Federal Circuit rejected that argument as well – finding that the USPTO director has implicit authority to delegate her authority to officials within the agency.

Ethicon argues that because Congress (1) specifically gave the Director the power to institute, see, e.g., 35 U.S.C. § 314(a), (2) did not explicitly give the Director authority to delegate the institution decision to the Board, and (3) gave the Board the power to make the final determination, Congress intended to keep the functions of institution and final decision separate.

= = = = =

The majority opinion was penned by Judge Dyk and joined by Judge Taranto.  Judge Newman wrote in dissent arguing that the statutory scheme created a clear distinction:

At the first stage, the Director determines whether the review is to be instituted. 35 U.S.C. § 314(a) (“The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition . . . and any response . . . shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.”). (Of course, the Director may designate an examiner or solicitor to conduct this initial review.)

If instituted by the Director, the Board then conducts a trial on the merits. 35 U.S.C. § 316(c). . . .

The bifurcated design of post-grant review is clear not only from the language of §§ 314(a) and 316(c), but pervades the structure of these post-grant proceedings. Congress unambiguously placed these separate determinations in different decision-makers, applying different criteria. The majority’s endorsement of the PTO’s statutory violation departs not only from the statute, but also from the due process guarantee of a “fair and impartial decision-maker.”

= = = = =

Phil Johnson (President of the Intellectual Property Owners Association) argued the case on behalf of Ethicon while Kathleen Daley of Finnegan argued for Covidien and Katherine Twomey Allen of the DOJ represented the USPTO as an intervenor.

The parties relied upon Supreme Court for support and the case has some chance of heading up.

= = = = =

[1] Federal Circuit Appeal No. 14-1771, appeal of PTAB IPR 2013-00209. [EthiconDecision]

Pending Supreme Court Patent Cases 2016 (January 12 Update)

Patent, , , , , , , , ,

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:

 

Chief Administrative Patent Judge

Patent, , , ,

The USPTO needs to hire a new Chief Administrative Patent Judge — head of the Patent Trial and Appeal Board. Apply here https://www.usajobs.gov/GetJob/ViewDetails/425567200.

The Chief Administrative Patent Judge (Chief Judge) is a full voting member of the Patent Trial and Appeal Board (Board) as provided by Title 35 U.S. Code, Section 6, and is the immediate supervisor of the Deputy Chief Administrative Judge and second-line supervisor for all of the lead Administrative Patent Judges (Judges) assigned to the Board. The Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the several administrative patent judges (including the Chief Judge, Deputy Chief Judge, Vice Chief Judges, and Lead Judges) constitute the membership of the Board. Any three or more of these individuals may constitute a legal panel of the Board to render a decision in a patent appeal, an interference proceeding, a post grant review proceeding, an inter partes review proceeding, a derivation proceeding, or a proceeding under the Transitional Program for Covered Business Methods Patents (TPCBMP). The Board has the sole authority to hear and adjudicate patent appeals from decisions of Primary Patent Examiners. The Board also holds oral hearings when requested, and has the authority to grant rehearings.With respect to patent appeals, final decisions of the Board, if unfavorable to an applicant, may be appealed to the United States Court of Appeals for the Federal Circuit in accordance with 35 U.S.C. § 141. Alternatively, dissatisfied applicants may elect to bring a civil action in accordance with 35 U.S.C. § 145. With respect to interferences, final decisions of the Board, if unfavorable to a party, may be appealed to the United States Court of Appeals for the Federal Circuit in accordance with 35 U.S.C. § 141. Alternatively, dissatisfied parties may elect to bring a civil action in accordance with 35 U.S.C. § 146. With respect to inter partes reviews, post grant reviews, and proceedings under the TPCBMP, final decisions of the Board, if unfavorable to a party, may be appealed only to the United States Court of Appeals for the Federal Circuit in accordance with 35 U.S.C. § 141. With respect to derivation proceedings, final decisions of the Board, if unfavorable to a party, may be appealed to the United States Court of Appeals for the Federal Circuit in accordance with 35 U.S.C. § 141. Alternatively, dissatisfied parties may elect to bring a civil action in accordance with 35 U.S.C. § 146.

The Chief Judge is responsible for developing and implementing the USPTO rules associated with patent appeals, interferences, post grant reviews, inter partes reviews, derivations, and TPCBMP. … The Chief Judge is also responsible for developing and implementing the Standard Operating Procedures necessary for the internal operation of the Board. Furthermore, the Chief Judge is responsible for adjudicating petitions for the Under Secretary of Commerce for Intellectual Property and Director of the USPTO.

The Chief Judge is responsible for the oversight and management of all Board operations. This requires performing the comprehensive executive management, strategic planning, and financial functions essential to effective Board operations. The Chief Judge is also responsible for the assignment of panels of administrative patent judges to adjudicate all patent appeals and interference proceedings, on which panels the Chief Judge periodically serves. The Chief Judge further develops and implements quality, timeliness, and productivity performance standards for the Judges to appropriately address filing and backlog issues.

For qualifications, the USPTO requires senior level management and technical experience in the areas of patent law and management.  This includes both a technical degree and a law degree and must be an attorney in good-standing.

 

Inter Partes Reviews are Won/Lost on the First Filing

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In Redline Detection v. Star Envirotech,[1] the Federal Circuit has affirmed (1) the PTAB substantive determination that Star’s patent claims[2] are not invalid as obvious and (2) the PTAB procedural refusal to allow Redline to submit a post-institution expert declaration in its attempt to challenge the patent.[3]

On procedure, the Federal Circuit found that the Patent Office must be given deference in interpreting its own regulations regarding PTAB process and that the PTO’s rules make sense as they are designed to encourage submission of “all of the efidence that supports the ground of unpatentability” at the petition stage.  Here, although the PTAB rules do allow for submission of supplemental information – the PTAB was justified in denying the submission here since the petitioner gave no reason for the delayed submission other than cost-savings.

Although the PTAB rules (§ 42.123) suggest that supplemental filings may be made within one-month of a petition being granted – that simply might not work in many cases.  Thus, this case stands for the proposition that, even when timely filed within the one-month deadline, a motion to submit supplemental information must be justified beyond merely being “relevant.” More broadly, the result here repeats the conventional wisdom that inter partes reviews are generally won/lost on the first-punch.

Star’s patent relates generally to the abstract idea of generating leak-identifying smoke for use in volatile environments such as a vehicle brake-system.  On the merits, the PTAB found that the submitted prior art did not render the particularly challenged claims obvious.

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[1] Redline Detection, LLC v. Star Envirotech, Inc., App. No. 2015-1047 (Fed. Cir. 2015), appealed from the Patent Trial Appeal Board’s final decision in IPR2013-00106.

[2]  Claims 9 and 10 of U.S. Patent No. 6,526,808.

[3] See 37 C.F.R. § 42.123(a) (2012).

IPR: Proving Patentability before Amendment

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By Dennis Crouch

In Prolitec, Inc. v. ScentAir Technologies,[1] the Federal Circuit has affirmed a USPTO inter partes review (IPR) decision cancelling Prolitec’s air-freshener diffuser claims.  The patent at issue[2] is the subject of a co-pending lawsuit between the parties that was stayed in 2013 — awaiting the IPR outcome.[3]

Here, the patent included a claim limitation requiring a diffusion head “mounted to” a reservoir.  The patentee wanted that term to be limited to require permanent joining of the head to the reservoir.

Too Clever Specification Drafting?: To achieve that permanent-joining result, the patentee first argued for a narrow claim construction of the “mounted term.”  That approach failed at the PTAB and has been affirmed on appeal.  The failure is to the ordinary patent drafting strategy, employed by the patentee, of using non-definite and non-limiting terms such as “may” to describe the role of various embodiments in the specification so as to not unduly limit claim scope. Here, in particular, the specification had indicated the possibility of a permanent joining in a disposable fashion, but, by clever specification drafting, had not foreclosed the potential for non-permanent mounting.  Thus, that narrowing argument was foreclosed by the patentee’s own prior actions.

No Amendment without Major Proof: As an alternative approach, the patentee also requested permission to amend its claims to replace “mounted” term with “permanently joined.”  As per its usual modus operandi, the Patent Trial and Appeal Board (PTAB) denied the motion to amend.  In particular, the PTAB found that Prolitec had failed to prove that its proposal was patentable over the prior art of record.  On appeal, the Federal Circuit affirmed – first reiterating its prior statement in Microsoft Corp. v. Proxyconn, Inc.[4] that the Board can require a patentee to establish patentability before allowing an amendment.  Here, the Federal Circuit extended that doctrine to affirm the PTAB rule that, prior to amendment, patentability must be established over all prior art of record (in both the IPR and prosecution history). That rule, according to the Federal Circuit, is not contrary to any statute and is also “reasonable.”  Further, the court held that the requirement of “establishing patentability” includes both novelty and nonobviousness.  On the merits, the court affirmed that the patentee had failed to show that its amended claims were non-obvious over the combination of references cited in the IPR petition and found in the prosecution history file.

The majority opinion was written by Chief Judge Prost and joined by Judge Taranto.

Writing in dissent, Judge Newman argued that the refusal to allow an amendment was “contrary to both the purpose and the text of the America Invents Act. . . . [E]ntry of a compliant amendment is [a] statutory right, and patentability of the amended claim is properly determined by the PTAB during the IPR trial, not for the first time at the Federal Circuit.”

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[1] Prolitec, Inc. v. ScentAir Technologies, App. No. 15-1020, (Fed. Cir. Dec. 4, 2015) (slip opinion available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1020.Opinion.12-1-2015.1.PDF)

[2] U.S. Patent No. 7,712,683.

[3] Prolitec, Inc. v. ScentAir Technologies, Civil Action #: 2:12-cv-00483-RTR, Docket No. 62 (E.D. Wisc., May 17, 2013).  The IPR petition was filed in May 2013 but not instituted until August 2013. See IPR2013-00179. The claims of a second patent in the lawsuit were also largely been cancelled and was the subject of a separate appeal. That PTAB decision was affirmed without opinion in June 2015. See Prolitec, Inc. v. ScentAir Technologies, App. No. 15-1017 (Fed. Cir. June 9, 2015) (R. 36 affirmance without opinion).

[4] 789 F.3d 1292 (Fed. Cir. 2015).

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.