by Dennis Crouch

LKQ’s brief for today’s en banc rehearing begins with the following interesting statement: “As with utility patents, the U.S. Constitution and the Patent Act prohibit design patents on ordinary innovations.” It is the Constitutional question that is most interesting and calls forth the concurring opinion by Justice Douglass in the Great A&P Case.

The attempts through the years to get a broader, looser conception of patents than the Constitution contemplates have been persistent. The Patent Office, like most administrative agencies, has looked with favor on the opportunity which the exercise of discretion affords to expand its own jurisdiction. And so it has placed a host of gadgets under the armour of patents—gadgets that obviously have had no place in the constitutional scheme of advancing scientific knowledge. . . . The fact that a patent as flimsy and as spurious as this one has to be brought all the way to this Court to be declared invalid dramatically illustrates how far our patent system frequently departs from the constitutional standards which are supposed to govern.

Great A&P Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147, 156 (1950). Although case applied pre-1952 law, the reminder here is poignant. Justice Douglas goes on:

It is worth emphasis that every patent case involving validity presents a question which requires reference to a standard written into the Constitution. . . .  The Congress does not have free reign, for example, to decide that patents should be easily or freely given. . . . Every patent is the grant of a privilege of exacting tolls from the public. The Framers plainly did not want those monopolies freely granted. The invention, to justify a patent, had to serve the ends of science—to push back the frontiers of chemistry, physics, and the like; to make a distinctive contribution to scientific knowledge. That is why through the years the opinions of the Court commonly have taken ‘inventive genius’ as the test. It is not enough that an article is new and useful. The Constitution never sanctioned the patenting of gadgets. Patents serve a higher end—the advancement of science.

The standard of patentability is a constitutional standard; and the question of validity of a patent is a question of law.

Id.   Later, in Deere, the Supreme Court suggests found that the newly written Section 103 was properly seen as statutory codification of the court’s standard “which exists in the law and has existed for more than 100 years, but only by reason of decisions of the courts.”  And, that standard is derived from the Court’s understanding of the U.S. Constitution’s requirement that the patent laws be designed to “promote the Progress of Science and useful Arts.”

The Congress in the exercise of the patent power may not overreach the restraints imposed by the stated constitutional purpose. Nor may it enlarge the patent monopoly without regard to the innovation, advancement or social benefit gained thereby. Moreover, Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available. Innovation, advancement, and things which add to the sum of useful knowledge are inherent requisites in a patent system which by constitutional command must ‘promote the Progress of * * * useful Arts.’ This is the standard expressed in the Constitution and it may not be ignored. And it is in this light that patent validity requires reference to a standard written into the Constitution.

Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 5–6 (1966).

Bringing this back to design patents and the LKQ case, the patent challenger here does not deeply engage with the constitutional question, but rather appears to use it as a constant interpretative reminder. GM’s brief does not mention the Constitution or its requirement to “promote the Progress.”  Likewise, none of the Federal Circuit’s obviousness decisions from the past year discussed the doctrine in light of the Constitutional requirement.

by Dennis Crouch

The new petition for certiorari filed by Liquidia raises some interesting questions about the ongoing race between inter partes review proceedings and district court litigation.  Liquidia Techs v. United Therapeutics Corp., 23-804 (US), on petition for writ of certiorari from United Therapeutics Corp. v. Liquidia Techs., Inc., 74 F.4th 1360 (Fed. Cir. 2023).

UTC won its infringement suit against Liquidia with a holding that its patent covering treprostinil administration by inhalation were valid and infringed. (US10716793).  While the appeal was pending, the PTAB sided against the patentee and found the claims unpatentable as obvious.  In the appeal, however, the Federal Circuit refused to give credence to the PTAB decision – finding that litigation was still “pending” and “non-final.” The claims had not actually been cancelled yet – since the Director only issues the certificate confirming unpatentability after any appeal. Further, the Federal Circuit concluded that IPR decisions do not have issue-preclusive (collateral estoppel) effect until the decision is affirmed on appeal, or the parties waive their right to appeal. Citing XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282, 1294 (Fed. Cir. 2018).

Liquidia’s petition argues that the PTAB’s final-written decision should be given preclusive effect in parallel litigation even if an appeal is pending, just like would be done for a district court opinion. (more…)

by Dennis Crouch

Ficep begins its petition for certiorari with a brilliant statement of how its patented steel manufacturing method has won numerous awards and complements for its innovative approach, been copied by competitors, and led to numerous successful sales. Despite these clear indicia of patentability, the Federal Circuit invalidated claims — affirming the lower court’s judgment on appeal.

That the invention was an important real-world manufacturing innovation was, as a factual matter, thoroughly established. The improvement was touted as enabling vastly more efficient and superior manufacture of components – not just by Petitioner’s experts, but also in the defendant’s advertising. There was industry recognition applauding the “innovation.” There was copying by competitors. There was successful litigation and licensing. And there was specific customer demand for the improvement to the manufacturing process. That is, every objective indicium of inventiveness that this Court has identified was present in the technological, traditionally patent-eligible, setting of manufacturing lines.

Ficep petition for certiorari.  But, in the Federal Circuit’s view, facts are confined to the obviousness analysis, and Ficep’s patent is invalid because it is directed to an abstract idea. Ficep Corp. v. Peddinghaus Corp., No. 2022-1590, 2023 WL 5346043 (Fed. Cir. Aug. 21, 2023).  The petition goes on to ask three questions:

1. Does a claim directed to patent-eligible subject matter (here, manufacturing) nevertheless become ineligible as “abstract” if the process is improved using automation? (and should an “abstract-idea” behind a claim to a patent-eligible process be identified and, if so, how and at what level of abstraction?)
2. What is the appropriate standard for determining whether a claim is “inventive,” conferring eligibility under Alice Step 2, including whether objective evidence of inventiveness and technological improvement is relevant?
3. Is either what a claim is “directed to” and whether that is abstract, or whether a claim is “inventive” as articulated in Alice step 2, only for a judge to decide as a legal matter or does it include fact issues and, if the latter, are they for a jury?

SCT No. 23-796.  This case again highlights the need for clearer guidance from the Supreme Court on when a patent claim directed to an industrial process should be considered an abstract idea and therefore patent ineligible under 35 U.S.C. § 101.

• Ficep Cert Petition
• Ficep FedCir Decision

For its part, the Federal Circuit applied the two-step test for patent eligibility established in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014). At step one, the court determines whether the patent is “directed to” a patent-ineligible concept like an abstract idea. If so, then at step two the court searches for an “inventive concept” beyond the ineligible concept.

Here, the Federal Circuit held Ficep’s patent claims to be directed to the abstract idea of “extracting and transferring information from a design file to a manufacturing machine.” The court characterized the focus of the claims as “automating a previously manual process” that a human operator used to perform. Further finding no inventive concept at step two, the Federal Circuit affirmed the district court’s ruling that the claims were patent ineligible under § 101.

In its cert petition, Ficep contends that the Federal Circuit misapplied Alice in a way that conflicts with precedent and casts doubt on patents for industrial innovations. Ficep argues that its claims are directed to an eligible manufacturing process under Diamond v. Diehr, 450 U.S. 175 (1981), which held that a rubber curing method did not become patent ineligible simply because one step used the Arrhenius equation to automate timing of when to open the presses. According to Ficep, the Federal Circuit improperly focused on one aspect of its claims—data extraction and transfer—rather than evaluating the claims as a whole, which require physical manufacture of components. Ficep also presented extensive evidence of its patented system’s superiority over prior manufacturing methods, which it contends demonstrates a technological advance under step two of Alice that the Federal Circuit wrongly dismissed.

Lets look at the claim at issue for just a moment. Claim 7 below claims an “apparatus for automatic manufacture of an object” and requires, among other things, “at least one manufacturing machine [that] manufactures the components” after receiving dimensions from a computing device.  Although the court agreed that the claim requires hardware, the court noted that the actual advance here is simply automating the previously manual process of transferring information from a CAD design model to a manufacturing machine.  The court found that, in a general sense, that automation process is an abstract idea.  And, that the patent claims offer no specific technological improvement that would transform the ineligible idea into a patent eligible.  But, the patentee here argues that the closest Supreme Court case on point is not Alice, but rather Diehr, which would favor eligibility.

7. An apparatus for automatic manufacture of an object, comprising:

a computing device adapted to create a design model of an object having multiple individual components, at least two of the individual components defining an intersection at which the two components are in contact with one another;

at least one programmable logic controller in communication with the computing device and with at least one manufacturing machine;

a receiver associated with the programmable logic controller for receiving the design model of the object;

a database unit adapted to store the design model received at the receiver;

a processor which is associated with the programmable logic controller and extracts from the design model a plurality of dimensions of components which define a plurality of components of the object;

wherein the processor identifies a plurality of intersection parameters which define the intersection of the two components;

wherein the processor extracts from the design model the intersection parameters;

a transmitter associated with the processor for transmitting the intersection and machining parameters and the component dimensions from the programmable logic controller to the at least one manufacturing machine; and

wherein the at least one manufacturing machine manufactures the components based at least in part on the transmitted component dimensions and on the transmitted intersection and manufacturing parameters.

In focusing on Diehr, the patentee here is raising a difficult issue that the the  Supreme Court’s landmark 1980 decision is effectively dead, even though it has not been rejected or repudiated by the Supreme Court. Rather, it was favorably cited in the Supreme Court’s recent trio of Bilksi, Mayo, and Alice.

Zombie Precedent: Ficep contends that its claims are analogous to the patent-eligible claims in Diamond v. Diehr for a rubber curing method that used the Arrhenius equation to calculate when to automatically open the presses. Ficep argues that like Diehr, its claims as a whole are directed to an eligible manufacturing process—namely manufacturing steel building components—even if one aspect involves automation based on extracting data like intersection parameters. But, the lower courts are not applying Diehr because they see that case as in conflict with the more recent trio. In its petition, Ficep asks the Supreme Court to make a statement on this issue — either confirm or overrule Diehr.

On the inventiveness issue that I started with in this post, the patentee here asks for guidance on Step-2 of Alice/Mayo and for a recognition that technological advance is a fact question for a jury to decide alongside parallel questions in obviousness and anticipation analysis.

= = =

The patentee-petitioner is represented by Matthew Lowrie and his team from Foley & Lardner.  Peddinghaus’s responsive brief is due Feb 23, 2024.  Their attorneys have not filed an appearance, but I expect they will still be represented by Nathaniel Love and his Sidley Austin team that includes Stephanie Koh and Leif Peterson.

by Dennis Crouch

Pacific BioSciences v. Personal Genomics (Fed. Cir. 2024)

PacBio was partially successful in its IPR against Personal Genomics that resulted in cancellation of some claims of US7767441.  Both sides appealed with PacBio wanting all the claims cancelled, and Personal Genomics wanting restoration of its patent rights. The case focuses on preamble claim construction and interpreting the prior art.

Construing the Preamble: The claims were directed to “an apparatus for identifying a single biomolecule, comprising” three different elements. The preamble here has a purposive statement “for identifying a single biomolecule,” and a key question in the case is whether the preamble should be limiting. In the IPR, the patentee wanted a narrow construction – giving effect to the preamble – in order distinguish its invention from prior art apparently not capable of single-molecule identification.

The PTAB found the preamble as limiting and the Federal Circuit affirmed that holding on appeal. This is probably a case where the PTAB’s move to the Phillips v. AWH standard from Broadest-Reasonable-Interpretation during inter partes review.

The general presumption in patent claim construction is that the preamble is not limiting for obviousness purposes. But, the preamble can be given weight when it crosses some threshold of providing important meaning to the claimed invention.  Here, the preamble identified “a single biomolecule” and body of the claim referenced “the biomolecule.”  This antecedent basis for referencing the biomolecule was enough for the PTAB find the preamble limiting, and that construction was not appealed.

What was appealed was the actual construction of “a single biomolecule.”  Petitioner argued that the claims should cover identifying a biomolecule by making copies, examining the resulting ensemble, and inferring the identity of the original molecule. But the court rejected this, finding it inconsistent with the language of the claim as supported by the specification describing problems of such ensemble approaches.  Of interest, the court decided that the ordinary meaning of “identifying” should be applied and thus cited two dictionary definitions.

A final note on this preamble construction is that it could also be given no meaning because it appears simply state the purpose of the device (and thus not really limiting) rather than a structural limitation (that would be limiting).  On appeal, the Federal Circuit noted that this issue was not challenged on appeal, but that there is precedential to support the notion that the phrase “for identifying a single biomolecule” is a limitation on the capability of the machine rather than simply a statement of purpose.

Scope of the Prior Art: One of the key prior art references (Hassibi) described its detection sensitivity “as low as 0.1 attomoles,” which is >60,000 molecules.  Thus, the court was able to affirm that Hassibi does not meet the requirement of identifying a single biomolecule.

The patentee also argued that a second reference (Choumane), did not detect a single molecule.  The patentee’s expert conducted a number of calculations and testified that Choumane’s sensitivity required at least 78 biomolecules — i.e., more than one.  But, the text of Choumane disclosed “detection and observation of individual [biomolecules].”  On appeal, the Federal Circuit recognized that that the expert’s calculations might have merit, but that the Board had substantial evidence to support its conclusion that Choumane disclosed a single molecule detector.

[T]his type of calculation can be proper where based on the express disclosures of a
piece of prior art. In this case, however, the Board, considering the calculation, had sufficient reason, in light of the Choumane statement quoted above, to reject the inference about Choumane that PGI offered the calculation to support.

Id.  Although obviousness is a question of law, it must be supported by various factual findings, including a determination of the scope and content of the prior art.  This means that the Court gives deference to the PTAB — affirming its factual finding so long as there is enough evidence available that a reasonable fact finder could rule as the Board ruled.  See Shoes by Firebug LLC v. Stride Rite Children’s Group, LLC, 962 F.3d 1362, 1369 (Fed. Cir. 2020).

Edward Reines of Weil Gotshal argued for the patentee; Keith Orso of Irell & Manella argued for petitioner. The panel included judges Prost, Taranto, and Hughes, with Judge Taranto authoring the opinion.

The Supreme Court announced on Monday, January 8, 2024, it has denied certiorari petitions in three patent cases that we have been watching. This leaves the Federal Circuit rulings intact.  It also means that the court is unlikely to hear a patent case this term.

The first case is Intel Corp. v. Vidal, which challenged the Patent Trial and Appeal Board’s “Fintiv rule.” This policy allows the PTAB to use the director’s delegated discretion to deny inter partes review petitions if, for instance, parallel litigation in district court is progressing quickly. Intel argued the rule is arbitrary, overly restrictive, and skirted proper rulemaking procedures. But the Federal Circuit said decisions on whether to institute reviews cannot be appealed. Although the Supreme Court has declined to take-up the issue, Dir. Vidal has already narrowed the approach taken under Dir. Iancu and will potentially go further.

The second case, Realtime Data v. Fortinet, involved eligible subject matter under 35 U.S.C. 101. Realtime alleged the Federal Circuit had expanded eligibility exceptions too broadly and asked SCOTUS to reinforce that most inventions should qualify as patentable. However, the Court turned down Realtime’s appeal.

Finally, Traxcell Techs v. AT&T raised a narrow question on whether attorney’s fees can be awarded for “baseless” litigation actions taken after a magistrate judge’s recommendation but before final confirmation by the district judge. Here too though, the Supreme Court denied cert, leaving the Federal Circuit’s answer that “yes, fees were appropriate.” (paraphrasing).

With these three denials on widely-varying patent issues, the Court seems inclined to let CAFC precedent control in these areas for now.

There are still two pending petitions, with VirnetX having a much greater shot than Tehrani.

• VirnetX Inc. v. Mangrove Partners Master Fund, Ltd., No. 23-315. The VirnetX petition focuses on the Federal Circuit’s interpretation of the inter partes review (“IPR”) joinder provisions and the requirements of the Federal Vacancies Reform Act (“FVRA”).  Both Cato and BIO filed briefs in support of the petition.
• Tehrani v. Hamilton Technologies LLC, No. 23-575.  The petition raises issues of obviousness, expert qualifications, claim interpretation, etc.  I wrote previously that although the issues are super interesting, “the petition largely re-argues the evidence — typically a losing approach at the Supreme Court” petition stage.