Tag Archives: obviousness

In my view, Obviousness is the most fundamental of patent law doctrines, and certainly much of the work of patent attorneys is to convince patent examiners that the claims are not obvious.

Can Your Patent Block Repair and Resale and Prevent Arbitrage?

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resaleby Dennis Crouch

The first rounds of merits briefs have now been submitted to the Supreme Court in Impression Prods. v. Lexmark. The case questions the extent a patentee can control the entire resale and repair market for its products.  For products originally sold in the US, the Federal Circuit held that express use/resale limits at the point of first-sale are effective – even against subsequent bona fide purchasers. For products sold overseas, the Federal Circuit held that US Courts should presume no exhaustion of the US patent – this would automatically prohibit 3rd party importation into the US.

As a property law professor, I tend to think about about the mass confusion among the students as they try to work through the law associated with real covenants and equitable servitudes on land.  It creates substantial confusion among lawyers. But what we want is a system where property rights can be fairly and openly traded without even having lawyers extensively involved with each of our purchases.  With personal property courts long ago rejected servitudes (such as use and resale restrictions) that bind subsequent purchasers. Unlike real property, personal property moves and is often transferred without substantial paperwork or record-keeping, and allowing a set of unique restrictions has the potential of gumming up the marketplace.  The Federal Circuit in this case went all the way to the other side — holding that the presumption in foreign sales is that no US patent rights are exhausted.  I purchased my last couple of smart phones through the used market – and have also repaired them several times.  Under the law, I probably should have taken steps to ensure that all of the original equipment manufacturers affirmatively granted repair and resale rights.  Coming together, the Federal Circuit’s approach here has the potential to limit the market for the repair and reselling of goods.  I would suggest that those activities are incredibly beneficial to our society in terms of resource allocation and avoiding waste as well as empowering citizens and avoiding anticompetitive market behavior.  Although these policy goals are relevant to the Supreme Court decision-making, the Court’s primary analysis pathway should be doctrinal.

In these cases, the most important brief is often the amicus filing by the U.S. Government. Here, the brief USG brief was filed on January 24 by President Trump’s newly appointed acting solicitor general (Noel Francisco) who (like Obama’s SG) has taken the position of supporting the challenger (Impression) against the patentee (Lexmark) and the Federal Circuit.  Time will tell whether this stance is more generally predictive of the new administration’s stance on patent rights and patent enforcement. [15-1189_amicus_reversal_united_states]

The Government frames the questions presented as follows:

  1. Whether a U.S. patent owner may invoke patent law to enforce restrictions on the use or resale of a patented article after the first authorized sale of the article in the United States.
  2. Whether and under what circumstances a U.S. patent owner may authorize the sale of a patented article in a foreign country, either under a foreign patent or otherwise in accordance with foreign law, while reserving its exclusive rights under U.S. patent law.

Answering these questions, the Government argues simply that “restrictions on post-sale use or resale are not enforceable under U.S. patent law” and that the Federal Circuit’s approach is wrong.  This is the same rule that applies generally to attempts to place a restrictive covenant on personal property.  As a minor caveat, the Government takes the position that, under limited circumstances, a foreign sale might not exhaust the associated U.S. patent rights.

The basic justification for this approach is to ensure that we have a working commercial market. The brief quotes the 1895 Keeler decision: “The inconvenience and annoyance to the public” if patent rights are not exausted by the first authorized sale [is] “too obvious to require illustration.”

Since A.B. Dick was overruled in 1917, this Court has rejected every attempt to invoke patent law to control the use or resale of an article after the first authorized sale in the United States.

At the international level, the Government suggests that the court allow express reservation of rights for foreign sales – this would thus allow a German company to sell its products in Germany (with an express export restriction) and then use its U.S. to patent to prevent those products from being sent to the U.S.  This gives the manufacturer more control over the market and would allow for price discrimination (i.e., charging higher prices in the U.S.).

In its merits brief, petitioner Impression Prods. takes a harder stand on international exhaustion — arguing that the court should follow its own prior precedent in the copyright case of Kirtsaeng and hold that any authorized sale by the patentee exhausts all U.S. patent rights – even if the authorized sale is abroad.  [15-1189-merits-petitioner]   Professor Feldman agrees in her brief, naming the Federal Circuit’s actions as “reversal from below” [15-1189_amicus_pet_professor_robin_feldman] as did the Huawei brief (although in different words) [15-1189_amicus_pet_huawei_technologies].

A common argument for exhaustion is that it allows for a robust resale market that greatly benefits consumers and helps price discrimination by allowing third party arbitrage.  Although U.S. prices are low for some goods, they are very high for others (such as pharmaceuticals and printer ink).  International exhaustion would help to solve that problem (although there are many regualtory hurdles associated with importing .  In its brief, the AARP join with EFF and Public Knowledge (and others) to argue this point: “Manufacturers currently exploit weak exhaustion rules to harm consumers. . . . Limitations on resale and repair rights lead to monopolization rather than competition.” [15-1189_amicus_pet_public_knowledge]

Costco is a business that is actively engaged in the sort of price lowering arbitrage discussed by AARP and argues that the Federal Circuit’s exhaustion rules “impose enormous costs for manufacturers, retailers, and consumers.”  They effectively ask – will the american retailers need to inspect patent licenses for all of the components and sub-components found in the products they sell? [15-1189_amicus_pet_costco_wholesale_corporation]  Similarly, an interesting trade group – the Association of Service and Computer Dealers International filed its brief and explained how the no-exhaustion rules impact the market for hard drives, DVDs, Flash Memory, and other consumer product. [15-1189_amicus_pet_ascdi] The UCC (Article 2) provides some protections here, but does not, for instance, provide authority to repair.

FSU Professor Frederick Abbott has an interesting take. Abbott is an expert on international trade law.  He writes:

A fundamental flaw in the approach of the Federal Circuit involves its reasoning that a rule of territoriality of patent rights precludes U.S. courts from taking into account activities of U.S. patent owners outside of the United States. The international agreements governing the international patent system do not prescribe such a rule of territoriality. . . The rule of independence of patents prescribed by the Paris Convention[] provides that acts taken by patent authorities in one country do not affect patent rights in other Paris countries.  recognition by this Supreme Court that first sales in foreign countries exhaust U.S. patent rights would not affect patents granted outside the United States.

[15-1189_amicus_pet_abbott]

Finally, Stanford’s IP Clinic filed a law professor’s brief signed by Mark Lemley, Dan Burk, Sam Ernst, Shubha Ghosh, Orly Lobel, Pamela Samuelson, Jessica Silbey, and others that explains:

A clear exhaustion rule promotes the alienability of patented articles and reduces transaction costs. Unlike clear, reliable property rights, idiosyncratic arrangements of rights that depend on what covenants or conditions an upstream seller has attached to a chattel impose high information costs on purchasers. . . . Exhaustion doctrine also prevents patentees from extracting a patent royalty at multiple stages in a product’s distribution chain, which would compensate them in excess of the societal benefit their inventions have provided.

[15-1189-intellectualpropertyprofessors]

It will be interesting to see how the ‘other side’ responds here .

 

The Last Inventorship Case? (102(f))

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Cumberland Pharma v. Mylan (Fed. Cir. 2017) [cumberland]

Cumberland’s Patent No. 8,399,445 is listed in the Orange Book as covering Acetadote, an intravenous antidote for overdoses of acetaminophen.  Following the process set out in the Hatch-Waxman Act, Generic manufacturer Mylan filed an abbreviated new drug application (ANDA) with the FDA to market its own version of the drug and Cumberland sued for infringement.  While patent infringement ordinarily requires some making/using/selling of the invention, 35 U.S.C. 271(e)(2)(A) creates a form of paper-infringement – stating that “It shall be an act of infringement to submit (A) an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act or described in section 505(b)(2) of such Act for a drug claimed in a patent or the use of which is claimed in a patent.”

The ‘445 patent (August 24, 2005 priority date) covers a non-chelating form of Acetadote.  Back in 2002, Cumberland was seeking FDA approval of a form of the drug that included a chelating agent (EDTA).   In a letter, to the listed inventor (Pavliv) of the ‘445 patent, the FDA requested justification for including EDTA in the formulation and later requested data proving that EDTA should be included.  Shortly after that letter, the inventor Pavliv had the idea of a formulation without the EDTA.

Based upon these (and a few other) facts, Mylan argues that (1) the ’patent had been derived from someone at the FDA – and therefore the patentee was not the “inventor” as required by pre-AIA law, 35 U.S.C. 102(f); and (2) the invention would have been obvious in light of the FDA communications.  On appeal, however, the Federal Circuit affirmed the lower court holding siding wholly with the patentee.

A request for justification of the inclusion of EDTA, supported by data, is not the same as a suggestion to remove it, let alone to remove it and not replace it with another chelating agent.

Further, the claim was not obvious because the defendant failed to prove “a reasonable expectation of success” if the non-EDTA version was tried.   That seems to be right here (based upon the evidence presented).  The inventor previously believed that EDTA (or similar agent) was needed to ensure formulation stability, but later was able to show that the non-EDTA version was still stable (and the claims expressly reflect that the formulation is stable but non-EDTA).  On appeal, the Federal Circuit agreed with the patentee:

Considerable evidence supports the finding that relevant skilled artisans believed that chelating agents were necessary to sequester metal contaminants and prevent oxidative degradation of acetylcysteine and that such artisans had no reasonable expectation of stability without such an agent. . . . As late as 2011, Mylan’s own scientists expressed concern that the removal of EDTA would make the product more vulnerable to oxidation.

 

Judgment of Not-Invalid Affirmed.

 

PTAB initiation of PGR Does not Negate Preliminary Injunction

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tinnuspatentby Dennis Crouch

Tinnus Enterprises v. Telebrands (Fed. Cir. 2017) [tinnustelebrands]

In an opinion by Judge Stoll, the Federal Circuit has affirmed an E.D.Texas preliminary injunction barring the accused infringer from selling its “Balloon Bonanza” product “or any colorable imitation thereof.”

I previously wrote about the case that involves Telebrands’ patented balloon-filling-toy. U.S. Patent No. 9,051,066.  The case is one of the first lawsuits involving a post-AIA patent.

Preliminary Injunctive Relief: Even before eBay, courts applied a four-factor test to determine whether to award a preliminary injunction to stop ongoing infringement pending a final judgment in the case. (eBay changed the rule for permanent injunctive relief.).

A decision to grant or deny a preliminary injunction is within the sound discretion of the district court, based upon its assessment of four factors: (1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.

The factors are slightly different than those considered for permanent relief in eBay.  Most importantly, at the pre-trial stage, the patentee has not established that it will actually win the case and be eligible for any remedy at all. Thus, the Preliminary Injunction factors include consideration of who is likely to win.  The Prelminary Injunction factors also eliminate the eBay factor that “remedies available at law are inadequate to compensate for the injury” by rolling that factor into the irreparable harm consideration.  A fifth element that is not usually stated in the test is that the patentee must also be willing and able to post a bond to the court that will compensate the enjoined party if it turns out that the injunction was improper. Rule 65(c) requires a bond “in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.” Fed. R. Civ. P. 65(c). Two important aspects on appeal: (1) A district court’s PI order (either grant or denial) is immediately appealable even though it is a non-final interloctutory order. 28 U.S. Code § 1292. (2) Because district courts are given discretion in awarding preliminary injunctive relief, those judgments are given deference on appeal.

PTAB Interplay: As with so many US patent lawsuits, the case involves a parallel AIA-trial. Since the patent at issue here is a post-AIA patent, the challenger was able to file for post-grant-review (PGR).

The timeline is relevant:

  • Patentee files the lawsuit and requests a preliminary injunction.
  • District court awards PI – after considering but rejecting invalidity challenges by defendant.
  • Defendant files PGR petition – making the same invalidity arguments (indefinite and obvious).
  • USPTO initiates PGR – finding claims likely invalid as obvious and indefinite.
  • Defendant appeals court PI.

As noted above, a key factor for awarding preliminary relief is the likelihood that the patentee will ultimately win the case on the merits.  Although a patent is presumed valid, a challenger can overcome this hurdle by showing that the patent is “vulnerable” to a specific validity challenge.  The court has also termed this as finding a “substantial question concerning the validity of the patent.”  A seemingly reasonable approach here would be to say – “If the PTO concludes that claims are likely invalid, then those claims are probably vulnerable to being found invalid.”  Here, the court does not follow that approach and – in fact – does not even mention the PTAB initiation decision in its discussion of the aforementioned vulnerability.  (The court does state that the PTAB has taken action, but does not appear to draw any conclusions for this case from that parallel proceeding).  Implicit holding here is that the PTAB initiation of a PGR Does not negate a preliminary injunction.

Rather, the appellate panel walked through the district court decision and found that (1) someone of skill in the art would likely understand the term “substantially filled” and thus it is not indefinite; and (2) the district court did not err in holding that prior art associated with filling an endoscopic balloon was not analogous or pertinent to the problem of filling toy water balloons.

Preliminary Injunction Affirmed.

= = = =

Motivated to Consider vs Motivated to Combine: The Federal Circuit is still working through how to deal with the analogous arts test post KSR.  Here, the court ultimately found there was no ‘motivation to combine’ the prior art since one of the references was not ‘analogous art.’  In at least pre-KSR tradition, these were separate inquiries within the obviousness process outlined in Graham v. John Deere.  The analogous arts test has long been thought of as part of the initial factual Graham inquiry – identify the scope and content of the prior art.  Under the doctrine as explained in Clay, the court limits the scope of prior art only to references that a worker may have been motivated to consider.  These are generally thought of as references in the same field of endeavor or addressing similar problems as those faced by the inventor.  Of course, just because two prior art references are within the same field does not mean that the worker would have been motivated to combine the elements of references in the way claimed by the inventor.  Thus, traditionally, the motivation to consider a reference is a unique and different inquiry than that of the motivation to combine the elements of multiple references.  Here, the court appears to mix them together in a way that adds to confusion in the inquiry rather than offering clarity.

Now, maybe it makes sense to throw-out the old Graham v. John Deere structured approach, but that should be an explicit process rather than a set of (perhaps-unintentional) undermining decisions.

Trading Technologies: User Interface for Stock Trading

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Before writing more about Trading Technologies v. CQG, I will first note that TT is my former client and I personally filed the original complaint in this very case 12 years ago (2005).  Although TT is no longer my client, I am bound by and respect the rules of professional ethics and the duties owed to former clients.  

The new non-precedential opinion from the Federal Circuit affirms the district court ruling that TT’s asserted claims are patent eligible.

The patent claims here cover a computerized method and system used for trading stocks and similar products.  When buying and selling stocks, speed and accuracy are both critically important and in this invention, TT created a Graphical-User-Interface design (and operational software) that helps traders buy and sell stock more quickly and more accurately. See U.S. Patents No. 6,772,132 and No. 6,766,304.

The court writes:

It is not disputed that the TTI System improves the accuracy of trader transactions, utilizing a software implemented programmatic [method]. For Section 101 purposes, precedent does not consider the substantive criteria of patentability. For Section 101 purposes, the claimed subject matter is “directed to a specific improvement to the way computers operate,” Enfish, for the claimed graphical user interface method imparts a specific functionality to a trading system “directed to a specific implementation of a solution to a problem in the software arts.” Id.

The opinion is authored by Judge Newman and joined by Judges O’Malley and Wallach.  The court’s opinion is a short and interesting read:

Precedent has recognized that specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter. … [I]neligible claims generally lack steps or limitations specific to solution of a problem, or improvement in the functioning of technology.

For some computer-implemented methods, software may be essential to conduct the contemplated improvements. Enfish… Abstraction is avoided or overcome when a proposed new application or computer-implemented function is not simply the generalized use of a computer as a tool to conduct a known or obvious process, but instead is an improvement to the capability of the system as a whole.

We reiterate the Court’s recognition that “at some level, all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Alice, quoting Mayo. This threshold level of eligibility is often usefully explored by way of the substantive statutory criteria of patentability, for an invention that is new, useful and unobvious is more readily distinguished from the generalized knowledge that characterizes ineligible subject matter. This analysis is facilitated by the Court’s guidance whereby the claims are viewed in accordance with “the general rule that patent claims ‘must be considered as a whole’.” Alice, quoting Diamond v. Diehr.

As demonstrated in recent jurisprudence directed to eligibility, and as illustrated in the cases cited ante, the claim elements are considered in combination for evaluation under Alice Step 1, and then individually when Alice Step 2 is reached. Applying an overview of this evolving jurisprudence, the public interest in innovative advance is best served when close questions of eligibility are considered along with the understanding flowing from review of the patentability criteria of novelty, unobviousness, and enablement, for when these classical criteria are evaluated, the issue of subject matter eligibility is placed in the context of the patent-based incentive to technologic progress.

 

The patents are also currently being challenged on 101 grounds in CBM proceedings before the USPTO.  Although I feel that it should have a direct impact, it is unclear to me whether this decision will impact the PTO proceedings addressing the identical question.  (For instance, the court here holds that the patent covers a technological invention – and CBM proceedings can only proceed for non-technological inventions.) Patentees may also consider petitioning the court to make this decision precedential.

E.D. Magistrate Love Orders Disclosure of Whether Mock Trial Done, Other Info In Camera

Ethics

This is interesting and the case name (wait for it) sort of ironic.  The district judge ordered the parties to disclose to each other whether they had done a mock trial, to keep a list of participants, and to cross-check participants against potential jurors and notify the other side if there was a match.  In addition, the judge ordered the parties to disclose in camera a list of participants.

Obviously, I think, a lawyer who knows that a potential juror participated in a mock trial has to disclose that fact, but this goes beyond that and is not something I’d seen before.

The case is 3rd Eye Surveillance, LLC v. City of Ft. Worth (E.D. Tex. Jan. 12, 2017), here.

Supreme Court 2017 – Patent Preview

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by Dennis Crouch

A new Supreme Court justice will likely be in place by the end of April, although the Trump edition is unlikely to substantially shake-up patent law doctrine in the short term.

The Supreme Court has decided one patent case this term. Samsung (design patent damages).  Five more cases have been granted certiorari and are scheduled to be decided by mid June 2017. These include SCA Hygiene (whether laches applies in patent cases); Life Tech (infringement under 35 U.S.C. § 271(f)(1) for supplying single component); Impression Products (using patents as a personal property servitude); Sandoz (BPCIA patent dance); and last-but-not-least TC Heartland (Does the general definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b)).

Big news is that the Supreme Court granted writs of certiorari in the BPCIA dispute between Sandoz and Amgen.   The BPCIA can be thought of as the ‘Hatch Waxman of biologics’ – enacted as part of ObamaCare.   The provision offers automatic market exclusivity for twelve years for producers of pioneer biologics.   Those years of exclusivity enforced by the FDA – who will not approve a competitor’s expedited biosimilar  drug application during the exclusivity period.   The statute then provides for a process of exchanging patent and manufacturing information between a potential biosimilar producer and the pioneer – known as the patent dance.  The case here is the Court’s first chance to interpret the provisions of the law – the specific issue involves whether the pioneer (here Amgen) is required to ‘dance.’ [Andrew Williams has more @patentdocs]

A new eligibility petition by Matthew Powers in IPLearn-Focus v. Microsoft raises eligibility in a procedural form – Can a court properly find an abstract idea based only upon (1) the patent document and (2) attorney argument? (What if the only evidence presented supports eligibility?).  After reading claim 1 and 24 (24 is at issue) of U.S. Patent No. 8,538,320, you may see why the lower court bounced this. Federal Circuit affirmed the district court’s ruling without opinion under Federal Circuit Rule 36 and then denied IPLF’s petition for rehearing (again without opinion).

1. A computing system comprising:

a display;

an imaging sensor to sense a first feature of a user regarding a first volitional behavior of the user to produce a first set of measurements, the imaging sensor being detached from the first feature to sense the first feature, the first feature relating to the head of the user, and the first set of measurements including an image of the first feature, wherein the system further to sense a second feature of the user regarding a second volitional behavior of the user to produce a second set of measurements, the second feature not relating to the head of the user; and

a processor coupled to the imaging sensor and the display, the processor to:

analyze at least the first set and the second set of measurements; and determine whether to change what is to be presented by the display in view of the analysis.

24. A computing system as recited in claim 1, wherein the system capable of providing an indication regarding whether the user is paying attention to content presented by the display.

=== THE LIST===

1. 2016-2016 Decisions:

  • Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component);  GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978.  These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

3. Petitions with Invited Views of SG (CVSG): 

4. Petitions for Writ of Certiorari Pending:

  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Civil Procedure – Final Judgment: Johnson & Johnson Vision Care, Inc. v. Rembrandt Vision Technologies, L.P., No. 16-489 (Reopening final decision under R.60).
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Post Grant Admin: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)
  • Post Grant Admin: SightSound Technologies, LLC v. Apple Inc., No. 16-483 (Can the Federal Circuit review USPTO decision to initiate an IPR on a ground never asserted by any party)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility and CBM: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (I have not seen the petition yet, but underlying case challenged whether (1) case was properly classified as CBM and (2) whether PTAB properly ruled claims ineligible as abstract ideas) (Patent Nos. 5,910,988 and 6,032,137).

5. Petitions for Writ of Certiorari Denied or Dismissed:
(more…)

Post-PTO Trials: Party must Prove Injury-in-Fact for Appellate Standing

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Phigenix v. ImmunoGen (Fed. Cir. 2017)

In this case, the patentee ImmunoGen won its case before the Patent Trial & Appeal Board (PTAB) with a judgment that the challenged claims are not obvious.  U.S. Patent No. 8,337,856. Phigenix appealed, but the appellate court has dismissed the case for lack of standing – holding that the challenger-appellant failed provide “sufficient proof establishing that it has suffered an injury in fact.”

Article III of the U.S. Constitution provides for federal judicial power over “cases [and] controversies.”  Although not found in the text, the Supreme Court requires existence of an “actual” conflict between the parties — thus prohibiting the courts from issuing advisory opinions.  The doctrine of standing requires that a plaintiff/appellant “have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [defendant/appellee], (3) that is likely to be redressed by a favorable judicial decision.” (quoting Spokeo (2016)).  As a Constitional limit on judicial power, standing must always exist during a lawsuit and may be raised sua sponte by a trial or appellate court.

The case here began with Phigenix’ filing its inter partes review (IPR) petition.  Since the PTO/PTAB is an administrative agency empowered by statute and Article I of the Constitution, its power is not limited by Article III.  Thus, for IPR petitions, the PTO Director need not concern herself with the question of whether the petitioner has standing in the Federal Courts sense.  When the case is appealed, however, the appellant must provide the required proof of injury.

In this case, Phigenix is something of a competitor of the patentee ImmunoGen and, although Phigenix does not plan to use the patented invention itself (at this point the company is only a licensor), the appellant argues that the existence of the patent makes ImmunoGen a stronger market competitor – leading to actual economic injury. In the appeal, the Federal Circuit suggests that the injury might be sufficient – but that Phigenix failed to prove its existence.

The conclusory statements in the Gold Declaration and the [attorney] letter as to the hypothetical licensing injury therefore do not satisfy the requirements of Rule 56(c)(4).

Without providing the evidence of injury, the court could not hear the case.   The court also reiterated its prior position that the right-to-appeal created by 35 U.S.C. 141(c) does not replace the standing requirement. See Lujan and Consumer Watchdog.

 

 

Proving the existence of Functional Limitations in the Prior Art

Patent,

In re Chudik (Fed. Cir. 2017)

This non-precedential decision offers a nice refresher on the law of anticipation for functional claim elements and discusses the patent casebook favorite – In re Schreiber, 128 F.3d 1473 (Fed. Cir. 1997).

In Schreiber, all of the structural limitations of a popcorn funnel were found in a prior art oil can spout.  However, the prior art did not expressly teach that the oil spout would “allows several kernels of popped popcorn to pass through at the same time.”  In its decision, the Federal Circuit held that the “where the Patent Office has reason to believe that a functional limitation … may, in fact, be an inherent characteristic of the prior art” the PTO can shift the burden to the applicant to prove that the prior art does not possess the characteristic.  (Quoting In re Swinehart, 439 F.2d 210 (C.C.P.A. 1971)).

Here, the court writes:

The price [of including functional limitations is] that when the structural limitations are met by a single prior art reference, and when the examiner “has reason to believe” that the prior art reference inherently teaches the functional limitation, the burden shifts to the patent applicant to show that the functional limitation cannot be met by the single prior art reference.

Of course, the benefit of functional claim limitations is that they can offer broad scope with little linguistic difficulty.  This case also shows how these functional limitations help avoid prior art.

In Chudik’s case, there is no dispute that all of the structural limitations for the claimed surgical scalpel are found within a single prior art reference. U.S. Patent No. 5,843,108 (“Samuels”).  A difference is that, Chudik’s invention is “configured for creating a passageway through skin and soft-tissue to a target site on a bone” while Samuels blade was designed for merely making ‘nicks’ in the skin for catheter insertion.  The examiner/PTAB concluded that the Samuels blade nicking could reach a shallow bone – and thus satisfied the limitation.

On appeal, the Federal Circuit has reversed — finding that the examiner did not have (or at least explain) a substantial ‘reason to believe’ that the prior art inherently taught the functional limitation of being configured to reach a bone.

The [PTO] gave no justification for this belief, and nothing in Samuels offers an indication of the size of the blade or indicates that it would be able to contact subdermal anatomical features. If anything, Samuels explains that its design specifically prevents incisions that could damage structures near the skin. The examiner and the Board failed to explain how the Samuels blade could be employed in a manner to reach a shallow bone, but without the “disastrous consequences” that the blocker in Samuels is designed to prevent. For that reason, the examiner failed to make the necessary prima facie showing to shift the burden of going forward the applicant.

Reversed and remanded. It will be interesting to see whether the PTO now issues the patent or reopens prosecution with an obviousness rejection.

 

When is the PTO’s claim construction “reasonable”?

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dagostinoimageD’Agostino v. Mastercard (Fed. Cir. 2016)

John D’Agostino’s patents cover processes for creating limited-use transaction codes to improve credit card security. U.S. Patent Nos. 7,840,486 and 8,036,988.  The approach basically keeps the card number out of the hands of the merchant (where most scamming occurs).  After being sued for infringement, MasterCard filed for inter partes review and successfully challenged many of the claims as obvious and anticipated by Cohen (U.S. Patent No. 6,422,462). On appeal, however, the Federal Circuit has vacated – holding that the PTAB’s claim interpretation was unreasonable.

Claim construction continues its reign as a messy hairball.  Rather than looking to the “proper” claim construction as defined by Phillips v. AWH, the PTAB defines claims according to their Broadest Reasonable Construction (BRI). That approach largely follows Phillips, but allows the PTO to select the “broadest” construction for any given limitation from the potential set of reasonable constructions.  The express intent here is to broaden the claims in order to make it easier to invalidate them during the IPR process. The idea then is that claims which survive the IPR-scope-puffery-gauntlet will be strong – giving confidence to judges and juries and fear into the hearts of infringers.

Reasonable is a Question of Law: In most areas of law ‘reasonableness‘ is considered a factual conclusion and conclusions regarding reasonableness are given deference on appeal.  The Federal Circuit however has ruled that the reasonableness of claim construction in the BRI context is reviewed de novo on appeal. Unfortunately, the court has not provided much helpful guidance in terms of knowing when a given construction is reasonable.  Their koan states that – although the BRI construction need not be the correct interpretation, the chosen BRI construction may not be “a legally incorrect interpretation.” (Quoting Skvorecz 2009).

Here, the question was whether the claims required a temporal separation between two communications.  The PTAB said no – since it was not expressly required and broadened the claims.   On appeal, the court looked at the claims and found that the express language did in fact require two separate communications: A first request that occurs “prior to” the merchant being identified  and then a second communication that includes the merchant ID.  According to the court, the PTAB’s interpretation (allowing for a single communication) was simply not reasonable.

On remand, the PTAB will decide whether the prior art the claim elements as they are more narrowly defined.

= = = = =

PTO Bound by its own Prior Construction?: Interesting issue ducked by the Federal Circuit involved the prior reexam of the patent where the PTO expressly narrowly construed the same claim scope. Court did not remark on the patentee’s suggestion here that PTO should be bound by its prior express constructions.  Seems reasonable to me.

 

My Letter to the USPTO About Duty of Candor Amendments

Ethics,

 

 

Dear Mr. Sked:

I write solely in my personal capacity as someone who advises patent practitioners on ethical issues and litigates patent cases.  These views are not those of my employer or my clients.

I have one broad concern and several more specific ones.

The USPTO Should Interpret the Patent Act Correctly and not Give False Security to Practitioners. 

            At a broad level, I agree uniformity is a good thing.  However, there will not be uniformity because of the different claim constructions given in litigation than in proceedings before the Office. I also agree with the USPTO that it need not follow the Federal Circuit’s definition of materiality (or anything else) from Therasense. However, it seems incongruous for the agency, as the entity charged by Congress with implementing the Patent Act, to adopt a definition that it rejected. Given than uniformity will not exist, what does the USPTO believe is required by the Patent Act of applicants?

More troublesome, however, is the real likelihood that the narrow definitions from Therasense will be rejected by the Supreme Court.  The Supreme Court has in recent years routinely rejected the Federal Circuit’s rigid, cabined interpretations of the Patent Act.  While no one knows what the future holds, today’s practitioner’s conduct may be judged by a more stringent standard than suggested in Therasense and proposed here. That has happened with eligibility, obviously.  Given that the Supreme Court could hold that the Patent Act requires more than avoiding intentionally obtaining a patent that you know you shouldn’t get, and given that that interpretation will likely be applied to all issued patents, and given the USPTO’s statement that it hopes that the new definition will result in less disclosure, one can see a trap for the unwary practitioner.  This may give practitioners a false sense of security.

My more specific comments relate primarily to “who” is covered by these rules.  They don’t make sense.

Rule 1.56 Makes Sense as to Who is Covered; Rule 1.555 Does Not.

As written, Rule 1.56 applies to “[e]ach individual associated with the filing and prosecution of a patent application,” and is further narrowed by subsection (c) which requires “substantive involvement.”  The rule ties the individual to substantive involvement in prosecution or filing.

Rule 1.555, in contrast, is (I think) unintentionally broad.  It states that the duty is owed by “the patent owner, each attorney or agent who represents the patent owner, and every other individual who is substantively involved on behalf of the patent owner.”  The way this is worded, every attorney and other person “associated with” the patent owner must disclose material information, even if the person has no involvement whatsoever in the reexamination. I believe if the sentence were written much like 1.56(c) is, this would clear this up: “The persons who owe a duty to disclose to the Office all information known to them to be material to patentability in a reexamination proceeding are every person who is substantively involved in the reexamination and who is associated with the patent owner, including each attorney or agent who represents the patent owner in the proceeding.”

            Who, in Both Rules, can Commit “Affirmative Egregious Misconduct?”

             The amendment to Rule 1.555 seems to limit who can commit “affirmative egregious misconduct” to the patent owner and those who act “on behalf of” the patent owner.  Rule 1.56 is not so limited, and is also written in the passive voice.

These differences and wordings raise three questions.

First, as noted above, the definition for reexamination would seem to allow for a patent to be held unenforceable due to conduct by every person “associated with” a patent owner, whether that person was involved in the reexamination, or not.  Granted, it likely won’t be affirmative egregious misconduct if the person wasn’t involved, but having a clear definition may help.

Second, under Rule 1.555, can someone other than “the patent owner, each attorney or agent who represents the patent owner, and every other individual who is substantively involved on behalf of the patent owner” in a reexamination commit affirmative egregious misconduct?  Presumably so; but is that the intent of the Office? Again, the comment in the prior paragraph may make this an academic point, but the way the rule is worded the person doesn’t need to be substantively involved in prosecution (and, as noted above, presumably substantive involvement is what was intended).

Third, when read in pari materia, Rule 1.56 is broader than Rule 1.555, since Rule 1.56’s “affirmative egregious misconduct” prong is not limited in the same way as Rule 1.555.  When read together, under Rule 1.56 a person’s conduct can result in non-issuance of a patent even if that person was not acting on behalf of the patent owner.  This seems harsh and unintended.  My suggestion would be to make the two provisions in the different rules have the same scope, and affirmative egregious conduct “by or on behalf of the patent owner” probably is reasonably clear and meaningfully limited in scope.

A Closing Thought:  Uniformity.

In closing, as noted at the outset, uniformity can be a good thing.  To that end, the USPTO has rules that relate to the same general concept – candor and disclosure – but which cover different groups of people. While there may be a policy basis to make the distinctions the rules make, I am not able to guess them.

For example, in addition to the differences discussed above, I note that Section 42.11 – the “rule 11” of IPR — applies to “parties and individuals involved” in an IPR.  Section 42.11 does not require “substantive involvement,” just “involvement.”  Further, because it includes “parties,” it creates the same problem discussed above with respect to Rule 1.555:  everyone who works for a “party” apparently is covered by 42.11, even if that person has nothing to do with the IPR.  As a final example of the varying coverage of these somewhat related rules, Section 42.51(b)(1)(iii) – the obligation in IPR to disclose inconsistent information — requires disclosure by “inventors, corporate officers, and persons involved in the preparation or filing of the documents or things.” Again, substantive involvement is not required, merely “involvement,” but “parties” are not subject to this rule.

It may be helpful to strive toward a single definition in these different rules is my point in closing.  These create practical problems and potential traps and needless litigation.

Glad to provide further information if I can.

Very truly yours,

/s

David Hricik

 

 

The “Right” to Challenge a Patent

Patent, , ,

by Dennis Crouch

The Supreme Court in Lear, Inc. v. Adkins (1969) held that a licensee can challenge a patent’s validity — overruling the prior presumption of licensee estoppel found by Automatic Radio Mfg. v. Hazeltine Research (1950).

In his recent article, Antitrust Economist (and lawyer) Erik Hovenkamp argues that the “right to challenge a patent” should also be an important consideration in antitrust analysis.  Hovenkamp defines these “challenge rights” as “the (statutory) rights of third parties to challenge patents as invalid or uninfringed.” Antitrust comes into play when a license or settlement agreement includes challenge restraints that would contractually prevent the exercise of the challenge rights.

There are obvious collateral problems with the way that Hovenkamp identifies the ability to challenge a patent as a “right” – especially if we call it a property right. However, for antitrust-contract consideration, forbearing the ability-to-challenge at least fits the definition of a legal detriment incurred by the promisee.

Although patent licenses are entitled to substantial safe harbor from antitrust regulations, Hovenkamp argues that challenge restraints should not be so entitled “but rather exist within antitrust’s domain” and barred when impermissible anticompetitive.

A problem with the argument is the way that Hovenkamp lumps-together validity and non-infringement challenges as roughly equivalent.  However, I see the two as substantially distinct.

Read the Paper: Challenge Restraints and the Scope of the Patent

The contractual waiver of challenge rights has risen in importance since the Supreme Court’s decision in MedImmune (2007) (licensee retains right to challenge patent without breaching) and creation of the Inter Partes Review system following enactment of the AIA (2011).  Prior to the availability of IPRs (and CBM/PRG), settlement of an infringement lawsuit would effectively preclude later validity challenges even without specific contractual terms. (Res Judicata).  However, those estoppel principles do not apply the same way in AIA proceedings.

Chicken?: Test your Patent Test Taking Skills 2017

Patent,

Introduction: Although not a poultry expert, Prof Crunch recently designed and built his own back-yard chicken coop (Coop) (started and completed in August 2016).  Among its special features, the coop includes a translucent roof to allow additional winter light, a hinged trap-door in the floor for removing waste, and a vertically sliding door opening to the chicken-run.  The vertically sliding door is operated by a pulley system and can be controlled while standing next-to the nesting box door.   Thus, a user can provide access to the chicken-run at the same time as collecting eggs. The coop is also designed to be long-and-narrow in order to fit through a 40-inch wide gate while also providing at least 21 square feet of floor area.  While Crunch expects that many of these features are not unique, he believes that the combination is unique.  Crunch is an idea-man. Rather than production is looking to sell plans and instructions for making his Coop.

Crunch drafts the following two patent claims in his patent application filed December 5, 2016:

I claim:

1.     A poultry coop having a length, width, and height, said poultry coop comprising:

a roof made of a translucent material with at least 50% light transmission;

a floor having a hinged trap door and having an area of at least 21 square feet;

a first side wall that includes a nesting box with an externally hinged door; and

a second side wall that includes a vertically sliding door operated via a pulley system; wherein said pulley system is operable by a user standing near said nesting box and wherein said coop is configured with a width of less than 40-inches.

2.     A set of instructions comprising: instructions for making the poultry coop of claim 1.

Question 1. (120 words).  Crunch had considered adding an additional limitation that precisely defines the configuration of the pulley system and its components.  What are major pros and cons of adding these additional limitations to claim 1 (considering primarily the doctrines of patentability and infringement)?

Question 2. (200 words) Are these claims patent eligible subject matter?

Question 3. (60 words) Provide a concise argument that claim 1 fails for lack of definiteness.

Question 4. (80 words) Should Crunch be concerned that his back-yard prototype constitutes prior art that could be used against his own patent application?

Question 5. (240 words) Assume the following for this question: (a) the back-yard prototype is not prior art; and (b) Crunch’s expectations are correct that while many of the patented elements are known in the prior art, the combination as a whole is unique.  What can we say about the novelty/nonobviousness of the claims.

Question 6. (25 words) Assuming claim 1 is patented but not claim 2. Does Crunch have an infringement claim against a third party who begins teaching others how to make the coop?

Power Integrations v. Fairchild Semiconductor

Patent, ,

By Jason Rantanen

Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. (Fed. Cir. 2016) 15-1329.Opinion.12-8-2016.1
Panel: Prost, Schall, Chen (author)

This appeal is the latest in a long-running patent saga between Power Integrations and Fairchild.  Each asserted patents against the other; each won as to liability against the other. The most interesting aspect of this opinion is its discussion of inducement, in which the court rejects a jury instruction on inducement that expressly stated that the third party’s direct infringement “need not have been actually caused by the [accused inducer’s] actions.”

Background:  The complexity of this appeal is illustrated by the opinion’s 8 bullet-point summary of its holdings.   The jury found that Power Integrations’ Patent Nos. 6,107,851 and 6,249,876 were not anticipated and were directly and indirectly infringed by Fairchild and that Fairchild’s Patent No. 7,259,972 was not obvious and was infringed by Power Integrations under the doctrine of equivalents (but was not literally infringed or indirectly infringed by Power Integrations).  The jury also found Power Integrations’ Patent No. 7,834,605 neither anticipated nor obvious.  Following trial, the district court granted judgment as a matter of law that Fairchild directly infringed this patent.  The district court granted a permanent injunction against Fairchild and declined to grant an inunction against Power Integrations.

Fairchild appealed and Power Integrations cross-appealed.

Inducement: The indirect infringement issue involved 35 U.S.C. § 271(b), a one sentence provision at the heart of several significant opinions over the last few years.  Section 271(b) reads “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”  Basic elements of an inducement claim include some type of action by the alleged inducer to encourage acts by a third party, an awareness that the third party’s acts would infringe a patent, and actual direct infringement by a third party.

The full jury instruction takes up almost a page and a half of the opinion.  The critical passage on appeal reads:

In order to establish active inducement of infringement, it is not sufficient that others directly infringe the claim. Nor is it sufficient that the party accused of infringement was aware of the acts by others that directly infringe. Rather, in order to find inducement, you must find that the party accused of infringement intended others to use its products in at least some ways that would infringe the asserted claims of the patent. However, that infringement need not have been actually caused by the party’s actions. All that is required is that the party took steps to encourage or assist that infringement, regardless of whether that encouragement succeeded, or was even received.

Slip Op. at 22 (emphasis in opinion).  The problem, in the court’s words, was that “[t]his instruction left the jury with the incorrect understanding that a party may be liable for induced infringement even where it does not successfully communicate with and induce a third-party direct infringer.”  Id. at 23.  Rather, inducement “requires successful communication between the alleged inducer and the third-party direct infringer.”  Id.  Quoting from Dynacore Holdings Corp. v. U.S. Philips Corp., 363, F.3d 1263, 1274 (Fed. Cir. 2004), the court observed “[w]e have further held that “[t]o prevail under a theory of indirect infringement, [plaintiff] must first prove that the defendants’ actions led to direct infringement of the [patent-in-suit].”  Id. at 24.  Thus, “a finding of induced infringement requires actual inducement.”  Id.  In terms of doctrine, the court situates this inquiry in the requirement of inducement itself.

Although the court does not come right out and say it, this is fundamentally a theory of causality in inducement.  In other words, it is not enough that the alleged inducer engage in acts intended to result in direct infringement by a third party and that the third party directly infringes.  At a minimum, there must be a successful communication between the two.  Attempted inducement is not enough; there must be “actual inducement.”  This interpretation  is further bolstered by the court’s rejection of the language in the jury instruction stating that “infringement need not have been actually caused by the party’s actions.”   That said, despite the invitation to address causality presented by the jury instruction, the court conspicuously avoids describing its holding in those terms.  Nowhere outside of the jury instruction and a few unrelated places does a permutation of “caus” appear.

Even as it recognized a requirement that there be some link between the acts of the alleged inducer and the directly infringing acts,  however, the Federal Circuit was not willing to go so far as to say that Fairchild did not induce infringement  as a matter of law.  After rejecting Fairchild’s argument on the lack of sufficiency of the evidence generally, the Federal Circuit dismissed its argument on nexus between Fairchild’s acts and the ultimate direct infringement.  Fairchild contended

that Power Integrations introduced evidence of only three acts of direct infringement—sales of an HP printer, Acer notebook computer, and Samsung notebook computer containing infringing Fairchild controller chips—and that Power Integrations was required to present evidence that Fairchild specifically induced HP, Acer, Samsung, or the retailers from which Power Integrations purchased the infringing products to incorporate the infringing controller chips into products bound for the United States.

Id. at 30.  The Federal Circuit rejected the argument that such specificity was required in the nexus.  “While none of [Power Integrations’  evidence can be directly linked to the particular HP printer, Acer notebook computer, or Samsung notebook computer Power Integrations
introduced at trial as representative acts of direct infringement, it was sufficient to allow the jury to find that Fairchild had induced its customers (including HP, Acer, and Samsung) to infringe as a class. This is all that we require.”  Id. at 31.  “Indeed, we have affirmed induced infringement verdicts based on circumstantial evidence of inducement (e.g., advertisements, user manuals) directed to a class of direct infringers (e.g., customers, end users) without
requiring hard proof that any individual third-party direct infringer was actually persuaded to infringe by that material.”  Id.

Thus, although some evidence of a link between inducer’s acts and the directly infringing acts is required, it need not be with the level of specificity that might need to be shown in other contexts.  Absolute precision of proof as to the machine in the courtroom is not necessary.  And yet, some proof of a link must be present.  Here, the court concluded, there was sufficient evidence for a reasonable jury to find that necessary link.

At this point you might be asking why all of this mattered, given that Fairchild did not appeal the jury verdict that it directly infringed the patents.  The reason is because the finding of inducement greatly expanded the scope of Fairchild’s liability beyond its direct infringement in the United States.  Based on its decision on inducement, the Federal Circuit vacated the district court’s grant of Power Integrations’ motion for a permanent injunction against Fairchild.  Of course, given that these issues are being remanded to the district court, it is conceivable that the outcomes of both could ultimately be the same.

Practice commentary: The opinion contains a simple articulation of the requirements of an inducement claim that rearranges the conventional elements.  Near the beginning of its discussion of the jury verdict, the court describes the elements as follows:

In other words, Power Integrations was required to prove that: (1) a third party directly infringed the asserted claims of the ’851 and ’876 patents; (2) Fairchild induced those infringing acts; and (3) Fairchild knew the acts it induced constituted infringement.

In my view, this version is much easier to understand than the usual way inducement is articulated.

Anticipation: The court’s review on anticipation of the ‘605 patent is also interesting as an example of a jury verdict of no anticipation being overturned on appeal.   Here, Fairchild bore a double-burden on Power Integrations ‘605 patent: not only did it bear the burden of proving that the presumptively-valid claims were anticipated, but it also had to convince the Federal Circuit on appeal that the jury’s finding to the contrary was unsupported by substantial evidence.  Fairchild was helped on appeal by the relative narrowness of the disputed evidentiary issue.  On that particular issue, the court concluded that Power Integrations’ own expert had testified that the critical element required by the claims was disclosed by the prior art reference.

Doctrine of equivalents: The main point here is Power Integrations’ successful claim vitiation argument.

Edit: Added the opinion itself.

Lemley-Oliver-Richardson: Patent Purchases and Litigation Outcomes

Articles and Publications, Journal, Patent, , , , , ,

The sales market for patent rights continues to vex analysts – especially in terms of valuation. In their Patently-O Patent Law Journal article, Professor Mark Lemley teams up with the Richardson Oliver Group to provide some amount of further guidance.  The article particularly considers how patent litigation outcomes vary according to the identity of the patentee (ownership) and the manner in which the patent was obtained (source).

We analyzed the data based on ownership and source to test our intuitions about how successfully purchased patents can be litigated. The results, especially, when analyzed based on the entity type produced both confirmatory and surprising results. For example, the intuition that companies generally do better with their own patents was confirmed. In contrast, surprisingly, inventor-started companies fared better with purchased patents. Purchasers can use the results of this analysis to inform future modeling and purchase decisions.

Mark A. Lemley, Erik Oliver, Kent Richardson, James Yoon, & Michael Costa, Patent Purchases and Litigation Outcomes, 2016 Patently-O Patent Law Journal 15.

Read the Article: Lemley.2016.PatentMarket

Prior Patently-O Patent L.J. Articles:

  • Bernard Chao and Amy Mapes, An Early Look at Mayo’s Impact on Personalized Medicine, 2016 Patently-O Patent Law Journal 10 (Chao.2016.PersonalizedMedicine)
  • James E. Daily, An Empirical Analysis of Some Proponents and Opponents of Patent Reform, 2016 Patently-O Patent Law Journal 1. (Daily.2016.Professors)
  • Tristan Gray–Le Coz and Charles Duan, Apply It to the USPTO: Review of the Implementation of Alice v. CLS Bank in Patent Examination, 2014 Patently-O Patent Law Journal 1. (GrayLeCozDuan)
  • Robert L. Stoll, Maintaining Post-Grant Review Estoppel in the America Invents Act: A Call for Legislative Restraint, 2012 Patently-O Patent Law Journal 1 (Stoll.2012.estoppel.pdf)
  • Paul Morgan, The Ambiguity in Section 102(a)(1) of the Leahy-Smith America Invents Act, 2011 Patently-O Patent Law Journal 29.  (Morgan.2011.AIAAmbiguities)
  • Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12 (sarnoff.2011.derivation.pdf)
  • Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent Patent Law Journal 6 (chao.sealedrecords.pdf)
  • Benjamin Levi and Rodney R. Sweetland, The Federal Trade Commission’s (FTC) Recommendations to the International Trade Commission (ITC):  Unsound, Unmeasured, and Unauthoritative, 2011 Patently-O Patent Law Journal 1 (levi.ftcunsound.pdf)
  • Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent Law Journal 111 (Collins.KingPharma.pdf)
  • Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent Law Journal 95 (matthews.falsemarking.pdf)
  • Kristen Osenga, The Patent Office’s Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89 (Osenga.pdf)
  • Peter S. Menell,  The International Trade Commission’s Section 337 Authority, 2010 Patently-O Patent L.J. 79
  • Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently‐O Patent L.J. 72
  • Kevin Collins, An Initial Comment on Ariad: Written Description and the Baseline of Patent Protection for After-Arising Technology, 2010 Patently-O Patent L.J. 24
  • Etan Chatlynne, Investigating Patent Law’s Presumption of Validity—An Empirical Analysis, 2010 Patently-O Patent L.J. 37
  • Michael Kasdan and Joseph Casino, Federal Courts Closely Scrutinizing and Slashing Patent Damage Awards, 2010 Patently-O Patent L.J. 24 (Kasdan.Casino.Damages)
  • Dennis Crouch, Broadening Federal Circuit Jurisprudence: Moving Beyond Federal Circuit Patent Cases, 2010 Patently-O Patent L.J. 19 (2010)
  • Edward Reines and Nathan Greenblatt, Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009, Part II, 2010 Patently‐O Patent L.J. 7  (2010) (Reines.2010)
  • Gregory P. Landis & Loria B. Yeadon, Selecting the Next Nominee for the Federal Circuit: Patently Obvious to Consider Diversity, 2010 Patently-O Patent L.J. 1 (2010) (Nominee Diversity)
  • Paul Cole, Patentability of Computer Software As Such, 2008 Patently-O Patent L.J. 1. (Cole.pdf)
  • John F. Duffy, The Death of Google’s Patents, 2008 Patently O-Pat. L.J. ___ (googlepatents101.pdf)
  • Mark R. Patterson, Reestablishing the Doctrine of Patent Exhaustion, 2007 Patently-O Patent L.J. 38
  • Arti K. Rai, The GSK Case: An Administrative Perspective, 2007 Patently-O Patent L.J. 36
  • Joshua D. Sarnoff, BIO v. DC and the New Need to Eliminate Federal Patent Law Preemption of State and Local Price and Product Regulation, 2007 Patently-O Patent L.J. 30 (Download Sarnoff.BIO.pdf)
  • John F. Duffy, Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21. (Duffy.BPAI.pdf)
  • Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1 (Casino-Seagate)

What it takes to Prove a Motivation to Combine

Patent, , ,

by Dennis Crouch

In re NuVasive (Fed. Cir. 2016)

In an important obviousness decision, the Federal Circuit has reversed the PTAB IPR decision – holding that the PTAB failed to sufficiently explain its ruling that a person having ordinary skill in the art (PHOSITA) would have been motivated to combine the prior art teachings to create the patented invention.  Although expressing its intent to follow KSR, the court here comes closer to trodding upon that (oft maligned) precedent.

The case involves an Inter Partes Review (IPR) challenge of NuVasive’s spinal fusion implant patent (U.S. Patent No. 8,361,156).  The claims require that the implants include, inter alia, radiopaque markers on the medial plane. The PTAB found the claims invalid as obvious based upon a collection of prior art references related to spinal fusion.

Doctrine of Obviousness: A claim is invalid if the differences between the prior art and the claim (considered “as a whole”) would have been obvious to PHOSITA considering the issue at the time the invention was made.  35 U.S.C. § 103.

Motivation to Combine: In many US obviousness cases, each of the claim limitations are found in some form within the body of prior art imputed to PHOSITA and the obviousness question becomes whether it would have been obvious to combine those references to form the claimed invention. In KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), the Supreme Court held that the motivation to combine references need not be found expressly in the prior art itself but may be explained by the fact finder using common sense.  Still, the KSR Court wrote that it “can be important to identify a reason that would have prompted [PHOSITA] to combine the elements in the way the claimed new invention does.”  Extending that decion, the Federal Circuit ruled that the PTAB must (1) “articulate a reason why a PHOSITA would combine the prior art references”; (2) have an adequate evidentiary basis for that finding; and (3) provide a “satisfactory explanation” for the motivation finding that includes an express and “rational” connection with the evidence presented.  See, In re Lee (conclusory statements are insufficient); Cutsforth v. MotivePower (must positively explain motivation – not just reject arguments against motivation); and Arendi v. Apple (PTAB “cannot rely solely on common knowledge or common sense to support its findings” of motivation).

Here, the basic question is whether it would have been obvious to combine prior art teaching the spinal fusion implant with references showing the use and importance of radiopaque markers in implants.  However, according to the appellate panel, “the PTAB failed to explain the reason why a PHOSITA would have been motivated to modify [the prior art], to place radiopaque markers ‘proximate to said medial plane'” as required by the challenged claims.

After discrediting the PTAB decision, the court also looked at the evidence presented by the challenger Medtronic.  Medtronic’s expert had explained that the motivation for adding the additional markers would be to provide surgens with “additional information” and that it would have been common sense to add the additional markers.

Medtronic’s arguments amount to nothing more than conclusory statements that a PHOSITA would have been motivated to combine the prior art references to obtain additional information.  According to the court, these “arguments amount to nothing more than conclusory statements” and thus should not be credited.  One key reference did explain that the medial markers were beneficial during the alignment process.  However, the Federal Circuit rejected that reference because it was published after the patent-in-question’s priority date and not cited in the prior art references.  Because they came after the priority date, the court found that the motivation “could not have been obtained . . . at the time of the invention.”

Microsoft v. Enfish: Turns Out the Claims Are Obvious

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This is a discussion of the new Federal Circuit Decision Microsoft v. Enfish appealing a PTAB final decision.

In the prior parallel decision – Enfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016), the Federal Circuit reversed a district court ruling that Enfish’s asserted software claims were ineligible under § 101 and also vacated the lower court’s holding that some of the claims were invalid as anticipated. U.S. Patent Nos. 6,151,604 and 6,163,775 (inventions relating to a “self-referential” database).

Enfish sued Microsoft for infringement in 2012. In addition to its litigation defenses, Microsoft marshaled a collateral attack on the patents with five petitions with the US Patent Office for inter partes review of the ’604 and ’775 patents.

After instituting review, the Patent Trial and Appeal Board found some of the patent claims invalid as anticipated/obvious.  On appeal, PTAB factual findings are generally given deference but legal conclusions are reviewed without deference.  After reviewing the claim construction and rejections, the Federal Circuit affirmed in a non-precedential decision.

Collateral Attacks: These collateral attacks work well to cancel patent claims with obviousness arguments that would have been unlikely to be accepted by a trial court or jury.  This is a pointed example here since the previously rejected district court’s judgment was based upon a more simplistic Section 101 analysis that is easier for the Federal Circuit to overturn.

Not Amenable to Construction:  The most interesting aspect of the decision is hidden in a single sentence statement:  “As to claims 1–26 and 30 of both patents—which are not at issue before us—the Board terminated proceedings after concluding that those claims were not amenable to construction.”

In its final judgment, the Board explained that those claims include a means-plus-function element (“means for configuring said memory according to a logical table“) but that no embodiments of the element were provided in the specification.  And, although a person of skill in the art may know how to construct the element, our 112(f) jurisprudence requires embodiments in the specification and does not allow a patentee to “rely on the knowledge of one skilled in the art to address the deficiencies” See Function Media, LLC v. Google Inc., 708 F.3d 1310 (Fed. Cir. 2013).  The statute states permits means-plus-function claims but also provides a guide for narrowly construing those claims.

35 U.S.C. 112(f) ELEMENT IN CLAIM FOR A COMBINATION.—An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

In both patent prosecution and district court litigation, failure to properly disclose structural embodiments for a means-plus-function limitation results in the claim being held invalid as indefinite since the limitation’s scope cannot be properly construed.  In the inter partes review situation, however, the Board’s power is limited to cancelling patents on novelty or obviousness grounds.  As such, the Board simply terminated the IPR trial with respect to these non-construable claims. The Board writes:

In the circumstance when the specification of the challenged patent lacks sufficient disclosure of structure under 35 U.S.C. § 112, sixth paragraph, the scope of the claims cannot be determined without speculation and, consequently, the differences between the claimed invention and the prior art cannot be ascertained. For the reasons given, we determine that independent claims 1, 11, and 15 are not amenable to construction and, thus, we terminate this proceeding with respect to claims 1, 11, and 15 under 37 C.F.R. § 42.72.

[PTAB Final Decision].

No Appeal of Termination: Neither party appealed the termination, although the Federal Circuit previously held that its appellate jurisdiction over these cases is limited to appeals of “final written decision[s] with respect to the patentability of any patent claim challenged by the petitioner …”  A termination decision was seen as essentially an extension of the institution decision that is not itself appealable.

 

Of course, the original Federal Enfish decision mentioned above also addressed this indefiniteness issue and held that the claims were not indefinite because sufficient structure was disclosed — holding that the scant description was adequate because “the sufficiency of the structure is viewed through the lens of a person of skill in the art and without need to ‘disclose structures well known in the art.’  I guess that this means that those claims are OK.

Is it Obvious to Combine Five References?

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by Dennis Crouch

On his (great) blog, Bill Vobach considers whether it is time to revisit In re Gorman, 933 F.2d 982 (Fed. Cir. 1991).   Gorman involved an obviousness rejection based upon a combination of thirteen references. The Federal Circuit rejected Gorman’s argument that the combination of a large number of references to support a rejection for obviousness “of itself weighs against a holding of obviousness.” See also, In re Troiel, 274 F.2d 94 (CCPA 1960) (rejecting appellant’s argument that combining a large number of references to show obviousness was “farfetched and illogical”).  The USPTO has regularized this holding within its Manual of Patent Examination Practice (MPEP) Section 707.07(f) (“reliance on a large number of references in a rejection does not, without more, weigh against the obviousness of the claimed invention”).  Of course, when Gorman was decided, the court also required some express motivation in order to combine references — that requirement was eliminated ten years ago by the Supreme Court in KSR v. Teleflex (2007).

I cannot recall any obviousness decision coming out of a district court that combines four or more references.  Neither Judges nor Juries will stand for that level of complexity.  The PTAB judges are so well trained in the complexity of technology and patent law that they are open to these poly-reference arguments in the AIA trial context.

Vobach, who reviews almost all of the Federal Circuit oral argument audio clips, reports that various judges have commented recently on the large number of references being relied upon in obviousness rejections.  Judge Moore most pointedly noting that “four or greater . . . that’s a lot of references!”

Two approaches for moving forward on the issue: (1) preserve the appeal and request en banc hearing; (2) argue that Gorman was reset by KSR.  An unlikely third approach might push Congress to move toward an European approach that begins the analysis with the closest single prior art reference and builds from there.

 

More Pressure on Texas Supreme Court to Enforce Ethical Rules Despite Arbitration Clauses

Ethics, ,

Dennis wrote about this case involving Jenner & Block and Parallel Networks on the main page, and I was an expert in the underlying case for the client.  Boiled down, Jenner agreed to represent Parallel Networks on a contingent fee.  The firm got upset when the client fell behind on expenses, and the client paid up.  Then the firm lost  on summary judgment, and dumped the client.

The law in Texas is pretty clear that there’s a big distinction between whether you can quit a case — withdrawal — and whether you can quit a case and be paid.  The former is pretty narrowly circumscribed but the latter is severely so:  without “just cause” you lose any right to any money.  Makes sense, otherwise a contingent fee is illusory:  I get in a case, and it’s a loser, I withdraw but still get paid.  Undermines the entire notion of contingent fees.

Although Jenner gave up on its client’s case, the client didn’t.  But the client had to pay another firm hourly fees to handle the appeal and get the case out of the ditch into which Jenner had put it, and left it.

Then that firm (my old firm, Baker Botts), turned the case around on appeal,  resulting in settlement money.

Believe it or not, Jenner then demanded that — even though it had left its own client in the ditch to fend for itself — because of the contingent fee agreement, it was entitled to its fully hourly fees. Yes, full hourly fees because supposedly that’s what the agreement provided.  The arbitrator awarded the firm some money, but not full hourly fees.  The agreement is quite something to read and Jenner pointed out that the client had used it in another case (long story), and so, presumably, was the cause of any unethical provisions in it.  (Think on that.)

The Texas courts have, so far, refused to even examine the merits  of the award because, supposedly, the Federal Arbitration Act precludes review unless the award was fraudulent, etc.

As you can imagine, the prevailing notion in Texas that we’ve outsourced ethics to arbitrators (aka, lawyers), and as a result insulated their decisions from review by the judiciary — supposedly independent and constitutionally charged in many states with enforcing ethics —  has caused some people to wonder about what is wrong in Texas courts.  If anything, the Texas Supreme Court should say, clearly:  “if there’s an arbitration clause it will be enforced even if the conduct is unethical because that’s what the FAA requires,” so the Supreme Court can take corrective action.

The latest amicus brief is here.  Dennis’ post which links to my earlier one, is here.

I don’t mean to be flippant but, the way things stand, suppose you hire a hit man and, being the good lawyer you are, you include an arbitration clause in your written agreement. He then decides it’s not right to murder someone. So you bring an arbitration proceeding for damages. Hooray for you.  That arbitrator is free to ignore public policy saying that contract is no good, and make then hitman pay, and a Texas court will enforce the award.  Yes, a silly example and obviously extreme, but that’s where Texas now is. It’s obviously wrong, seriously misguided, and needs to be corrected by that court or the one above it.

Federal Circuit Orders PTO to limit business method review trials (CBM) to “financial products or services” since that is the law

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by Dennis Crouch

In Unwired Planet v. Google, the Federal Circuit has vacated a PTAB covered business method decision – holding that the PTO’s definition of a “covered business method” was unduly broad.

The America Invents Act created a powerful set of post-issuance administrative review procedures known generally as AIA trials, including the covered business method (CBM) review. CBM is designed as a transitional proceeding that will sunset in the year 2020 barring congressional action. The most popular form of AIA trial is inter partes review (IPR) that allows for review of any issued patent but is limited to only novelty and obviousness challenges based upon prior art.  CBM review applies to a much narrower set of patents – only “covered business methods” – but those patents can be challenged on almost any patentability ground, including eligibility.  Here, the Board found the challenged claims unpatentable subject matter under section 101.

The term covered business method is particularly defined to include any patent “that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” AIA § 18(d)(1).  In its implementing rules, the PTO did not further define or explain the CBM definition within its official rules – although the PTO did propose the “incidental” or “complementary” language in its official responses to comments on its proposed rules.  On appeal, the Federal Circuit has rejected the more expansive definition as contrary to the statute.

Here Unwired’s Patent No. 7,203,752 claims a method of using privacy preferences to configure when various applications are permitted to access a wireless device’s location information.  PTAB found CBM claims by noting that businesses may want “to know a wireless device is in its area so relevant advertising may be transmitted.” The PTAB’s finding here was not conjecture but instead came from the patent’s written description.  On appeal, however, the Federal Circuit found the required “financial product or service” link too tenuous.  The court explains:

The Board’s application of the “incidental to” and “complementary to” language from the PTO policy statement instead of the statutory definition renders superfluous the limits Congress placed on the definition of a CBM patent.

The court then provides a few analogies:

The patent for a novel lightbulb that is found to work particularly well in bank vaults does not become a CBM patent because of its incidental or complementary use in banks. Likewise, it cannot be the case that a patent covering a method and corresponding apparatuses becomes a CBM patent because its practice could involve a potential sale of a good or service. All patents, at some level, relate to potential sale of a good or service. Take, for example, a patent for an apparatus for digging ditches. Does the sale of the dirt that results from use of the ditch digger render the patent a CBM patent? No, because the claims of the ditch-digging method or apparatus are not directed to “performing data processing or other operations” or “used in the practice, administration, or management of a financial product or service,” as required by the statute. It is not enough that a sale has occurred or may occur, or even that the specification speculates such a potential sale might occur.

The decision here thus appears to eliminate any chance that the patent will be considered a CBM and thus the Section 101 decision by the PTAB goes away.

No Appeal? Like IPR proceedings, CBM proceedings begin with an initiation decision followed by a trial decision.  And, like IPR proceedings, the decision to initiate a CBM is not appealable.  In Versata, however, the Federal Circuit held that the initiation question of whether a patent is a CBM patent may be reviewed on appeal.  Despite the statutory language and the intervening Supreme Court decision in Cuozzo, the court here held that it still has jurisdiction to review the CBM initiation question on appeal.

Deference: In reviewing the PTAB determination, the court gave no deference to the Board’s interpretation of the law. “We review the Board’s statutory interpretation de novo.”  The Court also gave no deference to the PTO’s “policy statement” made in its notice of final rules.  The court does implicitly suggest – as it did in Versata – that implementation of a more thorough definition in the CFR rules would be given deference. However, the PTO has not taken that approach.

I do not know yet whether Google will push this case to the Supreme Court.  The strongest argument is that Cuozzo implicitly overruled Versata. That is the holding suggested by Alito’s dissenting interpretation of the Cuozzo majority.

 

Happy Thanksgiving and Moving Forward in a Pluralistic America

Patent

by Dennis Crouch

Although many of us will retreat to our families for this week’s thanksgiving holiday – the American tradition is to use the time to build cross cultural ties with our neighbors.

I am a great admirer of WilmerHale’s top IP Litigator Bill Lee.  Lee is an amazing lawyer and delivers for his clients while maintaining the highest ethical standards for himself and his co-counsel.   This past week’s AmLaw Daily helps bring home to me the disturbing American cultural and racial trends that are directed more at division than unity. Susan Beck writes:

On a Tuesday night in August, Lee stopped at a gas station near his home outside Boston in Wellesley, Massachusetts, to fill up his Mercedes-Benz SUV. Lee—a graduate of Harvard College and one of the nation’s most accomplished intellectual property litigators—was wearing a suit and tie, having finished a long day at work.

As Lee tells it, a man wearing a “Wellesley Hockey Parent” shirt walked up to him.

“Where does a guy like you get a car like that?” the man said to Lee, looking at the litigator’s vehicle.

Lee, whose parents came to this country from China in 1948, tried to defuse the situation. “From Herb Chambers,” he said, referring to a local car dealer.

“Why don’t you go back to your own country,” the man said, according to Lee.

“I don’t understand you,” Lee said.

“You mean, you don’t understand English,” the man said.

“I don’t understand ignorance,” Lee replied.

The Wilmer partner drove away, but the man followed in his car. When Lee pulled into a nearby police station, the man vanished.

“In the bluest of Blue States, Massachusetts, a mile from Wellesley College, if someone tells you to go back to your own country, this can happen anywhere,” Lee said. “If this can happen to the managing partner of an Am Law 200 firm, what’s happening to the rest of the country?”

Lee said he hadn’t heard a comment like this for 40 years. He attributes the encounter to the political environment that has encouraged hostility to immigrants. “He felt he could say it,” Lee said. . . . “I grew up in the fifties when we were the only Chinese family in our school district,” Lee recalled. “It was not a great time to be Asian. In many ways this brought back things that I thought we had put behind us.”

As leading lawyers we obviously play an important role in ensuring that racism and some kind of white-nationalism does not again become acceptable and normal.  One of my friends who is openly gay here in Missouri was leaving his house last week and a passenger in a passing vehicle yelled-out “faggot” and targeted him with an open soda bottle.  As with Bill Lee, T____ noted that he had not experienced this type of open vitriol for decades.  These incidents are These incidents are not supposed to happen here, but they are happening.  As Dan Rather writes “now is a time when none of us can afford to remain seated or silent. We must all stand up to be counted. . . . I believe there is a vast majority who wants to see this nation continue in tolerance and freedom. But it will require speaking.”

Happy Thanksgiving!