Starting with my 2017 article chastising the Federal Circuit for its R.36 practice, dozens of parties have challenged the Federal Circuit's ongoing habit of regularly issuing a large number of no-opinion judgments. So far, the Federal Circuit has refused to address any of the legal process complaints - favoring silent efficiency over transparency.
A new en banc petition in Converter Manufacturing, LLC v. Tekni-Plex, Inc., raises the issue in a new way, particularly focusing on dicta from the Supreme Court's landmark ruling in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024). The petition highlights the tension between judicial efficiency and the court's constitutional duty to independently review agency actions.
This post offers some insight into four patent-focused academic articles that I've been reading lately.
1. A textualist approach to patent eligibility under § 101;
2. Reflections on the Myriad, ten years later
3. Message to Competition Regulators: Patents are not simply a necessary evil
4. Philosophical critique of AI inventorship
These pieces offer insights into ongoing debates within patent law and policy. Although I don't necessarily agree with the conclusions made by the various authors, each article provides fodder for continued discussion on these important topics.
We continue to see lots of action focusing on obviousness-type double patenting (ODP) in the U.S. patent law context. In Allergan v. MSN, the Federal Circuit created a major loophole for patentees and undermined the 2023 Cellect decision by holding that extended PTA in one family-member patent does not create an ODP problem so long as the extended term is in a first-filed, first-issued patent. Allergan USA, Inc. v. MSN Laboratories Priv. Ltd., 111 F.4th 1358 (Fed. Cir. 2024). Sun Pharma has petitioned for en banc rehearing - hoping to invalidate Allergan's protected patent.
Two amicus briefs were recently filed supporting the petition - One by the Association for Accessible Medicines (AAM) and the other by a corporate group led by Alvogen PB.
The USPTO has issued final rules aimed at expanding opportunities for practitioners to appear before the Patent Trial and Appeal Board (PTAB). The rules, which go into effect on November 12, 2024, make several changes to the requirements for counsel in AIA-trial proceedings. However, the final rules do not go as far as some had proposed in allowing non-registered practitioners to take lead roles. In other words, lead counsel must be a registered patent practitioner.
In AlexSam v. Aetna, the Federal Circuit recently revived the patentee's infringement lawsuit against health insurance giant Aetna over its Visa and Mastercard-branded health savings account (HSA) debit cards. AlexSam, Inc. v. Aetna, Inc., No. 22-2036 (Fed. Cir. Oct. 8, 2024). The district court has dismissed the case on 12(b)(6) for failure to state a claim of infringement. The case will likely be highly cited by future infringement plaintiffs seeking to overcome motions to dismiss, especially whether allegations in the complaint are unduly conclusory. The appellate panel also narrowly construed a prior license agreement between AlexSam and Mastercard
AlexSam's asserted U.S. Patent No. 6,000,608 covers a "multifunction card system" that can serve as both a debit card and a medical services card. I have reproduced the two asserted claims below. And no, this is not an eligibility case.
The landscape of patent litigation has been dramatically reshaped by the rise of third-party litigation funding (TPLF) over the past decade. As someone who has been involved in patent law issues for 20+ years, I can confidently say that if I were asserting a patent today, I would actively seek litigation finance to mitigate risk, even if I had sufficient resources to self-fund (which I don't). The availability of TPLF allows patent holders to create high-caliber legal teams and can also provide a strategic advantage by demonstrating to opponents that the case has been vetted by sophisticated investors willing to back it financially.
However, this trend toward litigation finance comes with complications and controversies. While TPLF has undoubtedly increased access for many patent holders, it has also given rise to significant ethical concerns and abuses. One of the most pressing issues is the potential for effectively sidelining the nominal plaintiff – the actual patent holder – in favor of the financial interests of funders and attorneys. In addition, there is some notion that TPLF is often channeled into the US via foreign sources -- something that has raised concerns that this could somehow destabilize the rule of law.
At the same time, it's important to acknowledge the positive impacts of TPLF. The availability of litigation finance has allowed larger, more established law firms to take on plaintiff-side patent cases that they might have previously declined due to risk or resource constraints. Anyone working in a law firm knows how difficult it is to convince partners to take on risk, and TPLF offers guaranteed partial payouts from funders even if the defendant wins. That means that these firms can assemble formidable legal teams, potentially leveling the playing field against well-resourced defendants and improving the overall quality of patent litigation.
The pending appeal in CeramTec v. CoorsTek Bioceramics again highlights the interplay between utility patents and trade dress protection -- this one focusing on the color pink. The case centers on CeramTec's attempt to maintain trademark registrations for the pink color of its ceramic hip implants after its utility patent expired. While color can sometimes serve as a trademark, the Board's decision to cancel CeramTec's registrations appears supported by the evidence and aligns with key Supreme Court precedent on functionality. At the same time, CeramTec offers a powerful argument that the TTAB decision disregarded direct evidence of non-functionality based upon recent material science testing.
There is some chance that the court will issue a quick affirmance without opinion, but it is more likely that we'll see an opinion in the next few months. (Note, the image above is marked "confidential" but was found in appellant's non-confidential brief making it, in my view, fair game for publication).
In a stunning development, the USPTO recently terminated proceedings in approximately 3,100 patent applications due to the fraudulent use of a practitioner's signature. This mass termination, announced on October 2, 2024, stems from an investigation that uncovered misconduct involving the unauthorized use of a registered patent agent's electronic signature.
The outcome here appears potentially over the top in the way that it punishes the patent applicants -- almost all Chinese companies -- for unknowingly participating in the fraud. As one attorney who is now representing one of the impacted applicants explained to me: "punishing the applicants for the actions of the practitioner goes a bit far, especially where the punishment is termination with no remedy." A number of the applicants used Chinese counsel who identified and hired the offending firm (W&K) years ago and worked with them for some time without issue. I would not be surprised if some of these applicants push for judicial review, perhaps by filing an APA action.
The Supreme Court has denied certiorari in all of the patent cases it considered in its first conference of the October 2024 term:
Denied: 23-1349 Provisur Technologies, Inc. v. Weber, Inc.. Does an on sale product constitute a printed publication that can be asserted in an IPR.
Denied: 23-1298 United Therapeutics Corporation v. Liquidia Technologies, Inc. Whether the IPR statute and SAS require the Federal Circuit to review de novo, or only for an abuse of discretion, the PTO's reliance on new grounds and new printed publications—not raised in the initial petition?
Denied: 23-1231 Cellect, LLC v. Vidal. Whether a patent procured in good faith can be invalidated on the ground that statutory Patent Term Adjustment created an improper term extension under the judge-made doctrine of obviousness type double patenting.
Denied: 23-1217 Chestek PLLC v. Vidal. Whether the PTO is exempt from notice-and-comment requirements when exercising its rulemaking power under 35 U.S.C. § 2(b)(2).
Denied: 23-1184 Eolas Technologies v. Amazon.com, Inc. Whether the claims recite patent-eligible subject matter under 35 U.S.C. § 101 and Alice Corp.
Denied: 23-1142 Surti v. Fleet Engineers, Inc. Whether the Court erred in denying proper compensation.
Only a handful of cases are still pending before the court:
In a recent decision, the Federal Circuit addressed several key issues in intellectual property litigation, including the scope of "absolute litigation privilege" under Illinois law, trade dress functionality, and the consequences of discovery sanctions. Toyo Tire Corp. v. Atturo Tire Corporation, No. 2022-1817, 2022-1892 (Fed. Cir. Oct. 4, 2024).
The decision here is non-precedential, likely because it does not include any patent-law issues and thus is entirely based upon regional circuit law (here, the Seventh Circuit). Still, the case includes a number of interesting and important holdings. In this post, I focus on two particular issues: (1) the scope of privilege against being sued for defamation or other similar torts based upon statements made in a court proceeding; (2) the strong functionality doctrine that limits protection of trade dress on three-dimensional product design.
In a significant ruling that breathes new life into false patent marking claims, the Federal Circuit has held that falsely advertising a product as "patented" can give rise to liability under the Lanham Act's prohibition on false advertising. In Crocs, Inc. v. Effervescent, Inc., the appellate panel reversed a Judge Brimmer (D.Colo) summary judgment ruling, thus allowing competitor Dawgs to pursue false advertising claims against Crocs for allegedly misrepresenting its "Croslite" material as patented and 'exclusive.' One advertisement read to the appellate panel stated: The reason the shoes are so comfortable is that they are made of a patented closed-cell resin. The resin has many positive aspects ..." But, the closed-cell resin was not patented and instead was commercially available for anyone to use.
This ruling opens up a new avenue for challenging false patent marking after the America Invents Act severely curtailed such claims under the Patent Act itself. The decision also clarifies the scope of false advertising claims under the Lanham Act in light of key Supreme Court and Federal Circuit precedents such as Dastar and Baden Sports.
Professor Rebecca Tushnet is a leading commentator on Dastar and its progeny. In an earlier post, she also argued that the district court decision was "wrong" for much the same reason expressed by the appellate panel:
The patented/proprietary/exclusive language here is not the same as claiming authorship; it’s claiming uniqueness as a reason for consumers to believe that Crocs possess superior product characteristics to those of competitors’ products. To the extent that the claims lead consumers to believe that Crocs are “made of a material ‘different than any other footwear,’” a difference made credible to consumers by reference to patents and/or proprietary knowledge, that is a claim about the physical nature of specific product components, not about authorship. When the Supreme Court left 43(a)(1)(B) claims open in Dastar, this is the kind of thing that fits well.
The Federal Circuit is set to decide an important issue regarding the scope of prior art that can be considered during inter partes review (IPR) proceedings in the pending appeal of Lynk Labs, Inc. v. Samsung Electronics Co., Ltd. At issue is whether section 102(a)(2) prior art qualifies for use in an IPR proceeding because those applications were not yet publicly accessible until after the priority date of the challenged patent. This case has very significant implications because 102(a)(2) prior art is extensively used - especially in crowded and rapidly moving areas of technology. The question, is whether this type of 102(a)(2) prior art qualifies as a "patent or printed-publication" under the IPR limits of section 311(b). Note that the same issue is raised in another pending CAFC case VLSI Tech. LLC v. Patent Quality Assurance LLC, No. 23-2298 (Fed. Cir.).
The dispute stems from an IPR petition filed by Samsung challenging claims of Lynk Labs' U.S. Patent No. 10,687,400 ("the '400 patent") related to LED lighting systems. Samsung's petition relied upon a prior-filed patent application ("Martin") as a key prior art reference. (Application No. 10/417,735 subsequently published as U.S. Patent App. Pub. No. 2004/0206970). This prior application is not prior art under 102(a)(1) - because it was not patented or published until after Lynk's effective filing date. However, the prior application is prior art under the "secret springing prior art" provision of 102(a)(2), since it was on file prior to Lynk and then subsequently published. I refer to this as "secret springing prior art" because Martin was only secretly on file at the time Lynk filed its application - later, once Martin published it suddenly became prior art --back dated to the application filing date.
The PTAB instituted review and ultimately found the challenged claims unpatentable based in part on the Martin reference.
The Federal Circuit recently issued a decision in Provisur Technologies, Inc. v. Weber, Inc., No. 23-1438 (Fed. Cir. Oct. 2, 2024), partially reversing a $10.5 million jury verdict in a patent infringement case involving food processing machinery. This decision marks the latest chapter in an ongoing legal battle between the two food processing equipment manufacturers. The case has a complex procedural history, including parallel inter partes review (IPR) that is now on petition to the U.S. Supreme Court.
This October decision covers some of the ground that the court may address in the upcoming en banc rehearing of EcoFactor v. Google, offering some foreshadowing of likely outcomes. Here, the court strongly sided with the accused infringer in requiring particularized apportionment related evidence before allowing a patentee to use the entire market value of a product as the royalty base. In EcoFactor, the court will similarly focus on the evidentiary standard required of expert testimony on damages apportionment. Provisur was authored by Chief Judge Moore, one of the most 'pro patentee' judges -- signaling that patent owners are unlikely to smile when they read the EcoFactor decision.
US Synthetic Corp. v. ITC, Docket No. 23-01217 (Fed. Cir., pending appeal)
The United States International Trade Commission (ITC) is often seen as a pro-patentee venue -- but not for US Synthetics and its attempts to enforce its patents covering drill bit diamond tips.
In its October 2022 decision, the ITC found the asserted claims of USS's US10508502 invalid under 35 U.S.C. § 101 even though the patent claims polycrystalline diamond compacts ("PDCs") used in drill bits and other applications. The ITC's decision is now on appeal to the Federal Circuit, with oral arguments set for October 8, 2024. PhRMA provided amicus support for the patentee, arguing that the ITC's decision represents an unprecedented expansion of abstract idea analysis to invalidate composition of matter claims. PhRMA contends such claims should be deemed inherently non-abstract and tangible, unlike computer programs that may rightfully be seen as mental processes or mathematical concepts.
Professor Jeffrey Lefstin (UC SF Law) provided an earlier blog post on the original ITC decision that included a detailed historical perspective on this case. Lefstin traced the evolution of functional claim language in patent law, from its initial rejection in cases like General Electric v. Wabash Appliance (1938) to its acceptance in In re Swinehart (1971). He argued that the ITC's decision in the PDC case, following the Federal Circuit's reasoning in American Axle, represents a dramatic shift away from decades of established patent jurisprudence. His analysis underscores the potential far-reaching implications of applying the American Axle framework to composition claims, suggesting it could invalidate many biotechnology patents and upend well-established enablement doctrines.
Termination of AFCP 2.0 Program: The USPTO has announced that the After Final Consideration Pilot (AFCP) 2.0 program will expire on December 14, 2024. This decision comes after the Office proposed implementing a new fee for AFCP 2.0 requests earlier this year, which received significant pushback.
Take-Home Points for Patent Practitioners:
AFCP 2.0 has been popular with over 60,000 requests filed annually for the past 8 years.
Last day for AFCP 2.0 requests: December 14, 2024
Reason for termination: Program is costly and applicants do not provide any direct fee recovery.
Proposed fee ($500 for large entities) was met with significant push-back.
As the USPTO bids farewell to this popular program, patent practitioners are focusing on reshuffling their after-final strategies.
On September 30, 2024, the Supreme Court held its long conference, and considered whether to grant certiorari in a number of pending patent cases, including the eligibility-focused petition in Eolas v. Amazon. As we await the outcome of that conference, I wanted to highlight another new elitibility petition. This one in Plotagraph v. Lightricks.
Plotagraph, Inc. along with inventors Troy Plota and Sascha Connelly petitioned the court - seeking review of a non-precedential Federal Circuit decision that invalidated five of their patents related to digital animation technology. U.S. Patent Nos. 10,346,017, 10,558,342, 10,621,469, 11,182,641, and 11,301,119. The patented invention allows users to animate portions of digital still photos or video frames by selecting and shifting sets of pixels to simulate motion. For example, the technology could be used to make a waterfall in a still photo appear to be flowing. The Federal Circuit affirmed a district court decision that found these patents ineligible under § 101, concluding that they were directed to the abstract idea of digital animation and lacked an inventive concept.
The United States Patent and Trademark Office (USPTO) has disclosed a significant error in its patent term adjustment (PTA) calculations, potentially affecting patents issued between March 19, 2024, and July 30, 2024.
The USPTO discovered a coding error introduced in a recent software update. This error specifically affected two aspects of the PTA calculation:
1. The "A" delay under 35 U.S.C. 154(b)(1)(A)
2. The amount of overlap under 35 U.S.C. 154(b)(2)(A)
Importantly, other components of the PTA calculation were not impacted by this error. The USPTO estimates that approximately 1% of patents issued during the affected period may have been impacted. In many cases, the overall PTA remained correct because the inaccurate "A" delay equaled the inaccurate "Overlap." However, in some instances, these inaccuracies didn't balance out.
In the ongoing debate over the proper standard for issuing injunctions in patent cases, a 240-year-old English Chancery decision has taken on renewed significance. Horton v. Maltby, LI Misc MS 112 (Ch. 1783), provides a window into the traditional principles of equity that modern U.S. courts are instructed to apply when considering injunctive relief for patent infringement.
The case arose when Horton, who had obtained a patent for a stocking-making machine, filed a bill in Chancery (England's primary court of equity until 1875) against Maltby for allegedly infringing the patent. Horton sought three equitable remedies: accounting of profits, delivery or destruction of the infringing machines, and an injunction to prevent further use. Maltby requested immediate dismissal via demurrer, arguing that Horton should first establish his right at law before seeking equitable relief.
Lord Ashurst, wrote the primary opinion rejecting the demurrer. His opinion draws a parallel between patent and copyright cases, noting that in both instances, ongoing infringement during litigation could cause "irreparable injury" to the rights holder. The opinion's reasoning suggests that the mere fact of continued infringement during the litigation was sufficient to establish irreparable harm—a key factor in granting injunctive relief.
The U.S. Court of Appeals for the Federal Circuit has granted Google's en banc rehearing in EcoFactor, Inc. v. Google LLC, No. 2023-1101 (Fed. Cir. Sept. 25, 2024), focusing on the admissibility of expert testimony regarding patent damages. This will be the first en banc utility patent case since 2018.
The order vacates the panel's previous decision that had sided with the patentee and calls for new briefing on: whether the district court properly applied Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), in allowing testimony from EcoFactor's damages expert. The court has set a tight briefing schedule, with Google's opening brief due in 45 days, EcoFactor's response due 45 days later, and Google's reply due 30 days after that. Notably, the court is also welcoming amicus briefs without requiring consent or leave. This is an important case to the patent community. Under eBay and its progeny, equitable remedies are already tightly limited, and this case is looking to similarly tie-down damages theories to prevent large damage awards and provide further mechanisms to allow a judge to decide the outcome rather than a jury.
I begin this post with pessimism about the fundamental inquiry into patent damages. In most cases, I see patent damages as inherently speculative. The law's hypothetical negotiation to reach a reasonable royalty is a counter-factual endeavor set so far apart from reality that its results have little real meaning. In typical infringement cases, there is no overlap between amounts acceptable to either party. The baseline for a hypothetical royalty is typically determined by what the court would likely award in damages. However, this creates a circular problem, as the court's award is itself based on the hypothetical royalty. This circularity makes it challenging to establish a truly objective starting point for damage calculations. Even when we have evidence of prior licenses -- those tend to be in wholly different scenarios where the patents have not yet been adjudged enforceable and infringed. This distinction is important because every case I have encountered at the licensing stage includes credible arguments from the potential licensee that the patent is either not-enforceable or not-infringed. Thus, although I see the hypothetical negotiation as a useful tool, our attempts to tightly align the historical fiction with the actual practice of patent licensing simply does not provide a real answer as to the results of such a hypothetical negotiation.
The inherent speculativeness of the hypothetical negotiation relates directly the Daubert standard and Rule 702. In particular, the law requires that expert testimony on damages be based upon "reliable principles and methods." And, I would reject any approach that, because of the difficulty in providing this evidence, would place a heightened burden on patentees to show they are deserving of a damage award associated with adjudged infringement. At the same time, we have to recognize that damages experts are paid large rates because they are compelling witnesses - and there are many examples of experts using their persuasive skills to convincingly present dubious methodologies or unsupported conclusions as scientific fact. The limits imposed by Rule 702 serve a crucial purpose in this context. The gatekeeping function of the court under Daubert is particularly important in patent cases, where the technical complexity of the subject matter and the large sums at stake can make jurors especially susceptible to well-presented but potentially flawed expert opinions. This is not an emperor's new clothes situation where a child can easily see the nakedness. The intricate patterns of economic theories, market analyses, and technical valuations woven by damages experts can be so sophisticated that even experienced judges and attorneys may find it challenging to identify flaws or inconsistencies.
In a nonprecedential opinion, the Federal Circuit affirmed the PTAB decision finding all claims of Novartis's U.S. Patent No. 9,220,631 unpatentably obvious. Novartis Pharma AG v. Regeneron Pharmaceuticals, Inc., No. 2023-1334 (Fed. Cir. Sept. 23, 2024). The court rejected a teaching-away argument even though the prior art had described a key component as "markedly inferior."
