Tag Archives: patent litigation

Texas Startup Must Litigate Apple in California because of Convenience to the Tech Giant

by Dennis Crouch

The Federal Circuit recently denied a petition for mandamus seeking to overturn a district court order transferring a patent case from the Western District of Texas to the Northern District of California. In re Haptic, Inc., No. 2024-121 (Fed. Cir. June 25, 2024). This case was filed in Austin and assigned to Judge Robert Pittman with Haptic alleging that Apple’s “Back Tap” feature on iPhones infringes U.S. Patent No. 9,996,738 relating to gesture detection systems. Haptic is headquartered in Austin at the home of its longtime CEO and listed inventor Jake Boshernitzan.  The company was part of Techstars Austin Accelerator as it developed its product known as Knocki that allows users to tap on ordinary surfaces to control various actions on phones and other devices. Knock on wood. The patent and Knocki product are designed to expand touch interfaces beyond traditional touchscreens, potentially opening up new modes of interaction with smart devices and appliances. The ‘738 patent particularly issue covers systems and methods for detecting tapping or knocking gestures on surfaces to control electronic devices.

Apple also has a major presence in Austin, with about 10,000 Austin employees and a billion-dollar second headquarters campus in the city. Nevertheless, Judge Pitman (more…)

Amarin v. Hikma: Federal Circuit reverses Inducement Dismissal in Skinny-Label Case

by Dennis Crouch

Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA Inc., No. 2023-1169 (Fed. Cir. June 25, 2024).

This is another “skinny label” generic pharmaceutical patent case.  The basic setup involves a drug that has several different approved uses; with the branded manufacturer holding patents covering only some of the uses.  The generic company is then permitted to sell the drug, but is labelled only for non-patented uses. These labels are known as  carve-out or “skinny” labels under 21 U.S.C. § 355(j)(2)(A)(viii).

It is inevitable that people will purchase and use the generic drugs for the patented uses, and that the generic distributer will be accused accused of inducing  those infringing acts.  Although the generic typically makes a profit on these sales, it those profits pale in comparison to the profits lost by the branded company.

Amarin v. Hickma highlights some of the challenges that generics are facing when marketing drugs with these carved-out labels.  One difficulty is that the FDA severely limits what the generic can say about the drug and its uses, and the carve-out is generally based upon statements made by the patentee.  Here, the court follows a label-plus approach. The skinny label itself will not be enough to show inducement, but that evidence can be combined with other evidence (such as marketing) to prove liability. (more…)

Patently-O Bits and Bytes

USPTO Patent News:

  • Patent number 12 million issued on Tuesday, June 4, 2024, to Pacific Biosciences of California.  The patent covers particular labeled nucleotide analogs that include an avidin protein for use in analyzing enzymatic reactions and molecular recognition events, such as single-molecule real-time nucleic acid sequencing. From the file history, it looks like David Roise was the lead attorney on the case.
  • Derris Banks has been appointed as the Regional Director of the USPTO’s Elijah J. McCoy Midwest Regional Office (Detroit), where he will oversee outreach efforts while serving inventors and entrepreneurs in the Midwest region.  Banks has been at the USPTO since joining as an examiner in 1994, rising to various leadership positions.  Damian Porcari, who led the office for five solid years, retired in 2023.
  • Several comment periods are still open at Regulations.Gov. Yesterday the period for comments closed on upcoming USPTO fee increases. At least 30 comments were submitted, including those from the AIPLA who “objects to the major policy shift wherein front-end fees are being added not only to recover aggregate costs, but change applicant behavior and implement significant policy changes, including large fee increases for claiming benefits of earlier effective filing dates, filing of Requests for Continued Examinations (“RCEs”), terminal disclaimer submissions, and for filing of large Information Disclosure Statements (“IDSs”).”  [This sentence was almost certainly written by a patent attorney.]

Recent Job Postings on Patently-O Jobs:

  • Van Pelt, Yi & James LLP is seeking local or remote patent engineers to prepare, file, and prosecute patent applications in the fields of computer science and electrical engineering. [Link]
  • Withrow + Terranova, PLLC is looking for an Associate Patent Attorney to work in Apex, NC (open to hybrid and remote arrangements) for patent application preparation and prosecution, client counseling, opinion work, and other related IP matters. [Link]
  • Epstein Becker & Green is seeking an intellectual property associate with at least three years of experience in patent prosecution within the life sciences industry to join their Columbus, Nashville, Pittsburgh, Portland, or Princeton office. [Link]
  • Viering, Jentschura & Partner mbB is seeking a U.S. patent attorney in either their Dresden or Munich office to draft and prosecute patent applications in the United States for various companies. [Link]
  • Dority & Manning is looking for an EE/CS Patent Attorney or Agent to draft and prosecute patent applications in their Raleigh-Durham, NC or Greenville, SC office. [Link]
  • Suiter Swantz IP has an immediate opening for a Patent Attorney or Patent Agent with 2-5 years of experience in their Omaha, NE office (remote considered). [Link]
  • Harrity & Harrity, LLP is seeking a patent professional to draft patent applications for leading global technology companies in software, computer, and electrical technology areas. The position is 100% remote. [Link]
  • The Marbury Law Group is seeking a highly motivated individual to join their Life Sciences team as a Pharma Associate in their Reston, VA, Boston, MA office or remote. [Link]
  • Ballard Spahr LLP is seeking an Electrical/Computer Engineering Patent Prosecution Associate with 2-4 years of experience to work in their Atlanta, Denver, Minneapolis or Phoenix office. [Link]
  • Ballard Spahr LLP is seeking a patent agent with 5+ years of patent prosecution experience to assist in prosecution, IP diligence, IP-transfer commercial transactions, and strategic IP business counseling in their Atlanta, New York, or Philadelphia office. [Link]
  • McNeill Baur is seeking experienced attorneys and agents with advanced degrees in Chemistry and at least 3 years of relevant experience in patent prosecution and/or patent counseling or patent litigation to work remotely. [Link]

SCT: False Claims Act Actions Based Upon Fraudulently Obtained Patent Rights

by Dennis Crouch

This post walks through a new petition for writ of certiorari involving claims that Valeant Pharma defrauded the U.S. government by using fraudulently obtained patent rights prop up its drug prices. [Read the Petition]

The False Claims Act (FCA), originally enacted in 1863 to combat contractor fraud during the Civil War, imposes civil liability on anyone who “knowingly presents” a “fraudulent claim for payment” to the federal government. 31 U.S.C. § 3729(a)(1)(A). The Act allows private citizens, known as “relators,” to bring qui tam actions on the government’s behalf against those who have defrauded the government. If successful, relators can recover up to 30 percent of the damages. 31 U.S.C. §§ 3730(b)(4), (d)(2).

To prevent opportunistic lawsuits, however, Congress has sought to strike a “balance between encouraging private persons to root out fraud and stifling parasitic lawsuits” (more…)

What I’m reading from academic journals

I’m always on the lookout for interesting new scholarship related to intellectual property and innovation policy. The following are a few of the articles that I’ve been delving into this past week:

  • James Hicks, Do Patents Drive Investment in Software?, 118 NW. U. L. REV. 1277 (2024).
  • Ana Santos Rutschman, From Myriad to Moderna: The Modern Pharmaceutical Company, ___ Texas A&M University Journal of Property Law ___ (2024) (forthcoming).
  • John Howells, Ron D Katznelson, Freedom to Operate analysis as competitive necessity—the Selden automobile patent case revisited, Journal of Intellectual Property Law & Practice (2024).
  • Christa Laser, Scientific Educations Among U.S. Judges, ___ American University Law Review ___ (2025) (forthcoming).
  • Garreth W. McCrudden, Drugs, Deception, and Disclosure, 38 BERKELEY TECH. L.J. 1131 (2024).

(more…)

Patent Rights and Cell-Free DNA cancer testing

by Dennis Crouch

I have been following the ongoing case of Natera v. NeoGenomics that is currently on appeal before the Federal Circuit. Docket No. 24-1324. The technology in these cases has amazing potential and I have several friends who have used these techniques to detect early stage cancer.

The particular litigation here centers on Natera’s US Patent No. 11,519,035 issued on December 6, 2022 that covers a method of detecting cancer through analysis of cell-free DNA (cfDNA) obtained from blood samples.  The basic idea is that small fragments of DNA that are released into the bloodstream by cells, including cancer cells. High throughput extraction and sequencing technologies can then be used to detect mutations and their potential associated risk factors, including the presence of cancer and the specific type of cancer. cfDNA cancer screening has lots of advantages, most notably, it is almost non-invasive (blood sample) and provides potential early across the entire body.  It can be particularly effective for detecting reemergence of cancer for someone in remission because the particular mutation is already known.  This is known as a “tumor-informed” test.

Natera’s ‘035 patent is directed to methods for amplifying and sequencing cell-free DNA (cfDNA) to detect cancer. The claimed invention involves three key steps: (1) tagging cfDNA with universal adaptors, (2) amplifying 25-2,000 single nucleotide polymorphism (SNP) loci in a single reaction volume, and (3) performing massively parallel sequencing.  Each of these steps were known in the prior art, but the combination of all three appears to be new. NeoGenomics is accused of infringing through its use of its RaDaR, an independently developed cancer-detection test that purportedly employs a similar process for analyzing cfDNA to provide highly sensitive detection of cancerous mutations. NeoGenomics disagrees, arguing the claims require the tagging and targeted amplification to occur in separate PCR reactions with different primer sets, and that its approach combines this process. (more…)

A New Horizon: Design Patent Practitioner Bar Proposed by USPTO

by Dennis Crouch

The United States Patent and Trademark Office has proposed a rule to create a separate design patent practitioner bar. The USPTO is publishing this proposal in the Federal Register on May 16, 2023 (link below to the prepub).

As it stands today, there is a single patent bar that applies to those practicing in patent matters before the USPTO, covering utility, plant, and design patents.  And, even though design patents cover ornamentally, the current rules require that the  design patent practitioner be an engineer or scientist.

The proposed rule aims to establish an additional separate bar for those who only specialize in design patents, ensuring that they have the necessary qualifications, while opening the door to non-engineers.  The proposal appears to not affect those already registered to practice. Existing patent practitioners will continue to practice as before, and new applicants who meet the current criteria, including passing the existing registration exam, will also be permitted to practice in all patent matters, including design patent matters.

In Fall 2022, the USPTO asked for comments on proposals in this direction and received mostly positive comments. Stakeholders acknowledged that the move would encourage broader participation in the patent system.

The proposal would still have a ‘technical’ requirement, typically a degree in one of the following: industrial design, product design, architecture, applied arts, graphic design, fine/studio arts, or art teacher education. The degree requirements here align with the current hiring practices of the USPTO for design patent examiners.  In addition to the degree requirements, applicants would have to meet the other requirements to register for the bar, including taking and passing the current registration examination and passing a moral character evaluation.

The USPTO will accept comments on the proposed rulemaking through August 14, 2023 via the regulations.gov portal.

Links:

Certiorari Denied in Eligibility Cases

by Dennis Crouch

In spite of robust amicus backing, including from the US Solicitor General, the Supreme Court has declined to review two pending patent-eligibility petitions: Interactive Wearables v. Polar and Tropp v. Travel Sentry. These cases contended that the Alice/Mayo framework produced (1) instability and unpredictability in the law; (2) facilitated non-evidence based judgments by district courts; and (3) prohibited patenting of subject matter that has traditionally been eligible for patents.

In my perspective, these cases wouldn’t have led to pro-patentee opinions from the Supreme Court as the inventions involved were not firmly rooted in technology. Rather, the court would likely have regarded the appellate cases as correctly denying eligibility.

The case of utmost importance still awaiting judgment, in my opinion, is CareDx Inc. v. Natera, Inc. CareDx is centered around the eligibility of an important diagnostic method for early detection of transplant organ failure. In this instance, the patent holder (Stanford University) solved a significant, longstanding problem that others had been unable to resolve. However, the lower courts determined that the patent claims were improperly directed towards a law of nature. Another petition pending before the Court is the eligibility appeal in Avery Dennison Corp. v. ADASA Inc. In the Avery Dennison case, the patent for RFID unique-ID encoding was deemed eligible and therefore valid on debatable grounds. The patent challenger has petitioned the Supreme Court, arguing that the lower courts are unduly narrowing their eligibility assessment.

A further petition, Killian v. Vidal, was reportedly filed in April but has yet to appear on the Supreme Court docket. Killian’s patent application proposes a computerized algorithm for detecting “overlooked eligibility for social security disability insurance.” The petition contends that the uncertainty created by the courts, along with the non-statutory eligibility exceptions, amount to violations of the Administrative Procedure Act (APA) and Due Process. Furthermore, the petition asserts that these judge-made exceptions “overstep the constitutional authority of the courts.” This petition has a minimal likelihood of being granted.

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The court also denied certiorari in the skinny-label FDA-Patent case of Teva Pharmaceuticals USA, Inc. v. GlaxoSmithKline LLC.

Attorney Fees on Undecided Inequitable Conduct Issues

by Dennis Crouch

United Cannabis Corp (UCANN) vs. Pure Hemp Collective, — F.4th — (Fed. Cir. 2023)

The UCANN vs. Pure Hemp patent case has come to a close with the Federal Circuit affirming the district court’s decision to deny attorney fees to Pure Hemp. The original infringement lawsuit was filed in 2018, with UCANN suing Pure Hemp for infringing US Patent No. 9,730,911, covering various high concentration cannabis and CBD extract formulations. During the litigation, UCANN filed for bankruptcy, causing the case to be stayed, and eventually, the parties stipulated to a dismissal of the infringement claims with prejudice. However, the stipulated dismissal did not include any discussion of attorney fees — leading to the current appeal.

Following the dismissal, Pure Hemp moved for attorney fees and sanctions, arguing that UCANN’s counsel committed inequitable conduct during patent prosecution and that UCANN’s litigation counsel had a conflict of interest. The district court sided with UCANN and denied attorney fees, stating (1) that Pure Hemp was not the prevailing party and (2) that Pure Hemp did not prove that the case was exceptional. The Federal Circuit has now affirmed the decision, finding that the district court did not abuse its discretion in finding the case unexceptional. Although district court the district court erred in not finding Pure Hemp to be the prevailing party, the error was harmless.

(more…)

Generative AI and Copyright

A few days ago I wrote an essay about the ongoing economic war between the leaders of the US and those of China, with a focus on the impact US attorneys representing Chinese clients. For the article, I used an AI tool to create some art for my publication. The image above shows the resulting four images. I chose the bottom right and had the AI enhance the image for publication by pushing a single button. I then did a cut and paste before publishing.

Although I didn’t contribute any of the expression seen in the work, after these actions and then publishing it, I actually feel some gut level of ownership. And, that I might be upset if someone else used _my_ image without permission.

My questions for you:

  • Do I deserve to “own” this image?
  • Should I be able to claim authorship?
  • Should I disclose my AI creation methodology when I use the image in published works?

Comment on LinkedIn: https://www.linkedin.com/posts/patentlyo_ai-publishing-art-activity-7059984906633842688-eGgf

 

Bringing Home the Bacon with Joint Inventorship

Guest Post by Jordan Duenckel.  Jordan is a second-year law student at the University of Missouri, head of our IP student association, and a registered patent agent.  He has an extensive background in chemistry and food science.

HIP, Inc., v. Hormel Foods Corp., 2022-1696, — F.4th — (Fed. Cir. May 2, 2023)

Joint inventorship requires a substantial contribution to the invention. In the decision HIP, Inc. vs. Hormel, Judge Lourie writes for a unanimous panel to reverse a district court’s determination of joint inventorship involving a new process for precooking bacon. US Patent 9,980,498 has four inventors that are employees of and assigned their interest to Hormel.  HIP sued Hormel, alleging that David Howard was either the sole inventor or a joint inventor of the ’498 patent. The district court determined that Howard was a joint inventor based solely on his alleged contribution to the infrared preheating concept in independent claim 5.  

Bacon is an interesting food with unique preservation and cooking properties. Being a cured product, for food safety reasons, no additional cooking of the bacon is needed when bought off the shelf in a refrigerated section. Of course, most people are not consuming the bacon without additional cooking and some companies will precook the product for consumer convenience. When precooking, Hormel is trying to avoid the loss of salt, and therefore flavor, through condensation and prevent the creation charred off flavors (as opposed to the desirable char on a steak).  

 In the process of viability testing the new method, prior to filing the application, the inventors consulted with David Howard of Unitherm, HIP’s predecessor, to discuss methods related to Unitherm’s cooking equipment to create a two-step process of preheating then a higher temperature step. After some difficulties, Hormel leased the equipment and returned to their own R&D lab. The method created, the subject matter of the ‘498 patent, involves a first step that allows the fat of the bacon to seal the surface of the bacon and prevent condensation. The charring was remedied by adjusting the heating method of the oven in the second step of high-temperature cooking. In Hormel’s product development, Hormel tried an infrared oven and a conventional spiral oven.

HIP argued that Howard contributed to the ‘498 patent in the preheating by hot air in claim 5 and/or preheating with an infrared oven in claim 5.  Claim Five reads in the relevant part:  

  1. A method of making precooked meat pieces using a hybrid cooking system, comprising: preheating meat pieces in a first cooking compartment using a preheating method selected from the group consisting of a microwave oven, an infrared oven, and hot air to a temperature of at least 140º F. to create preheated meat pieces…

On appeal, Hormel argues that Howard’s contribution is well-known in the art and insignificant when measured against the full invention. With inventorship being a question of law, and the issuance of a patent creating a presumption of inventorship, an alleged joint inventor must provide clear and convincing evidence to substantiate their claim. In evaluating whether a significant contribution was made by Howards, the parties apply the test from Pannu v. Iolab Corp., 155 F.3d 1344, 1351 (Fed. Cir. 1998). The test requires that the alleged joint inventor: 

(1) contributed in some significant manner to the conception of the invention; (2) made a contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention; and (3) did more than merely explain to the real inventors well-known concepts and/or the current state of the art. 

Analyzing the second Pannu factor, the Court found that the alleged contribution of preheating meat pieces using an infrared oven to be insignificant in quality because it was mentioned only once in the patent specification as an alternative heating method to a microwave oven and was recited only once in one Markush grouping in a single claim. In contrast, preheating with microwave ovens and microwave ovens themselves were prominently featured throughout the specification, claims, and figures. The examples and corresponding figures also employed procedures using preheating with a microwave oven, but not preheating with an infrared oven.  

Infrared heating seems to have been an afterthought in the creation of the two-step precooking method. Whatever discussions Howard might have had about the importance of the infrared, Hormel seems to have focused on microwave heating to solve the condensation problem. From one step further back, it seems absurd to permit joint ownership by a cooking equipment manufacturer when the significant discoveries and refinements of the methods were made in Hormel’s R&D facility without Howard present. The prevention of condensation and avoiding the char flavor were both made independent of Howard’s contributions. Considering the second Pannu factor, the reversal of inventorship seems appropriate.  

The Split on Pleading Scienter for Inequitable Conduct

by David Hricik, Mercer Law School

Federal Rule of Civil Procedure 9(b) requires that fraud or mistake be pled with particularity.  The Federal Circuit has held that, although inequitable conduct is “broader than fraud” inequitable conduct must be pled with particularity in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1330 (Fed. Cir. 2009).  (A digression:  I think this is wrong because the Supreme Court has held that Rule 9(b) is limited to “fraud” and “mistake” and it is improper to rely on judicial policies to expand the plain meaning of the rule.  See David Hricik, Wrong about Everything: The Application by the District Courts of Rule 9(b) to Inequitable Conduct, 86 Marquette Law Review  895 (2003) (here).)

One issue that has split the district courts is whether the “single most reasonable inference” standard for scienter applies at the pleading stage. The court in Deere & Co v. Kinze Mfg., Inc (No. 4:20-cv-00389-RGE-HC, C.D. Iowa May 1, 2023) collected the cases:

iLife Techs. Inc. v. AliphCom, No. 14-CV-03345-WHO, 2015 WL 890347, at *4 n.1 (N.D. Cal. Feb. 19, 2015) (“I recognize that there is currently a dispute among courts as to the pleading requirements for an inequitable conduct counterclaim.”) (collecting cases); see also Wyeth Holdings Corp. v. Sandoz, Inc., CIV.A. No. 09-955-LPS-CJB, 2012 WL 600715, at *7 (D. Del. Feb. 3, 2012) (“Several district courts have recently confronted this question and have reached different conclusions.”) (collecting cases); Cutsforth, Inc. v. LEMM Liquidating Co., L.L.C., No. 12-cv-1200 (SRN/JSM), 2013 WL 2455979, at *4 (D. Minn. June 6, 2013) (“District courts are currently conflicted on the effect of the Federal Circuit’s holding in Therasense on the pleading requirements for the specific intent to deceive element.”) (collecting cases). More recent decisions, however, have acknowledged that a majority of courts do not view Therasense as requiring pleadings of inequitable conduct to satisfy the “single most reasonable inference” standard. See Jaguar Land Rover Ltd. v. Bentley Motors Ltd., No. 2:18cv320, 2021 WL 8086357, at *2 (E.D. Va. May 6, 2021) (“[T]he majority position among district courts is that even applying the Rule 9(b) standard requiring heightened specificity when pleading fraud, it is not necessary that intent to deceive be the ‘single most reasonable inference,’ at the pleading stage.” (quoting W.L. Gore & Assocs., Inc. v. Medtronic, Inc., 850 F. Supp. 2d 630, 633 (E.D. Va. 2012))); Front Row Techs., L.L.C. v. NBA Media Ventures, L.L.C., 163 F. Supp. 3d 938, 986 (D.N.M. 2016) (A “line of cases . . . hold[s] that the pleader ‘need only allege facts from which the Court could reasonably infer that the patent applicant made a deliberate decision to deceive the [US]PTO.’ . . . Th[is] . . . line of cases is now the majority position.” (quoting Wyeth Holdings, 2012 WL 600715, at *7)).

The John Deere court ultimately held pleadings showing only a reasonable inference of scienter was required, not the single most reasonable inference, reasoning in part:

Moreover, as multiple courts have noted, the Federal Circuit’s opinion in Delano Farms Co. v. California Table Grape Commission––decided after Therasense––affirmed the Exergen pleading standard on a motion to dismiss an inequitable conduct counterclaim alleging the withholding of material references. Delano Farms Co. v. Cal. Table Grape Comm’n, 655 F.3d 1337, 1350 (Fed. Cir. 2011). The Delano Farms court stated the charge of inequitable conduct would survive “only if the plaintiff’s complaint recites facts from which the court may reasonably infer that a specific individual both knew of invalidating information that was withheld from the [US]PTO and withheld that information with a specific intent to deceive the [US]PTO.” Id. (emphasis added); see also Wyeth Holdings, 2012 WL 600715, *8 (citing Delano Farms, 655 F.3d 1337); Human Genome Scis., Inc., 2011 WL 7461786, at *3 (“Delano Farms, a post-Therasense case . . . also seems to indicate that the less rigorous standard applies.” (citing same)); accord Cutsforth, 2013 WL 2455979, at *4; Mentor Graphics Corp. v. EVE-USA, Inc., 13 F. Supp. 3d 1116, 1125–26 (D. Or. 2014); Illumina Inc. v. BGI Genomics Co., Ltd., No. 20-cv-01465-WHO, 2021 WL 428632, at *4 (N.D. Cal. Feb. 8, 2021); Jaguar Land Rover Ltd., 2021 WL 8086357, at *2; Front Row Techs., 163 F. Supp. 3d at 986; TiVo Inc. v. Verizon Commc’ns, Inc., No. 2:09-cv-257, 2011 WL 13134426, at *3 (E.D. Tex. Sept. 7, 2011); Graphic Packaging Int’l, Inc. v. C.W. Zumbiel Co., No. 3:10–cv–891–J–37JBT, 2011 WL 4862498, at *3 (M.D. Fla. Sept. 12, 2011).

It seems to me that it’s much too high a bar to require the single most reasonable inference at the pleading stage in part because the facts to establish scienter largely will be in the patentee’s possession and if pleading is denied, there won’t be any discovery since it is, largely, limited to information relevant to a pled claim or defense.

The Supreme Court and Patent Protection for Medical Diagnostics: A Closer Look at CareDx and Stanford U v. Eurofins

by Dennis Crouch

The recently filed petition for certiorari in CareDx and Stanford University v. Eurofins Viracor, Inc. (Supreme Court 2023) offers an opportunity to examine the patent eligibility doctrine in the context of an important health diagnostics innovation. The inventions at issue relate to early detection of organ transplant failure, which obviously hold significant potential to save lives and reduce reliance on invasive exploratory surgical procedures. The detection method involves identifying DNA fragments from the transplant within the bloodstream, a challenge that had stumped scientists for over a decade.  Although various scientists had proposed mechanisms for using this information, the evidence shows more than a decade of failed ideas, and at least one article reported that the process is “difficult and impractical.”  The breakthrough came when Stanford researchers successfully applied high-throughput multiplex sequencing (“shotgun sequencing”) to detect single nucleotide polymorphisms (SNPs) unique to donor organs.  Of potential importance, the Stanford researchers did not create these new sequencing techniques, but they were the first to take advantage of them in this particular context and, as the claim language below shows, the scientists focuses on creating thresholds as part of a method that particularly work in this situation.

Three patents are central to this case: U.S. Patent Nos. 8,703,652, 9,845,497, and 10,329,607. Claim 1 of the ‘607 patent exemplifies the claimed method, which includes the following steps:

  1. Providing a plasma sample from the recipient;
  2. extracting cell-free DNA from the sample;
  3. performing “selective amplification” of target DNA sequences, wherein that amplification “amplifies a plurality of genomic regions comprising at least 1,000 [SNPs]” using PCR;
  4. performing “high throughput sequencing” comprising a “sequencing-by-synthesis reaction” with an error rate of less than 1.5%;
  5. providing sequences comprising “at least 1,000 [SNPs]”; and
  6. quantifying the proportion of donor-derived DNA, using distinguishing biomarkers drawn from those at least 1,000 SNPs, and wherein the donor’s cell-free DNA comprises at least 0.03% of the total in the sample.

The Infringement Lawsuit: The Delaware District Court initially denied defendants’ motions to dismiss and for summary judgment of ineligibility. However, Chief Judge Connolly later reconsidered the summary judgment motion and ultimately ruled that the claims were ineligible under the two-step analysis set forth in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012). The Federal Circuit affirmed this decision.

The petition to the Supreme Court raises the following simple question: Is a new and useful method for measuring a natural phenomenon, which improves upon prior methods for measuring the same phenomenon, eligible for patent protection under Section 101? The petition emphasizes the importance of this case compared to Tropp and Interactive Wearables, and it underscores the need for the Supreme Court to review its application of eligibility exceptions to medical diagnostics.

This case has potentially significant implications for US patent law doctrine as well as potential impact on investment in medical diagnostics. We’ll be following the case closely and talking more about its potential effects.

Supreme Court Holds Over Two Patent Cases, Considers Two More on Patent Eligibility

by Dennis Crouch

On May 1, the U.S. Supreme Court revealed its decisions from the April 28 conference. Among the three patent cases considered, the court denied certiorari for the pro se case of Wakefield v. Blackboard, while holding over the other two for reconsideration at a later conference. This development increases the likelihood of these two cases being heard by the court, although a grant of certiorari has not yet been announced.

The held-over cases include: (more…)

Establishing Guidelines for Patent Damages: The Garretson v. Clark Case of 1884

by Dennis Crouch

Calculating damages for patent infringement can be a complex task, particularly when the invention is an improvement to an existing machine or product.  The Supreme Court’s 1884 decision in Garretson v. Clark, 111 U.S. 120, helped establish a rule requiring apportionment in cases involving improvement patents.

The plaintiff, Garretson held two patents covering improved mop heads and sued the defendants for infringement.  The lower court sided with the patentee — finding the claims valid and infringed and also issued an injunction to halt ongoing infringement.  However, the court balked at awarding the requested back-damages for past infringement.

The patentee had offered a simple lost-profit damage calculation.  In particular the court was presented with evidence showing how much profit the patentee made from the sale of each mop, and the patentee asked the court to force the defendant to pay that amount for each of infringing mop.  The circuit court judge Samuel Blatchford appointed NY patent attorney George J. Sicard to conduct an accounting.  Sicard came back with a recommendation of $0 in damages, and Blatchford agreed.

The issue here is that the patent covered an improvement to a mop, but the patentee was seeking damages for the entire profits associated with the mop — not just the value of the improvement.  In his opinion, Blatchford wrote:

The patentee must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features, and such evidence must be reliable and tangible, and not conjectural or speculative; or he must show, by equally reliable and satisfactory evidence, that the profits and damages are to be calculated on the whole machine, for the reason that the entire value of the whole machine, as a marketable article, is properly and legally attributable to the patented feature.

Garretson v. Clark, 10 F. Cas. 40, 44 (C.C.N.D.N.Y. 1878).  The plaintiff has the burden of proving damages, but its theory of damages utterly failed. And, no other damages evidence was presented. The effective result was no damages.

At the time of the decision, Blatchfort was a circuit court judge. In 1882, he was nominated by President Chester Arthur to the U.S. Supreme Court.  Because of the long backlog at the time, Blatchfort reached the court before the case was heard (even though it was directly appealed).  The Supreme Court finally got around to hearing the appeal in 1886 and affirmed in an opinion by Justice Field.

The high court quoted Blatfort’s decision as I have done above and  also remarked that for improvement patents, “the patentee must show in what particulars his improvement has added to the usefulness of the machine or contrivance. He must separate its results distinctly from those of the other parts, so that the benefits derived from it may be distinctly seen and appreciated.” Garretson v. Clark, 111 U.S. 120 (1884).

The decision helped establish a clear rule for patentees to follow when claiming damages for improvements in existing machines or contrivances. It emphasized the presentation reliable and tangible evidence to apportion profits and damages between patented and unpatented features or evidence to demonstrate that the entire value of the product is attributable to the patented feature.

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An interesting aside from this case is that the defendant – Charles B. Clark – is also co-inventor of one of the two asserted patents.  Clark had transferred his rights to a third party, and Garretson bought them up.  The case involves sales of 100,000+ mops.

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Note here that this case was brought in equity rather than at law and so that raises a major difference between current cases, and we had different statutory language under the 1870 Act.  A lot of our 1800s patent cases have quirks that leave them not susceptible to direct application to today’s cases.  Still, I be but they still provide some amount of foundational guidance and gives a chance to observe the evolution of the legal principles we know today.

Patently-O Bits and Bytes by Juvan Bonni

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Guest Post: Third-Party Litigation Funding: Disclosure to Courts, Congress, and the Executive

Guest post by Jonathan Stroud.  Stroud is General Counsel at Unified Patents – an organization often adverse to litigation-funded entities.[1] He is also an adjunct professor at American University Washington College of Law. 

Patent assertion finance today is a multibillion-dollar business.[2]  Virtually nonexistent in the patent space in the U.S. ten years ago—at least in part due to longstanding common law rules on champerty, maintenance,[3] and patent law’s relative high risk—today third-party litigation funding (TPLF)[4] undergirds about 30% of all patent litigation, by conservative estimates.[5] Insurance options are suddenly plentiful,[6] funders are expanding and multiplying,[7] and new deal commitments are on the rise.[8] This general trend is seen in the first chart below, adapted from a recent white paper by Korok Ray.[9]

That is in no small part due to it being the fastest-growing piece of the wider U.S. litigation finance boom of the past 20 years—as has been widely reported, private equity now undergirds huge swaths of U.S. bankruptcy, class action, trademark, securities, and tort litigation, to the tune of $50 to $100 billion in investments annually.[10]  According to one of the biggest litigation funders, publicly traded Burford Capital—recently featured on 60 Minutes[11]—there was a 237% increase in overall litigation funding in the US between 2012 and 2018, a trend that, by all accounts, continues unabated.[12]  Industry reports show new investments pouring fastest into patent infringement litigation; new deal commitments for TPLF saw an increase of 61%; and patent litigation accounted for 29% of all new commitments by TPLFs in 2021.[13]  Recent trends are shown in the chart below, adapted from a Westfleet Advisors report. [14]

In terms of how TPLF is structured, deals are variegated, complex private agreements.  But generally the funder will offer non-recourse funding (or funding that is “at risk”) upfront to cover expenses in exchange for being first in line to recoup all of that funding first (i.e., to be “paid back”) out of any recovery, and then to take some hefty percentage—often 60% or more of whatever is remaining, particularly in litigations deemed high-risk (like patent litigation), though there are no rules governing how much funders can ask for.  (It generally amounts to more than 50% of the total settlement recovery, acknowledging, at least by basic math, that they are the primary beneficiary of the litigation.). Sometimes all fees are paid upfront by the funder (Fortress is known for this); some pay some continuing level of a fee/contingency split with firms to split risk; some pay the original patentholder upfront, though others think that disincentivizes them from robust ongoing participation; others make all recovery, for all parties in a waterfall, contingent upon settlement.  Many start with and later add investors to ongoing funds and matters.  Nearly all require oversight and consultation at all key decision points.

Patent TPLF funds generally promise roughly 20% internal rates of return to funders (IRR) year-over-year, or about a 2x to 2.5x return on investment over generally four- or five-year investment cycles, suggesting, at least at the pitch level, that these investments are lucrative for the funders.[15]  The biggest (or at least most well-known) players—Magnetar Capital, Burford Capital, Fortress Investment Group, Omni Bridgeway, and Curiam Capital, to name just a few[16]—have funded patent cases for years, reporting in some cases that their existing funds were on pace to return 20% or more—less than some other investments tout, but still beating the market by a fair margin.[17]

At least, that’s as far as can be pieced together.  What we do know comes mostly from self-reporting, industry reports, and journalists.  That’s because current disclosure of litigation funding relies on a patchwork of state law, court rules, self-reporting, FOIA requests, leaks to journalists, and funding pitches.  It’s true today that no one in the government (Federal or state, judicial, legislative, or executive) knows who is funding which litigations, whether they are as profitable as they claim to be, if they are being properly taxed, or even how they are generally structured.  Disclosure is limited even for the two well-known, publicly traded litigation fund managers, Burford Capital and Omni Bridgeway; it is sparser still—and highly self-selective—for all the private funds involved.  According to a recent Government Accountability Office (GAO) report on litigation funding (written at Congress’ behest), “[e]xperts GAO spoke with identified gaps in the availability of market data on third-party litigation financing, such as funders’ rates of return and the total amount of funding provided,” and noted that no government body is aware of who is funding these cases, who is influencing or controlling them, or what promises they are making to investors.[18]  (It also notes litigation finance industry lobbying groups active today, and their membership.)

Disclosure remains sparse at least in part because the very wealthy private investors who fund litigation claims and then reap, they claim, windfall profits—some of them concededly foreign sovereign nation funds[19]—have fought hard to keep those agreements secret, even from judges asking for disclosure, much less from government officials, researchers, reporters, opposing parties, or the public.  As such, the Federal District Court of Delaware has recently found itself at the center of this high-stakes debate about transparency and the purpose of the courts.

In April of 2021, the District of Delaware’s Chief Judge, Colm Connolly, issued two standing orders requiring litigants to, inter alia, disclose third-party litigation funding.[20]  (The orders apply to all parties and litigation before his Court, not just parties to patent disputes, but do not extend, as yet, to the other sitting judges there.) The orders were neither ultra vires nor exceptional—The Federal Rules of Civil Procedure have been moving toward greater ownership transparency for years, the advisory committees have recommended that judges have the right to such disclosure and are considering further requirements,[21] and similar requirements in Federal District courts across the nation have been in place for years, in districts in, for example, California, Georgia, Iowa, Maryland, Michigan, Nevada, New Jersey, Ohio, and Texas (in the Western district).[22]  But that trend toward disclosure had thus far largely avoided being raised and enforced in the few Federal districts where patent litigation primarily resides (though the California and Texas districts have long had rules requiring disclosures—ones that are often ignored by LLC PAEs).

(more…)

A Free Speech Right to Accuse Others of Patent Infringement

by Dennis Crouch

Rule 1 of the Federal Rules of Civil Procedure sets out a bold goal for civil litigation: “the just, speedy, and inexpensive determination of every action.”  Patent litigation is rarely speedy; quite expensive; and, many would argue, often unjust.  In the case below, one party attempted some quick relief via preliminary injunction, but the Federal Circuit has vacated on free-speech grounds.

Light-Netics owns U.S. Patent Nos. 7,549,779 and 8,128,264 that cover easy-to-hang Christmas lights. These lights include a magnetic backing that can attach easily to metal surfaces (such as a metal roof).  Light-Netics sued after discovering competing products on sale from Holiday Bright Lights (HBL).  And, in addition, Light-Netics sent a notice to various light stores warning them that HBL lights were infringing. Lite-Netics LLC v. Nu Tsai Capital LLC (DBA Holiday Bright Lights), — F.4th — (Fed. Cir. 2023). 

Light-Netics sued for infringement, HBL responded with unfair competition counterclaims. The district court quickly issued a TRO followed-up with a preliminary injunction against the patentee.  Judge Buescher (D.Neb.) ordered the patentee to (1) stop publicly stating that HBL copied the invention and (2) stop telling HBL customers that they could also be liable for infringement.   Part of the district court’s justification here was a preliminary consideration of the merits of the lawsuit: narrowed claim construction eliminated literal infringement; and a finding that the patentee was estopped from asserting DOE.   At base, the issue has to do with the meaning of the article “a”: can “a” be plural? Here, the claim requires a light socked with “a neodymium magnet [having] a pull strength of at least five pounds” while the accused device uses several magnets.

On appeal, the Federal Circuit has vacated and remanded — holding that the district court went too far in restricting the patentee’s protected speech.

Objectively Baseless: The Federal Circuit has given patentees a fairly-wide berth with regard to public accusations of infringement and customer cease-and-desist letters. In particular, the court has held that state court tort claims associated with out-of-court patent enforcement activities are preempted by federal law unless the patent holder “acted in bad faith.” Breaking this down, the court requires that the infringement allegation be “objectively baseless” and that the patentee conducted its affairs with subjective bad faith. Although the court does not conduct a full First-Amendment analysis, the high burden is justified by our individual liberty interest (that includes corporate commercial speech).

In its decision, the Federal Circuit concluded that it is not-unreasonable for a patentee to assert that a claimed “magnet” could be infringed by two or more magnets.

Decisions of this court lend strong support to the proposition that, “in patent parlance,” at least in an open-ended “comprising” claim, use of “a” or “an” before a noun naming an object is understood to mean to “one or more” unless the context sufficiently indicates otherwise. . . .

The patent uses “the” or “said” when referring back to an antecedent “a” phrase, but that usage does not itself suffice to demand the singular meaning because if the “a” phrase means “one or more,” so would the subsequent reference-back phrases.

Slip Op.  The court notes that the patentee’s embodiments all just show a single magnet, but the court found nothing in the specification that limits the claim to that embodiment.

There is no “present invention” or other specification language that restricts the invention to a single (or single-piece) magnet, and there are no structural limitations in the claims that implicitly demand such a configuration. Importantly, and more generally, nothing in the ’779 patent indicates that the evident purpose of the magnet on the socket base (to attach the light string to a metal surface) can be achieved only, or with specified effectiveness, through a single (or single-piece) magnet, rather than a plurality of magnets collectively having the specified pull force.

Id.  Likewise, the Federal Circuit also concluded that the doctrine of equivalents could be pursued. The patentee had argued that “two semicircular magnets in the Magnetic Cord light-fixture bases are equivalent to the one [claimed] magnet.”  The Federal Circuit found “nothing unreasonable” about that allegation.  Further, Lite-Netics did not make any amendments or statements during prosecution concerning the number of magnets in a way that would create estoppel.

On remand, the patentee may seek a narrower preliminary injunction — focusing on the patent not discussed by the Federal Circuit.  Still, the Federal Circuit’s discussion gives a big boost to the patentee’s case.

UPC: First step – Opting-Out

The launch of the Unified Patent Court (UPC) has been waiting on Germany to formally ratify the UPC agreement.  That has now happened.

The court is set to begin operation on June 1, 2023.  Folks with European Patents will want to consider whether to file opt-outs for your patents (beginning March 1, 2023).  Some patentees with highly valuable patents will likely opt-out because the UPC rules allows competitors to challenge and invalidate the patents.  Unlike in the US IPR system, EPO opposition does not appear to create any estoppel against later UPC challenges.