Tag Archives: Supreme Court

Dewberry Group: Structuring the Firm to Avoid Trademark Liability

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by Dennis Crouch

The U.S. Supreme Court has granted certiorari in Dewberry Group, Inc. v. Dewberry Engineers Inc., a trademark damages case focused on how corporate separateness principles apply to disgorgement remedies under the Lanham Act, 15 U.S.C. § 1117(a). The Fourth Circuit’s decision affirmed a $43 million disgorgement award against petitioner Dewberry Group (DG) for trademark infringement, an amount that included profits earned by DG’s “legally separate” corporate affiliates. Apparently, the affiliates were “single-purpose entities,” also privately owned by John Dewberry, whose sole function was to own commercial properties serviced by DG.

Pierce the Veil: In its literal sense, a veil is a delicate fabric that separates the visible from the concealed, a barrier that can be easily lifted or parted. However, the phrase has a history of extending beyond the material world, with a veil often serving as a boundary between the physical and spiritual realms in our universe. Many of us go through life, only occasionally glimpsing beyond this veil into the hidden spiritual dimensions that, according to story tellers, lie alongside our own. In the corporate world, the veil of corporate personhood serves to shield the owners from personal liability, creating a legal fiction that separates the actions of the company from those of its shareholders. This veil of protection is not impenetrable, however, and can be pierced by the courts in cases of serious misconduct or wrongdoing, exposing the owners to personal responsibility. Although the truth of owner identity may already be known, piercing the corporate veil removes the protection against responsibility  by attempting to holding accountable those who would misuse its protections. But, the legal doctrine of corporate separateness is quite strong and I might venture that it is easier to pierce the veil of our spiritual realms than the corporate analogue. (more…)

Does Justice Thomas Hate Invention or Just the Hubris of Inventors?

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by Dennis Crouch

The Supreme Court recently decided Moore v. United States, — U.S. — (June 20, 2024), a case focusing on the constitutionality of the Mandatory Repatriation Tax (MRT). While the majority opinion, authored by Justice Kavanaugh, upheld the MRT, Justice Thomas published a strong dissent relying upon an invention metaphor in a decidedly negative light, something that he has done in several other recent opinions. For Thomas, judicial invention is a synonym to judicial activism and antithetical to his approach that looks primarily to historic preservation, especially when interpreting the U.S. Constitution.

In Moore, the majority held that the MRT, which attributes the realized and undistributed income of an American-controlled foreign corporation to the entity’s American shareholders and then taxes those shareholders, “falls squarely within Congress’s constitutional authority to tax.” The Court reached this holding by relying on its “longstanding precedents” that allow Congress to attribute the undistributed income of an entity to the entity’s shareholders or partners for tax purposes.

Justice Thomas, joined by Justice Gorsuch, dissented. He argued that the Sixteenth Amendment requires realization for income to be taxed without apportionment.  His main complaint against the majority opinion is that it “invent[ed]” a new attribution doctrine to reach its conclusion.

Justice Thomas’ negative invocation of “invention” in Moore is part of a broader trend in his recent opinions. Just a week before Moore, in FDA v. Alliance for Hippocratic Medicine, 602 U.S. — (June 13, 2024), Justice Thomas refused to “invent a new doctrine of doctor standing,” concluding that “there would be no principled way to cabin such a sweeping doctrinal change to doctors or other healthcare providers.”  Similarly, in a recent concurring opinion, Justice Thomas argued that “Federal courts have the power to grant only the equitable relief ‘traditionally accorded by courts of equity,’ not the flexible power to invent whatever new remedies may seem useful at the time.” Alexander v. S.C. State Conf. of the NAACP, 144 S. Ct. 1221 (2024) (Thomas, J., concurring).  And in his dissent in US v. Rahimi, 602 U.S. — (June 21, 2024), Justice Thomas complained that “At argument, the Government invented yet another position.”

Justice Thomas is not alone in his negative view of judicial invention. In a recent dissent, Justice Gorsuch lamented that “Despite [a] settled rule, the Court today doubles down on a new tort of its own recent invention.” Chiaverini v. City of Napoleon, Ohio, 602 U.S. — (June 20, 2024) (Gorsuch, J., dissenting).

This antipathy to judicial invention truthfully in line with the stated approach of all judges today. Claiming judicial restraint, “calling balls and strikes,” avoiding judicial activism. In Moore, for instance, the majority opinion also tied its holding to history.  Although what caught my attention in the case is that the majority opinion does also reference invention — applauding the taxpayers’ attorneys for being inventive, even if ultimately unpersuasive on a particular point. The Court wrote, “Moores’ effort to thread that needle, although inventive, is unavailing.”  The concept of invention also appeared in Justice Barrett’s concurring opinion in Moore, but in a different context. She wrote, “A patent is an inventor’s property, and royalties are the income she receives from licensing it. A capital fund is a banker’s property, and interest is the income she receives from lending it.” Here, Justice Barrett was distinguishing between a “seed” (property) and its “fruit” (income), not commenting on judicial invention.

Showing that it is not only the conservative Justices, in a recent majority opinion, Justice Jackson also used the term “invention” pejoratively, arguing that “the dissent invents new arguments to arrive at its favored outcome.” Office of U.S. Tr. v. John Q. Hammons Fall 2006, LLC, 602 U.S. — (U.S. June 14, 2024). Justice Jackson noted that the dissent’s purported inventiveness was two-fold problematic: (1) it went beyond the arguments of the parties, and (2) it went beyond controlling precedent.

I have been delving into mythology recent as part of an academic project, and Justice Thomas’ approach calls to mind the many ancient myths that warn against hubris that often leads to folly. To escape from the labyrinth, the great inventor Daedalus created wings for himself and his son Icarus using feathers and wax. Daedalus warned Icarus not to fly too close to the sun, as the heat would melt the wax. But, Icarus could not listen: The wax melted and Icarus plummeted into the sea and drowned. Thomas views “judicial invention” as a dangerous flight too close to the sun – risking the integrity of the legal system that has stood for so many years.  But, this analysis is a bit too quick because the myth does not condemn invention itself, but rather reckless and unrestrained use of it. Daedalus, after all, successfully used his invention to escape, demonstrating that innovation, when applied with restraint, can be beneficial. In the context of jurisprudence, this suggests to me that there might be a middle ground for judicial invention – one that provides due respect to established precedents and historic traditions while allowing for thoughtful adaptation to new societal challenges. Just as Daedalus found the right balance in his flight, perhaps there’s a path for judicial reasoning that innovates responsibly.

You might think that Justice Thomas believes that invention is best left to those seeking patents, not those wearing judicial robes. But, Justice Thomas is also no friend to patents or patent owners.  Rather, he is author of key opinions that  have greatly weakened patent rights over the past two decades, including eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006); Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208 (2014); and Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 584 U.S. 325 (2018).   Hate is a strong word, but perhaps the answer is that Justice Thomas does not favor invention.

Double Trouble: IPO asks for Supreme Court review of PTA/ODP Cellect dispute

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by Dennis Crouch

A second amicus brief has been filed – this one from the Intellectual Property Owners Association (IPO) – encouraging the Supreme Court to grant certiorari in Cellect, LLC v. Vidal, No. 23-1231. The case concerns the interplay between the Patent Term Adjustment (PTA) statute, 35 U.S.C. § 154(b), and the judicially-created doctrine of obviousness-type double patenting (ODP). (more…)

Veterans’ Benefits at the Supreme Court: The Battle Over Benefit-of-the-Doubt

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by Dennis Crouch

In April 2024, the Supreme Court granted certiorari in the consolidated cases of Bufkin v. McDonough and Thornton v. McDonough, two veterans’ benefits cases on appeal from the Court of Appeals for the Federal Circuit. The cases involve the “benefit-of-the-doubt” rule, a longstanding principle that is codified in veterans law that requires the VA to resolve close or unclear issues in a veteran’s favor when adjudicating benefits claims. [SCT Docket]

Both Bufkin and Thornton are veterans who were denied disability benefits by the VA. (more…)

Supreme Court Update: June 2024

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The US Supreme Court’s October 2023 term will come to a close later this month.  The patent side has not seen much action in terms of new cases. 27 IP-related petitions for writ of certiorari have been filed during this time. Of those 23 have been denied. Four recently filed petitions are still pending. In each of the remaining cases, respondent has indicated that it will be filing a brief.

  • Cellect, LLC v. Vidal (23-1231): Whether a patent procured in good faith can be invalidated for obviousness-type double patenting when the improper term extension is due to Patent Term Adjustment.  NYIPLA amicus in support; USPTO responsive brief due: July 22, 2024.
  • Chestek PLLC v. Vidal (23-1217): Whether the USPTO is exempt from notice-and-comment requirements when exercising its rulemaking power under 35 U.S.C. § 2(b)(2). USPTO responsive brief due: July 15, 2024.
  • Eolas Technologies Inc. v. Amazon.com, Inc. (23-1184): Patent eligibility issues. Responsive brief due: July 31, 2024.
  • Surti v. Fleet Engineers, Inc. (23-1142): Pro se patent owner focused on DoE as well as tortious interference. Responsive brief due: July 22, 2024.

I’ve listed these in what I see as the most to least likely grant.  Cellect is of particular interest as debates over double patenting continue. Based upon the timing of the briefs, a certiorari decision won’t come until the Fall.

The NYIPLA Brief: Advocating for Patent Term Adjustments

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by Dennis Crouch

The Federal Circuit’s 2023 decision in In re Cellect, LLC, 81 F.4th 1216 (Fed. Cir. 2023) has set the stage for a potentially significant Supreme Court case on the interplay between the Patent Term Adjustment (PTA) statute, 35 U.S.C. § 154(b), and the judicially-created doctrine of obviousness-type double patenting (ODP). Cellect is now seeking certiorari, and the New York Intellectual Property Law Association (NYIPLA) has stepped in with an amicus brief supporting the petition, arguing that the case presents “questions of exceptional importance.” Brief for New York Intellectual Property Law Association as Amicus Curiae Supporting Petitioner at 23, Cellect, LLC v. Vidal, No. 23-1231 (U.S. May 28, 2024). (more…)

Gorsuch’s “Dead Letter” Prophecy: Hearst v. Martinelli may Settle Copyright’s Discovery Rule following the Warner Chappell Avoidance

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by Dennis Crouch

The pending Hearst v. Martinelli case may be the “dead letter” offered by Justice Gorsuch. This time, the Supreme Court might actually decide whether the “discovery rule” applies to the Copyright Act’s statute of limitations.

Copyright law provides (more…)

Supreme Court Affirms Availability of Back-Damages Under Copyright Discovery Rule

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By Dennis Crouch and Timothy Knight

On May 9, 2024, the Supreme Court issued its opinion in Warner Chappell Music v. Nealy, No. 22-1078, 601 U.S. ___ (2024), resolving a circuit split over the availability of back-damages in copyright infringement cases. In a 6-3 decision authored by Justice Kagan, the Court affirmed the Eleventh Circuit’s ruling, permitting recovery of damages for acts that occurred more than three years before the filing of the lawsuit under the “discovery accrual rule.”

For those of you who have not been following the case, the Plaintiff Sherman Nealy, a music producer, helped create musical works in the 1980s with his collaborator, Tony Butler.  Nealy was incarcerated from 1989 to 2008 and again from 2012 to 2015 (more…)

Eolas Seeks Supreme Court Review of Federal Circuit’s Patent Eligibility Decision

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Eolas is seeking a writ of certiorari from the Supreme Court — hoping that the court will overturn the Federal Circuit’s decision invalidating its distributed computing (WWW) claims as ineligible under Alice Corp. and Mayo and ostensibly under 35 U.S.C. § 101. The petition presents three key questions: (more…)

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

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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…)

Supreme Court Declines to Hear Vanda’s Patent Obviousness Appeal

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by Dennis Crouch

The Supreme Court has denied Vanda Pharmaceuticals’ petition for certiorari, leaving in place a Federal Circuit decision that invalidated Vanda’s patents on methods of using the sleep disorder drug Hetlioz (tasimelteon) as obvious.

Vanda had argued in its cert petition that (more…)

Seeking Clarity on Comparison Prior Art: Seirus Petitions Supreme Court in Heat Wave Design Patent Dispute

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by Dennis Crouch

Seirus has petitioned for writ of certiorari in its long-running design patent dispute with Columbia Sportswear.  The petition asks two questions related to the comparison process for design patent infringement — in particular, the questions focus on what can qualify as “comparison prior art” used to provide context for the infringement analysis.

Questions presented: (more…)

Certiorari Denied in Eligibility Cases

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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.

Judge Newman vs. Chief Judge Moore

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I have often written about situations where Judge Pauline Newman’s position is opposed to those taken by other judges on the Federal Circuit. But today we go a step further, by actually filing a lawsuit: Newman v. Moore.  The defendant is Chief Judge Kimberly Moore along with Judge Sharon Prost, Judge Richard Taranto, and the Judicial Council of the Federal Circuit.

The lawsuit stems from the move by the Chief along with other members of the court to forcibly remove Judge Newman from office pursuant to the Judicial Conduct and Disability Act of 1980.   Of course, the Constitution indicates that impeachment is the process for removing a Federal Judge, not some internal process, even if authorized by Congress.

The lawsuit asks for the Act to be held unconstitutional; any ongoing proceedings held unconstitutional; declare any secrecy order on Judge Newman to be a violation of her rights; etc. The complaint also reveals some previously unreported allegations.

Read it here: NewmanVMooreComplaint

 

Can States Legislate in the AI Rights Space?

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by Dennis Crouch

In Bonito Boats, Inc. v. Thunder Craft Boats, Inc., the Supreme Court addressed the issue of state laws that provide additional patent-like rights. The Court held that a Florida law prohibiting the use of a direct molding process to duplicate unpatented boat hulls was preempted by federal patent law. The Court reasoned that the Florida law conflicted with the “carefully crafted” goals of the federal patent system.

The USPTO and Courts have made clear that AI-created inventions are outside of the scope of US patent law. I think the answer is probably quite clear, but do folks think that the Bonito Boats approach would also preempt the states from from creating an exclusive-right award for AI-generated innovations?

Add your vote and remarks here.

The Split on Pleading Scienter for Inequitable Conduct

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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

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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

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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

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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.

Eligibility and the U.S. Solicitor General: Patenting the Scientific, Technological, and Industrial Arts

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by Dennis Crouch

A decade ago, the US Supreme Court issued a pair of decisions that upended substantial aspects of patent practice. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012); and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014).  These cases broadened scope of the “abstract idea” and “law of nature” exclusions in ways that largely overlap with other patent law doctrines, such as obviousness, indefiniteness, and even enablement.  But, unlike those doctrines, subject-matter eligibility jurisprudence is more of free-wheeling approach that typically does not require evidence.  In court, these cases are often decided at pleading-stage, before any evidence is introduced or considered.

Many thousands of patents have been denied or invalidated under the expanded doctrine.  Opponents of the change argue that it has created unpredictability, lack of respect for the law, and overreach that inhibits our culture of innovation historically fostered by the fuel of potential exclusive rights.

One difficulty with the law here is that it is entirely judge made.  The statute isclear that patents should be awarded to “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” so long as the other requirements of patentability are met.  35 U.S.C. 101.  The Supreme Court added its admittedly atextual gloss of excluding “laws of nature, natural phenomena, and abstract ideas.”  And, although those limits have been longstanding, the court expanded their scope and simplified the procedures for invalidating patents in Mayo and Alice. A substantial number of prior petitions have asked the Supreme Court to clarify and revise its stance on Section 101 eligibility, but the Supreme Court has repeatedly denied certiorari.  We may be moving to the next step with the two pending cases discussed below.

Most recently, the Solicitor General has provided its views in two pending cases and has recommended that the court grant certiorari and revise its eligibility doctrine. “These cases would be suitable vehicles for providing much-needed clarification in this area.”

In its briefing, the SG ties itself to the idea of “technological inventions”; arguing that “quintessentially technological inventions” should be patent eligible. SG Brief. A positive SG amicus brief usually indicates a high likelihood that the Supreme Court will hear the case. The two parallel pending cases are:

  • Interactive Wearables, LLC, v. Polar Electro Oy, 21-1281.  Interactive Wearables asserts two patents covering a wearable content player connected to a screen-based remote control that permits users to view information about the song being played from the remote. U.S. Patent Nos. 9,668,016 and 10,264,311.  The district court dismissed the case with prejudice on the pleadings for lack of eligibility. On appeal, the Federal Circuit affirmed without opinion.
  • Tropp v. Travel Sentry, Inc., 22-22.  Tropp’s asserted patents claim a method of improving airline luggage inspection by selling TSA-labelled locks having a master key held by TSA authorities.  If TSA needs to open the luggage for inspection, they use their key rather than cutting the lock. U.S. Patent Nos. 7,021,537 and 7,036,728. The district court found the claims ineligible on summary judgment.  On appeal, the Federal Circuit affirmed with a non-precedential per curiam opinion. Importantly, Tropp does not claim to have created any new technology here, but rather a new process.  Of course, Section 100 of the Patent Laws defines process to “include[] a new use of a known process, machine, manufacture, composition of matter, or material.”

In its brief filed jointly in both cases, the Solicitor General distinguishes between the inventions in Interactive and in Tropp; arguing that only the first represents a patent eligible invention because it is directed to the “scientific, technological, [or] industrial arts” rather than “non-technological methods of organizing human activity.”

Properly construed, [the abstract idea] exception helps cabin Section 101’s reach to patent law’s traditional bailiwick of the scientific, technological, and industrial arts. The category of patent-ineligible abstract ideas thus does not encompass quintessentially technological inventions, like the improved content player that the patentee claimed in Interactive. By contrast, as the court of appeals correctly recognized, Section 101 excludes non-technological methods of organizing human activity like the luggage-inspection method claimed in Tropp.

SG Brief.  In looking at the court decisions, the SG also argued that the lower courts had unduly considered other doctrines such as novelty, obviousness, and enablement and overlayed them into the obviousness analysis.

A court at step two therefore should ask whether a claimed invention sufficiently transforms an abstract idea into the kind of innovation eligible for patent protection. Rather than undertake that inquiry, however, the Interactive court placed undue emphasis on considerations of novelty, obviousness, and enablement. Although those considerations may sometimes overlap with the abstract-idea inquiry, they are the purview of different statutory provisions and perform different functions. See 35 U.S.C. 102, 103, 112. By contrast, the Tropp court correctly held that nothing in the claimed method transforms it into a technological invention.

Id. Although not clear, the Supreme Court may consider whether to grant or deny certiorari in these cases as early as its May 18, 2023 conference.  Meanwhile, a third eligibility case of Avery Dennison v. ADASA is also pending and could be taken-up on the same date.

It is of some importance here that the USPTO also signed the brief – indicating that it is on board with creating a technological invention dividing line.