Tag Archives: USPTO Director

First Rehearing Request Challenging No-Opinion Judgments

Patent, , , , , ,

by Dennis Crouch

LSI v. FLIR (Fed. Cir. 2017) (request for rehearing) [16-1299-leak-surveys-v-flir_combined-rehg]

In its newly filed petition for rehearing, Leak Surveys has asked the Federal Circuit to withdraw its Judgment Without Opinion. Leak’s Counsel (Donald Puckett) argues:

It is hard to imagine an appeal more unsuitable for affirmance without opinion under Fed. Cir. R. 36 than this one.

The petition makes two primary arguments:

  1. If the Federal Circuit’s judgment is based upon new or alternative grounds not stated by the PTAB, then it must write an opinion.  Although the reason for a judgment without opinion are not directly discernible, the petitioner here suggests that it was likely based upon theories first espoused by the court and respondent at oral arguments — sufficient to form a prima facie conclusion that the judgment relied upon new or alternate grounds.
  2. LSI urges the en banc Court to grant rehearing to decide whether this Court can ever affirm a PTAB IPR decision without opinion. See 35 U.S.C. § 141 (in USPTO appeal, Federal Circuit “shall issue to the Director its mandate and opinion . . .”) (emphasis added). See also Crouch, Wrongly Affirmed Without Opinion, Univ. of Missou. L. Stud. Research Paper No. 2017-02, Forthcoming 52 Wake Forest Law Review ___ (2017) (http://ssrn.com/abstract=2909007).

In offering the first weaker option, LSI gives the court an option in case it “may hesitate to open a floodgate of rehearing requests.”  Of course, there are only about a dozen R.36 decisions that are still within the court’s 30-day deadline for requesting rehearing.  (The Supreme Court has a 90-day deadline).  The stronger approach that I argue for: “LSI presents this argument here to preserve it for further appeal to the U.S.
Supreme Court if necessary.”  [Amicus support due within two weeks]

The underlying appeal center on the validity of Leak’s U.S. Patent No. 8,193,496 and 8,426,813 that cover gas-leak detection equipment and methods using a passive-IR camera and bandpass filter.  The primary issues were claim construction (“leak” and “normal operating conditions”) and motivation to combine in the ultimate obviousness conclusion.   The original brief began as follows:

The IPR proceedings below resulted in the creation of a dense factual record involving 24 declarations and 14 depositions. Almost all witnesses were scientists (many with Ph.D. degrees) having personal knowledge of the petroleum industry’s extensive efforts (and failures) to develop a commercially viable imaging system for detecting hydrocarbon gas leaks in the field. Most of these same witnesses also offered first-hand testimony of [the inventor] David Furry’s own efforts to solve the same technical problem. Several witnesses -top scientists from the largest petroleum companies – described the day in 2004 when Furry showed up at the industry’s “Scan Off” to demonstrate his “Hawk” camera against the industry’s then-best optical leak detection systems. These scientists, having dedicated years of work and countless resources to creating a commercially viable optical leak detection system, testified that they were completely surprised and astonished by the Hawk’s unexpected results. It was immediately apparent that Furry had solved an important technical problem that the petroleum industry had been unable to solve.

leaksurveysmeritsbrief

us08193496-20120605-d00001

 

Judgments Without Opinion Continue at the Federal Circuit

Patent,

I had hoped that the Federal Circuit would quickly change its ways, but the court has now issued a new R.36 Judgment in a PTO Appeal: GreatBatch Ltd. v. AVX Corp. (Fed. Cir. 2017) (judgment without opinion).  In a draft article released last week (now forthcoming in The Wake Forest Law Review), I argue that 35 U.S.C. § 144 requires the PTO to issue opinions in these cases rather than simply judgments without opinion.  In particular, the statute states:

[T]he Federal Circuit shall review the decision from which an appeal is taken …. Upon its determination the court shall issue to the Director its mandate and opinion, which shall be entered of record in the Patent and Trademark Office and shall govern the further proceedings in the case.

The particular case here is narrow – what exactly is disclosed by the cited prior art – and  how a prior art pin assembly is grounded.  Truly a narrow issue, but what the oral arguments suggest is that the court did not really understand the technology at issue and instead planned to rely upon the substantial evidence standard of review.

Supreme Court Update: Are Secondary Indicia of Invention Relevant to Eligibility?

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by Dennis Crouch

The Supreme Court is on recess until Feb 17.

I don’t know if my end-of-April prediction will hold true, but I do expect Neil Gorsuch to become a Justice on the United States Supreme Court.  As a 10th Circuit Judge, Gorsuch never decided a patent case, but does have a handful of interesting IP cases.

There are a few petitions filed that we have not discussed here: 

 In its newest petition, DataTreasury takes 101 for a new spin by taking the 101/103 analysis to its next logical level.  If we are going to include a 103 analysis as part of the eligibility doctrine then lets go whole hog.  Thus, DataTreasury asks: whether a court must consider secondary indicia of invention as evidence in its eligibility analysis? In the case, the Federal Circuit had affirmed the PTAB judgment without opinion under R.36. A second eligibility petition is found in TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc. TDE asks the court to “please reconcile Diehr and Alice.” (I’m not literally quoting here).  The patent at issue (No. 6,892,812) claims a four-step process of “determining the state of a well operation.” (a) store several potential “states”; (b) receive well operation data from a plurality of systems; (c) determine that the data is valid by comparing it to a threshold limit; and (d) set the state based upon the valid data.

In Wi-LAN v. Apple, the patentee revives both Cuozzo and Markman claim construction arguments – this time focusing on “whether claim terms used to define the metes and bounds of an invention are generally given their “plain and ordinary meaning,” or are redefined (limited) to match the scope of the exemplary embodiments provided in the specification.”

duPont v. Macdermid asks whether summary judgment of obviousness is proper because of the factual disputes at issue.  Similarly, in Enplas v. Seoul Semiconductor, the petitioner argues that a finding of anticipation by the PTAB must be supported by findings each and every element of the subject patent claim is disclosed in the prior art.  In Enplas, the Federal Circuit affirmed the PTAB on a R.36 Judgment Without Appeal — it difficult for the petitioner to point to the particular deficiencies.

 

=== THE LIST===

1. 2016-2016 Decisions:

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

2. Petitions Granted:

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

4. Petitions for Writ of Certiorari Pending:

  • Claim Construction: Wi-LAN USA, Inc., et al. v. Apple Inc., No. 16-913 (“plain and ordinary meaning”)
  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Anticipation/Obviousness: E.I. du Pont de Nemours and Company v. MacDermid Printing Solutions, L.L.C., No. 16-905 (summary judgment of obviousness proper)
  • Jury Trial: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Jury Trial: Nanovapor Fuels Group, Inc., et al. v. Vapor Point, LLC, et al., No. 16-892 (Can a party forfeit a properly demanded trial by jury without an explicit, clear, and unequivocal waiver?)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility: TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc., No. 16-890 (Please reconcile Diehr and Alice)
  • Eligibility: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (secondary indicia as part of eligibility analysis).
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)

5. Petitions for Writ of Certiorari Denied or Dismissed:

(more…)

Guest Post: Administrative Law Matters Even More following Cuozzo Speed Technologies v. Lee

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By David Boundy

David Boundy of Cambridge Technology Law LLC, a patent law firm in Cambridge, Massachusetts, practices at the intersection of patent and administrative law, and consults with other firms on PTAB trials and appeals. In 2007–09, David led the teams that successfully urged the Office of Management and Budget to quash the USPTO’s continuations, claims, information disclosure statements, and appeal regulations under the Paperwork Reduction Act.

This paper is a short version of an article in the current issue of ABA Landslide, vol. 9, no. 3, electronic edition.  It’s a follow up to my earlier paper on the Cuozzo case, which ran in Patently-O in February 2015.

Cuozzo Speed Technologies v. Lee[1] illustrates an important lesson for the patent bar: federal courts are far more familiar with administrative law than with patent law. Almost every federal court hears several times as many administrative law cases as patent cases. Even the Federal Circuit sees at least as many administrative law issues (involving various federal employees and contracts) as patent law issues. We patent lawyers need better administrative law issue spotting skills, and when a case presents them, we must argue on administrative law grounds with administrative law expertise. Basic principles of good advocacy urge us to argue our cases on the courts’ choice of turf.

Cuozzo is a prime illustration.  In Cuozzo, the Supreme Court narrowly decided that the PTO’s decision to institute an inter partes review (IPR) against Cuozzo’s patent was unreviewable.  Notably, the Court’s reasoning clarifies that many decisions to institute are judicially reviewable, so long as the issues are cloaked in administrative law terms rather than patent law terms. Cuozzo’s loss stems from Cuozzo’s briefing that failed to mention a dead-on administrative law statute, and that was all but silent on the Supreme Court’s administrative law precedent. Cuozzo creates many future opportunities for informed administrative law advocacy.

The AIA, Its Preclusion Statutes, and Cuozzo’s Path to the Supreme Court

The 2011 America Invents Act (AIA) created new patent reviews within the United States Patent and Trademark Office (USPTO): inter partes review (IPR), post-grant review (PGR), and covered business method review (CBM). Congress included preclusion statutes that limit judicial review of USPTO decisions to institute such reviews.

The preclusion statutes for IPR and PGR decisions to institute, 35 U.S.C. § 314(d) and § 324(e) respectively, are essentially similar: “The determination by the Director whether to institute [a review] under this section shall be final and nonappealable.” Compared to other preclusion statutes (discussed in the full Landslide paper), this is decidedly on the weak end of the spectrum of preclusion statutes.

In February 2015, the Federal Circuit gave its first deep consideration to these statutes in In re Cuozzo Speed Technologies LLC.[2] The IPR petition against Cuozzo’s patent had applied reference A to claim 10, and references A, B, and C to claim 17 (which depended from claim 10). However, the Patent Trial and Appeal Board (PTAB) instituted on references A, B, and C against claim 10. The PTAB cited no statute or regulation, only its own naked claim of “discretion” to mix and match among the grounds in the petition.

The IPR ended in cancellation of claim 10, on references A, B, and C.

Cuozzo appealed the final decision to the Federal Circuit, and challenged the decision to institute. The Federal Circuit held that § 314(d) precluded all review of all issues embedded in a decision to institute: “On its face, the provision is not directed to precluding review only before a final decision. It is written to exclude all review of the decision whether to institute review.”[3]

In June 2016, the Supreme Court issued its further decision.  Where all decisions leave open issues, Cuozzo introduces several internal contradictions.  Let’s look at the background administrative law case law, and how Cuozzo fits—or misfits.

APA § 706: Government-Wide Grounds of Judicial Review

The Administrative Procedure Act (APA), in 5 U.S.C. § 706(2), confines judicial review of agency action to a specific list of errors—a court may set aside agency actions that are:

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;  …
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law; …

Section 706(2) is famously deferential to agencies, but it doesn’t insulate agencies totally. Courts set aside agency decisions that fail standards of “reasoned decisionmaking” by failing to explain an important point, giving an irrelevant explanation, omitting consideration of important factors or basing a decision on impermissible factors, deciding without evidence, deciding on legal error, acting beyond jurisdictional authority, and the like.

APA § 704: Preliminary Decisions Are Reviewable with Final Agency Action

Procedural lapses usually find review under 5 U.S.C. § 704: “A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action.” Thus, if an agency’s final decision is infected by error earlier in the process, the final decision can be attacked on the basis of that underlying error.

Supreme Court’s Presumption of Judicial Review

Since the days of Chief Justice John Marshall, the Supreme Court has relied on a strong presumption that judicial review is available for executive branch action.[4] Agency decisions are presumed to be reviewable, and preclusion statutes are construed narrowly. Even within the scope of preclusion, an agency decision that reflects “brazen disregard” of procedure, or “abuse,” or that has sufficiently grave consequences, often can be reviewed.  Likewise, the Court has always held agencies to scrupulous observance of their own procedures. The presumption of review has always been extraordinarily high for procedure, and the “holes” in preclusion statutes for procedure and “abuse” have always been quite large. Cuozzo is an extraordinary outlier. Among the principles established in Supreme Court precedent:

  • Courts accept judicial review of underlying issues in agency decisions, even if the final decisions are unreviewable, especially where procedural fairness is at stake.[5]
  • Preclusion statutes are read narrowly—they preclude only what they say they preclude, and no more. Even where a statute precludes review of an end result decision, underlying issues are not precluded unless the preclusion statute speaks expressly to those underlying issues.  “[R]eview is available to determine whether there has been a substantial departure from important procedural rights, a misconstruction of the governing legislation, or some like error going to the heart of the administrative determination.”[6]
  • Courts read statutes closely to split issues finely, and will review issues (especially underlying issues) that differ by a hair’s breadth from precluded issues. When a statute precludes benefit amounts for individual claimants, “challenges to the validity of the Secretary’s instructions and regulations[] are cognizable in courts of law.”[7]
  • When an agency statute, regulation, or guidance promises the public that an agency or agency employee “must” or “will,” the agency must follow those procedures “scrupulously.” Review of agency decisions under § 706(2)(D), “without observance of procedure required by law,” is “strict” and “without deference.”[8]

Review under § 704/§ 706 is a persistent substrate. To preclude review, especially of underlying issues, Congress must speak expressly.

Cuozzo’s Brief, the Majority Opinion, and the End Result: Cuozzo’s Specific Institution Is Nonreviewable

The Cuozzo majority opinion follows the basic contour of 50 years of precedent: preclusion statutes are to be read narrowly. However, on the facts, Cuozzo lost—the Court characterized Cuozzo’s complaint to be a “mine-run claim,” “an ordinary dispute about the application of certain relevant patent statutes,” and “little more than a challenge to the Patent Office’s conclusion, under § 314(a), that the ‘information presented in the petition’ warranted review.”[9] That is, the Supreme Court understood the case to be a good faith difference of opinion in application of validly promulgated law, not a case of an agency tribunal exercising naked “discretion” against a party, making up new rules on the fly with no grounding in any text, and asserting those new rules in a context with no opportunity for rejoinder. Because the Court was not informed of the procedural basis for the case, the Cuozzo opinion stands in striking contrast with the Court’s precedent that requires agencies’ “scrupulous” observance of procedure, and strict “no deference” judicial review for procedural issues.

The Supreme Court majority opinion embeds a number of internal contradictions that leave a great deal of unclear ground. The majority’s holding, if applied to the facts—at least the procedural facts as we patent lawyers understand them—leads to the opposite result.

Most of these contradictions in the majority opinion, and perhaps the final result itself, are invited error. Cuozzo’s brief treats the case as a patent law case, arguing page after page of Title 35 U.S.C. and Federal Circuit patent law cases.[10] Cuozzo’s opening brief cites Supreme Court “preclusion of review” cases only as a cursory afterthought—a single string cite, with no discussion of analogies to precedential cases. The brief compounds the error by citing a 1946 case that had been overruled by the Supreme Court in 2013.  The table of authorities in Cuozzo’s opening brief has only a single cite to Title 5 U.S.C., and only one more in the reply brief.

But reviewability is an administrative law issue, and that’s where the Court decided it.

Even though Cuozzo’s briefs are all but irrelevant to the administrative law bases on which the Court decided the case, the reasoning comes so close to going Cuozzo’s way. Cuozzo demonstrates the importance of identifying the turf where a court is likely to decide an issue, and arguing it there.  And that may well be administrative law, rather than patent law.

Cuozzo’s “Long Paragraph”

The heart of the majority opinion is a long paragraph toward the end of section II, beginning “Nonetheless.” The majority explains that most issues arising under patent law are precluded, but that issues arising under other bodies of law are not. Review remains available for constitutional questions, and most importantly, for issues slotted into one of the pigeonholes of APA § 706.  The latter half of the “long paragraph” reads as follows:

[W]e do not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under § 112” in inter partes review. Such “shenanigans” may be properly reviewable in the context of § 319 and under the Administrative Procedure Act, which enables reviewing courts to “set aside agency action” that is “contrary to constitutional right,” “in excess of statutory jurisdiction,” or “arbitrary [and] capricious.”[11]

The latter half of the long paragraph, especially the last sentence, opens a wide barn door. The Cuozzo majority’s long paragraph indicates that the full reach of § 706 applies to underlying issues in decisions to institute.  Cuozzo tells us that issues that are losers when presented in patent law vocabulary become winners when wrapped in administrative law vocabulary.

Cuozzo Could Have Argued an Administrative Law Jurisdictional Issue

Cuozzo’s brief doesn’t squarely present the issue of the PTAB’s transgression of its own jurisdictional boundaries. Section 312(a) reads, “A petition . . . may be considered only if . . . the petition identifies, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based . . . .” Section 314(a) reads, “The Director may not authorize [institution of an IPR] unless the Director determines that the information presented in the petition . . . shows that there is a reasonable likelihood that the petitioner would prevail . . . .” These are plainly jurisdictional statutes, confining jurisdiction to the grounds in the petition. The APA, in § 706(2)(C), provides that a court shall set aside agency action “in excess of statutory jurisdiction.” Yet, Cuozzo’s brief argues only breaches of the AIA, not the administrative law jurisdictional issues that—the majority tells us—would be reviewable under administrative law principles.

The Supreme Court has been quite strict in enforcing agencies’ jurisdictional boundaries, no matter (in the Cuozzo majority’s words) how compelling “one important congressional objective” might be.[12]

Cuozzo’s brief fleetingly nibbles at the edges of the issue, and even cites one of the important cases in this line (for a different proposition), but never squarely frames the challenge as “in excess of [the agency’s] jurisdiction”—neither brief mentions § 706 at all.  And thus Cuozzo lost the issue.

The latter half of Cuozzo’s “long paragraph” places jurisdictional issues within the scope of judicial review, so long as they are framed in an § 706(2)(C) administrative law context, not a patent law context.  Subject matter jurisdiction is central to a court’s duty to prevent agencies from “act[ing] outside . . . statutory limits,” or in the language of § 706, “in excess of statutory jurisdiction.”

Had the issue been presented squarely as a challenge to PTAB action beyond its jurisdiction, with the patent law issues argued as underlying support for APA § 706(2)(C) “in excess of jurisdiction” grounds, Cuozzo likely would have obtained a favorable result, and the Court majority would not have been left grasping at inconsistent straws to reach its decision.

Several more omissions from Cuozzo’s brief, and internal contradictions in the majority opinion, are discussed in the full Landslide paper.  The full paper shows that Cuozzo lost a very winnable case because the opening brief argued patent law principles to the near exclusion of administrative law principles. The patent bar is left with a resultant set of internal contradictions in the Cuozzo decison, with all the problems and opportunities they create.  And the Federal Circuit is left with a difficult task of reconciling Cuozzo’s reasoning against its end result.

Conclusion

The full paper gives a number of other examples of questions that come out differently depending on whether they’re argued as patent law issues or administrative law issues. There are many differences between the powers of an Article III court and of an agency tribunal, differences between appellate review of an Article III court vs. judicial review of an agency, differences in the arguments that an appellant and appellee can raise, and differences in limits on raising new issues on appeal. Unfortunately, Cuozzo’s brief did not exploit those differences or cite the applicable administrative law.

The key take-away is that almost every PTAB proceeding and appeal presents a “target rich environment” of administrative law issues. Teams that include administrative law expertise will successfully exploit many opportunities that are invisible to teams without that expertise.

Because of internal tensions in the Cuozzo decision, many issues remain to be decided by the Federal Circuit, and will be decided differently depending on how well parties match their argument turf to courts’ choice of decision turf.

Endnotes

[1]. Cuozzo Speed Techs. v. Lee (Cuozzo III), 136 S. Ct. 2131 (2016).

[2]. In re Cuozzo Speed Techs. LLC (Cuozzo I), 778 F.3d 1271 (Fed. Cir. 2015), reissued without change to the reviewability discussion, Cuozzo II, 793 F.3d 1268 (Fed. Cir. 2015).

[3]. Cuozzo I, 778 F.3d at 1276.

[4]. 5 U.S.C. § 702 (“A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.”); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971).

[5]. Service v. Dulles, 354 U.S. 363 (1957); Vitarelli v. Seaton, 359 U.S. 535 (1959).

[6]. Lindahl v. Office of Personnel Management,470 U.S. 768, 791 (1985) (internal quotation marks omitted).

[7]. Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 680 (1986).

[8]. Reuters Ltd. v. FCC, 781 F.2d 946, 950–51 (D.C. Cir. 1986); see also Berkovitz v. United States, 486 U.S. 531, 544 (1988) (“The agency has no discretion to deviate from [its procedural regulations].”).

[9]. Cuozzo III, 136 S. Ct. 2131, 2136, 2139, 2142 (2016).

[10]. See Brief for the Petitioner, Cuozzo III (No. 15-446), 2016 WL 737452 at xiv, 52-53, 54 (Feb. 22, 20142016); Reply Brief for the Petitioner at iii, Cuozzo III, 2016 WL 1554733 (Apr. 15, 2016).

[11]. Cuozzo III at 2141–42 (majority opinion).

[12]. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 125 (2000)

Guest Post: Challenging PTO Institution Policies (If Not Institution Decisions)

Patent, , , , ,

endrunThe following is a guest post by Oliver Richards (Fish & Richardson).  Mr. Richards is a NYU Law alum and a former clerk for Judge Dyk on the Federal Circuit. 

After several rounds at the Federal Circuit and a trip to the Supreme Court, the law surrounding what aspects of the PTAB’s decision to institute on a petition for inter partes review are reviewable remains unclear. In light of the Federal Circuit’s decision to again revisit this issue in the grant of a petition for rehearing en banc in Wi-Fi One, LLC v. Broadcom Corporation (No. 2015-1944, -1945, -1946), I wanted to share a few thoughts on what, exactly, should be reviewable under 35 USC 314(d).   I believe that the yes/no decision of the PTAB as applied to any particular petition should be unreviewable.  However, in my view, review of PTAB regulations should be available either through appeal from the PTAB, or (preferably) through an APA challenge in district court. [1]  The distinction between review of specific PTAB institution decisions and general review of PTAB regulations and policies, I believe, makes sense for at least three reasons:

First, this distinction comports with the language of the statute.  314(d) prohibits judicial review of “[t]he determination . . . whether to institute an inter partes review.”  The statute should be read to mean what it says.  A review of “the” decision to institute in any case is not allowed.  General review of any agency regulation is not review of “the determination . . . whether to institute” even if the result of that review overturns the decision in any particular case.

In McNary v. Hatian Refugee Ctr. Inc., 498 US 479 (1991) the Supreme Court drew a similar distinction relating to reviewability of “special agricultural worker” (“SAW”) eligibility decisions of immigration officials under the provisions of the Immigration Reform and Control Act of 1986.  In McNary, the Supreme Court was asked whether 8 U.S.C. § 1160(e)—which prohibits “administrative or judicial review of a determination respecting an application for adjustment of status”—deprived a district court of jurisdiction over a suit challenging agency policies and procedures.

The Supreme Court allowed the challenge.  According to the Court, “[t]he critical words in § 210(e)(1) … describe the provision as referring only to review ‘of a determination respecting an application’ for SAW status. Significantly, the statutory reference to “a determination” describes a single act rather than a group of decisions or a practice or procedure employed in making decisions.”  McNary, 498 U.S. at 491–92.  Thus the language prohibiting review indeed prohibited “direct review of individual” determinations but did not prohibit “general collateral challenges to unconstitutional practices and policies used by the agency in processing applications.”    “[H]ad Congress intended the limited review provisions of § 210(e) of the INA to encompass challenges to INS procedures and practices, it could easily have used broader statutory language” such as by prohibiting “all causes arising under any of the provisions” of the immigration program as it had done in other places.  Id. at 494. [2]

In my view, the patent law’s statutory language – “The determination . . . whether to institute” similarly indicates that § 314(d) was intended to apply to only individual determinations, not to prohibit any and all review of PTO procedures and policies relating to institution.

Second, the distinction strikes a fair balance between making sure the PTAB is complying with its statutory mandate and maintaining the efficiency of the IPR system.  Perhaps wary of a flood of appeals clogging the courts and the corresponding slow down in IPR determinations, Congress choose efficiency in section 314(d) by prohibiting an appeal relating to every single IPR institution decision.  On the other hand, allowing parties to turn to courts to check potentially problematic regulations or practices by the PTAB is an important check on that body’s power.  See, e.g., Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1382 (Fed. Cir. 2016) (concluding that the PTAB’s definition of a “covered business method patent” exceeded the statute.”)[3]   Prohibiting challenges to each and every institution decision but allowing general challenges provides for efficient review of PTAB regulations, policies, and procedures without slowing down the whole IPR system.

Third, the distinction is consistent with most Federal Circuit decisions on the topic.  Although the distinction I suggest was not provided as the reasoning, the CAFC has notably found many PTAB regulations/policies relating to institution reviewable.  See, e.g., Ethicon Endo-Surgery, Inc. v. Covidien LP, 812 F.3d 1023 (Fed. Cir. 2016) (hearing a challenge to 37 C.F.R. § 42.4 – “Institution of trial.  The Board institutes the trial on behalf of the Director”); Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309 (Fed. Cir. 2016) (hearing a challenge to 37 C.F.R. § 42.108, titled “Institution of inter partes review”).  The cases where the Federal Circuit has found issues not to be reviewable are typically cast in case-specific ways.  See, e.g.,  Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) (reviewing “whether Apple’s petition was time barred”); Cuozzo, 793 F.3d at 1272 (“Cuozzo argues that the PTO improperly instituted IPR on claims 10 and 14 because the PTO relied on prior art that Garmin did not identify in its petition as grounds for IPR as to those two claims.”)

Any resolution of the reviewability issue must comply with the statute, must put teeth to Congress’s embrace of efficiency, and at the same time must make sure that the rights of patent holders are adequately protected.  The approach I have outlined above, in my view, adequately balances efficiency with appropriate supervision of the PTAB.   I’m curious to see what you all think, and I look forward to reading the comments.

Note: The views views expressed here are solely my own and do not necessarily reflect the views of my firm or any clients.

___________________

[1] The CAFC left open the question of whether the APA allowed for challenges to PTAB regulations in district court in Synopsys, Inc. v. Lee, 812 F.3d 1076 (Fed. Cir. 2016).   From a practical standpoint, an APA challenge in a district court would seem to be a better option–the parties will have an opportunity to develop a fuller record removed from the facts of any particular IPR, and a district court may well provide a better first look than than the agency that promulgated the challenged regulation.

[2] NcNary follows other Supreme Court decisions distinguishing between specific challenges to a particular determination and general challenges to regulations.  See Bowen v. Michigan Acad. of Family Physicians, 476 U.S. 667, 675 (1986).

[3] For individual determinations where the PTAB clearly exceeds its statutory authority, mandamus remains available.  See, e.g., In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1274 (Fed. Cir. 2015),  aff’d sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016).

 

PTO Director Michelle Lee?

Patent,

undersecretaryWith conflicting media reports and no statement from the USPTO or Department of Commerce, we are left guessing as to whether Michelle Lee continues-on as USPTO Director and Undersecretary of Commerce for Intellectual Property.  The Commerce Department leadership has been substantially filled – but the IP position remains blank.  My request for clarification from the office have also been denied.   I have also submitted a FOIA request, but that process tends to be slow.  We will likely have to wait for the Confirmation of Wilbur Ross as Commerce Secretary before stakeholders are informed of the state-of-affairs.

Meanwhile, Hal Wegner has called for Michelle Lee’s resignation in an ascorbic ascerbic letter titled “Draining the Swamp: Your Resignation as PTO Director.”  I see Wegner’s letters as stirring the pot rather than offering any genuine path forward.  Repeating what I wrote last week:

I want to give my congratulations and thanks to Michelle Lee, Russ Slifer, and other members of PTO Leadership.  The past five years have been a time of tremendous shifting in the patent system led by the legislature (the AIA of 2011) and the Supreme Court (Alice/Mayo).  PTO Leadership has offered a stabilizing force with a constant push toward an efficient and high quality system.  Many patentees were saved by by the PTO’s intentionally narrow reading of Alice and Mayo and the long-complaint-of backlog of pending cases is substantially reduced.  These days I hear two major competing complaints: (1) the PTO continues to issue too many invalid patents and (2) the PTAB is too tough on patentees.  It will be interesting to see where we arrive four years from now.

If I were a patentee, I would certainly have great concern that the next director may be far worse.

wegnerlee

More Confusion on Trump’s Next USPTO Director

Patent,

departmentofcommerceFolks are having fun today with Federal Government web page conversions.

We still do not have confirmation that Michelle Lee will stay-on as Under Secretary of Commerce for Intellectual Property and USPTO Director.  The newly updated COMMERCE.GOV website shows the position vacant while other positions remain filled.

It should all be figured out by Monday.

If you remember, Dir. Lee’s initial appointment by President Obama was also filled with some amount of discord and confusion a la The Office with her “acting as director” for several months before actually being nominated for the position.

Michelle Lee, Acting as Director but not “Acting Director”

 

Major Crossover Move: Michelle Lee Staying on as PTO Director?

Patent,

The Hill and others are reporting that USPTO Director Michelle Lee will stay on as PTO Director under President Trump.  No official statement yet (perhaps because PTO Chief Communications officer Patrick Ross resigned yesterday).

 

 

USPTO Transitions and Traditions

Patent,

The USPTO only houses a handful of political appointees – Director (Michelle Lee), Deputy Director (Russ Slifer), Chief of Staff (Vikrum Aiyer); and a couple more senior advisors including the Chief Communications Officer (Patrick Ross). These folks will all resign on or before noon on Inauguration Day, January 20, 2017.  Through an Agency procedure put in place by former Director James Rogan, Commissioner for Patents (Drew Hirshfeld) will then step-in as acting director.  One unlikely potential kink in the tradition is that this is the first presidential transition with competing PTO leaders – namely the four Regional Office directors (John Cabeca, Molly Kocialski; Cristal Sheppard, and Hope Shimabuku) any of whom could step-in as acting director (recognizing that is the pathway taken by Michelle Lee).  However, the Regional Directors are really outside of the ordinary PTO chain of command.

Recognize that these transitions and traditions are subject to immediate adjustment by the incoming Trump Administration.  I would expect significant shake-up in PTO Senior Staff in the coming months: General Counsel, regional PTO Directors, and perhaps Solicitor and PTAB Director.   However, every president struggles through how to deal with career federal employees loyal to the efforts of the prior administration.

I want to give my congratulations and thanks to Michelle Lee, Russ Slifer, and other members of PTO Leadership.  The past five years have been a time of tremendous shifting in the patent system led by the legislature (the AIA of 2011) and the Supreme Court (Alice/Mayo).  PTO Leadership has offered a stabilizing force with a constant push toward an efficient and high quality system.  Many patentees were saved by by the PTO’s intentionally narrow reading of Alice and Mayo and the long-complaint-of backlog of pending cases is substantially reduced.  These days I hear two major competing complaints: (1) the PTO continues to issue too many invalid patents and (2) the PTAB is too tough on patentees.  It will be interesting to see where we arrive four years from now.

[Errors in this post are all mine, but I want to thank former PTO General Counsel Bernie Knight for helpful pointers]

 

Supreme Court 2017 – Patent Preview

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by Dennis Crouch

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

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

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

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

1. A computing system comprising:

a display;

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

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

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

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

=== THE LIST===

1. 2016-2016 Decisions:

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

2. Petitions Granted:

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

4. Petitions for Writ of Certiorari Pending:

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

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

Patent Quality: Where We Are

Patent, , ,

Guest Post by Professors Arti Rai (Duke) and Colleen Chien (Santa Clara).  Professors Rai and Chien both served in the Obama Administration.  

On the eve of a new Administration, it is useful to take stock of progress that has been made on patent quality over the last eight years, and particularly since February 2015, when the U.S. Patent and Trademark Office launched its Enhanced Patent Quality Initiative (EPQI).  In this contribution, we review progress to date and outline directions for the future.

Patent quality means agency decision making that is appropriate as a matter of both product and process – that is, legally correct, clear, consistent, and efficient.  Measuring correctness, clarity, consistency, and efficiency is difficult, however.  Achieving these goals can also entail significant resources – a challenge for an agency funded entirely by applicants.

When former USPTO Director David Kappos took the helm in 2009, budgetary strains and application backlog demanded immediate attention.  Even so, then-Director Kappos pushed through redesign of the agency’s IT system, gave an across-the-board increase in time to examiners, adjusted count allocation so as to reduce incentives for rework, and emphasized quality improvements through international worksharing, industry training, and the creation of the Common Patent Classification system.  Then, with the passage of the American Invents Act of 2011, the agency’s budgetary position stabilized and the stage was set for further focus on quality.  The backlog subsided, with the queue of patents reduced by 30% over the last eight years, according to statistics released by the USPTO.

Building on these steps, as well as executive actions to crowdsource prior art and technical training, the USPTO launched the EPQI in 2015. Introduced and championed by Director Michelle Lee, the EPQI comprises a group of initiatives that embrace not only the substantive goal of quality but also take seriously issues of measurement. In total, the EPQI comprises 12 different programs and initiatives. We focus here on four initiatives that have thus far yielded data: the Clarity of the Record Pilot; the Master Review Form for measuring quality; the USPTO’s case study on examiners’ use of Section 101; and the Post-Grant Outcomes Pilot.

The Clarity of the Record Pilot ran from March 5 to August 20, 2016 as an effort to train examiners on best practices with respect to claim interpretation, reasons for allowance, and interview summaries and to determine the impact on this training on their work relative to a control group.  Relative to the control group, the 125 trained examiners who examined 2600 cases averaged a 15% improvement in the clarity of their interview summary and a 25% improvement in the clarity of their reasons for allowance.  Notably, although examiners in the pilot were allowed as much time as they wanted, they reported using only about 4 more hours per bi-week than the control group.

On the quality measurement front, the PTO is using its new Master Review Form (MRF) to provide both reviewers at the Office of Patent Quality Assurance (OPQA) and Technology Center (TC) supervisors a single, comprehensive record of the accuracy and clarity of patent work products.  Historically, OPQA and TC supervisor reviews had used different criteria and only OPQA reviews were systematically recorded for identification of trends across different TCs.  Additionally, in contrast with prior quality scores used by the PTO, the quality metrics used in the MRF disaggregate product quality (legal correctness and clarity) from process quality (efficiency and consistency) as well as perceptions of quality.

Current data on product quality, focusing on compliance with the statutory requirements of Section 101; prior art (Sections 102 and 103); and Section 112, is available for reviews conducted in the 4th quarter of FY2016.  These data, admittedly self-reported, indicate compliance in about 97% of cases for Section 101; 88% of cases for prior art; and about 94% of cases for Section 112.

The USPTO’s case study on examiners’ use of Section 101, one of six stakeholder-requested case studies that the agency is currently conducting, examined a sample of 816 Office actions with an Alice/Mayo-type rejection issued between January 2016 and August 2016.  Overall, the study found that 90% of rejected claims were in fact ineligible under the USPTO’s 101 guidance.  However, only 75% of the substantively correct rejections were properly explained.  Rates of properly explained rejections rose significantly after the USPTO conducted training on Section 101 in May and June of 2016.

The USPTO Post-Grant Outcomes pilot provided examiners of pending applications that related to patents that were the subject of an AIA trial with the contents of the trial. This common-sense initiative, which ran from April to August 2016, aimed to alert examiners of highly relevant prior art, identify training opportunities, and build a bridge between PTAB and the examining corps. 44% of the 323 examiners surveyed by the USPTO reported that they had referred to references cited in the AIA trial petition when examining the child case.

Going forward, the USPTO is pursuing bold initiatives on automated pre-examination search and on revising time allocations for examiners, the latter which is the subject of a current request for comment. To carry out efficient, correct examination, examiners must have the appropriate amount of time to examine each individual application, which can vary, making these initiatives critical for improving quality.

Going forward, one important question that remains to be fully addressed is the extent to which examination should be an “one size fits all” enterprise.  In 2011, the USPTO established a separate Track 1 process for those applicants who need decisions made quickly.  Small and micro-sized firms have filed more than fifty percent of the Track 1 applications, even though such entities only represented twenty percent of applicants in 2015. (The heaviest individual users of the system are large firms, however.) For other applicants, it may be appropriate to offer options for deferred, “Track 3” examination.

With a go-ahead from Congress, the USPTO might also make available varied intensity of examination.  Thus applications that were more commercially valuable might be subject to heightened review, by peers or others, in exchange for greater protection from post-grant challenges. Conversely, applications that were filed for defensive reasons only could pay lower fees in exchange for a promise to limit patent use.

Another way to ensure that the quality conversation continues in public is to support continued transparency and measurement of progress on patent quality. The focus should be on objective, independently verifiable metrics such as the percentage of cases with examiner-cited non-patent literature, or the percentage of cases resolved through compact prosecution – “once and done.”  Facilitating tracking of such metrics not only by examiner but by Art Unit or Technology Center could stimulate some healthy competition and also help identify best practices.

For the new focus on metrics and quality two USPTO administrators in particular deserve credit – the Office of the Chief Economist and the Deputy Commissioner for Patent Quality. Together these positions and these personnel, newly created and appointed during the last 8 years, may indeed end up being some of this Administration’s most enduring legacies on patent quality.

= = = =

For an alternate viewpoint, read Gene Quinn’s post: Patently Surreal.

USPTO 2016 Performance and Accountability Report

Patent,

By Jason Rantanen

Last week, the United States Patent and Trademark Office released its annual Performance and Accountability Report.  If you’ve never read this document before, I highly encourage giving it a look.  It’s chock-full of information on the PTO, from summary overviews to financials to performance metrics to changes in agency operation.  There’s also an extensive set of tables with tons of data for those who like that kind of stuff.

Law students and junior attorneys who want to quickly get up to speed on the PTO, in particular, can obtain a lot of information about the agency from the PAR.  But there’s something in there for everyone.

Here’s a link to the USPTO Chief Financial Officer’s blog post on the 2016 PAR: https://www.uspto.gov/blog/director/entry/uspto_releases_its_fy_2016

And a direct link to the 2016 PAR: https://www.uspto.gov/sites/default/files/documents/USPTOFY16PAR.pdf

Utility Patents for 2016

Patent,

The chart below shows the number of utility patents granted each year for the past few decades. I have included images of PTO chiefs as well. Although only small view of PTO work-product, the dramatic shifts in the number of grants (all occurring while facing a large backlog of cases) helps highlight the importance of the role of PTO Director.  You’ll note that more utility patents were issued in 2016 than any prior calendar year – 303,000.  However, the rate-of-increase seen under Dir. Kappos is clearly gone.

patentgrants

grantsperyearNotes:

  • Non-animated version to the right.
  • Directors shown are Q.Todd Dickenson (1998-2001); Jon Dudas (2004-2009); David Kappos (2009-2013); and Michelle Lee (2014-2017). J.Rogan and the acting directors are not shown.

 

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

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Phigenix v. ImmunoGen (Fed. Cir. 2017)

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

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

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

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

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

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

 

 

Make Patents Great Again – PTO Speculation: Judge Rader?

Patent,

Scott Graham of The National Law Journal reports that Chief Judge Rader is in the mix to be the next USPTO Director. Rader wrote hundreds of patent opinions during his 25 years on the Court of Appeals for the Federal Circuit, including four as Chief Judge.  Prior to joining the judiciary, Rader spent eight years as counsel to the Senate Judiciary Committee’s Subcommittee on Patents, Trademarks, and Copyrights.  He is a recipient of the Jefferson Medal for exceptional contributions to the field of intellectual property law.  In a fairly minor scandal, Judge Rader resigned from the bench in 2014.  At that time, I wrote:

Judge Rader is a longtime member of the court and has been a gregarious Chief Judge. His willingness to have frank and open discussions on a variety of patent law issues has been welcomed by the bar as has his work to build ties with patent law authorities from around the globe. Those connections will continue to serve the court well into the future. However, this outgoing approach has also been criticized as contrary to the traditions of judicial detachment and seclusion.

Judge Rader has the patent law and political expertise to do this job — question whether he would really want to run a 10,000 person organization.  Rader likely has strong support from President Pro Tempore of the United States Senate Orin Hatch. 

In my mind, the other leading candidate is Phil Johnson. The PTO directorship would serve as a capstone to a truly incredible career.   Trump and his team have substantial trademark experience, and so an internal dark-horse candidate is always likely.

Because of her ties to the Obama Administration, I see it as highly unlikely that current PTO director Michelle Lee would be asked to stay-on even temporarily in that position.

PTO Director wears many hats, but I see the primary job as leading the 10,000+ examiners and judges to ensure a high quality work product at a reasonable cost and speed.  Patent and trademark experience are certainly necessary – but I would think it is also important to have experience or understanding of managing such a large workforce of unionized employees.

Congratulations to Harold McElhinny on his retirement from MoFo; he has apparently refused calls from Trump Tower.

 

 

Wi-Fi One v. Broadcom: Mine-Runs and Shenanigans in Inter Partes Review

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by Dennis Crouch

Wi-Fi One v. Broadcom (Fed. Cir. 2017)

First en banc order of the year: the Federal Circuit will review the following question:

Should this court overrule Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) and hold that judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review?

en banc order. Briefs of amicus curiae may be filed without consent.

One Year Filing Deadline: Section 315(b) creates a statute of limitations for inter partes review proceedings – indicating that the petition for IPR must be filed within one-year of “the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”  Here, Wi-Fi argues that Broadcom was in privity with entities involved in parallel district court litigation involving challenged patents — creating a time bar under 315(b).

The PTAB rejected Wi-Fi’s argument and call for discovery on the issue — holding that the “privy” requirement could only be met if Broadcom had the right to control the District Court litigation.

No Appeal: On appeal, the Federal Circuit affirmed – holding Section 314(d) prohibits appellate review of the institution issue.  In particular Section 314(d) states that

The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

In Achates, the court ruled that the one-year-deadline determination is an institution decision – “even if such assessment is reconsidered during the merits phase of proceedins and restated as part of the Board’s final written decision.”

In the background stands the 2016 Supreme Court decision in Cuozzo.  In that case, the Supreme Court gave effect to the no-appeal provision of 314(d).  However, the Supreme Court noted that unusual questions – such as constitutional questions – might still be appealable.  The foundation for the en banc review decision will be its interpretation of the following Cuozzo excerpts:

We conclude that [314(d)], though it may not bar consideration of a constitutional question, for example, does bar judicial review of the kind of mine-run claim at issue here, involving the Patent Office’s decision to institute inter partes review. . . .

Nevertheless, in light of §314(d)’s own text and the presumption favoring review, we emphasize that our interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review. See §314(d) (barring appeals of “determinations . . . to initiate an inter partes review under this section” (emphasis added)). This means that we need not, and do not, decide the precise effect of §314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond “this section.” . . .  Thus, contrary to the dissent’s suggestion, we do not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under §112” in inter partes review. Such “shenanigans” may be properly reviewable in the context of §319 and under the Administrative Procedure Act, which enables reviewing courts to “set aside agency action” that is “contrary to constitutional right,” “in excess of statutory jurisdiction,” or “arbitrary [and] capricious.”

The question then for court is whether we have a shenanigan here.

 

 

AIPLA comes out in favor of USPTO rule for patent agent-client privilege

Ethics,

The AIPLA letter to director Lee is here.

First, I’m not sure the USPTO has power to do this.  Whether or not there is privilege turns, under Fed. R. Evid. 501, on federal common law, federal statutes, or the Constitution, not agency rule-making.

Second, the scope of the privilege is a quagmire.  The problem is that the scope of privilege, at least so far as the Federal Circuit in a 2-1 panel decision in Queen’s University (and other courts) has said, turns on the scope of authority of patent agents.  So, a patent agent who, for example, emails after a patent has issued about, say, its potential infringement: no privilege.

And don’t get me started about the incomprehensible approach of the USPTO on whether patent agents can write assignments.  (“Drafting an assignment or causing an assignment to be executed for the patent owner in contemplation of filing or prosecution of a patent application for the patent owner, where the practitioner represents the patent owner after a patent issues in a proceeding before the Office, and when drafting the assignment the practitioner does no more than replicate the terms of a previously existing oral or written obligation of assignment from one person or party to another person or party.”).  Why on earth would it be competent for a patent agent to simply “replicate” an agreement, without first determining what it does?  And how does one “replicate” an oral agreement?  And why — in order to draft the assignment before filing — must the patent agent represent the patent owner “after a patent issues”?  More fundamentally, how does a patent agent write an assignment before a case is filed, but also is representing the owner after the patent issues? I like time travel movies, but…

But I digress.

For now, and I would say even after/if the USPTO adopts a rule, be very careful if you have patent agents communicating directly with clients, without supervision of a lawyer, because there’s also the possibility that a court won’t follow the Queen’s University case and hold there is no privilege, anyway. That’s already happened in Texas.

Stay tuned.

Guest Post: Can an Inventorship Be Challenged in a PGR Proceeding?

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Thomas D. Kohler and Kevin C. McGrath*

The enactment of the AIA brought several changes to processes for correcting and challenging inventorship.  Perhaps most notable were the elimination of 35 U.S.C. § 102(f) and the replacement of interference proceedings with derivation proceedings.  These changes have raised several questions on the implications of improper inventorship in a post-AIA patent.  See, e.g., Crouch, With 102(f) Eliminated, Is Inventorship Now Codified in 35 U.S.C. 101?, Patently-O (October 4, 2012).  Of the many questions yet to be addressed, one is whether an allegation of improper inventorship can be raised in a Post Grant Review (PGR) proceeding.

The PTAB recently had a chance to address that question when it ruled on the first ever PGR petition filed against a design patent.  Galaxia Electronics Co. v. Revolution Display, LLC,  PGR2016-00021, paper 11 (PTAB  November 2, 2016).   In deciding not to institute trial, the PTAB also made the first ever decision on an alleged inventorship error in a PGR proceeding.  However, the PTAB chose to not address the fundamental question of whether an alleged error in inventorship is a statutorily proper ground for institution of a PGR and instead denied institution by deciding the Petitioner failed to present adequate evidence to support its allegation.  While this may have been the judicially expedient way to resolve this specific petition, sooner or later the PTAB is going to have to deal with the question of whether inventorship challenges should be grounds for PGR.  When it does get to that question, the PTAB should decide there is no place in a PGR proceeding for inventorship challenges.

A PGR trial cannot be instituted unless the information in a petition demonstrates that it is more likely than not that at least one challenged claim is unpatentable.  See 35 U.S.C. § 324; see also 37 C.F.R. § 42.208.  Even before the AIA, however, an allegation of improper inventorship typically did not result in invalidation.  See Viskase Corp. v. American National Can Co., 261 F.3d 1316, 1329 (Fed. Cir. 2001) (“Absent fraud or deceptive intent, the correction of inventorship does not affect the validity or enforceability of the patent for the period before the correction.”); see also 1-2 Donald S. Chisum, Chisum on Patents § 2.03 [4][a] (Matthew Bender) (“Misjoinder and nonjoinder [of inventors] have long been viewed as ‘technical’ defects, not to be favored as objections or defenses to patent rights.”).  The reason being that, despite 35 U.S.C. § 102(f) (pre-AIA), inventorship could be corrected in most instances under either §§ 251 (“Reissue Of Defective Patents”) or 256 (“Correction Of Named Inventor”).

A limited pre-AIA exception where inventorship could not be corrected was if a movant could not demonstrate the error arose without deceptive intent.  See, e.g., Pannu v. Iolab Corp., 155 F.3d 1344, 1350 n.4 (Fed. Cir. 1998) (noting the requirement of showing the error occurred without deceptive intent, but also that “good faith [was] presumed in the absence of a persuasive showing of deceptive intent”). The AIA removed that limited exception, thereby eliminating any possibility of invalidating a patent based on improper inventorship, assuming at least one of the owners is willing to make corrections deemed necessary.  Specifically, besides eliminating § 102(f), the AIA also amended sections 251 and 256 by removing the “without any deceptive intention” requirement from those two sections.  While commentators have questioned whether that pre-AIA requirement had any practical effect, see Chisum § 2.04[4][d], the amendments to sections 251 and 256 make it clear that any demonstrated inventorship error can be corrected; either by a certificate of correction, a reissue application, or by a suit under § 256 in Federal court.  See, e.g., Vapor Point, LLC v. Alford, 832 F.3d 1343, 1348 (Fed. Cir. 2016) (ruling on an action to correct inventorship brought under § 256).

Admittedly, in situations where a party has raised an inventorship issue in a PGR, it is unlikely that all alleged inventors would be willing to cooperate with the patent owner.  But this still is not a stumbling block to correction of inventorship because cooperation of all inventors is not necessarily required. As noted in MPEP § 1481.02(I), in the event an inventor is unavailable or uncooperative, a patent owner can still obtain correction via reissue.  See 37 C.F.R. §§ 1.175, 1.64; see also MPEP § 1412.04(II) (“Reissue As A Vehicle For Correcting Inventorship”).  Further, the patent owner may establish the right to take action pursuant to procedures described in MPEP § 325.  To the extent there was a legitimate dispute as to ownership affecting entitlement toact, that dispute is separate from inventorship and a matter governed under state law—a matter that simply cannot be resolved by the PTAB or anyone at the USPTO. See, e.g., Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1471 (Fed. Cir. 1998).

There is a further, practical problem to permitting inventorship challenges in a PGR.  If the PTAB were to institute trial on that ground (alone or among others), nothing would appear to prevent the patent owner from admitting the error and filing a reissue application or § 256 court action to correct it. It would then seem that fundamental due process considerations should allow the patent owner to correct a correctable error.  But the PTAB may not be able to wait to see if inventorship is corrected before ruling in the PGR because it is statutorily obligated to reach a final determination within 12-18 months of instituting trial.  35 U.S.C. § 326 (a)(11).  Based on the current backlog of reissue applications and other matters before the Central Reexamination Unit (CRU), it is unlikely that a reissue application could reach final disposition within the 12-18 month time period.   The USPTO would thus seem to be stepping into a quagmire if it does not eliminate inventorship error as a ground for PGR—a patent owner has a right to pursue correction of inventorship, yet the PTAB is obligated to reach a final decision before that correction can be effected.   On the other hand, if inventorship challenges before the PTAB are limited to Derivation proceedings, which are not statutorily mandated to be completed within a specific time frame and also contemplate correction of inventorship as a possible outcome (35 U.S.C. § 135(b)), that potential quagmire is avoided.

So even if, despite the elimination of § 102(f), inventorship can still be challenged under 35 U.S.C. §§ 101 or 171, such a challenge is not a statutorily proper ground for institution of a PGR because such a petition cannot demonstrate that it is more likely than not that at least one challenged claim is unpatentable.  And such a ruling would comport with the statutory-framework of the AIA—Congress created Derivation proceedings, the replacement for Interference proceedings (35 U.S.C. § 135 (pre-AIA)), as the sole proceeding before the Board for inventorship challenges to post-AIA patents.  See 35 U.S.C. § 135; see also 37 C.F.R. § 42.401 et seq.  Thus, inventorship challenges can still be brought before the PTAB, it is simply a matter of choosing the correct vehicle through which to do so.  While the PTAB chose not to address this issue this time, when next raised, it should decide the Derivation proceeding is the sole process to bring such a claim before the Board.

But until the PTAB rules definitively that inventorship error is not a ground on which PGR may be based, it is our view that failure to raise that ground in a petition will most likely lead to an estoppel on the issue.  See 35 U.S.C. § 325 (e).  Thus, for now, any PGR petitioner that thinks it might have a possible basis for challenging inventorship better raise that ground in its PGR petition or risk being estopped from later challenging the patent on that basis.

Tom Kohler and Kevin McGrath are director and associate, respectively, at Downs Rachlin Martin, PLLC which represented the Patent Owner in Galaxia Electronics Co. v. Revolution Display, LLC, PGR2016-00021 (PTAB May 18, 2016); the first PGR petition directed to a design patent.

Director Lee: IP is a Necessary Key Piece of President-Elect Trump’s Promised Economic Growth and Job Creation

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Today, USPTO Director provided her first Post-Election speech that includes some thoughts on IP policy after Obama.

I believe the incoming administration must and will continue our effort to promote innovation fueled by a strong and robust IP system. Support for IP in the United States has a long history of bipartisanship, and there’s no reason to imagine that changing with a new president and a new Congress, both of whom have economic growth as a top priority. . . .

I’m optimistic the incoming administration will share our appreciation of the importance of intellectual property as a driver of economic growth. As I look ahead, I foresee legislative patent reform changes will continue to be discussed in Congress, though those conversations will likely occur later in the term after some of the other priorities including filling a Supreme Court vacancy, immigration and tax reform are addressed, and any legislative patent reform will likely be more targeted, rather than the comprehensive reforms we’ve seen in prior Congresses. I would hope any legislative proposal will take into account the numerous positive changes that have occurred recently in the patent system including: through the courts, including on attorneys fees, pleading requirements and discovery limits, and at the USPTO through the PTAB and the agency’s efforts to improve the quality of patents in our system. As far as issues, I predict legislative discussions may include venue reform and possibly changes to Section 101 and PTAB. On venue, with nearly half of the patent cases filed in 2015 filed in a single district out of 94 federal judicial districts, it is easy for critics to contend that plaintiffs seek out this district preferentially for the wrong reasons. And the mere perception that there are advantages to be gained by forum-shopping challenges the public’s faith in the patent system. So there will be continuing pressure for legislative (and likely judicial) action on the issue of venue. The scope of any legislative reform remains is to be determined, but I predict that the focus will be on more targeted, rather than comprehensive reform as we saw these past couple Congresses. Further, I anticipate that the USPTO’s work across the globe to ensure that other countries have strong IP protections adequate enforcement mechanisms and remedies, and appropriate technology transfer (or licensing and competition) policies, will continue in the next Administration particularly in such countries as China and others. This is a President-elect that has promised economic growth and job creation in our country, and IP will necessarily be a key piece to achieving that goal. . . .

I firmly believe that the USPTO is healthy, well-functioning and poised to successfully handle whatever challenges and opportunities lie ahead.  . . . When President Obama was inaugurated in 2009, his focus was on leading this nation’s recovery from the Great Recession. One of his first acts was to ask the Smithsonian to provide for display in the Oval Office some patent models that demonstrated past American innovation that led to new jobs and new industries. The president said that throughout our history, Americans solved problems through innovation and IP. He wanted to see reminders of that every day as he encountered the challenges he faced. The Smithsonian provided him with three models: Samuel Morse’s telegraph (1849),  John Peer’s gear cutter (1874), and Henry Williams’ steamboat wheel (1877). As I stood behind the President in the Oval Office earlier this year when he signed the Defend Trade Secrets Act, I couldn’t help but notice those three models along the wall to my left—still there almost eight years later—and feel extraordinarily humbled and honored. I feel that same honor and humility today standing before all of you and reflecting on just how much we have accomplished under this administration.  I’ve been fortunate to lead the USPTO at a time when intellectual property issues have been front and center on the consciousness of the American public and President and to have had the opportunity to help guide the direction in a small way. My hope is that the President-elect keeps the patent models from Morse, Peer and Williams in his office as a reminder of the importance of intellectual property to the economic prosperity that I know he wants for our country.

Read the full remarks here.