Tag Archives: USPTO Director

USPTO Launches Cancer Moonshot Challenge

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The following was originally published on the USPTO Director’s Blog and is a guest post by USPTO Chief of Staff Vikrum Aiyer and Senior Advisor Thomas A. Beach

The USPTO is playing an important role in the National Cancer Moonshot, a Presidential initiative we blogged about earlier this summer, to speed up cancer advances, make more therapies available to more patients, and improve the ability to prevent cancer and detect it at an early stage. Today, we are launching the USPTO Cancer Moonshot Challenge to enlist the public’s help to leverage our intellectual property data, often an early indicator of meaningful research and development (R&D), and combine it with other economic and funding data (ie. U.S. Securities and Exchange Commission filings, Food and Drug Administration reporting, National Science Foundation grants vs. philanthropic investments, venture capital funding, etc.). This comes on the heels of our Patents 4 Patients program, which was launched in July and aims to cut in half the time it takes to review patent applications in cancer therapy.

The USPTO Cancer Moonshot Challenge will conclude on September 12 and winners will be announced on September 26. Learn more about the prizes.

Participants will have the opportunity to leverage USPTO Cancer Moonshot patent data to reveal new insights into investments around cancer therapy research and treatments. Some questions to address include: What are the peaks and valleys in the landscape of cancer treatment technologies? What new insights can be revealed by correlating R&D spending/funding to breakthrough technologies? What would trace studies of commercially successful treatments from patent to product tell us? With the data sets released through the USPTO Developer Hub, users will be able to use analytic tools, processes and complimentary data sets to build rich visualizations of intellectual property data, which will help illuminate trend lines for new treatments. During the three week challenge, the USPTO will hold a USPTO Cancer Moonshot Workshop to assist participants, on Thursday August 25.

After the challenge has concluded, the USPTO, in tandem with other Moonshot Task Force partners, will look at further ways to use the findings. By bringing together cancer experts, policymakers, and data scientists, we can explore and identify how intellectual property data can be better leveraged and combined with other data sets to support cancer research and the development of new commercialized therapies. This will empower the federal government—as well as the medical, research, and data communities—to make more precise funding and policy decisions based on the commercialization lifecycle of the most promising treatments, and maximize U.S. competitiveness in cancer investments.

 We recognize that by enlisting the public’s assistance through our USPTO Cancer Moonshot Challenge, we can identify new and creative ways to fight cancer and work towards breakthroughs in treatment.  And by harnessing the power of patent data, and accelerating the process for protecting the intellectual property undergirding cancer immunotherapy breakthroughs, the USPTO is standing up and doing its part to help bring potentially life-saving treatments to patients, faster. Are you up to the challenge?

Expanding the Scope of Ex Parte Reexaminations MidStream

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by Dennis Crouch

A new petition by Pactiv (a Reynolds Co.) asks the Supreme Court to consider whether the PTO can expand the scope of an ex parte reexamination beyond the “substantial new question of patentability” identified in the Director’s order granting the reexamination.   Basically, can the reexamination examiner rely upon prior art different from that in the petition.

Question as presented to the Supreme Court:

Whether, because [35 U.S.C. §] 304 requires the Director to issue an order for a reexamination “for resolution of the question,” the “substantial new question of patentability” included in the Director’s order delineates the scope of the ex parte reexamination.

[Pactiv v. Lee petition]  Pactiv argues that the scope of reexaminations were intended to be limited to avoid becoming an “unbridled review system [that] could impose enormous burden and undue harassment on patentees.” (Petition).

Section 304 explains that the PTO Director can order ex parte reexamination after finding that “a substantial new question of patentability affecting . . . is raised.”  The statute goes on to state flatly that the reexamination order should be “for resolution of the question” — i.e., for resolution of the substantial new question raised in the petition.  That part of the statute is clear, however, the statute does not flatly bar modification of the question during the substantive reexamination.

The PTO’s position that allows for shifting rejections appears to stem from Belkin Intl Inc. v. Kappos, 696 F.3d 1379 (Fed. Cir. 2012), a decision involving inter partes reexamination.  Belkin is something of a mixed-bag.  In its decision, the Federal Circuit wrote that the inter partes challenger could not raise new questions of patentability beyond those in the SNQ order.  At the same time, the court also wrote (in dicta) that the PTO may, on its own, raise other issues. The court wrote:

Inter partes reexamination is not totally limited to those issues suggested by the requester that present a substantial new question of patentability. Indeed, the PTO may make any new rejection, as long as that rejection also meets the substantial new question of patentability requirement. See 35 U.S.C. § 303(a) (“On his own initiative, and any time, the Director may determine whether a substantial new question of patentability is raised by patents and publications discovered by him . . . .”). Thus, the scope of reexamination may encompass those issues that raise a substantial new question of patentability, whether proposed by the requester or the Director. . .

Belkin.  Pactiv challenges this dicta portion of Belkin – arguing that it is a misinterpretation of the statute and, in any event, does not apply to ex parte reexamination.  I would agree with Pactiv in its reading of this portion of the statute – if the USPTO wants to raise a new question on its own, the statute provides for a process of ordering reexamination rather than the implicit addition as done here.  At the same time, the availability of amendments and addition of new claims mean that new searches must be available in some form.  See 35 U.S.C. § 305.

For its part in the case, the Federal Circuit affirmed the PTAB determination without opinion (R.36 Affirmance).

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The patents at issue in the case are U.S. Patent No. 6,315,921 and U.S. Patent No. 6,395,195.  They relate to an oxygen absorber used in meat packaging.

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Dear USPTO: Nine-Month Delay is not Prompt Publication as Requied by Statute

Patent

by Dennis Crouch

In researching for my recent essay on Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. August 1, 2016), I looked into the family of the three invalidated patents.[1]  As I expected, the patentee has at child-applications still pending.

  • Application No. 14/954,886 filed on 11-30-2015 which is Pending; and
  • Application No. 15/080,578 filed on 03-24-2016 which is Pending.

Following the court’s decision, these likely will be (or perhaps already have been) amended in attempt to recapture coverage lost by the invalidations. Unfortunately, we don’t know what is happening with these cases.

Although both of these pending applications apparently claim priority back to a 2003 application and multiple issued patents, neither file-history is publicly available via PAIR since neither application has been published.  This, despite the statutory requirement that applications “shall be published . . . promptly after the expiration of a period of 18 months from the earliest filing date for which a [priority] benefit is sought.”[2]

The 9-month delay in publication here is inappropriate and problematic. When an application already qualifies for publication as of its filing date, then it should be immediately published and the file history automatically laid open for public inspection and consideration.  It is these late-family applications where applicant game playing is most likely.  And, although public access is not a cure, it can help address some of the potential issues.

It turns out that most continuation and divisional applications are published about 4-months after filing even though the 18-month date had already passed as of the filing date. That delay is already unduly long, it is unclear why the PTO has taken so much longer with these cases.

Moving forward, the USPTO Director is already empowered to make this change.  Technological feasibility can perhaps justify the historic delay.  However, a multi-month delay can no longer realistically square with the requirement that applications be published “promptly” following the 18-month date.

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[1] U.S. Patent Nos. 7,233,843; 8,060,259; and 8,401,710.

[2] 35 U.S.C. § 122(b).

35 U.S. Code § 316 – Conduct of inter partes review

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(a)Regulations.—The Director shall prescribe regulations—

(1) providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall, if accompanied by a motion to seal, be treated as sealed pending the outcome of the ruling on the motion;
(2) setting forth the standards for the showing of sufficient grounds to institute a review under section 314(a);
(3) establishing procedures for the submission of supplemental information after the petition is filed;
(4) establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title;
(5) setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to—
(A) the deposition of witnesses submitting affidavits or declarations; and
(B) what is otherwise necessary in the interest of justice;
(6) prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;
(7) providing for protective orders governing the exchange and submission of confidential information;
(8) providing for the filing by the patent owner of a response to the petition under section 313 after an inter partes review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;
(9) setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;
(10) providing either party with the right to an oral hearing as part of the proceeding;
(11) requiring that the final determination in an inter partes review be issued not later than 1 year after the date on which the Director notices the institution of a review under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section 315(c);
(12) setting a time period for requesting joinder under section 315(c); and
(13) providing the petitioner with at least 1 opportunity to file written comments within a time period established by the Director.

(b)Considerations.—

In prescribing regulations under this section, the Director shall consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter.

(c)Patent Trial and Appeal Board.—

The Patent Trial and Appeal Board shall, in accordance with section 6, conduct each inter partes review instituted under this chapter.

(d) Amendment of the Patent.—

(1)In general.—During an inter partes review instituted under this chapter, the patent owner may file 1 motion to amend the patent in 1 or more of the following ways:
(A) Cancel any challenged patent claim.
(B) For each challenged claim, propose a reasonable number of substitute claims.
(2)Additional motions.—
Additional motions to amend may be permitted upon the joint request of the petitioner and the patent owner to materially advance the settlement of a proceeding under section 317, or as permitted by regulations prescribed by the Director.
(3)Scope of claims.—
An amendment under this subsection may not enlarge the scope of the claims of the patent or introduce new matter.

(e)Evidentiary Standards.—

In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.

Choice of Law Compared to Subject Matter Jurisdiction

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One thing I have to deal with a lot when advising lawyers — whether practitioners for prosecution matters or litigators in patent case (or other stuff) — is the difference between subject matter jurisdiction and choice of law.

First, I cannot tell you how important this issue can be. For example, under some state rules public information is confidential; it’s not under the USPTO rules.  If state rules apply, I may have to ask a client for permission before I disclose a prior art patent to the Office.  That sounds like a silly example, and it is, but you’d be surprised what “experts” I’ve testified against say sometimes…

So let me give a simple walk through.

Ordinarily, a state bar is going to be able to discipline a lawyer for conduct occurring in representing clients in a state even if the practice is entirely federal and even if the lawyer is not licensed in a state.  So, if Bob is a patent lawyer licensed only in Minnesota and is prosecuting an application for an Iowan, the Iowa authorities (whether it’s disciplinary counsel or the court, I don’t know) are going to be able to subject him to discipline.  Likewise, more obviously, the OED can discipline him.

What rules apply?  The goal of modern choice of law principles in legal ethics is to make it so that one set of rules applies and we can easily figure that out.  Where a matter is pending before a tribunal, the tribunal’s rules will generally apply.  So, if Bob files the application and misses a deadline, the USPTO’s rule about neglect, or competence, should be applied by both the Iowa bar and the OED.

Here is the USPTO Rule on subject matter jurisdiction, which is unique to the Office, but notice how it defines its reach — to practice before the office:

All practitioners engaged in practice before the Office… are subject to the disciplinary jurisdiction of the Office….. A person not registered or recognized to practice before the Office is also subject to the disciplinary authority of the Office if the person provides or offers to provide any legal services before the Office.

“Proceeding before the Office” is itself defined:  “Proceeding before the Office means an application for patent, an application for reissue, a reexamination, a protest, a public use matter, an inter partes patent matter, correction of a patent, correction of inventorship, an application to register a trademark, an inter partes trademark matter, an appeal, a petition, and any other matter that is pending before the Office.”

So, plainly Bob is involved in a proceeding before the Office and the OED could discipline him.  Can the OED apply Iowa’s Rules to his conduct?  Do they apply? Before we get there, let’s see if the OED could discipline Bob because Bob had violated an Iowa rule — without Iowa already having done so.

Another subsection of that same USPTO regulation in title 37 of the CFR identifies what is a basis for OED discipline:

The following, whether done individually by a practitioner or in concert with any other person or persons and whether or not done in the course of providing legal services to a client, or in a matter pending before the Office, constitute grounds for discipline or grounds for transfer to disability inactive status.

(1) Grounds for discipline include:

(i) Conviction of a serious crime;

(ii) Discipline on ethical grounds imposed in another jurisdiction or disciplinary disqualification from participating in or appearing before any Federal program or agency;

(iii) Failure to comply with any order of a Court disciplining a practitioner, or any final decision of the USPTO Director in a disciplinary matter;

(iv) Violation of any USPTO Rule of Professional Conduct; or

(v) Violation of the oath or declaration taken by the practitioner. See § 11.8.

So, unless some other agency or court has disciplined a practitioner, or one of the other specific acts has occurred, the OED has to find that a practitioner violated a USPTO Rule.  So, the OED has to find that Bob violated the USPTO Rules.

Now for Iowa.  (I used to speak there every year!  Why haven’t they invited me back in a couple years?).  Let’s do it in reverse order.  What rules would Iowa apply to Bob’s conduct?  Luckily, it’s the USPTO rules, as Iowa Rule 32:805(b) makes clear:

(b) Choice of Law. In any exercise of the disciplinary authority of Iowa, the rules of professional conduct to be applied shall be as follows:

(1) for conduct in connection with a matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits, unless the rules of the tribunal provide otherwise; and

(2) for any other conduct, the rules of the jurisdiction in which the lawyer’s conduct occurred or, if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied to the conduct. A lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.

The USPTO is a “tribunal.”  It defines itself as one!  See 37 C.F.R. 11.1 (“Tribunal means the Office…”). So, the Iowa Rules won’t apply to Bob’s conduct; even if Iowa tried to discipline Bob, it would apply the USPTO Rules.

Warning:  not every state has the same version of Rule 8.5, and some have weird carve outs (e.g., D.C.).

Now, if Iowa wanted to discipline Bob, does it have subject matter jurisdiction to do so?  It does!  Here is the rest of Iowa’s rule 8.5:

(a) Disciplinary Authority. A lawyer admitted to practice in Iowa is subject to the disciplinary authority of Iowa, regardless of where the lawyer’s conduct occurs. A lawyer not admitted in Iowa is also subject to the disciplinary authority of Iowa if the lawyer provides or offers to provide any legal services in Iowa. A lawyer may be subject to the disciplinary authority of both Iowa and another jurisdiction for the same conduct.

(Remember, Bob’s licensed only in Minnesota.)  So, we end up with a nice good, predictable approach.  A recent case analyzing the subject matter jurisdiction issues, but not the choice of law issue, is York v. W. Va. Office of Disciplinary Counsel, 744 S.E.2d 293 (2013).  According to this opinion, (scroll down to top of page 26), in an unreported later decision, Mr. York was disciplined.

(By the way, Minnesota could also discipline Bob, and it would also apply the USPTO rules in doing so.  Whew!)

Here, unless the facts are weird, Bob’s conduct would violate both Iowa and the USPTO rules, and Minnesota’s for that matter, so who cares?

Like I said at the start, there are critical differences between the USPTO rules and many state rules and often those differences tell us whether Bob keeps his license, or not. More often, choice of law becomes an issue in disqualification motions and in legal malpractice cases.  Ethical rules like state bar rules and then USPTO rules are are applied in disqualification and malpractice cases.  If something is ethical under the USPTO rules, but unethical under state law, choice of law may provide the answer to what’s right — whether a client has a malpractice claim, or a lawyer is subject to disqualification.

Where it gets even more interesting is if the conduct occurs before the application is filed, and so there is no matter before a tribunal (yet).  Some choice of law rules state that that apply to matters that going to be before a tribunal, but many don’t.  Others say that the cover only the lawyer who appears before the tribunal, so what about a lawyer who does work in the office on an application but whose name doesn’t appear on the filing?  What rules apply?  What if it’s an assignment that’s incompetently drafted (probably won’t matter but you see my point)?  What if…

Finally, if state law somehow does apply to conduct before the office, then it may be that a preemption analysis is required, because the USPTO rules do narrowly preempt state law to the contrary.

Supreme Court Patent Report: End of 2015 Term

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by Dennis Crouch

The Supreme Court has completed its patent law business for the 2015 term and will re-open decision making in September 2016.  Briefing and new filings will, however, continue throughout the summer.

Two Decisions: The Supreme Court has decided its two major patent cases – Halo/Stryker and Cuozzo.  In Halo, the court re-opened the door to more treble-damage awards for willful patent infringement.  The decision rejects the objective-recklessness standard of Seagate (Fed. Cir. 2007)(en banc) and instead places substantial discretion in the hands of district court judges for determining the appropriate sactions “egregious infringement behavior.”  In Cuozzo, the court affirmed the Federal Circuit’s pro-PTO decision.  The decisions confirms the PTO’s authority construe claims according to their broadest-reasonable-construction (BRI) even during post-issuance review proceedings and also confirms the Federal Circuit ruling that the PTO’s initiation of an inter partes review (IPR) proceeding is not appealable (even after final decision).  A major caveat of this appealability issue is that the court limited its holding to run-of-the-mill IPR patent issues.  The court did not determine when other issues arising from institution, such as constitutional due process challenges, might be appealable.

Both decisions are important. Halo adds at least a gentle breeze to the would-be patent infringement armada.  I heard many discussions of pendulum’s swinging in the days following the case, although I would not go quite so far.  Cuozzo was a full affirmance of the PTO position and will operate to continue to raise the statute and importance of the agency.

Three Pending Cases Set the Stage for Next Term: With the certiorari writ grant in Life Tech v. Promega, we now have three patent cases set for review and judgment next term.  The issue in Life Tech is fairly narrow and involves export of of a component of a patented invention for combination in a would-be-infringing manner abroad.  The statute requires export of a “substantial portion of the components” and the question in the case is whether export of one component can legally constitute that “substantial portion.”  In the case, the component (Taq) is a commodity but is also an admitted critical aspect of the invention.  Life Tech may be most interesting for those generally interested in international U.S. law (i.e., extraterritorial application of U.S. law).  The other two pending cases are Samsung v. Apple (special damages in design patent cases) and SCA Hygiene (laches defense in patent cases).

None of these three pending cases are overwhelmingly important in the grand scheme of the patent system, although Samsung is fundamental to the sub-genre of design patents.  This week, the Supreme Court denied certiorari in Sequenom v. Ariosa – a case that some thought might serve to rationalize patent eligibility doctrine in a way that favors patentees.  For now, the Mayo, Alice, _____ trilogy remains open-ended. This leaves the Federal Circuit in its nadir.

Following Cuozzo, the only AIA post-issue review cases still ongoing are Cooper and MCM.  These cases raise US Constitutional issues that were expressly not decided in Cuozzo.  Briefing is ongoing in MCM and one scenario is that the court will sit on Cooper and then grant/deny the pair together.  A new petition was filed by Trading Technologies just before Cuozzo was released – the case focuses on a mandamus (rather than appeal) of a CBM institution decision for a patent covering a GUI tool. (Full disclosure – while in practice I represented TT and litigated the patent at issue).  Of minor interest, the court issued a GVR order (Grant-Vacate-Remand) in Click-to-Call Tech. v. Oracle Corp (15-1014) with instructions to the Federal Circuit to reconsider its prior decision in light of the recently decided Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ___ (2016).  It will be interesting to see whether the patentee can develop a new hook for the Federal Circuit.

The end-of-term clean sweep leaves only two-more briefed-cases with potential for certiorari: Impression Prod. v. Lexmark Int’l. (post-sale restrictions); and Sandoz v. Amgen (BPCIA patent dance).  In both cases the court called for the views of the Solicitor General (CVSG). DOJ briefs should be filed around the end of the year – although the election may shift some of the timing.  SG Donald Verrilli has stepped down with former deputy Ian Gershengorn now serving as Acting SG.

The big list:

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End of the Road for Ethicon’s Anti-Delegation Argument?

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by Dennis Crouch

In a 10-1 decision, the Federal Circuit has rejected Ethicon’s petition for en banc rehearing on the question of  whether the USPTO Director improperly delegated IPR institution decisionmaking. Ethicon will likely petition the Supreme Court for its views.  The case raises interesting, but ones that I expect will ultimately fail.  Chief Judge Prost likely held the decision release to await the Cuozzo affirmance that implicitly supports the court’s ruling here.

Inter Partes Reviews (IPRs) can be broken down into a two step process. At the institution stage, the Patent Office Director is tasked with determining whether to institute the proceeding. 35 U.S.C. § 314. Once instituted, the Patent Trial and Appeal Board (PTAB) holds trial and makes a final determination of merits. 35 U.S.C. § 316(c).  Despite the statutory separation, the Director has delegated the entire procedure to the PTAB – including the institution decision.  In its failed petition, Ethicon questioned this delegation – asking: “Does the Patent Act permit the [PTAB] to make inter partes review institution decisions?”

The decision in Cuozzo does not directly address the challenge issues here, but the court’s loose language does suggest that it would side with the Federal Circuit.  In particular, the court repeatedly refers to actions by the “Patent Office” regarding institution and other decision rather than using the statutory language “Director.”  Although not as consistent, the court also repeatedly refers to actions by the PTAB as by the “Patent Office.”  In his dissent, Judge Alito addresses the issue directly and without criticism, although failing to note that Director Lee is a woman:

The Director of the Patent Office has delegated his authority to institute inter partes review to the Patent Trial and Appeal Board (Board), which also conducts and decides the inter partes review. See 37 CFR §§42.4(a), 42.108 (2015); 35 U. S. C. §§316(c), 318(a). I therefore use the term “Patent Office” to refer to the Director, the Board, and the Patent Office generally, as the case may be.

Alito dissent at footnote 2.

 

Supreme Court Affirms Cuozzo – Siding with Patent Office on BRI and No-Appeal

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By Dennis Crouch

The Supreme Court has upheld the AIA provision barring challenges to the Patent Office’s decision to institute inter partes review. 35 U. S. C. §314(d).  In addition, Justice Breyer’s majority opinion approved of the Patent Office’s approach of applying the broadest reasonable construction (BRI) standard to interpret patent claims – finding it a “reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.”

The Court was unanimous as to the BRI standard however, Justices Alito and Sotomayor dissented from the no-appeal ruling – they would have interpreted the statute as limiting interlocutory appeals but still allowing review of the decision to institute within the context of an appellate review of the PTO’s final decision on the merits.

Cuozzo Speed Technologies, LLC v. Lee, 579 U. S. ____ (2016).

No Appeal: The court began with the express language of the statute which expressly states that the decision of “whether to institute an inter partes review . . . shall be final and non-appealable.”  The provision is plain on its face and indicates congressional purpose of delegating authority to the Patent Office.  The dissenting opinion offered by Justice Alito offered to limit the statute as preventing only interlocutory appeals, but the majority rejected that interpretation as lacking textual support and being ‘unnecessary’ since the APA “already limits review to final agency decisions.”[1]  The Supreme Court also analogized the PTO’s initiation decision to that of a grand jury – which is likewise unreviewable. “The grand jury gets to say— without any review, oversight, or second-guessing— whether probable cause exists to think that a person committed a crime” (quoting Kaley v. United States, 571 U. S. ___ (2014)).

If you remember, Cuozzo did not present a Constitutional challenge to the AIA regime and the majority opinion offered a glimmer of limitation in that regard. Notably, the Court suggested that challenges to the decision to institute might be appealable if based upon a Constitutional issue or some other issue outside “well beyond” the post issuance review proceeding statutory provisions.

We conclude that the first provision, 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.

The opinion here includes a number of nuances that will be interesting to tease-out, but the bottom line is that IPR remains a powerful tool for challenging patents.

Claim Construction during Inter Partes Review: Regarding the Broadest-Reasonable-Interpretation being applied to patent claims, the court was unanimous in siding with the USPTO.  The court began by noting that Congress granted rulemaking authority to the USPTO to create regulations governing inter partes review and that this authority empowered the USPTO to enact rules both substantive and procedural that are reasonable in light of the statutory text.  Since the statute was “not unambiguous” as to the appropriate claim construction standard, and therefore that the USPTO must be given leeway in determining its administrative approach.

Cuozzo had argued that IPR proceedings were like trials in many ways and therefore the claim construction should be parallel to that of trial proceedings.  The Supreme Court rejected that analogy – finding that IPR proceedings serve a purpose much broader than merely “helping resolve concrete patent-related disputes among parties.”

[I]nter partes review helps protect the public’s “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806 (1945); see H. R. Rep., at 39–40 (Inter partes review is an “efficient system for challenging patents that should not have issued”).

In finding BRI reasonable, the court followed this public-interest pathway and found that BRI helps to provide stronger bounds on patent scope:

We conclude that the regulation represents a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office. For one thing, construing a patent claim according to its broadest reasonable construction helps to protect the public. A reasonable, yet unlawfully broad claim might discourage the use of the invention by a member of the public. Because an examiner’s (or reexaminer’s) use of the broadest reasonable construction standard increases the possibility that the examiner will find the claim too broad (and deny it), use of that standard encourages the applicant to draft narrowly. This helps ensure precision while avoiding overly broad claims, and thereby helps prevent a patent from tying up too much knowledge, while helping members of the public draw useful information from the disclosed invention and better understand the lawful limits of the claim. See §112(a); Nautilus, Inc. v. Biosig Instruments, Inc., 572 U. S. ___ (2014).

Affirmed.

Most of the IPR-related petitions for writ of certiorari that are still pending are likely to fall-away at this point. However, the major caveats in the majority opinion (noted above) offer some light for both Cooper v. Lee and MCM v. HP since those petitions challeng the system on US Constitutional grounds.

USPTO Director Michelle Lee offered the following statement in reaction to the Cuozzo decision:

The USPTO appreciates the Supreme Court’s decision which will allow the Patent Trial and Appeal Board (PTAB) to maintain its vital mission of effectively and efficiently resolving patentability disputes while providing faster, less expensive alternatives to district court litigation.

Director Lee will likely step-down as the Obama Administration moves out.  A portion of her legacy will remain as the named respondent.

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[1] 5 U. S. C. §704

 

USPTO’s Six New Patent Quality Studies

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1) Evaluation of the deviation of 35 U.S.C. §101 rejections from official guidance, correctness of rejections and completeness of the analysis. This study will evaluate whether examiners are properly making subject matter eligibility rejections under 35 U.S.C. §101 and clearly communicating their reasoning.

2) Review of consistency of the application of 35 U.S.C. §101 across art units/technology centers. This study will take a look at applications with related technologies located in different art units or technology centers and determine whether similar claims are being treated dissimilarly under 35 U.S.C. §101.

3) The practice of compact prosecution when 35 U.S.C. §101 rejections are made.  This study will determine whether all appropriate rejections are being made in a first Office action when a subject matter eligibility issue is also identified.

4) Correctness and clarity of motivation statements in 35 U.S.C. §103 rejections. This study will evaluate whether reasons for combining references set forth in rejections under 35 U.S.C. §103 are being set forth clearly and with correct motivation to combine statements.

5) Enforcement of 35 U.S.C. §112(a) written description in continuing applications. This study will evaluate claims in continuing applications to determine if they contain subject matter unsupported by an original parent application and whether examiners are appropriately enforcing the requirements of 35 U.S.C. §112(a) written description.

6) Consistent treatment of claims after the May 2014 35 U.S.C. §112(f) training. This study will determine whether claims invoking 35 U.S.C. §112(f) are being properly interpreted and treated.

http://www.uspto.gov/blog/director/entry/topics_announced_for_case_studies

 

Digital Trademark and Design Patent Infringement

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Guest post by Lucas S. Osborn, Associate Professor of Law at Campbell University School of Law. He will be visiting at Denver University School of Law for 2016-17.

Digital technology continues its collision with intellectual property law, this time in BMW’s lawsuit against the online virtual modeling company TurboSquid. TurboSquid sells digital 3D models of various items for use by game developers, architects, visual effects studios, etc.

This case is paradigmatic of a project Mark McKenna and I are working on, which analyzes trademarks in the context of digital goods. BMW complains that TurboSquid’s “marketing of 3-D virtual models” of BMW vehicles infringes BMW’s trademarks, trade dress, and design patents. Specifically, it complains that TurboSquid “markets and tags BMW-trademarked 3-D virtual models of BMW vehicles as suitable for games.”

Interestingly, although some of BMW’s registrations cover “miniature toy vehicles,” “interactive game programs,” and “scale model vehicles,” none of the registrations covers virtual models of vehicles. BMW also alleges that it “licenses its trademarks and patented designs for use in 3-D virtual models for computer games.”

BMW’s claims of infringement raise conceptual difficulties. Does selling a virtual object directly infringe a trademark or design patent that contemplates, or is in fact limited to, a physical good?

In thinking about trademark infringement, the core analysis focuses on whether the digital file is a good about which there is confusion as to source, sponsorship, or the like.  Confusion might arise from at least three mechanisms. First, TurboSquid might create a website environment that looks as if it is a BMW-sanctioned website, such as by using a domain name like BMW.net or by designing the webpage to suggest that it is affiliated with BMW. The TurboSquid website does not do this.

Second, TurboSquid might cause confusion through the external labels attached to each file. If the file name/description read, “BMW authorized model of BMW X3,”  TurboSquid would falsely suggest an affiliation or source. But its external file labels read simply, “BMW X3” and the like. BMW will doubtless argue that this external file labeling provides an indication of source or affiliation, but is this so? Arguably the external description is nominative or descriptive because it merely describes what the file is, i.e., a model of a BMW car. Of course, TurboSquid could change all the external file descriptions to eliminate the potential confusion (i.e., “unauthorized model of BMW X3”), but courts should balance the burden on TurboSquid and the effects on user search costs against any evidence of the extent of actual or potential confusion.

Deciding whether the external file description creates confusion or instead is nominative bleeds into the third potential argument for confusion, which is that the content of the digital file itself causes the confusion. That is, BMW will argue that since the content of the digital file displays a BMW logo on the car, the purchaser will be confused as to source or sponsorship. The Supreme Court, however, seemingly foreclosed this argument in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). Dastar directs that a court should not use the content of the digital file to inform the confusion analysis.

Dastar copied footage from Fox’s Crusade in Europe television series and reused portions of that footage in its own videos without attribution to Fox. Id. at 26-27. Fox alleged Dastar committed reverse passing off in violation of § 43(a) of the Lanham Act by representing Fox’s content as its own. Id. at 27. The Supreme Court rejected Dastar’s claim, holding that “origin of goods” refers only to the “producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. Id. at 37.

The Court was concerned that allowing claims for reverse passing off in the context of copyrightable works “would create a species of mutant copyright law” that would conflict with the Federal copyright regime. Id. at 34. Dastar’s concern about conflicts between copyright and trademark law channels courts away from finding confusion based on the content of expressive works. See generally Mark P. McKenna, Dastar’s Next Stand, 19 J. Intell. Prop. L. 357 (2012). Thus, the content of TurboSquid’s files cannot form the basis of the confusion. The content of the files is protected, if at all, by some other form of intellectual property law, such as copyright.

Even assuming there is no point-of-sale confusion with the purchase of the digital file, TurboSquid cannot drive away freely just yet; it must contend with post-sale confusion. Post-sale confusion protects trademark owners when there is no point-of-sale confusion because the purchaser of the good knows it is fake. Courts have found that confusion can arise after a sale when the individual wears the infringing good in public, causing observers to see the branded item and become confused about whether it is genuine or not.

TurboSquid’s purchasers obviously will not wear the digital files in public. Nevertheless, they will use the files in downstream productions such as video games, and thus BMW also alleged there will be post-sale confusion. However, use of the models in expressive works like games and other video productions will not likely lead to an actionable trademark claim because the First Amendment protections provided to expressive works would likely trump any trademark claim.  See, e.g., Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989); E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir. 2008). Moreover, once again Dastar suggests that any potential confusion generated from the content of the video game or other expressive work is irrelevant under the Lanham Act.

Trademark law arose in a world of physical goods to protect manufacturers and prevent consumer confusion as to who manufactured the goods. In a digital world, manufacturing will increasingly be done, if at all, by individuals with 3D printers. Other digital models, such as TurboSquid’s BMW models, will never exist as physical objects.  Where consumers care about the quality of a digital file, trademark law can protect consumers from being deceived by indicia external to the file. But if purchasers are not confused about the source of the digital file based on external indicia, courts should channel any other potential claims (if any) to other areas of intellectual property law.

Supreme Court Patent Update: 271(e) Safe Harbor

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by Dennis Crouch

Look for opinions in Halo/Stryker and Cuozzo by the end June 2016.

Post Grant Admin: While we await Cuozzo, a set of follow-on cases continue to pile-up.  My speculation is that the Supreme Court will delay any decision in those cases until it finalizes the outcome of Cuozzo. With a host of new friend-of-the-court briefs and interesting constitutional questions, MCM v. HP is perhaps best positioned for certiorari.  Additional pending cases include Versata v. SAP (scope of CBM review); Cooper v. Lee (whether IPRs violate Separation of Powers); Click-to-Call Tech, LP v. Oracle Corp., (Same questions as Cuozzo and now-dismissed Achates v. Apple); GEA Process Engineering, Inc. v. Steuben Foods, Inc. (Flip-side of Cuozzo: Appeal when PTAB exceeds its authority by terminating an instituted IPR proceeding?); Interval Licensing LLC v. Lee (Same as Cuozzo); and Stephenson v. Game Show Network, LLC (Same as Cuozzo)

Design Patent Damages: Samsung has filed its opening merits briefs in the design patent damages case against Apple.  Design patent infringement leads to profit disgorgment, but the question is what profits? [More from Patently-O].

Versus Cisco: There are a couple of newly filed petitions. Interestingly, both filed by Michael Heim’s firm with Miranda Jones on both briefs representing plaintiff-petitioners.  In both cases Cisco is respondent.

  • CSIRO v. CISCO (fact-law divide in proving infringement damages under 35 U.S.C. § 284).
  • COMMIL v. CISCO (appellate disregard of factual evidence).

Of course, Commil was the subject to a 2015 Supreme Court decision that rejected the Federal Circuit’s original opinion favoring Cisco.  On remand, the Federal Circuit completely changed its decision but again sided with Cisco and rejected the jury verdict — holding “that substantial evidence does not support the jury’s finding that Cisco’s devices, when used, perform the “running” step of the asserted claims.”

Safe Harbor for Federal Submissions: In the newly filed Amphastar Pharma case, the Supreme Court has already requested a response from Momenta. The question presented focuses on the safe-harbor provision of 35 U.S.C. § 271(e)(1) and asks: Whether the safe harbor protects a generic drug manufacturer’s bioequivalence testing that is performed only as a condition of maintaining FDA approval and is documented in records that must be submitted to the FDA upon request.  The federal circuit held that Amphastar’s activity in this case was not protected by the safe harbor because it involved information “routinely reported” to the FDA post-approval. [Amphastar Petition]

The big list:

(more…)

Pending Supreme Court Patent Cases 2016 (May 18 Update)

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by Dennis Crouch

It is now time to begin looking for an opinion in the Halo/Stryker regarding whether the Federal Circuit’s test for willful infringement is too rigid. Those cases were argued in February 2016.  We can also expect a decision in Cuozzo prior to the end June 2016.

Supplying Components Abroad: The Solicitor General has finally filed its brief in Life Tech v. Promega. The brief supports certiorari — but only for one of the two questions presented: namely,

whether a supplier can be held liable for providing ‘all or a substantial portion of the components of a patented invention’ from the United States when the supplier ships for combination abroad only a single commodity component of a multi-component invention

The patent in the case involves a DNA amplification kit used for personal identification.  And, although the allegedly infringing kids were made in the UK, one commodity-component (the Taq polymerase) was supplied from the U.S.  Focusing on the language of the statute, the Solicitor Generals argues that liability for export of a single component of a multi-component invention “is contrary to Section 271(f)’s text and structure, and it is inconsistent with the presumption against extraterritoriality.”  Separately, the brief argues that the Federal Circuit was correct in its holding that a party can actively induce itself – thus 271(f)(1) inducement does not require a third party to be induced. [USPromega CVSG Petition].

Post Grant Admin: I previously discussed GEA Process Engineering. That case involves the Flip-side of Cuozzo and asks whether an appeal can follow when the PTAB exceeds its authority by terminating an already instituted IPR proceeding?  The respondent (Steuben Foods) had previously waived its right to respond, but the Supreme Court has now requested a response.  That move makes certiorari more likely, but the result will depend upon the outcome in Cuozzo.

Attorney Fees: Newegg Inc. v. MacroSolve, Inc., No. 15-1369.  Professor Mark Lemley’s brief on behalf of Newegg asks that the attorney-fee framework of Octane Fitness actually be implemented. [NewEggPetition].  Although Octane Fitness gives district courts discretion in determining whether to award fees, Newegg argues that the E.D. Texas court improperly applied “a special, heightened burden of proof.”  The Supreme Court is currently considering the Kirtsaeng attorney fee case for copyright law. That decision may shed some light on the patent cases as well.

A new petition in Automotive Body Parts, No. 15-1314,  focuses on a question of civil procedure regarding a clerk’s transfer of a design patent case out of E.D.Tx in a manner that violated the local rules.  Here, the clerk transferred the case immediately after the judge ordered transfer even though the local rules call for a 21 day delay.  The case is rising through a petition for mandamus, but my view is that the petition fails to show why transfer is so harmful (except for the reality that patent plaintiffs are usually given more respect in E.D.Tx.).

The court was scheduled to discuss Cooper v. Lee at its May 12 conference. No action was taken following that conference – lightly suggesting to me that the court is holding judgment until it resolves Cuozzo.  Apart from the AIA Trial challenges, most potential life changing case on the docket for patent attorneys is Cubist v. Hospira that focuses on the role of secondary indicia of non-obviousness. As with most Supreme Court patent cases over the past decade, Cubist argues that the Federal Circuit’s rules are too restrictive and should instead follow a looser factor-based analysis when considering the issue.  In the next couple of weeks, the court will consider the Cubist petition as well as that of Dow v. NOVA  (appellate review standard); Vehicle Intelligence (abstract idea); and WesternGeco (damages calculation for 271(f) infringement by exporting components).

Secret Offers to Sell: The Federal Circuit is not slowing down its patent jurisprudence in any way – except for the rash of R.36 affirmances. An important case is Helsinn that focuses on whether the AIA abrogated the rule in Metallizing Engineering.

The big list: (more…)

Precedent and Process in the Patent Trial and Appeal Board

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Guest post by Saurabh Vishnubhakat, Associate Professor of Law at the Texas A&M University School of Law.  Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, although his arguments here should not be imputed to the USPTO or to any other organization.

On May 9, the USPTO Patent Trial and Appeal Board (PTAB) designated five opinions as “precedential”—the most significant of the four labels that the agency attaches to its administrative decisions.  This action is itself a milestone, as the USPTO has designated only three other opinions as precedential over the last 22 months.  So this is a useful moment to examine the process by which PTAB opinions become precedential and to consider what this new body of administrative precedent means for the patent validity review procedures created by the AIA.

What the Current Precedential Opinions Say

The eight PTAB precedential opinions themselves are as follow:

Designated as Precedential in May 2016

Designated as Precedential in January 2016

Designated as Precedential in July 2014

What the PTAB Designations Mean

PTAB opinions come in four varieties—until recently, it was three—and each serves a different function.  The most difficult to designate and so the rarest are precedential opinions, which are binding in all future cases before the PTAB unless and until they are superseded by later binding authority.  Two particularly strong motivations for designating an opinion as precedential is to resolve a conflict among multiple PTAB decisions and to address novel questions.

By contrast, the largest and least significant set of opinions are routine; all opinions are routine by default, and some further action is necessary to elevate an opinion’s status.  Routine opinions are still binding as to the particular case, but should generally not be cited as persuasive authority except as to their particular facts.

In the middle are two more types of non-binding opinions: informative and representative.  Informative opinions articulate the PTAB’s norms on recurring issues and offer guidance both on issues of first impression and on PTAB rules and practices.  Representative opinions offer a sample of typical decisional outcomes on a given matter.  Until recently, the only middle category was informative opinions, which presented guidance on the rules and practices of the PTAB, representative samples of opinion types, or representative samples of outcomes. On September 22, 2014, the PTAB created a new category for representative opinions—ranked below informative opinions.

In short, representative opinions are a descriptive curation of routine opinions.  Informative opinions go beyond merely surveying an issue and synthesize some further normative guidance.  Precedential opinions go further still and make the synthesis binding.

How the PTAB Designates Opinions

The process for designating opinions resides in the PTAB’s Standard Operating Procedure No. 2 (Rev. 9, Sept. 22, 2014).  Any member of the PTAB may nominate an opinion to be designated as representative, informative, or precedential.  This includes the Director and Deputy Director of the USPTO and the Commissioners for Patents and Trademarks as ex officio members.  Interested parties and members of the public may nominate an opinion within 60 days of its issuance to be designated as precedential.  Nominations are received and referred by the Chief Judge of the PTAB.

Upon a nomination to make an opinion precedential, members of the PTAB discuss the proposal for a prescribed period (usually 10 business days) and then vote.  Approval by a majority sends the opinion to the Director, whose approval is also necessary.  Upon approval by the Director, the opinion is designated as precedential and published (with appropriate notice and opportunity for written objection where confidentiality applies under 37 C.F.R. § 1.14).

For opinions already designated as precedential, any member of the PTAB may suggest that later authority has overcome the opinion’s precedential value.  If first the Chief Judge and then the Director both agree, then the opinion loses its precedential force, and a notice of the change is posted in its place among the list of precedential PTAB opinions.

The Chief Judge of the PTAB may designate any opinion as informative or representative so long as it is not already precedential.

Why the PTAB’s Precedents (and Process) Matter

Both the content of the PTAB’s body of precedential opinions and the PTAB’s process have important implications for ex post administrative review of patent validity.

As to content, it is telling that all eight precedential opinions pertain to the procedural structure of IPR and CBM proceedings, particularly insofar as that procedural structure interacts with the structure of patent litigation in the federal courts.  The separation of patent powers between the executive and the judiciary is now before the Supreme Court in multiple cases, and this body of precedential opinions should be understood as a signal of the USPTO’s strong interest in shoring up its regime of administrative adjudication.

The opinions in SecureBuy, LG Electronics, and Oracle address when earlier civil actions do and do not bar a petition for PTAB review.  Westlake Services addresses estoppel in future CBM review, and there is good reason to expect that the same reasoning will apply to the parallel statutory language that governs IPR estoppel.  Lumentum Holdings rejects a jurisdictional view of certain procedural requirements, preserving the PTAB’s broad authority to choose its cases.  MasterImage 3D frames a patent owner’s ability to amend claims during review.  And Bloomberg and Garmin Int’l address limits on trial-type discovery in both the IPR and the CBM/PGR contexts.  Making these procedural and structural decisions into binding authority is, by definition, intended to bring uniformity to the PTAB’s large and increasing body of case law.

The need for such uniformity is particularly strong right now.  The Supreme Court in Cuozzo v. Lee is evaluating whether the PTAB’s authority in instituting petitions is truly nonreviewable.  The Court in Cuozzo is also considering whether the PTAB’s claim construction standard can properly remain unaligned with federal court standards, a question that turns significantly on the ability of patent owners to amend their claims during review.  The trial-like nature of PTAB proceedings is more generally under attack as to whether IPR and CBM review violate the separation of powers doctrine and the Seventh Amendment jury trial right, as the recent cert petition in MCM Portfolio LLC, Petitioner v. Hewlett-Packard Company (No. 15-1330) suggests.  In this environment of Supreme Court scrutiny, a persuasive argument that PTAB practice is proceeding with institutional coherence may do much to influence the USPTO’s autonomy in administering the validity and scope of patent rights.

Automatic Assignment of Future Inventions: A Serious Error of Federal Law that Requires Supreme Court Review

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Guest post by Dr. Shubha Ghosh, Crandall Melvin Professor of Law and Director of the Technology Commercialization Law Program at Syracuse University College of Law

In Stanford v Roche, 563 U.S. 776 (2011), the Supreme Court ruled that the Bayh-Dole Act did not create special rules of patent ownership for universities and other recipients of federal research funding.  Traditional rules of inventor ownership and assignment, developed for for-profit entities applied to research institutes. Nothing in the language of the Bayh-Dole changed the basic rules and created a statutory automatic assignment (one analogous to work made for hire under the Copyright Act).

But what are the traditional rules for patent assignment? One issue the majority ignored in Stanford is the future interest assignment rule created by the Federal Circuit in Filmtec Corp. v. Allied Signal, 939 F.2d 1568 (Fed. Cir. 1991).  By containing the phrase “hereby assigns,” the Federal Circuit stated in Filmtec, an assignment would have priority over another that only contained the word “assigns.” An assignor stating that he “assigns” a future interest is simply conveying a promise to assign in the future. However, the magic phrase “hereby assigns” is a present assignment of a future interest.  Stanford University’s failure to include the word “hereby” in its assignment agreement lost patent rights to Roche, a competing assignee that showed the wisdom to include the word “hereby” in its agreement.

Justices Breyer and Ginsburg in dissent sharply criticized the Filmtec rule of “automatic assignment” through agreement in the Stanford case. This sentiment was echoed in Justice Sotomayor’s concurrence. All three justices, however, recognized that the assignment interpretation issue was not properly before the Court.  Dr. Alexander Shukh, a computer hardware engineer, signed an assignment to his former employer Seagate.  The assignment contained the “hereby” language sanctioned by the Filmtec decision.  Seagate, and the Federal Circuit, reads the hereby language as creating an automatic assignment of Shukh’s rights to his inventions and resulting patents. The Shukh decision does not involve priority of assignments and  goes beyond the Filmtec decision criticized by Justices Breyer, Ginsburg, and Sotomayor.  Under Shukh, the magic words “ hereby assigns” extinguishes all rights of employees in their inventions.

The Court should grant Shukh’s certiori petition. This post demonstrates that there is a serious error of federal law that requires Supreme Court review. It also shows how the Court might correct the misapplication of federal law.

The Federal Circuit created the rule of automatic assignment through agreement without any basis in the Patent Act or in the common law of assignment. Acting from its institutional law as patent law expert, the Federal Circuit seemingly adopted the Filmtec rule as one of patent assignment. But, as Professor Ted Hagelin pointed out in a 2013 article in the AIPLA Law Quarterly, the automatic assignment rule has no foundation in the Patent Act.  Section 261 speaks to writing requirements and priority rules arising from filing.  There is no mention of the magic word “hereby” as a marker between promises to assign in the future and present assignments of future interests.  Professor Hagelin recommended that Congress correct the error by amending Section 261.

But the Federal Circuit’s error is deeper than one of statutory misconstruction. Its decision confuses the relationship between patent law and contract law. The error is in the same category as the controversy over the conditional sale doctrine, a court created rule from Mallinckrodt v. Medipart, 976 F.2d 700 (Fed. Cir. 1992).  In Mallinckrodt, the Federal Circuit examined a patent owner’s power to impose conditions on its grant of rights to a licensee. Through announcing the conditional sale doctrine, the Federal Circuit ruled that a violation of such conditions constituted patent infringement rather than contract breach.  By so ruling, the Federal Circuit expanded its own jurisdiction by transforming questions of state contract law into those of patent law. A similar move occurs in Filmtec.

The usurpation of contract law by patent law is the subject of my 2014 article in the Journal of the Patent and Trademark Office Society.  My argument in that paper is grounded, in part, in Judge Pauline Newman’s criticism of Filmtec in her dissent from denial of en banc review in Abraxis v. Navinta. 672 F.2d 1239 (Fed. Cir. 2011). According to Justice Newman, patent assignments are a matter of contract law, which is in the jurisdiction of the states. Therefore, the Federal Circuit should look more closely at state law in deciding cases about patent assignments.

The judge’s point is particularly salient when one remembers that the Federal Circuit was created as an expert patent court.  It was given jurisdiction to hear some non-patent matters when these matters are related to patent cases.  Patent assignments are one obvious example of when the Federal Circuit has jurisdiction to consider state matters.  But, as Judge Newman points out, jurisdiction to hear a case does not mean authority to create new law, as the Federal Circuit arguably did in Filmtec and in Stanford. Instead, the Federal Circuit should look to other authorities to address non-patent law matters. For contract law matters, what state courts and legislatures have said about assignments generally would be relevant.  Furthermore, state law provides a stable and predictable source of authority for actors engaged in the business practice of negotiating patent assignments and other contracts.

The core problem is that the court has ignored the Erie doctrine. Under the Supreme Court’s 1937 decision in Erie v. Tompkins, a federal court ruling on a matter of state law under its diversity jurisdiction must apply the law of the state from which the dispute arose.  Which state law to apply is a matter of choice of law principles.  What the federal court cannot do is create its own federal common law in lieu of the state statutory or common law. As the Court affirmed in Butner v. United States, 440 U.S. 48 (1979),  the Erie doctrine applies to a court’s supplemental jurisdiction over state law claims attendant to a federal question. By creating its own federal common law of contracts, the Federal Circuit reveals a fundamental error in its understanding of the federal court system.

State law offers a different analysis of patent assignments from what the Federal Circuit adopts. Justice Breyer, in his Stanford dissent, cited a treatise on patent law by George Ticknor Curtis from 1873 that discusses patent assignments.  Curtis addresses how state law treats assignments and cites a Massachusetts case from 1841 dealing with patent assignments.  Relevant to the issues in Stanford, the assignment involved the present assignment of an invention that had not been made yet.  The court analyzed the assignment as it would any contract, identifying the terms of the document as a key to the expectations of the parties. State law precedents perhaps offer an alternative to the questionable Federal Circuit jurisprudence, at least with respect to patent assignments.

One related area in state law is that of security interests, a part of debtor-creditor law.  In entering into credit agreements, creditors ask for security in the form of collateral for a loan. The collateral may be a legal interest that is not in existence at the time of the loan.  An example would be the future sales or proceeds from a debtor’s business. Another example would be inventory remaining at the end of an accounting period.  These future interests are analogous to the future inventions or patents that I have been discussing.  Rights can be claimed in these properties that are nonexistent at the time of the contract formation between creditor and debtor.

Security interests provide the most common situation in which conflicting obligations arise.  Debtors often take multiple mortgages, hypothetic future proceeds to multiple creditors, and take multiple loans out on the same collateral.  As long as the value of the collateral can cover all the debts, then there is no problem in general.  However, if not all creditors can be satisfied, priority rules are necessary.  In the case of future interests, the law does not fall back on simple rules like first in time because there are multiple interests involved.  A creditor does not want to run the risk of not receiving any return on the debt.  The legal rules of priority allow the creditor to investigate the collateral and through such due diligence identify competing claimants on the collateral.  Priority rules, consequently, depend not only on the timing of the contract, but also on recording and notice requirements.

The case of conflicting patent assignments bears some similarity to the law on intangible future interests in creditor-debtor law.  Both entail rights in property that has yet to come into being.  The main lesson from creditor-debtor law, which is largely a matter of state law, is that many interests are implicated and therefore simple rules are not satisfactory.  The Federal Circuit has arguably adopted too simple and misguided a rule in the Filmtec.  The Supreme Court has confounded the error in the Stanford decision by ignoring the issue of automatic assignments. One way to correct course is by granting Shukh’s petition for certiori and restore the proper balance between federal patent law and state commercial law.

Guest Post: The AIA, Inter Partes Review, and Takings Law

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In a provocative new article called “Taking Patents,” 72 Wash & Lee L. Rev. (forthcoming 2016), Gregory Dolin (Baltimore) and Irina Manta (Hofstra) argue that the Federal Government effectuated a taking through its creation and implementation of the inter partes review mechanism.  Below, Camilla Hrdy and Ben Picozzi summarize the main points of their recent response to Dolin and Manta, “The AIA Is Not a Taking: A Response to Dolin & Manta,” 72 Wash. & Lee L. Rev. Online 472 (2016).

Gregory Dolin and Irina Manta argue in a forthcoming article that the Leahy-Smith America Invents Act (AIA) effectuated a Fifth Amendment “taking” by enhancing the mechanisms for challenging issued patents in administrative proceedings. Initial data do indicate that patents are more likely to be found invalid in the new inter partes review (IPR) and covered business method review (CBMR) proceedings than in district court actions or through the IPR and CBMR’s administrative predecessors. Patentees’ have even complained that the filing of individual IPR petitions has affected their stock prices.

Has the AIA made it too easy to invalidate a patent? Have patentees been treated unfairly? Maybe. Maybe not. But one things is clear: Dolin and Manta’s argument that the AIA is a taking faces serious legal hurdles.

First, Dolin and Manta’s premise that patents are property rights protected by the Takings Clause is far less clear than they contend. While the Supreme Court has recently suggested that patents, like land, “cannot be appropriated or used by the government itself, without just compensation,” see Horne v. Department of Agriculture, 135 S. Ct. 2419 (2015) (quoting James v. Campbell, 104 U.S. 356, 358 (1882)), both that statement, and the statement it quotes, are dicta. More recent decisions express greater ambivalence regarding patents’ status under the Takings Clause.

In contrast with trade secrets, the Supreme Court has never held that patents are property under the Takings Clause. In Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999), the Court held that Congress can’t abrogate states’ sovereign immunity from patent infringement claims. In reaching this conclusion, the Court stated that patents are “surely included within the ‘property’ of which no person may be deprived by a State without due process of law.” Id. at 642. But the Court declined to rule on patents’ status under the Takings Clause. See id. at 642.

Most recently, in Zoltek Corp. v. United States, 442 F.3d 1345 (Fed. Cir. 2006) (per curiam), vacated on other grounds, 672 F.3d 1309, 1314–22 (Fed. Cir. 2012) (en banc), the Federal Circuit held (rightly or wrongly) that 28 U.S.C. § 1498 is the only means of recovery for patentees whose patents are infringed by the U.S. government. Patentees can’t bring claims for compensation under the Takings Clause. Although the court eventually vacated that decision, the court never repudiated the reasoning behind its constitutional holding.

Dolin and Manta try to get around Zoltek by arguing that, unlike government infringement—which is like a forced permit and leaves all the rights of a patent intact—the AIA “changed the scope of patent rights themselves” by subjecting issued patents to more stringent post-issuance review. However, courts have not endorsed that argument, and analogs are difficult to find.

Second, even if we accept the argument that government can potentially take patents by altering their scope retroactively, courts are unlikely to view post-issuance review proceedings as the kinds of government actions regulated by the Takings Clause. Courts assessing constitutional challenges under the Fifth or Fourteenth Amendment tend to distinguish actions intended to “cure” defects in government administrative systems from incursions on property rights. In Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985), the Federal Circuit rejected a very similar challenge to IPR’s predecessor based partly on this distinction, noting that reexamination statute belonged to “the class of ‘curative’ statutes, designed to cure defects in an administrative system[,]” and that such statutes are treated more favorably for Fifth Amendment purposes even when they devalue property rights. We see little reason that a court would reach a different conclusion today.

Lastly, even if a court decides it is possible for the government to take patents by subjecting them to more stringent post-issuance review, Dolin and Manta’s argument almost certainly loses as a matter of takings doctrine. To determine whether a particular governmental action effectuates a taking, courts assess “the character of the governmental action, its economic impact, and its interference with reasonable investment-backed expectations.” See Penn. Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978). Thus, even assuming we accept that the AIA significantly devalued all patents (a big “if”), whether this constitutes a taking depends on whether patentees should have anticipated that Congress would amp up administrative review, given the existing regulatory background.

Dolin and Manta argue the AIA’s enhanced IPR and CBMR proceedings interfered with patentees’ “reasonable investment-backed expectations” by increasing the likelihood that their patents would be found invalid in administrative proceedings utilizing patentee-unfriendly rules such as “preponderance of the evidence” standard for invalidation and “broadest reasonable construction” with limited opportunity to amend. But, as Dolin and Manta concede, the AIA was enacted against a background of federal statutes and regulations that authorize challenges to patent validity. IPR and CBMR review are only the latest in a series of administrative procedures authorizing parties to offensively challenge the validity of issued patents. To us, it seems highly unlikely that the question of whether the Takings Clause applies to the creation of new IPR and CBMR review could turn on such small differences as whether or not patentees have a full opportunity to amend their claims during review.

Also, it is worth noting that beyond third party challenges to patent validity, numerous federal regulatory statutes limit patentees’ ability to exploit their inventions for purposes of health and safety. For example, various regulatory review statutes, such as the Food, Drug, and Cosmetic Act (FDCA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Toxic Substances Control Act (TSCA), practically reduce effective patent lifetimes by prohibiting patentees from commercially marketing or using protected products prior to regulatory approval. Yet none of these statutes fully compensate patentees for their losses.

Are these actions all takings as well? This conclusion has troubling consequences. Does Congress really need to compensate patentees every time it passes a statute that significantly affects the value of issued patents? Could Congress pass regulations for the purpose of restraining bad-faith enforcement of patents that have already been granted? What about judicial actions that reduce the value of patents? Do they intend for Congress to compensate patentees in these cases or to take fewer actions limiting patent rights, simply due to the fear of effectuating a taking? This seems like a dangerous basis on which to formulate patent policy.

In any case, we think that, given this regulatory backdrop and the existence of administrative review proceedings for over thirty years, patentees could foresee—or reasonably should have foreseen—that the government would continue to actively regulate patent rights without “just compensation.”

Together, these arguments persuade us that the AIA is not a taking. Nevertheless, the authors’ article is a thought-provoking and educational analysis of the constitutional implications of Congress’s recent efforts to reform the patent system. We thank them for reopening the door on this area of scholarship.

Pending Supreme Court Patent Cases 2016 (May 3 Update)

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by Dennis Crouch

Laches: The Supreme Court granted SCA’s writ of certiorari on the question of whether laches defense applies to block back-damages in patent cases. The Federal Circuit says “yes” while the Supreme Court recently said “no” in a parallel copyright case (Patrella).  The Supreme Court decided Patrella 6-3 with Justice Scalia in the majority offering the potential of a tight-split in this case.  The court looks to be sitting-on the parallel case of Medinol v. Cordis until SCA is decided.

CheerCopyrightCopyright on Useful Articles: Although not a patent case, the court also decided to hear a “useful article” copyright case.  Star Athletica v. Varsity Brands.  The case asks whether the stripes and chevrons found in a cheerleader uniform are sufficiently “separable” from the uniform in order to be copyrightable.  The useful article doctrine is generally considered to be setting up a boundary line between the domains of copyright and patent.

More Challenges to USPTO Authority: MCM filed its petition for writ of certiorari directly challenging USPTO authority to conduct inter partes review proceedings with two easy questions:

  1. Does IPR violate Article III of the Constitution?
  2. Does IPR violate the Seventh Amendment to the Constitution?

[MCM Petition and Appendix] MCM’s brief was filed Tom Goldstein along with Ned Heller.  The question for the Supreme Court is whether to extend or contract from its position in Stern v. Marshall, 131 S. Ct. 2594 (2011) where the court held that Article III of the U.S. Constitution prohibits Congress from withdrawing “from judicial
cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.” Quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272  (1856)).

The brief raises a set of interesting old cases focusing both on the separation of powers and the tradition that patent-revocation for invalidity requires a jury to decide disputed facts.

  • Ex Parte Wood & Brundage, 22 U.S. 603 (1824)
  • McCormick Harvesting Mach. Co. v. C. Aultman & Co., 169 U.S. 606 (1898)
  • Mowry v. Whitney, 81 U.S. 434 (1871)
  • Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272 (1856)
  • Neilson v. Harford, Webster’s Patent Cases 295 (1841)
  • Pennock v. Dialogue, 27 U.S. 1 (1829)
  • United States v. Am. Bell Tel. Co., 128 U.S. 315 (1888)

Cooper v. Lee raises some parallel issues. Its petition will be considered by the Court in its May 12. [Update: The court has “rescheduled” consideration of Cooper’s brief – perhaps awaiting its own determination in Cuozzo.]

Hereby Assign Future Inventions: In Shukh v. Seagate, the petitioner raises the long-brewing question involving the Federal Circuit’s interpretation of patent assignments.  In particular, the Federal Circuit has ruled – as a matter of federal patent law – that patent rights are assignable before their invention is even contemplated. The petition asks:

[W]hether FilmTec’s “automatic assignment” rule should be overruled because it extinguishes inventors’ constitutional and statutory rights to inventorship and ownership.

In Stanford v. Roche, Justices Breyer, Ginsburg and Sotomayor criticized the Federal Circuit’s rule and suggested that the issue should be presented in a future case. The majority expressly noted that its opinion did not decide the issue. [Shukh v. Seagate – Redacted Public Petition]

Disparaging Trademarks: A pair of disparaging trademark cases have also been petitioned: Lee v. Tam (“Slants”) and  Pro-Football v. Blackhorse (“Redskins”).   The Federal Circuit previously held the limit on registering disparaging marks to be an unconstitutional abrogation of the freedom of speech.

The big list: (more…)

Patent Quality Symposium Report – USPTO Patent Quality Initiative Moving Forward

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Guest Post by Professors Colleen Chien, Santa Clara University Law School and Arti Rai, Duke Law School

On Wednesday, April 27, 2016, the USPTO hosted a day-long conference around the one-year anniversary of its Enhanced Patent Quality Initiative. We were among the over 1,800 virtual attendees (in addition to over 400 participants at USPTO headquarters and in the satellite offices) and provide this brief summary of some of the highlights. A recording of the day is available here, and information on the launch of the Office’s Stakeholder Training on Examination Practice and Procedure (STEPP) program is here. The USPTO’s current request for comments on patent quality metrics, including the Master Review Form (MRF), is due May 24. Santa Clara Law research assistant Angela Habbibi is pulling together a summary of the USPTO’s request for comments on quality case studies here, and the hardworking students of the Berkeley Technology Law Journal have done the same, with respect to comments submitted to the USPTO from last year, here, and comments submitted to the Journal here.

USPTO Director Michelle Lee and Deputy Commissioner for Patent Quality Valencia Martin-Wallace opened the day by highlighting four inter-related components: 1) the clarity of the record pilot; 2) new quality metrics, as embodied in a new Master Review Form; 3) using post-grant outcomes to improve patent examination; and 4) improved prior art search, so as to accomplish “compact prosecution.”  Subsequent speakers discussed each of these components in detail, generally with a focus on one or more of the following themes – clarity, consistency, accountability, and collaboration.

Clarity of Record Pilot

Robin Evans, Director of TC 2800, focused on the clarity of the record pilot, which started in March and will run for 6 months. The pilot includes approximately 130 randomly selected examiner participants, (all GS 11-15 with at least years of 2 years of experience) and 45 SPEs.  The USPTO anticipates processing about 2000 applications through the pilot.

Examiners in the pilot will focus on enhancing documentation of claim interpretation (including functional/112(f) language), giving more precise reasons for allowance, doing pre-search interviews at the request of the examiner, and giving more detailed interview summaries.  Examiners are also supposed to document the amount of time they spend improving clarity. Examination conducted in the pilot will be compared with that conducted by a control group composed of similar examiners.

Master Review Form, Consistency, and Data Collection and Analysis

According to Director Lee and Brian Hanlon, the Director of the Office of Patent Legal Administration, the pilot’s emphasis on record clarity is also embodied in the new 25-page Master Review Form for quality, which places equal weight on clarity and correctness.  As Marty Rater, Chief Statistician of the Office of Patent Quality Assurance explained in the afternoon, the MRF is the Office’s response to a general perception that the quality composite that the Office has long relied upon needed to be replaced.  While not all 25-pages would be used for any one application, having a single uniform form will enable previously siloed reviews, carried on (for example) at the TC, OPQA, and other levels, to draw from a common core of data and improve consistency across the agency. Stakeholders in the afternoon session provided feedback on how the MRF could be made clearer and shorter, so as to facilitate consistent reviews.

A look at the 135 quality case study topics submitted for consideration to the USPTO in response to a recent request highlights that consistency in the application of Sections 101, 103, and 112 is perhaps the greatest concern. Consistency has ramifications for compact prosecution and continuation practice as well. If an applicant is confident that her applications are consistently subjected to high-quality examination, she may find it easier to appeal or abandon on the basis of a final rejection, rather than continuing the case in hopes of a different outcome from a different examiner on the same patent application.

In line with the case study suggestions, the USPTO aims to address concerns about particular types of examiner rejections and consistency across technology groups within the patent corps. To that end, it will be conducting studies on the use of section 101 and 112(f) by examiners; on the correctness and clarity of motivation statements in obviousness rejections based on combining references; and enforcement of written description requirements in continuation applications.

The release by the Patent Office of large amounts of data in accordance with the Obama Administration’s decision to treat government data as a national asset of the American people has led to the burgeoning of patent data companies and innovation, with at least 135 companies relying on patent data, according to a count by one of us. But a question regarding data analysis by external sources prompted Valencia Martin-Wallace to note that these external sources produced results that didn’t always match the USPTO’s own analyses.  Deputy Director Russ Slifer elaborated on this theme by noting that the USPTO wanted to be part of the community dialogue on data analysis and had recently put out a large amount of publicly available, freely analyzable data at https://developer.uspto.gov.

Use of Post-Grant Outcomes

Jack Harvey, the Acting Assistant Deputy Commissioner for Patent Operations, discussed several objectives with respect to a just-initiated pilot, expected to last 3-4 months, that will use of post-grant outcomes to enhance quality.  First, in cases where patents petitioned before the PTAB have related applications pending, the examiner on the related applications will receive the petition. Second, and more broadly, data collected from post-grant proceedings will be used to improve examiner search strategy, both at the level of the individual examiner and also across the corps. It’s our understanding that such “feedback loops” have also been a feature of EPO practice: in which nullity proceedings involve the original patent examining team that granted the patent, which can then learn from the post-grant proceedings.

Improved Search and Training

According to Maria Holtmann, Director of International Programs, the goal of improved search will also be pursued through a pilot, to be begun later this year, that will “jumpstart” search by providing automated pre-examination search results.  Ongoing pilots are currently providing examiners with JPO and KIPO search reports prior to the first office action.  And the Global Dossier now provides examiners and the public with “one-stop access” to dossiers of all related applications in the IP5.

We were happy to hear that access to comprehensive prior art sources – including non-patent sources – earlier in the examination process is seen as a major patent quality lever. Work by one of us suggests that European Patent Office search reports cite non-patent literature sources more than USPTO examiners rely upon on them in their own examination, but a number of existing and future initiatives could close this gap. As Donald Hajec, Assistant Deputy Commissioner for Patent Operations, described, the USPTO  is promoting greater awareness of non-patent technical sources, through the STIC, crowdsourcing of NPL, and technical training by outside scientists through the PETTP program, for example. And in line with numerous commentators who have emphasized the importance of Section 112 in policing quality, Hajec stressed the extensive training examiners, particularly those in electrical/mechanical and computer/software art units, have received on Section 112(a) (written description and enablement), 112(b) definiteness, and 112(f).

Collaboration

During the last set of panels, moderated by Deputy Director Russ Slifer, participants from companies and law firms acknowledged the responsibility for patent quality that stakeholders share with the USPTO. The participants on the panel provided their sense of 1) what initiatives of the USPTO initiatives are working for stakeholders and what needs improvement, 2)  the wide variability in the business uses of patents based on company size and industry, and 3) what stakeholders could do, on their own or in conjunction with Examiners, to improve the quality of submitted applications and patent prosecution.

In particular, props were given to Track One, which Bill Bunker of Knobbe commented that certain clients (not small entities) use exclusively, with a much more efficient outcome. He also described the First Action Interview Program as a good early opportunity to achieve a meeting of the minds. Other panelists applauded the USPTO for focusing on patent quality, a topic that they thought had significant economic consequences and was imperative to the functioning and perception of the patent system. However, Laura Sheridan of Google observed that the voluntary nature of certain initiatives like the glossary pilot program limited their impact, and that mandatory enforcement would likely be more effective at raising quality uniformly across applications.

An interesting question is whether or not all patents “need” to be of the highest quality, given the diverse business uses of patents by different types of companies and industries. SAS files patents primarily for defensive reasons, commented Tim Wilson, and needs to have reliable patents for negotiations. In contrast, according to Bill Nydegger of Workman Nydeggerr commented, startups are often just trying to validate their technology and get an issued patent, rather than thinking about it being tested in court or negotiations. Biopharma patents often prove their value in the last five years of a patent’s life, with written description and utility requirements providing the most important filters, Kevin Noonan of MBHB commented.

For both the USPTO and prosecutors, the challenge of increasing quality in the face of flat budgets and price pressure is quite real, although perhaps less of an issue in the biopharma sector. In that vein, several ways to do more with less were discussed. In response to a question from Deputy Director Slifer, panelists discussed how they could continue to ensure that patent prosecutors were actually pursuing a strategy that serves the business use – whether that be to cover one’s own product or that of a competitor. Although getting an issued patent is often the goal of the prosecutor, if its scope is diminished to such a degree that it doesn’t make business sense, cutting off prosecution earlier may be the right approach. In addition, greater collaboration between examiners and applicants earlier in the process could streamline the process. Examiners would probably appreciate applicant summaries of the subject matter. Though applicants are loath to put material into the record, examiners could perhaps get a demonstration of the technology before examination and search began, enabling a substantive discussion of the prior art early in the process.

One question that deserves more attention, in our opinion, is whether the USPTO could provide “model applications” or patents to facilitate  public understanding of what a “quality” application looks like from the standpoint of the USPTO. Shared responsibility comes from shared understanding. The newly devised STEPP program, to educate law-firm and in-house practitioners on how Patent Examiners review applications, starting in July, as well as the Symposium overall, are important steps in achieving shared understanding, and we join the patent community in applauding USPTO efforts.

To further these efforts, our institutions, Santa Clara and Duke Law Schools, will be hosting two conferences on USPTO initiatives and other levers for improving patent quality later this year.  The conferences will be held in Santa Clara and also in the DC area and will focus on empirical evaluation of patent quality levers.  We will provide more information on these forthcoming conferences shortly.

Patentlyo Bits and Bytes by Anthony McCain

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Pending Supreme Court Patent Cases 2016 (April 18 Update)

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by Dennis Crouch

Cuozzo: Prof Mann provides his preview of the April 25 oral arguments in Cuozzo v. Lee; and Cuozzo has filed its reply brief. Neither document address my the mootness concern regarding Cuozzo’s demand for an ordinary construction of claim terms rather than their broadest reasonable interpretation.  As far as I have seen, nothing in the record suggests that a change in claim interpretation standard would alter the PTO’s determination.

Following its April 15 Conference, the Supreme Court denied certiorari in a set of cases, including Vermont v. MPHJ; Limelight v. Akamai; Hemopet v. Hill’s Pet Nutrition; and Tas v. Beachy. In its April 1 Conference, the Court denied cert in Retirement Capital v. US Bancorp. That case had questioned whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2).

The only patent cases surviving the April 15 conference are (1) Interval Licensing v. Lee that asks the same question as Cuozzo: Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?; and (2) Medinol v. Cordis that focuses on whether “the equitable defense of laches [may be used to] bar legal claims for damages that are timely under the express terms of the Patent Act.”   Medinol is conceptually linked to the SCA Hygiene case that also raises the laches issue. The court will consider both cases in its April 22 conference and may likely couple the decision to grant/deny.  The court is also scheduled to consider Cloud Satchel (abstract idea eligibility) and Globus Medical (appellate jurisdiction) at Friday’s conference. Neither of these cases offer much hope for the respective petitioner.

In Cooper v. Lee, the US Government filed its brief opposing certiorari. The government argues that Cooper’s Article III challenge to the IPR system “lack’s merit.”

[P]atents are quintessential “public rights” whose issuance and cancellation Congress may permissible entrust to a non-Article III tribunal. . . . Pursuant to its constitutional authority to “promote the Progress of Science and useful Arts” by establishing a patent system, Congress created the PTO – an agency with “special expertise in evaluating patent applications.” Kappos v. Hyatt, 132 S. Ct. 1690 (2012). It directed that agency to issue a patent if “it appears that the applicant is entitled to a patent” under standards set by federal law, 35 U.S.C. 131. Patents are accordingly rights that “exist only by virtue of statute.” Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 n.5 (1964). They “dispose of public rights held by the government on behalf of the people.” Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 849 n.2 (2015) (Thomas, J., dissenting).

The government also argues that the posture of the case lacks merits – in particular that Cooper’s collateral challenge to the procedures doesn’t work.  Cooper has argued that “inter partes review violates Article III of the Constitution by authorizing an Executive Branch agency, rather than a court, to invalidate a previously issued patent.”

Daniel Bohnen has filed a brief on behalf of UK’s Chartered Institute of Patent Attorneys (CIPA) in support of the Sequenom v. Ariosa petition.   The brief argues that the court should look to “maintain international harmonisation in the law of patent-eligibility.”[AriosaCIPA].  More briefs in support of the petitioner are expected this week as is Ariosa’s opposition brief (if any).

Finally, Nova has filed its opposition in Dow v. Nova and is attempting to refocus attention on the merits of the indefiniteness decision rather than the procedure for reaching that decision.  The difference in question presented is interesting:

Dow: Whether factual findings underlying a district court’s determination on the definiteness of a patent claim under the Patent Act, 35 U.S.C. 112, like a district court’s factual findings underlying construction of a patent claim, are subject to appellate review only for clear error or substantial evidence rather than de novo review.

Nova: Whether the court of appeals correctly invalidated Dow’s patent claims as indefinite under 35 U.S.C. § 112.

Explaining its shift of the question, Nova argues that “Dow’s petition rests on a false premise that the Federal Circuit refuses to give deference to factual findings” that underlie the definiteness determination.  Nova is correct as to the Federal Circuit’s position — the only question here is whether the Supreme Court will order the appellate court to follow its own law in this case. [DowPetition][NovaOpposition]

The big list: (more…)

Pending Supreme Court Patent Cases 2016 (April 1 Update)

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by Dennis Crouch

Design Patent Damages: The Supreme Court has granted Samsung’s petition for writ of certiorari on the issue of design patent damages under 35 U.S.C. 289.  The statute allows for disgorgment of the infringer’s “total profit,” but the question is total-profit-as-to-what? Certainly not the entire company. The Federal Circuit has ruled that the total profit applies to the article of manufacture (here a mobile phone) while Samsung argues that the profit should be reduced to the profits associated with the component at issue (the screen). The Supreme Court rejected the second proposed issue of design patent scope.

No Standing for Cuozzo?: I wrote some about the standing and appellate jurisdiction issue in Cuozzo earlier this week.  [Link].  Up to now, Cuozzo has not explained how a Phillips claim construction would impact the outcome of its inter partes review.  Cuozzo’s reply brief may address that issue – either way they almost have to come-up at oral arguments under questioning from Justice Breyer or Justice Sotomayor.

Post Sale Restraints: A key new petition was filed in Impression Products v. Lexmark on the issue of patent exhaustion and the extent that a manufacturer can rely upon patent rights to create post-sale use requirements and restrictions and limits on international trade. [Link]. In Sequenom, v. Ariosa, the court is subtly asked to reconsider and scale-back the language of Mayo v. Prometheus.  The petition actually asks the court to stop mis-interpreting Mayo. [Link].  Vehicle Intelligence and Safety as well as Cloud Satchel also raise Section 101 challenges, but those cases are battling long odds.

Reviewing a Jury Verdict of Definiteness: New petition Dow v. Nova raises the interesting question regarding the standard for appellate review of factual findings that serve as the underlying basis for a definiteness determination. Based upon a logical extension of Teva v. Sandoz, those factual findings should be given deference even though the ultimate determination of definiteness is a question of law.  An important distinction from pure claim construction is that (as here) juries may be tasked with the job of ruling whether a claim is indefinite.  In that situation, the juries do not separate their factual conclusions from legal conclusions creating some amount of confusion.  The original Federal Circuit opinion cited to Teva, but not for its holding regarding deference. I would not be surprised by a GVR order from the Supreme Court asking the Federal Circuit to reconsider based upon that holding. [DowPetition].

Flexible Obviousness Test Does Not Apply to Secondary Indicia of Nonobviousness: In Cubist Pharma v. Hospira, the petitioner-patentee challenges the Federal Circuit’s increasingly bright line limits on secondary indicia of nonobviousness.  How do those limits mesh with the flexible doctrine outlined in Section 103 and explained by Deere and KSR.  [CubistPetition].

Did the AIA Shrink Federal Circuit Appellate Jurisdiction?: Finally, in Globus Medical, the question focuses on Federal Circuit jurisdiction over appeals in former-patent-cases, but where the only issue appealed is a non-patent issue.  This same issue was previously decided in favor of Federal Circuit jurisdiction. However, the AIA modified the language of the Federal Circuit appellate jurisdiction statute and opened the door to a re-visitation.  28 U.S.C. 1292.  However, the argument barely carries the weight of its linguistics if that.

Previously, the Federal Circuit had appellate jurisdiction over cases if the district court’s jurisdiction could at least in-part be traced to 28 U.S.C. 1338 (giving district court’s jurisdiction over patent cases). The AIA amended the statute to give appellate jurisdiction to the Federal Circuit in any “civil action arising under” the patent laws.  Since appellate jurisdiction ordinarily attaches at the notice-of-appeal filing stage, Globus Medical argues that former patent cases no longer “arise under” the patent laws once final judgment is issued and no patent questions are appealed.

Denials: Cert was denied in Daiichi Sankyo v Lee (term adjustment); ParkerVision (standard for setting aside jury verdict based upon errors in expert testimony); Biogen (district court jurisdiction over interferences post-AIA); Morales v. Square (eligibility); Joao Bock v. Jack Henry (eligibility); and BriarTek v. DeLorme (USITC preclusion issue).

The big list:

1. Petitions Granted:

2. Petitions Granted with immediate Vacatur and Remand (GVR)

3. Petitions for Writ of Certiorari Pending:

  • Indefiniteness: The Dow Chemical Company v. Nova Chemicals Corporation (Canada), et al., No. 15-1160 (standard for appellate review of jury verdict of definiteness that is inherently based upon the jury’s factual findings) [DowPetition]
  • Exhaustion: Impression Products, Inc. v. Lexmark International, Inc., No. 15-1189 (unreasonable restraints on downstream uses)
  • Obviousness: Cubist Pharmaceuticals, Inc. v. Hospira, Inc., No. 15-1210 (bright line limits on secondary indicia of nonobviousness) [CubistPetition]
  • Infringement by Joint Enterprise: Limelight Networks, Inc. v. Akamai Technologies, Inc., et al., No. 15-993 (can a defendant be held liable for the collective performance of method steps by multiple independent parties?)
  • Post Grant Admin: Versata v. SAP, No. 15-1145 (scope of CBM review)
  • Post Grant Admin: Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers; two amici now filed in support)
  • Post Grant Admin: Click-to-Call Tech, LP v. Oracale Corp., No. 15-1014 (Same questions as Cuozzo and now-dismissed Achates v. Apple)
  • Post Grant Admin: GEA Process Engineering, Inc. v. Steuben Foods, Inc., No. 15-1075 (Flip-side of Cuozzo: Can there be no appeal when the PTAB exceeds its authority by terminating an instituted IPR proceeding?)
  • Post Grant Admin: Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
  • Post Grant Admin: Stephenson v. Game Show Network, LLC, et al., No. 15-1187 (is BRI proper for IPR validity challenges?; Same as Cuozzo) [GameShowNetworkPetition]
  • Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998
  • Laches: SCA Hygiene Products Aktiebolag, et al. v. First Quality Baby Products, LLC, et al., No. 15-927 (three amici filed in support)
  • Biologics Notice of Commercial Marketing: Sandoz Inc. v. Amgen Inc., et al., No. 15-1039 (Does the notice requirement of the BPCIA create an effective six-month exclusivity post-FDA approval?) (cross-petition asks for recourse on failure to dance).
  • Design Patents: Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations – similar issues as Samsung v. Apple)
  • Inducement: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (whether an entity can “induce itself” under 271(f)(1))(CVSG, awaiting government brief)
  • Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
  • Preclusion or Jurisdiction: Globus Medical, Inc. v. Sabatino Bianco, No. 15-1203 (Appellate jurisdiction of the Federal Circuit) [GlobusMedicalPetition]
  • Eligibility Challenges: Sequenom, Inc. v. Ariosa Diagnostics, Inc., et al., No. 15-1182 (scope of the natural phenomenon eligibility exclusion)
  • Eligibility Challenges: Retirement Capital Access Management Company, LLC v. U.S. Bancorp, et al., No. 15-591 (Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2))
  • Eligibility Challenges: Hemopet v. Hill’s Pet Nutrition, Inc., No. 15-1062 (natural phenom case of tailoring a diet to a pet’s genomic characteristics)
  • Eligibility Challenges: Cloud Satchel, LLC v. Barnes & Noble, Inc., et al., No. 15-1161 (abstract idea eligibility) [CloudSatchelPetition]
  • Eligibility Challenges: Vehicle Intelligence and Safety LLC v. Mercedes-Benz USA, LLC, et al., No. 15-1201 (abstract idea eligibility) [VehicleIntelligencePetition]
  • Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
  • Damages: WesternGeco LLC v. ION Geophysical Corporation, No. 15-1085 (consequential lost-profit damages for infringement under Section 271(f))
  • Written Description: Tas v. Beach, No. 15-1089 (written description requirement for new drug treatments)

4. Petitions for Writ of Certiorari Denied or Dismissed:

  • Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies; could bleed into admin law issues)
  • Parkervision, Inc. v. Qualcomm Incorporated, No. 15-1092 (“Whether and under what circumstances an inconsistency in expert testimony permits a court to set aside a jury verdict and grant the losing party judgment as a matter of law.”)
  • Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea)
  • Biogen MA, Inc. v. Japanese Foundation for Cancer Research, et al., No. 15-607 (Whether AIA eliminated federal district courts’ jurisdiction over patent interference actions under 35 U.S.C. § 146.)
  • BriarTek IP, Inc. v. DeLorme Publishing Company, Inc., et al., No. 15-1025 (Preclusive impact of ITC consent judgment).
  • Morales v. Square, No. 15-896 (eligibility under Alice)
  • ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
  • Media Rights Technologies, Inc. v. Capital One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
  • Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial)
  • Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
  • STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
  • Achates Reference Publishing, Inc. v. Apple Inc., et al., No. 15-842 (IPR institution decisions unreviewable, even when addressed in a final written decision by PTAB) [Note – This case was dismissed after being settled by the parties]
  • Alps South, LLC v. The Ohio Willow Wood Company, No. 15-567
  • Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538
  • OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642
  • Fivetech Technology Inc. v. Southco, Inc., No. 15-381
  • Tyco Healthcare Group LP, et al. v. Ethicon Endo-Surgery, Inc., No. 15-115
  • Nautilus, Inc. v. Biosig Instruments, Inc., No. 15-561
  • Chunghwa Picture Tubes, Ltd., et al. v. Eidos Display, LLC, et al., No. 15-288
  • Kenneth Butler, Sr. v. Balkamp Inc., et al., No. 15-273
  • Arthrex, Inc. v. KFx Medical Corporation, No. 15-291
  • Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
  • Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
  • Mylan Pharmaceuticals Inc. v. Apotex Inc., No. 15-307
  • Luv N’ Care, Ltd. v. Munchkin, Inc., No. 15-242
  • Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, United States Patent and Trademark Office, No. 15-326
  • I/P Engine, Inc. v. AOL Inc., et al., No. 14-1358
  • Interval Licensing LLC v. AOL Inc., et al., No. 14-1362
  • Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, et al., No. 14-1473
  • L. Gore & Associates, Inc. v. Bard Peripheral Vascular, Inc., et al., No. 15-41
  • NetAirus Technologies, LLC v. Apple Inc., No. 14-1353
  • Muffin Faye Anderson v. Kimberly-Clark Corporation, No. 14-10337
  • MobileMedia Ideas LLC v. Apple Inc., No. 15-206
  • SpeedTrack, Inc. v. Office Depot, Inc. et al., No. 15-461 (Kessler doctrine)
  • Rodney K. Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602
  • Lakshmi Arunachalam v. JPMorgan Chase & Co., No. 15-691

5. Prior versions of this report: