Source: https://patentlyo.com/tag/affirmed-without-opinion/page/2
Timestamp: 2018-09-21 14:16:10
Document Index: 494277585

Matched Legal Cases: ['§ 101', '§ 112', '§ 42', '§ 303', '§ 305', '§ 101', '§ 101', '§ 101', '§ 101', '§ 289', '§ 289', '§ 289', '§ 289', '§ 112', '§ 154']

Affirmed Without Opinion | Patently-O | Page 2
Tag Archives: Affirmed Without Opinion
The Federal Circuit decides a substantial number of its cases without opinion, but rather simply issues a judgment of “affirmed without opinion.” This procedure began in the late 1980’s and has been relatively noncontroversial. Lately, however, the patent statute has been reconsidered and the process appears to violate Section 144 of the Patent Act.
November 30, 2016 PatentAffirmed Without Opinion, AIA Trials, anticipation, Claim Construction, Enablement, IPR, obviousness, Written DescriptionDennis Crouch
This is a discussion of the new Federal Circuit Decision Microsoft v. Enfish appealing a PTAB final decision.
In the prior parallel decision – Enfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016), the Federal Circuit reversed a district court ruling that Enfish’s asserted software claims were ineligible under § 101 and also vacated the lower court’s holding that some of the claims were invalid as anticipated. U.S. Patent Nos. 6,151,604 and 6,163,775 (inventions relating to a “self-referential” database).
Enfish sued Microsoft for infringement in 2012. In addition to its litigation defenses, Microsoft marshaled a collateral attack on the patents with five petitions with the US Patent Office for inter partes review of the ’604 and ’775 patents.
After instituting review, the Patent Trial and Appeal Board found some of the patent claims invalid as anticipated/obvious. On appeal, PTAB factual findings are generally given deference but legal conclusions are reviewed without deference. After reviewing the claim construction and rejections, the Federal Circuit affirmed in a non-precedential decision.
Collateral Attacks: These collateral attacks work well to cancel patent claims with obviousness arguments that would have been unlikely to be accepted by a trial court or jury. This is a pointed example here since the previously rejected district court’s judgment was based upon a more simplistic Section 101 analysis that is easier for the Federal Circuit to overturn.
Not Amenable to Construction: The most interesting aspect of the decision is hidden in a single sentence statement: “As to claims 1–26 and 30 of both patents—which are not at issue before us—the Board terminated proceedings after concluding that those claims were not amenable to construction.”
In its final judgment, the Board explained that those claims include a means-plus-function element (“means for configuring said memory according to a logical table“) but that no embodiments of the element were provided in the specification. And, although a person of skill in the art may know how to construct the element, our 112(f) jurisprudence requires embodiments in the specification and does not allow a patentee to “rely on the knowledge of one skilled in the art to address the deficiencies” See Function Media, LLC v. Google Inc., 708 F.3d 1310 (Fed. Cir. 2013). The statute states permits means-plus-function claims but also provides a guide for narrowly construing those claims.
35 U.S.C. 112(f) ELEMENT IN CLAIM FOR A COMBINATION.—An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.
In both patent prosecution and district court litigation, failure to properly disclose structural embodiments for a means-plus-function limitation results in the claim being held invalid as indefinite since the limitation’s scope cannot be properly construed. In the inter partes review situation, however, the Board’s power is limited to cancelling patents on novelty or obviousness grounds. As such, the Board simply terminated the IPR trial with respect to these non-construable claims. The Board writes:
In the circumstance when the specification of the challenged patent lacks sufficient disclosure of structure under 35 U.S.C. § 112, sixth paragraph, the scope of the claims cannot be determined without speculation and, consequently, the differences between the claimed invention and the prior art cannot be ascertained. For the reasons given, we determine that independent claims 1, 11, and 15 are not amenable to construction and, thus, we terminate this proceeding with respect to claims 1, 11, and 15 under 37 C.F.R. § 42.72.
[PTAB Final Decision].
No Appeal of Termination: Neither party appealed the termination, although the Federal Circuit previously held that its appellate jurisdiction over these cases is limited to appeals of “final written decision[s] with respect to the patentability of any patent claim challenged by the petitioner …” A termination decision was seen as essentially an extension of the institution decision that is not itself appealable.
Of course, the original Federal Enfish decision mentioned above also addressed this indefiniteness issue and held that the claims were not indefinite because sufficient structure was disclosed — holding that the scant description was adequate because “the sufficiency of the structure is viewed through the lens of a person of skill in the art and without need to ‘disclose structures well known in the art.’ I guess that this means that those claims are OK.
October 19, 2016 PatentAffirmed Without Opinion, obviousnessDennis Crouch
In a split opinion, the Federal Circuit has affirmed the PTAB’s determination of obviousness. Biota’s patent claims influenza treatment through oral inhalation of zanamivir while the prior art teaches the identical treatment by nasal inhalation. A second prior art reference also suggests that similar compound can be taken via “inhalation” (without the nasal or oral modifier). On appeal, the Federal Circuit affirmed that the general inhalation disclosure “is reasonably understood to disclose inhalation by either the nose alone, mouth alone, or both.”
Judge Newman writes in dissent:
The PTAB and now this court rule that it was obvious to administer this drug by oral inhalation, although there is no reference, no prior art, no suggestion, proposing that this mode of application might succeed, or that it should be tried. There was evidence of skepticism even as oral inhalation was evaluated. There was no contrary evidence. The evidence on which the Board and now this court rely is the evidence in the patent application itself, describing oral inhalation, its benefits, and its effectiveness. Upon learning this information from this inventor’s disclosure, the Board found that it was obvious, and my colleagues agree that it is obvious to them.
In its brief, the PTO wrote:
Efthymiopoulos seeks to capture as his exclusive property right a particular (but not particularly new) way of delivering an old compound to treat a well-known disease. Specifically, Efthymiopoulos claims a method for treating influenza, an infectious disease of the respiratory tract caused by influenza (flu) viruses, by administering zanamivir, a compound known in the prior art as an inhibitor of influenza virus production, by inhalation of zanamivir through the mouth alone. Efthymiopoulos contends that his contribution to the art is the route of inhalation – treating influenza solely by oral inhalation.
But the evidence of record shows that oral inhalation would have been obvious. Specifically, as of the effective filing date, skilled artisans understood inhalation to mean oral, nasal, or both. The prior art was replete with available oral inhaler devices for use with well-known micronized dry powder formulations. Skilled artisans also knew that oral inhalation delivers more drug to the lungs and that nasal inhalation delivers more drug to the nasal cavity. Skilled artisans further knew that some strains of influenza infect the lungs, and that young children are more susceptible to lung infections.
The case here is an example of the difficulty with the flexible obviousness analysis — it allows for well supported arguments on both sides.
October 4, 2016 PatentAffirmed Without Opinion, Damages, Federal Circuit En BancDennis Crouch
Although at first glance, Lyda appears as a narrow decision against an individual-inventor plaintiff, the decision is important because it establishes that a patent infringement complaint must provide factual allegations at the claim-element-by-claim-element level in order to avoid a dismissal on the pleadings.
In a civ-pro focused decision, the court has affirmed the dismissal of Lyda’s infringement case for failure to state a claim – finding that Lyda’s complaint fails to satisfy the Twiqbal pleading standards.[1] Rule 8 of the Federal Rules of Civil Procedure require a “ a short and plain statement of the claim showing that the pleader is entitled to relief.”[2] Failure to state a claim is grounds for dismissal under R. 12(b)(6).[3] The Supreme Court gloss requires allegations of sufficient facts to state a plausible claim for relief. Although statements in the complaint are taken as true, “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”[4] “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”
Until recently, Twiqbal was not directly applied to patent complaints because the existence of a bare-bones form infringement complaint (Form 18) that the rules deemed to be sufficient. Form 18 was eliminated in the December 1, 2015 changes to the rules. In the present case, the amended complaint was filed prior to the change, but the court held that Form 18 does not apply in this case because Lyda implicitly alleged a claim of joint infringement rather than the standard direct infringement that is the focus of Form 18.[5]
Applying Twiqbal is not easy – although the general rule is that the pleadings must include enough plausible facts that – if taken as true – would lead to a verdict for the plaintiff. In discussing its application, the Supreme Court noted that it will be “context-specific” requiring both “judicial experience and common sense.” Applying that approach to patent infringement cases, the court here took the fairly bold stance of requiring that the facts plausibly pled be “sufficient to allow a reasonable inference that all steps of the claimed method are performed.”
Lyda’s case was particularly dismissed because the patentee failed to plead the elements of joint infringement required by Akamai. The Lyda court writes:
[Under the plaintiffs theory of infringement, the] Amended Complaint must plausibly allege that Defendants exercise the requisite “direction or control” over the performance of the claim steps, such that performance of every step is attributable to Defendants. The Amended Complaint alleges that CBS Interactive controls certain independent contractors who in turn direct and control the “participation” of unnamed third persons to send votes on either their own or borrowed cell phones. Mr. Lyda does not set forth any factual allegations in support of his assertion that CBS Interactive directed or controlled the independent contractors. Nor does the Amended Complaint contain factual allegations relating to how the independent contractors directed or controlled the unnamed third parties. Most importantly, the Amended Complaint does not allege any relationship between the Defendants and the unnamed third parties, who own or borrow cell phones, in a way that the actions of these unnamed third parties should be attributed to Defendants. Rather, the Amended Complaint alleges conclusively and without factual support that CBS directed or controlled the independent contractors who then directed or controlled the unnamed third parties. There are thus no allegations in the Amended Complaint that can form the basis of a reasonable inference that each claim step was performed by or should be attributed to Defendants. The Amended Complaint fails to plausibly plead sufficient facts to ground a joint infringement claim under this court’s Akamai decision and does not satisfy the Iqbal/Twombly pleading standard.
The district court also denied Lyda leave to amend the complaint a second time. On appeal, the Federal Circuit affirmed that determination – finding that the district court has “broad power to control its own docket.” With the case dismissed, I expect that Lyda can refile and just potentially lose some of the back damages.
[The complaint]
[1] Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009).
[2] Fed. R. Civ. Pro. R. 8.
[3] Fed. R. Civ. Pro. R. 12(b)(6) (“a party may assert . . . (6) failure to state a claim upon which relief can be granted”).
[4] Iqbal.
[5] See Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015) (en banc) (requiring that “(1) one party exercises the requisite ‘direction or control’ over the others’ performance or (2) the actors form a joint enterprise such that performance of every step is attributable to the controlling party).
September 26, 2016 PatentAbstract Idea, Affirmed Without Opinion, First to Invent, Subject Matter Eligibility, Written DescriptionDennis Crouch
A few days ago I wrote about the Federal Circuit decision in Affinity Labs. v. DirecTV affirming that Affinity’s U.S. Patent No. 8,688,085 claims an ineligible abstract idea rather than a patent eligible invention.
The companion case – Affinity Labs v. Amazon was decided by the same panel of Chief Judge Prost and Judges Bryson (author) and Wallach and U.S. Patent No. 7,970,379 and also affirmed that the challenged claims lack eligibility under Section 101.
In DirectTV, the court first “stripped” the representative claim “of excess verbiage.” Using the same approach but different words, the Amazon court here offered its version of the representative claim “stated more succinctly:” the claim “is directed to a network-based media system with a customized user interface, in which the system delivers streaming content from a network-based resource upon demand to a handheld wireless electronic device having a graphical user interface.” [Full claim text below]
Abstract Idea: Analyzing the claimed invention, the court found that the claims are directed to a high level of generality “describing a desired function or outcome, without providing any limiting detail that confines the claim to a particular solution to an identified problem. The purely functional nature of the claim confirms that it is directed to an abstract idea, not to a concrete embodiment of that idea.” In Enfish, the court considered technological inventions and queried whether the invention represents “an improvement in the functioning of a computer,” or merely “adding conventional computer components to well-known business practices.” Here, of course, the invention uses more than just a “computer component” but the court still found Enfish applicable — finding that the claims “fall into the latter [ineligible] category.” Further, the “tailoring of content based on information about the user . . . is an abstract idea that is as old as providing different newspaper inserts for different neighborhoods.” Slip opinion at 10.
Burden Shifting for Step Two?: Once a patent is deemed to be directed to an abstract idea, the burden appears to shift against the patentee to show that the claim includes “something more” such as an “innovative concept” that goes beyond the ineligible abstract idea. This burden-shifting would go against the traditional rule that each each element in an invalidity analysis must be proven with clear and convincing evidence — and so it may still be proper to say that the challenger also has the burden under Step Two of Alice/Mayo to show the claim includes “nothing more” of patentable weight. A complication of this internal dialogue is that eligibility is deemed a question of law whereas the C&C evidentiary requirement applies only to questions of fact. That distinction became important in this case since the district court dismissed the case on the pleadings prior to the consideration of any factual conflicts.
Nothing More: Enfish substantially increased the overlap between Steps One and Two of the eligibility analysis. Typically, if a claim includes an eligible inventive concept then it will not be deemed directed to an abstract idea in the first place. Here, the court found the converse logic also true:
As noted [in our Enfish analysis], representative claim 14 is written in largely functional terms, claiming “a collection of instructions” that perform the functions of displaying a selection of available content on a graphical user interface and allowing the user to request streaming of that content. . . . [These features] do not convert the abstract idea of delivering media content to a handheld electronic device into a concrete solution to a problem. The features set forth in the claims are described and claimed generically rather than with the specificity necessary to show how those components provide a concrete solution to the problem addressed by the patent.
Thus, the claim fails under Step Two as well – Judgment on the Pleadings of Invalidity Affirmed.
The court noted that the title of the patent ““System and Method to Communicate Targeted Information” has essentially no relation to the asserted claims. That disconnect had no direct impact on patentability. However, it appears to have lent credence to the notion that the claims lack innovative weight and technical application since the focus of the claims is something different than what was originally thought to be innovative and worth extensive description.
Claim 14: A media system, comprising:
a collection of instructions stored in a nontransitory storage medium and configured for execution by a processor of a handheld wireless device, the collection of instructions operable when executed: (1) to initiate presentation of a graphical user interface for the network based media managing system; (2) to facilitate a user selection of content included in the library; and (3) to send a request for a streaming delivery of the content; and
Obviousness does not Require Prior Art to Fit Together Exactly
September 22, 2016 PatentAffirmed Without Opinion, AIA Trials, IPR, obviousnessDennis Crouch
ClassCo v. Apple (Fed. Cir. 2016)
In response to being sued for patent infringement, Apple filed for inter partes reexamination of ClassCo’s Patent No. 6,970,695. That litigation (originally filed in 2011) has been stayed pending the resolution here. Although the patent had survived a prior reexamination, this time the Examiner rejected the majority of the patent claims as obvious; the PTAB affirmed those rejections; and the Federal Circuit has now re-affirmed.
The patent relates to a “caller announcement” system that uses a phone’s speaker (rather than screen or separate speaker) to announce caller identity information. The system includes a “memory storage” that stores identify information being announced.
The examiner identified the prior art as U.S. Patent No. 4,894,861 (Fujioka) that teaches all of the claimed elements (of representative claim 2) except for use of the phone’s regular audio speaker (rather than a separate speaker) to announce a caller’s identity (claimed as the “audio transducer”). A second prior art reference was then identified as U.S. Patent No. 5,199,064 (Gulick) that taught the use of the audio transducer for providing a variety of call related alerts.
On appeal, ClassCo argued that the combination of Fujioka and Gulick was unreasonable because it would involve changing the function of the known elements. The Federal Circuit disagreed writing that:
KSR does not require that a combination only unite old elements without changing their respective functions. . . . Instead, KSR teaches that ‘[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.’ And it explains that the ordinary artisan recognizes ‘that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle.
Slip opinion at 8 (quoting KSR). The court goes on to explain that a combination of known elements can be obvious even the elements don’t fit perfectly together like puzzle pieces. Rather, the approach is “flexible” in its pursuit of determining whether the combination would have been “predictable” – i.e., obvious.
Although KSR rejected a strict application of a motivation-to-combine, the court consistently required at least an explanation of that motivation. Here, the court found that “substantial evidence” supports the PTO conclusions since some of the benefits were suggested by both prior art references.
Secondary Indicia: During reexamination, ClassCo had also presented evidence of industry praise for its products covered by the patent. That evidence was disregarded by the PTO as, inter alia, not commiserate commensurate with the scope of the claims. :) In particular, the Board noted that the industry praised particular embodiments but did not praise other potential embodiments. On appeal, the Federal Circuit rejected those conclusions. The court found that some of the evidence praised ClassCo features that were not available in the prior art and that were “within the scope” of the representative claims.
[T]he Board found the evidence not commensurate in scope with these claims on the ground that they are too broad, encompassing other embodiments. But “we do not require a patentee to produce objective evidence of nonobviousness for every potential embodiment of the claim.” Rambus. Rather, “we have consistently held that a patent applicant ‘need not sell every conceivable embodiment of the claims in order to rely upon evidence of [objective indicia of nonobviousness].’” In re Glatt Air Techniques, 630 F.3d 1026 (Fed. Cir. 2011) (quoting In re DBC, 545 F.3d 1373 (Fed. Cir. 2008)).
Although the Board erred in its approach to objective indica, that was harmless error since the prior art evidence was strong. “We nonetheless agree that the value this evidence possesses in establishing nonobviousness is not strong in comparison to the findings and evidence regarding the prior art under the first three Graham factors.” Obviousness affirmed.
Although a different product, the following ClassCo video review is a fun throw-back:
Expanding the Scope of Ex Parte Reexaminations MidStream
August 17, 2016 PatentAffirmed Without Opinion, AIA Trials, IPR, USPTO DirectorDennis 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).
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.
Common Sense Distinctions in Section 101 Analysis
August 1, 2016 PatentAbstract Idea, Affirmed Without Opinion, anticipation, Subject Matter EligibilityDennis Crouch
In a short opinion, Judge Taranto has affirmed the lower court ruling that Electric Power Group’s asserted claims lacked subject matter eligibility. U.S. Patent Nos. 7,233,843; 8,060,259; and 8,401,710. The court writes:
Though lengthy and numerous, the claims do not go beyond requiring the collection, analysis, and display of available information in a particular field, stating those functions in general terms, without limiting them to technical means for performing the functions that are arguably an advance over conventional computer and network technology. The claims, defining a desirable information-based result and not limited to inventive means of achieving the result, fail under § 101.
Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. August 1, 2016) [EPGvsAlstom] (Judges Taranto, Bryson, and Stoll).
The claims at issue require the reception of real-time data coming in from a wide geographical distribution; analyzing the data for instability that may be indicative of grid stress; displaying visualizations of the stability metrics; storing the data; and deriving a composite indicator of power grid reliability. According to the court, this sequence – even when taken as a whole – is an abstract idea. Thus, a collection of abstract ideas is itself likely to be an abstract idea.
In distinguishing Enfish, the court explained that the claims here merely used “existing computers as tools in aid of processes focused on abstract ideas” while Enfish claimed “computer-functionality improvements . . . a particular database technique—in how computers could carry out one of their basic functions of storage and retrieval of data.” Although line drawing may be admittedly difficult at times it was not difficult for the court here.
In Step-Two of a Alice/Mayo, the courts asks whether the claims require “something more” than the abstract idea that is sufficient to serve as a foundation for the invention. Although not entirely clear, this “something more” is generally thought to require an inventive concept – a point of novelty sufficient to transform the idea into a patent eligible invention. Here, the court found that none of the sources of information, analysis & display techniques, or measures were new or inventive.
The claims in this case . . . do not include any requirement for performing the claimed functions of gathering, analyzing, and displaying in real time by use of anything but entirely conventional, generic technology. The claims therefore do not state an arguably inventive concept in the realm of application of the information-based abstract ideas.
According to the patentee, the benefit of the invention was to provide “humanly comprehensible” information regarding an extremely complex system. The court rejected that result as offering a patent eligible concept:
Merely requiring the selection and manipulation of information—to provide a “humanly comprehensible” amount of information useful for users, by itself does not transform the otherwise-abstract processes of information collection and analysis.
Common Sense Distinction: Perhaps the most important added element of the opinion is the appellate court’s approval of the lower court’s “important common-sense distinction between ends sought and particular means of achieving them, between desired results (functions) and particular ways of achieving (performing) them.” Here, the court found that the claims were effectively directed to the problem-to-be-solved rather than the actual and concretely defined solution to the problem. Although the appellate panel acknowledged that this distinction is not the Alice/Mayo test, but rather as “one helpful way of double-checking the application of the Supreme Court’s framework to particular claims.”
Indeed, the essentially result-focused, functional character of claim language has been a frequent feature of claims held ineligible under § 101, especially in the area of using generic computer and network technology to carry out economic transactions. In this case, the district court’s wrap-up description confirms its, and our, conclusion that the claims at issue fail to meet the standard for patent eligibility under § 101.
This statement of the appellate court is designed to further free district courts to apply common sense in their Section 101 analysis.
Will the Walls Come Tumbling Down: Jericho v. Axiomatics at the Supreme Court
June 15, 2016 PatentAbstract Idea, Affirmed Without Opinion, AIA Trials, Enablement, obviousness, PGR, Subject Matter Eligibility, Supreme CourtDennis Crouch
In a new petition for writ of certiorari, Jericho Systems has asked the Supreme Court to review its abstract idea test:
Whether, under this Court’s precedent in Alice Corp. Party Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), a patent may be invalidated as an “abstract idea” under 35 U.S.C. § 101 when it claims a specific implementation and does not preempt other uses of the abstract idea.
Jericho Systems Corp v. Axiomatics – Petition for Certiorari.
The district court ended the case with a judgment on the pleadings – finding that the asserted claims of Jericho’s Patent No. 8,560,836 lacked eligibility under Alice and Mayo (focusing on claim 1 as axiomatic).
Using the ‘gist analysis’, the district court found that:
[T]he gist of the claim involves a user entering a request for access, looking up the rule for access, determining what information is needed to apply the rule, obtaining that information, and then applying the information to the rule to make a decision.
This is an abstract idea. The abstract idea being that people who meet certain requirements are allowed to do certain things. This is like Axiomatic’s example of making a determination if somebody is old enough to buy an R rated movie ticket.
Thus, finding that the claim encompasses an abstract idea, the district court moved to Step 2 of the Alice/Mayo analysis – and again sided with the defendant:
As al ready stated, [the claimed invention simply] uses standard computing processes to implement an idea unrelated to computer technology. It does not change [sic] way a computer functions or the way that the internet operates.
On appeal, the Federal Circuit affirmed in a R.36 judgment without opinion. On this point, the petition cites Jason Rantanen’s recent post indicating that around 50% of Federal Circuit decisions are being resolved without opinion. Jason Rantanen, Data on Federal Circuit Appeals and Decisions, PATENTLY-O (June 2, 2016).
A grant of certiorari in this case would serve as a salutary reminder to the Federal Circuit about the appropriate use of one-word affirmances—which currently resolve over 50 percent of that court’s cases. Rantanen, supra (showing that the percentage of Rule 36 opinions in appeals from district courts has increased from 21 percent to 43 percent in less than a decade). If the Federal Circuit is content to allow district court opinions to effectively substitute for its own opinions at such a high rate, that practice should not be permitted to “cert proof ” issues that are otherwise cleanly presented and worthy of this Court’s review. Cf. Philip P. Mann, When the going gets tough . . . Rule 36!, IP Litigation Blog (Jan. 14, 2016) (arguing that the Federal Circuit relies on summary affirmance under Rule 36 to “sidestep difficult issues on appeal and simply affirm”).
One issue that the district court (and obviously the Federal Circuit) failed to address was that of preemption – what is the relevance of the fact that substantial, practical, an and non-infringing applications of the given abstract idea are available and not covered by the patent. Petitioner argues that issue is critical to the analysis. “[T]he lower courts regularly decline any discussion of preemption in favor of rote analysis of patent language at so high a level of generality that the claim language is rendered all but meaningless. This leads to the untenable result that patents—such as the one here—that do not preempt other uses of the alleged “abstract idea” at issue are nevertheless held to violate Alice.”
Hotel Security Checking Co v Lorraine Co, 160 F 467 (2d Cir 1908).
May 15, 2016 PatentAbstract Idea, Affirmed Without Opinion, anticipation, obviousness, Subject Matter EligibilityDennis Crouch
OPINION BY: COXE
OPINION: Before LACOMBE, COXE, and WARD, Circuit Judges.
COXE, Circuit Judge. The Hicks patent describes and claims a “method of and means for cash-registering and account-checking” designed to prevent frauds and peculation by waiters and cashiers in hotels and restaurants. The object of the alleged invention is accurately to check the account of the cashier and of each waiter. In carrying out the system, each waiter is provided with slips of paper, so marked as to distinguish them from those used by the other waiters in the same establishment. The person in charge of each department, which fills an order given by waiters, is provided with a sheet of paper ruled lengthwise in parallel columns, each waiter having a particular column exclusively appropriated to him. Each waiter is numbered or otherwise marked. If numbered, and this is the simplest method of designation, the number on the slips given him will correspond with his own number and his orders will be entered in the sheet column bearing a similar number. For instance, waiter No. 6 is given a badge showing that number, which he is required to wear conspicuously; he is also given slips bearing that number and his orders are entered under column No. 6 by the person in charge of the department filling the orders. The large sheet on which the orders of the different waiters are entered is simply a sheet of plain paper with parallel lines ruled thereon, the columns being numbered at the top; a sheet of legal cap could easily be utilized for this purpose.Each waiter is given a number of slips about 3 1/2 by 5 1/2 inches in size, which are blank except that the waiter’s number is marked thereon. If, for instance, waiter No. 6 receives an order for food, he goes to the kitchen department and when the order is filled he exhibits his tray to the checker, who enters the price of each article on the waiter’s slip and also on his own sheet under the column No. 6. The slip is returned to the waiter, who presents it at the proper time to the customer. Either the waiter or the customer pays the amount to the cashier who retains the slip. It is usually sufficient in practice to enter the total of any one order and not each item separately. If subsequent orders are given either from the kitchen, the bar or the cigar stand, the same process is repeated and the amounts entered upon the same slip. At the close of business the sum of the slips of waiter No. 6 in the hands of the cashier, can easily be compared with the sum of the items charged to him by the departments collectively and the same is, of course, true of all the other waiters. The amount charged to all the waiters can be compared with the total of all the items of all the slips in the hands of the cashier and with the cash reported by the latter. If there has been no carelessness or dishonesty, the amounts will agree and if there has been, it is easy to discover where the fault lies.
The specification enumerates ten separate results, which it is alleged are accomplished by the use of the patented system, all having in view the protection of the employer from peculation by his servants either individually or in combination with each other.
“1. The herein-described improved means for securing hotel or restaurant proprietors or others from losses by the peculations of waiters, cashiers or other employes, which consists of a sheet provided with separate spaces, having suitable headings, substantially as described, said headings being designatory of the several waiters to whom the several spaces on the sheet are individually appropriated, in conjunction with separate slips, each so marked as to indicate the waiter using it, whereby the selling price of all the articles sold may be entered in duplicate, once upon the slip of the waiter making the sale, and once upon his allotted space upon the main sheet, substantially as and for the purpose specified.
“2. The herein-described improvement in the art of securing hotel or restaurant proprietors and others from losses by the peculations of waiters, cashiers or other employes, which consists in providing separate slips for the waiters, each so marked as to indicate the waiter using it, and in entering upon the slip belonging to each waiter the amount of each sale that he makes, and also in providing a main sheet having separate spaces for the different waiters and suitably marked to correspond with the numbers of the waiters and of their slips, and in entering upon said main sheet all the amounts marked upon the waiters’ slips so that there may thus be a duplication of the entries, substantially in the manner and for the purpose specified.”
The principal defense is lack of novelty and invention. Section 4886 of the Revised Statutes (U.S. Comp. St. 1901, p. 3382) provides, under certain conditions, that “any person who has invented or discovered any new and useful art, machine, manufacture or composition of matter” may obtain a patent therefor. It is manifest that the subject-matter of the claims is not a machine, manufacture or composition of matter. If within the language of the statute at all, it must be as a “new and useful art.” One of the definitions given by Webster of the word “art” is as follows: “The employment of means to accomplish some desired end; the adaptation of things in the natural world to the uses of life; the application of knowledge or power to practical purposes.” In the sense of the patent law, an art is not a mere abstraction. A system of transacting business disconnected from the means for carrying out the system is not, within the most liberal interpretation of the term, an art. Advice is not patentable. As this court said in Fowler v. City of New York, 121 Fed. 747, 58 C.C.A. 113:
“No mere abstraction, no idea, however brilliant, can be the subject of a patent irrespective of the means designed to give it effect.”
It cannot be maintained that the physical means described by Hicks, — the sheet and the slips, — apart from the manner of their use, present any new and useful feature. A blank sheet of paper ruled vertically and numbered at the top cannot be the subject of a patent, and, if used in carrying out a method, it can impart no more novelty thereto, than the pen and ink which are also used. In other words, if the “art” described in the specification be old, the claims cannot be upheld because of novelty in the appliances used in carrying it out, — for the reason that there is no novelty.
The patent seems to us to cover simply a system of bookkeeping made applicable to the conditions existing in hotels and restaurants. The fundamental principle of the system is as old as the art of bookkeeping, i.e., charging the goods of the employer to the agent who takes them. Suppose the case of a firm selling goods by agents direct to the public. Before starting out the agent goes to each department and secures the goods needed by him, let us say, 5 dozen pairs of gloves, 3 dozen shirts, 100 neckties, 2 dozen pairs of shoes, etc. As a matter of course, the bookkeeper charges these items to the agent on the books of the firm and gives him a bill, or list, with the items and prices entered thereon. The agent knows from an examination of the list exactly what price he is to charge to the customer. When he makes remittances to the firm with statements showing the goods sold by him and the names of the buyers, the firm knows by an examination of its books what goods he has sold, how his sales compare with those of other agents and what amount, if any, he still owes. This, in essentials, is the scheme of the patent and it is as old as the laws of trade.
The patentee has modified and adapted it to fit the ephemeral character of the business in hand, but it required no exercise of the inventive faculties to do this. In a transaction which is to be concluded within an hour, a ponderous system of bookkeeping is unnecessary; but the substitution of a blank sheet laid on the desk for a blank sheet bound in a book, and a series of slips of uniform size for the ordinary bill heads, may require ingenuity and be more convenient, but it adds nothing of substance to the art.
The patentee is evidently an observant man, and, with large experience in the business, has written a treatise on restaurant account keeping, containing many valuable suggestions for preventing dishonesty by waiters, which may be epitomized as follows: — employ a competent and observant head waiter, have at least one honest man in charge, give each waiter a number and slips with a corresponding number, stamp the price of the articles ordered by him on the slip, and charge the amounts to him on a sheet of paper under his number, printed or written at the top of the sheet. Although the record does not show that this identical system was used prior to the patent, it does show that the underlying idea of keeping a duplicate record of the items taken by the waiter from the kitchen or bar, so that the cashier may know whether the proper amount of cash has been paid or not, had long been known. The essential features were old, the changes, elaborations and improvements of the patent belong to the evolution of the business of restaurant and hotel keeping, and would, we think, occur to any clever and ingenious person familiar with the needs of that business. The truth of this proposition will be made apparent by a brief survey of the prior art.
We agree with the judge of the Circuit Court in thinking that the patent to Smith for “a service and cash check,” while not a direct anticipation, describes a system which in the main corresponds to that of the patent in suit. Smith says:
“The invention has for its object to assure returns to the proprietor to the full value of the food served by preventing collusion of employes and patrons without offense, and also to economize time of patrons and employes and assure more satisfactory service.”
Smith provides each waiter with a package of checks requiring the waiter to write his name on the body and coupon of each check. As the waiter passes the checker on his way to the guest with the food ordered by him, the checker punches from the check the value of the food on the waiter’s tray. When the order has been fully served, the cashier adds up the sums opposite the punch marks and writes the sum total in ink next the dollar mark on the check and coupon. The cashier has at hand a series of numbered spindles, one for each waiter, and on the proper one he places the coupon torn from the check. When a check is paid to the cashier, the coupon is returned to the waiter as a voucher and at the close of the day’s business the cash in hand must correspond with the amount punched on the checks and also with the amounts written in ink on the coupons which are delivered up by the waiters when they have finished work for the day. The Smith claim is not for a system, method or means, but is for “a service of cash check provided,” etc.
Admitting, arguendo, that a system such as Hicks describes is patentable, if absolutely novel, we are of the opinion that the improvements of Hicks over the system disclosed in the Smith patent are such as would occur to anyone conversant with the business. The testimony also shows that several years prior to the Hicks application, there was in vogue in Harvey’s restaurant in Washington, a system similar in all essential details to that of Hicks’. Although we are not prepared to say that the two systems are identical in detail, we are unable to discover any patentable improvements in the latter system over the former. We have no reason to discredit the statement of defendant’s witnesses that Harvey used a checker’s sheet ruled in parallel columns on which the prices of the articles ordered by the waiters, respectively, were entered, being also entered on the waiter’s slip.
The brass check system which was in use prior to the patent is thus described in the complainant’s brief:
“In this system the waiter received from the checker a brass check having thereon the total amount of the food, etc., served to the guest. If the guest gave a second order the waiter gave back the check to the checker and received a larger one in exchange. In some cases a record was made of the total paid by each guest, but this record was not like or comparable with the Hicks main sheet and could not achieve its results. There was no division of the sheet into spaces for the different waiters and there was no duplication of entries. The inadequacy of this system is obvious.”
This statement is adopted because of its conciseness and, although it omits some features of the system, it will close debate upon the facts if it be accepted as correct. The principal differences between this system and the Hicks system are the substitution of paper for brass, recording each item separately instead of the total and using a recording sheet which is ruled instead of one that was not ruled.
Regarding the entry of the total amount upon the brass, or paper, check and upon the sheet, it will be remembered, as before stated, that the patentee says:
“Each item of the order may be entered separately on the slip and on the sheet if so desired, but, in practice, I have found it more convenient and usually sufficient for the purposes of my invention to enter the whole of any one order as a total.”
This language is too plain to admit of doubt. It is a clear declaration on the part of the patentee that if the total be entered on the slip and sheet it will infringe the claims. This being so, if a system, similar in other respects, be found in the prior art where totals are so entered, it will anticipate the claims. The complainant has endeavored to explain away this statement but we are not in the least impressed by his efforts in that direction.
The alleged prior use by McKenna, we dismiss without comment for the reason that the testimony in its support is too uncertain to satisfy the requirements of the rule that prior use must be proved beyond a reasonable doubt.
If at the time of Hicks’ application, there had been no system of bookkeeping of any kind in restaurants, we would be confronted with the question whether a new and useful system of cash-registering and account-checking is such an art as is patentable under the statute. This question seems never to have been decided by a controlling authority and its decision is not necessary now unless we find that Hicks has made a contribution to the art which is new and useful. We are decidedly of the opinion that he has not, the overwhelming weight of authority being that claims granted for such improvements as he has made are invalid for lack of patentability.
The case at bar is not distinguishable in principle, from the case of Hocke v. N.Y. Central & H.R.R. Co., 122 Fed. 467, 58 C.C.A. 627, in which this court, after describing the improvements “for securing against loss of freight” covered by the claims, said, “All this evidences good judgment upon the part of one who is experienced in the particular business, but it does not rise to the level of invention.”
In the case of U.S. Credit System Co. v. American Credit Indem. Co., 59 Fed. 139, 8 C.C.A. 49, this court had before it a patent for “means for securing merchants and others from excessive losses by bad debts, which consist of a sheet provided with separate spaces and suitable headings,” etc. The court says:
“There is nothing peculiar or novel in preparing a sheet of paper with headings generally appropriate to classes of facts to be recorded, and whatever peculiarity there may be about the headings in this case is a peculiarity resulting from the transactions themselves. * * * Given a series of transactions, there is no patentable novelty in recording them, where, as in this case, such record consists simply in setting down some of their details in an order or sequence common to each record.”
It is unnecessary to multiply authorities as we are convinced that there is no patentable novelty either in the physical means employed or in the method described and claimed in the Hicks patent.
Guest Post: 35 USC 289—Grant of Certiorari in Samsung v Apple = The Opportunity for a Better-Crafted Standard for Awarding Total profits
May 12, 2016 PatentAffirmed Without Opinion, Damages, Federal Circuit En Banc, Licenses, Marking, VenueJason Rantanen
Guest post by Gary L. Griswold. Mr. Griswold is a Consultant residing in Hudson, WI and was formerly President of and Chief Intellectual Property Counsel for 3M Innovative Properties Company. The paper reflects the views of the author. He wishes to thank Bob Armitage and Mike Kirk for their excellent contributions to the essay.
In August, 2015, I published an article on Patently-O entitled “35 USC 289-After Apple v Samsung, Time for a Better-Crafted Judicial Standard for Awarding “Total Profits.” [i] The article appeared before the Supreme Court granted certiorari in this appeal.[ii] My use of the word “after” was, thus, a bit premature. The crafting of a new judicial standard may actually be accomplished over the next several months, as the Supreme Court considers the damages issue in Apple v. Samsung case later in its current term.
The statutory basis for awarding damages in this case is no “small-change.” 35 USC 289 provides the design patent holder with the infringer’s “total profits” on the “article of manufacture” to which the patented design “has been applied”[iii]. My August article referenced a Patently-O article by Professor Rantanen that included an analysis of the Federal Circuit’s Apple v Samsung decision and its ramifications, suggesting that the section 289 damages provision could induce “an explosion of design patent assertions and lawsuits.”[iv] Indeed, section 289 holds the potential for design patent procurement and assertion to become the next big “patent assertion entity” business model.
Some commentators have suggested that design patents, being sought and accumulated differently from utility patents, are not likely to stimulate much PAE interest. Whatever merit in that view, it needs to be tempered with the realization that greed is the mother of all of this type of business-model invention. One need only reflect on the fact that more than 1,000 qui tam actions for false marking were filed by opportunistic plaintiffs following the 2009 Federal Circuit decision in Forest Group, Inc. v. Bon Tool Co. before such actions were thankfully banished by the “Leahy-Smith America Invents Act.”[v] The prospects for design infringement revenue generation based on the “total profits”-recovery provision in 35 USC 289 could make successful design patent assertion a staggeringly profitable business. The potential for such an outcome as well as an example of such assertion was referenced in the briefs relating to the Apple v. Samsung certiorari petition[vi].
The possibility of a surge in design-patent PAE activity is almost certainly one of many reasons why the Supreme Court granted certiorari—and why it should not squander the opportunity presented in the Apple v. Samsung appeal to provide a reasoned and principled demarcation between those fact patterns where a “total profits” remedy is clearly warranted and those where it is not.
In deciding this appeal, the Supreme Court may focus on what constitutes an “article of manufacture” under section 289. The statute provides a design patent infringer “shall be liable to the [design patent] owner to the extent of [the infringer’s] total profit” if the infringer “applies the patented design … to any article of manufacture.” [vii](emphasis added) But, the patented design is not necessarily synonymous with the article of manufacture itself.
Indeed, for section 289 purposes, an “article of manufacture” has been held to be the entire substrate to which the patented design is applied. For example, it has been held that a boat becomes the “article of manufacture” when the patented design is for the windshield applied to the boat[viii]. Other examples of “articles of manufactures” whose total profits might be subject to a section 289 recovery include (1) a large agricultural combine, when the patented design is for a tire tread applied to a tire used on the combine; (2) an automobile, when the patented design is for the automobile’s rear taillights; and (3) an HDTV, when the patented design is for a semiconductor used in the television.
In my earlier articles, I described such “total profits” recovery scenarios as a problem in need of a judicial solution. I suggested eliminating access to section 289 “total profits” recoveries in situations where a consensus exists that a remedy of this type would be entirely unwarranted. My approach would interpret section 289 as authorizing a total-profits recovery only “if the patented design is substantially the basis for customer demand for the entire article”.[ix] If it is the basis for consumer demand, the section 289 total-profits recovery would apply to the article; if not, a recovery of total profits would not be available for the article.
This approach bears some similarity to the determination of utility patent damages under the entire market value rule[x]. A utility patent on a boat windshield does not allow the value of the boat to be used as the basis for determining a reasonable royalty absent a demonstration that the windshield was the basis for the customer demand for the boat.
In addition, the “customer demand” limitation is consistent with the apparent rationale for enacting section 289 in the first place. Current section 289 and its predecessors replaced a Supreme Court decision[xi] that provided limited damages to design patent owners even where the infringers had applied the patented design to an article of manufacture in order to create the customer demand for the article of manufacture. In such a situation, forcing the copyist to turn over its total profits obtained on the infringing article represents good policy.
However, even under a “customer demand” limitation, section 289 is no timid remedy. It would not involve any form of “apportionment” of the profits to be awarded to the design patent holder on the ground that some proportion of the profits might be attributable to non- design patented factors. Apportionment is not consistent with the Congressional intent when section 289 and its predecessors were enacted.
Moreover, even if the section 289 remedy is unavailable, the patent owner is not left without the right to recover damages. All the remedies otherwise available for patent infringement remain, whether or not a section 289 “total profits” recovery can be secured as long as there is no double recovery of damages[xii].
The Apple v. Samsung case is of particular importance because imposing the “customer demand” standard on section 289 recoveries does not require another act of Congress. The courts are free to interpret statutes to effectuate the purpose Congress had in enacting them. Under section 289, Congress did nothing to preclude the courts from determining what qualifies—and does not qualify—as an “article of manufacture.”
The Federal Circuit sees this judicial flexibility otherwise. It (incorrectly) saw its hands as having been tied by Congress in Apple v. Samsung, stating: “We are bound by what the statute says, irrespective of policy arguments that may be against it”[xiii]. Fortunately, the Supreme Court has the opportunity to see the situation differently.
The Supreme Court may—and should—see it differently. It can define an “article of manufacture” as being limited to objects for which the patented design is substantially the basis for customer demand. Courts have acted similarly in the past to assure that application of a statute will not result in foreseeable outcomes which are clearly inappropriate and manifestly unintended. The emergence of the “entire market value” rule is a good example of where the alleged “infringing product” cannot be reflexively used as the basis for a damages calculation where the “patented invention” is a mere component or feature of the product and not the product itself.
The Court will have, however, some competing approaches to consider in the course of deciding this appeal. Another possible approach to interpreting section 289 is the so-called “separate product” exception. This exception to a section 289 recovery limits the availability of total profits to the smallest separately sold product to which the patented design is applied. While this exception has the potential to limit the possibility of some of the ludicrous outcomes noted above, it is no panacea. For example, it fails to exclude a section 289 recovery where a design patented graphical user interface (GUI) is used in an electronic device which does not involve a separately sold product. This is a serious deficiency because of the difficulty in finding any policy rationale for awarding total profits on an electronic device simply because a design on a GUI used in it is patented.
Apple has, nonetheless, suggested in its responsive brief to “Defendant-Appellants’ Petition for Rehearing en banc” what amounts to a more generalized rendition of a “separate product” exception: “As the panel correctly recognized, this distinctive design was not severable from the inner workings of Samsung’s smartphones, see Op.27-28, in a way that a cupholder is analytically distinct from the overall look-and-feel of a car.”[xiv] (emphasis added) While “severability” appears to be a more general “exception” criterion than simply being a “separate” product, the “severability” approach does not appear to address the deficiency explained above for the “separate product” exception.
If there is a concern with the “customer demand” limitation, it would be whether the limitation is so broad that it swallows most or all of the “total profits” rule. Indeed, there are many factors which cause a purchaser to acquire a particular article of manufacture—most notably its functional aspects. However, to apply the “customer demand” approach, one begins with the customer looking for something in a product space and then making the specific decision to purchase. Everyday products with new, ornamental designs such as specially shaped paper clips are a good example.[xv] While they have a known function, they are most likely purchased for their appearance. An option would be to only consider the ornamental features of a product to determine whether they were substantially the basis for customer demand, but that may well be too narrow and could lead to a total profit remedy for minor differences from an ornamental perspective.
The Supreme Court would not have granted certiorari without a sense that its guidance was needed to properly titrate a powerful damages provision. It can best do so by allowing section 289 to remain a viable incentive to create and commercialize new designs, but then limiting the articles of manufacture qualifying for a “total profits” recovery to those where the patented design is substantially the basis for customer demand for the article of manufacture. Such a holding would secure section 289 as both a distinguishing and distinguished feature of U.S. design patent law.
[i] Griswold, Gary. “35 USC 289 – After Apple v. Samsung, Time for a Better-Crafted Judicial Standard for Awarding “Total Profits”? Patently-O. August 14, 2015. https://patentlyo.com/patent/2015/08/griswold-patent-damages.html
[ii] See U.S. Supreme Court Orders List from March 21, 2016 at 2. http://www.supremecourt.gov/orders/courtorders/032116zor_h3ci.pdf
[iii] 35 U.S.C. § 289:
“Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.
Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.”
[iv] Rantanen, Jason, “Apple v. Samsung: Design Patents Win.” Patently-O. May 18, 2015. https://patentlyo.com/patent/2015/05/samsung-design-patents.html
[v] Laurie Rose Lubiano, “The America Invents Act applies the brakes to the false marking bandwagon.” LEXOLOGY, January 3 2012. http://www.lexology.com/library/detail.aspx?g=401c9bea-d643-4521-bc7d-c63d5b4a25f5
[vi] Samsung Petition for a Writ of Cert. Case No. 15-777. at 36-38. http://www.scotusblog.com/wp-content/uploads/2016/01/15-777_PetitionForAWritOfCertiorari.pdf
[vii] 35 U.S.C. § 289
[viii] Order on Motion for Partial SJ, In re Pacific Coast Marine Windshields Ltd. v. Malibu Boats LLC, Case No. 6:12-cv-33 (M.D. Fl. August 22, 2014)
[ix] See Griswold, https://patentlyo.com/patent/2015/08/griswold-patent-damages.html; See also Griswold, Gary. “35 USC § 289 – An Important Feature of U.S. Design Patent Law: An Approach to its Application.” IPO Law Journal. April 6, 2015. http://www.ipo.org/wp-content/uploads/2015/04/griswold_an-approach.pdf
[x] See Cornell University v. Hewlett-Packard Co., 609 F.Supp. 2d 279, 288-89 (N.D.N.Y. 2009):
(1) The infringing components must be the basis for customer demand for the entire machine including the parts beyond the claimed invention, (2) the individual infringing and non-infringing components must be sold together so that they constitute a functional unit or are parts of a complete machine or single assembly of parts, and (3) the individual infringing and non-infringing components must be analogous to a single functioning unit. It is not enough that the infringing and non-infringing components are sold together for business advantage. Notably, these requirements are additive, not alternative, ways to demonstrate eligibility for application of the entire market value rule.
See also Virnetz, Inc. v. Cisco Systems, Inc., 113 F.3d 1308, 1326 (Fed. Cir. 2014) (Judge Prost: “we recently affirmed that ‘[a] patentee may assess damages on the entire market value of the accused product only where the patented feature creates the basis for customer demand or substantially creates the value of the component parts.”)
[xi] See Dobson v. Dornan, 118 U.S. 10, (1886); Dobson v. Hartford Carpet Co., 114 U.S. 439 (1885); Dobson v. Bigelow Carpet Co., 114 U.S. 439 (1885); Bigelow Carpet Co. v. Dobson/Hartford Carpet Co. v. Same, 10 F. 385,386; 1882 U.S. App. LEXIS 2295 (E.D. Pa. 1882).
[xii] 35 U.S.C. § 289, paragraph 2: “Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.”
[xiii] Apple v. Samsung, Fed. Cir. Opinion at 27, fn. 1.
[xiv] See Brief in Opp’n to Rhg, Apple v. Samsung, Case No. 2014-1335; 2015-1029 at 27-28 (Fed. Cir. July 20, 2015)
[xv] See, e.g., Design Patent No. USD647,138: https://docs.google.com/viewer?url=patentimages.storage.googleapis.com/pdfs/USD647138.pdf
May 3, 2016 PatentAffirmed Without Opinion, AIA Trials, Federal Circuit En Banc, Personal Jurisdiction, PGRDennis Crouch
Guest Post By: Paul Dietze and Mini Kapoor, Haynes and Boone, LLP[1]
On March 18, 2016, the Federal Circuit held that Mylan Pharmaceuticals, Inc. (“Mylan”), a generic drug manufacturer, was subject to specific personal jurisdiction in Delaware because Mylan had filed an abbreviated new drug application (“ANDA”) and “contemplate[d] plans to engage in marketing of the proposed generic drugs” in the state.[2] The ruling affirmed two different decisions by judges in the United States District Court for the District of Delaware that Mylan was subject to specific jurisdiction in Delaware.[3] However, as noted below, it looks like Mylan intends to seek panel or en banc rehearing and possibly pursue a petition for certiorari if the Federal Circuit does not grant the rehearing or re-hears the case and continues to find personal jurisdiction.
I. Procedural Posture of the Cases
Mylan filed two separate ANDAs with the U.S. Food & Drug Administration (“FDA”) seeking permission to market generic versions of unrelated pharmaceutical products marketed by Acorda Therapeutics, Inc. and AstraZeneca AB under the statutory scheme outlined in the Hatch-Waxman Act (the “Act”). As permitted under the Act, Mylan certified that the patents of the brand name drug companies listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“the Orange Book”) were either invalid or would not be infringed by Mylan’s marketing of its proposed generic versions of the drugs. Each certification is deemed an artificial act of infringement under the Act, and permits the brand name drug companies to sue the generic drug company. Acorda and AstraZeneca sued Mylan for patent infringement in separate lawsuits filed in Delaware. Mylan moved to dismiss in both cases, arguing that it was not subject to either general or specific personal jurisdiction.[4]
Specifically, Mylan, citing the Supreme Court’s decision in Daimler AG v. Bauman,[5] argued that it was not subject to general jurisdiction in Delaware because it did not have contacts with Delaware that were so continuous “as to render it essentially at home in the forum state,” and was not subject to specific jurisdiction because it did not satisfy the minimum contacts requirement.[6] Both district court decisions held that Mylan was subject to specific jurisdiction in Delaware.[7] The district court decisions, however, differed as to whether or not Mylan was subject to general jurisdiction in Delaware.
On appeal, the majority opinion of the Federal Circuit panel affirmed specific jurisdiction without addressing general jurisdiction.[8] The panel identified Mylan’s ANDA filings as “formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs” and held the particular actions that “Mylan has already taken—its ANDA filings—for the purpose of engaging in that injury-causing and allegedly wrongful marketing conduct in Delaware” were sufficient to satisfy the minimum contacts requirement.[9] The court also identified the significant expense a generic drug company incurs in the ANDA application process as evidence of an ANDA-filer’s plans to market the drug.[10] The court further noted that Mylan’s distribution channels in Delaware make clear that these future marketing activities would “unquestionably take place in Delaware (at least).”[11] The court concluded that the planned sales were “close enough” to the subject of the lawsuits to satisfy the minimum contacts requirement and justify specific jurisdiction in Delaware.[12]
Having found the minimum contacts requirement satisfied, the court considered whether Delaware’s exercise of jurisdiction would “offend traditional notions of fair play and substantial justice.”[13] The court held that other considerations, such as those identified in Burger King Corp. v. Rudzewicz,[14] would not render jurisdiction unreasonable.
III. The Logical Implications
By establishing specific personal jurisdiction by virtue of filing an ANDA with plans to direct sales of a generic drug into a particular state, a generic drug manufacturer, such as Mylan, would appear to be subject to specific jurisdiction in any state in which it intends to market the generic drug. Almost always, this will be any state in the country.
Prior to the Supreme Court’s ruling in Daimler, branded-drug companies often asserted jurisdiction in a state based on general jurisdiction, arguing that the generic company was subject to jurisdiction in the state because it intended to sell the generic version of the drug in the state. In Daimler, however, the Supreme Court held that general jurisdiction cannot attach unless the defendant’s contacts with the forum state are “so continuous and systematic as to render [the non-resident corporate defendant] essentially at home in the forum State.”[15] A corporation is essentially at home only in its state of incorporation and the state where its principal place of business is located.[16] Daimler specifically rejected the notion that general jurisdiction will lie “in every State in which a corporation engages in a substantial, continuous, and systematic course of business.”[17] This decision in Daimler raised the concern as to whether brand name drug companies could continue to rely on general jurisdiction to file suits in the forum of their choice. However, the court’s ruling in Acorda, by establishing specific jurisdiction based on filing an ANDA with plans to sell the drug in a state, arguably makes the high bar for general jurisdiction established in Daimler of little significance in ANDA cases.
Thus, under Acorda, brand name drug companies are likely to continue to have wide latitude in selecting the forum in which to sue an ANDA-filer. Delaware and New Jersey, where ANDA cases are often brought, are likely to continue to be forums of choice for ANDA cases.
IV. Expected Future Litigation
Letters filed by Mylan in pending district court actions indicate that Mylan plans to seek panel and en banc rehearing in Acorda.[18] The letters provide a preview of Mylan’s potential arguments for rehearing. Mylan is expected to argue that Acorda’s holding that Mylan is subject to specific jurisdiction in every state “is contrary to the basic notion of specific jurisdiction and the more basic constitutional guarantees at the heart of the Supreme Court’s due process/personal jurisdiction jurisprudence.”[19] Mylan is further expected to argue that Acorda was wrongly decided because it “simply recreates the pre-Daimler status quo by allowing courts throughout the nation to rely on specific jurisdiction where general jurisdiction is no longer applicable.”[20] Mylan also indicates that it will argue that Acorda’s reliance on Mylan’s future contacts in Delaware is contrary to the Supreme Court’s Walden v. Fiore decision[21] and that the present decisions are misplaced in view of prior Federal Circuit precedent in Zeneca Ltd. v. Mylan Pharm., Inc.,[22] where the Federal Circuit “held that submission of an ANDA to the FDA in Maryland did not authorize the exercise of jurisdiction over the ANDA-filer by Maryland federal courts.”[23] Acorda, Mylan argues, makes “Zeneca merely academic.”
Regardless of the Federal Circuit’s final ruling, the losing party may very well file a petition for certiorari with the Supreme Court seeking review of the Federal Circuit’s decision. That Acorda and Mylan were represented at the Federal Circuit by former Solicitor Generals (Theodore Olson for Acorda and Paul Clement for Mylan), while AstraZeneca was represented by another Supreme Court veteran (Kannon Shanmugam), shows that each party considers this case to be important and that they are likely preparing to ask the Supreme Court to consider the matter. So the panel decision in Acorda appears to be merely the beginning of the appellate proceedings. Given these expected actions it will be interesting to see if the brand name drug companies continue to file suits in both the brand name drug company’s preferred jurisdiction as well as where the generic drug company is incorporated or has its principal place of business until all the Acorda appellate proceedings are concluded.
[1] Paul E. Dietze, Ph.D., is Of Counsel in the Washington, DC office and Mini Kapoor, Ph.D., is an associate in the Houston, Texas office of the law firm of Haynes and Boone, LLP. Their practices emphasize pharmaceutical patent counseling, patent procurement, and patent litigation.
[2] Acorda Therapeutics Inc. et al. v. Mylan Pharm. Inc., No. 2015-1456 and AstraZeneca AB v. Mylan Pharm. Inc., No. 2015-1460, 2016 WL 1077048 (Fed. Cir. March 18, 2016) [Patently-O Discussion].
[3] Acorda Therapeutics Inc. & Alkermes Pharma Ireland Ltd. v. Mylan Pharm. Inc. & Mylan Inc., 78 F. Supp. 3d 572 (D. Del. 2015) (Stark, C.J.); AstraZeneca AB v. Mylan Pharm. Inc., 72 F. Supp. 3d 549 (D. Del. 2014) (Sleet, J.).
[4] Acorda, No. 1:14-cv-00935, 2014 WL 8772659 (Defs.’ Br. Supp. Mot. Dismiss) (Aug. 27, 2014); AstraZeneca, No. 14-696, 2014 WL 4745288 (Defs.’ Br. Supp. Mot. Dismiss) (June 26, 2014).
[5] 134 S. Ct. 746 (2014).
[6] Acorda, No. 1:14-cv-00935, 2014 WL 8772659 (Defs.’ Br. Supp. Mot. Dismiss 3, 6) (Aug. 27, 2014); AstraZeneca, No. 1:14-00696, 2014 WL 4745288 (Defs.’ Br. Supp. Mot. Dismiss 5, 13) (June 26, 2014).
[7] Acorda, 78 F. Supp. 3d at 597; AstraZeneca, 72 F. Supp. 3d at 560.
[8] Judge O’Malley opined that by virtue of voluntarily electing to do business in Delaware, and registering and selecting an agent for service of process in the state, Mylan was subject to general jurisdiction in Delaware. Acorda, Nos. 2015-1456 & 2015-1460, 2016 WL 1077048 at *11 – *12 (Judge O’Malley concurring).
[9] Acorda, Nos. 2015-1456 & 2015-1460, 2016 WL 1077048 at *8 -*9.
[10] Id. at *11 – *12.
[11] Id. at *13.
[13] Id. at *13 -*14 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
[14] 471 U.S. 462, 477 (1985).
[15] Daimler, 134 S. Ct at 758 n.11 (emphasis added).
[16] Id. at 760.
[17] Id. at 760-61 (internal quotations omitted).
[18] See, for example, Takeda GmbH, et al., v. Mylan Pharm. Inc., 1:15-cv-00093 (N.D. W. Va.) (Defs.’ Letter Status Rep.) (Mar. 25, 2016).
[21] 134 S. Ct. 1115 (2014).
[22] Takeda GmbH, et al., v. Mylan Pharm. Inc., 1:15-cv-00093 (N.D. W. Va.) (Defs.’ Letter Status Rep.) (Mar. 25, 2016).
[23] 173 F.3d 829 (Fed. Cir. 1999).
Cardpool: Amending Claims in Reexam after Court Judgment of Invalidity
April 6, 2016 PatentAffirmed Without Opinion, anticipation, Federal Circuit En Banc, obviousness, Supreme CourtDennis Crouch
The timing of a settlement is sometimes really important for patentees — especially if a court is about to find your patent invalid.
Slightly complex story: In Cardpool v. Plastic Jungle, the district court ruled on summary judgment that Cardpool’s gift-card-exchange patent claims invalid under 35 U.S.C. 101 and dismissed the case with prejudice. U.S. Patent No. 7,494,048. That decision was initially affirmed by the Federal Circuit in a R.36 Judgment Without Opinion. Shortly thereafter, however, the USPTO issued a reexamination certificate finding the claims (as amended in reexam) patentable (of course, the PTO did not consider eligibility but only novelty and nonobviousness).
The timing of the reexamination certificate gave Cardpool the opportunity to request rehearing from the Federal Circuit. The appellate court agreed and vacated its prior summary affirmance (although not the district court’s opinion) and remanded to the district court to consider the impact of the reexamination changes.
The parties apparently came to some agreement and thus on remand the parties jointly moved for the district court to vacate its invalidity judgment since the claims had been amended and since the PTO certificate issued before the appellate mandate. See Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1346 (Fed. Cir. 2013).
However, the district court rejected the plea for vacatur — finding that the PTO decision does not “displace a district court judgment” and that it would be “against the public interest” to allow a patentee to overcome an invalidity judgment simply by “amending its invalid claims.”
No Vacation: Now, on appeal again, the Federal Circuit has affirmed the lower court ruling that vacatur is not necessary or proper:
The Supreme Court counsels that “vacatur must be decreed for those judgments whose review is . . . ‘prevented through happenstance’—that is to say, where a controversy presented for review has ‘become moot due to circumstances unattributable to any of the parties.’” U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 23 (1994).
Here, the mootness is due to amendments made by the patentee. As such, the appellate court refused to vacate the district court judgment.
Res Judicata: What is unclear here is the level of claim & issue preclusion that will apply going forward when Cardpool asserts the patent against some third party. Claim 1 was found invalid by a final judgment. However, Claim 1 has now been amended. Could Cardpool sue Plastic Jungle (or its assigns) on the revised Claim 1? Could Cardpool sue an unrelated alleged infringer? Writing for the majority, Judge Newman suggests (but does not hold) that Cardpool will be able to do so:
On the facts and procedures of this case, the issue of validity of the reexamined claims remains to be addressed in any future proceeding. In the initial proceeding the original claims were adjudicated only on the ground of subject matter eligibility under section 101. As in Aspex, the effect of a prior judgment rendered on specific issues as applied to the original claims, depends on the facts and issues of the reexamination, and invokes equity as well as law.
I pulled-up the reexamined claims and found that they were extensively amended to require that the method be computer-implemented using a processor, computer program, data requests, validation process by the processor, etc. I would be truly surprised, if these amendments are sufficient to overcome the Alice Corp. test for eligibility (as implemented).
Baker Botts Dodges $42 million Verdict in Patent Conflict Case
March 31, 2016 EthicsAffirmed Without OpinionDavid
This is a fascinating case on several levels, Axcess International, Inc. v. Baker Botts LLP (Tex. App. Dallas March 2016). Baker Botts was representing one client, Axcess International, Inc. (“Axcess”) in prosecuting patent applications involving certain radio frequency identification technology. After it had filed those applications, it began to represent another client, Savi Technologies, Inc. (“Savi”) in prosecuting applications on similar technology. There is a lot going on in the case, but essentially Axcess sued Baker Botts and alleged two breaches of duty.
First, that, but for a conflict of interest between Savi and Axcess, Baker Botts would have broadened claims the firm had been pursuing for Axcess. The opinion is hard to follow but there seem to be two, related, claims made by Axcess.
First, Axcess argued that had it broadened its claims, the USPTO would have declared an interference with a then-pending Savi application, and Axcess would have prevailed. Put the other way, Baker Botts “pulled its punches” – had a material limitation in terms of 37 C.F.R. 11.107, I presume — on its ability to represent Axcess – because of its representation of Savi. Had it prevailed in the interference, Axcess would have claims to subject matter that turned out to be the lucrative technology. That leads to the second basis, which is that the broadened claims would have issued to Axcess and would have covered the lucrative terrain.
The case went to trial and the jury awarded $42 million dollars to Axcess. However, Baker Botts moved that judgment be entered in its favor, and raised four grounds. The trial court granted the motion without saying why.
The appellate court affirmed on one of the alternate grounds to affirm raised by Baker Botts – that there was no causation: specifically, that expert testimony was required and the testimony presented fell short of reliable expert testimony but was instead speculative.
In holding there was no evidence of causation, the Texas state appellate court placed the standard quite high, in my opinion and based solely on what is repeated in the opinion. The appellate court held that Axcess should have had an expert who was competent to testify that an interference would have been declared, specifically someone who could testify an Interference Practice Specialist would have reacted to the suggestion of an interference.
The second point seems to be that conflict-free counsel would have obtained broader claims that covered Savi’s commercial products. Here, the appellate court said there was no evidence the USPTO would have issued the claims. It is not clear what was done by Axcess: did the expert compare the hypothetical claims to the prior art of record? If so, that would seem to be enough, but the appellate court stated that there had to be evidence of how the USPTO would have responded to hypothetical patent applications and “evidence from similar cases.” In a vacuum and without the full trial record, this seems odd. Again, the opinion is hard to follow.
So, Baker Botts for now has dodged a $42 million verdict that arose out of relating competitors in closely related patent applications. Who knows how much the firm spent in doing so, and whether it will be reviewed by the Texas supreme court (that court has a discretionary review procedure sort of like the U.S. Supreme Court. Those risks need to be assessed in examining so-called “subject matter” conflicts. (Buy my book on prosecution ethics and read more!)
One other thing: along the way, the court stated that Baker Botts had been subpoenaed in a related case where an accused infringer argued that Baker Botts had failed to disclose in applications for Savi information the firm had obtained from Axcess. That case settled and there is no indication Savi sued Baker Botts for that failure; the existence of the subpoena and that case shows the risks of representing competitors and being careful about doing so!
Finally, the case is a warning about being careful: state courts are going to decide patent prosecution malpractice claims. Think about that. I honestly sometimes don’t know if arbitration is any better, however, and I am beginning to think that there really are some issues in even a routine malpractice case where a state’s interpretation of law could radically affect a federal objective and interfere with patent prosecution. Stay tuned for that.
Pending Supreme Court Patent Cases 2016 (February 17 Update)
February 17, 2016 PatentAbstract Idea, Affirmed Without Opinion, AIA Trials, Broadest Reasonable Interpretation, Claim Construction, Damages, Federal Circuit En Banc, Marking, obviousness, PGR, Subject Matter Eligibility, Supreme Court, USPTO Director, Written DescriptionDennis Crouch
Justice Scalia died this week. May he rest in peace. Although he (as well as Justice Kagan) had left the University of Chicago before I arrived, their influence continues to be felt in that institution. (Posner, Obama, Sunstein, Meltzer & Epstein, etc. were all still around). On her blog, Professor Ouellette (Stanford) has a nice post about the mixed bag of Justice Scalia’s IP scholarship legacy. Most recently, Justice Scalia may be best remembered for calling-out Federal Circuit jurisprudence on obviousness as “gobbledygook.” In many cases, I would expect that his ‘vote’ was less important than the ideas he brought to the table and the way he changed the debates.
I don’t see Scalia’s death having any impact on Halo/Stryker — where I predict the Federal Circuit will be reversed. Cuozzo is perhaps a different story where I expect a divided court to affirm in a situation where Justice Scalia may have voted to reverse. Oral arguments are still set for February 23, 2016 in Halo and Stryker. Tony Mauro has an interesting article on the case titled “Coin toss decides which advocate will argue key patent case.” Professor Mann provides an argument preview on SCOTUSblog.
New petitions this week include the reappearance of Limelight v. Akamai. The Supreme Court previously shot-down the Federal Circuit’s expanded definition of inducing infringement, but on remand the Federal Circuit expanded its definition of direct infringement (to include joint enterprise liability). The case is interesting and I hope that the court grants certiorari, but I would side with the patentee here.
In Medinol v. Cordis, the patentee questions whether the laches doctrine still applies in patent cases. This case parallels SCA Hygiene and comes on the heels of the Supreme Court’s Petrella decision which eliminated the laches defense for back-damages in copyright cases.
Briartek IP v. DeLorme, delves into interesting separation of powers and jurisdiction issues, asking: Whether a binding consent order, entered between the federal government, the ITC, and an ITC respondent, deprives federal district courts of jurisdiction over a declaratory judgment action, seeking to invalidate the patent at issue, filed by the ITC respondent … against the patent holder: a non-party to the consent order. The Federal Circuit had affirmed without substantive opinion.
Finally, last but not least, is Click-to-Call Tech v. Oracle Corp. who has copied the questions from Cuozzo and the recently denied Achates v. Apple. These questions challenge the seeming the absolute bar on judicial review of Patent Trial & Appeal Board’s power to institute IPR proceedings. Although this particular petition is unlikely to be granted. It lends additional credence to the other two. The petition is also a mechanism for the patentee here to keep the issue alive.
1. Petitions Granted:
Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513 (enhanced damages) (February 23 Oral Arguments linked with Stryker)
Stryker Corporation, et al. v. Zimmer, Inc., No. 14-1520 (enhanced damages) (linked to Halo)
Cuozzo Speed Technologies, LLC v. Michelle K. Lee, No. 15-446 (BRI construction in IPRs; institution decisions unreviewable)
2. Petitions Granted with immediate Vacatur and Remand (GVR)
3. Petitions for Writ of Certiorari Pending:
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: Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers).
Post Grant Admin: Click-to-Call Tech, LP v. Oracale Corp., No. 15-1014 (Same questions as Achates v. Apple and Cuozo)
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
Design Patents: Samsung Electronics Co. v. Apple Inc., No 15-777 (design patent scope and damages calculation)
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)
Inducement: Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 15-559 (Commil re-hash – if actions were “not objectively unreasonable” can they constitute inducement?)
Claim Construction: Universal Lighting Technologies, Inc., v. Lighting Ballast Control LLC, No. 15-893 (intrinsic vs extrinsic evidence for claim construction).
Preclusion or Jurisdiction: BriarTek IP, Inc. v. DeLorme Publishing Company, Inc., et al., No. 15-1025 (Preclusive impact of ITC consent judgment).
Preclusion or Jurisdiction: Vermont v. MPHJ Technology Investments, LLC, No. 15-838 (Federal court jurisdiction in anti-troll consumer protection case)
Preclusion or Jurisdiction: Alexsam, Inc. v. The Gap, Inc., No. 15-736 (appellate jurisdiction over patents that were dropped from case pre-trial)
Eligibility Challenges: Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea)
Claim Construction: 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.”)
Damages: Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on – potential wait-and-see)
Low Quality Brief: Morales v. Square, No. 15-896 (eligibility under Alice)
3. Petitions for Writ of Certiorari Denied:
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)
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
Daiichi Sankyo, Inc., et al. v. Apotex Inc., No. 15-281
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
W.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
4. Prior versions of this report:
Pre-Issuance Damages under Section 154(d)
February 9, 2016 PatentAffirmed Without Opinion, Damages, MarkingDennis Crouch
Rosebud LMS v. Adobe Systems (Fed. Cir. 2015)
In one of its first interpretation of the pre-issuances damages statute, 35 U.S.C. § 154(d), the Federal Circuit has affirmed that “actual notice of the published patent application” is a necessary element of infringement, even when the infringer buries its head in the sand to avoid knowledge of the application.
Section 154(d) defines the poorly-named concept of “provisional rights”[1], which I refer to as “pre-issuance damages.” Under the statute,
a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application . . . and ending on the date the patent is issued–(A)(i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application or imports such an invention into the United States . . . and (B) had actual notice of the published patent application.
The statute further requires that the patented invention be “substantially identical to the invention as claimed in the published patent application.” Although actual notice is required, the statute does not appear to require any affirmative act by the patentee to provide that notice.
The action here involves Rosebud’s allegations against Adobe for infringing its U.S. Patent No. 8,578,280. Prior to the present lawsuit, Rosebud had previously sued Adobe for infringing the two additional applications – the ‘parent’ and ‘grandparent’ of the ‘280 patent. At the time of the prior lawsuit, the application leading to the ‘280 patent had already published. However, Rosebud did not introduce any evidence showing that Adobe had particular knowledge of the published application. Instead, Rosebud presented circumstantial evidence that: (1) Adobe had actual notice of the predecessor patent that shared an identical specification (Adobe was sued for infringing the parent/grandparent and it was cited by an examiner as prior art against Adobe) (2) Adobe followed Rosebud products, based upon confidential internal Adobe emails; and (3) standard practice in the industry” suggest that Adobe’s counsel knew of the published application that resulted in the ‘280 patent.
Although the Federal Circuit agreed that circumstantial evidence could prove actual notice, the evidence presented here was insufficient to lead to that conclusion. Further, the court reiterated that proof of “constructive notice” is insufficient to prove actual notice.
Rosebud attempted to the SynQor decision regarding pre-suit damages for inducement that require “actual knowledge” of the asserted patent. In that case, the court approved of jury instructions that asked whether “Defendants knew or should have known” that its actions would induce actual infringement and had “reason to be aware of the existence of the patent.” In the case, the holding of actual knowledge (affirmed on appeal) was based upon (1) marking of products with the parent’s patent number; (2) defendant’s effort’s to imitate SynQor’s products; and some evidence of patent monitoring by the defendant. In Rosebud, the Federal Circuit did not cite or refer to this SynQor analysis.
I’ll pause here to suggest that Adobe got away with something here – It is unbelievable to me that Adobe’s counsel did not know of the published application – the sole child application of the patent that was the subject of an infringement lawsuit.
One reason why Adobe won on this issue seems to be that Rosebud delayed its push for discovery and the district court decided the summary-judgment motion before the close of discovery. Rosebud hade provided a R. 30(b)(6) deposition notice to Adobe on the topic of knowledge of the application, but the deposition had not yet taken place. On those points, the Federal Circuit found no abuse of discretion:
The district court did not abuse its discretion in granting summary judgment before the close of discovery. Rosebud had notice of Adobe’s intent to file an early motion for summary judgment, and did not oppose this request or indicate at the time that it needed further discovery on issues relevant to the motion. Moreover, Rosebud did not serve its Rule 30(b)(6) deposition notice or its subpoenas on Adobe’s outside counsel until several weeks after it received Adobe’s motion for summary judgment. It appears that Rosebud delayed filing much of its discovery until after it received Adobe’s motion for summary judgment, without informing Adobe or the court that such discovery might be necessary. Given this timing, we see no abuse of discretion in the district court’s action.
No pre-issuance damages for Rosebud.
[1] There is already a substantial amount of confusion regarding the filing of provisional patent applications, and Section 154(d) has nothing to do with provisional applications other than borrowing the name.
February 3, 2016 PatentAbstract Idea, Affirmed Without Opinion, AIA Trials, Broadest Reasonable Interpretation, Claim Construction, Damages, Federal Circuit En Banc, Marking, PGR, Subject Matter Eligibility, Supreme Court, USPTO DirectorDennis Crouch
With Washington DC snowed-in, action within the Supreme Court has also been somewhat slow. Briefing is now complete in ePlus v. Lawson. In that case, a district court originally held an adjudged infringer in contempt-of-court for refusing to comply with its injunction order. Following the contempt order, the USPTO independently cancelled the patent claims and, at that point, the Federal Circuit vacated both the injunction and the contempt order. ePlus presents the following questions:
1. Whether civil contempt of a permanent injunction order that has been affirmed on appeal and is binding on the litigants under the law of judgments, may be set aside based on a legal development that came after both the permanent injunction and the contumacious conduct, and that did not call into question the correctness of the injunction when it was entered.
2. Whether, under Plaut v. Spendthrift Farm, 514 U.S. 211 (1995), the PTO, an administrative agency, may issue an order that retroactively overrides a federal court’s judgment on a question of law that is not subject to further judicial review, so long as some other part of the litigation is pending.
BIO/PhRMA filed a brief in support of the petition. The ePlus case is one of several challenging the structure of administrative review proceedings running in parallel with court litigation. William Jay (Goodwin Proctor) is representing ePlus with Mark Perry (Gibson Dunn) on the other side.
Oral arguments for the parallel willfulness cases of Halo and Stryker are set for February 23, 2016. The cases are consolidated to a single one-hour hearing. The attorneys for Halo/Stryker will chose a representative who gets 20-minutes; the US Department of Justice (who generally supports the Halo/Stryker position) will have 10-minutes of oral arguments; and Pulse/Zimmer will choose an attorney for a 30-minute opposition. For those attending, the other case being heard that day is the criminal case of Taylor v. US involving the Hobbs Act that creates federal criminal liability for “interference with commerce by threats of violence.” 18 U.S.C. 1951. The question is whether the required element of interstate commerce must be proven beyond a reasonable doubt in order to obtain a criminal conviction.
A new petition for certiorari has been filed in Cooper v. Lee, No. 15-955 (whether IPRs violate Separation of Powers). The petition by Robert Greenspoon links itself with the Cuozzo challenge — noting that Cuozzo raises the “smaller issue” while Cooper raises “larger issues.”
Other new petitions include a filing from Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc., No. 15-974 (defining an abstract idea) and Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations). The Federal Circuit decided Joao Bock with a R.36 affirmance (without opinion affirming that claim 30, et. al, of U.S. Patent No. 7,096,003 are invalid as effectively claiming abstract ideas). Regarding Nordock, although it is not as high profile, its simplicity may make it a better vehicle than Samsung v. Apple for challenging design patent damage calculations. In any event Nordock’s timing is good and I would expect that the court will at least withhold judgment until it decides whether to grant certiorari in Samsung v. Apple.
Post Grant Admin: 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)
Design Patents: Systems, Inc. v. Nordock, Inc., No. 15-978 (design patent damage calculations – similar issues as Samsung v. Apple).
Preclusion or Jurisdiction: