b"\x0cPatent Law\nCases, Problems, and Materials\n\nJonathan S. Masur\nJohn P. Wilson Professor of Law, David and Celia Hilliard Research Scholar,\nDirector of the Wachtell, Lipton, Rosen & Katz Program in Behavioral Law,\nFinance and Economics\nUniversity of Chicago Law School\n\nLisa Larrimore Ouellette\nProfessor of Law and Justin M. Roach, Jr. Faculty Scholar\nStanford Law School\n\n\x0cFor generous comments on earlier versions of this casebook, we are grateful to Michael\nAbramowicz, Thomas Cotter, Tabrez Ebrahim, Janet Freilich, Dmitry Karshtedt, Mark\nLemley, Doug Melamed, Amy Motomura, Jason Reinecke, Heidi Williams, Stephen\nYelderman, Samantha Zyontz, and participants at the Notre Dame Patent Colloquium.\nSpecial thanks to the Honorable Timothy B. Dyk for his time and thoughtful suggestions.\nThanks also to Gabrielle Dohmen, Hayk Esaghoulyan, Mila Gauvin, Trip Henningson, Yiwei\nJiang, Yiming Sun, and Elizabeth Trujillo for extraordinary research assistance.\nWe would like to thank Kavita, Kiran, and Alice for their inspiring and unending\ncuriosity. We hope that your love of science never fades and your love of law never grows.\n\n\xc2\xa9 2021, Jonathan S. Masur & Lisa Larrimore Ouellette\n\nThis work is licensed under a Creative Commons\nAttribution-NonCommercial-NoDerivatives 4.0 International License.\nExcerpts from cases, statutes, the MPEP, and other government works are in the\npublic domain. Other excerpted materials are used with permission or under the fair use\nprovisions of 17 U.S.C. \xc2\xa7 107. We have restricted the creation of derivative works, but we are\nlikely willing to authorize many derivative uses\xe2\x80\x94please contact us to discuss\n(jmasur@uchicago.edu, ouellette@law.stanford.edu).\nWhen editing cases and the MPEP, our goal has been pedagogical clarity, not\nBluebook-compliant accuracy. We have frequently dropped citations and portions of text\nwithout the usual ellipses and brackets where they seemed more cumbersome than helpful.\nAs James Grimmelmann explained in his own free IP casebook, \xe2\x80\x9cThese are pedagogical\nmaterials, not a legal brief. If it matters to you what the original said, consult the original.\xe2\x80\x9d\n\n\x0c4\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nContents\nI. OVERVIEW......................................................................................................................... 10\n1. The Patent System and Patent Claims ............................................................ 10\nA. U.S. Patent Institutions ................................................................................................................... 13\nB. Patent Practice ................................................................................................................................. 19\nC. Locating Patent Documents: An Online Exercise........................................................................... 21\nD. Introduction to Patent Claims and Claim Construction ................................................................ 23\nPractice Problems: Patent Claims ............................................................................................ 29\nClaim Drafting Exercise: Spikeball .......................................................................................... 30\nE. Economics of Patent Law ................................................................................................................. 31\nF. Innovation and Inequality................................................................................................................ 36\n1. Inequality Among Innovators .................................................................................................... 37\n2. Inequality in Access to Innovation ............................................................................................ 38\n\nII. PATENTABILITY.............................................................................................................. 40\n2. Novelty ..................................................................................................................... 43\nA. The America Invents Act and Prior Art Timing ............................................................................. 45\n1. Pre- and Post-AIA \xc2\xa7 102 Statutory Text ................................................................................... 48\n2. The Structure of Pre- and Post-AIA \xc2\xa7 102................................................................................. 51\nPractice Problems: Pre- and Post-AIA \xc2\xa7 102 Timing ............................................................... 53\nB1. Paper Prior Art: Printed Publications & Patents ......................................................................... 55\n1. Printed Publications ................................................................................................................... 55\nPractice Problems: Printed Publications.................................................................................. 58\n2. Patents as Prior Art.................................................................................................................... 59\nPractice Problems: Patents as Prior Art .................................................................................. 60\n3. \xe2\x80\x9cKnown . . . By Others\xe2\x80\x9d and \xe2\x80\x9cOtherwise Available to the Public\xe2\x80\x9d............................................ 60\n4. The Enablement Standard for Paper Prior Art ........................................................................ 61\nB2. Real-World Prior Art: In Public Use & On Sale ........................................................................... 64\n1. Public Use ................................................................................................................................... 64\nNetscape Communications v. Konrad, 295 F.3d 1315 (Fed. Cir. 2002) .................................. 65\nMotionless Keyboard v. Microsoft, 486 F.3d 1376 (Fed. Cir. 2007) ......................................... 68\nPractice Problems: Public Use .................................................................................................. 72\n2. On Sale ........................................................................................................................................ 72\nPfaff v. Wells Electronics, 525 U.S. 55 (1998) .......................................................................... 73\n3. Trade Secrets and Third-Party Rules........................................................................................ 79\nSecret Sales and Secret Commercial Use ................................................................................ 79\nQuest Integrity USA v. Cokebusters USA, 924 F.3d 1220 (Fed. Cir. 2019) ............................ 81\nThird-Party Rules ...................................................................................................................... 83\nW.L. Gore & Associates v. Garlock, 721 F.2d 1540 (Fed. Cir. 1983) ....................................... 83\nNational Research Development v. Varian Assocs., 30 U.S.P.Q.2d 1537 (Fed. Cir. 1994) .... 85\nPractice Problem: Third-Party Rules ....................................................................................... 91\n\n\x0cTABLE OF CONTENTS\n\n5\n\n4. Public Disclosure and the AIA Third-Party Grace Period ....................................................... 91\nPractice Problems: Third-Party AIA Grace Period .................................................................. 92\n5. The Enablement Standard for Real-World Prior Art ............................................................... 93\nB3. Earlier Invention as Prior Art Under Pre-AIA \xc2\xa7 102(g) ............................................................... 94\n1. Conception and Reduction to Practice ....................................................................................... 96\nPractice Problems: Conception and Reduction to Practice ..................................................... 97\n2. Reasonable Diligence .................................................................................................................. 97\nPractice Problems: Reasonable Diligence ................................................................................ 99\n3. Abandonment, Suppression, Concealment.............................................................................. 100\nPractice Problems: \xc2\xa7 102(g) ..................................................................................................... 104\nC. The Anticipation Analysis .............................................................................................................. 105\n1. Anticipation Claim Charts ....................................................................................................... 105\nEverything Baseball v. Wilson Sporting Goods, 611 F. Supp. 2d 832 (N.D. Ill. 2009) ......... 107\nPractice Problem: Creating an Anticipation Claim Chart .................................................... 110\n2. Accidental and Inherent Anticipation ..................................................................................... 112\nIn re Seaborg, 328 F.2d 996 (C.C.P.A. 1964) .......................................................................... 112\nSchering Corp. v. Geneva Pharmaceuticals, 339 F.3d 1373 (Fed. Cir. 2003) ....................... 115\nPractice Problems: Accidental and Inherent Anticipation .................................................... 119\n\n3. Nonobviousness ................................................................................................... 121\nA. Applying the Graham Test ............................................................................................................ 122\nKSR International v. Teleflex, 550 U.S. 398 (2007) ............................................................... 124\nKSR Claim Chart Exercise ..................................................................................................... 133\nPractice Problems: \xc2\xa7 102 Review and \xc2\xa7 103 Warm Up.......................................................... 136\nPractice Problem: Creating an Obviousness Claim Chart .................................................... 137\nB. Secondary Considerations .............................................................................................................. 138\nApple v. Samsung Electronics, 839 F.3d 1034 (Fed. Cir. 2016) (en banc) ............................ 140\nPractice Problems: Post-KSR Federal Circuit Cases on Nonobviousness ............................ 151\n\n4. Utility and Disclosure ........................................................................................ 153\nA. Utility .............................................................................................................................................. 155\nIn re \xe2\x80\x99318 Patent Infringement Litigation, 583 F.3d 1317 (Fed. Cir. 2009) .......................... 157\nB. Enablement ..................................................................................................................................... 164\nThe Incandescent Lamp Patent, 159 U.S. 465 (1895) ............................................................ 164\nIdenix Pharmaceuticals v. Gilead Sciences, 941 F.3d 1149 (Fed. Cir. 2019)........................ 170\nApplying the Undue Experimentation Standard: Excerpts from MPEP \xc2\xa7 2164 ................. 179\nC. Written Description ........................................................................................................................ 181\nGentry Gallery v. Berkline, 134 F.3d 1473 (Fed. Cir. 1998) .................................................. 181\nAriad Pharmaceuticals v. Eli Lilly, 598 F.3d 1336 (Fed. Cir. 2010) (en banc) .................... 186\nIdenix Pharmaceuticals v. Gilead Sciences, 941 F.3d 1149 (Fed. Cir. 2019)........................ 194\nApplying the Possession Test: Excerpts from MPEP \xc2\xa7 2163 ................................................ 196\nPractice Problems: Utility, Enablement, and Written Description ...................................... 203\n\n5. Definiteness and Functional Claiming .......................................................... 205\nA. The Standard for Definiteness ....................................................................................................... 205\nNautilus v. Biosig Instruments, 572 U.S. 898 (2014) ............................................................ 205\nPractice Problems: Applying the Nautilus Indefiniteness Standard ................................... 213\nB. Definiteness for Means-Plus-Function Claim Elements .............................................................. 216\n\n\x0c6\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n1. Does \xc2\xa7 112(f) Apply to a Claim Limitation? ............................................................................ 217\nPractice Problem: Does \xc2\xa7 112(f) Apply? .................................................................................. 219\n2. Does a \xc2\xa7 112(f) Limitation Have a Corresponding Structure? ............................................... 219\nPractice Problem: Definiteness and Functional Claims ........................................................ 222\n\n6. Patentable Subject Matter ................................................................................ 225\nA. Laws of Nature, Natural Phenomena, and Products of Nature .................................................. 227\nMayo Collaborative Services v. Prometheus Laboratories, 566 U.S. 66 (2012) .................... 227\nAssociation for Molecular Pathology v. Myriad Genetics, 569 U.S. 576 (2013) .................... 240\nNatural Alternatives Int\xe2\x80\x99l v. Creative Compounds, 918 F.3d 1338 (Fed. Cir. 2019) ............ 246\nApplying the Two-Step Test to \xe2\x80\x9cNature\xe2\x80\x9d Claims: MPEP \xc2\xa7 2106 .......................................... 253\nPractice Problems: Laws of Nature and Products of Nature ................................................ 255\nB. Abstract Ideas ................................................................................................................................. 258\nAlice Corp. v. CLS Bank Int\xe2\x80\x99l, 573 U.S. 208 (2014) ............................................................... 258\nEnfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016) .............................................................. 265\nChargePoint v. SemaConnect, 920 F.3d 759 (Fed. Cir. 2019) ............................................... 272\nUSPTO Guidance on Abstract Ideas: MPEP \xc2\xa7 2106.............................................................. 278\nAmerican Axle and the State of Federal Circuit Law on Patentable Subject Matter .......... 280\nPractice Problems: Abstract Ideas.......................................................................................... 282\n\n7. Inventorship and Double Patenting ............................................................... 285\nA. Inventorship.................................................................................................................................... 285\nBurroughs Wellcome v. Barr Laboratories, 40 F.3d 1223 (Fed. Cir. 1994)........................... 287\nB. Double Patenting ............................................................................................................................ 295\nPractice Problem: Inventorship, Double Patenting, and \xc2\xa7 102 Review ................................ 300\n\nIII. INFRINGEMENT ........................................................................................................... 301\n8. Claim Construction ............................................................................................ 303\nPhillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc) ........................................ 304\n\n9. Direct Infringement ........................................................................................... 318\nA. Literal Infringement ...................................................................................................................... 318\nExercise Based on Unique Concepts, Inc. v. Brown, 939 F.2d 1558 (Fed. Cir. 1991) .......... 318\nExercise Based on Brookhill-Wilk 1 v. Intuitive Surgical, 334 F.3d 1294 (Fed. Cir. 2003) 320\nExercise Based on K-2 Corp. v. Salomon S.A., 191 F.3d 1356 (Fed. Cir. 1999) ................... 321\nB. Infringement by Equivalents ......................................................................................................... 323\nFesto Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002) ...................... 325\nAdditional Limitations on Equivalents .................................................................................. 335\n\n10. Indirect Infringement ...................................................................................... 339\nA. Contributory Infringement ............................................................................................................ 340\nAro Manufacturing v. Convertible Top Replacement (\xe2\x80\x9cAro II\xe2\x80\x9d), 377 U.S. 476 (1964) .......... 340\nB. Inducement ..................................................................................................................................... 345\nSanofi v. Watson Labs. Inc., 875 F.3d 636 (Fed. Cir. 2017) .................................................. 345\nNote on Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011).............................. 350\n\n\x0cTABLE OF CONTENTS\n\n7\n\n11. Other Infringement Issues.............................................................................. 356\nA. Divided Infringement ..................................................................................................................... 356\nLimelight Networks v. Akamai Techs., 572 U.S. 915 (2014) ................................................. 357\nAkamai Techs. v. Limelight Networks, 797 F.3d 1020 (Fed. Cir. 2015) (en banc) ............... 360\nPractice Problems: Divided Infringement .............................................................................. 364\nB. Cross-Border Infringement ............................................................................................................ 364\nC. Government Infringement ............................................................................................................. 368\n1. Federal Government ................................................................................................................. 369\n2. State Governments ................................................................................................................... 370\n3. Native Nations .......................................................................................................................... 372\nD. Pharmaceutical Infringement and the FDA ................................................................................. 373\nInfringement Review Exercise ................................................................................................ 380\n\n12. Defenses .............................................................................................................. 381\nA. Invalidity and Noninfringement .................................................................................................... 381\nB. Licenses and Exhaustion ............................................................................................................... 383\nImpression Products v. Lexmark International, 137 S. Ct. 1523 (2017) ............................... 384\nC. Inequitable Conduct ....................................................................................................................... 391\nD. Patent Misuse and Antitrust Violations ....................................................................................... 393\nE. Prior User Rights............................................................................................................................ 395\nF. Experimental Use ........................................................................................................................... 396\nG. Laches ............................................................................................................................................. 398\nPractice Problems: Defenses ................................................................................................... 399\n\nIV. REMEDIES ...................................................................................................................... 400\n13. Injunctions ......................................................................................................... 401\neBay v. MercExchange, 547 U.S. 388 (2006) .......................................................................... 401\nPractice Problems: Injunctions ............................................................................................... 410\n\n14. Lost Profits Damages ....................................................................................... 412\nRite-Hite v. Kelley Co., 56 F.3d 1538 (Fed.Cir.1995) (en banc) ............................................. 416\nGrain Processing v. American Maize-Products, 185 F.3d 1341 (Fed. Cir. 1999).................. 425\nPractice Problems: Lost Profits Damages .............................................................................. 435\n\n15. Reasonable Royalties ....................................................................................... 437\nLaserDynamics v. Quanta Computer, 694 F.3d 51 (Fed. Cir. 2012) ..................................... 437\n\n16. Enhanced Damages and Attorneys\xe2\x80\x99 Fees .................................................... 454\nA. Enhanced Damages ........................................................................................................................ 454\nHalo Electronics v. Pulse Electronics, 136 S. Ct. 1923 (2016) ............................................... 454\nPractice Problems: Enhanced Damages ................................................................................. 464\nB. Attorneys\xe2\x80\x99 Fees ............................................................................................................................... 465\nPractice Problems: Attorneys\xe2\x80\x99 Fees ........................................................................................ 467\n\n\x0c8\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nV. U.S. AND INTERNATIONAL PATENT SYSTEMS .............................................. 468\n17. U.S. Patent Litigation Procedure .................................................................. 468\nA. Jurisdiction, Standing, and Venue ................................................................................................ 468\nB. Patent Local Rules.......................................................................................................................... 472\nC. Post-Issuance Review at the USPTO ............................................................................................ 474\nD. Litigation at the International Trade Commission ...................................................................... 478\nE. Alternative Dispute Resolution ..................................................................................................... 479\nPractice Problems: Patent Litigation Procedure ................................................................... 481\n\n18. Patent Licensing and Transactions .............................................................. 482\nA. Standards-Essential Patents, FRAND Licensing, Patent Pools, and Monopoly ........................ 483\nB. Kimble v. Marvel and the Structure of Licenses ........................................................................... 485\nC. Patents in Mergers, Acquisitions, and Other Deals ..................................................................... 486\nD. Assignor Estoppel ........................................................................................................................... 488\n\n19. Other U.S. Intellectual Property Rights ...................................................... 490\nA. Non-Patent IP ................................................................................................................................. 491\n1. Trade Secrets ............................................................................................................................ 491\n2. Copyright................................................................................................................................... 492\n3. Trademark ................................................................................................................................ 494\nB. Design Patents ................................................................................................................................ 496\n1. Claiming and Disclosing Design Patents ................................................................................ 496\n2. Novelty and Nonobviousness ................................................................................................... 497\n3. Ornamentality .......................................................................................................................... 498\n4. Design Patent Infringement .................................................................................................... 498\n5. Design Patent Damages ........................................................................................................... 499\nPractice Problems: Designs ..................................................................................................... 500\nC. Plant Protection .............................................................................................................................. 502\n1. Plant Patents ............................................................................................................................ 502\n2. Plant Variety Protection Certificates ...................................................................................... 503\n\n20. International and Comparative Patent Law .............................................. 504\nA. International Patent Institutions and Treaties ............................................................................ 505\n1. WIPO, WTO, and Other Fora .................................................................................................. 505\n2. Paris Convention and TRIPS: Basic Principles ...................................................................... 508\nPractice Problems: Basic Principles of Paris and TRIPS ...................................................... 510\n3. Justifying International Patent Coordination ........................................................................ 511\nB. Acquiring Multinational Patent Rights with the PCT ................................................................. 514\nC. Pre-Grant Flexibilities: Comparative Patent Validity ................................................................. 517\nPractice Problem: Patentable Subject Matter in the USPTO and EPO ............................... 520\nD. Post-Grant Flexibilities: Rights, Exceptions, and Remedies ....................................................... 521\n1. Rights ........................................................................................................................................ 521\n2. Exceptions ................................................................................................................................. 522\n3. Remedies ................................................................................................................................... 523\nE. Coordinating Multinational Patent Litigation ............................................................................. 525\n\n\x0cTABLE OF CONTENTS\n\n9\n\n1. Choosing Among Forums ......................................................................................................... 526\nWhere Can You File?............................................................................................................... 526\nWhere Should You File? ......................................................................................................... 526\nIs Alternative Dispute Resolution a Better Option? ............................................................. 528\n2. Advising a Hypothetical Client ................................................................................................ 529\n3. Case Study: Apple v. Samsung Global Smartphone Patent Wars ......................................... 530\n\n\x0c10\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nI. Overview\n1. The Patent System and Patent Claims\nA patent is a government-granted intellectual property right over a new invention,\nwhich can range from a new pharmaceutical to a software algorithm. Patents don\xe2\x80\x99t cover new\nworks of art, music, or literature, such as the new Taylor Swift album (which is all three)\xe2\x80\x94\nthose are the subject of copyright. They don\xe2\x80\x99t cover brand names or symbols, like the Nike\nswoosh\xe2\x80\x94those are the subject of trademark. Instead, patent law covers only inventions:\ntangible objects that have practical purposes, or methods of accomplishing some sort of useful\npurpose.1\nAs you may recall from 1L Property, \xe2\x80\x9cproperty\xe2\x80\x9d can be understood as a bundle of\ndifferent rights, often referred to with the \xe2\x80\x9cbundle of sticks\xe2\x80\x9d metaphor. Intellectual property\nis no different. The most important right in the patent owner\xe2\x80\x99s bundle is the right to exclude\nothers. A patent does not provide an affirmative right to make or use the invention it\ndescribes, and many patent owners do not in fact produce their inventions. Rather, the owner\nof a patent can prevent others from making, using, or selling the invention during the life of\nthe patent, which typically lasts twenty years from when the patent application is filed.\nThe basic rationale for granting inventors these exclusionary rights is to provide\nincentives to create new inventions in the first place. The problem for innovators is that it is\nfrequently much more expensive to create a new invention in the first place than it is to copy\none. Imagine a firm that spends a substantial amount of money researching and developing\na new invention, such as a prescription drug, and then begins selling it. Competitors could\nswoop in, copy the drug, and then sell it at a lower price. These competitors would bear only\nthe cost of producing the drug itself. They would not have to recoup any initial expenditures\nin R&D. (Think about how much cheaper it usually is to buy the generic version of a drug\nthan the brand-name version.) Accordingly, the competitors could undercut the firm that\ninvented the drug and force it out of business (or cause it to lose money). With the looming\nthreat of being undersold like this, what firm would want to invest in R&D in the first place,\nknowing that it might never recoup its investment? The result could be a reduction in\ninnovation, to all of our detriment.\nPatent law solves this problem by giving the inventor a right to exclude competitors\nfor a limited period. This prevents it from being undersold, allows it to charge higher prices,\nIn addition to patents on inventions, sometimes called utility patents, there are also design\npatents on new ornamental designs and plant patents on new plant varieties. In 2020, the U.S. Patent\nand Trademark Office granted 352,049 utility patents, 34,877 design patents, and 1,398 plant patents.\nThis casebook focuses on utility patent law.\n1\n\n\x0cOVERVIEW\n\n11\n\nand thereby enables it to recoup its R&D investments. Patents thus make it more profitable\nfor a firm to invest in innovation. This economic rationale is explored in more detail later in\nthis chapter.\nBecause patent law constantly must adapt to new technologies, it is one of the most\ndynamic areas of legal practice, and it has grown in importance as the global economy\nbecomes increasingly reliant on technology-based industries. Patent law can be used to both\nenforce and subvert structural inequalities, and it is hard to understand the modern\neconomy\xe2\x80\x94including venture capital, corporate deals, and international trade\xe2\x80\x94without\nunderstanding patent law and its reach. It is also a field in which any law student can excel:\na technical background is not required for patent litigation or transactional work.\nWe begin this casebook with an overview of the legal institutions that compose the\npatent system, its underlying economic justifications, and its effects on global inequality.\nThis overview includes examples of the basic architecture of a patent and an introduction to\ndrafting patent claims, which define the boundaries of the legal rights protected by a patent.\nFor example, a simple patent claim for a pencil might read as follows:\n\nChapters 2\xe2\x80\x937 then focus on the legal requirements for obtaining a patent. Most\nimportantly, a claimed invention must be novel and nonobvious when compared with\neverything available to the public that preceded it, including earlier publications, patents,\nand other inventions that have been sold or used. The collection of information available to\nthe public before a patent application is filed is known as the prior art. For example, our\npencil claim might be rejected as an obvious combination of prior art erasers and wooden\ncylinders with graphite cores. The patent document also must disclose technical details about\nhow to make and use the claimed invention to prevent inventors from receiving legal rights\nbroader than what they actually contributed. The inventor of a wooden pencil thus cannot\nreceive a patent claim covering the future development of pens.\nChapters 8\xe2\x80\x9312 cover patent infringement and defenses. We begin with a module on\nclaim construction, the critical process of determining what the technical language of a patent\nclaim actually covers. For example, does a pencil made from a wood-plastic composite infringe\na claim covering pencils with a \xe2\x80\x9cwooden holder\xe2\x80\x9d? Again, the owner of a valid patent claim can\nprevent others from directly exploiting the invention\xe2\x80\x94including by making, using, or selling\nit\xe2\x80\x94or from indirectly inducing or contributing to infringement by others. And there are\nlimited defenses to patent infringement; it typically doesn\xe2\x80\x99t matter if the infringer was\n\n\x0c12\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nunaware of the patent or was using the invention for research, and there is no patent\nequivalent to copyright fair use.\nChapters 13\xe2\x80\x9316 examine the remedies patent owners can receive if their patents are\nvalid and infringed. In some cases, the patent owner can obtain an injunction to block\ninfringers from making, using, or selling the patented invention. But injunctions to stop the\ninfringing conduct are not guaranteed, especially if the patent is on a small component of a\ncomplex product, so courts are often tasked with calculating money damages for both past\nand future infringement. Damages are intended to return patent holders to the position they\nwould have been in but for the infringement, which can include lost profits that a patentee\nwould have made or a reasonable royalty that a patentee and infringer would have agreed\nto. Patent owners can also receive attorneys\xe2\x80\x99 fees and enhanced damages in exceptional cases.\nIn Chapter 17, we explain additional details of U.S. patent litigation procedure.\nPatent practitioners should be familiar with the patent procedural rules many federal district\ncourts have adopted, the options for challenging the validity of granted patents at the U.S.\nPatent and Trademark Office (USPTO), the procedures for litigating patents covering\nimported goods at the International Trade Commission, and alternative dispute resolution.\nChapter 18 briefly reviews the law surrounding patent licensing and transactions.\nAlthough this casebook focuses on patent litigation, most uses of patented technology involve\nvoluntary licenses rather than formal judicial proceedings. For the most part, licenses are\nevaluated under standard contract principles, but there are some specialized concerns that\nstem from patent transactions, including in the context of standards-essential patents (SEPs)\nand agreements to license under fair, reasonable, and non-discriminatory (FRAND) terms.\nPatents on useful inventions, the focus of this casebook, are sometimes called utility\npatents. Chapter 19 provides a brief overview of the most prominent forms of non-patent IP\n(trade secrets, copyright, trademark, and regulatory exclusivity), as well as the two other\nkinds of U.S. patents: design patents on new ornamental designs and plant patents on new\nplant varieties. Many of the rules of patent validity and infringement are the same for all\nthree types of patents, but we highlight some important differences.\nThis casebook focuses on U.S. patent law, but in Chapter 20 we turn to the\nincreasingly global nature of the patent system. Under international treaties\xe2\x80\x94particularly\nthe Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)\nadministered by the World Trade Organization\xe2\x80\x94almost every country must grant patents\nfor new, nonobvious, and useful inventions in all fields of technology, including to foreign\ninventors. Since 2008, foreign inventors have filed for more U.S. patents each year than\nAmerican inventors have. In turn, U.S. inventors file nearly as many patents in other\ncountries as they do in the United States. The five largest patent offices\xe2\x80\x94in China, the\nUnited States, Japan, Korea, and Europe\xe2\x80\x94collectively employ more than 27,000 patent\nexaminers who are tasked with evaluating over 2.7 million patent applications filed each\nyear. U.S. patent lawyers regularly need to advise clients on acquiring, licensing, and\nlitigating patents across the globe.\n\n\x0cOVERVIEW\n\n13\n\nA. U.S. Patent Institutions\nU.S. patent law is centered around two institutions: the U.S. Patent and Trademark\nOffice (USPTO), an agency within the Department of Commerce, and the Court of Appeals\nfor the Federal Circuit, which is unique among the thirteen federal circuit courts in having a\njurisdiction based entirely on subject matter\xe2\x80\x94including patent law\xe2\x80\x94rather than geography.\nAs illustrated below, the life of a patent begins when a patent application is filed by\nan inventor with the USPTO. Inventors often file patent applications for multiple aspects of\na potential new product, with the number of patents per product scaling with complexity. A\nsimple chemical used as a pharmaceutical might be covered by a handful of patents, while a\nsmartphone may be covered by tens or hundreds of thousands.\n\nThe Life of a Patent\n\nFiling a patent involves a fee, typically a few thousand dollars, depending upon the\nsize of the party filing for the patent and the complexity of the application. The inventor is\noften represented by a professional known as a \xe2\x80\x9cpatent prosecutor,\xe2\x80\x9d who can be an attorney\n(also referred to as a \xe2\x80\x9cpatent attorney\xe2\x80\x9d) or a non-lawyer who has been licensed to practice\nbefore the USPTO (also known as a \xe2\x80\x9cpatent agent\xe2\x80\x9d).2 The patent application is initially\nTo become a patent prosecutor, one must pass the registration examination, colloquially\nknown as the patent bar, a test administered by the USPTO that is analogous to the bar exams\nadministered by the states. An applicant must have scientific or technical training to sit for the patent\nbar. But fear not, philosophy majors: this is the only job in patent law that requires a technical degree.\nMany of the greatest patent litigators in the country\xe2\x80\x94the people who argue patent cases in federal\ncourt\xe2\x80\x94have no technical background.\n2\n\n\x0c14\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nassigned to an examiner within the agency, who possesses technical expertise in the\nappropriate field of technology and is tasked with determining whether the application meets\nthe necessary criteria for patentability. The period when an application is pending at the\nUSPTO is known as \xe2\x80\x9cpatent prosecution.\xe2\x80\x9d\nThe USPTO received 597,175 utility patent applications in 2020, and examiners are\noften pressed for time when reviewing each one. The typical examiner spends an average of\n19 hours reviewing each patent application, including the time to search for prior art and\nwrite rejections and responses to the applicant\xe2\x80\x99s arguments. Empirical evidence suggests\nthat these time constraints cause examiners to erroneously grant too many invalid patents.\nSee Michael D. Frakes & Melissa F. Wasserman, Is the Time Allocated to Review Patent\nApplications Inducing Examiners to Grant Invalid Patents?: Evidence from Micro-Level\nApplication Data, 99 Rev. Econ. & Stat. 550 (2017).\nErrors in patent grants also stem from examiners\xe2\x80\x99 limited experience in the technical\nfields they examine and difficulty searching for non-patent prior art. Patents are not \xe2\x80\x9cpeer\nreviewed,\xe2\x80\x9d the way that scientific publications are, and there have been many suggestions\nfor adding a peer review component to the patent system. A recent study has shown, however,\nthat doing so would create considerable expense and yield relatively modest benefits. See\nDaniel E. Ho & Lisa Larrimore Ouellette, Improving Scientific Experiments in Law and\nGovernment: A Field Study of Patent Peer Review, 17 J. Emp. Leg. Stud. 190 (2020).\nPerhaps even more importantly, patent prosecution is ex parte: at this stage, there is\nno party opposing the patent application and offering evidence and arguments as to why the\npatent should not be granted. The only parties involved in examination are the USPTO and\nthe applicant.3 That means that it is very common for patent examiners to miss key pieces of\nevidence when a patent is being examined, only for those pieces of evidence to come to light\nyears later when a motivated (and well-funded) counter-party challenges a patent\xe2\x80\x99s validity.\nPatent applications usually remain secret for 18 months after they are filed, at which\npoint they typically are published and become part of the public record.4 In many cases, a\npatent examiner does not even begin to look at the patent until the 18-month mark has\npassed. However, patent applicants can pay an additional fee for expedited examination,5\nwhich moves them to the front of the line and spurs action more quickly.\nIf the examiner determines that the application is legally flawed in some manner, the\napplication is sent back to the applicant with a description of the problem (in what is known\n3 Under a limited and little-used exception, within six months of an application\xe2\x80\x99s publication,\na third party may submit relevant prior art along with a concise description of its relevance for\nconsideration by the patent examiner. See 35 U.S.C. \xc2\xa7 122(e).\n\nFor the roughly 50% of applications without foreign counterparts, applicants can opt out of\npublication at 18 months, but only about 10% of applicants choose to do so. See 35 U.S.C. \xc2\xa7 122(b).\n4\n\nOptions for expediting examination include the \xe2\x80\x9cAccelerated Examination\xe2\x80\x9d introduced in\n2006, which has low fees but requires high effort, and the \xe2\x80\x9cTrack One Prioritized Examination\xe2\x80\x9d system\nintroduced in 2011, which requires less effort but has high fees and an annual cap.\n5\n\n\x0cOVERVIEW\n\n15\n\nas an \xe2\x80\x9coffice action\xe2\x80\x9d). The applicant can then respond to the objection, such as by amending\nthe claims or arguing that the examiner is mistaken. The back and forth of patent\nexamination generates a written record, which remains associated with the patent in\nperpetuity.6 The written examination record is typically referred to as the patent\xe2\x80\x99s\n\xe2\x80\x9cprosecution history,\xe2\x80\x9d or sometimes the \xe2\x80\x9cfile wrapper.\xe2\x80\x9d (The latter name comes from the fact\nthat the documents were attached to the outside of the file that contained the patent\ndocument.) Prosecution history will be relevant to several patent infringement doctrines.\nNotably, even after multiple salvos back and forth with a patent applicant, U.S. patent\nexaminers\xe2\x80\x94unlike most foreign counterparts\xe2\x80\x94do not have the authority to reject a patent\napplication with finality. An examiner can issue a \xe2\x80\x9cfinal rejection,\xe2\x80\x9d but applicants have\nnumerous options to continue the examination process, often by paying an additional fee. In\ntheory, an applicant could continue amending an application and re-filing it in perpetuity.\nThe downside of this approach for applicants is that it would involve substantial costs (in\nfiling fees and attorney payments) and delay, and the patent applicant might be forced to\namend the patent in a manner she does not wish. Accordingly, a patent applicant can appeal\na patent examiner\xe2\x80\x99s denial to a tribunal within the USPTO: the Patent Trial and Appeal\nBoard (PTAB). (This tribunal was previously known as the Board of Patent Appeals and\nInterferences (BPAI), and you will see that name crop up occasionally in older cases.) The\nPTAB is staffed by administrative \xe2\x80\x9cpatent judges,\xe2\x80\x9d and they have the power to reverse an\nexaminer\xe2\x80\x99s decision and send the application back to the examiner for allowance.\nIf the PTAB affirms the examiner\xe2\x80\x99s rejection, the applicant may appeal further to the\nCourt of Appeals for the Federal Circuit, the second institution around which patent law\norbits. The Federal Circuit is an Article III court of appeals that sits in Washington, D.C. (not\nto be confused with the D.C. Circuit) and has exclusive jurisdiction over all appeals in cases\narising under the Patent Act (as well as over an assortment of other cases). Every appeal\nfrom every patent case around the country goes to the Federal Circuit, not to the regional\ncourts of appeal (the 7th Circuit, 9th Circuit, etc.). In addition, appeals from denials by the\nPTAB go directly to the Federal Circuit, without passing through the lower federal courts.7\nThe Federal Circuit was created in 1982; before then, appeals from the BPAI (the predecessor\nto the PTAB) went to the Court of Customs and Patent Appeals, and appeals from other\npatent cases were sent to the regional circuits. If the patent applicant loses before the Federal\nCircuit, she may seek certiorari from the United States Supreme Court. The Supreme Court\nhas shown considerable interest in patent law in recent years, with an average of over three\npatent cases per year since 2010.8\nThe animating principle behind the creation of the Federal Circuit was the idea that\npatent law should be uniform throughout the country. Congress believed that it would cause\n6\n\nThese written records can be found here: https://portal.uspto.gov/pair/PublicPair.\n\nApplicants may first file in the U.S. District Court for the Eastern District of Virginia if they\nwish to gather additional evidence before appealing to the Federal Circuit, but this is relatively\nuncommon. See 35 U.S.C. \xc2\xa7 145.\n7\n\n8\n\nFor a list, see https://writtendescription.blogspot.com/p/patents-scotus.html.\n\n\x0c16\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ntoo many problems for inventors and innovative firms if patent law in California differed\nfrom patent law in Illinois. As you proceed through this course, you should consider three\nquestions: (1) Was Congress right to view patent law as more in need of national uniformity\nthan other areas of federal law, such as employment law or securities law? (2) Has the\nFederal Circuit succeeded in bringing national uniformity to the law? (3) What are the costs\nof judicial specialization?\nNote that the ex parte nature of patent examination means that only the applicant\ncan appeal, and thus only patent denials are ever appealed. If the USPTO incorrectly grants\na patent, there is no party on the other side to appeal the grant. This asymmetry has the\npotential to introduce distortions in the law, as it offers the Federal Circuit more\nopportunities to grant patents that were initially denied and fewer opportunities to invalidate\npatents that were initially granted. See Jonathan Masur, Patent Inflation, 121 Yale L.J. 470\n(2011). But see Lisa Larrimore Ouellette, What Are the Sources of Patent Inflation?, 121 Yale\nL.J. Online 347 (2011).\nThe typical patent takes approximately 22 months to be granted by the USPTO. For\nthe patent to be granted, the patent applicant must pay an issuance fee. The now-patent\nowner must also pay additional maintenance fees 3.5, 7.5, and 11.5 years after the patent\nwas issued to keep the patent in force. Failure to pay any of these fees renders the patent\nunenforceable against infringers. These fees\xe2\x80\x94which can be quite substantial, in the\nthousands of dollars\xe2\x80\x94do not really exist to cover the cost of \xe2\x80\x9cmaintaining\xe2\x80\x9d the patent (which\ninvolves trivial expense). Rather, they are used by the USPTO to cover the costs of\nexamination and of the office more generally. Because they are administered later in a\npatent\xe2\x80\x99s life, they serve a separate function as well: they \xe2\x80\x9cweed the patent thicket\xe2\x80\x9d\xe2\x80\x94that is,\nthey help to screen out worthless patents that have no real value but can make it more\ndifficult for innovative firms to operate. See Jonathan S. Masur, Costly Screens and Patent\nExamination, 2 J. Legal Analysis 687 (2010). Assuming that all the maintenance fees are\npaid, patents remain valid for 20 years from the date on which they are filed, not the date\nthey are issued. This is part of the reason why delays in the patent examination process can\nbe so costly to inventors: once the patent is filed, the 20-year clock is ticking, and any delay\neats into the patent\xe2\x80\x99s useful life. Extensions to the patent term are available in some cases;\nin particular, patent term adjustment (PTA) compensates for delays caused by the USPTO,\nand patent term extension (PTE) partially compensates pharmaceutical patent owners for\ndelays in the drug commercialization process caused by clinical trials.9 But in general, utility\npatents will expire 20 years from filing.10\n\nOn average, about half of patents receive additional term through PTA, with an average\nadjustment of over four months. See 35 U.S.C. \xc2\xa7 154(b). The USPTO processes about 100 PTE\napplications per year, which allow up to five years of extension for patents claiming products that\nrequire approval by the Food and Drug Administration (FDA), Drug Enforcement Agency (DEA), or\nDepartment of Agriculture (USDA). See 35 U.S.C. \xc2\xa7 156.\n9\n\nFor patents filed before June 8, 1995, the patent term was 17 years from issuance rather\nthan 20 years from filing. See Uruguay Round Agreements Act, Pub. L. No. 103-465, \xc2\xa7 532(a)(1), 108\nStat. 4809, 4983 (1994) (amending 35 U.S.C. \xc2\xa7 154).\n10\n\n\x0cOVERVIEW\n\n17\n\nAs a practical matter, however, patent applicants often receive protection lasting 21\nyears from their initial filing date because many applicants begin with a patent application\nin another country (after which they have one year to file at the USPTO11) or with a U.S.\nprovisional patent application filed under 35 U.S.C. \xc2\xa7 111(b). A provisional application must\ndescribe the invention, but it need not have claims and the USPTO will not commence\nexamination. The inventor then has one year to file a nonprovisional application, which will\nbe evaluated based on the provisional filing date\xe2\x80\x94known as \xe2\x80\x9cclaiming priority\xe2\x80\x9d to that date.\nProvisional applications thus allow inventors to establish an early priority date\xe2\x80\x94which is\nimportant for demonstrating the novelty of the invention\xe2\x80\x94while delaying the expense of\nfiling and prosecuting a full nonprovisional application. After an applicant files a first\nnonprovisional application, known as a \xe2\x80\x9cparent\xe2\x80\x9d application, she often files additional \xe2\x80\x9cchild\xe2\x80\x9d\napplications that claim priority to the same earliest provisional filing date. A divisional\napplication under 35 U.S.C. \xc2\xa7 121 is a child with claims to an \xe2\x80\x9cindependent and distinct\ninvention\xe2\x80\x9d that were originally filed in the parent, which often results when an examiner\nissues a restriction requirement asking the original application to be restricted to one related\nset of claims. A continuation application may have new claims, and results when a new\napplication is filed claiming priority to a pending application. There is little legal difference\nbetween divisionals and continuations; both have the same priority date as the parent and\nmust be supported by the parent\xe2\x80\x99s disclosure. Applicants may also file a continuation-in-part,\nwhich may add new matter to the disclosure, with the priority date of each claim based on\nwhether it requires the new matter for support. A patent owner may also obtain a reissue\npatent to correct substantive errors in a granted patent under 35 U.S.C. \xc2\xa7 251; a reissue\nbroadening claim scope must be applied for within two years of the original patent grant.\nEven though third parties cannot insert themselves into the ex parte patent\nexamination process, there are administrative avenues available to them once a patent has\nbeen granted. Three separate processes exist. Post-grant review (PGR) allows any party who\npays the necessary (substantial) filing fee to challenge a patent\xe2\x80\x99s validity within the first nine\nmonths after it is issued. The patent can be challenged only on certain grounds, but the range\nof options available to the challenger is relatively wide. Second, after the first nine months\nhave passed, any party may challenge a patent via the separate inter partes review (IPR)\nprocedure, which allows for challenges on a more limited set of grounds than PGR. Finally,\nanyone\xe2\x80\x94including anonymous parties\xe2\x80\x94can petition for ex parte reexamination, which\nallows challenges on the same limited grounds as IPR, but with less expense, less risk of\nestoppel, and less opportunity for the third party to participate. All three of these processes\nexist in order to facilitate challenges to patents that should not have been granted without\nforcing the challenger to wait to be sued and then undergo the expense of litigation in federal\ncourt. The most popular procedure, IPR, is often initiated by a party who has been sued for\ninfringement, which often results in a stay of the district court litigation. We discuss these\nprocedures in more detail in Chapter 17.\n\n11\n\nFor more on the process of acquiring patent protection in multiple countries, see Chapter 20.\n\n\x0c18\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nOnce a patent has been granted, the patent\xe2\x80\x99s owner can bring suit against any party\nbelieved to be infringing the patent.12 The federal district courts have exclusive jurisdiction\nover all lawsuits arising under the Patent Act; unlike for almost any other claim under\nfederal law, patent cases cannot be brought in state court. 28 U.S.C. \xc2\xa7 1338(a). Importantly,\na party sued for patent infringement may defend itself by arguing not only that it does not\ninfringe the patent, but also that the patent is invalid. That is, the USPTO\xe2\x80\x99s decision to grant\na patent is not final, although the USPTO\xe2\x80\x99s decision to grant the patent does receive\ndeference. See Jonathan S. Masur & Lisa Larrimore Ouellette, Deference Mistakes, 82 U. Chi.\nL. Rev. 643 (2015). The losing party in a patent litigation in district court may appeal that\ncourt\xe2\x80\x99s decision to the Federal Circuit, and from there again to the Supreme Court.\nThe Federal Circuit and Supreme Court thus consider patent validity in two types of\ncases: appeals from the USPTO in which the agency does not think the claims at issue are\nvalid (with captions of the form \xe2\x80\x9cIn re Inventor\xe2\x80\x9d at the Federal Circuit and \xe2\x80\x9cInventor v.\nUSPTO Director\xe2\x80\x9d at the Supreme Court), and appeals from patent infringement litigation in\nwhich the accused infringer challenges the patent\xe2\x80\x99s validity (with captions of the form \xe2\x80\x9cPatent\nOwner v. Accused Infringer,\xe2\x80\x9d or reversed if the infringer filed the suit as a declaratory\njudgment action). The following figure represents this institutional structure in graphic form:\n\nAdministrative Structure of the Patent System\n\nPre-issuance damages are also available under 35 U.S.C. \xc2\xa7 154(d) if the infringer had\nknowledge of a published patent application.\n12\n\n\x0cOVERVIEW\n\n19\n\nTo decide patent cases, the primary source of legal authority is the Patent Act, found\nat Title 35 of the U.S. Code, which Congress passed under the authority of the Constitution\xe2\x80\x99s\nIP Clause. As we will see, many provisions of the Patent Act are short and provide little\nguidance on how they should be applied, so many core patent law doctrines have been\ndeveloped and elaborated by the courts through doctrinal development. The USPTO does not\nhave rulemaking authority over substantive patent law, but it has issued regulations (at 37\nC.F.R.) governing the procedural rules of practice before the agency. The USPTO also\npublishes a Manual of Patent Examining Procedure (MPEP), which provides guidance on\npatent law to patent examiners and prosecutors.13 The federal courts have never treated the\nMPEP as binding authority, but it exerts significant influence over the patents that the\nUSPTO chooses to grant, many of which are never challenged in court. The USPTO updates\nthe MPEP regularly in accord with changes in patent law. We will refer to this document\nthroughout the book, most prominently when discussing the law of patentable subject matter.\n\nB. Patent Practice\nMost U.S. patent law work falls into three general categories: (1) being involved in the\npatent examination process before the USPTO, either by helping inventors obtain patents\n(which, as noted above, is known as \xe2\x80\x9cprosecution\xe2\x80\x9d) or by working for the USPTO to decide\nwhich patent applications to grant; (2) helping clients assert their patent rights in court or\ndefend against patent lawsuits (\xe2\x80\x9clitigation\xe2\x80\x9d); or (3) helping arrange transfers of patent rights\n(\xe2\x80\x9clicensing\xe2\x80\x9d or \xe2\x80\x9ctransactional work\xe2\x80\x9d). There are other options, including the growing field of\npatent office litigation (a hybrid of litigation and practice before the USPTO) and advocacy\nwork at nonprofits like the Electronic Frontier Foundation that include patent policy in their\nportfolios. Practice environments also vary, with many patent practitioners starting at law\nfirms and then moving \xe2\x80\x9cin house\xe2\x80\x9d to a private firm or a nonprofit such as a university\ntechnology transfer office.\nPatent prosecution involves interviewing inventors, writing patents, and rebutting\npatent examiners\xe2\x80\x99 arguments about why your applications shouldn\xe2\x80\x99t be granted. Patent\nprosecution does not require a legal degree; rather, prosecutors need to have a bachelor\xe2\x80\x99s\ndegree in a technical field or its equivalent, and to pass the registration examination (also\nknown as the \xe2\x80\x9cpatent bar exam\xe2\x80\x9d), a six-hour multiple-choice exam that tests knowledge of\nUSPTO rules.14 Passing the patent bar makes you a \xe2\x80\x9cpatent agent.\xe2\x80\x9d If you are also admitted\nto a state bar, which typically requires going to law school and passing a state bar exam, you\nmay call yourself a \xe2\x80\x9cpatent attorney\xe2\x80\x9d and are allowed to provide legal advice.\n\n13\n\nThe MPEP is available online: https://www.uspto.gov/web/offices/pac/mpep/index.html.\n\nFor information about the USPTO\xe2\x80\x99s registration examination and its requirements, see\nhttps://www.uspto.gov/learning-and-resources/patent-and-trademark-practitioners/becoming-patentpractitioner/registration. For advice about preparing for the exam compiled by Eric E. Johnson, see\nhttps://writtendescription.blogspot.com/2021/03/advice-about-patent-bar-for-current-and.html.\n14\n\n\x0c20\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nMany patent prosecutors find the work gratifying because they enjoy learning and\nwriting about different successful technologies and communicating with people from different\nbackgrounds, and they often appreciate the relatively stable work hours compared with other\nareas of law. Scientists who are interested in pursuing patent prosecution careers sometimes\nbegin by applying for a job as a patent examiner at the USPTO, which is often a transition\nstep to other careers. If you have an advanced technical degree (usually an M.S. in\nengineering or a Ph.D. in science), you may also be able to start with a higher-paying job at\na law firm as a \xe2\x80\x9ctechnical advisor\xe2\x80\x9d or \xe2\x80\x9cscientific advisor\xe2\x80\x9d who helps draft patent applications.\nThe firm will typically pay for your patent bar exam course so that you can become a patent\nagent, and will sometimes also pay for you to attend law school.\nPatent litigation involves duking out patent rights in court. Contrary to most court\nTV shows, your day-to-day life will not involve arguments in front of a jury. Rather, as with\nother types of commercial litigation, you will be reviewing documents, drafting questions and\nresponses related to \xe2\x80\x9cdiscovery\xe2\x80\x9d (gathering information for cases), doing legal research, and\nwriting legal arguments in memos and briefs. Patent litigators must be admitted to a state\nbar. A technical degree is not required, and many terrific patent litigators spin their lack of\ntechnical background as an asset that allows them to communicate more effectively with lay\njudges and juries. But many firms also look for new patent litigation associates who do have\nsome technical training, so this is another common route for those transitioning from science\nto patent law.\nPatent litigators often enjoy the opportunity to strategize on behalf of their clients, to\ntranslate technical ideas for lay audiences, and to work on high-stakes cases. Patent litigators\ntypically earn higher salaries than patent prosecutors, although they also work longer hours.\nSome litigators start as prosecutors and then broaden their practice to include litigation\nassignments, but it is more common to begin litigation straight out of law school, and many\npatent litigators have not taken the patent bar exam.\nIn the nineteenth century, patent litigation was a staple of many large, generalpractice commercial law firms. Over the course of the twentieth century, most patent\nlitigation moved to smaller patent-centered firms, typically known as \xe2\x80\x9cpatent boutiques.\xe2\x80\x9d\nOver the past thirty years, however, patent litigation has again become a centerpiece of many\nlarge general-practice firms. Many of these firms acquired smaller patent boutiques as a\nmeans of creating patent litigation shops out of whole cloth; others built them from the\nground up. It is now quite common for the largest and most profitable law firms to have\nsubstantial patent litigation departments. And there are many patent litigation jobs\navailable to budding associates, whether or not they have technical degrees.\nPatent licensing and transactional work involves arranging deals involving patents.\nIt involves the least engagement with the technical aspects of patents and can be an\nattractive option for those with economics and business skills. Like litigation, transactional\npractice does not require the patent bar but does require admission to a state bar. Some\npatent-related transactional work involves individual commercial transactions where\npatents are important, including patent licenses and collaboration agreements, with day-to-\n\n\x0cOVERVIEW\n\n21\n\nday work focused on independently reading large documents to spot potential concerns to\ndiscuss with your client. Patent-focused transactional lawyers also help with patent issues\nfor mergers and acquisitions (\xe2\x80\x9cM&A work\xe2\x80\x9d), where the corporate team reaches out to\nspecialists to discuss patent-related portions of the deal. For example, deals often include\nrepresentations (\xe2\x80\x9creps\xe2\x80\x9d) and warranties as to the title of patent rights, that those rights are\nsufficient to continue the business, that the business isn\xe2\x80\x99t infringing others\xe2\x80\x99 patent rights,\netc. Salaries are similar to those for patent litigators. We discuss patent licensing in more\ndetail in Chapter 18.\nBased on a recent survey by the American Intellectual Property Law Association, the\nmedian legal charge for filing a new utility patent ranged from $7,000 for an invention of\nminimal complexity to $10,000 for more complex biotech or electrical inventions, and the\nmedian charge for a patent license was $5,000. Of course, arranging a more complex deal\nthat involves patent licenses is far more expensive. For litigation, the median legal costs for\na full trial with less than $1 million at risk was $700,000; for a case with more than $25\nmillion at risk, the median cost was $4 million.\n\nC. Locating Patent Documents: An Online Exercise\nWe think it is important for patent law students to feel comfortable finding and\ninterpreting patent documents. The best way to acquire this skill is through active practice.\nThis assignment will guide you through the process of locating a U.S. patent, understanding\nits contents, and finding additional information about the patent on the USPTO website.\nConsider the important problem of removing corks from wine bottles. The most\ncommon approach is to use a corkscrew, such as the one shown below on the left, which is\nscrewed into the cork and then pulled out. Another cork remover, shown in the center, is\nknown as an ah-so, butler\xe2\x80\x99s friend, or twin-prong cork puller. The prongs are pushed between\nthe cork and the neck of the bottle, and then the cork is twisted out of the bottle. These two\ncork-removing mechanisms can also be combined, as shown at right below. This combination\ncorkscrew and ah-so is sold as \xe2\x80\x9cThe Durand.\xe2\x80\x9d\n\n\x0c22\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n1. The Durand website includes information on patents in six countries, including U.S.\nPatent No. 7,237,455. Can you find a PDF of this patent? One option is to use the\nUSPTO website (www.uspto.gov); their Patent Search page has separate options for\ngranted patents (PatFT, which is what you want) and patent applications (AppFT). If\nyou use the Advanced Search option for patents since 1976, you can query\npn/7237455 to pull up the text of the patent in HTML form. Click \xe2\x80\x9cImages,\xe2\x80\x9d and then\nyou\xe2\x80\x99ll see a PDF you can save. Another option is to simply Google patent 7237455,\nclick the first link, and then click \xe2\x80\x9cDownload PDF.\xe2\x80\x9d Who invented this bottle opener?\n2. For utility patents filed on or after June 8, 1995, the patent term is 20 years from the\nfiling date of the earliest non-provisional application on which the patent is based.\nMany patents are tied to earlier or later patents (referred to as \xe2\x80\x9cparents\xe2\x80\x9d and\n\xe2\x80\x9cchildren,\xe2\x80\x9d and collectively as \xe2\x80\x9cfamilies\xe2\x80\x9d), so in general you should not assume that\nyou can just add 20 years to the filing date. Some patents also receive term\nadjustments or extensions for government-caused delays, or the patent applicant may\ndisclaim a portion of the term. But for this patent, the \xe2\x80\x9cRelated U.S. Application Data\xe2\x80\x9d\nfield only contains a provisional application, and there was no term adjustment or\ndisclaimer. If all maintenance fees are paid and it is not invalidated, what year will\npatent 7,237,455 expire?\n3. After the cover information (including a list of prior art references cited by the\napplicant or the examiner), you can see the patent drawings. Then, starting on p. 13\nof the PDF, is the background of the invention, which often reads like an infomercial.\n(The text of patents is printed in 2 columns with line numbering every 5 lines. The\nline numbers are rarely aligned with the text, but they are nevertheless used for\ncitation. E.g., U.S. Patent No. 7,237,455 col. 2 ll. 14\xe2\x80\x9318.) According to this patent,\nwhat are the problems with the traditional spiral corkscrew and with the ah-so?\n4. Next comes the summary of the invention, a brief description of the drawings, and a\ndetailed description of the invention, including \xe2\x80\x9cpreferred embodiments\xe2\x80\x9d (i.e., what\nthe inventor thinks are the best ways to make the invention). These can be painful to\nread, particularly due to the references to figure numbers, but they make sense if you\ngo slowly. Note that patent applicants may be their own lexicographers, meaning that\nthey may use terms in idiosyncratic ways. What does this patent mean by \xe2\x80\x9cstabilizer\xe2\x80\x9d?\n5. At the very end of the patent are the \xe2\x80\x9cclaims,\xe2\x80\x9d which are what the patent legally\ncovers. The claims are the fence posts that mark out the metes and bounds of a patent\nowner\xe2\x80\x99s intellectual property. The first claim begins on column 6, line 65, and is an\n\xe2\x80\x9cindependent\xe2\x80\x9d claim because it does not refer to other claims. The second claim,\nbeginning with \xe2\x80\x9cThe bottle opener of claim 1, wherein . . .\xe2\x80\x9d is a \xe2\x80\x9cdependent\xe2\x80\x9d claim. How\nmany independent claims does this patent have?\n6. As we explained above, the \xe2\x80\x9cprosecution history\xe2\x80\x9d or \xe2\x80\x9cfile wrapper\xe2\x80\x9d of a patent is\neverything that happened during patent examination. To find the file wrapper for the\nDurand patent, go back to the USPTO patent search page and find the link for Patent\nApplication Information Retrieval (PAIR), and then access Public PAIR and search by\n\n\x0cOVERVIEW\n\n23\n\npatent number (7237455). The \xe2\x80\x9cTransaction History\xe2\x80\x9d tab lists the events that occurred\nduring prosecution, and the \xe2\x80\x9cImage File Wrapper\xe2\x80\x9d tab lists these events with links to\nthe relevant documents for patents filed after 2003. On average, it takes over a year\nfrom when a patent is filed (the first date in the transaction history) for a patent\nexaminer to issue a \xe2\x80\x9cfirst office action\xe2\x80\x9d in which the claims are either allowed (\xe2\x80\x9cNotice\nof Allowance\xe2\x80\x9d) or rejected (typically, \xe2\x80\x9cNon-Final Rejection\xe2\x80\x9d). Approximately how many\nmonths did it take in this case?\n7. This application is unusual in that after the examiner allowed the claims, the\napplicant submitted an Information Disclosure Statement (IDS) listing additional\nprior art documents on Jan. 12, 2007, along with payment for the issuance fee, which\ncaused the examiner to issue a \xe2\x80\x9cFinal Rejection\xe2\x80\x9d on Feb. 8, 2007. You can read this\nfile on the \xe2\x80\x9cImage File Wrapper\xe2\x80\x9d tab. What statutory provision was used to reject some\nof the claims in light of this new prior art?\n8. The \xe2\x80\x9cContinuity Data\xe2\x80\x9d tab lists any \xe2\x80\x9cparent\xe2\x80\x9d or \xe2\x80\x9cchild\xe2\x80\x9d applications, including\napplications filed under the Patent Cooperation Treaty (PCT) to facilitate patenting\nin multiple countries. When a child application claims priority to a parent, it is as if\nclaims in that application were filed at the same time as the parent. The child\napplication relies on the same description of the invention and has the same effective\nfiling date. Can you find the U.S. patent number (not application number) of a child\nof the 7,237,455 patent?\n9. The \xe2\x80\x9cAssignee\xe2\x80\x9d field on the patent tells you something about patent ownership at the\ntime the patent was issued. Typically, the assignee is the company or institution that\nemploys the inventors (unless they are independent inventors). The \xe2\x80\x9cAssignments\xe2\x80\x9d\ntab in Public PAIR provides any information about transfers of interests in the patent\nthat have been recorded with the USPTO. Assignments are not always recorded, and\nrequiring greater transparency about patent ownership is surprisingly controversial.\nWho owned the 7,237,455 patent at the time of issuance, and what month was\nownership transferred?\n\nD. Introduction to Patent Claims and Claim Construction\nAt the beginning of this chapter, we explained that claims define the legal rights\nprotected by a patent, and we gave an example of a simple patent claim for a pencil. You have\nalso seen patent claims for the Durand wine opener. Understanding how to read patent\nclaims like this is an essential preliminary for applying patent law doctrines.\nThe process of interpreting what a patent claim covers\xe2\x80\x94known as claim\nconstruction\xe2\x80\x94is a key step in analyzing the claim\xe2\x80\x99s validity and whether a given product or\nprocess infringes the claim. During patent examination, claims are given their \xe2\x80\x9cbroadest\nreasonable interpretation.\xe2\x80\x9d Once claims are granted, they are given their \xe2\x80\x9cordinary meaning\xe2\x80\x9d\nto a researcher of \xe2\x80\x9cordinary skill\xe2\x80\x9d in the relevant field. We save a more detailed discussion of\n\n\x0c24\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nclaim construction for Chapter 8; for now, it is enough to recognize that many claim terms\nhave some ambiguity. Consider the pencil claim at the start of this chapter. Does the claim\ncover pencils with cores containing any percentage of graphite? Pencils with holders made\nfrom a wood-plastic composite? Wooden mechanical pencils? Broader claims are both more\nlikely to be infringed and less likely to be valid, making claim construction a critical part of\npatent infringement litigation.\nFor another example, consider a more recent invention: the Swiffer mop, introduced\nby Procter & Gamble in 1997. As illustrated below on the left, the Swiffer eliminates the need\nto clean the mop head or to use a separate bucket by using a disposable cleaning pad and an\nintegrated system for delivering the cleaning solution, which can be sprayed by pressing a\nbutton on the handle. Sales of Swiffer products quickly grew to over $1 billion per year, and\nProcter & Gamble protected this market with numerous patents. A simplified version of claim\n1 from one such patent, U.S. Patent No. 6,663,306, is shown below on the right. Can you spot\nany ambiguities in any of the claim terms? We will return to this example later.\n\nPatent claims follow stylized drafting rules:\n1. Preamble. Claims begin with a preamble introducing the kind of invention at\nissue\xe2\x80\x94like \xe2\x80\x9cA cleaning implement\xe2\x80\x9d\xe2\x80\x94which generally does not limit the legal scope of the\nclaim unless necessary, such as for more detailed preambles that describe features of the\ninvention. (The Federal Circuit\xe2\x80\x99s less-than-helpful test for whether a preamble is limiting\nconsiders whether it \xe2\x80\x9cbreathes life and meaning into the claim.\xe2\x80\x9d See generally Mark A.\nLemley, Without Preamble, 100 B.U. L. Rev. 357 (2020).) What are the advantages to the\npatentee of writing a broad preamble?\n2. Transition. After the preamble comes the transition, which for the vast majority of\nclaims is \xe2\x80\x9ccomprising,\xe2\x80\x9d an \xe2\x80\x9copen\xe2\x80\x9d term signaling that the invention includes but is not limited\n\n\x0cOVERVIEW\n\n25\n\nby the body elements that follow. In contrast, the \xe2\x80\x9cclosed\xe2\x80\x9d transition \xe2\x80\x9cconsisting of\xe2\x80\x9d signals\nthat the invention is limited to the following elements, and not more. A claim to \xe2\x80\x9cA writing\nimplement comprising graphite encased by a wooden holder\xe2\x80\x9d covers pencils that include\nadded elements such as an eraser, whereas a claim to \xe2\x80\x9cA writing implement consisting of\ngraphite encased by a wooden holder\xe2\x80\x9d does not cover pencils with erasers. Claims can also\nuse the middle ground of \xe2\x80\x9cconsisting essentially of,\xe2\x80\x9d which covers devices that include the\nfollowing elements and may include others that \xe2\x80\x9cdo not materially affect the basic and novel\nproperties of the invention,\xe2\x80\x9d but this transition is even rarer than \xe2\x80\x9cconsisting of.\xe2\x80\x9d Why do you\nthink patentees prefer the \xe2\x80\x9ccomprising\xe2\x80\x9d transition? Why would a patentee ever use\n\xe2\x80\x9cconsisting of\xe2\x80\x9d?\n3. Body Elements. After the transition come the claim elements, which define the scope\nof the invention. The Swiffer claim covers mops with four elements\xe2\x80\x94a handle, a mop head,\na liquid delivery system, and a disposable cleaning pad. A few important points:\n\xe2\x97\x8f\n\nAs will be discussed in detail in later chapters, understanding the body elements\nis essential for determining whether the claim is valid and infringed. If any earlier\nmop (or a description of a mop) has all four of the Swiffer claim elements, the claim\nwould be invalid for lack of novelty. And if the claim is valid, Procter & Gamble\ncan prevent others from making, using, or selling mops that include all four of\nthese elements (even if the infringing mops have additional elements).\n\n\xe2\x97\x8f\n\nFor understanding the scope of the Swiffer claim, Procter & Gamble\xe2\x80\x99s actual\nproduct is completely irrelevant. In fact, many patent owners do not sell products\ncovered by their patent claims. Rather, the legal right is defined by the words in\nthe claim text.\n\n\xe2\x97\x8f\n\nDrafting rules require the claim to explain how each element interacts with at\nleast one other element that has already been introduced. For example, the mop\nhead is \xe2\x80\x9cattached to said handle\xe2\x80\x9d (i.e., to the handle already introduced).\n\n4. The Interaction between Novelty, Infringement, and Transitions. Imagine that\nJemele obtains a patent \xe2\x80\x9ccomprising elements A, B, C, and D.\xe2\x80\x9d Fernando later obtains a\nseparate patent \xe2\x80\x9ccomprising elements A, B, C, D, and E.\xe2\x80\x9d Suppose that Rebecca then begins\nproducing a product that includes elements A, B, C, D, and E. Whose patent does she\ninfringe? The answer is both Jemele\xe2\x80\x99s and Fernando\xe2\x80\x99s. The transition word \xe2\x80\x9ccomprising\xe2\x80\x9d\nmeans that any product that has all four of the elements of Jemele\xe2\x80\x99s patent infringes her\npatent, even if it includes one or more additional elements.\nNow, consider the question of novelty. As we just noted above, if all the elements of a\nclaim are found in one piece of prior art, the claim is not novel. Thus, if all the elements of\nFernando\xe2\x80\x99s patent were found in Jemele\xe2\x80\x99s earlier patent, then Fernando\xe2\x80\x99s patent would be\ninvalid. Jemele used the transition word \xe2\x80\x9ccomprising,\xe2\x80\x9d which means \xe2\x80\x9cincludes A, B, C & D\nbut is not limited to them.\xe2\x80\x9d Does this mean that Fernando\xe2\x80\x99s patent is invalid because Jemele\xe2\x80\x99s\npatent could include E as well? The answer is no. Jemele\xe2\x80\x99s patent doesn\xe2\x80\x99t actually include E.\nThe word \xe2\x80\x9ccomprising\xe2\x80\x9d ensures that any product that includes element E (or element F, or\n\n\x0c26\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nG) will infringe, so long as it includes A, B, C & D as well. But because Jemele does not\nmention E, her patent will not destroy the novelty of any subsequent patent that includes E\nas an element\xe2\x80\x94which means the patent system still provides some incentive for Fernando.\nClaim elements\n\nJemele\xe2\x80\x99s patent\n\nFernando\xe2\x80\x99s patent\n\nRebecca\xe2\x80\x99s product\n\nA\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\nB\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\nC\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\nD\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\nE\n\nThis means that sequential inventors can (and do) obtain patents that stack on\nadditional elements as technology progresses, known as blocking patents. After Jemele\nobtains a patent claiming an invention comprising A, B, C & D and Fernando obtains one\ncomprising A, B, C, D & E, Rebecca could obtain a patent comprising A, B, C, D, E & F. All\nthree of these patents can be valid. Woe unto the manufacturer who seeks to sell a product\nthat includes A, B, C, D, E & F; this manufacturer infringes all three patents and must\nnegotiate licenses with all three inventors. That is, each of Jemele, Fernando, and Rebecca\ncan independently block the manufacturer if the manufacturer does not license their patents.\n5. Single-Sentence Rule. The USPTO requires each claim to be a single sentence\n(typically beginning \xe2\x80\x9cI claim: 1. A cleaning implement comprising . . .\xe2\x80\x9d or \xe2\x80\x9cThe invention\nclaimed is: 1. A cleaning implement comprising . . .\xe2\x80\x9d). Needless to say, this rule does not\nenhance claim clarity.\n6. Antecedent Basis. If the Swiffer claim read: \xe2\x80\x9cA cleaning implement comprising a\nmop head pivotably attached to the handle,\xe2\x80\x9d it would be rejected because it is unclear what\nhandle is being referred to\xe2\x80\x94i.e., \xe2\x80\x9cthe handle\xe2\x80\x9d lacks \xe2\x80\x9cantecedent basis.\xe2\x80\x9d The first time a\nlimitation is introduced, it must be introduced with \xe2\x80\x9ca\xe2\x80\x9d or \xe2\x80\x9can\xe2\x80\x9d (as in \xe2\x80\x9ca handle\xe2\x80\x9d);\nsubsequently, that limitation can be referred to using either \xe2\x80\x9csaid\xe2\x80\x9d or \xe2\x80\x9cthe\xe2\x80\x9d (as in \xe2\x80\x9csaid\nhandle\xe2\x80\x9d). In the following claims, each term has proper antecedent basis:\n\n\x0cOVERVIEW\n\n27\n\n7. Independent and Dependent Claims. Inventions can be described at many different\nlevels of abstraction, so inventors will often seek multiple claims in a patent. As noted in the\nDurand exercise above, patent claims can be \xe2\x80\x9cindependent,\xe2\x80\x9d meaning that they stand on their\nown, or \xe2\x80\x9cdependent,\xe2\x80\x9d meaning that they refer to a claim previously set forth and further limit\nthat claim. For example, a dependent claim in the Swiffer patent states: \xe2\x80\x9c6. The cleaning\nimplement of claim 1, wherein said absorbent layer has a t1200 absorbent capacity of at least\nabout 5 grams/gram.\xe2\x80\x9d (The patent defines \xe2\x80\x9ct1200 absorbent capacity\xe2\x80\x9d as the number of grams\nof water per gram of cleaning pad absorbed at a pressure of 0.09 psi after 1200 seconds.) Each\ndependent claim is a separate legal right that is legally equivalent to writing out the full\nindependent claim with the additional limitation. See 35 U.S.C. \xc2\xa7 112(c)-(f). That is, the\nelements of dependent claim 6 of the Swiffer patent are (a) the handle, (b) the mop head, (c)\nthe liquid delivery system, and (d) the disposable cleaning pad, where (e) the absorbent layer\nhas an absorbent capacity of at least 5 grams/gram.\nBecause they have additional limitations, dependent claims are necessarily narrower\nthan the claims from which they depend. This means that they are more likely to be valid\nand less likely to be infringed. A product could include all of the elements of the independent\nclaim but not the additional element of the dependent claim and thus not infringe the\ndependent claim. Or, if the product existed before the patent application, it could invalidate\nthe independent claim, but not invalidate the dependent claim because it lacks that\nadditional element.\nImportantly, for this reason, invalidation of an independent claim does not imply that\nany associated dependent claims are invalid. This is often counterintuitive\xe2\x80\x94the independent\nclaim feels like the foundation on which the dependent claims rest, and we naturally expect\nthat when the foundation is destroyed, the rest of the building will fall. But that is not the\ncase. However, the converse is very often true: if a dependent claim is invalid because it is\nnot novel, any independent claim to which it refers will be invalid as well, so long as the\nindependent claim uses the transition word \xe2\x80\x9ccomprising.\xe2\x80\x9d Can you see why? Why do you think\npatent drafters include more than one dependent claim?\n8. Product and Process Claims. The claims you have seen so far\xe2\x80\x94for a pencil, the\nDurand wine opener, and the Swiffer mop\xe2\x80\x94are all examples of claims to a product, or a\ntangible thing. But the majority of new patents also include at least one method or process\nclaim, which is written in the form of a series of steps. For example, Procter & Gamble has\nreceived claims along these lines:\nA method of cleaning a surface comprising the steps of:\n(a) providing a cleaning implement comprising: [the four elements\nabove\xe2\x80\x94a handle, a mop head, a liquid delivery system, and a disposable\ncleaning pad];\n(b) actuating said liquid delivery system; and\n(c) mopping said surface with said cleaning pad.\n\n\x0c28\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThis claim is infringed by someone who carries out these steps of using a Swiffer-like mop to\nclean a surface, but not by someone who merely makes or sells a Swiffer-like mop. Similarly,\ninventors of software algorithms often claim both the method of the algorithm and a\nproduct\xe2\x80\x94such as some electronic storage medium\xe2\x80\x94containing instructions for carrying out\nthe algorithm. What are the advantages of writing claims in both product and process\nformats?\nClaims can also be written in product-by-process format, such as \xe2\x80\x9cA [product] prepared\nby a process comprising the steps of . . . .\xe2\x80\x9d In a product-by-process claim, the process is a claim\nlimitation, so the product obtained by other processes would not be infringing. Why might a\nclaim drafter use this format?\n9. Means-Plus-Function Claim Elements. An additional option for claim drafting is\nprovided in 35 U.S.C. \xc2\xa7 112(f), under which a claim element may be \xe2\x80\x9cexpressed as a means\nor step for performing a specified function\xe2\x80\x9d\xe2\x80\x94known as a means-plus-function claim\nelement\xe2\x80\x94which is then interpreted \xe2\x80\x9cto cover the corresponding structure . . . described in the\nspecification.\xe2\x80\x9d For example, if one step of your software algorithm method claim involves\nsorting data entries based on some criterion, your claim does not need to explicitly list all the\ndifferent sorting algorithms\xe2\x80\x94quick sort, merge sort, bubble sort, etc. Instead, you can include\na step with a \xe2\x80\x9cmeans for sorting\xe2\x80\x9d the data, and then this element will legally cover all the\nmeans for sorting listed in the patent specification. (If the specification doesn\xe2\x80\x99t list any means\nfor sorting, the claim is invalid.) If a claim element includes the phrase \xe2\x80\x9cmeans for,\xe2\x80\x9d it is a\nstrong signal that it is a means-plus-function claim element, but elements written in similar\nfunctional terms will also trigger \xc2\xa7 112(f). We will discuss these rules in more detail in\nChapter 5 on Definiteness and Functional Claiming.\n10. Other Claim Formats. Patent claims may also be drafted in other formats. For\nexample, a claim with a Markush group (named after the case that approved this format)\ncontains an element such as \xe2\x80\x9cmaterial selected from the group consisting of A, B, and C,\xe2\x80\x9d\nwhich is frequently used for chemical structures. A Jepson claim explains how the invention\nimproves on some existing product or process, with a form such as: \xe2\x80\x9cIn an [existing product]\nhaving A, B, and C, the improvement comprising . . . .\xe2\x80\x9d A \xe2\x80\x9ckit\xe2\x80\x9d claim of the form \xe2\x80\x9cA kit for X\ncomprising A, B, and C\xe2\x80\x9d is used to claim products that involve separate parts that are used\ntogether. We will not discuss these formats in more detail in this casebook, but you may\nencounter them in practice.\n\n\x0cOVERVIEW\n\n29\n\nPractice Problems: Patent Claims\nConsider the first three claims from U.S. Patent No. 6,635,133, titled \xe2\x80\x9cMethod for\nMaking a Multilayered Golf Ball\xe2\x80\x9d:\n1. A method of making a ball, comprising:\n(a) forming an inner sphere by forming an outer shell with a fluid mass center;\n(b) forming a plurality of core parts from elastomeric material;\n(c) arranging and adhesively joining the core parts around the inner sphere\nwith a flexible adhesive and then crosslinking the core parts to each other by\ncompressing them together at an elevated temperature to form a substantially\nspherical core;\n(d) molding a cover around the assembled core, wherein the elastomeric\nmaterial has a cohesive strength and the adhesive has an adhesive strength\nthat is stronger than the cohesive strength.\n2. The method of claim 1, further comprising molding nonplanar mating surfaces on\nthe core parts, wherein the core parts comprises meshing the mating surfaces.\n3. The method of claim 1, wherein forming the inner sphere comprises freezing a\nsphere of a fluid.\nWhat is the preamble for all three claims? Are these claims open or closed? What are the\nelements of dependent claim 2? If claim 1 is invalid because an earlier publication already\ndescribes this method, what can you say about the validity of claims 2 and 3? If instead it is\nclaim 3 that is invalid because of an earlier publication, what can you say about the validity\nof claims 1 and 2?\n\n\x0c30\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nClaim Drafting Exercise: Spikeball\nSpikeball, also known as roundnet, is a backyard game played with a small trampoline\n(typically with a three-foot diameter), called a \xe2\x80\x9cnet,\xe2\x80\x9d and a small bouncing ball (typically with\na 3.8-inch diameter), as shown. In a standard game, two teams of two people take turns\nbouncing the ball on the net. After an initial serve to the net, each team has three hits to\nreturn the ball onto the net. There are no boundaries; players may run anywhere around the\nnet. Play continues until a team fails to return the ball onto the net within three touches. For\na video illustration, see https://spikeball.com/pages/how-to-play-1. There are numerous\nvariations of the basic rules, including allowing the ball to bounce off the ground once per\npossession, playing with tennis rackets, requiring one touch to be with a player\xe2\x80\x99s foot, and\ntwo- or three-player games. The Spikeball\ntrampoline has foldable legs to allow for easy\ntransport and storage.\nThe inventor of Spikeball has asked\nyou to draft a patent claim (or set of claims)\nthat covers this invention and that will be as\nuseful as possible in preventing others from\nentering the market with competing products\nthat might reduce Spikeball sales.\nAt the same time, you must be careful not to draft claims that would cover any of the\nexisting prior art. If some piece of prior art would infringe one of your claims, the claim is\ninvalid. After some research, you determine that trampolines and bouncy balls of many\ndifferent sizes and net strengths are well known in the prior art; there are no important\ndifferences between prior art trampolines and the Spikeball net besides the foldable legs to\nallow for easy transport and storage. You also determine that the following games have\nsometimes been played on large trampolines:\n\xe2\x97\x8f\n\nVolleyball. Two teams attempt to hit a ball back and forth over a net without allowing\nthe ball to touch the trampoline, and each team may touch the ball three times before\nit must be returned over the net.\n\n\xe2\x97\x8f\n\nFour Square. Four players each have their own quadrant of the trampoline, and when\na ball is bounced in a player\xe2\x80\x99s quadrant, it must be bounced back into another\nquadrant.\n\n\xe2\x97\x8f\n\nBasketball. Players dribble a ball on the trampoline and attempt to shoot it through\nhoops mounted high in the air.\n\n\xe2\x97\x8f\n\nHacky Sack. Players stand in a circle on the trampoline and attempt to keep a ball in\nthe air using only their feet. A player who allows the ball to hit the trampoline loses.\n\nFor purposes of this exercise, assume that this is all the relevant prior art.\n\n\x0cOVERVIEW\n\n31\n\nE. Economics of Patent Law\nThe dominant framework for justifying and analyzing U.S. patent laws is\nutilitarianism\xe2\x80\x94the idea that the government grants patents because the benefits they create\nfor society are larger than their social costs. In other words, patents should be granted only\nwhen they have a positive effect on social welfare. This purpose is reflected in the \xe2\x80\x9cIP Clause\xe2\x80\x9d\nof the Constitution: Article 1, Section 8, Clause 8 grants Congress the power to enact patent\nlaws to \xe2\x80\x9cpromote the Progress of Science and useful Arts.\xe2\x80\x9d Similarly, the Supreme Court\nexplained in Graham v. John Deere Co., 383 U.S. 1 (1966): \xe2\x80\x9cThe patent monopoly was not\ndesigned to secure to the inventor his natural right in his discoveries. Rather, it was a reward,\nan inducement, to bring forth new knowledge.\xe2\x80\x9d\nWhy should the government intervene in the market for new ideas? Consider some\nideas that might be protected by a patent: the design of a new mousetrap, a cheaper method\nof manufacturing mousetraps, an algorithm for a faster computational search method, the\nformula for a new pharmaceutical compound, or the fact that a certain chemical is effective\nat treating cancer. Ideas like these\xe2\x80\x94which we will refer to as knowledge goods\xe2\x80\x94are\nfundamentally different from most tangible property in that they have the two characteristics\nof what economists call public goods:\n1. Nonrivalry: One person\xe2\x80\x99s use of some piece of information does not decrease others\xe2\x80\x99\nability to use it. The social benefit from producing a new knowledge good is thus\ngreater than the private benefit to its producer. Because an additional user can benefit\nwithout imposing costs on others\xe2\x80\x94or in economic terms, the marginal cost of\nproduction is zero\xe2\x80\x94the good should be as widely and freely available as possible.\n2. Nonexcludability: The producer of a knowledge good often cannot prevent others from\nusing the good. Persons other than the producer can thus free-ride off the producer\xe2\x80\x99s\nefforts. And because a self-interested firm will not consider the benefits of these freeriders when deciding how much to invest in producing knowledge goods, it will invest\nless than the socially optimal amount.\nCan you think of other goods that are nonrivalrous and at least somewhat nonexcludable?\nCommon examples outside the innovation context include things like national defense and\nclean air. Public goods such as knowledge goods will be underproduced by the market,\nproviding a justification for government intervention.\nThe fundamental problem for producers of knowledge goods is that it is often far\ncheaper to copy the invention than it is to create the invention in the first place. Consider a\nnew cancer drug. Once one company has undertaken the tremendous expense of developing\nthe drug and testing whether it is safe and effective at treating cancer, it is comparatively\ninexpensive for a generic manufacturer to copy the drug and enter the market. Estimates\nvary, but R&D costs have been estimated at around $1 billion per approved drug, while\ngeneric entry costs are on the order of $10 million.\n\n\x0c32\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIf patents did not exist, a generic manufacturer could wait until someone else has\ndeveloped the drug and then enter the market and sell generic versions of the drug at a much\nlower price. (Many of you have probably had the experience of being offered the generic\nalternative to a brand name prescription drug at a much lower price than the brand name\ndrug would cost.) By itself, this wouldn\xe2\x80\x99t necessarily constitute a social problem\xe2\x80\x94it\xe2\x80\x99s not clear\nthat society should care whether the original pharmaceutical developer (a large corporation)\nor the brand name manufacturer (a large corporation) makes more money. The problem is\nthat pharmaceutical firms would anticipate this problem. If they thought their drugs would\nbe underpriced, such that they couldn\xe2\x80\x99t recover their R&D costs, they wouldn\xe2\x80\x99t invest in R&D\nin the first place! This would represent a major social problem because the public would lose\nthe benefit of new drugs. Put another way, the high cost of pharmaceutical development\nrelative to generic production means that even if a new drug has enormous social value\nrelative to existing treatments, the private value often will not be enough to induce\ndevelopment absent government intervention.\nTo be sure, the economics of public goods do not mean that no innovation will occur\nwithout government intervention. For one thing, knowledge goods are often partially\nexcludable, such as through secrecy or social norms. For another, in some cases the private\nvalue will be enough to recover the costs of R&D. But in many cases the gap between social\nand private value will cause society to miss out on valuable innovations.\nPolicymakers have numerous policy tools to address the concern that inventors will\nnot have sufficient incentives to invest in R&D. See generally Daniel J. Hemel & Lisa\nLarrimore Ouellette, Beyond the Patents\xe2\x80\x93Prizes Debate, 92 Tex. L. Rev. 303 (2013). They can\ndirectly fund R&D, such as through grants to universities or firms or through governmentrun laboratories like the National Institutes of Health. They can offer prizes for successful\ninnovations, such as the fixed prizes offered at Challenge.gov or the market subsidies\nprovided by government health insurance programs. They can use R&D tax incentives to\nreduce firms\xe2\x80\x99 R&D costs, such as those at I.R.C. \xc2\xa7\xc2\xa7 41, 174. And they can use patents.\nIf the government grants the drug developer an exclusive right to sell or license the\ndrug for a limited time, then the developer can prevent generic entrants and have a limited\nmonopoly over that drug. In this way, patents can address the nonexcludability problem by\nmaking knowledge goods more excludable, such that others cannot benefit from the goods\nwithout the patent owner\xe2\x80\x99s permission. In practice, few patents confer a true monopoly, but\nmany patents do allow their owners to charge prices above marginal cost\xe2\x80\x94that is, the cost of\nproducing one more unit of that good. In a competitive market, firms will sell goods at\nmarginal cost, which means that they will not earn much profit for each unit of the good sold.\nBut when a firm has market power (like in a monopoly), the firm can increase its profits by\nselling a smaller quantity of the goods at a higher price. In this sense, the patent system is\nequivalent to a sales tax on patented technologies, with revenues going to the knowledgegood producers.\nPatents have the virtue of rewarding inventors based on how much consumers value\nthe goods they are creating. If an inventor creates a very useful product, such as a treatment\n\n\x0cOVERVIEW\n\n33\n\nfor a debilitating disease, it can use the power of its patent to sell that invention at a high\nprice. This creates an incentive for inventive firms to pursue the inventions that will be most\nhighly valued by the public, which is of course the objective. But using patents as an\nallocation mechanism has costs. Most importantly, if the patent owner is unable to price\ndiscriminate by charging different prices to different consumers, those who value the good\nabove its competitive price\xe2\x80\x94the price the good would sell for absent a patent, equal to\nmarginal cost\xe2\x80\x94but below the patent owner\xe2\x80\x99s price will be denied access to the good. For\nexample, if a month\xe2\x80\x99s supply of a patented new cancer drug would have a competitive price\nof $100 but is sold by the patent owner for $10,000, then consumers who value the drug at\n$5,000 (more than $100 but less than $10,000) will be priced out of the market by the patent.\nThis lack of access\xe2\x80\x94and the resulting cost to human health and lives\xe2\x80\x94is a real cost to society\nknown as deadweight loss. Under the conventional account, patents thus create a\nfundamental tradeoff between incentives on the one hand and access on the other, or what\neconomists call a tradeoff between dynamic efficiency (incentives to create more inventions)\nand allocative efficiency (access to existing inventions).\nThis incentives/access tradeoff is not inevitable, however. As one of us has explored in\nwork with Daniel Hemel, society can have both widespread access and substantial rewards\nfor innovation. First, the patent system itself may affect the demand for a new technology:\npatents incentivize manufacturers to invest in creating demand for their products, such as\nthrough marketing, which increases the number of patients who access them. In the\npharmaceutical context, this means that patent expiration often leads to a decrease in price\nwithout a corresponding increase in use.15 This patent-driven increase in demand and access\ncould be either beneficial or harmful. In some cases, perhaps including mental health\ntreatments, marketing by developers prior to a patent\xe2\x80\x99s expiration may have encouraged\npatients to seek treatment for conditions that otherwise might have been unrecognized or\nstigmatized in the absence of a patented treatment. In other cases, such as Purdue Pharma\xe2\x80\x99s\nmisleading marketing in support of their patented and addictive opioid OxyContin, this\nexpansion in pharmaceutical use has been disastrous. See Daniel J. Hemel & Lisa Larrimore\nOuellette, Innovation Institutions and the Opioid Crisis, 7 J.L. & Biosciences (2020).\nMore importantly, the choice of patents as an incentive mechanism does not mean\nthat the patent system must be used to allocate access to the resulting technologies: financial\nincentives for developers could be made distinct from out-of-pocket costs for consumers. For\nexample, if the government purchases products or patent rights from the patent owner for\nfair market value and then distributes the patented products at no cost, the innovator\nreceives the same patent-based incentive while consumers get access for free. And this kind\nPatent expiration does not always lead to a decrease in price; in many cases, other features\nof the pharmaceutical industry such as high entry costs or natural monopolies provide market power.\nFor example, there are over 300 off-patent drugs with no approved generic, and it typically takes\nmultiple generic competitors to lead to a substantial price decrease. The revolutionary cancer drug\nGleevec (imatinib) had a list price of over $10,000 per month when it first faced a generic competitor,\nbut the price declined by only 10% in the first 20 months after generic entry. Ashley L. Cole & Stacie\nB. Dusetzina, Generic Price Competition for Specialty Drugs: Too Little, Too Late?, 37 Health Aff. 738\n(2018).\n15\n\n\x0c34\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nof matching of patent incentives with non-patent allocation is not merely hypothetical: other\ncountries like the United Kingdom already purchase medicines directly from patent holders\nand distribute them at low or no cost to patients, and Medicare and Medicaid achieve much\nthe same thing for many patients in the United States. See Daniel J. Hemel & Lisa Larrimore\nOuellette, Innovation Policy Pluralism, 128 Yale L.J. 544 (2019). This is part of the reason\nwhy price decreases for pharmaceutical drugs don\xe2\x80\x99t always lead to increases in use of the\ndrug, as we noted above. Many people who might not be able to afford the expensive, brandname drug at retail are nonetheless able to access it through Medicare, Medicaid, or private\ninsurance. In short, patents can create deadweight loss by limiting access, but this is not\ninevitable.\nPatents can also create other social costs, although the extent of each cost is contested.\nPerhaps most importantly, patents can over-incentivize innovation. To be clear, by \xe2\x80\x9coverincentivizing,\xe2\x80\x9d we do not mean providing rewards greater than whatever is \xe2\x80\x9cjust enough\xe2\x80\x9d to\ninduce invention\xe2\x80\x94such rewards are transfers from one party to another, not true social\ncosts.16 Rather, over-incentivizing occurs when patents spur R&D costs that are greater than\nthe expected social value of those expenditures, where social value accounts for the risk of\nfailure and is measured compared with the next-best alternative. For example, if multiple\nfirms compete to solve a particular technological problem, their combined R&D expenditures\nmight be greater than the prize for the winning firm. This problem is variously known as the\n\xe2\x80\x9cpatent racing\xe2\x80\x9d or \xe2\x80\x9ccommon pool\xe2\x80\x9d problem, and numerous scholarly articles have debated how\nsignificant it is in practice and whether alternative reward systems might be preferable. See\ngenerally Michael Abramowicz, The Uneasy Case for Patent Races over Auctions, 60 Stan. L.\nRev. 803 (2007).\nOver-incentivizing innovation can also occur without patents. One such mechanism is\n\xe2\x80\x9cbusiness stealing,\xe2\x80\x9d whereby a firm expends a significant amount of resources to produce an\ninvention that is different from\xe2\x80\x94but no better than\xe2\x80\x94existing inventions and then captures\nsome of the existing market share. (Think about how many roughly identical statins are on\nthe market.) A firm might reap a great deal of profit from this strategy without creating any\nsocial value, if its product is no better than the ones that existed. But here too, patents can\nexacerbate the problems.\nIn addition to the costs from raising prices on patented products and from patent\nracing, the patent system creates substantial administrative and transaction costs.17 A rough\nIf the reward is in the form of monopoly power that leads to deadweight loss, then there is a\nsocial loss, but as noted above, patent rewards need not be coupled to allocation through proprietary\npricing. Alternative allocation mechanisms do require taxpayer funding, but tax scholars have\nexplained why the deadweight loss of taxation is largely irrelevant to choices about the magnitude of\npublic spending. See Louis Kaplow, On the (Ir)Relevance of Distribution and Labor Supply Distortion\nto Government Policy, 18 J. Econ. Persp. 4 (2004); David A. Weisbach, Daniel J. Hemel & Jennifer\nNou, The Marginal Revenue Rule in Cost-Benefit Analysis, 160 Tax Notes 1507 (2018).\n16\n\nThe patent system can also reduce transaction costs for joint technology ventures by solving\nwhat is known as Arrow\xe2\x80\x99s information paradox. Without patents, transacting over a knowledge good\nis difficult because no one will want to buy an idea without knowing what it is, but once the idea is\ndisclosed, what\xe2\x80\x99s to stop the prospective purchaser from walking away and pursuing the idea herself?\n17\n\n\x0cOVERVIEW\n\n35\n\nestimate suggests the costs of obtaining and litigating patents are on the order of $10 billion\nper year. Hemel & Ouellette, Beyond the Patents\xe2\x80\x93Prizes Debate, supra at 365. And this\nestimate does not include nonlitigation legal costs such as the cost to an inventor of\ndetermining whether she is at risk of infringing her competitors\xe2\x80\x99 patents and negotiating\npatent licenses. For a complex product, conducting a patent clearance search and negotiating\nwith multiple holders of overlapping patent rights can be costly, leading to concern about\n\xe2\x80\x9cpatent thickets\xe2\x80\x9d slowing commercialization. See Carl Shapiro, Navigating the Patent\nThicket: Cross Licenses, Patent Pools, and Standard Setting, 1 Innovation Pol\xe2\x80\x99y & Econ. 119\n(2000). Litigation and licensing are complicated by the many patents that are erroneously\ngranted by the USPTO and invalidated only when subjected to greater scrutiny, or that are\nintentionally written in vague terms that make it difficult to determine what they cover.\nConcern about this \xe2\x80\x9cpatent quality\xe2\x80\x9d problem has driven many of the recent doctrinal changes\nwe will discuss in subsequent chapters.\nComplex patent landscapes have given rise to some firms that are solely in the\nbusiness of patent litigation and licensing. These firms are known variously as \xe2\x80\x9cnonpracticing entities,\xe2\x80\x9d \xe2\x80\x9cpatent assertion entities,\xe2\x80\x9d or (least favorably) \xe2\x80\x9cpatent trolls.\xe2\x80\x9d The terms\nare not used exactly interchangeably. For instance, a major research university such as\nStanford University or the University of Chicago is a non-practicing entity, in that it does\nnot produce and sell products, but it would be odd to refer to it as a patent assertion entity.\nPatent assertion entities are typically for-profit firms whose business is asserting patents;\nany patent assertion entity is also (by definition) a non-practicing entity. And \xe2\x80\x9cpatent troll\xe2\x80\x9d\nis the unfavorable word used to describe any non-practicing entity that is attempting to\ncapture value from a patent in situations where it does not deserve to do so, perhaps because\nthe patent is invalid or vaguely worded. There are ongoing policy debates about whether\nthese types of firms increase the efficiency of technology markets or merely serve as a drag\non truly innovative companies.\nGiven the magnitude of the many social costs arising from the patent system, society\nshould ensure it is obtaining some offsetting benefit. Unfortunately, \xe2\x80\x9cwe lack sufficient\nevidence to inform this big picture question of whether strengthening the patent system\xe2\x80\x94\nthrough longer or stronger patents\xe2\x80\x94would increase or decrease research investments and\ninnovation, much less whether this benefit is large enough to outweigh patents\xe2\x80\x99 costs.\xe2\x80\x9d Lisa\nLarrimore Ouellette & Heidi Williams, Reforming the Patent System (Hamilton Project Policy\nProposal 2020-12). We have chosen examples from the pharmaceutical industry because this\nis the industry in which patents appear to play the largest role. For example, pharmaceutical\nexecutives report that they regularly drop drugs that lack strong patent protection from their\ndevelopment pipelines. Benjamin N. Roin, Unpatentable Drugs and the Standards of\nPatentability, 87 Tex. L. Rev. 503, 545 (2009). One of the best empirical efforts to study the\neffect of patent protection on research investments documented less private R&D investment\nin cancer drugs that require longer clinical trials and thus have shorter effective patent\nterms. Eric Budish, Benjamin N. Roin & Heidi Williams, Do Firms Underinvest in Long-Term\nSee Jonathan M. Barnett, Property as Process: How Innovation Markets Select Innovation Regimes,\n119 Yale L.J. 284 (2009).\n\n\x0c36\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nResearch? Evidence from Cancer Clinical Trials, 105 Am. Econ. Rev. 2044 (2015). But even\nthis study could not determine whether the decreased investment incentive was caused by\nthe shorter effective patent term or from corporate short-termism.\nAll of this is to say that there are good justifications for having a large-scale innovation\nincentive system such as patent law. The social returns to innovation, even accounting for\nracing and business stealing, appear to be enormous. See Benjamin F. Jones & Lawrence H.\nSummers, A Calculation of the Social Returns to Innovation (Nat\xe2\x80\x99l Bureau of Econ. Rsch.,\nWorking Paper No. 27863, 2020). But the details of where and when patent law provides too\nmuch, too little, or just the right amount of protection are very much up for grabs.\nPatents also serve other objectives. Part of the quid pro quo for obtaining patent rights\nis disclosure: in exchange for the right to exclude, the inventor must teach the public how to\nmake and use the invention. This disclosure enables subsequent inventors to improve upon\nthe invention and further grow the store of public knowledge. (Subsequent research efforts\nmight infringe the patent, however, which is a subject we take up later in the book.) Patents\ncan also be privately valuable to market participants\xe2\x80\x94as a signal to potential investors that\nan invention is new and nonobvious, or as a feather in the cap of an inventor. Here, we can\nthink of patents as providing information to the market, though it may be hard to know how\nmuch that information is worth given the problem of patent quality. In any event, these\nconsiderations are undoubtedly important, and for some patentees they may be the principal\nreason for pursuing patents. On the whole, however, they are generally viewed as secondorder to the objective of creating incentives for innovation.\nAs you read through this book and learn patent law, you should consider which legal\nchanges might be warranted to enable the patent system to better achieve all of its objectives.\n\nF. Innovation and Inequality\nThe focus on a utilitarian framework for patent law doesn\xe2\x80\x99t mean that patent law is\njust about money, or that patent lawyers and scholars shouldn\xe2\x80\x99t or don\xe2\x80\x99t care about issues of\ninequality. Throughout history, innovation has been a leading driver of economic growth and\nhas helped lift communities out of poverty. The importance of knowledge goods to the global\neconomy has only increased with the rise of computing and information technologies. But the\nbenefits of innovation are not evenly distributed. Patent law and other legal institutions that\nincentivize innovation and allocate access to knowledge goods are used both to reinforce and\nsubvert existing power structures and inequalities, including issues related to gender, race,\ngeography, and income.\nThe connection between innovation and inequality has been the subject of scholarly\ninterest in fields ranging from economics to critical legal studies. Here, we briefly highlight\ninequalities in two key aspects of innovation: Who becomes an inventor, and who benefits\nfrom innovation?\n\n\x0cOVERVIEW\n\n37\n\n1. Inequality Among Innovators\nInequality among innovators is a pervasive social problem. As one of us has explained:\nDisparities in innovation by gender, race, and class raise concerns for both\nequity and economic growth. For example, Professor Raj Chetty\xe2\x80\x99s team of\neconomists has estimated that if women, racial minorities, and people from\nlow-income backgrounds invented at the same rate as white men from families\nin the top income quintile, these \xe2\x80\x9clost Einsteins\xe2\x80\x9d\xe2\x80\x94or perhaps \xe2\x80\x9clost Maryam\nMirzakhanis\xe2\x80\x9d\xe2\x80\x94would quadruple the rate of innovation in America. But\nprogress on increasing participation of underrepresented groups in the\ninnovation ecosystem has been glacial. Unless something dramatic changes,\ngender inequality . . . will persist among American innovators in science and\nengineering for well over a century.\nAmy C. Madl & Lisa Larrimore Ouellette, Policy Experiments to Address Gender Inequality\nAmong Innovators, 57 Hous. L. Rev. 813 (2020) (citing Alex Bell et al., Who Becomes an\nInventor in America? The Importance of Exposure to Innovation, 134 Q.J. Econ. 647 (2019)).\nUnfortunately, \xe2\x80\x9cthe evidence base for most policy interventions to reduce the innovation\ngender gap is depressingly shallow, and there is even less evidence for disparities by race and\nethnicity.\xe2\x80\x9d Id. at 816.\nDoes the choice of patent law as a key innovation policy ameliorate or exacerbate these\ninequalities? Some scholars have argued that because patent law places relatively little\ndiscretion in the hands of government decisionmakers\xe2\x80\x94requiring the USPTO to grant\npatents to any inventions that meet relatively objective criteria, without regard to the race,\nclass, or gender of the inventor\xe2\x80\x94it has democratized innovation. See, e.g., B. Zorina Khan,\nThe Democratization of Invention: Patents and Copyrights in American Economic\nDevelopment, 1790\xe2\x80\x931920 (2005). Other scholars have argued, however, that patent law is far\nfrom \xe2\x80\x9cneutral\xe2\x80\x9d to societal identities in its design. See, e.g., Anjali Vats & Deidr\xc3\xa9 A. Keller,\nCritical Race IP, 36 Cardozo Arts & Ent. L.J. 735 (2018) (arguing that \xe2\x80\x9crace is an exceedingly\nimportant site for intellectual property analysis for which existing considerations of power,\ninequality, or distributive justice simply do not fully account\xe2\x80\x9d); Keith Aoki, Distributive and\nSyncretic Motives in Intellectual Property Law (with Special Reference to Coercion, Agency,\nand Development), 40 U.C. Davis L. Rev. 717, 741 (2007) (arguing that the early U.S. patent\nsystem exacerbated race-based wealth disparities between inventors).\nAdditionally, even if patent laws are objectively applied, receiving a patent from the\nUSPTO is worth little in isolation; financially benefiting from patents depends on institutions\nsuch as corporate rent-sharing and venture capital, which may have their own biases. See,\ne.g., Patrick Kline et al., Who Profits from Patents? Rent-Sharing at Innovative Firms, 134\nQ.J. Econ. 1343 (2019); Dana Kanze et al., Male and Female Entrepreneurs Get Asked\nDifferent Questions by VCs\xe2\x80\x94and It Affects How Much Funding They Get, Harv. Bus. Rev.\n(June 27, 2017).\n\n\x0c38\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nShould these considerations affect the choice of patent law versus other innovation\ninstitutions? Although direct funding of R&D through federal grants involves far more\ndiscretion for government decisionmakers, race and gender gaps among grant recipients are\nsmaller than among patent inventors.\n\n2. Inequality in Access to Innovation\nThe patent system is built around the notion that rewarding innovators based on\nconsumers\xe2\x80\x99 willingness to pay is a good way to aggregate dispersed information about the\nsocial value of new knowledge goods. Policymakers do not have to make tough decisions in\ndoling out R&D funding, such as whether Pfizer or Gilead will make better drugs or whether\nApple or Samsung will make better smartphones\xe2\x80\x94they can let the market decide. But this\nmeans that R&D investment decisions are often based on consumers\xe2\x80\x99 ability to pay, which\naffects both what innovations are produced and who has access to them.\nConsider what innovations will emerge from a patent-based reward system. Firms\nfocused on market returns may choose to invest in lifestyle drugs like Viagra rather than\nessential medicines, or in the next generation iPhone rather than more accessible internet\ndevices. Private firms will also overinvest in products with negative externalities\xe2\x80\x94ranging\nfrom addictive opioids to carbon-emitting power plants\xe2\x80\x94for which the social burden often\nfalls disproportionately on marginalized communities. A system based on disaggregated R&D\ndecisions can also intensify social problems like technological unemployment\xe2\x80\x94job loss due to\ninnovations like automation. The net effect of private R&D investment decisions is product\ninnovations that disproportionately benefit high-income households. See Xavier Jaravel, The\nUnequal Gains from Product Innovations: Evidence from the U.S. Retail Sector, 134 Q.J.\nEcon. 715 (2019); David Rotman, Technology and Inequality, MIT Tech. Rev. (Oct. 21, 2014).\nOne might look at these market failures and conclude that society should rely less on\npatents and more on non-patent incentives such as direct public funding for R&D. But\nfailures of political markets can be devastating. Government actors are subject to corruption\nand capture and are limited by the constraints of the next election. And even absent explicit\nbias, government funding can still compound social inequalities. For example, NIH grants\ntargeted at the most common causes of U.S. infant mortality were effective at reducing\nmortality, but they exacerbated racial disparities in infant outcomes. See David M. Cutler et\nal., Induced Innovation and Social Inequality: Evidence from Infant Medical Care, 47 J. Hum.\nRes. 456 (2012). More targeted legislation may be needed to shift the distributive balance of\nwhat innovations are produced. See, e.g., Christopher Buccafusco, Disability and Design, 95\nN.Y.U. L. Rev. 952 (2020) (\xe2\x80\x9c[T]wo of the most important drivers of innovation for accessible\ndesign have been social welfare laws and antidiscrimination laws.\xe2\x80\x9d).\nIn addition to distorting what innovations are produced, the patent system can\nmagnify inequalities in who has access to new innovations. Recall the example above of a\ncancer drug with a competitive price of $100 but a profit-maximizing patent-protected price\nof $10,000. Unless the government takes steps to increase access to the drug\xe2\x80\x94such as by\n\n\x0cOVERVIEW\n\n39\n\ninstituting a national healthcare system\xe2\x80\x94consumers who cannot afford to pay $10,000 will\nbe priced out of the market, resulting in a substantial social loss. For health technologies,\nmany government programs do exist to increase access, alleviating the incentives/access\ntradeoff. But healthcare is an exception. For other types of technology\xe2\x80\x94including technology\nthat is nearly essential in the modern world, such as computers and smartphones\xe2\x80\x94access is\nbased on willingness to pay.\nAgain, these distributional concerns are not necessarily a sufficient reason to abandon\nthe patent system, especially if we think political institutions are even less likely to make the\nright R&D investment decisions. First, as famously articulated in Louis Kaplow & Steven\nShavell, Why the Legal System is Less Efficient than the Income Tax in Redistributing Income,\n23 J. Legal Stud. 667 (1994), the first-best approach to distributional problems would be to\nmake innovation institutions as efficient as possible and then use the tax system to\nredistribute income so as to promote greater equality. This would have the effect of promoting\ngreater access to patented goods as well. Of course, this argument that distribution should\nbe left to the tax-and-transfer system can be challenged on a number of grounds; for example,\nsee the discussion of political action costs in Lee Anne Fenell & Richard H. McAdams, The\nDistributive Deficit in Law and Economics, 100 Minn. L. Rev. 1051 (2016). Second, and\nperhaps more compellingly, there is a distributive argument for patent law\xe2\x80\x99s user-pays\nallocation system in the case of nonessential goods, and especially luxury goods. The patent\nsystem allocates the costs of developing those goods to the consumers who actually use them.\nSee Hemel & Ouellette, Beyond the Patents\xe2\x80\x93Prizes Debate, supra, at 349\xe2\x80\x9352.\nAll of this is to say that the patent system will suffer from all of the same pathologies\nas the markets on which it is based. Those pathologies are amplified by the fact that patent\nlaw deliberately distorts markets, creating monopolies or quasi-monopolies. This can\nexacerbate existing inequalities in access to patented goods. The challenge for policymakers\nlies in determining how to harness the advantages of patent law while simultaneously\nensuring access to essential goods for everyone who needs them.\n\n\x0c40\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nII. Patentability\nThe following six chapters examine the requirements for patentability:\nRequirements\n\nOverview\n\n2. Novelty\n(\xc2\xa7 102)\n\nA claimed invention must be new compared with each piece of\nprior art (e.g., an earlier publication, patent, use, or sale). The\ngoverning statute changed dramatically from a \xe2\x80\x9cfirst to invent\xe2\x80\x9d\nsystem for applications filed before March 16, 2013, to a \xe2\x80\x9cfirst to\ndisclose\xe2\x80\x9d system for more recent applications.\n\n3. Nonobviousness\n(\xc2\xa7 103)\n\nA claim cannot be an obvious variation or combination of the prior\nart. To avoid hindsight bias, a court may look to \xe2\x80\x9csecondary\nconsiderations\xe2\x80\x9d such as near-simultaneous invention and failure of\nothers.\n\n4. Utility and\nDisclosure\n(\xc2\xa7 112, \xc2\xa7 101)\n\nAn invention must be useful at the time of filing: the specification\nmust demonstrate that the invention is operable and that it has a\nspecific and substantial real-world use. The disclosure also must\nshow that the claim satisfies enablement (teaching how to make\nand use the invention without \xe2\x80\x9cundue experimentation\xe2\x80\x9d) and\nwritten description (showing that the inventor \xe2\x80\x9cpossessed\xe2\x80\x9d the\ninvention at the time of filing).\n\n5. Definiteness\nand Functional\nClaiming\n(\xc2\xa7 112(b), (f))\n\nA claim must describe the scope of the invention with \xe2\x80\x9creasonable\ncertainty\xe2\x80\x9d or it is invalid as indefinite. If a claim element is in\n\xe2\x80\x9cmeans-plus-function\xe2\x80\x9d form (like \xe2\x80\x9ca means for fastening\xe2\x80\x9d), its scope\nis limited to the corresponding structure in the specification, and\nthe claim is indefinite if there is no corresponding structure.\n\n6. Patentable\nSubject Matter\n(\xc2\xa7 101)\n\nIf the claim is directed to a patent-ineligible category (laws of\nnature, natural phenomena, or abstract ideas), it must add\n\xe2\x80\x9csignificantly more\xe2\x80\x9d to be patentable. Adding conventional steps\xe2\x80\x94\nimplementing an abstract idea on a general-purpose computer or\ndrawing blood for a diagnostic\xe2\x80\x94is not enough.\n\n7. Inventorship\n(\xc2\xa7\xc2\xa7 116, 256) and\nDouble Patenting\n(nonstatutory)\n\nOmitted inventors may seek correction of inventorship and then\nmay independently license the patent. Double patenting prevents\nan inventor from patenting the same invention or obvious variants\nthereof unless a terminal disclaimer is filed so that later patents\nexpire at the same time as the first one.\n\n\x0cPATENTABILITY\n\n41\n\nBefore turning to the first requirement of novelty, we emphasize several points that\napply across the patentability requirements:\nCommon Law Statutory Interpretation. Most of the patentability requirements are\ncodified in the Patent Act, but many of these statutory provisions are short and vaguely\nworded. A substantial portion of the law of patentability has been developed by the courts\nthrough a common-law process that is informed by the underlying social welfare goals of the\npatent laws. The following chapters will frequently refer to the policy considerations\nintroduced in Chapter 1 and will include numerous problems to help students develop a\nlawyer\xe2\x80\x99s situation sense for how courts evaluate different cases.\nThe PHOSITA. These requirements are generally evaluated from the perspective of\nthe Person Having Ordinary Skill in the Art (PHOSITA) as of the effective filing date for the\nclaim at issue.1 The PHOSITA is a hypothetical person like the \xe2\x80\x9creasonable person\xe2\x80\x9d in tort\nlaw\xe2\x80\x94you can think of her as a \xe2\x80\x9creasonable researcher\xe2\x80\x9d in the field of the patent at issue, with\na level of skill and general background knowledge that increases as the field becomes more\ncomplex. For example, the PHOSITA will have more skill for a bioinformatics invention than\nfor a simple mechanical invention.\nClaim Construction. As noted in Chapter 1, interpreting what a claim covers is an\nimportant preliminary step for assessing its validity. We save a detailed discussion of the law\nof claim construction for Chapter 8 because it is difficult to understand what is at stake in\nclaim construction without some understanding of the patentability requirements, and\nbecause the Federal Circuit has emphasized the importance of the context of a specific\nallegation of infringement when ruling on claim construction. See, e.g., Jang v. Bos. Sci.\nCorp., 532 F.3d 1330, 1337 (Fed. Cir. 2008). For now, it is sufficient to know that claims in a\npatent application are given their \xe2\x80\x9cbroadest reasonable interpretation,\xe2\x80\x9d whereas claims in a\ngranted patent are given their \xe2\x80\x9cordinary meaning\xe2\x80\x9d to a PHOSITA at the time of filing. As you\nread the cases in the following chapters, look for places where the interpretation of a claim\nterm might affect the outcome.\nQuestions of Law or Fact? Most of the patentability requirements are questions of law\nbased on underlying questions of fact. The main exception is determining whether a given\nprior art reference renders a claim invalid for lack of novelty under \xc2\xa7 102 because this is\nsimply a question of whether the reference discloses every claim element, as we discuss in\nthe following chapter. Additionally, the written description requirement of \xc2\xa7 112(a) is a\nquestion of fact for reasons that seem \xe2\x80\x9cinexplicable.\xe2\x80\x9d Anascape v. Nintendo of Am., 601 F.3d\n1333, 1342 (Fed. Cir. 2010) (Gajarsa, J., concurring).\nEvidentiary Standards. Patentability is relevant both before and after a patent is\ngranted: the USPTO evaluates whether a patent application satisfies these requirements\nwhen deciding whether to grant the application, and courts or the USPTO may be asked to\nOne of the hottest debates in patent law is exactly how to abbreviate and pronounce this\nhypothetical person. See Dennis Crouch, Person (Having) Ordinary Skill in the Art, Patently-O (Nov.\n30, 2018), https://patentlyo.com/patent/2018/11/person-having-ordinary.html.\n1\n\n\x0c42\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nreevaluate these issues if an accused infringer argues that a granted patent is invalid. The\nsubstantive legal test is generally the same in both contexts, but the evidentiary standard is\ndifferent. During examination, a claim should be rejected if the USPTO establishes\nunpatentability by a preponderance of the evidence, meaning it is more likely than not that\nthe claim is unpatentable. But granted patents are entitled to a presumption of validity,\nmeaning that a challenger must establish invalidity by clear and convincing evidence. See\nMicrosoft Corp. v. i4i Ltd. P\xe2\x80\x99ship, 564 U.S. 91 (2011). It is thus important to pay attention to\nthe context in which a case arises, as we have written previously: \xe2\x80\x9cJust because there is not\nclear and convincing evidence that a patent is invalid does not mean that it should not be\nheld invalid under a lower standard. It is often a mistake for the PTO to rely on precedent\nfrom infringement cases when deciding to grant patents.\xe2\x80\x9d Jonathan S. Masur & Lisa\nLarrimore Ouellette, Deference Mistakes, 82 U. Chi. L. Rev. 643 (2015). That is, it is possible\nthat the same patent could be declared not invalid during litigation\xe2\x80\x94where the \xe2\x80\x9cclear and\nconvincing evidence\xe2\x80\x9d standard applies\xe2\x80\x94but invalid in a direct appeal from the USPTO,\nwhere the \xe2\x80\x9cpreponderance of the evidence\xe2\x80\x9d standard applies. Courts that reason from validity\nprecedents should take care to consider whether the precedent arose in the context of\nlitigation or a direct appeal from the USPTO.\nValidity and Preclusion. Neither the USPTO nor the courts determine that a patent\nclaim is legally valid; rather, examiners determine that they have not been able to establish\na prima facie case of unpatentability, and the courts determine that a patent challenger has\nnot been able to establish invalidity by clear and convincing evidence. We will thus often\nwrite that a claim was held \xe2\x80\x9cnot invalid\xe2\x80\x9d\xe2\x80\x94avoid the temptation to rewrite the double\nnegative! Because courts do not hold a claim to be valid, the validity of a patent can be\nchallenged repeatedly by different defendants. In contrast, once a claim has been held\ninvalid, issue preclusion (also known as collateral estoppel) prevents a patentee from\nrelitigating its validity. Blonder\xe2\x80\x93Tongue Laboratories v. University of Illinois Foundation,\n402 U.S. 313 (1971).\nAdditional Resources. As noted in Chapter 1, courts do not grant deference to the\nUSPTO\xe2\x80\x99s interpretation of substantive patent law, but the USPTO generally updates\ntraining materials and guidance to examiners to be consistent with the most recent caselaw.\nThe MPEP has a free and useful summary of the law of patentability in Chapter 2100.2 The\nleading patent treatise is Chisum on Patents (available on Lexis), although it is so detailed\nthat it can be difficult to read. Westlaw\xe2\x80\x99s resources include Matthews Annotated Patent\nDigest, Moy\xe2\x80\x99s Walker on Patents, and the Patents section of Business and Commercial\nLitigation in Federal Courts by the Honorable Timothy B. Dyk & Samuel F. Ernst.\n\n2\n\nhttps://www.uspto.gov/web/offices/pac/mpep/mpep-2100.html.\n\n\x0cNOVELTY\n\n43\n\n2. Novelty\nTo be patentable, an invention must be new. This rule derives from the fundamental\npatent tradeoff between the benefits of creating incentives for research and development and\nthe costs that arise from patents themselves. If an invention is truly new, the public gains\nsomething in exchange for the cost of granting a patent: the benefit of an invention it might\notherwise not have enjoyed. If the invention already exists, however, the public can benefit\nfrom it without bearing the costs that a patent would create for consumers and subsequent\ninnovators. The goal of patent law is to provide incentives for people to create new and useful\ninventions, not to claim patent rights on inventions that already exist. The novelty\nrequirement is meant to police these incentives.\nThis policy justification for patent law\xe2\x80\x99s novelty requirement is longstanding and\ngenerally compelling. Nonetheless, as we will see, the doctrine of novelty extends well beyond\nthese boundaries. In some cases, even inventions that enrich the store of knowledge\xe2\x80\x94and\nthat were invented by the person who is filing for the patent\xe2\x80\x94may be barred from patenting.\nIn these cases, the law rests upon different principles, which we explore below.\nA claimed invention is unpatentable for lack of novelty only if a single piece of prior\nart\xe2\x80\x94an earlier reference, such as a publication or item for sale\xe2\x80\x94discloses every element of\nthe claim, which is also referred to as anticipating the claim. For example, as illustrated in\nthe chart below, the simplified Swiffer patent claim described in Chapter 1, which combines\na handle, a mop head, a liquid delivery system for cleaning solution, and a disposable cleaning\npad, is not anticipated by a sponge mop that has long been in use, by an article describing a\nmop with a disposable pad, or by an earlier patent on a broom with an integrated cleaning\nsolution. Only a single prior art reference teaching all four claim elements arranged together\nas they are in the claim would destroy the claim\xe2\x80\x99s novelty. See Net MoneyIN, Inc. v. VeriSign,\nInc., 545 F.3d 1359, 1371 (Fed. Cir. 2008). As we discuss later, however, the separate article\nand earlier patent references might render the claim invalid as obvious. Claim charts like\nthis are a useful tool for organizing a novelty analysis, as we discuss in more detail below.\n\n\x0c44\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nNovelty Claim Chart\nThe Swiffer claim is not anticipated because no single prior art reference discloses every claim element.\nPrior art references\nClaim elements of\nsimplified Swiffer\npatent\n\nTraditional\nsponge mop in\npublic use\n\nArticle describing\nmop with\ndisposable pad\n\nhandle\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\nmop head\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\n\xe2\x9c\x93\n\xe2\x9c\x93\n\nliquid delivery\nsystem\ndisposable cleaning\npad\n\nEarlier patent on\nbroom with\ncleaning solution\n\n\xe2\x9c\x93\n\nNovelty doctrine often operates as rules, not as standards, and occasionally harsh\nrules at that. U.S. patent law takes an expansive approach to novelty: even obscure\nreferences can prevent a later inventor from receiving a patent. This rule can have\nsubstantial consequences. If an invention was described decades ago in an obscure\npublication but never implemented in practice, the public has received little benefit\xe2\x80\x94and the\nresulting unpatentability might deter others from further developing that invention.\nUnpatentable drugs are regularly dropped from pharmaceutical development pipelines, for\nexample, even if they have tremendous potential social value. See Benjamin N. Roin,\nUnpatentable Drugs and the Standards of Patentability, 87 Tex. L. Rev. 503 (2009).\nThe rule that an invention must be new is simple to state but is the most challenging\ndoctrine to master for many students. When assessing the novelty of a given patent claim in\npractice\xe2\x80\x94or on an exam\xe2\x80\x94you typically will have a list of references that might invalidate\nthe claim, like publications, other patents, or actions taken by the inventor of the claim at\nissue or by an independent inventor. As a preliminary step, you will need to determine which\nstatute applies. The law governing novelty, 35 U.S.C. \xc2\xa7 102, was significantly changed by the\n2011 America Invents Act (AIA). If the effective filing date of the claim at issue is before\nMarch 16, 2013, it is governed by the \xe2\x80\x9cpre-AIA\xe2\x80\x9d rules; later claims are governed by the current\n\xe2\x80\x9cpost-AIA\xe2\x80\x9d statute. We then recommend the following plan of attack:\n\n\x0cNOVELTY\n\n45\n\nA. For each reference that might invalidate the claim, does the timing of the reference\nallow it to serve as prior art under the relevant statute? For example, both the preAIA and post-AIA statutes give inventors a one-year grace period between disclosing\nor using their invention and filing a patent.\nB. If yes, does the reference fall under some statutory category of prior art: (1) paper prior\nart (for a \xe2\x80\x9cprinted publication\xe2\x80\x9d or \xe2\x80\x9cpatent\xe2\x80\x9d), (2) real-world prior art (for a reference\nthat is \xe2\x80\x9cin public use\xe2\x80\x9d or \xe2\x80\x9con sale\xe2\x80\x9d), or (3) earlier invention (which is relevant only preAIA)?\nC. If yes, does the information disclosed in the prior art reference anticipate the patent\nclaim, meaning that it explicitly or inherently discloses every element of the\ninvention? (If not, don\xe2\x80\x99t ignore the reference\xe2\x80\x94it may still be relevant for assessing\nobviousness!)\nSometimes, the answer to each of these questions is straightforward. If you try to\nclaim a particular chemical compound, but that exact compound was disclosed in a published\nscientific journal article ten years ago, then under either pre- or post-AIA law the article is a\nprinted publication that anticipates the claim. This is true whether the article was published\nby someone else or by you. But each question can also present more challenging issues. How\ndoes a claim\xe2\x80\x99s effective filing date differ from its actual filing date? What if the reference is a\nconference poster that is no longer available, or a secret offer for sale that was declined and\nnever made public? What if the chemical compound was frequently made by a prior art\nprocess, but no one realized it? What if someone else invented the compound first but did not\ndisclose or use it for many years? The following sections explore these subtleties.\nWe will tackle the three \xe2\x80\x9cplan of attack\xe2\x80\x9d questions in order. Section A presents the\ntwo versions of \xc2\xa7 102 and examines whether the timing of a reference allows it to serve as\nprior art under the relevant statute. Sections B1, B2, and B3 then discuss three categories of\nprior art: paper prior art (printed publications and earlier patents), real-world prior art\n(references that are in public use or on sale), and prior inventions (which are relevant preAIA). Finally, Section C explains how to determine whether a given reference anticipates a\nclaim.\n\nA. The America Invents Act and Prior Art Timing\nWhen the AIA was enacted in September 2011, it became the most significant\nstatutory revision to the Patent Act since 1952. A key change was shifting the United States\nfrom a \xe2\x80\x9cfirst-to-invent\xe2\x80\x9d system to a \xe2\x80\x9cfirst-to-file\xe2\x80\x9d system for patent applications with an\neffective filing date on or after March 16, 2013. Under the pre-AIA law, whether a particular\ninvention was novel was determined primarily by whether there was some piece of prior art\nthat predated the patent applicant\xe2\x80\x99s invention. This accorded with widespread intuition\nabout what it meant for an invention to be \xe2\x80\x9cnew\xe2\x80\x9d\xe2\x80\x94that it is the first time that invention has\ncome into existence\xe2\x80\x94but created administrative difficulties. To resolve a dispute between\n\n\x0c46\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ncompeting independent inventors under the pre-AIA first-to-invent system, the USPTO had\nto conduct an evidence-intensive inquiry into invention dates.1\nUnder the post-AIA first-to-file system, the USPTO now joins most other patent offices\naround the world in simply looking to which inventor got to the patent office first (or, as we\nwill see, publicly disclosed and then got to the patent office within one year). Under this\nsystem, invention dates are largely irrelevant. (As we will see, invention dates are not entirely\nirrelevant; for example, the date an invention is \xe2\x80\x9cready for patenting\xe2\x80\x9d is relevant to when it\nmay be placed \xe2\x80\x9con sale.\xe2\x80\x9d) What matters for judging novelty is which party made the invention\npublic first, either by filing for a patent or through some other means.\nIt is important for students of patent law to learn both systems because many litigated\npatents will be governed by pre-AIA rules for the next decade. The last pre-AIA patents will\nnot expire until around 2033 (twenty years after filing in 2013), and over one-third of patent\nassertions are not resolved until within three years of expiration. Additionally, courts\ninterpreting the post-AIA statutory language have looked to pre-AIA caselaw.\nNote that the key to determining whether pre- or post-AIA law applies is the effective\nfiling date of the patent. As described in Chapter 1, patent applications often \xe2\x80\x9cclaim priority\xe2\x80\x9d\nto earlier \xe2\x80\x9cparent\xe2\x80\x9d applications, which include (1) provisional U.S. applications, (2) earlier\nU.S. applications, (3) applications filed under the Patent Cooperation Treaty, and\n(4) applications directly filed in a foreign country and then filed in the United States within\none year. If a patent application properly claims priority to an application filed before March\n16, 2013, then it is governed by pre-AIA rules.2\nBelow is the first page of a patent filed by the Broad Institute and MIT on CRISPR\ngene-editing technology, which has been the subject of a high-profile dispute with UC\nBerkeley. (Jennifer Doudna and Emmanuelle Charpentier won the 2020 Nobel Prize in\nChemistry for developing CRISPR at Berkeley, which filed its own patent applications, but\nFeng Zhang\xe2\x80\x99s group at Broad was the first to use the gene-editing technique in human cells.)\nBefore you look at the answer in the footnote, try to figure out: What is the effective filing\ndate of this application? Which \xc2\xa7 102 applies: pre-AIA or post-AIA?3\n\n1 If two inventors file competing patent applications, this proceeding is known as an\ninterference. If one inventor wants to show that her invention predates a prior art reference, she must\nfile an affidavit swearing behind the reference with facts demonstrating earlier invention.\n\nIf an applicant files a first application before March 16, 2013, and a second continuation-inpart application on or after March 16, 2013 that includes \xe2\x80\x9cnew matter,\xe2\x80\x9d then claims that require the\nnew matter for support do not receive the earlier effective filing date, and the entire second\napplication\xe2\x80\x94including claims with a pre-AIA effective filing date\xe2\x80\x94is governed by post-AIA rules.\n2\n\nThe application was actually filed on Oct. 15, 2013, but the effective filing date is generally\nthe earliest date in the \xe2\x80\x9cRelated U.S. Application Data\xe2\x80\x9d section\xe2\x80\x94in this case, December 12, 2012. The\napplication was thus governed by the pre-AIA first-to-invent rules. Note also that this patent issued\nextraordinarily fast\xe2\x80\x94five months after it was actually filed\xe2\x80\x94because the applicant filed an\nAccelerated Examination Request. See MPEP \xc2\xa7 708.02(a).\n3\n\n\x0cNOVELTY\n\n47\n\n\x0c48\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n1. Pre- and Post-AIA \xc2\xa7 102 Statutory Text\nBoth versions of \xc2\xa7 102 are complicated, and we recommend reading them multiple\ntimes and bookmarking this section for easy reference. What differences do you see between\nthe statutes, and what statutory terms seem particularly important?\n\nPost-AIA \xc2\xa7 102 (for patents filed on or after March 16, 2013)\n(a) Novelty; Prior Art.\xe2\x80\x94A person shall be entitled to a patent unless\xe2\x80\x94\n(1) [Prior Art] the claimed invention was patented, described in a printed\npublication, or in public use, on sale, or otherwise available to the public before\nthe effective filing date of the claimed invention; or\n(2) [Prior Patent Filing] the claimed invention was described in a patent\nissued under section 151, or in an application for patent published or deemed\npublished under section 122(b), in which the patent or application, as the case\nmay be, names another inventor and was effectively filed before the effective\nfiling date of the claimed invention.\n(b) Exceptions.\xe2\x80\x94\n(1) [Exceptions to (a)(1)] Disclosures made 1 year or less before the effective\nfiling date of the claimed invention.\xe2\x80\x94A disclosure made 1 year or less before\nthe effective filing date of a claimed invention shall not be prior art to the\nclaimed invention under subsection (a)(1) if\xe2\x80\x94\n(A) [Inventor Disclosures] the disclosure was made by the inventor\nor joint inventor or by another who obtained the subject matter\ndisclosed directly or indirectly from the inventor or a joint inventor; or\n(B) [Third Party Disclosures that Follow Inventor Disclosures]\nthe subject matter disclosed had, before such disclosure, been publicly\ndisclosed by the inventor or a joint inventor or another who obtained\nthe subject matter disclosed directly or indirectly from the inventor or\na joint inventor.\n(2) [Exceptions to (a)(2)] Disclosures appearing in applications and\npatents.\xe2\x80\x94A disclosure shall not be prior art to a claimed invention under\nsubsection (a)(2) if\xe2\x80\x94\n(A) [Disclosures Obtained from Inventor] the subject matter\ndisclosed was obtained directly or indirectly from the inventor or a joint\ninventor;\n\n\x0cNOVELTY\n\n49\n\n(B) [Third Party Disclosures that Follow Inventor Disclosures]\nthe subject matter disclosed had, before such subject matter was\neffectively filed under subsection (a)(2), been publicly disclosed by the\ninventor or a joint inventor or another who obtained the subject matter\ndisclosed directly or indirectly from the inventor or a joint inventor; or\n(C) [Commonly Owned Disclosures] the subject matter disclosed\nand the claimed invention, not later than the effective filing date of the\nclaimed invention, were owned by the same person or subject to an\nobligation of assignment to the same person.\n(c) Common Ownership Under Joint Research Agreements.\xe2\x80\x94Subject matter disclosed\nand a claimed invention shall be deemed to have been owned by the same person or\nsubject to an obligation of assignment to the same person in applying the provisions\nof subsection (b)(2)(C) if\xe2\x80\x94\n(1) the subject matter disclosed was developed and the claimed invention was\nmade by, or on behalf of, 1 or more parties to a joint research agreement that\nwas in effect on or before the effective filing date of the claimed invention;\n(2) the claimed invention was made as a result of activities undertaken within\nthe scope of the joint research agreement; and\n(3) the application for patent for the claimed invention discloses or is amended\nto disclose the names of the parties to the joint research agreement.\n(d) Patents and Published Applications Effective as Prior Art.\xe2\x80\x94For purposes of\ndetermining whether a patent or application for patent is prior art to a claimed\ninvention under subsection (a)(2), such patent or application shall be considered to\nhave been effectively filed, with respect to any subject matter described in the patent\nor application\xe2\x80\x94\n(1) if paragraph (2) does not apply, as of the actual filing date of the patent or\nthe application for patent; or\n(2) if the patent or application for patent is entitled to claim a right of priority\nunder section 119, 365(a), 365(b), 386(a), or 386(b), or to claim the benefit of an\nearlier filing date under section 120, 121, 365(c), or 386(c), based upon 1 or\nmore prior filed applications for patent, as of the filing date of the earliest such\napplication that describes the subject matter.\n\n\x0c50\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPre-AIA \xc2\xa7 102 (for patents filed before March 16, 2013)\nA person shall be entitled to a patent unless \xe2\x80\x94\n(a) [Novelty] the invention was known or used by others in this country, or\npatented or described in a printed publication in this or a foreign country, before the\ninvention thereof by the applicant for patent, or\n(b) [Statutory Bars] the invention was patented or described in a printed\npublication in this or a foreign country or in public use or on sale in this country, more\nthan one year prior to the date of the application for patent in the United States, or\n(c) [Abandonment] he has abandoned the invention, or\n(d) [Late Filing in the U.S.] the invention was first patented or caused to be\npatented, or was the subject of an inventor\xe2\x80\x99s certificate, by the applicant or his legal\nrepresentatives or assigns in a foreign country prior to the date of the application for\npatent in this country on an application for patent or inventor\xe2\x80\x99s certificate filed more\nthan twelve months before the filing of the application in the United States, or\n(e) [Earlier U.S. Patent Applications] the invention was described in \xe2\x80\x94 (1)\nan application for patent, published under section 122(b), by another filed in the\nUnited States before the invention by the applicant for patent or (2) a patent granted\non an application for patent by another filed in the United States before the invention\nby the applicant for patent, except that an international application filed under the\ntreaty defined in section 351(a) [the Patent Cooperation Treaty] shall have the effects\nfor the purposes of this subsection of an application filed in the United States only if\nthe international application designated the United States and was published under\nArticle 21(2) of such treaty in the English language; or\n(f) [Derivation] he did not himself invent the subject matter sought to be\npatented, or\n(g) [First-to-Invent] (1) during the course of an interference conducted under\nsection 135 [for USPTO proceedings] or section 291 [for federal district court\nproceedings], another inventor involved therein establishes, to the extent permitted\nin section 104, that before such person\xe2\x80\x99s invention thereof the invention was made by\nsuch other inventor and not abandoned, suppressed, or concealed, or (2) before such\nperson\xe2\x80\x99s invention thereof, the invention was made in this country by another inventor\nwho had not abandoned, suppressed, or concealed it. In determining priority of\ninvention under this subsection, there shall be considered not only the respective\ndates of conception and reduction to practice of the invention, but also the reasonable\ndiligence of one who was first to conceive and last to reduce to practice, from a time\nprior to conception by the other.\n\n\x0cNOVELTY\n\n51\n\n2. The Structure of Pre- and Post-AIA \xc2\xa7 102\nBelow is a graphical illustration of each statute mapped onto an invention timeline;\ncan you match the statutory sections above onto these pictures?\n\n\x0c52\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nSection 102(a) under both the pre-AIA law and the post-AIA law is best understood as\nthe baseline requirement of novelty: if the invention existed publicly before the person\nseeking a patent published it (post-AIA \xc2\xa7 102(a)) or invented it (pre-AIA \xc2\xa7 102(a)), then it\ncannot be patented. Accordingly, prior art that is relevant to pre-AIA \xc2\xa7 102(a) is typically\nprior art that has been created by someone other than the party seeking the patent. Pre-AIA\nlaw couples this with \xc2\xa7 102(g), which asks whether the party seeking a patent actually\ninvented first, or whether some other party beat it to the patent. Similarly, post-AIA \xc2\xa7 102(a)\nprohibits a party from patenting an invention that was already available to the public before\nthe patent was filed. Under either statute, the question in such cases is whether the patent\napplicant is enriching the state of knowledge available to the public or merely duplicating\nknowledge that already exists. These are often referred to as \xe2\x80\x9cthird-party cases\xe2\x80\x9d (under both\npre-AIA and post-AIA law): the party who created the prior art and the party seeking the\npatent are different.\nIt is important to note, however, that a prior art reference does not have to come from\nsomeone other than the patent applicant. The patent applicant herself can create prior art\nthat will block her own patent under both versions of the statute. If it is the patent applicant\nherself who has created the prior art, \xc2\xa7 102(b) (both pre- and post-AIA) provides a safe harbor\nand permits the applicant to obtain a patent. But this safe harbor lasts for only one year,\nknown as the \xe2\x80\x9cgrace period.\xe2\x80\x9d If a patent applicant publishes information about an invention,\nthis starts a one-year clock to file for a patent. If the applicant waits 367 days before filing,\nshe is barred from obtaining a patent under either statute, even though she is the one who\ncreated the printed publication. This limit on patenting your own invention after one year is\nsometimes referred to as a \xe2\x80\x9cstatutory bar.\xe2\x80\x9d\nThis means that many of the novelty cases that arise under both pre-AIA and postAIA law involve prior art that was created by the inventor herself and may now bar her\npatent. These \xe2\x80\x9cfirst-party cases\xe2\x80\x9d are instances where the party seeking the patent has indeed\ncreated something new and enriched the state of knowledge, and yet nonetheless she is\nbarred from patenting her creation. Accordingly, they require policy justifications separate\nfrom the standard policy rationale that undergirds the requirement of novelty. We will\ndiscuss these policy justifications below in the course of discussing the various forms of prior\nart, because there are different justifications for various types of prior art.\nFor now, what is important to remember is that under both post-AIA and pre-AIA\nlaw, \xc2\xa7 102 prior art can be generated by someone other than the inventor who is seeking a\npatent, and it can be generated by the inventor herself. The doctrine and timing rules that\napply to each type of prior art are different, as are the policies that underlie that doctrine.\n\n\x0cNOVELTY\n\n53\n\nPractice Problems: Pre- and Post-AIA \xc2\xa7 102 Timing\nAlthough some students find the bright-line rules of \xc2\xa7 102 timing refreshing after\nencountering the ambiguous standards of many legal doctrines, many others find these\nstatutes to be the most challenging aspect of a Patent Law course. To check your own\nunderstanding, we highly recommend tackling the following practice problems.\nAlyssa, an entrepreneur in Palo Alto, invents a novel diaper in April 2012 and files a\nU.S. patent application in September 2013. Consider each of the following additional sets of\nfacts. In each scenario, is Alyssa entitled to receive a patent based on the facts presented? In\nyour explanation, please note the relevant statutory section (e.g., \xe2\x80\x9cpost-AIA \xc2\xa7 102(a)(2)\xe2\x80\x9d).\n1. In May 2013, Alyssa publishes an article describing the diaper in Parenting magazine.\n2. In June 2013, Luis independently invents the same diaper in Mexico and immediately\nputs the diapers into public use in his publicly accessible childcare facility in Mexico\nCity.\n3. In June 2013, Luis independently invents the same diaper, and in July 2013, he\npublishes a Spanish-language article describing it in Mi Beb\xc3\xa9.\n4. In May 2013, Alyssa publishes an article describing the diaper in Parenting magazine.\nIn June 2013, Luis independently invents the same diaper. And then in July 2012,\nLuis publishes a Spanish-language article describing it in Mi Beb\xc3\xa9.\n5. In June 2013, Luis independently invents the same diaper, and in July 2013, he files\na U.S. patent application claiming the diaper. His patent application is published 18\nmonths after filing.\n6. In May 2013, Alyssa publishes an article describing the diaper in Parenting magazine.\nIn June 2013, Luis independently invents the same diaper. In July 2013, Luis files a\nU.S. patent application claiming the diaper.\n7. In August 2012, Alyssa places her diaper on sale by offering to sell it to Strawberry\nBaby, a boutique in Menlo Park. The boutique declines.\n8. Please re-answer questions 1\xe2\x80\x937 after shifting all dates in the scenarios above back by\none year. Alyssa now invents in April 2011 and files her patent application in\nSeptember 2012, her publication in question 1 is in May 2012, etc.\n\n\x0c54\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nDiscussion Questions: Distinctions Between Pre- and Post-AIA Law\nPost- and Pre-AIA law differ in a variety of important ways, many of which we have\nalready discussed or will explore further below. Here, we pause to highlight two large-scale\nimpacts wrought by the change in law.\n1. International Prior Art. Pre-AIA law is in many respects quite American-centric.\nAlthough printed publications count as prior art anywhere in the world, sections 102(a),\n102(b), and 102(g)(2) all classify other types of activities as prior art only if they occurred in\nthe United States. This means that inventors who, for instance, placed their inventions into\npublic use in a foreign country before the critical date could nonetheless find themselves\nsqueezed out of the American market if someone obtained an American patent that their\nprior use did not bar. The existence of this rule might have been due in part to a nationalistic\ndesire to benefit American inventors at the expense of foreign inventors; it might also have\nbeen due to concerns regarding reliable evidence from overseas. (These provisions of the law\nare quite old.)\nRegardless, the AIA eliminated these geographic limitations, as some of the practice\nproblems above indicate. This is an appropriate recognition of the fact that innovation can\neasily cross borders, as well as the fact that the internet and related technologies have made\nit easier to prove that various activities took place abroad. There may well be other\nconsequences from the change in law as well. For instance, some scholars have argued that\nthe AIA will lead to greater legal protection for long-standing cultural knowledge. See Ryan\nLevy & Spencer Green, Pharmaceuticals and Biopiracy: How the America Invents Act May\nReduce the Misappropriation of Traditional Medicine, 23 U. Miami Bus. L. Rev. 401 (2015).\nDo you think these are unequivocally positive changes, or will there be downsides for the\nAmerican innovation system?\n2. First-to-File and Small Inventors. One concern that accompanied the passage of the\nAIA was that it would disadvantage inventors with fewer resources\xe2\x80\x94small and mediumsized business, as well as solo inventors\xe2\x80\x94to the advantage of larger corporations. Larger\ncorporations of course have many advantages in the race to invent, including economies of\nscale and substantial resources that can be deployed toward a particular line of R&D. But\nthe AIA threatened to add another layer of advantage: no longer would it be enough for a\nsmaller inventor to beat a large corporation to the invention; now the small inventor would\nhave to beat the larger player to the Patent Office. Larger corporations typically have greater\naccess to patent counsel\xe2\x80\x94either in-house or external\xe2\x80\x94to file patent applications, not to\nmention the resources to devote to those operations. There was thus concern that the AIA\nwould exacerbate the trend toward large corporations dominating patent filings. See, e.g.,\nDavid S. Abrams & R. Polk Wagner, Poisoning the Next Apple? How the America Invents Act\nHarms Inventors, 65 Stan. L. Rev. 517 (2013).\nThe AIA offers a partial solution to this issue by creating what is effectively a \xe2\x80\x9cfirstto-publish\xe2\x80\x9d regime, rather than strictly a first-to-file regime. If an inventor is the first to\npublish her invention, she will (1) bar anyone else from obtaining a patent on the invention\n\n\x0cNOVELTY\n\n55\n\nunder \xc2\xa7 102(a), (2) disqualify any subsequently published prior art (such as prior art from a\ncompeting inventor) from serving as prior art against her, via \xc2\xa7 102(b)(2)(B), and (3) create a\nyear-long grace period for herself during which time she may file for a patent, under\n\xc2\xa7 102(b)(1)(A). We will explore all of these provisions and rules in greater detail below, but\nthe bottom line is that a smaller inventor who fears losing a race to the patent office has a\nbetter alternative: simply publish the details of the invention, such as on a website. It is too\nearly to say with certainty whether these provisions of the AIA have helped level the playing\nfield between large and small innovators. But it is fair to say that the first-to-publish rule\nrepresents at least a creative potential solution to the inequities created by a race to the\npatent office. Can you think of other possible solutions that Congress might have enacted to\nlevel the playing field between small and large inventors? Does this seem like the best\napproach, or is there another option that would have been preferable? Why do you think\nCongress chose this one?\n\nB1. Paper Prior Art: Printed Publications & Patents\nBoth versions of \xc2\xa7 102 describe various statutory categories of prior art. We\xe2\x80\x99ll begin\nwith written disclosures in printed publications and patents\xe2\x80\x94which we will collectively refer\nto as \xe2\x80\x9cpaper prior art\xe2\x80\x9d\xe2\x80\x94before turning to real-world disclosures through use or sale of the\ninvention.\n\n1. Printed Publications\nA \xe2\x80\x9cprinted publication\xe2\x80\x9d can be prior art under pre-AIA \xc2\xa7 102(a) or (b), or under postAIA \xc2\xa7 102(a)(1), and (so far as we know) the term has the same meaning under either statute.\nThe Federal Circuit has interpreted the \xe2\x80\x9cprinted publication\xe2\x80\x9d category broadly, encompassing\na reference that is obscure or only temporarily available as long as \xe2\x80\x9cpersons interested and\nordinarily skilled in the subject matter or art, exercising reasonable diligence, can locate it.\xe2\x80\x9d\nSamsung Elecs. v. Infobridge Pte., 929 F.3d 1363, 1369 (Fed. Cir. 2019). A reference can be a\nprinted publication even if no member of the public actually accessed it. Electronic\npublications, including digital videos, can be printed publications.\nWhether a reference is sufficiently accessible to constitute a printed publication is a\nlegal conclusion based on a case-by-case balancing of underlying factual determinations.\nCourts have interpreted this standard to include many references that might not seem very\naccessible. If even a single copy of a reference is in a public library indexed by subject matter,\nit is a printed publication. See In re Hall, 781 F.2d 897 (Fed. Cir. 1986). Other factors favoring\naccessibility include distribution without confidentiality restrictions, a large number of\npeople of ordinary skill in the art having access, availability for longer periods of time (e.g.,\ndays rather than minutes), relative ease of copying, and the absence of restrictions on copying\nthe material (or the lack of reasonable expectations that the material would not be copied).\nSee In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004). Where the underlying facts are not in\n\n\x0c56\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ndispute, the Federal Circuit has often resolved the question of whether something is a printed\npublication as a matter of law.\nThe date a publication is available as a reference is determined by when a member of\nthe relevant public could have accessed it. Journal articles are thus dated by when they\nbecome available to the public, not when they are submitted to the publisher or mailed. The\ndate of accessibility can be established through routine business practices. For online\nmaterials, the Wayback Machine at archive.org can be used to establish the date of\naccessibility. Timestamped material from social media websites can also be used as prior art.\nAgain, remember that invalidating prior art can be disclosed by either a third party\nor the inventor herself, although both pre- and post-AIA rules generally provide the inventor\na one-year grace period between disclosing the invention and filing a U.S. patent.\nThe following references have been held to be sufficiently accessible to constitute\nprinted publications:\n\xe2\x97\x8f\n\nA single cataloged doctoral thesis in a German university library that has a routine\nbusiness practice of cataloging, even without specific evidence of the date the thesis\nwas cataloged. In re Hall, 781 F.2d 897 (Fed. Cir. 1986).\n\n\xe2\x97\x8f\n\nA poster displayed at two scientific conferences for a total of about three days, with no\nrestriction on copying, even though the poster was not indexed in any database or\ndistributed to the public. In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004).\n\n\xe2\x97\x8f\n\nA paper distributed orally to between 50 and 500 people in the relevant art, after\nwhich copies were distributed on request, without restrictions, to as many as six\npeople. Massachusetts Inst. of Tech. v. AB Fortia, 774 F.2d 1104 (Fed. Cir. 1985).\n\n\xe2\x97\x8f\n\nAn Australian patent application kept on microfilm at the Australian Patent Office.\nIn re Wyer, 655 F.2d 221 (C.C.P.A. 1981).\n\n\xe2\x97\x8f\n\nAn electronic post to a newsgroup populated by people in the relevant art, even though\nthe post was non-indexed and non-searchable. Suffolk Techs., LLC v. AOL Inc., 752\nF.3d 1358 (Fed. Cir. 2014).\n\n\xe2\x97\x8f\n\nA sales catalog for which hundreds of copies were distributed at a trade show without\nrestriction, even though the trade show was open exclusively to dealers and not the\ngeneral public, and there was no evidence as to whether or not a person of ordinary\nskill in the art attended the show. GoPro, Inc. v. Contour IP Holding LLC, 908 F.3d\n690 (Fed. Cir. 2018).\n\nIn contrast, these references were found to not be printed publications:\n\xe2\x97\x8f\n\nStudent theses that were not cataloged or indexed in a meaningful way. In re Cronyn,\n890 F.2d 1158 (Fed. Cir. 1989); In re Bayer, 568 F.2d 1357 (C.C.P.A. 1978).\n\n\x0cNOVELTY\n\n57\n\n\xe2\x97\x8f\n\nAn article uploaded in 1999 to a university library website organized by author and\nyear but without a working keyword search option. Acceleration Bay v. Activision\nBlizzard, 908 F.3d 765 (Fed. Cir. 2018).\n\n\xe2\x97\x8f\n\nA presentation of lecture slides that was of limited duration. Univ. of California v.\nHowmedica, Inc., 530 F. Supp. 846 (D.N.J. 1981) (discussed by Klopfenstein, supra).\n\n\xe2\x97\x8f\n\nAn abstract that was brought to a technical conference to distribute upon request to\nthe authors, where there was no evidence that it had been requested or disseminated.\nNorian Corp. v. Stryker Corp., 363 F.3d 1321 (Fed. Cir. 2004).\n\n\xe2\x97\x8f\n\nFour technical reports distributed to fifty persons or organizations involved in a\nmilitary computing project that were of the class of documents typically distributed\nwith a \xe2\x80\x9cnot for public release\xe2\x80\x9d notice. Telecom, Inc. v. Datapoint Corp., 908 F.2d 931\n(Fed. Cir. 1990).\n\n\xe2\x97\x8f\n\nMonographs distributed by an inventor to (1) university and hospital colleagues,\nwhere there was evidence in the record that academic norms gave rise to an\nexpectation that the disclosures would remain confidential, and (2) two commercial\nentities, where there was an oral agreement on confidentiality. Cordis Corp. v. Bos.\nSci. Corp., 561 F.3d 1319 (Fed. Cir. 2009).\n\nDiscussion Questions: Printed Publications\n1. First-Party Printed Publications. It is easy to see why a printed publication created\nby someone other than the patent applicant should bar the applicant from obtaining a patent.\nIf the invention already existed, and the applicant did not enrich the store of knowledge, then\nthere is nothing to be gained from awarding a patent. The question is, why should a printed\npublication created by the applicant bar the applicant from obtaining a patent? (Note that\nmany of the cases mentioned above involve applicant-created prior art.) Suppose Alice\ninvents something new and publishes a paper about her invention. Thirteen months later,\nAlice files for a patent on her invention. Under pre-AIA \xc2\xa7 102(b) or post-AIA \xc2\xa7 102(a), she\ncannot obtain a patent. (Her safe-harbor period under post-AIA \xc2\xa7 102(b)(1)(A) has expired.)\nWhat do you think is the policy rationale behind this rule? From the perspective of the public,\nor of society as a whole, what is gained from barring patents in these situations? What, if\nanything, is lost?\n2. Obscure Printed Publications. What are the advantages and disadvantages of\ninterpreting \xe2\x80\x9cprinted publication\xe2\x80\x9d so broadly that a patent can be invalidated based on an\nobscure or ephemeral piece of third-party prior art that most inventors are unlikely to be\naware of? If the invention has already been described, even in an obscure reference, is that\nevidence that the patent incentive is less important for spurring that invention? Would a\nrequirement that the publication be more easily accessible by the public be difficult to\nimplement in practice? Would this policy change have an affect on inequalities among\n\n\x0c58\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ninnovators? How does the rise of search tools like Google Scholar affect the inquiry into public\naccessibility of online references?\n3. Patenting Academic Research. After the 2004 Klopfenstein decision held a\ntemporary conference poster to be a prior art printed publication, commentators worried that\nthe decision \xe2\x80\x9ccould have a further chilling effect on conference presentations by university\nresearchers seeking to disseminate early results.\xe2\x80\x9d Margo A. Bagley, Academic Discourse and\nProprietary Rights: Putting Patents in Their Proper Place, 47 B.C. L. Rev. 217, 244 (2006).\nThe availability of state university research files under open records laws may also limit the\npatentability of some university research. See Jason Rantanen & Madison Murhammer\nColon, Can Public Universities Patent Their Research?: The Tension Between Open Records\nLaws and Patentability, 69 Drake L. Rev. (2021). Is this a policy concern, and if so, should it\nbe addressed through patent law or through open records rules? Should academic research\nbe treated differently from industry research?\n\nPractice Problems: Printed Publications\nDo you think the references described below are sufficiently publicly accessible to\ncount as prior art printed publications? (Assume they qualify under the relevant timing\nprovisions.) If you are unsure, what additional facts would you want to know to determine\nwhether or not they qualify?\n1. A medical device manufacturer has been sued for infringement of a patent claiming a\nmethod for correcting spinal column deviations such as scoliosis. In arguing that the\npatent is invalid, the manufacturer points to a CD containing a video demonstration\nand related slide presentation that it distributed to spinal surgeons at three industry\nmeetings before the patent\xe2\x80\x99s effective filing date. The meetings were attended by\nnearly 100 surgeons. See Medtronic v. Barry, 891 F.3d 1368 (Fed. Cir. 2018).\n2. The inventors of a cybersecurity patent on \xe2\x80\x9cevent monitoring enabling responses to\nanomalous live disturbances\xe2\x80\x9d (EMERALD) submitted a paper on the invention for\npublication in conference proceedings more than one year before filing a patent. When\nsubmitting the paper, one of the inventors also placed a copy on his firm\xe2\x80\x99s file transfer\nprotocol (FTP) server at ftp://ftp.csl.sri.com/pub/emerald/ndss98.ps for a week, making\nit publicly accessible to anyone who visited that address without restrictions on\ncopying. In seven other instances, the inventor directed third parties to the papers in\nthe same \xe2\x80\x9cemerald\xe2\x80\x9d FTP subdirectory to find other papers related to the EMERALD\nproject. See SRI Int\xe2\x80\x99l v. Internet Sec. Sys., 511 F.3d 1186 (Fed. Cir. 2008).\n3. A scientist attends a conference of experts in her field, where she presents her\ninvention at a plenary session attended by 250 other leading scientists. During the\npresentation she talks for 60 minutes and takes questions for another 30 minutes but\ndoes not show slides or make copies of her paper available. See In re Klopfenstein, 380\nF.3d 1345, 1349 n.4 (Fed. Cir. 2004).\n\n\x0cNOVELTY\n\n59\n\n2. Patents as Prior Art\nPatents are an important category of paper prior art for subsequent inventions.\nDespite efforts to improve search tools for \xe2\x80\x9cnon-patent literature,\xe2\x80\x9d U.S. patent examiners\noverwhelmingly focus on patent prior art when evaluating applications. Patent prior art is\nalso treated differently under both pre- and post-AIA \xc2\xa7 102. Patents can be prior art under\nthree categories:\nFirst, patents (including most foreign patents) are \xe2\x80\x9cpatented\xe2\x80\x9d prior art under the same\nsections as printed publications\xe2\x80\x94pre-AIA \xc2\xa7 102(a) or (b), and post-AIA \xc2\xa7 102(a)(1)\xe2\x80\x94as of\nwhen they are issued. But the nuances of the \xe2\x80\x9cpatented\xe2\x80\x9d category are generally irrelevant\nbecause almost all patents become prior art under other provisions, and usually sooner.\nSecond, patents and patent applications\xe2\x80\x94whether U.S. or foreign\xe2\x80\x94are prior art\n\xe2\x80\x9cprinted publications\xe2\x80\x9d when published. At most patent offices, patent applications are\ngenerally published when granted or 18 months after the earliest priority date, whichever is\nsooner.4 When considering a patent as a \xe2\x80\x9cprinted publication,\xe2\x80\x9d there is no need to distinguish\nbetween the specification and the claims\xe2\x80\x94the entire patent document is prior art.\nThird, under pre-AIA \xc2\xa7 102(e) and post-AIA \xc2\xa7 102(a)(2), any U.S. patent or patent\napplication that is eventually published is prior art as of its effective filing date. This means\nthat if Alice files a U.S. patent application that is published 18 months later, Alice\xe2\x80\x99s\napplication is prior art against an application Becca files a month after Alice, even though\nBecca has no way of knowing about Alice\xe2\x80\x99s prior art for the first 17 months that her\napplication is pending. This rule applies only to patents and patent applications filed in the\nUnited States, including international applications filed under the Patent Cooperation Treaty\nthat designate the United States.5 A patent application that is filed only in China is prior art\nas of when it is published, not when it is filed.\nNote that Alice\xe2\x80\x99s application does need to be published (including through issuance)\nto trigger this pre-publication prior art rule. If Alice\xe2\x80\x99s application is abandoned before\npublication, it never becomes prior art. But if a patent application is abandoned after\npublication, it is still prior art as of its filing date. One study found that abandoned\napplications are actually more likely than issued patents to be used by patent examiners as\nprior art. Christopher A. Cotropia & David L. Schwartz, The Hidden Value of Abandoned\nApplications to the Patent System, 61 B.C. L. Rev. (2020).\nAdditionally, note that an inventor\xe2\x80\x99s own patent applications are prior art against her\nonly as of the date they are published. Pre-AIA \xc2\xa7 102(e) applies only to patents filed \xe2\x80\x9cby\n35 U.S.C. \xc2\xa7 122(b)(2) contains exceptions to this rule for U.S. patents, including that an\napplicant who has not filed corresponding foreign patents at offices that require 18-month publication\nmay request that an application not be published until it is granted.\n4\n\nIf a U.S. application claims priority to an earlier-filed foreign patent application not filed\nunder the Patent Cooperation Treaty, the relevant prior art date is the U.S. filing date pre-AIA and\nthe foreign filing date post-AIA. For more on international patent institutions, see Chapter 20.\n5\n\n\x0c60\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nanother,\xe2\x80\x9d which means patents not filed by the same combination of inventors and assignee\n(known as an \xe2\x80\x9cinventive entity\xe2\x80\x9d). Similarly, post-AIA \xc2\xa7 102(a)(2) applies only to a patent that\n\xe2\x80\x9cnames another inventor,\xe2\x80\x9d and post-AIA \xc2\xa7 102(b)(2)(C) creates an even broader exception for\npatents \xe2\x80\x9cowned by the same person or subject to an obligation of assignment to the same\nperson.\xe2\x80\x9d Thus, \xc2\xa7 102 does not prevent an inventor from filing a second patent application that\nis identical or very similar to an application she filed a year earlier. Instead, the double\npatenting doctrine, discussed in Chapter 7, prevents an inventor from obtaining multiple\npatents on the same invention.\n\nPractice Problems: Patents as Prior Art\n1. Mila invents a novel roller skate in January 2012 and files a U.S. patent application\nin July 2013. Hayk independently invents the same roller skate in April 2013 and files\na U.S. patent application in May 2013. Both patent applications are published in due\ncourse, 18 months after filing. Who gets a patent?\n2. Same facts as question 1, but Hayk decides to abandon his patent application in May\n2014 because he does not think there is a large market for the roller skate.\n3. Same facts as question 2, but Hayk now abandons his patent application in May 2015.\n\n3. \xe2\x80\x9cKnown . . . By Others\xe2\x80\x9d and \xe2\x80\x9cOtherwise Available to the Public\xe2\x80\x9d\nFor the most part, knowledge that becomes publicly available\xe2\x80\x94and thus will\ninvalidate a patent\xe2\x80\x94will fall into one of the categories described here or in the next section.\nEither the prior art will be written down, in which case it will be a printed publication or a\npatent; or the prior art will relate to a real-world embodiment of the invention, in which case\nit will be in public use or on sale. However, it is possible to imagine cases in which knowledge\nof an invention becomes public without one of the denominated categories of prior art being\nimplicated. For instance, imagine the following hypothetical scenario:\nOn January 1, Alice creates an invention, which she stores in her laboratory.\nOn January 2, she gives a public lecture about the invention to a group of 1000\nleading scientists in her field in which she describes the invention in detail.\nHer lecture is purely audial; there are no slides displayed and no papers\ndistributed. Many of the scientists who attend the lecture take careful notes,\nbut their notes are never published. On January 3, Brian independently\ncreates the same invention, and on January 4 he files for a patent.\nWill Brian be able to obtain a patent in this scenario? Alice did not herself create a printed\npublication. The notes of the conference attendees, while printed, were never made public, so\nthey cannot qualify. Alice also did not put the invention into public use or offer to sell it, so\nthose types of prior art are not implicated. (More on that below.) Yet information about the\n\n\x0cNOVELTY\n\n61\n\ninvention is widely known by people in the field before Brian invents or patents it, and thus\nit would be hard to say that Brian meaningfully enriched the store of public knowledge.\nGranting him a patent in these circumstances would seem to run counter to the principles\nthat undergird the law of novelty.\nIf these events took place before March 2013, it seems likely that Brian\xe2\x80\x99s patent would\nbe barred by pre-AIA \xc2\xa7 102(a) because the invention was \xe2\x80\x9cknown . . . by others\xe2\x80\x9d before Brian\xe2\x80\x99s\ninvention. Some litigants have gone so far as to argue that under pre-AIA \xc2\xa7 102(a),\ninformation \xe2\x80\x9cknown . . . by others\xe2\x80\x9d before the date of invention could anticipate a patent even\nif that information is not disclosed or used, but courts have rejected these arguments. \xe2\x80\x9c[T]o\ninvalidate a patent based on prior knowledge or use, that knowledge or use must have been\navailable to the public.\xe2\x80\x9d Woodland Tr. v. Flowertree Nursery, Inc., 148 F.3d 1368 (Fed. Cir.\n1998). Here, however, the fact that the information was known to 1000 people in the field\nseems sufficiently public to qualify. Nonetheless, we are unaware of a single case in which a\npatent was invalidated by virtue of being \xe2\x80\x9cknown . . . by others\xe2\x80\x9d without reference to any\nother category of prior art. Situations in which knowledge of an invention reaches the public\nwithout implicating any of the other categories of prior art appear to be very rare.\nThe \xe2\x80\x9cknown . . . by others\xe2\x80\x9d language was removed by the AIA. Post-AIA law contains\nits own catch-all category: \xe2\x80\x9cotherwise available to the public.\xe2\x80\x9d The Federal Circuit has yet to\ndecide a case that squarely implicates this provision, but an oral presentation,\nunaccompanied by any printed matter, might well be an example of something that is\n\xe2\x80\x9cotherwise available to the public.\xe2\x80\x9d Accordingly, it seems unlikely that Brian would be able\nto obtain a patent if these events took place after March 2013, with post-AIA law in effect.\nThe upshot is that these provisions in pre- and post-AIA law likely exist to capture\nsituations, such as the hypothetical scenario above, in which information has been made\npublic but without implicating one of the other enumerated categories of prior art. It is\ndifficult to know for sure, however, precisely because such situations so rarely arise.\n\n4. The Enablement Standard for Paper Prior Art\nAs we will explore in more detail later, a patent is only valid if it satisfies the\nenablement requirement of 35 U.S.C. \xc2\xa7 112, meaning that it must teach a researcher in that\nfield how to make and use the invention without \xe2\x80\x9cundue experimentation.\xe2\x80\x9d Similarly, printed\npublications and patents are only prior art for what they enable. After all, if a printed\npublication or patent does not teach a researcher in the field how to make an invention, it\ncan hardly be said to have added that invention to the store of public knowledge. A\nsubsequent inventor who actually figures out how to build this invention and teaches the\npublic should not be barred from obtaining a patent by a publication that does not do the\nsame.\nFor example, the fictional 1995 film Clueless, in which the lead character Cher uses a\ncomputer program to determine whether certain clothing combinations match, would not\n\n\x0c62\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nanticipate a real-world outfit-choosing algorithm. The program is fictitious and contains no\ndetails to help a programmer implement it in real life. The film is prior art, however, for what\nit does contain: the idea of using a computer to select matching outfits, which may be relevant\nfor determining whether an outfit-choosing invention is obvious. See Symbol Techs., Inc. v.\nOpticon, Inc., 935 F.2d 1569 (Fed. Cir. 1991) (\xe2\x80\x9cWhile a reference must enable someone to\npractice the invention in order to anticipate under \xc2\xa7 102[], a non-enabling reference may\nqualify as prior art for the purpose of determining obviousness under \xc2\xa7 103.\xe2\x80\x9d).\nPrior art is presumed to be enabling. The patentee thus has the burden of showing\nthat an otherwise anticipatory prior art reference is not enabling, both during examination\nand in subsequent challenges to validity. See In re Antor Media Corp., 689 F.3d 1282, 1289\n(Fed. Cir. 2012); Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1354 (Fed. Cir.\n2003). For an argument that this burden of proving non-enablement has a negative effect on\ninnovation due to the large number of references that disclose an invention (such as a\nchemical structure) without actually enabling it, see Sean B. Seymore, Rethinking Novelty in\nPatent Law, 60 Duke L.J. 919 (2011).\nThe enablement standard for paper prior art is similar to the enablement requirement\nof \xc2\xa7 112, but there is an important difference. As we will discuss later, \xc2\xa7 112\xe2\x80\x94in conjunction\nwith the utility requirement of \xc2\xa7 101\xe2\x80\x94requires a patentee to disclose a known use for an\ninvention. The predecessor court to the Federal Circuit explained this distinction in In re\nHafner, 410 F.2d 1403 (C.C.P.A. 1969), in which a patent applicant\xe2\x80\x99s own earlier patent\napplication\xe2\x80\x94which had been rejected under \xc2\xa7 112 for failing to disclose any use for a new\nchemical compound\xe2\x80\x94was used as prior art under \xc2\xa7 102 against his later patent application\nthat included a use:\nIn essence, appellant is contending that a double standard should not\nbe applied in determining the adequacy of a disclosure to anticipate under\n\xc2\xa7 102, on the one hand, and to support the patentability of a claim under \xc2\xa7 112\non the other. He feels that a disclosure adequate for the one purpose is\nnecessarily adequate for the other but, unhappily for him, this is not so. As we\nshall develop, a disclosure lacking a teaching of how to use a fully disclosed\ncompound for a specific, substantial utility or of how to use for such purpose a\ncompound produced by a fully disclosed process is, under the present state of\nthe law, entirely adequate to anticipate a claim to either the product or the\nprocess and, at the same time, entirely inadequate to support the allowance of\nsuch a claim. This is so because of the requirements of law engrafted on\nsections 101 and 112 by the decision of the Supreme Court in Brenner v.\nManson, 383 U.S. 519 (1966), with respect to the meaning to be given to the\nwords \xe2\x80\x9cuseful\xe2\x80\x9d and \xe2\x80\x9cuse\xe2\x80\x9d in those sections. In construing them, we must of\ncourse, give them the meaning demanded by the Supreme Court.\nStanding alone, appellant\xe2\x80\x99s argument against a double standard is a\nplausible proposition. However, when considered in light of the specific\nprovisions of \xc2\xa7 102, and \xc2\xa7 112 as it has been interpreted, it is seen to be\n\n\x0cNOVELTY\n\n63\n\nuntenable\xe2\x80\x94\xc2\xa7 112 provides that the specification must enable one skilled in the\nart to \xe2\x80\x9cuse\xe2\x80\x9d the invention whereas \xc2\xa7 102 makes no such requirement as to an\nanticipatory disclosure. The disclosure of how to use must relate to a use of the\nkind considered by the Supreme Court in Brenner v. Manson to be a sufficient\nutility. Thus, the double standard which appellant criticizes is now, implicitly\nif not explicitly, required by law, at least in situations such as we have here,\nalthough the \xe2\x80\x9cinvention\xe2\x80\x9d per se claimed is fully disclosed and though the\nmanner of \xe2\x80\x9cmaking,\xe2\x80\x9d as distinguished from \xe2\x80\x9cusing,\xe2\x80\x9d the invention is also fully\ndisclosed or is obvious.\nNote that to satisfy the enablement standard for prior art, a reference need not be a\ntechnical scientific publication. For example, in Iovate Health Sciences v. Bio-Engineered\nSupplements & Nutrition, 586 F.3d 1376 (Fed. Cir. 2009), the Federal Circuit affirmed the\ndistrict court\xe2\x80\x99s grant of summary judgment of invalidity based on a prior art advertisement\nthat listed the ingredients for a dietary supplement:\nHere the parties do not dispute that the Professional Protein ad was\npublished in Flex and that the magazine was accessible to those interested in\nthe art of nutritional supplements prior to [the critical date of] November 13,\n1996. To be anticipatory, the ad must also describe, either expressly or\ninherently, each and every claim limitation and enable one of skill in the art\nto practice an embodiment of the claimed invention without undue\nexperimentation.\nWe agree with [defendant] that all one of ordinary skill in the art would\nneed to do to practice an embodiment of the invention is to mix together the\nknown ingredients listed in the ad and administer the composition as taught\nby the ad. We have already rejected [plaintiff\xe2\x80\x99s] argument that the claims\nrequire administering an effective amount of the claimed composition. But\neven if the claims did require an effective amount, one of skill in the art would\nhave been able to determine such an amount based on the ad and the\nknowledge in the art at the time. Again, the ad teaches the amount of protein\nan active athlete needs per day per kilogram of body weight and that\nProfessional Protein should be taken once before and once after exercise. In\naddition, the \xe2\x80\xb2287 patent specification lists numerous pre\xe2\x80\x931996 publications\nthat teach acceptable clinical dosages of the two claimed components. It also\nlists pre\xe2\x80\x931996 publications that teach the effects of the components\xe2\x80\x99\nadministration on humans . . . . Thus, contrary to [plaintiff\xe2\x80\x99s] assertions, the\ndistrict court correctly concluded, as do we, that a person of skill in the art,\ncombining his or her knowledge of the art with the advertisement\xe2\x80\x99s\nsuggestions, would have considered the advertisement to be enabled.\nAs emphasized in Iovate, an anticipatory prior art publication must only enable the claimed\nlimitations, not the most effective embodiment of an invention, and enablement may depend\n\n\x0c64\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\non knowledge the person of ordinary skill in the art obtains from other sources. Whether a\npaper prior art reference is enabled is a question of law based on underlying facts.\n\nDiscussion Questions: Enablement Standard for Paper Prior Art\n1. Why should there be any enablement requirement for paper prior art? Why is it not\nenough that the prior art disclose every element of the invention?\n2. Can you justify the distinction drawn by the Hafner court between enablement for\n\xc2\xa7 102 and \xc2\xa7 112, either as a matter of statutory interpretation or as a matter of policy?\n\nB2. Real-World Prior Art: In Public Use & On Sale\nThe previous section involved what might be thought of as \xe2\x80\x9cpaper\xe2\x80\x9d categories of prior\nart: patents and printed publications. In this section we consider categories that cover realworld embodiments of the invention: \xe2\x80\x9cin public use\xe2\x80\x9d and \xe2\x80\x9con sale.\xe2\x80\x9d We will refer to these as\n\xe2\x80\x9creal-world\xe2\x80\x9d prior art.6 Many of the rules governing these types of prior art, including the\ntiming rules we described above, function similarly. But as you will see, a number of doctrinal\nrules function very differently.\n\n1. Public Use\nAn invention is no longer patentable if it was \xe2\x80\x9cin public use\xe2\x80\x9d more than one year before\nthe patent was filed, under post-AIA \xc2\xa7 102(a) and pre-AIA \xc2\xa7 102(b), or if it was \xe2\x80\x9cused by\nothers\xe2\x80\x9d before the invention date under pre-AIA \xc2\xa7 102(a). (Despite the slight difference in\nlanguage, these phrases are understood to mean the same thing.) As with printed\npublications, it is easy to see why public use initiated by one party should bar another party\nfrom obtaining a patent. That is, if Firm A develops an invention and places that invention\ninto public use, Firm B should not be permitted to patent the invention because it has not\nenriched the store of public knowledge.\nBut, again in parallel with the printed publication rule, there are many instances\xe2\x80\x94\nincluding several of the cases below\xe2\x80\x94in which it is the inventor herself who has placed the\ninvention into public use, thus barring herself from obtaining a patent if she does not file\nquickly enough. This is possible under pre-AIA \xc2\xa7 102(b) and post-AIA \xc2\xa7 102(a)(1) and (b)(1),\nwhich provide the inventor with a one-year grace period by which time she must file or lose\n\nAs we will see, the \xe2\x80\x9con sale\xe2\x80\x9d category also includes sales that were never consummated, and\nwhere the invention was never actually built, and thus in which the invention technically never\nentered the real world.\n6\n\n\x0cNOVELTY\n\n65\n\nany right to the patent. These situations, where the inventor does enrich the store of\nknowledge but is denied a patent nonetheless, call for additional justification.\nOne important principle behind applying the public use bar in these \xe2\x80\x9cfirst-party\xe2\x80\x9d\nsituations\xe2\x80\x94where the party seeking the patent is the same party who created the public\nuse\xe2\x80\x94is that inventions available to the public should not be removed from the public domain\nvia patenting. Doing so would upset the reliance interests that members of the public might\nhave formed regarding access to the invention. See Continental Plastic Containers v. Owens\nBrockway Plastic Products, Inc., 141 F.3d 1073, 1079 (Fed. Cir. 1998). Another rationale is\nto speed up patenting: the public use bar gives parties incentives to file their patents more\nquickly lest they find themselves barred if they\xe2\x80\x94or someone else\xe2\x80\x94puts the invention into\npublic use.\nAccordingly, the canonical \xe2\x80\x9cpublic use\xe2\x80\x9d case would involve widespread use of an\ninvention among members of the public for years before the inventor files for a patent on it.\nThis would squarely implicate the policies behind imposing the bar, whether it is the inventor\nherself or a third party who made the invention available to the public. Of course, courts have\nhad to adjudicate a number of cases involving much more borderline instances of public\naccess.7 In particular, there can be a great deal of uncertainty surrounding how \xe2\x80\x9cpublic\xe2\x80\x9d or\nwidespread a use must be before it qualifies as \xe2\x80\x9cpublic use.\xe2\x80\x9d The following two cases consider\nthat question.\n\nNetscape Communications v. Konrad, 295 F.3d 1315 (Fed. Cir. 2002)\nHaldane R. Mayer, Chief Judge.\nBackground\nAllan Konrad is the owner of the \xe2\x80\x99320, \xe2\x80\x99901, and \xe2\x80\x99444 patents, all directed to systems\nthat allow a computer user to access and search a database residing on a remote computer.\nHe began working as a staff scientist for the Lawrence Berkeley Laboratory in 1977, where\nhe studied how an individual computer workstation user could obtain services from a remote\ncomputer. On September 26, 1990, while working with Cynthia Hertzer, a Lawrence\nBerkeley Laboratory staff assistant, Konrad successfully tested the remote database object\nsystem. The first prototype of this system was configured to access Lawrence Berkeley\nLaboratory\xe2\x80\x99s STAFF database from a remote workstation. The Lawrence Berkeley\nLaboratory STAFF database resided on an IBM mainframe computer on the Berkeley\ncampus of the University of California. In 1991, Konrad and Hertzer adapted the Lawrence\nBerkeley Laboratory STAFF remote database object system prototype for the high energy\nphysics database, maintained at the Stanford Linear Accelerator Center, which is a national\nOne study of district court litigation from 2011 to 2017 estimated that prior art based on uses\nand sales were 52% of prior art in \xc2\xa7 102 invalidations, of which only 14% were even potentially secret\nuses or sales (such as when proof of sale relied on a contract or use was performed by a limited group).\nStephen Yelderman, Prior Art in the District Court, 95 Notre Dame L. Rev. 837 (2019).\n7\n\n\x0c66\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nlaboratory operated by Stanford University. The high energy physics database was a\ncompilation of abstracts and technical papers used as a research tool for physicists worldwide.\nThe \xe2\x80\x99320 patent, Konrad\xe2\x80\x99s first issued patent, is a continuation of an application filed\non January 8, 1993. The \xe2\x80\x99901 patent is a continuation of the \xe2\x80\x99444 patent application, which is\na continuation of the \xe2\x80\x99320 patent application. Thus, the earliest filing date that Konrad is\nentitled to is January 8, 1993, making the critical date for the public use and on-sale inquiry\nJanuary 8, 1992.\nOn February 8, 2000, Konrad filed a patent infringement suit in the District Court for\nthe Eastern District of Texas, alleging that thirty-nine commercial entities, all customers of\nNetscape, had infringed the \xe2\x80\x99320, \xe2\x80\x99901, and \xe2\x80\x99444 patents. Citing threatened customer\nrelationships, Netscape filed a declaratory judgment action against Konrad in the District\nCourt for the Northern District of California, seeking a judgment of invalidity,\nnoninfringement, and unenforceability. Netscape moved for partial summary judgment that\nprototypes of the invention were in public use or on-sale under 35 U.S.C. \xc2\xa7 102(b) based on\nKonrad\xe2\x80\x99s activities prior to January 8, 1992. The California district court entered partial\nsummary judgment for Netscape concluding that: (1) Konrad\xe2\x80\x99s demonstration of the claimed\ninvention to Shuli Roth and Dick Peters, University of California computing personnel,\nwithout any obligation of confidentiality was a public use; [and] (2) his demonstration of the\nhigh energy physics remote database object to the Stanford Linear Accelerator Center in\nconjunction with the use of the remote database object by University Research Association\nSuperconducting Super Collider Laboratory employees was a public use . . . .\nDiscussion\nPublic use includes \xe2\x80\x9cany use of [the claimed] invention by a person other than the\ninventor who is under no limitation, restriction or obligation of secrecy to the inventor.\xe2\x80\x9d\nPetrolite Corp. v. Baker Hughes Inc., 96 F.3d 1423, 1425 (Fed. Cir. 1996). \xe2\x80\x9cThe public use bar\nserves the policies of the patent system, for it encourages prompt filing of patent applications\nafter inventions have been completed and publicly used, and sets an outer limit to the term\nof exclusivity.\xe2\x80\x9d Allied Colloids v. Am. Cyanamid Co., 64 F.3d 1570, 1574 (Fed. Cir. 1995).\nThe law recognizes that an inventor may test his invention in public without incurring\nthe public use bar. \xe2\x80\x9cThe use of an invention by the inventor himself, or of any other person\nunder his direction, by way of experiment, and in order to bring the invention to perfection,\nhas never been regarded as such a use.\xe2\x80\x9d City of Elizabeth v. Am. Nicholson Pavement Co., 97\nU.S. 126, 134 (1877).\nWe look to the totality of the circumstances when evaluating whether there has been\na public use within the meaning of section 102(b). The circumstances may include: the nature\nof the activity that occurred in public; the public access to and knowledge of the public use;\nwhether there was any confidentiality obligation imposed on persons who observed the use;\nwhether persons other than the inventor performed the testing; the number of tests; the\nlength of the test period in relation to tests of similar devices; and whether the inventor\nreceived payment for the testing. There may be additional factors in a particular case\n\n\x0cNOVELTY\n\n67\n\nrelevant to the public nature of the use or any asserted experimental aspect. On summary\njudgment, once Netscape presented facts sufficient to establish a prima facie case of public\nuse, it fell to Konrad to come forward with some evidence raising a genuine issue of material\nfact to the contrary.\nA.\nKonrad argues that the district court erred in determining that his 1991\ndemonstration of the Lawrence Berkeley Laboratory STAFF remote database object to\nUniversity of California computing personnel was an invalidating public use. He maintains\nthat the invention disclosure he submitted to the Lawrence Berkeley Laboratory patent\ndepartment in October of 1990, established an expectation of confidentiality from Roth and\nPeters.\n[We do not agree with Konrad.] Konrad did not show that Roth or Peters were ever\nmade aware of any requirement of confidentiality or even apprised of the invention disclosure\nforms that he submitted to the Lawrence Berkeley Laboratory patent department. He also\ndid not make any discernable effort to inform the 1991 demonstration attendees of the\nrequirement of confidentiality, or otherwise indicate to them that they would owe him a duty\nof confidentiality. Lack of a confidentiality agreement is significant here because Roth and\nPeters were computer personnel who could easily demonstrate the invention to others.\nKonrad also argues that the 1991 demonstration was an experimental use for the\npurpose of obtaining technical support to incorporate upgrades and make the invention run\nmore smoothly. To establish that an otherwise public use does not run afoul of section 102(b),\nit must be shown that the activity was \xe2\x80\x9csubstantially for purposes of experiment.\xe2\x80\x9d Konrad\npresented no objective evidence to support experimental use. Indeed, his testimony leads to\nthe opposite conclusion. He said that the purpose of the demonstration \xe2\x80\x9cwas to convince the\npeople in the Berkeley computer center VM systems group that there was a viable project.\xe2\x80\x9d\nHe added that he hoped showing them the remote database object would make them\nsupportive of it. Konrad\xe2\x80\x99s demonstration was geared more toward making the remote\ndatabase object more commercially attractive, with endorsements from outside technical\npeople, than for experimental use purposes. The experimental use negation is unavailable to\na patentee when the evidence presented does not establish that he was conducting a bona\nfide experiment. Furthermore, Konrad presented no objective evidence that he maintained\nany records of testing the remote database object. This failure weighs against him.\nKonrad also argues that at all relevant times he took affirmative steps to maintain\ncontrol of his invention and questions the substantiality of the evidence to the contrary. He\nasserts that Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261 (Fed. Cir. 1986), applies\nhere. That case said that the display of a device to friends and colleagues of the inventor was\nsubject to an implied restriction of confidentiality, and thus did not constitute a public use.\nHowever, that inventor always retained control over the use of the device as well as over the\ndistribution of information concerning it. Here, Konrad testified that during 1991 he did not\nmonitor tests of the remote database object, but that he would simply turn on the system and\nlet people try it out. He further testified that he was aware that a workstation was made\n\n\x0c68\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\navailable to use the remote database object system, but was unaware of where it was located.\nThere was no indication that he ever monitored this workstation\xe2\x80\x99s use or imposed a\nconfidentiality agreement on those persons exercising the database.\nB.\nKonrad argues that the district court erred in determining that the demonstration of\nthe high energy physics remote database object system to Stanford Linear Accelerator Center\nand use by University Research Association Superconducting Super Collider Laboratory\nemployees were invalidating public uses under section 102(b). He contends that the\nDepartment of Energy owned all of the intellectual property rights to the invention, and that\nall Department of Energy laboratory employees were under an obligation of confidentiality\nto the government during all demonstrations and testing.\nKonrad tries to cloak his failure to protect the confidentiality of his invention and\nmaintain control of others\xe2\x80\x99 use by arguing that because the Department of Energy was\nproviding the funding for his project, it ultimately owned the invention; therefore, anyone\nworking on the remote database object server was subject to Department of Energy\nconfidentiality. This argument is without merit. Konrad is the inventor of the patents; the\nlimitation, restriction, or obligation of secrecy of others using the invention is owed to him,\nnot the persons or entities providing the funding. See Egbert v. Lippmann, 104 U.S. 333, 336\n(1881). The onus is on him, as the inventor, to protect the confidentiality of his invention and\nits use by others before the critical date. The contract between Lawrence Berkeley Laboratory\nand the Department of Energy provides for the protection of government property, the\nUniversity of California\xe2\x80\x99s duty to safeguard restricted data and provide written disclosures,\nand the government\xe2\x80\x99s right to duplicate and disclose the subject invention. Moreover, Konrad\nhas not shown that this contract applied to the University Research Association\nSuperconducting Super Collider Laboratory or Stanford Linear Accelerator Center\nemployees.\n\nMotionless Keyboard v. Microsoft, 486 F.3d 1376 (Fed. Cir. 2007)\nRandall R. Rader, Circuit Judge.\n[Independent inventor Thomas L. Gambaro developed a new ergonomic keyboard for\nhandheld devices while working part-time as a graphic artist and dishwasher. On February\n22, 1987, he developed a prototype known as the Cherry Model 5. He entered a partnership\nwith Keith Coulter to further develop and patent the keyboard. In 1987, Mr. Gambaro\ndemonstrated the keyboard to potential investors who signed two-year non-disclosure\nagreements (NDAs), and to his friend Kathie Roberts who did not sign a NDA. He also\ndisclosed the keyboard to Sheila Lanier on June 25, 1990 to conduct typing tests. On June 6,\n1991, he filed an application that became Patent No. 5,178,477, and on January 11, 1993, he\nfiled an application that became Patent No. 5,332,322. He then assigned both patents to\nMotionless Keyboard Co. (MKC), which sued Microsoft and other parties for patent\n\n\x0cNOVELTY\n\n69\n\ninfringement. MKC appeals the district court grant of summary judgment that both patents\nare invalid for public use under 35 U.S.C. \xc2\xa7 102(b).]\nThe classical standard for assessing the public nature of a use was established in\nEgbert v. Lippman, 104 U.S. 333 (1881). In Egbert, the inventor of a corset spring gave two\nsamples of the invention to a lady friend, who used them for more than two years before the\ninventor applied for a patent. Although the inventor in Egbert did not obtain any commercial\nadvantage, the Court determined that the invention had been used for its intended purpose\nfor over a decade without limitation or confidentiality requirements. Thus, even though not\nin public view, the invention was in public use. In Electric Storage Battery Co. v. Shimadzu,\n307 U.S. 5 (1939), the Court found \xe2\x80\x9cthe ordinary use of a machine or the practice of a process\nin a factory in the usual course of producing articles for commercial purposes is a public use.\xe2\x80\x9d\nOn the other hand, in TP Laboratories, Inc. v. Professional Positioners, Inc., 724 F.2d 965\n(Fed. Cir. 1984), this court found that premature installation of an inventive orthodontic\nappliance in several patients without a written confidentiality agreement was not a public\nuse due to the expectation of confidentiality inherent in the dentist-patient relationship. This\ncase again presents the question of the meaning of public use under 35 U.S.C. \xc2\xa7 102(b).\nIn this case, Mr. Gambaro disclosed his Cherry Model 5 to his business partner, a\nfriend, potential investors, and a typing tester (Ms. Lanier). In all these disclosures, except\nin the case of Ms. Lanier, however, the Cherry Model 5 was not connected to a computer or\nany other device. In the case of Ms. Lanier, the Cherry Model 5 was used to conduct typing\ntests on July 25, 1990, and thereby connected to a computer for its intended purpose. With\nrespect to the \xe2\x80\x99477 patent, the typing test occurred after the critical date of June 6, 1990.\nWith respect to the \xe2\x80\x99322 patent, [the test was before the January 11, 1992 critical date but\nunder a NDA]. In this case, the one time typing test coupled with a signed NDA and no record\nof continued use of the Cherry Model 5 by Ms. Lanier after July 25, 1990 did not elevate to\nthe level of public use. Thus, the Cherry Model 5 was never in public use. All disclosures,\nexcept for the one-time typing test, only provided a visual view of the new keyboard design\nwithout any disclosure of the Cherry Model 5\xe2\x80\x99s ability to translate finger movements into\nactuation of keys to transmit data. In essence, these disclosures visually displayed the\nkeyboard design without putting it into use. In short, the Cherry Model 5 was not in public\nuse as the term is used in section 102(b) because the device, although visually disclosed and\nonly tested one time with a NDA signed by the typing tester, was never connected to be used\nin the normal course of business to enter data into a system.\nUnlike the situations in Egbert and Electric Storage Battery, where the inventions\nwere used for their intended purpose, neither the inventor nor anyone else ever used the\nCherry Model 5 to transmit data in the normal course of business. The entry of data did not\never occur outside of testing and the tester signed an NDA. The Cherry Model 5 was not used\nin public, for its intended purpose, nor was the Cherry Model 5 ever given to anyone for such\npublic use. Thus, the disclosures in this record do not rise to the level of public use.\n\n\x0c70\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nDiscussion Questions: Public Use\n1. The Expansive Understanding of \xe2\x80\x9cPublic.\xe2\x80\x9d The court\xe2\x80\x99s holding in Netscape v. Konrad\nis based on the disclosure of the invention without any obligation of confidentiality or secrecy.\nBut it would be hard to describe it as \xe2\x80\x9cpublic\xe2\x80\x9d in the conventional sense. The disclosures\noccurred in private offices, behind closed doors, not out in the open. And the invention was\nshared with only a handful of people, not broadcast widely to the masses.\nIn an early influential case, the Fifth Circuit held that any type of work \xe2\x80\x9cdone openly\nand in the ordinary course of the activities of the employer\xe2\x80\x9d was \xe2\x80\x9cpublic\xe2\x80\x9d under the statute.\nRosaire v. Nat\xe2\x80\x99l Lead Co., 218 F.2d 72, 75 (5th Cir. 1955). The activity in Rosaire\xe2\x80\x94an\nunderground oil-drilling method on private property\xe2\x80\x94was not \xe2\x80\x9cpublic\xe2\x80\x9d in any usual sense of\nthe word, but because it was done \xe2\x80\x9cwithout any deliberate attempt at concealment or effort\nto exclude the public\xe2\x80\x9d it was held to be a public use that anticipated a third party\xe2\x80\x99s patent.\nLater, the Federal Circuit (in a case we will read below) similarly held that \xe2\x80\x9c[t]he nonsecret\nuse of a claimed process in the usual course of producing articles for commercial purposes is\na public use.\xe2\x80\x9d W.L. Gore & Associates, Inc. v. Garlock, Inc., 721 F.2d 1540, 1549 (Fed. Cir.\n1983). This can be thought of as a two-part test: if an invention is being used under conditions\nthat are (1) nonsecret, and (2) in the usual course of business, then it is in public use.\nTogether, these cases indicate that it is not necessary for \xe2\x80\x9cthe public\xe2\x80\x9d to make\nwidespread use of an invention for it to be in public use. Rather, even \xe2\x80\x9cconstructive\xe2\x80\x9d public\nuse\xe2\x80\x94use that the public could have access to, or that it could discover\xe2\x80\x94appears to be\nsufficient. This should indicate the breadth of the courts\xe2\x80\x99 understanding of what is \xe2\x80\x9cpublic\xe2\x80\x9d\nfor purposes of the public use bar. Note the similarity to courts\xe2\x80\x99 broad interpretation of\n\xe2\x80\x9cprinted publication,\xe2\x80\x9d as discussed above.\nNonetheless, the requirement that the use be nonsecret will eliminate a wide swath\nof potential public uses. The vast majority of inventive activity in private firms takes place\nbehind closed and locked doors, both literally and metaphorically, and those firms closely\nguard their secrets. If a curious member of the public knocked on Apple Computer\xe2\x80\x99s\nheadquarters and asked what new inventions the firm was working on, that person would be\nlaughed (and escorted) off the premises. It is not coincidental that Konrad was a government\nresearcher talking with other government researchers\xe2\x80\x94under a set of academic norms that\nfavor disseminating research\xe2\x80\x94rather than an employee at a for-profit corporation.\nWhat effect does the expansive understanding of \xe2\x80\x9cpublic\xe2\x80\x9d have on unsophisticated or\nless resourced inventors? Remember that innovative entrepeneurs interact with the patent\nsystem as producers, consumers, or both. In some instances they may be concerned about\ninadvertently creating prior art against themselves; in others they may need to determine\nthe patentability of their inventions; and in still others they may need to assess their freedom\nto operate based on others\xe2\x80\x99 patents. Do you think those tasks will be easy or difficult for less\nsophisticated inventors to accomplish? Are there particular aspects of this doctrine that will\npose especially greater problems?\n\n\x0cNOVELTY\n\n71\n\n2. Usual Course of Business. It is easy to understand why it is necessary that a use be\nnonsecret for it to qualify as a public use. But why have the courts required that it take place\nin the usual course of a given individual or firm\xe2\x80\x99s business? What is that adding to the test?\n3. Experimental Use. In some cases, courts have held that uses that would otherwise\nconstitute public use are exempted if they are for experimental purposes. The seminal case\nis City of Elizabeth v. Am. Nicholson Pavement Co., 97 U.S. 126 (1877). In that case, an\ninventor installed a new type of wooden paving on a heavily trafficked street. Under normal\ncircumstances, this would have obviously put the invention into public use. During the time\nthat it was installed, hundreds or thousands of members of the public used that stretch of\nroad. Nonetheless, the Supreme Court carved out an exception to the general public use bar\nfor uses that take place for \xe2\x80\x9cexperimental\xe2\x80\x9d purposes. The Court held that the inventor\xe2\x80\x99s use\nhad been experimental, and thus he was not barred from obtaining a patent. Three factors\nwere critical to the Court\xe2\x80\x99s decision:\nFirst, while the invention was physically complete, the inventor did not yet know that\nit would work properly for its intended purpose. (In patent parlance, the invention had not\nyet been \xe2\x80\x9creduced to practice,\xe2\x80\x9d a concept we will discuss at length in the section below on\n\xc2\xa7 102(g).) Here, that purpose was durability: the point of the invention was to create a type\nof paving that could remain intact for a period of years under heavy use. Second, the best\nway to test the paving was through use by the public. There was no good substitute for\nactually installing the paving on a segment of road and allowing people to walk and drive\n(their horses) over it, exposing it to use and to the elements. Third, the inventor kept the\ninvention \xe2\x80\x9cunder his own control.\xe2\x80\x9d Here, that meant that he kept it under observation on a\nregular basis and did not distribute it more widely. It is at least plausible that members of\nthe public did not think that they would have unfettered access to the invention.\nAgain, once an invention has been built and proven to work for its intended purpose\xe2\x80\x94\nthat is, once it has been reduced to practice\xe2\x80\x94experimental use does not apply. See\nContinental Plastic Containers v. Owens Brockway Plastic Prods., 141 F.3d 1073, 1079 (Fed.\nCir. 1998). For instance, market testing to gauge consumer demand is not experimental use.\nIn re Smith, 714 F.2d 1127, 1135 (Fed. Cir. 1983). The experimental use exception is thus\nnarrow, but some cases still arise in which it applies. The Federal Circuit upheld jury findings\nthat the exception applied to otherwise valid \xc2\xa7 102(b) public use prior art in Barry v.\nMedtronic, 914 F.3d 1310 (Fed. Cir. 2019) (spinal correction device), and Polara Engineering\nInc. v. Campbell Co., 894 F.3d 1339 (Fed. Cir. 2018) (crosswalk control system), although it\nwas not applied for at least a decade before Polara. What do you think are the policy\nrationales behind the experimental use exception? How effectively do you think it is serving\nthese goals? Do you think the narrow role of the experimental use exception is salutary?\n\n\x0c72\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPractice Problems: Public Use\nDo you think the following uses constitute \xe2\x80\x9cpublic use\xe2\x80\x9d?\n1. An inventor develops a new small, wooden toy. He brings it to his office workplace and\nallows his boss to play with the toy and examine how it works. Both the inventor and\nhis boss tell their friends and acquaintances about the toy, but no one else has a\nchance to play with it. See Moleculon Research v. CBS, 793 F.2d 1261 (Fed. Cir. 1986).\n2. An inventor develops a new type of toy. She holds a party, to which she invites\napproximately 20\xe2\x80\x9330 friends, to solicit feedback about the toy. At the party, her\nfriends play with the toy and then offer suggestions regarding how it might be\nimproved or changed. The inventor did not impose any confidentiality obligation, and\none of the guests testified that she did not think the information was confidential.\nNone of the inventor\xe2\x80\x99s friends are allowed to take copies of the toy home. See\nBeachcombers v. WildeWood Creative Products, Inc., 31 F.3d 1154 (Fed. Cir. 1994).\nIf your answer to this question is different from your answer to the prior question,\nwhat do you think differentiates the situations?\n3. An inventor developed a new strain of table grape. Unbeknownst to the inventor, an\nemployee of the inventing company gave samples of the grape to another grape\ngrower. The grape grower was instructed \xe2\x80\x9cnot to let the material \xe2\x80\x98get away from [him]\xe2\x80\x99\nand not to \xe2\x80\x98put them in a box,\xe2\x80\x99 which [he] understood to mean that he should not sell\nthe resulting grapes until the varieties were commercially released.\xe2\x80\x9d The grape vines\n\xe2\x80\x9cbore no usable fruit, and the [grower] sold no grapes from those plantings prior to the\ncritical date. Although the various plantings were visible from publicly accessible\nroads, none of the vines were marked or labeled in any way, and the evidence showed\nthat the particular variety of the grapes could not be readily ascertained from simply\nviewing the vines.\xe2\x80\x9d See Delano Farms v. California Table Grape Comm\xe2\x80\x99n, 778 F.3d\n1243 (Fed. Cir. 2015).\n\n2. On Sale\nPost-AIA \xc2\xa7 102(a) and pre-AIA \xc2\xa7 102(b) similarly bar an inventor from patenting an\ninvention that was placed \xe2\x80\x9con sale\xe2\x80\x9d more than one year before filing.8 As with \xe2\x80\x9cprinted\npublication\xe2\x80\x9d and \xe2\x80\x9cpublic use\xe2\x80\x9d prior art, whether an invention has been placed \xe2\x80\x9con sale\xe2\x80\x9d is a\nquestion of law based on underlying facts.\n\nTechnically speaking, post-AIA 35 U.S.C. \xc2\xa7 102(a) bars a patent if the invention was placed\non sale before the date of filing. However, if it was the patent applicant who placed the invention on\nsale, post-AIA 35 U.S.C. \xc2\xa7 102(b)(1)(A) provides the applicant with a one-year grace period. This aligns\npre- and post-AIA law and means that under both versions of the law, inventors must file within a\nyear of placing an invention on sale or risk losing the ability to obtain a patent.\n8\n\n\x0cNOVELTY\n\n73\n\nThough it is often considered in conjunction with the \xe2\x80\x9cpublic use\xe2\x80\x9d bar, the principle\nunderlying the on sale bar is actually quite different. As explained in the following case, the\non sale bar is designed to prevent an inventor from using the patent system to enable\nexclusive commercial exploitation of an invention for longer than the twenty-year statutory\npatent term. Without the on sale bar, an inventor could conceivably hold an invention as a\ntrade secret for a period of years, and then patent the invention for an additional twenty\nyears\xe2\x80\x94effectively controlling exclusive rights over an invention for much longer than the\nstatutory twenty-year period. The on sale bar forces an inventor to choose between trade\nsecret protection and patent protection, rather than availing herself of both. Thus, whereas\nthe public use bar is focused on the public and the reliance interests formed around available\ninventions, the on sale bar is focused on the inventor and the possibility that she will attempt\nto exploit the invention for longer than allowed. This difference in underlying policy has\nramifications for the on sale bar doctrine, as the sections below will make clear.\nThe on sale bar is triggered whenever \xe2\x80\x9cthe invention\xe2\x80\x9d is \xe2\x80\x9con sale.\xe2\x80\x9d This raises the\nquestion of what it means for \xe2\x80\x9cthe invention\xe2\x80\x9d to be on sale\xe2\x80\x94for instance, must the invention\nphysically exist? It also raises the question of what it means for the invention to be \xe2\x80\x9con sale\xe2\x80\x9d\xe2\x80\x94\nmust the invention actually have been sold? How many units of the invention? What if the\ninvention is available for purchase but has not been sold? And so forth. In 1998, the Supreme\nCourt granted certiorari in the case below to answer these questions.\n\nPfaff v. Wells Electronics, 525 U.S. 55 (1998)\nJustice John Paul Stevens delivered the opinion of the Court.\nSection 102(b) of the Patent Act of 1952 provides that no person is entitled to patent\nan \xe2\x80\x9cinvention\xe2\x80\x9d that has been \xe2\x80\x9con sale\xe2\x80\x9d more than one year before filing a patent application.\nWe granted certiorari to determine whether the commercial marketing of a newly invented\nproduct may mark the beginning of the 1\xe2\x80\x93year period even though the invention has not yet\nbeen reduced to practice.\nI\nOn April 19, 1982, petitioner, Wayne Pfaff, filed an application for a patent on a\ncomputer chip socket. Therefore, April 19, 1981, constitutes the critical date for purposes of\nthe on-sale bar of 35 U.S.C. \xc2\xa7 102(b); if the 1\xe2\x80\x93year period began to run before that date, Pfaff\nlost his right to patent his invention.\nPfaff commenced work on the socket in November 1980, when representatives of\nTexas Instruments asked him to develop a new device for mounting and removing\nsemiconductor chip carriers. In response to this request, he prepared detailed engineering\ndrawings that described the design, the dimensions, and the materials to be used in making\nthe socket. Pfaff sent those drawings to a manufacturer in February or March 1981.\n\n\x0c74\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPrior to March 17, 1981, Pfaff showed a sketch of his concept to representatives of\nTexas Instruments. On April 8, 1981, they provided Pfaff with a written confirmation of a\npreviously placed oral purchase order for 30,100 of his new sockets for a total price of $91,155.\nIn accord with his normal practice, Pfaff did not make and test a prototype of the new device\nbefore offering to sell it in commercial quantities.9\nThe manufacturer took several months to develop the customized tooling necessary\nto produce the device, and Pfaff did not fill the order until July 1981. The evidence therefore\nindicates that Pfaff first reduced his invention to practice in the summer of 1981.\nThe Court of Appeals [found] all six claims invalid. Four of the claims (1, 6, 7, and 10)\ndescribed the socket that Pfaff had sold to Texas Instruments prior to April 8, 1981. Because\nthat device had been offered for sale on a commercial basis more than one year before the\npatent application was filed on April 19, 1982, the court concluded that those claims were\ninvalid under \xc2\xa7 102(b). That conclusion rested on the court\xe2\x80\x99s view that as long as the\ninvention was \xe2\x80\x9csubstantially complete at the time of sale,\xe2\x80\x9d the 1\xe2\x80\x93year period began to run,\neven though the invention had not yet been reduced to practice. The other two claims (11 and\n19) described a feature that had not been included in Pfaff\xe2\x80\x99s initial design, but the Court of\nAppeals concluded as a matter of law that the additional feature was not itself patentable\nbecause it was an obvious addition to the prior art. Given the court\xe2\x80\x99s \xc2\xa7 102(b) holding, the\nprior art included Pfaff\xe2\x80\x99s first four claims.\nII\nThe primary meaning of the word \xe2\x80\x9cinvention\xe2\x80\x9d in the Patent Act unquestionably refers\nto the inventor\xe2\x80\x99s conception rather than to a physical embodiment of that idea. The statute\ndoes not contain any express requirement that an invention must be reduced to practice\nbefore it can be patented. Neither the statutory definition of the term in \xc2\xa7 100 nor the basic\nconditions for obtaining a patent set forth in \xc2\xa7 101 make any mention of \xe2\x80\x9creduction to\npractice.\xe2\x80\x9d The statute\xe2\x80\x99s only specific reference to that term is found in \xc2\xa7 102(g), which sets\nforth the standard for resolving priority contests between two competing claimants to a\npatent. That subsection provides:\n\n9\n\nPfaff:\n\n[n.3 in opinion] At his deposition, respondent\xe2\x80\x99s counsel engaged in the following colloquy with\n\n\xe2\x80\x9cQ. Now, at this time [late 1980 or early 1981] did we [sic] have any prototypes developed or\nanything of that nature, working embodiment?\n\xe2\x80\x9cA. No.\n\xe2\x80\x9cQ. It was in a drawing. Is that correct?\n\xe2\x80\x9cA. Strictly in a drawing. Went from the drawing to the hard tooling. That\xe2\x80\x99s the way I do my\nbusiness.\n\xe2\x80\x9cQ. \xe2\x80\x98Boom-boom\xe2\x80\x99?\n\xe2\x80\x9cA. You got it.\n\xe2\x80\x9cQ. You are satisfied, obviously, when you come up with some drawings that it is going to go\xe2\x80\x94\n\xe2\x80\x98it works\xe2\x80\x99?\n\xe2\x80\x9cA. I know what I\xe2\x80\x99m doing, yes, most of the time.\xe2\x80\x9d\n\n\x0cNOVELTY\n\n75\n\nIn determining priority of invention there shall be considered not only the\nrespective dates of conception and reduction to practice of the invention, but\nalso the reasonable diligence of one who was first to conceive and last to reduce\nto practice, from a time prior to conception by the other.\nThus, assuming diligence on the part of the applicant, it is normally the first inventor\nto conceive, rather than the first to reduce to practice, who establishes the right to the patent.\nIt is well settled that an invention may be patented before it is reduced to practice. In\n1888, this Court upheld a patent issued to Alexander Graham Bell even though he had filed\nhis application before constructing a working telephone. When we apply the reasoning of [the\ncases concerning Bell\xe2\x80\x99s invention] to the facts of the case before us today, it is evident that\nPfaff could have obtained a patent on his novel socket when he accepted the purchase order\nfrom Texas Instruments for 30,100 units. At that time he provided the manufacturer with a\ndescription and drawings that had \xe2\x80\x9csufficient clearness and precision to enable those skilled\nin the matter\xe2\x80\x9d to produce the device. The parties agree that the sockets manufactured to fill\nthat order embody Pfaff\xe2\x80\x99s conception as set forth in claims 1, 6, 7, and 10 of the \xe2\x80\x99377 patent.\nWe can find no basis in the text of \xc2\xa7 102(b) or in the facts of this case for concluding that\nPfaff\xe2\x80\x99s invention was not \xe2\x80\x9con sale\xe2\x80\x9d within the meaning of the statute until after it had been\nreduced to practice.\nIII\nPfaff nevertheless argues that longstanding precedent, buttressed by the strong\ninterest in providing inventors with a clear standard identifying the onset of the 1\xe2\x80\x93year\nperiod, justifies a special interpretation of the word \xe2\x80\x9cinvention\xe2\x80\x9d as used in \xc2\xa7 102(b). We are\npersuaded that this nontextual argument should be rejected.\nAs we have often explained, most recently in Bonito Boats, Inc. v. Thunder Craft\nBoats, Inc., 489 U.S. 141 (1989), the patent system represents a carefully crafted bargain that\nencourages both the creation and the public disclosure of new and useful advances in\ntechnology, in return for an exclusive monopoly for a limited period of time. The balance\nbetween the interest in motivating innovation and enlightenment by rewarding invention\nwith patent protection on the one hand, and the interest in avoiding monopolies that\nunnecessarily stifle competition on the other, has been a feature of the federal patent laws\nsince their inception.\nConsistent with these ends, \xc2\xa7 102 of the Patent Act serves as a limiting provision,\nboth excluding ideas that are in the public domain from patent protection and confining the\nduration of the monopoly to the statutory term.\nWe originally held that an inventor loses his right to a patent if he puts his invention\ninto public use before filing a patent application. \xe2\x80\x9cHis voluntary act or acquiescence in the\npublic sale and use is an abandonment of his right.\xe2\x80\x9d Pennock v. Dialogue, 27 U.S. (2 Pet.) 1,\n24 (1829) (Story, J.). A similar reluctance to allow an inventor to remove existing knowledge\nfrom public use undergirds the on-sale bar.\n\n\x0c76\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nNevertheless, an inventor who seeks to perfect his discovery may conduct extensive\ntesting without losing his right to obtain a patent for his invention\xe2\x80\x94even if such testing\noccurs in the public eye. The law has long recognized the distinction between inventions put\nto experimental use and products sold commercially. In 1878, we explained why patentability\nmay turn on an inventor\xe2\x80\x99s use of his product.\nIt is sometimes said that an inventor acquires an undue advantage over the\npublic by delaying to take out a patent, inasmuch as he thereby preserves the\nmonopoly to himself for a longer period than is allowed by the policy of the law;\nbut this cannot be said with justice when the delay is occasioned by a bona fide\neffort to bring his invention to perfection, or to ascertain whether it will answer\nthe purpose intended. His monopoly only continues for the allotted period, in\nany event; and it is the interest of the public, as well as himself, that the\ninvention should be perfect and properly tested, before a patent is granted for\nit. Any attempt to use it for a profit, and not by way of experiment, for a longer\nperiod than two years before the application, would deprive the inventor of his\nright to a patent.\nElizabeth v. Am. Nicholson Pavement Co., 97 U.S. 126, 137 (1877) (emphasis added).\nThe patent laws therefore seek both to protect the public\xe2\x80\x99s right to retain knowledge\nalready in the public domain and the inventor\xe2\x80\x99s right to control whether and when he may\npatent his invention.\nThe word \xe2\x80\x9cinvention\xe2\x80\x9d must refer to a concept that is complete, rather than merely one\nthat is \xe2\x80\x9csubstantially complete.\xe2\x80\x9d It is true that reduction to practice ordinarily provides the\nbest evidence that an invention is complete. But just because reduction to practice is\nsufficient evidence of completion, it does not follow that proof of reduction to practice is\nnecessary in every case. Indeed, both the facts of [the Alexander Graham Bell cases] and the\nfacts of this case demonstrate that one can prove that an invention is complete and ready for\npatenting before it has actually been reduced to practice.\nWe conclude, therefore, that the on-sale bar applies when two conditions are satisfied\nbefore the critical date. First, the product must be the subject of a commercial offer for sale.\nAn inventor can both understand and control the timing of the first commercial marketing of\nhis invention. The experimental use doctrine, for example, has not generated concerns about\nindefiniteness, and we perceive no reason why unmanageable uncertainty should attend a\nrule that measures the application of the on-sale bar of \xc2\xa7 102(b) against the date when an\ninvention that is ready for patenting is first marketed commercially. In this case the\nacceptance of the purchase order prior to April 8, 1981, makes it clear that such an offer had\nbeen made, and there is no question that the sale was commercial rather than experimental\nin character.\nSecond, the invention must be ready for patenting. That condition may be satisfied in\nat least two ways: by proof of reduction to practice before the critical date; or by proof that\nprior to the critical date the inventor had prepared drawings or other descriptions of the\n\n\x0cNOVELTY\n\n77\n\ninvention that were sufficiently specific to enable a person skilled in the art to practice the\ninvention. In this case the second condition of the on-sale bar is satisfied because the\ndrawings Pfaff sent to the manufacturer before the critical date fully disclosed the invention.\nThe evidence in this case thus fulfills the two essential conditions of the on-sale bar.\nAs succinctly stated by Learned Hand:\n[I]t is a condition upon an inventor\xe2\x80\x99s right to a patent that he shall not exploit\nhis discovery competitively after it is ready for patenting; he must content\nhimself with either secrecy, or legal monopoly.\nMetallizing Engineering v. Kenyon Bearing & Auto Parts, 153 F.2d 516, 520 (2d Cir. 1946).\nThe judgment of the Court of Appeals finds support not only in the text of the statute\nbut also in the basic policies underlying the statutory scheme, including \xc2\xa7 102(b). When Pfaff\naccepted the purchase order for his new sockets prior to April 8, 1981, his invention was\nready for patenting. The fact that the manufacturer was able to produce the socket using his\ndetailed drawings and specifications demonstrates this fact. Furthermore, those sockets\ncontained all the elements of the invention claimed in the \xe2\x80\x99377 patent. Therefore, Pfaff\xe2\x80\x99s \xe2\x80\x99377\npatent is invalid because the invention had been on sale for more than one year in this\ncountry before he filed his patent application.\n\nDiscussion Questions: On Sale\n1. Commercial Offer for Sale. The first prong of the Pfaff test is that the product must\nbe the subject of a \xe2\x80\x9ccommercial offer for sale.\xe2\x80\x9d Note that this means that the offer need not\nbe accepted, no money need change hands, the product need not be delivered, and so forth.\nAll that is required is that the product be offered for sale. But this is different from a mere\nadvertisement. An advertisement that says \xe2\x80\x9cComing soon: a brand new widget!\xe2\x80\x9d is not an\noffer for sale (though it may be a printed publication if it enables the widget).\nWhether there is an offer for sale is a standard question of contract law and is treated\nas such by the Federal Circuit. However, the Federal Circuit does not look to the law of the\nrelevant state to determine whether there has been an offer for sale. Instead, the Federal\nCircuit has created its own version of federal/patent contract law, which it uses to determine\nwhether a product has been offered for sale.\nWhat work do you think the word \xe2\x80\x9ccommercial\xe2\x80\x9d is doing in the phrase \xe2\x80\x9ccommercial\noffer for sale?\xe2\x80\x9d What would be an example of a non-commercial offer for sale? Why do you\nthink the Supreme Court chose to trigger the on sale bar merely with an offer for sale, rather\nthan holding that the bar is triggered when the product is actually sold?\nAs you consider these questions, keep in mind that the purpose of the on sale bar is to\nprevent the patentee from exploiting the patented invention beyond the twenty-year\nexclusivity period. That means that the on sale bar is typically only triggered when the\npatentee offers a sale to an outside party in a manner that is intended to earn profit. For\n\n\x0c78\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ninstance, in Medicines Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016) (en banc), the\npatentee contracted with a manufacturing company to produce the patented invention, with\nthe intention of later selling the invention to the public. The Federal Circuit, sitting en banc,\nheld that this did not place the invention on sale for purposes of the on sale bar. Does this\nseem like the right result, and if so, why?\n2. Ready for Patenting. The second prong of the Pfaff test is that the invention must\nbe ready for patenting. What, exactly, does it mean for an invention to be ready for patenting?\nDoes it mean that the invention has to exist in finished form (such that it could be put into\npublic use)?\nLater in this chapter, you will learn about two important moments in an invention\xe2\x80\x99s\nlifespan: the moment of conception, and the moment of reduction to practice. When you do,\nconsider whether \xe2\x80\x9cready for patenting\xe2\x80\x9d is equivalent to either of those moments. Why do you\nthink the Supreme Court chose to trigger the on sale bar at this point in the invention\xe2\x80\x99s\nlifespan, as opposed to earlier or later?\n3. Alternatives to Barring the Patent. As we have explained, the purpose of the on sale\nbar is to prevent the patentee from exploiting the patented invention for longer than the\ndesignated twenty-year term. But barring the patentee from obtaining a patent if the\ninvention was placed on sale is not the only way of doing this. Can you think of alternatives?\nOne option would be to simply run the twenty-year patent term from the date of the\nfirst offer for sale. So, for instance, if a putative patentee placed the invention on sale in 2021,\nand then filed for a patent in 2026, the patent would expire in 2041 (20 years from the first\nsale), not in 2046. What do you think would be the advantages and disadvantages of this\napproach? Try to think about this question from the perspectives of the patentee, the public,\nand potential competitors to the patentee.\n4. Timing Problems. The timing of events in Pfaff was relatively conventional: the\ninvention was ready for patenting, and the inventor then placed it on sale. The on sale bar\nwas triggered when the offer for sale occurred. But what if these events happened in a\ndifferent order, or in a more scattered fashion? For each of the following situations, can you\nidentify the date on which the on sale bar is triggered (if it is triggered at all)?\n(a) The prospective invention is placed on sale on March 1, before it is ready for\npatenting. It becomes ready for patenting on April 1.\n(b) The prospective invention is placed on sale on March 1. The offer for sale is\nthen withdrawn on April 1, with no sales having been made. The invention\nbecomes ready for patenting on May 1.\n(c) The same situation as (b), except now the offer for sale was accepted by one\npurchaser on March 15, before the offer was withdrawn (with regard to others) on\nApril 1.\n\n\x0cNOVELTY\n\n79\n\n3. Trade Secrets and Third-Party Rules\nThe simplest types of public use and on sale bar situations involve an inventor who\nhas put the invention on sale or in public use in a \xe2\x80\x9cpublic\xe2\x80\x9d fashion, observable to outsiders\xe2\x80\x94\nsay, listing an invention for sale on Amazon. But these prior art provisions can give rise to\nmuch more complicated situations as well. In some cases, the complexity is generated by\nsecrecy: the inventor is attempting to hold the invention as a trade secret and either sell it or\nuse it in secret. In other cases, complexity stems from the fact that someone other than the\npatent applicant has put the invention on sale or into public use. The question that arises is\nwhether the activities of this third party should affect the applicant\xe2\x80\x99s patent rights. Though\nthey arise from different sources, these additional complexities raise related questions.\n\nSecret Sales and Secret Commercial Use\nPfaff implies that even entirely \xe2\x80\x9csecret\xe2\x80\x9d sales\xe2\x80\x94sales in which no enabling information\nis made public, and the very fact of the sale itself is not made public\xe2\x80\x94will nonetheless trigger\nthe on sale bar. After all, in that case Pfaff\xe2\x80\x99s patent was invalidated due to a sale without the\nproduct changing hands and without enabling information about the device reaching the\npublic. Nonetheless, the Supreme Court did not explicitly hold that secret sales would trigger\nthe on sale bar.\nThis question garnered renewed attention after the passage of the AIA. Recall that\n\xc2\xa7 102(a)(1) of the post-AIA law states that an inventor is entitled to a patent unless \xe2\x80\x9cthe\nclaimed invention was patented, described in a printed publication, or in public use, on sale,\nor otherwise available to the public\xe2\x80\x9d (emphasis added). The inclusion of the word \xe2\x80\x9cotherwise\xe2\x80\x9d\nled some commentators to argue that the phrase \xe2\x80\x9cavailable to the public\xe2\x80\x9d should be seen as\nmodifying each of the other categories of prior art listed in the statute. This would not affect\nour understanding of \xe2\x80\x9cpatented,\xe2\x80\x9d \xe2\x80\x9cin public use,\xe2\x80\x9d or a \xe2\x80\x9cprinted publication,\xe2\x80\x9d all of which by\ntheir nature are publicly available. Rather, it was suggested that the on sale bar could now\nonly be triggered by \xe2\x80\x9cpublic\xe2\x80\x9d sales, and a purely private or secret sale (such as the one in\nPfaff) would not implicate the on sale bar.\nThe Supreme Court rejected that argument in Helsinn Healthcare S.A. v. Teva\nPharmaceuticals USA, Inc., 139 S. Ct. 628 (2019):\nAlthough this Court has never addressed the precise question presented\nin this case, our precedents suggest that a sale or offer of sale need not make\nan invention available to the public. For instance, we held in Pfaff that an offer\nfor sale could cause an inventor to lose the right to patent, without regard to\nwhether the offer discloses each detail of the invention. E.g., 525 U.S. at 67.\nOther cases focus on whether the invention had been sold, not whether the\ndetails of the invention had been made available to the public or whether the\nsale itself had been publicly disclosed. E.g., Consolidated Fruit\xe2\x80\x93Jar Co. v.\n\n\x0c80\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nWright, 94 U.S. 92, 94 (1877) (\xe2\x80\x9c[A] single instance of sale or of use by the\npatentee may, under the circumstances, be fatal to the patent . . . .\xe2\x80\x9d).\nThe Federal Circuit\xe2\x80\x94which has \xe2\x80\x9cexclusive jurisdiction\xe2\x80\x9d over patent\nappeals, 28 U.S.C. \xc2\xa7 1295(a)\xe2\x80\x94has made explicit what was implicit in our\nprecedents. It has long held that \xe2\x80\x9csecret sales\xe2\x80\x9d can invalidate a patent. E.g.,\nSpecial Devices, Inc. v. OEA, Inc., 270 F.3d 1353, 1357 (Fed. Cir. 2001)\n(invalidating patent claims based on \xe2\x80\x9csales for the purpose of the commercial\nstockpiling of an invention\xe2\x80\x9d that \xe2\x80\x9ctook place in secret\xe2\x80\x9d); Woodland Trust v.\nFlowertree Nursery, Inc., 148 F.3d 1368, 1370 (Fed. Cir. 1998) (\xe2\x80\x9cThus an\ninventor\xe2\x80\x99s own prior commercial use, albeit kept secret, may constitute a public\nuse or sale under \xc2\xa7 102(b), barring him from obtaining a patent\xe2\x80\x9d).\nIn light of this settled pre-AIA precedent on the meaning of \xe2\x80\x9con sale,\xe2\x80\x9d\nwe presume that when Congress reenacted the same language in the AIA, it\nadopted the earlier judicial construction of that phrase. The new \xc2\xa7 102 retained\nthe exact language used in its predecessor statute (\xe2\x80\x9con sale\xe2\x80\x9d) and, as relevant\nhere, added only a new catchall clause (\xe2\x80\x9cor otherwise available to the public\xe2\x80\x9d).\nAs amicus United States noted at oral argument, if \xe2\x80\x9con sale\xe2\x80\x9d had a settled\nmeaning before the AIA was adopted, then adding the phrase \xe2\x80\x9cor otherwise\navailable to the public\xe2\x80\x9d to the statute \xe2\x80\x9cwould be a fairly oblique way of\nattempting to overturn\xe2\x80\x9d that \xe2\x80\x9csettled body of law.\xe2\x80\x9d The addition of \xe2\x80\x9cor\notherwise available to the public\xe2\x80\x9d is simply not enough of a change for us to\nconclude that Congress intended to alter the meaning of the reenacted term\n\xe2\x80\x9con sale.\xe2\x80\x9d\n\nHelsinn thus confirms what was implicit in Pfaff: even secret sales in which no enabling\ninformation reaches the public\xe2\x80\x94and even when the fact of the offer for sale is not public\xe2\x80\x94\nwill still trigger the on sale bar under both pre- and post-AIA law. This holding also reinforces\nthe policy justification for the on sale bar by preventing an inventor from having exclusive\nrights over her invention for longer than the statutory patent term.\nIn some cases, an inventor can earn money from an invention not by selling the\ninvention itself, but by selling some product or service that is produced using the invention.\nThis is particularly true when the invention is a process or method, rather than a physical\nproduct, but it can be true as well for certain types of machines that are used to produce other\nphysical products, rather than being sold themselves. When an inventor makes commercial\nuse of an invention in this fashion, it is not immediately obvious which provisions in pre-AIA\n\xc2\xa7 102(b) or post-AIA \xc2\xa7 102(a) are implicated by the inventor\xe2\x80\x99s actions. It is not obvious that\nthis activity implicates the on sale bar because \xe2\x80\x9cthe invention\xe2\x80\x9d is not exactly being placed on\nsale. Instead, the inventor is selling a \xe2\x80\x9cfruit\xe2\x80\x9d of the invention (a related product or service).\nIt is also not obvious that this implicates the public use bar because \xe2\x80\x9cthe invention\xe2\x80\x9d is not\nexactly in public use. Instead, in many cases the invention itself is being used in secret,\nbehind closed doors, and what is made public is only the product or fruit of the invention.\n\n\x0cNOVELTY\n\n81\n\nThese are commonly referred to as cases involving \xe2\x80\x9csecret commercial use.\xe2\x80\x9d The\nfollowing case illustrates the Federal Circuit\xe2\x80\x99s approach to these situations.\n\nQuest Integrity USA v. Cokebusters USA, 924 F.3d 1220 (Fed. Cir. 2019)\nTimothy B. Dyk, Circuit Judge.\nOn December 15, 2014, Quest filed suit against Cokebusters in the District of\nDelaware, alleging infringement of the \xe2\x80\x99874 patent. Cokebusters defended on the ground that\nthe claims were invalid under 35 U.S.C. \xc2\xa7 102(b) because there was a commercial sale of\nservices that used the claimed methods, computer-readable media, and system more than\none year before June 1, 2004, the date the application that led to the \xe2\x80\x99874 patent was filed in\nthe United States.\nThe basis for the on-sale bar defense was an offer by Quest itself to provide furnace\ntube inspection services to a client in the petrochemical industry. In February and March\n2003, Quest performed furnace tube inspection services for Orion Norco Refinery in Norco,\nLouisiana in exchange for $72,060 (\xe2\x80\x9cthe Norco Sale\xe2\x80\x9d). Cokebusters alleged that these\ncommercial activities rendered the claims invalid because of the on-sale bar. Cokebusters\nargued that during those inspections, Quest used its commercial furnace tube inspection\nmethod, computer-readable medium, and system and generated two inspection reports (\xe2\x80\x9cthe\nNorco Reports\xe2\x80\x9d), which Quest provided to the customer. The Norco Reports contained twodimensional, color-coded strip charts displaying the collected furnace inspection data (\xe2\x80\x9cthe\nNorco Strip Charts\xe2\x80\x9d). Cokebusters alleged that the method, computer-readable medium, and\nsystem used to prepare the Norco Strip Charts satisfied the limitations of the asserted claims.\nQuest did not sell any hardware or software to the customer.\nDiscussion\nSection 102(b) prevents a person from receiving a patent if, \xe2\x80\x9cmore than one year prior\nto the date of the application for patent in the United States,\xe2\x80\x9d \xe2\x80\x9cthe invention was . . . on sale\xe2\x80\x9d\nin the United States. This is known as the \xe2\x80\x9con-sale bar.\xe2\x80\x9d The date exactly one year prior to\nthe date of the patent application is known as the critical date. As noted above, since the\napplication for the \xe2\x80\x99874 patent was filed on June 1, 2004, the critical date here is June 1,\n2003.\nThe on-sale bar seeks to prevent \xe2\x80\x9c[a]ny attempt to use [the claimed invention] for a\nprofit, and not by way of experiment,\xe2\x80\x9d for more than one year before filing for a patent\napplication. Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 65 (1998). And \xe2\x80\x9c[i]t is a condition upon an\ninventor\xe2\x80\x99s right to a patent that he shall not exploit his discovery competitively after it is\nready for patenting; he must content himself with either secrecy, or legal monopoly.\xe2\x80\x9d Pfaff,\n525 U.S. at 68 (quoting Metallizing Eng\xe2\x80\x99g Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d\n516, 520 (2d Cir. 1946)).\n\n\x0c82\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIn Pfaff, the Supreme Court outlined a two-part test for determining whether an\ninvention is \xe2\x80\x9con sale\xe2\x80\x9d within the meaning of \xc2\xa7 102(b). The patented invention must have been\n(1) \xe2\x80\x9cthe subject of a commercial offer for sale\xe2\x80\x9d and (2) \xe2\x80\x9cready for patenting.\xe2\x80\x9d There is no\ndispute here that the method, system, and computer-readable medium used by Quest during\nthe Norco Sale were ready for patenting at the time of the Norco Sale. The question is whether\nthe invention was the subject of a commercial offer for sale before the critical date. This\ninquiry requires there have been a \xe2\x80\x9ccommercial offer,\xe2\x80\x9d and \xe2\x80\x9cthe invention that [wa]s the\nsubject matter of the offer for sale must satisfy each claim limitation of the patent, though it\nmay do so inherently.\xe2\x80\x9d Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1328\xe2\x80\x9329 (Fed. Cir.\n2001). Further, \xe2\x80\x9ca sale or offer of sale need not make an invention available to the public,\xe2\x80\x9d\nand \xe2\x80\x9c\xe2\x80\x98secret sales\xe2\x80\x99 can invalidate a patent.\xe2\x80\x9d Helsinn Healthcare v. Teva Pharm. USA, Inc.,\n139 S. Ct. 628, 633 (2019).\nThe parties agree on appeal that the Norco Sale, which includes the Norco Strip\nCharts, was \xe2\x80\x9ca commercial offer for sale\xe2\x80\x9d under \xc2\xa7 102(b). The fact that Quest did not sell its\nfurnace inspection hardware or software (i.e., its method, computer-readable medium, or\nsystem) does not take Quest\xe2\x80\x99s commercial activities outside the on-sale bar rule. Rather,\nQuest used its method, computer-readable medium, and system commercially to perform\nfurnace inspection services and produce the Norco Reports for its customer.\nSale of a product (here, sale of the Norco Reports) produced by performing a claimed\nprocess implicates the on-sale bar. Cf. Quanta Comput., Inc. v. LG Elecs., Inc., 553 U.S. 617,\n629 (2008) (\xe2\x80\x9c[T]his Court has repeatedly held that method patents were exhausted by the\nsale of an item that embodied the method.\xe2\x80\x9d). Performance of a claimed method for\ncompensation, or a commercial offer to perform the method, can also trigger the on-sale bar,\neven where no product is sold or offered for sale. As we held in Scaltech, \xe2\x80\x9c[t]he on sale bar\nrule applies to the sale of an \xe2\x80\x98invention,\xe2\x80\x99 and in this case, the invention was a process.\xe2\x80\x9d 269\nF.3d at 1328.\nThe same approach necessarily applies where a service (here, furnace tube inspection)\nis performed for compensation using a claimed computer-readable medium or system that\ngenerates a \xe2\x80\x9cproduct\xe2\x80\x9d (here, the Norco Reports). The method, system, and software used\nduring the Norco Sale to perform furnace inspection services for compensation for a customer\nwere thus \xe2\x80\x9con sale.\xe2\x80\x9d\n\nNote on Secret Commercial Use\nIn some instances, the courts have treated secret commercial use cases as implicating\nthe public use bar, rather than the on sale bar. One important early example is Metallizing\nEngineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2d Cir. 1946). There, an\ninventor was using a metal reconditioning process in secret (behind the closed doors of his\nworkshop) and selling the fruits of the process\xe2\x80\x94the reconditioned metal\xe2\x80\x94to the public.\nJudge Learned Hand held that the inventor was barred from obtaining a patent by the public\nuse bar. Some scholars have similarly treated these types of cases as implicating the public\n\n\x0cNOVELTY\n\n83\n\nuse bar. See, e.g., Mark A. Lemley, Does \xe2\x80\x9cPublic Use\xe2\x80\x9d Mean the Same Thing It Did Last Year?,\n93 Tex. L. Rev. 1119 (2015).\nNotwithstanding the courts\xe2\x80\x99 waffling on the question, secret commercial use cases are\nbetter understood as implicating the on sale bar, not the public use bar. The most important\nreason is that secret commercial use more strongly implicates the central principle animating\nthe on sale bar: concern that the inventor will exploit the invention commercially for longer\nthan the prescribed patent term. As Judge Hand says in Metallizing (again, a case in which\nhe relied upon the public use bar), \xe2\x80\x9cit is a condition upon an inventor\xe2\x80\x99s right to a patent that\nhe shall not exploit his discovery competitively after it is ready for patenting; he must content\nhimself with either secrecy, or legal monopoly.\xe2\x80\x9d In addition, \xe2\x80\x9cpublic\xe2\x80\x9d use is an odd fit for cases\nof secret commercial use, which are (by definition) not public. And finally, this doctrine\noperates like the on sale bar and not like the public use bar in that it applies only to the\ninventor, as the next section will explain. Regardless, the outcome of the cases is consistent:\nirrespective of which particular doctrinal category is triggered, instances of secret commercial\nuse by an inventor before the critical date will bar that inventor from later patenting the\ninvention.\n\nThird-Party Rules\nIn all the public use and on sale cases above, it is the patent applicant who has created\nthe prior art that makes the invention unpatentable. Indeed, this is one of the salient features\nof those categories of prior art: a careless inventor who does not file in time can bar herself\nfrom ever obtaining a patent.10 Nonetheless, these cases beg the question as to when public\nuse or sale by Party A will bar Party B from obtaining a patent, even if Party B meets all of\nthe other requirements of patentability. That is, what are the third-party effects of placing\nan invention in public use or on sale? The following cases address that question, first for on\nsale, and then for public use.\n\nW.L. Gore & Associates v. Garlock, 721 F.2d 1540 (Fed. Cir. 1983)\nHoward T. Markey, Chief Judge.\nBackground\nIn late October, 1969, Dr. Gore discovered that stretching [rods of\npolytetrafluorethylene (PTFE), also known by du Pont\xe2\x80\x99s trademark TEFLON] as fast as\npossible enabled him to stretch them to more than ten times their original length with no\nbreakage. The rapid stretching also transformed the hard, shiny rods into rods of a soft,\nflexible material. On May 21, 1970, Gore filed the patent application that resulted in the\nThis is unlike the \xe2\x80\x9cknown or used by others . . . before the invention thereof\xe2\x80\x9d provision from\npre-AIA \xc2\xa7 102(a), under which it is nearly impossible for an inventor to bar herself from obtaining a\npatent. After all, an inventor cannot inform \xe2\x80\x9cothers\xe2\x80\x9d of an invention before she has invented it herself.\n10\n\n\x0c84\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\npatents in suit. The \xe2\x80\x99566 patent has 24 claims directed to processes for stretching highly\ncrystalline, unsintered, PTFE.\nThe district court declared all claims of the patent invalid under 102(b) because the\ninvention had been in public use and on sale more than one year before Gore\xe2\x80\x99s patent\napplication, as evidenced by Budd [Company]\xe2\x80\x99s use of the Cropper machine.\nOpinion\n\xc2\xa7 102(b) and the Cropper Machine\nIn 1966 John W. Cropper of New Zealand developed and constructed a machine for\nproducing stretched and unstretched PTFE thread seal tape. In 1967, Cropper sent a letter\nto a company in Massachusetts, offering to sell his machine, describing its operation, and\nenclosing a photo. Nothing came of that letter. There is no evidence and no finding that the\npresent inventions thereby became known or used in this country.\nIn 1968, Cropper sold his machine to Budd, which at some point thereafter used it to\nproduce and sell PTFE thread seal tape. The sales agreement between Cropper and Budd\nprovided:\nARTICLE \xe2\x80\x9cE\xe2\x80\x9d\xe2\x80\x94PROTECTION OF TRADE SECRETS Etc.\n1. BUDD agrees that while this agreement is in force it will not\nreproduce any copies of the said apparatus without the express written\npermission of Cropper nor will it divulge to any person or persons other than\nits own employees or employees of its affiliated corporations any of the said\nknown-how or any details whatsoever relating to the apparatus.\n2. BUDD agrees to take all proper steps to ensure that its employees\nobserve the terms of Article \xe2\x80\x9cE\xe2\x80\x9d 1 and further agrees that whenever it is proper\nto do so it will take legal action in a Court of competent jurisdiction to enforce\nany one or more of the legal or equitable remedies available to a trade secret\nplaintiff.\nBudd told its employees the Cropper machine was confidential and required them to\nsign confidentiality agreements. Budd otherwise treated the Cropper machine like its other\nmanufacturing equipment.\nA former Budd employee said Budd made no effort to keep the secret. That Budd did\nnot keep the machine hidden from employees legally bound to keep their knowledge\nconfidential does not evidence a failure to maintain the secret. Similarly, that du Pont\nemployees were shown the machine to see if they could help increase its speed does not itself\nestablish a breach of the secrecy agreement. There is no evidence of when that viewing\noccurred. There is no evidence that a viewer of the machine could thereby learn anything of\nwhich process, among all possible processes, the machine is being used to practice. As\nCropper testified, looking at the machine in operation does not reveal whether it is stretching,\n\n\x0cNOVELTY\n\n85\n\nand if so, at what speed. Nor does looking disclose whether the crystallinity and temperature\nelements of the invention set forth in the claims are involved. There is no evidence that\nBudd\xe2\x80\x99s secret use of the Cropper machine made knowledge of the claimed process accessible\nto the public.\nThe district court held all claims of the \xe2\x80\x99566 patent invalid under 102(b) because \xe2\x80\x9cthe\ninvention\xe2\x80\x9d was \xe2\x80\x9cin public use [and] on sale\xe2\x80\x9d by Budd more than one year before Gore\xe2\x80\x99s\napplication for patent. [I]t was error to hold that Budd\xe2\x80\x99s activity with the Cropper machine,\nas above indicated, was a \xe2\x80\x9cpublic\xe2\x80\x9d use of the processes claimed in the \xe2\x80\x99566 patent, that activity\nhaving been secret, not public.\nAssuming, arguendo, that Budd sold tape produced on the Cropper machine before\nOctober 1969, and that that tape was made by a process set forth in a claim of the \xe2\x80\x99566 patent,\nthe issue under \xc2\xa7 102(b) is whether that sale would defeat Dr. Gore\xe2\x80\x99s right to a patent on the\nprocess inventions set forth in the claims.\nIf Budd offered and sold anything, it was only tape, not whatever process was used in\nproducing it. Neither party contends, and there was no evidence, that the public could learn\nthe claimed process by examining the tape. If Budd and Cropper commercialized the tape,\nthat could result in a forfeiture of a patent granted them for their process on an application\nfiled by them more than a year later. D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144,\n1147\xe2\x80\x9348 (Fed. Cir. 1983); see Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts\nCo., 153 F.2d 516 (2d Cir. 1946). There is no reason or statutory basis, however, on which\nBudd\xe2\x80\x99s and Cropper\xe2\x80\x99s secret commercialization of a process, if established, could be held a\nbar to the grant of a patent to Gore on that process.\nEarly public disclosure is a linchpin of the patent system. As between a prior inventor\nwho benefits from a process by selling its product but suppresses, conceals, or otherwise keeps\nthe process from the public, and a later inventor who promptly files a patent application from\nwhich the public will gain a disclosure of the process, the law favors the latter. See Horwath\nv. Lee, 564 F.2d 948 (C.C.P.A. 1977). The district court therefore erred as a matter of law in\napplying the statute and in its determination that Budd\xe2\x80\x99s secret use of the Cropper machine\nand sale of tape rendered all process claims of the \xe2\x80\x99566 patent invalid under \xc2\xa7 102(b).\n\nNational Research Development v. Varian Assocs., 30 U.S.P.Q.2d 1537 (Fed. Cir. 1994)\nRaymond C. Clevenger III, Circuit Judge.\nU.S. Patent No. 3,999,118 (\xe2\x80\x99118 patent), entitled \xe2\x80\x9cSpectrographic Analysis of\nMaterials,\xe2\x80\x9d issued on December 21, 1976, to Hoult, who assigned his rights thereunder to\nNRDC. The subject matter of the \xe2\x80\x99118 patent\xe2\x80\x99s four claims concerns a method and apparatus\nfor eliminating systemic noise produced in a Nuclear Magnetic Resonance (NMR)\nspectrometer during sample analysis.\n\n\x0c86\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThe invention resulted from the endeavors of Dr. David Hoult, a graduate student at\nOxford University, England, while under the supervision of his advisor, Dr. (Sir) Rex\nRichards. A patent application to Dr. Hoult\xe2\x80\x99s invention was filed in the United Kingdom on\nApril 8, 1974. The patent application from which the \xe2\x80\x99118 patent issued was filed on February\n27, 1975, in the United States.\nDuring the period of Dr. Hoult\xe2\x80\x99s development work, Dr. Richards attended an\nExperimental NMR Conference in the United States in April 1973. While travelling to the\nconference one morning, Dr. Richards had an informal, one-on-one conversation on a bus with\nDr. Stejskal, a Monsanto Company research scientist. During that conversation, Dr. Richards\ndisclosed the essence of Dr. Hoult\xe2\x80\x99s invention to Dr. Stejskal. It is undisputed, and the district\ncourt expressly found, that Dr. Richards at that time did not ask Dr. Stejskal to keep the\ninformation confidential, and did not inform him that either he or Dr. Hoult intended to file\nfor a patent thereon.\nUpon his return to Monsanto, Dr. Stejskal and his colleague, Dr. Schaefer (the\nMonsanto scientists), collaborated in incorporating Dr. Hoult\xe2\x80\x99s invention as disclosed by Dr.\nRichards into one of the NMR spectrometers in their Monsanto research laboratory. As the\ndistrict court found, \xe2\x80\x9cby the summer of 1973, more than one year before the application for\nHoult patent [sic] was filed in the United States,\xe2\x80\x9d the Monsanto NMR spectrometer modified\nby the Monsanto scientists was using the subject matter of the \xe2\x80\x99118 patent. The Monsanto\nscientists then used this modified spectrometer as an analytical tool to determine, inter alia,\nwhether the then-experimental herbicide \xe2\x80\x9cRoundup\xe2\x80\x9d was safe for release into the\nenvironment.\nIn 1989, NRDC filed suit against Varian Associates, Inc. in the U.S. District Court for\nthe District of New Jersey alleging infringement of its \xe2\x80\x99118 patent. [The district court held a\nbench trial.] The court held \xe2\x80\x9cthe patent\xe2\x80\x9d invalid under the public use bar of 35 U.S.C. \xc2\xa7 102(b)\nbecause the Monsanto scientists were using the spectrometer in the usual course of\nMonsanto\xe2\x80\x99s business, without restriction, more than one year before the filing date of Dr.\nHoult\xe2\x80\x99s patent application in the United States.\n[Discussion]\nThis court in In re Smith, 714 F.2d 1127 (Fed. Cir. 1983), defined the public use of a\nclaimed invention under section 102(b) as including \xe2\x80\x9cany use of that invention by a person\nother than the inventor who is under no limitation, restriction or obligation of secrecy to the\ninventor.\xe2\x80\x9d Id. at 1134 (citing Egbert v. Lippmann, 104 U.S. (14 Otto) 333, 336 (1881)).\nOn appeal, NRDC argues that the district court erred in concluding that the facts of\nthis case evidence a prior public use, as defined by In re Smith, because the totality of the\ncircumstances indicates that there was an \xe2\x80\x9cunderstanding\xe2\x80\x9d between Drs. Richards and\nStejskal that the information was not to be disclosed to the public, and therefore that the\ninformation was provided under enough of a restriction to preclude a public use bar. Relying\non W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540 (Fed. Cir. 1983), NRDC reasons\n\n\x0cNOVELTY\n\n87\n\nthat the district court therefore erred as a matter of law in placing undue emphasis on the\nabsence of a restrictive or confidentiality agreement. We disagree.\nThere is ample evidence in the record to support the district court\xe2\x80\x99s factual finding\nthat the information was disclosed to Dr. Stejskal without any restriction on use or\ndissemination. The \xe2\x80\x9ctotality of the circumstances,\xe2\x80\x9d even including describing the\nconversation on the bus as \xe2\x80\x9cprivate,\xe2\x80\x9d simply does not support NRDC\xe2\x80\x99s position. Moreover, the\nmere fact that Drs. Richards and Stejskal had known each other for many years cannot of\nitself create the \xe2\x80\x9cunderstanding\xe2\x80\x9d of confidentiality that NRDC struggles to establish,\nespecially since the NMR Conference was specifically designed to encourage intellectual\ndiscourse through the free disclosure of information. Thus, the unrestricted disclosure of the\ninvention, coupled with use of that information in the ordinary course of business, renders\nthat use public.\nMoreover, use by only one member of the public, without that use informing other\nmembers of the public as to the true nature of the invention, is sufficient under Supreme\nCourt jurisprudence to invalidate a patent under section 102(b) for prior public use. See, e.g.,\nEgbert v. Lippmann, 104 U.S. (14 Otto) at 336 (\xe2\x80\x9cIf an inventor . . . gives or sells [the invention]\nto another, to be used by the donee or vendee, without limitation or restriction, or injunction\nof secrecy and it is so used, such use is public, even though the use and knowledge of the use\nmay be confined to one person.\xe2\x80\x9d). Thus, even assuming that only the Monsanto scientists had\naccess to the modified spectrometer, and that others visiting the laboratory had no idea as to\nthe true nature thereof, the Monsanto scientists\xe2\x80\x99 knowledge and use alone provide sufficient\nbasis on which to invoke the statutory bar of section 102(b). Monsanto\xe2\x80\x99s internal policies\nconcerning dissemination of information are to that extent irrelevant.\nW.L. Gore is not contrary to this result. In that case, this court concluded that the\nfacts did not support a public use bar because an entity entirely separate from the inventor,\nCropper, had independently developed the subject matter of the subsequently issued patent\nand had kept it entirely secret from the public, even though it had been used in a commercial\nprocess. We reasoned:\nAs between a prior inventor who benefits from a process by selling its product\nbut suppresses, conceals, or otherwise keeps the process from the public, and\na later inventor who promptly files a patent application from which the public\nwill gain a disclosure of the process, the law favors the latter.\n721 F.2d at 1550. The present case, however, does not involve a secret development of the\npatent\xe2\x80\x99s subject matter wholly separate from the patentee. Rather, the source of the\ninformation about the invention which led to the public use was indirectly the patentee\nhimself. Under United States patent law, an inventor has the obligation to avoid public use\nof his invention more than one year before filing, in order to preserve his right to receive a\npatent thereon. See Moleculon Research, 793 F.2d at 1265. This applies as much to the\ninventor\xe2\x80\x99s confidants as it does to the inventor himself. Thus, in order to avoid application of\nthe public use bar of section 102(b), Dr. Richards, having free access to Dr. Hoult\xe2\x80\x99s invention,\nhad to refrain from freely disclosing information concerning that invention. Since Dr.\n\n\x0c88\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nRichards failed to do so, Dr. Hoult failed to meet his obligation and the resulting public use\nof the invention invalidates NRDC\xe2\x80\x99s patent on the subject matter publicly used. This result\nfurthers the important public policy of discouraging the removal of inventions from the public\ndomain which members of the public justifiably have come to believe are freely available.\n\nNote on Third-Party Rules\nGore v. Garlock is really a case of third-party secret commercial use: Budd was using\nthe process in secret and selling the (non-informing) fruits of that process publicly. The\nFederal Circuit held that Budd\xe2\x80\x99s secret commercial use did not bar Gore from later obtaining\na patent. This echoed a result from 43 years earlier, when the Second Circuit (in the person\nof Judge Learned Hand) held in Gillman v. Stern, 114 F.2d 28 (2d Cir. 1940), that a third\nparty\xe2\x80\x99s secret commercial use of a pneumatic machine used in quilting did not invalidate\nanother inventor\xe2\x80\x99s later effort to obtain a patent.\nOne would imagine that other types of secret sales similarly should not bar third\nparties if they do not lead to public use. For instance, suppose Alice creates an invention and\noffers it for sale (without disclosing any information about it), but the sale is never accepted.\nAlice has triggered the on sale bar, and under Pfaff she will be barred from obtaining a patent\nif she does not file within a year. But should her offer for sale bar Brian, another inventor\nwho is unconnected with Alice? Everything we know about the on sale bar indicates that the\nanswer should be \xe2\x80\x9cno.\xe2\x80\x9d Per Pfaff, the on sale bar exists to prevent inventors from\ncommercially exploiting their inventions for longer than the twenty-year statutory period.\nBrian is not doing that; only Alice is. And from the perspective of patent law, there is no\nmeaningful difference between secret commercial use that does not disclose the invention\nand a secret sale that does not disclose the invention. Both involve commercial exploitation,\nneither involves any sort of public use, and neither creates enabling prior art. It would seem\nthat they should be treated identically.\nHowever, this is not what the Federal Circuit has said. That court has stated\nexplicitly, on multiple occasions, that third-party sales will bar anyone from obtaining a\npatent. See, e.g., Zacharin v. United States, 213 F.3d 1366, 1371 (Fed. Cir. 2000) (\xe2\x80\x9cFinally,\nunder this court\xe2\x80\x99s precedents, it is of no consequence that the sale was made by a third party,\nnot by the inventor.\xe2\x80\x9d); Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315,\n1318 (Fed. Cir. 1999) (\xe2\x80\x9cFurthermore, the statutory on-sale bar is not subject to exceptions for\nsales made by third parties either innocently or fraudulently.\xe2\x80\x9d). At the same time, every case\nin which the Federal Circuit has held that a third-party sale bars another inventor has\ninvolved a sale that was not secret. In all of those cases, the sale either put the invention into\npublic use\xe2\x80\x94by making embodiments of the invention publicly available\xe2\x80\x94or disclosed the\ninvention to the public in an enabling way.\nZacharin offers a good example. In that case, the inventor, an engineer working for\nthe Army, disclosed the invention to the Army. The Army in turn disclosed it to a third-party\nprivate company (Breed), which manufactured 6000 units and sold them back to the Army.\n\n\x0cNOVELTY\n\n89\n\nThe court held that this third-party sale (Breed to the Army) barred the inventor. There is\nno mention of Breed being bound by any duty of secrecy. At minimum, then, the invention\nappears to have been in public use by Breed itself. The argument for public use here is even\nstronger than it would be in a typical case, because Breed was actively induced by the\ninventor to use the invention, without any mention of a patent. The public use bar exists to\nprotect reliance interests on the part of members of the public who believe that they have\naccess to an unpatented invention. Those reliance interests loom especially large in a case\nsuch as this one. And as National Research Development Corp. v. Varian teaches, the public\nuse bar is not party-specific, precisely because the concern is for the public\xe2\x80\x99s reliance\ninterests, which can be triggered regardless of which party puts the invention into public use.\nLower courts have gone back and forth on this question. Some lower courts have held\nthat the on sale bar is party-specific: a sale by one party does not preclude another party from\nobtaining a patent, so long as the sale does not also trigger the public use bar. See, e.g.,\nSchlumberger Tech. Corp. v. BICO Drilling Tools, 2019 WL 2450948 (S.D. Tex. June 12,\n2019); MDS Associates v. United States, 37 Fed. Cl. 611 (1997). MDS is illustrative. That case\ninvolved a patent on technology used to prevent ship-to-ship collisions. More than a year\nbefore the patent application was filed, a third party\xe2\x80\x94the United States Navy\xe2\x80\x94had sold the\ninvention to the nation of West Germany. As befitting a sale from one country\xe2\x80\x99s military to\nanother\xe2\x80\x99s, the sale was confidential and the technology was protected by various secrecy and\nclassification rules. The court held that the secret third-party sale did not bar the patent. In\nother cases, however, courts have held that truly secret sales nonetheless trigger the on sale\nbar against third parties. See, e.g., Piet v. United States, 176 F. Supp. 576 (S.D. Cal. 1959).\nAccordingly, there are two ways of understanding this area of law. The first accords\nwith the language of Federal Circuit opinions: the on sale bar is not party-specific. A sale by\none party will bar a patent by another party who was unconnected to the sale. However, there\nare two problems with this approach to the law. The first is that it requires incorporating at\nleast one exception for secret commercial use (as in Gore v. Garlock). (Again, the Federal\nCircuit has never decided a case involving a truly secret sale by a third party.) There is of\ncourse nothing wrong with exceptions to a doctrine when the exceptions are motivated by\nsome compelling reason. But here, there is no reason whatsoever that secret commercial use\nshould be treated differently than secret sales when they implicate precisely the same policy\nconcerns. This relates to the second\xe2\x80\x94and more significant\xe2\x80\x94problem, which is that the policy\nunderlying the on sale bar dictates that it should be party-specific. Again, as the Supreme\nCourt explains in Pfaff, the primary focus of the on sale bar is the threat that a party will\nattempt to exploit a patent beyond the prescribed twenty-year term. Actions by one party\nsimply do not implicate this concern with respect to another party; the second party has done\nnothing wrong.\nThe second way of understanding this area of law is to view the on sale bar as purely\nparty-specific: sales by A can only bar A, not B. However, sales by A will often give rise to\nother types of statutory bars. If Alice sells 1000 units of her invention to the public, the\ninvention is now in public use. The public use bar is not party-specific, so those uses will bar\nBrian from obtaining a patent on the same invention. But if Alice\xe2\x80\x99s sale had been non-public,\n\n\x0c90\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nor if her offer for sale had never been accepted, the offer itself would bar only Alice and not\nBrian.\nThere are several important virtues to this approach. First, and most importantly, it\nwould align the on sale and public use doctrines with their underlying policies. The on sale\nbar would be party-specific because it exists to vindicate a party-specific policy objective; the\npublic use bar would not be party-specific because it exists to vindicate a policy objective that\nconcerns the public at large, rather than any specific patent applicant. Second, it would\neliminate the need for a special, unprincipled exception for secret commercial use. The\ndownside of this approach is that it would conflict with the Federal Circuit\xe2\x80\x99s language. But\ncritically, it would not actually conflict with any of the Federal Circuit\xe2\x80\x99s results. As we\nexplained above, every case in which the Federal Circuit has stated that the on sale bar\napplies to third parties has also involved some element of public use. Those cases are better\nunderstood as instances in which a sale led to public use, which in turn barred all parties\nfrom patenting. Indeed, the Federal Circuit has at least once described the two bars as\noperating in this manner. In a footnote to In re Caveney, 761 F.2d 671 (Fed. Cir. 1985), the\ncourt wrote:\nThe \xe2\x80\x9con sale\xe2\x80\x9d provision of 35 U.S.C. \xc2\xa7 102(b) is directed at precluding an\ninventor from commercializing his invention for over a year before he files his\napplication. Sales or offers made by others and disclosing the claimed invention\nimplicate the \xe2\x80\x9cpublic use\xe2\x80\x9d provision of 35 U.S.C. \xc2\xa7 102(b).\nFor these reasons, we think that this second route is the best way to understand the\non sale and public use bars. It better aligns doctrine with policy and principle, and it\nrationalizes the doctrine without epicycles of caveats and exceptions.11 From the perspective\nof students looking to learn and understand the law, we believe this is the cleanest and most\nrational approach. We hope that the Federal Circuit will soon come to see it our way and\nalter how it discusses these cases. But please exercise caution! If you are writing a brief to a\ncourt or a memo to a senior partner, you are well-advised not to blithely state that the on sale\nbar is party-specific. Less enlightened lawyers who have not learned from this book may not\nunderstand what you mean. Rather, you should explain that the Federal Circuit claims that\nsales bar everyone from patenting, but that how that court decides a case is in fact likely to\nturn on whether the sale created a public use.\n\nThere is one other potential option, which is that the court could maintain that the on sale\nbar is not party-specific but carve out an exception for \xe2\x80\x9csecret\xe2\x80\x9d sales, which would bar only the party\nmaking the sale, where \xe2\x80\x9csecret\xe2\x80\x9d means \xe2\x80\x9cdoes not create a public use.\xe2\x80\x9d This would harmonize the rules\nfor secret sales and secret commercial use, but only by creating yet another exception to the general\nrule. If this is how the court believes these cases should be decided (as it should), better to simplify\nmatters by treating the on sale bar as party-specific and the public use bar as not.\n11\n\n\x0cNOVELTY\n\n91\n\nPractice Problem: Third-Party Rules\nIn 1998, S invented a new type of motor to be used in drilling for oil and gas.\nSeparately, K invented the same type of motor the same year. In 1999, K exhibited the motor\nitself, as well as drawings of the motor, at a trade show. The motor was available for viewing\nbut could not be touched or examined. The drawings outlined the basic features of the motor\nbut did not contain all of the technical detail that would have been necessary to build the\nmotor. In 2000, K reached a confidential agreement to sell 1000 motors to B. B planned to\nresell the motors on the retail market. Those motors were eventually delivered in 2003, and\nB resold them on the retail market in 2004. In 2002, S filed for a patent on the invention. Is\nS\xe2\x80\x99s patent valid? Why or why not?\n(a) Would your answer have been different if K had delivered the motors to B in 2000,\nand B had immediately resold them to retail purchasers who began using them?\n(b) Would your answer be different in either scenario above if the events were shifted\nforward in time so they were governed by the AIA?\nSee Schlumberger Tech. Corp. v. BICO Drilling Tools, 2019 WL 2450948 (S.D. Tex. June 12,\n2019).\n\n4. Public Disclosure and the AIA Third-Party Grace Period\nPost-AIA \xc2\xa7 102(b)(1)(A) provides a one-year grace period for prior art disclosed by the\npatent filer herself. For instance, if an inventor discloses an invention via a printed\npublication, under \xc2\xa7 102(b)(1)(A) that inventor has one year to file for a patent before she will\nhave barred herself. In this respect, the post-AIA and pre-AIA law are identical. And this\none-year grace period distinguishes the U.S. patent system from that in many other\njurisdictions, in which any public disclosure bars a later patent.\nNow consider post-AIA \xc2\xa7 102(b)(1)(B). That section provides a one-year grace period\nwith regard to prior art disclosed by a third party, but only if the invention had previously\nbeen \xe2\x80\x9cpublicly disclosed\xe2\x80\x9d by the applicant herself or someone associated with her. So, for\ninstance, if Alice creates a printed publication disclosing an invention on March 1, before\nKavita has disclosed anything, Kavita is forever barred from filing a patent on that invention.\nHowever, if Kavita discloses the invention via a printed publication on February 1, and then\nAlice discloses on March 1, Kavita\xe2\x80\x99s earlier disclosure creates a one-year grace period with\nrespect to her own disclosure and Alice\xe2\x80\x99s disclosure. So long as she files before February 1 of\nthe following year, she will not be barred by these pieces of prior art. Because of this feature,\nthe AIA is sometimes referred to as a \xe2\x80\x9cfirst-to-publish\xe2\x80\x9d system, rather than a first-to-file\nsystem.\nImportantly, however, post-AIA \xc2\xa7 102(b)(1)(B) states that the grace period only\napplies if the patent applicant publicly disclosed before the other party\xe2\x80\x99s prior art came into\n\n\x0c92\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nexistence. This is in contrast to \xc2\xa7\xc2\xa7 102(b)(1) and 102(b)(1)(A), which refer to the various\ncategories of prior art merely as \xe2\x80\x9cdisclosures,\xe2\x80\x9d without the \xe2\x80\x9cpublic\xe2\x80\x9d modifier. What does it\nmean to publicly disclose, as opposed to merely disclosing? This statutory provision has never\nbeen adjudicated, so it is difficult to say for certain. But we can guess. Paper prior art\xe2\x80\x94which\nmust necessarily be both public and enabling\xe2\x80\x94are almost surely public disclosures of the\ninvention. Public use, by its very nature, is presumably a public disclosure as well. (After all,\npublic use is defined by its publicness.) However, we suspect that secret commercial uses and\nsecret sales\xe2\x80\x94sales that do not create public uses\xe2\x80\x94would not be considered public disclosures.\nThese types of disclosures create no enabling information and do not make the invention\navailable to the public. If the requirement that a disclosure be \xe2\x80\x9cpublic\xe2\x80\x9d is to have any\nmeaning, it must disqualify disclosures that do neither of those things.\nThis understanding of the \xc2\xa7 102(b)(1)(B) third-party grace period has the virtue of\nunifying that provision of law with the general third-party prior art rules described above.\nPaper prior art and public uses, which bar third parties from patenting, would similarly\ninsulate the disclosing party against subsequent third-party disclosures. Secret commercial\nuses and secret sales, which do not bar third parties from patenting, would not insulate the\n\xe2\x80\x9cdisclosing\xe2\x80\x9d party against subsequent third-party disclosures. Public disclosures are public\nfor all purposes; secret \xe2\x80\x9cdisclosures\xe2\x80\x9d are secret for all purposes.\n\nPractice Problems: Third-Party AIA Grace Period\n1. On January 1, 2015, A writes a blog post describing and enabling a new invention.\nFour days later, completely independently, B writes a blog post describing the same\ninvention. B files for a patent on October 15, 2015, and A files for a patent on\nNovember 1, 2015. What result?\n2. Same facts as question 1, but now A filed on February 1, 2016, and B filed on February\n10, 2016. What result then?\n3. A invents a widget on Jan. 1, 2015. On June 1, 2015, A reaches an agreement to sell\nthe widget to B. This agreement is never made public. C invents the same widget on\nJuly 1, 2015 and files for a patent on October 1, 2015. A files for a patent on October\n2, 2015. What result?\n4. A invents a widget on Jan. 1, 2015. On April 1, 2015, A gives an enabling oral\npresentation about the widget to an audience of 50 widget purchasers. The next day,\none of them writes an enabling blog post about the widget. Without reading the blog\npost, B files for a patent on the widget on April 3, 2015. A files for a patent on April 5,\n2015. What result?\n5. A invents a widget on Jan. 1, 2015. On May 1, 2015, A offers the widget for sale to\nsome widget users. Word leaks out that a new widget is for sale, but no details about\nit are revealed. On June 1, 2015, A tells three friends, B, C, and D, all about the\nwidget. On June 1, 2015, B writes a blog post about the widget but does not explain\n\n\x0cNOVELTY\n\n93\n\nhow to manufacture it. On June 2, 2015, after reading the post, E figures out how to\nmake the widget and files for a patent on it. A files for a patent on July 1, 2015. What\nresult?\n6. A invents a widget on Jan. 1, 2015. On Feb. 1, 2015, B steals technical information\nthat enables the widget from A and publishes it on her blog. On Jan. 15, 2015, C\ninvents the same widget. On Jan. 16, 2015, C offers to sell 50 widgets to D. The offer\nis secret, and no information regarding it reaches the public. On April 2, 2015, C puts\nup a website describing the widget in enabling fashion. On October 1, 2015, C files for\na patent on the widget. On November 1, 2015, A files for a patent on the widget.\nResult?\n7. Same facts as question 6, but now A files Mar. 1, 2016. Result?\n\n5. The Enablement Standard for Real-World Prior Art\nUnlike printed publications and patents, prior art based on putting the invention in\npublic use or on sale need not be enabling. As summarized by the Federal Circuit: \xe2\x80\x9cBeyond\n[an] \xe2\x80\x98in public use or on sale\xe2\x80\x99 finding, there is no requirement for an enablement-type inquiry.\n. . . [T]he question is not whether the sale, even a third party sale, \xe2\x80\x98discloses\xe2\x80\x99 the invention at\nthe time of the sale, but whether the sale relates to a device that embodies the invention.\xe2\x80\x9d In\nre Epstein, 32 F.3d 1559, 1568 (Fed. Cir. 1994). That is, it only matters whether some\nmembers of the public have the opportunity to buy or use the invention, not whether a\nmember of the public could learn how the invention functions. This rule stems from the\nprinciples underlying the public use and on sale bars. Again, the public use bar operates to\nprevent an inventor from depriving the public of an invention to which it has had\n(unpatented) access, thus upsetting the public\xe2\x80\x99s reliance interests. Those reliance interests\ncan form irrespective of whether members of the public are able to learn how the invention\nactually functions, so long as they believe they will have access to it and be able to use it. For\nits part, the on sale bar exists to prevent an inventor from improperly extending her\nmonopoly, which could occur even if a sale was not enabling.\nLockwood v. American Airlines, 107 F.3d 1565 (Fed. Cir. 1997), is a prototypical\nexample of this rule. The invention at issue was the SABRE system, which is used for\nsearching and booking airline tickets across airlines. (If you\xe2\x80\x99ve booked a ticket through\nKayak, Expedia, or similar platforms, you\xe2\x80\x99ve used SABRE.) SABRE was widely in use among\nmembers of the public\xe2\x80\x94particularly travel agents\xe2\x80\x94before the filing of a patent on the\ntechnology. But nobody who used SABRE would have been able to determine precisely how\nit worked, just as an individual user of Kayak today cannot see the inner workings of the\nprogram. The Federal Circuit held that this was immaterial to the question of public use:\nAmerican submitted an affidavit averring that the SABRE system was\nintroduced to the public in 1962, had over one thousand connected sales desks\nby 1965, and was connected to the reservation systems for most of the other\n\n\x0c94\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nairlines by 1970. Lockwood does not dispute these facts, but argues that\nbecause \xe2\x80\x9ccritical aspects\xe2\x80\x9d of the SABRE system were not accessible to the\npublic, it could not have been prior art. American\xe2\x80\x99s expert conceded that the\nessential algorithms of the SABRE software were proprietary and confidential\nand that those aspects of the system that were readily apparent to the public\nwould not have been sufficient to enable one skilled in the art to duplicate the\nsystem. However, American responds that the public need not have access to\nthe \xe2\x80\x9cinner workings\xe2\x80\x9d of a device for it to be considered \xe2\x80\x9cin public use\xe2\x80\x9d or \xe2\x80\x9cused\nby others\xe2\x80\x9d within the meaning of the statute.\nWe agree with American that those aspects of the original SABRE\nsystem relied on by the district court are prior art to the \xe2\x80\x99359 patent. The\ndistrict court held that SABRE, which made and confirmed reservations with\nmultiple institutions (e.g., airlines, hotels, and car rental agencies), combined\nwith the terminal of the \xe2\x80\x99631 patent rendered the asserted claims of the \xe2\x80\x99359\npatent obvious. The terminal of the \xe2\x80\x99631 patent admittedly lacked this\n\xe2\x80\x9cmultiple institution\xe2\x80\x9d feature. It is undisputed, however, that the public was\naware that SABRE possessed this capability and that the public had been\nusing SABRE to make travel reservations from independent travel agencies\nprior to Lockwood\xe2\x80\x99s date of invention.\nIf a device was \xe2\x80\x9cknown or used by others\xe2\x80\x9d in this country before the date\nof invention or if it was \xe2\x80\x9cin public use\xe2\x80\x9d in this country more than one year before\nthe date of application, it qualifies as prior art. See 35 U.S.C. \xc2\xa7 102(a) and (b).\nLockwood attempts to preclude summary judgment by pointing to record\ntestimony that one skilled in the art would not be able to build and practice\nthe claimed invention without access to the secret aspects of SABRE. However,\nit is the claims that define a patented invention. As we have concluded earlier\nin this opinion, American\xe2\x80\x99s public use of the high-level aspects of the SABRE\nsystem was enough to place the claimed features of the \xe2\x80\x99359 patent in the\npublic\xe2\x80\x99s possession. See In re Epstein, 32 F.3d 1559, 1567\xe2\x80\x9368 (Fed. Cir. 1994)\n(\xe2\x80\x9cBeyond this \xe2\x80\x98in public use or on sale\xe2\x80\x99 finding, there is no requirement for an\nenablement-type inquiry.\xe2\x80\x9d). Lockwood cannot negate this by evidence showing\nthat other, unclaimed aspects of the SABRE system were not publicly\navailable. Moreover, the \xe2\x80\x99359 patent itself does not disclose the level of detail\nthat Lockwood would have us require of the prior art. For these reasons,\nLockwood fails to show a genuine issue of material fact.\n\nB3. Earlier Invention as Prior Art Under Pre-AIA \xc2\xa7 102(g)\nIn some cases, the pre-AIA question of who invented first can be settled with reference\nto the types of \xc2\xa7 102(a) prior art discussed above. Before the second inventor can invent, the\nfirst inventor will have already produced a printed publication, a patent application, or put\n\n\x0cNOVELTY\n\n95\n\nthe invention into public use. But in other instances, two (or more) parties might invent\nbefore either of them can publicize the invention. Section 102(g) exists to govern invention\nraces in these sorts of cases.\nSection 102(g) is complex; you should take a moment to reread that statutory section\nand then probably read it a third time. Importantly, \xc2\xa7 102(g) is phrased in the negative. It\nstates that a party cannot obtain a patent if there is another party who (a) invented first and\n(b) did not abandon, suppress, or conceal the invention. Thus, it is possible to obtain a patent\neven if one did not invent first, or if one abandoned, suppressed, or concealed the invention.\nSo long as there is not another party with a stronger claim to having invented, \xc2\xa7 102(g) will\nnot bar an applicant from receiving a patent.\nAlso pay attention to the two key differences between \xc2\xa7 102(g)(1) and \xc2\xa7 102(g)(2).\nFirst, they differ in whether both independent inventors are seeking U.S. patent rights. When\nboth are, the USPTO declares an \xe2\x80\x9cinterference\xe2\x80\x9d between the parties under \xc2\xa7 102(g)(1) and\nconducts a trial-like hearing to determine which party will receive the patent. When only one\ninventor seeks patent rights, a second inventor\xe2\x80\x99s earlier invention can serve as prior art\nunder \xc2\xa7 102(g)(2) as long as she did not abandon, suppress, or conceal the invention. That is,\nyou can win an invention race and bar others from patenting without ever filing yourself. The\nsecond difference between \xc2\xa7 102(g)(1) and \xc2\xa7 102(g)(2) is that they differ in territorial scope.\nFor interferences under \xc2\xa7 102(g)(1), the invention locations can be almost anywhere (since\n1995, any country that is a member of the World Trade Organization). For \xc2\xa7 102(g)(2), the\nprior art invention must have been in the United States.\nThe following subsections will decompose the various component parts of \xc2\xa7 102(g) in\ndepth. In brief, as illustrated in the following figure, the process of invention starts with\nconception\xe2\x80\x94having a definite and permanent idea of the complete and operative invention\xe2\x80\x94\nand ends with reduction to practice. Reducing an invention to practice can be done either by\nconstructing a product or performing a process within the scope of the claim (known as actual\nreduction to practice) or by filing an enabling patent application (constructive reduction to\npractice). If the inventor demonstrates reasonable diligence throughout the entire period\nbetween conception and reduction to practice, then the date of invention is the date of\nconception; otherwise, it is the date of reduction to practice. If the first inventor has engaged\nin actual reduction to practice, patent rights could still go to a second inventor under \xc2\xa7 102(g)\nif the first inventor has abandoned, suppressed, or concealed the invention rather than\nbringing the invention to the public by either filing a patent application or commercializing\nit. As we will explain more below, \xe2\x80\x9cabandoned, suppressed or concealed\xe2\x80\x9d is a unified idea, not\nthree separate concepts, and it does not require active suppression\xe2\x80\x94delay due to neglect can\nfall under this category, although the standard is not as exacting as the diligence inquiry.\n\n\x0c96\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThe Process of Invention\n\n1. Conception and Reduction to Practice\nInvention begins with conception. The term \xe2\x80\x9cconception\xe2\x80\x9d might bring to mind the first\nmoment an inventor has an idea for an invention\xe2\x80\x94the \xe2\x80\x9caha\xe2\x80\x9d moment that sparks the process\nof inventing. In fact, however, conception is much more than a spark of an idea. Rather,\nconception is the \xe2\x80\x9cformation in the mind of the inventor, of a definite and permanent idea of\nthe complete and operative invention, as it is thereafter to be applied in practice.\xe2\x80\x9d Coleman v.\nDines, 754 F.2d 353, 359 (Fed. Cir. 1985). Thus, to have conceived of an invention, an inventor\nmust have a sense of how the full invention will be constructed and how it will function. This\ndoesn\xe2\x80\x99t necessarily mean that the inventor needs to have built the invention or even produced\ndetailed blueprints and schematics. But it does require much more than just an initial idea.\nInvention concludes with reduction to practice, which can be established in either of\ntwo ways. First, the party can simply file a patent application. This is known as \xe2\x80\x9cconstructive\nreduction to practice.\xe2\x80\x9d Second, the party can (a) make the actual invention and (b) ascertain\nthat it works for its intended purpose. This is known as \xe2\x80\x9cactual reduction to practice.\xe2\x80\x9d These\ntwo routes to reduction to practice are treated as equivalent because either way, the inventor\n\n\x0cNOVELTY\n\n97\n\nhas concluded the inventive process: either the invention has been completed and the\ninventor knows it will work, or the inventor has filed a patent, which requires legal\naffirmation that the inventor has enabled the invention.\nThe text of \xc2\xa7 102(g) does not explain the relationship between conception and\nreduction to practice or the conditions under which an inventor who is first to one stage or\nanother will be declared the first inventor. However, the courts have clarified this issue. The\nfirst inventor is the party who reduced to practice first, unless another party can prove that\nit (a) conceived first and (b) was diligent during the relevant period. We will discuss the\nrequirement of diligence at greater length in the next subsection.\nFinally, note that if a party cannot prove when it conceived of an invention or when it\nreduced to practice, the party can always rely on its filing date. Filing the patent counts as\nconstructive reduction to practice, and so a party that cannot prove conception or reduction\nto practice prior to the date of its filing will be treated as if it conceived and reduced to practice\non its filing date.\n\nPractice Problems: Conception and Reduction to Practice\n1. Suppose I\xe2\x80\x99m working on inventing a cancer drug. I know what the chemical compound\nis, but I don\xe2\x80\x99t know whether it should be administered in pill or liquid form. Have I\nconceived?\n2. Suppose I want to make a new type of electric car. It needs a special battery, and I\ndon\xe2\x80\x99t know yet if there\xe2\x80\x99s a battery that will work for it. Have I conceived?\n3. Once I have conceived of my electric car, how can I reduce the invention to practice?\nAre there advantages to the inventor of pursuing one route over the other?\n4. Recall that in Pfaff, the Supreme Court held that \xe2\x80\x9cthe invention\xe2\x80\x9d exists once it is\n\xe2\x80\x9cready for patenting,\xe2\x80\x9d meaning that the inventor would be capable of constructively\nreducing the invention to practice at that point by filing for a patent. How does \xe2\x80\x9cready\nfor patenting\xe2\x80\x9d map onto the conception \xe2\x86\x92 reduction-to-practice timeline of an\ninvention? Is it the same thing as reduction to practice? Is it the same thing as\nconception?\n\n2. Reasonable Diligence\nIf an inventor is first to conceive but second to reduce to practice, she may stretch her\ninvention date back past her reduction-to-practice date if she shows reasonable diligence; any\nperiods of inactivity must be legally excused. The Federal Circuit has stated that the purpose\nof this inquiry is to ensure the invention was not \xe2\x80\x9cunreasonably delayed by the first inventor\nduring the period after the second inventor entered the field.\xe2\x80\x9d Brown v. Barbacid, 436 F.3d\n1376, 1379 (Fed. Cir. 2006).\n\n\x0c98\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nTo establish reasonable diligence, the first party to conceive must demonstrate\n\xe2\x80\x9creasonably continuing activity\xe2\x80\x9d directed toward actual or constructive reduction to practice\nduring the critical period between the second party\xe2\x80\x99s conception and the first party\xe2\x80\x99s\nreduction to practice. Id. at 1380. Diligence is a strict standard. Reasonable diligence must\nbe shown \xe2\x80\x9cthroughout the entire critical period.\xe2\x80\x9d Monsanto v. Mycogen Plant Science, 261\nF.3d 1356, 1369 (Fed. Cir. 2001). Although \xe2\x80\x9cthere need not necessarily be evidence of activity\non every single day if a satisfactory explanation is evidenced,\xe2\x80\x9d all gaps must be accounted for\nwith either activity related to reduction to practice or a reasonable excuse. Id. Diligence and\nits corroboration may be shown by a variety of activities, including time obtaining necessary\nsupplies, testing, and preparing a patent application. Reasonable diligence is a question of\nfact that is assessed on a case-by-case basis, and an inventor\xe2\x80\x99s testimony must be\ncorroborated.\nEfforts directed to \xe2\x80\x9congoing laboratory experimentation\xe2\x80\x9d are the clearest evidence of\ndiligence, whereas \xe2\x80\x9cpure money-raising activity that is entirely unrelated to practice of the\nprocess\xe2\x80\x9d does not demonstrate diligence. Scott v. Koyama, 281 F.3d 1243 (Fed. Cir. 2002).\nDelay will be excused for \xe2\x80\x9creasonable everyday problems and limitations\xe2\x80\x9d such as illness,\nshort vacations, the demands of an everyday job, or delays in receiving necessary materials,\nbut not for \xe2\x80\x9cefforts to refine an invention to the most marketable and profitable form.\xe2\x80\x9d Griffith\nv. Kanamaru, 816 F.2d 624 (Fed. Cir. 1987). To provide some sense of how courts evaluate\ndiligence, inventors were found to be reasonably diligent in the following cases:\n\xe2\x97\x8f\n\nThe inventor\xe2\x80\x99s laboratory notebook showed evidence of activity on all but six days of\nthe 31-day critical period, and each of those six days was a single-day gap. Brown v.\nBarbacid, 436 F.3d 1376 (Fed. Cir. 2006).\n\n\xe2\x97\x8f\n\nDuring an eleven-month critical period, laboratory notebooks demonstrated activity\nduring every month, from which a jury could reasonably infer the work was ongoing\nwithout interruption, despite the lack of daily entries. Monsanto Co. v. Mycogen Plant\nScience, 261 F.3d 1356 (Fed. Cir. 2001).\n\n\xe2\x97\x8f\n\nThe inventor\xe2\x80\x99s patent attorney was working on the patent application during the\nthree-month critical period. There was no specific evidence of activity during three\nportions of this period (lasting nineteen, three, and eighteen days), but there was\nevidence from which the court could infer what activities occurred during those gaps\n(such as time the inventor spent responding to the attorney\xe2\x80\x99s questions). Perfect\nSurgical Techniques v. Olympus America, 841 F.3d 1004 (Fed. Cir. 2016).\n\n\xe2\x97\x8f\n\nOver a seventeen-day critical period, the inventor showed daily activity directed\ntoward building a facility for large-scale commercial practice of a chemical process.\nAlthough these activities \xe2\x80\x9cwere not of themselves an actual reduction to practice,\xe2\x80\x9d\nthey were \xe2\x80\x9cdirectly aimed at achieving actual practice\xe2\x80\x9d and are not disqualified by\ntheir commercial scale. Scott v. Koyama, 281 F.3d 1243 (Fed. Cir. 2002).\n\n\x0cNOVELTY\n\n99\n\nIn contrast, the activities in these cases were found to not constitute reasonable diligence:\n\xe2\x97\x8f\n\nA \xe2\x80\x9cbald assertion\xe2\x80\x9d of diligence during an eighteen-month critical period fails to raise\na genuine issue of material fact because a party must \xe2\x80\x9caccount for the entire period\nduring which diligence is required.\xe2\x80\x9d Creative Compounds, LLC v. Starmark Labs., 651\nF.3d 1303 (Fed. Cir. 2011).\n\n\xe2\x97\x8f\n\nThe inventor, a professor at Cornell University, had a three-month period of inactivity\nto wait for a graduate student to arrive and for grant funding to come through.\nCornell\xe2\x80\x99s standard academic policy of waiting for outside research funding reflects a\nchoice \xe2\x80\x9cto assume the risk that priority in the invention might be lost to an outside\ninventor.\xe2\x80\x9d Griffith v. Kanamaru, 816 F.2d 624 (Fed. Cir. 1987).\n\n\xe2\x97\x8f\n\nOver a five-month critical period, the inventor\xe2\x80\x99s patent attorney \xe2\x80\x9chad a few\nconversations with [the inventor], conducted a prior art search, billed for under 30\nhours of work, and drafted the patent application.\xe2\x80\x9d There were few records showing\nthe exact days when activity specific to the application occurred, allowing the Federal\nCircuit to find that substantial evidence supported the PTAB\xe2\x80\x99s finding that the\ninventor had failed to demonstrate sufficient attorney diligence. In re Enhanced Sec.\nRsch., LLC, 739 F.3d 1347 (Fed. Cir. 2014).\n\nDiscussion Questions: Reasonable Diligence\n1. Why Require Diligence? Why do you think patent law has a diligence requirement\nat all, and what\xe2\x80\x99s the best justification for such a strict standard?\n2. Why Not Require Everyone\xe2\x80\x99s Diligence? Diligence is only relevant in one situation:\nwhen the party who was first to reduce to practice was not first to conceive. That is, if a given\nparty is both first to conceive and first to reduce to practice, it is irrelevant how diligent that\nparty was during the period between conception and reduction to practice. The inventor could\nhave taken 10 year-long vacations to Tahiti in the intervening time, and she still would win\nthe \xc2\xa7 102(g) priority race. Why should this be? What policy rationale explains this rule? And\nwhat policies would be furthered by adopting a contrary rule that required diligence\nirrespective of who was first to conceive and reduce to practice?\n\nPractice Problems: Reasonable Diligence\n1. Suppose I conceive of an idea, but I have a full-time job teaching patent law. So I work\non my new idea one or two evenings/week, though I\xe2\x80\x99m mostly spending time on my\nfull-time job. Have I been diligent?\n2. Suppose I conceive of an idea, and then I take a five-year vacation. Toward the end of\nmy vacation, I hear that you\xe2\x80\x99re about to start doing research on the same technologies.\n\n\x0c100\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nI rush home and get back to work on my invention immediately, two days before you\nbegin work. Have I been diligent?\n\n3. Consider the following timeline:\n\nIf both parties are diligent, who will win the \xc2\xa7 102(g) priority race? Whose diligence is\nrelevant in this scenario? During what period must that party establish diligence?\nWhy not require that each party be diligent from the moment of her conception until\nthe moment of her reduction to practice?\n\n3. Abandonment, Suppression, Concealment\nAn earlier inventor will not win an interference under \xc2\xa7 102(g)(1) or have her\ninvention count as prior art under \xc2\xa7 102(g)(2) if she \xe2\x80\x9cabandoned, suppressed, or concealed\xe2\x80\x9d\nthe invention between actual reduction to practice and bringing the invention to the public\nby filing a patent application or commercializing the invention. Like the reasonable diligence\ninquiry, whether a first inventor abandoned, suppressed, or concealed an invention is a factspecific equitable inquiry, but the standard is less exacting than it is for diligence\xe2\x80\x94delays\nare typically measured in years rather than days or weeks.\nAbandonment, suppression, or concealment can be shown not only through deliberate\nconcealment but also through inactivity and neglect. For example, in Peeler v. Miller, 535\nF.2d 647 (C.C.P.A. 1976), Miller invented in 1966, Peeler filed in 1968 (and could not\nestablish an earlier invention), and then Miller filed in 1970. During the four years between\ninvention and filing, Miller\xe2\x80\x99s invention was sitting in a backlog of invention disclosures in the\nlegal office of his employer, Monsanto. The court held that \xe2\x80\x9ca four-year delay from the time\nan inventor is satisfied with his invention and completes his work on it and the time his\nassignee-employer files a patent application is, prima facie, unreasonably long\xe2\x80\x9d and\nconstituted abandonment, suppression, or concealment. Id. at 654.\nThe abandonment, suppression, concealment inquiry is an equitable one. Accordingly,\nnot all delays are treated equally. It matters what the first inventor was doing between\nreduction to practice and filing. The Federal Circuit has indicated that if the inventor was\nworking to \xe2\x80\x9cimprove or perfect the invention,\xe2\x80\x9d a longer period of delay is excusable. Lutzker\nv. Plet, 843 F.2d 1364, 1367 (Fed. Cir. 1988). However, these improvements (or perfections)\nmust be reflected in the final patent application: they must involve claimed elements, and\nthey must be described in the specification. If the delay is due to efforts to commercialize the\ninvention\xe2\x80\x94prepare it for market, but not in a way that changes the actual patented\n\n\x0cNOVELTY\n\n101\n\ninvention\xe2\x80\x94a court will not excuse the delay. Lutzker\xe2\x80\x99s patent was on a machine for making\ncanapes (!), but his post-reduction to practice activity involved creating different canape\nmolds and publishing a recipe book, none of which appeared in the patent application.\nAccordingly, the court held that Lutzker had abandoned his invention for purposes of\n\xc2\xa7 102(g).\nOn the other hand, as we noted at the beginning of this section, not every \xc2\xa7 102(g)\npriority contest involves two parties who both filed for patents. Sometimes one party will\nbring the invention directly to market without attempting to patent it or disseminate it to\nthe public through a printed publication or some other means. That party can still bar others\nfrom patenting under \xc2\xa7 102(g)(2) if it was the first party to invent and did not abandon,\nsuppress, or conceal. In such cases, the relevant time period for measuring abandonment,\nsuppression, concealment is from reduction to practice to when the invention hits the market\nor appears in a printed publication (at which point it is no longer concealed from the public\nand can serve as \xc2\xa7 102(a) prior art). Palmer v. Dudzik, 481 F.2d 1377 (C.C.P.A. 1973). When\nthe inventor takes the product to market without patenting it, the Federal Circuit has been\nmore permissive regarding the types of activities the inventor may engage in between\nreduction to practice and commercialization without the court finding that the inventor has\nabandoned, suppressed, or concealed. In particular, the court is more inclined to excuse time\nspent commercializing the invention and preparing it to be marketed and sold. See\nCheckpoint Sys., Inc. v. U.S. Intern. Trade Commn., 54 F.3d 756, 762 (Fed. Cir. 1995). It is\nnot necessary that the inventor have spent the intervening time improving or perfecting the\ninvention for the equities to tilt in her favor.\nAs some additional examples of how courts have adjudicated these cases, the following\ncases found that inventors had not abandoned, suppressed, or concealed their inventions:\n\xe2\x97\x8f\n\nThe inventor corresponded nearly monthly with his employer\xe2\x80\x99s patent department in\nthe seven months before publicly disclosing the invention, and then filed a patent\napplication one month later, satisfying \xe2\x80\x9cthe public policy requirement of early public\ndisclosure.\xe2\x80\x9d Seven months has never \xe2\x80\x9cbeen seen as raising a presumption\xe2\x80\x9d of\nabandonment. Correge v. Murphy, 705 F.2d 1326 (Fed. Cir. 1983).\n\n\xe2\x97\x8f\n\nDuring a three-year period from reduction to practice to filing a patent, the inventor\nworked on improving the invention until his firm went into bankruptcy, and after\nfinding work at another firm he continued to communicate with the new owner of the\ninvention rights and was eventually hired back, at which point he continued to work\non the invention until he filed a patent. \xe2\x80\x9cThe delay of active work in these\ncircumstances was not unreasonable and was consistent with a continuing\ncommitment to pursuing the project to the full extent conditions allowed.\xe2\x80\x9d Fleming v.\nEscort, 774 F.3d 1371 (Fed. Cir. 2014).\n\n\xe2\x97\x8f\n\nAn earlier invention as reflected in a web browser that was demonstrated to industry\ncolleagues without a confidentiality agreement could be \xc2\xa7 102(g)(2) prior art even\nthough the browser was then replaced with an improved version that was posted on a\npublic website. If improvements to an invention removed it from the prior art, \xe2\x80\x9cthe\n\n\x0c102\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\npublic would lose the benefit of diligent efforts to produce a more useful product.\xe2\x80\x9d\nEolas Techs. v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005).\n\n\xe2\x97\x8f\n\nA firm that spent two and one-half years after reduction to practice engaged in\n\xe2\x80\x9creasonable efforts towards commercialization\xe2\x80\x9d and never filed a patent did not\nabandon, suppress, or conceal, and the firm\xe2\x80\x99s earlier invention constituted \xc2\xa7 102(g)(2)\nprior art. Dow Chemical v. Astro-Valcour, 267 F.3d 1334 (Fed. Cir. 2001).\n\nIn contrast, the activities in these cases were found to constitute abandonment, suppression,\nor concealment:\n\xe2\x97\x8f\n\nAfter reducing to practice, the inventor forwarded an invention disclosure to his firm\xe2\x80\x99s\npatent department. The matter was treated under standard docketing practice, and\nan application was filed twenty-nine months later. The delay raised an inference of\nsuppression that the inventor had not rebutted. Shindelar v. Holdeman, 628 F.3d\n1337 (C.C.P.A. 1980).\n\n\xe2\x97\x8f\n\nThe two-year delay in patenting after reduction to practice constituted suppression\nbecause it was due to the inventor\xe2\x80\x99s pursuit of a cheaper manufacturing process as\nopposed to perfecting the invention itself. Young v. Dworkin, 489 F.2d 1277 (C.C.P.A.\n1974).\n\n\xe2\x97\x8f\n\nDuring the nineteen months between reduction to practice and commercial release of\na software invention, the earlier inventors failed to take \xe2\x80\x9caffirmative steps to make\nthe invention publicly known\xe2\x80\x9d and instead entered \xe2\x80\x9ca web of nondisclosure\nagreements, confidentiality agreements, and noncompete agreements.\xe2\x80\x9d These facts\nsupported a jury verdict of suppression. TQP Dev. v. 1-800-Flowers.com, 120 F. Supp.\n3d 600 (E.D. Tex. 2015), aff\xe2\x80\x99d, 677 F. App\xe2\x80\x99x 683 (Fed. Cir. 2017).\n\nNotes on Timing for Abandonment, Suppression, Concealment\n1. Charting Time for Abandonment, Suppression, and Concealment. The relevant time\nperiod for determining whether an inventor abandoned, suppressed, or concealed, is not\nentirely clear. In Peeler, the court counted four years of delay from Monsanto\xe2\x80\x99s reduction to\npractice until its filing date, despite the fact that Peeler only took action halfway through\nthat four-year period. On the other hand, in Paulik v. Rizkalla, 760 F.2d 1270 (Fed. Cir. 1985)\n(en banc), Paulik invented in 1970, but his employer (again Monsanto!) did not begin work\non the patent application until January or February of 1975. The second inventor, Rizkalla,\nfiled in March 1975 (and could not establish an earlier invention), and then Paulik filed in\nJune 1975. The en banc Federal Circuit held that Paulik did not abandon, suppress, or\nconceal because \xe2\x80\x9cthe first inventor will not be barred from relying on later, resumed activity\nantedating an opponent\xe2\x80\x99s entry into the field.\xe2\x80\x9d Id. at 1276. The court noted the similarities\nwith the four-year period in Peeler v. Miller but distinguished the cases: \xe2\x80\x9cPeeler had entered\nthe field and filed his patent application while Miller remained dormant; Rizkalla entered\nthe field, according to the record before us, after Paulik had renewed activity on the\n\n\x0cNOVELTY\n\n103\n\ninvention.\xe2\x80\x9d Based on this discussion, what is the relevant time period for determining\nwhether a first inventor A has abandoned, suppressed, or concealed if A files a patent after a\nsecond inventor B, as illustrated by the following timeline?\n\nEven though Paulik says A can rely on resumed activity before B\xe2\x80\x99s entry, suggesting\nthat the relevant period should be between Time 2 and Time 4 (as with the diligence inquiry\nabove), Peeler focuses on a four-year delay, and Paulik claims to be consistent with Peeler.\nWe think the best way to understand this is that we measure abandonment using the entire\nperiod of inactivity (Time 1 to Time 4), but that a party that abandoned can still win the\npriority race if it resumed activity before the other party invented (Time 2) and then did not\nagain abandon between the resumption and filing (at Time 4).\n2. When Does the Second Inventor Enter the Field? In Paulik, the first inventor is saved\nby his resumption of activity prior to the moment when the second inventor \xe2\x80\x9centers the field.\xe2\x80\x9d\nHowever, the Paulik court does not specify what it means to \xe2\x80\x9center the field\xe2\x80\x9d\xe2\x80\x94is it conception,\nreduction to practice, or something else? As best as one can tell, the Federal Circuit dates a\nparty\xe2\x80\x99s entrance into the field to its earliest invention date. So, for instance, the court will\nview a party as having entered the field on the date of its conception if it was diligent between\nconception and reduction to practice. If the party was not diligent, or if it cannot establish an\nearlier conception date (like Rizkalla), it will have entered the field on the date of its reduction\nto practice. Fleming v. Escort, 774 F.3d 1371, 1378\xe2\x80\x9379 (Fed. Cir. 2014).\n\nDiscussion Questions: Abandonment, Suppression, Concealment\n1. What Time Period Should Be Relevant? Consider again the timeline above, in which\nA invents first but files a patent after a second inventor B. What are the policy arguments in\nfavor of treating the entire period of time from A\xe2\x80\x99s invention to A\xe2\x80\x99s filing as relevant to the\nabandonment inquiry? What are the policy arguments in favor of only considering the period\nfrom B\xe2\x80\x99s invention until A\xe2\x80\x99s filing?\n2. Why Treat Abandonment Differently from Diligence? Recall that when evaluating\ndiligence in a comparable situation where A is first to conceive and last to reduce to practice,\nthe only relevant time period is between B\xe2\x80\x99s conception and A\xe2\x80\x99s reduction to practice, not the\nfull span of time between A\xe2\x80\x99s conception and A\xe2\x80\x99s reduction to practice. Is there an argument\nfor treating abandonment differently?\n\n\x0c104\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n3. Why Treat Patenting Differently from Commercialization? What is the policy\nrationale for permitting different activities depending on whether the endpoint is a patent or\na commercialized product?\n\nPractice Problems: \xc2\xa7 102(g)\nConsider the following hypotheticals. What do the answers to these various\nhypotheticals tell you about the advantages and disadvantages of the various strategies an\ninventor can pursue with a new invention?\n1. Suppose I reduce to practice, then let my invention sit around for 6 months, then file\nmy patent. Have I abandoned, suppressed, or concealed?\n2. Suppose I conceive, then let the invention sit around for 6 months before reducing to\npractice. Was I diligent? If your answer is different from question 1, why do you think\nthat is? Why is diligence a stricter standard than abandonment, suppression, or\nconcealment. Should it be that much stricter?\n3. Suppose I reduce to practice, and then (since I\xe2\x80\x99m an academic) go off and give talks\nfor five years about how great I am and how exciting my invention is. Then I file. Have\nI abandoned, suppressed, or concealed?\n4. Suppose in 2000 I reduce to practice, then I put the invention down to work on other\nthings. In 2010, I pick it back up and then file. Two days later, a competitor conceives\nof the same invention, reduces to practice, and then files. Have I abandoned,\nsuppressed, or concealed in the intervening decade?\n5. Same question as 4, but here the other party conceives of the invention two days before\nI picked it back up? Who is going to get the patent? If your answer is different from\nquestion 4, can you explain why they should be different? Why should a few days here\nor there make such a difference, as against a decade of inactivity?\n6. Suppose I invent something and reduce it to practice. I then spend one year working\nto create a product and bring it to market. Halfway through this year-long period, you\ninvent the same thing, reduce it to practice, and quickly bring it to market. We each\nfile for a patent at the end of the year. Who gets the patent?\n7. In January 2000, I invent a new invention. I then do nothing for five years. In January\n2001, you invent the same thing. You spend a year and a half working to\ncommercialize the invention, and in July 2002 you file for a patent on it and\nconfidentially offer it for sale. Nobody buys the invention. In January 2005, I file for\na patent on the same invention. Who is entitled to the patent?\n\n\x0cNOVELTY\n\n105\n\nC. The Anticipation Analysis\nThe rule for whether a piece of prior art anticipates a given patent claim is easy\nenough to state: Does the prior art reference disclose every element of the claim? (This rule\nis sometimes called the \xe2\x80\x9cidentity requirement.\xe2\x80\x9d) Recall the Swiffer patent example from the\nbeginning of this chapter: none of the three prior art references had all four elements of the\nSwiffer patent claim, so it was not anticipated. But applying this rule in practice is not always\nstraightforward. What is an \xe2\x80\x9celement\xe2\x80\x9d of a claim? Is what the reference discloses the same\nthing as that element?\n\n1. Anticipation Claim Charts\nAs an example of how courts grapple with these kinds of questions, consider U.S.\nPatent No. 6,161,226, which was filed in 1999 and disclosed a baseball chest protector. Here\nare three of the figures from the \xe2\x80\x99226 patent:\n\nThe \xe2\x80\x99226 patent issued in 2000 with a single claim, to which we have added numbers\ncorresponding to the figures above:\n1. A baseball chest protector comprising:\na flexible main pad [11] having a left shoulder portion [14], a right\nshoulder portion [15], a chest portion [16], and an abdomen portion [17];\na flexible shoulder guard [12] extending from the left shoulder portion\nof the main pad over the shoulder of a wearer and having a front portion\n[20] adjacent the main pad, a top portion [21], and a back portion [22];\nand adjustable straps [13], each adjustable strap attached at one end to\nthe abdomen portion of the main pad and at the other end to the back\nportion of the shoulder guard.\nThe assignee of the \xe2\x80\x99226 patent, Everything Baseball, sued manufactures of baseball\nchest protectors including Wilson Sporting Goods, Rawlings Sporting Goods, and Adidas\n\n\x0c106\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAmerica. The defendants moved for summary judgment of invalidity, arguing that the claim\nwas anticipated by each of three prior art references related to a chest protector invented by\nMajor League Baseball umpire Joe West, illustrated below: (1) a chest protector\nmanufactured and sold by Douglas Athletic Equipment beginning in 1993; (2) U.S. Patent\nNo. 5,530,966, filed by West in 1992; and (3) the paper \xe2\x80\x9chang tag\xe2\x80\x9d for a protector sold by\nWilson Sporting Goods.\n\nIn their motion for summary judgment, defendants argued:\nAs each West embodiment shows, the West designed chest protector features\nboth a flexible inner layer and outer shell portions. It is the flexible inner layer\nthat is significant to Defendants\xe2\x80\x99 motion. The West chest protector has a\nflexible main pad (the inner layer) that protects the user\xe2\x80\x99s shoulders, chest,\nand abdomen; right and left shoulder guards that bend over the shoulder to\nprotect the front, top and rear of the shoulder, and adjustable straps that\nattach and connect to the back of the shoulder guards and the abdomen region\nof the main pad.\nBefore you keep reading to see how the district court ruled on this motion, look back\nat the claim language above and compare it with the West references. At trial, this is typically\ndone through what is known as a \xe2\x80\x9cclaim chart.\xe2\x80\x9d In a claim chart, a party separates the claim\ninto its component elements and attempts to identify some feature in the prior art that\nmatches each element\xe2\x80\x94or, for the plaintiff, attempts to show that there is no match for at\nleast one of the claim elements.12 We have created a sample claim chart below. Try to identify\nthe part of each of the three West references that meets each claim limitation. Do you agree\nwith the defendants that each reference clearly anticipates the claim?\n\nClaim charts are also used in infringement analysis to match claim elements with\ncomponents of the product or process that is accused of infringing the patent.\n12\n\n\x0cNOVELTY\n\nClaim 1 elements\n\n107\n\nLocation of element in prior art?\n\n(1) a flexible main pad [11] having\n(a) a left shoulder portion [14],\n(b) a right shoulder portion [15],\n(c) a chest portion [16],\n(d) an abdomen portion [17];\n(2) a flexible shoulder guard [12]\n(a) extending from the left shoulder\nportion of the main pad over the\nshoulder of a wearer and having\n(b) a front portion [20] adjacent the\nmain pad,\n(c) a top portion [21], and\n(d) a back portion [22]; and\n(3) adjustable straps [13],\n(a) each adjustable strap attached at\none end to the abdomen portion of\nthe main pad\n(b) and at the other end to the back\nportion of the shoulder guard.\n\nEverything Baseball v. Wilson Sporting Goods, 611 F. Supp. 2d 832 (N.D. Ill. 2009)\nElaine E. Bucklo, District Judge.\nAlthough patent claims are presumed valid, that presumption can be overcome\xe2\x80\x94and\nthe claims invalidated as \xe2\x80\x9canticipated\xe2\x80\x9d\xe2\x80\x94where clear and convincing evidence shows that the\nclaimed subject matter was previously described in a single prior art reference. To anticipate,\na single reference must teach every limitation of the claimed invention. Anticipation is a\nquestion of fact.\nThe parties agree that to anticipate the \xe2\x80\x99226 patent, at least one of the West references\nmust demonstrate all of the following limitations: \xe2\x80\x9ca flexible main pad having . . . an abdomen\nportion\xe2\x80\x9d; \xe2\x80\x9ca flexible shoulder guard\xe2\x80\x9d that extends \xe2\x80\x9cover the shoulder of a wearer\xe2\x80\x9d; and\n\xe2\x80\x9cadjustable straps attached at one end to the abdomen portion of the main pad.\xe2\x80\x9d The parties\n\n\x0c108\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nalso generally agree on the structure of the West references. Nevertheless, the parties\xe2\x80\x99\npositions on whether these references disclose the aforementioned limitations are\ndiametrically opposed: defendants assert that each West reference demonstrates all of the\nlimitations, while plaintiff argues that none of the references contains any of them. I need\nnot examine all of these disputes, however, because even a single material dispute relating\nto each of the references is sufficient to deny summary judgment.\n1. The Douglas chest protector\nAfter viewing, handling, and observing the Douglas embodiment as worn by a law\nclerk, I am not persuaded that this reference indisputably contains \xe2\x80\x9can abdomen portion\xe2\x80\x9d as\nrequired by the \xe2\x80\x99226 patent. When worn in what appears to be the proper position (as I\nassume was the case in the photographs defendants submitted in support of their motion),\nthe Douglas chest protector comes down to just below the sternum, i.e., several inches above\nthe navel, leaving a large portion of the abdomen exposed. I am thus baffled by defendants\xe2\x80\x99\ncontention that it is \xe2\x80\x9cself-evident from just looking at\xe2\x80\x9d this reference that it has an abdomen\nportion. At the very least, whether the Douglas chest protector contains an abdomen portion\nis a question of fact for the jury. Accordingly, the Douglas chest protector does not anticipate\nthe patent-in-suit as a matter of law.\n2. The \xe2\x80\x99966 Patent\nI am also not persuaded that the \xe2\x80\x99966 patent indisputably contains \xe2\x80\x9ca flexible main\npad.\xe2\x80\x9d Defendants concede that the \xe2\x80\x99966 patent discloses a protective garment with an outer\nshell layer of plastic plates (which both the specification and the claims of that patent\ndescribe as \xe2\x80\x9cstiff\xe2\x80\x9d), but they argue that the invention is nevertheless \xe2\x80\x9cflexible\xe2\x80\x9d because 1) the\ninner portion of the garment is flexible, which satisfies the requirement that the reference\ncontain a \xe2\x80\x9cflexible main pad,\xe2\x80\x9d and 2) the assembly taken together is flexible because the\nplastic plates of the outer shell are themselves flexible and, in any event, are hingedly linked\nso as to be capable of folding when disassembled from the inner portion.\nTo set the stage for their first argument, defendants characterize the plates as\n\xe2\x80\x9cseparate components added to the flexible inner pad,\xe2\x80\x9d then argue that the presence of\n\xe2\x80\x9cadditional\xe2\x80\x9d features (i.e., the external plastic plates) in the \xe2\x80\x99966 patent do not diminish the\nreference\xe2\x80\x99s satisfaction of the \xe2\x80\x9cflexible\xe2\x80\x9d limitation in the asserted claim. But it is not the\n\xe2\x80\x9cinner pad\xe2\x80\x9d that must be flexible according to the claim; it is the \xe2\x80\x9cmain pad.\xe2\x80\x9d I share plaintiff\xe2\x80\x99s\nskepticism that the term \xe2\x80\x9cmain pad\xe2\x80\x9d can be construed as referring to the \xe2\x80\x9cinner pad\xe2\x80\x9d (rather\nthan to the assembly of the inner and outer portions), which is how the phrase would have to\nbe interpreted for defendants\xe2\x80\x99 argument to win the day. Defendants are correct that the\ntransition \xe2\x80\x9ccomprising\xe2\x80\x9d (which precedes the limitation \xe2\x80\x9ca flexible main pad\xe2\x80\x9d) typically\nsuggests an open-ended claim, and that provided all limitations of the patent-in-suit are\npresent in a prior art reference, the presence of \xe2\x80\x9cadditional\xe2\x80\x9d features in the prior art reference\ndoes not undermine its satisfaction of the criteria for anticipation. If the claim language read,\nfor example, \xe2\x80\x9ca main pad comprising a flexible inner pad,\xe2\x80\x9d defendants might have a point,\nsince a \xe2\x80\x9cmain pad\xe2\x80\x9d having both a flexible inner pad and inflexible outer plates would\npresumably satisfy the limitation as written. The asserted claim, however, recites \xe2\x80\x9ca flexible\n\n\x0cNOVELTY\n\n109\n\nmain pad,\xe2\x80\x9d and a reasonable interpretation of this language is that the main pad must be\n\xe2\x80\x9cflexible\xe2\x80\x9d when all of its components are considered together.\nThis brings me to defendants\xe2\x80\x99 second argument, which is that even if the inner and\nouter layers of the chest protector disclosed in the \xe2\x80\x99966 patent are considered collectively to\nbe the \xe2\x80\x9cmain pad,\xe2\x80\x9d the assembly still meets the requirement of the \xe2\x80\x99226 patent that the chest\nprotector be \xe2\x80\x9cflexible.\xe2\x80\x9d I cannot decide this question as a matter of law, despite the parties\xe2\x80\x99\nagreed-upon construction of the term \xe2\x80\x9cflexible\xe2\x80\x9d as meaning \xe2\x80\x9ccapable of being bent or flexed.\xe2\x80\x9d\nAs to the first prong of defendants\xe2\x80\x99 argument (that the plastic plates are themselves flexible),\nmost any material is capable of being bent or flexed if sufficient pressure is exerted (indeed,\neven steel structures such as buildings and bridges are engineered to be flexible enough to\nwithstand the pressures of wind and earthquakes, for example). That some amount of\npressure will cause the plastic plates to bend or flex thus does not compel the conclusion that\nthe plates are \xe2\x80\x9cflexible\xe2\x80\x9d as that term is used in the patent-in-suit. Moreover, the \xe2\x80\x99966 patent\nrepeatedly describes the plastic plates used in the invention as \xe2\x80\x9cstiff.\xe2\x80\x9d Defendants point out\nthat the \xe2\x80\x99226 patent itself also contemplates the use of plastic for the \xe2\x80\x9couter casing\xe2\x80\x9d of the\nmain pad. Unlike the \xe2\x80\x99966 patent, however, which specifically describes the plastic plates\nused for the outer portion of the garment as \xe2\x80\x9cstiff,\xe2\x80\x9d there is nothing in the patent-in-suit to\nsuggest that the invention contemplates the use of \xe2\x80\x9cstiff\xe2\x80\x9d outer material in the \xe2\x80\x9cflexible main\npad.\xe2\x80\x9d The disclosure states only that the outer layer \xe2\x80\x9cmay be made of any suitable material,\nsuch as fabric or plastic.\xe2\x80\x9d In light of the overall requirement that the main pad be flexible, a\nreasonable interpretation of this language is that it contemplates the use of malleable, rather\nthan \xe2\x80\x9cstiff\xe2\x80\x9d plastic for the outer casing. In sum, defendants have not demonstrated, as a\nmatter of law, that the plastic plates of the \xe2\x80\x99966 patent are \xe2\x80\x9cflexible\xe2\x80\x9d as that term is used in\nthe patent-in-suit.\nThis leaves the second prong of defendants\xe2\x80\x99 second argument: that the assembly of\nthe inner and outer portions of the invention embodied in the \xe2\x80\x99966 patent is \xe2\x80\x9cflexible\xe2\x80\x9d because\nthe \xe2\x80\x9cstiff\xe2\x80\x9d outer plates are \xe2\x80\x9chingedly connected by flexible straps.\xe2\x80\x9d This issue also cannot be\nresolved as a matter of law. Plaintiff and defendants point to the same portion of the \xe2\x80\x99966\ndisclosure in support of their respective positions: a passage that discusses the relationship\namong the various plastic plates. The relevant text describes an embodiment of the \xe2\x80\x99966\npatent in which the plastic plates are connected by \xe2\x80\x9cflexible straps\xe2\x80\x9d that \xe2\x80\x9cafford hinge-like\ndisplacement of the associated plate elements about a hinge axis.\xe2\x80\x9d In addition, the description\nspecifies that \xe2\x80\x9cthe straps are of a width and stiffness so as to resist flexing of the straps except\nalong the hinge axis.\xe2\x80\x9d Unsurprisingly, plaintiff focuses on the \xe2\x80\x9cof a width and stiffness so as\nto resist flexing\xe2\x80\x9d portion of this excerpt, while defendants emphasize the \xe2\x80\x9cexcept along the\nhinge axis\xe2\x80\x9d portion, which they say \xe2\x80\x9cdirectly contradicts\xe2\x80\x9d plaintiff\xe2\x80\x99s argument that the\ninvention in the \xe2\x80\x99966 patent is \xe2\x80\x9crigid.\xe2\x80\x9d\nDefendants\xe2\x80\x99 argument fails because even assuming the presence of flexible hinges\nmeans the exterior shell cannot accurately be characterized as \xe2\x80\x9crigid,\xe2\x80\x9d reasonable minds can\ndiffer as to whether the ability of the stiff plastic plates to be \xe2\x80\x9cdisplaced\xe2\x80\x9d about their axes\xe2\x80\x94\nbut not in any other direction\xe2\x80\x94satisfies the requirement that the main pad be \xe2\x80\x9cflexible\xe2\x80\x9d as\nthat term is used in the patent-in-suit. A reasonable interpretation of \xe2\x80\x9cflexible\xe2\x80\x9d as used in\n\n\x0c110\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthe \xe2\x80\x99226 patent is that the main pad must be flexible in various directions, not merely among\na particular axis or axes. Indeed, such an interpretation would support the patent-in-suit\xe2\x80\x99s\nstated object of protecting a catcher \xe2\x80\x9cwithout restricting the catcher\xe2\x80\x99s mobility,\xe2\x80\x9d which\npresumably is not limited to movement along the axes formed by the interconnected plates.\nIn other words, the hinged movement among the stiff plastic plates disclosed in the \xe2\x80\x99966\npatent may render the invention non-rigid without rendering it \xe2\x80\x9cflexible\xe2\x80\x9d as that term is used\nin the \xe2\x80\x99226 patent.\nFor at least these reasons, the \xe2\x80\x99966 patent does not anticipate the patent-in-suit as a\nmatter of law.\n3. The Wilson West Vest \xe2\x80\x9cHang Tag\xe2\x80\x9d\nFirst of all, other than identifying what appears to be the inner layer of the garment\nas the \xe2\x80\x9csoft underpad,\xe2\x80\x9d there is no evidence that any or all of the portion of the West Vest\ncorresponding to the \xe2\x80\x9cmain pad\xe2\x80\x9d of the \xe2\x80\x99226 patent is \xe2\x80\x9cflexible.\xe2\x80\x9d The front view drawing\ndepicts and identifies the following parts: collar plates; collar roll; shoulder cup; bicep pad;\nside chest plates; breast plate; sternum plate; soft underpad; \xe2\x80\x9cT\xe2\x80\x9d hooks; and \xe2\x80\x9cT\xe2\x80\x9d hook slots. (I\nnote in passing that no \xe2\x80\x9cabdomen plate\xe2\x80\x9d is identified, and the extent to which the \xe2\x80\x9csternum\nplate\xe2\x80\x9d descends below the sternum when worn is not ascertainable from the drawing.) It is\nnot clear from the picture whether certain of these parts are overlapping or adjacent. I cannot\ndiscern, for example, whether the portion identified as the \xe2\x80\x9cbreast plate\xe2\x80\x9d overlaps with the\nparts identified as \xe2\x80\x9cside chest plates,\xe2\x80\x9d or whether one of these plate ends where the other\nbegins. Moreover, nothing tells me the extent to which the \xe2\x80\x9cplate\xe2\x80\x9d components are themselves\nflexible or stiff, or how they are connected to one another, if at all. For at least these reasons,\nI cannot conclude as a matter of law that the Wilson \xe2\x80\x9chang tag\xe2\x80\x9d anticipates the patent-insuit.\nFor the foregoing reasons, defendants\xe2\x80\x99 motion for summary judgment is denied.\n[After the summary judgment motion was denied, the parties agreed to a stipulated\ndismissal, indicating a likely settlement.]\n\nPractice Problem: Creating an Anticipation Claim Chart\nAs explained above, patent practitioners create claim charts to demonstrate which\nelements of a patent claim are present in another work. Invalidity claim charts show how\neach element is present (or not) in the prior art; infringement claim charts show how each\nelement is present (or not) in the defendant\xe2\x80\x99s accused product. In this exercise,13 you will\nassemble an invalidity claim chart for claim 1 of U.S. Patent No. 5,026,109 (the \xe2\x80\x99109 patent),\nwhich claims a tarp system for covering a truck trailer. You represent the accused infringer,\nwho wants to argue that the claim is anticipated by prior art U.S. Patent No. 4,189,178\n(Cramaro). (Conventionally, the patent-in-suit is referred to by its last three digits, and prior\n13\n\nWe thank Roger Ford for creating the original version of this exercise.\n\n\x0cNOVELTY\n\n111\n\nart patents are referred to by the first inventor\xe2\x80\x99s last name.) Please download PDFs of these\npatents. If you forget how to do this, look back at the \xe2\x80\x9cLocating Patent Documents\xe2\x80\x9d exercise\nin Chapter 1.\nFor each limitation of claim 1 of the \xe2\x80\x99109 patent, provide one or more quotes, cites, or\nfigures from the reference demonstrating how the limitation is disclosed by that reference. If\nyou do not believe that the reference includes one or more of the limitations, indicate that as\nwell. We have filled in two of the rows already as models. Do you think Cramaro anticipates\nthe \xe2\x80\x99109 patent?\nU.S. Patent No. 5,026,109\n\nU.S. Patent No. 4,189,178 (Cramaro prior art)\n\n1. A retractable segmented\ncover system used with a truck\ntrailer comprising\n\n\xe2\x80\x9cA tarpaulin cover system for use in trucks eliminates\nthe need for usual side tracks for guiding the tarpaulin\nsupporting rods.\xe2\x80\x9d Abstract.\n\xe2\x80\x9cThis invention relates to a new tarpaulin cover system\nfor use in a truck box. More particularly, the present\ninvention relates to a tarpauline cover system suitable\nfor vehicles such as dump trucks or the like, frequently\nused in hauling sand, gravel, rocks etc.\xe2\x80\x9d Col. 1, ll. 6\xe2\x80\x9310.\n\n(a) a plurality of flexible cover\nsections with\n\n(b) a plurality of substantially\nparallel supporting bows spaced\ntherebetween and\n\n\xe2\x80\x9cTurning now to the embodiment of FIGS. 6 and 7, it\nwill be seen that the rods 5' 6' of this embodiment are\nof the type of upwardly arched bows.\xe2\x80\x9d Col. 3, ll. 45\xe2\x80\x9347.\n(c) a drive assembly,\n\n(d) wherein each cover section is\ndetachably connected between\nsubstantially parallel\nsupporting bows,\n\n\x0c112\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n(e) the bows are slideably\nsupported on the truck trailer\nand\n(f) at least one bow is fixedly\nconnected to the drive assembly\nsuch that the cover system can\nbe extended or retracted by the\ndrive assembly and\n(g) wherein a cover section can\nbe removed from the cover\nsystem independent of the other\ncover sections.\n\n2. Accidental and Inherent Anticipation\nAs we explained at the very beginning of this section on novelty, a claimed invention\nis unpatentable for lack of novelty only if a single piece of prior art discloses every element of\nthe claim. Much of the time, this analysis is straightforward: a printed publication or a prior\npatent either does or does not describe all of the elements of the claim; an invention that is\nin public use or on sale either does or does not include every claim element. But in some cases,\nthe elements of a patent claim will necessarily be present in a prior art reference without\nexplicitly being mentioned or described in that reference. Or a reference will disclose the\nelements of a claim without the party who created the reference having any idea (or intention)\nthat it does so.\nThese situations involve what is known as \xe2\x80\x9caccidental\xe2\x80\x9d or \xe2\x80\x9cinherent\xe2\x80\x9d anticipation, and\nthey raise a number of related questions. Can prior art anticipate if the elements of a claim\nare necessarily present in the prior art reference, even if they are never explicitly mentioned?\nIf so, under what circumstances? And must the creator of a piece of prior art realize that the\nclaimed elements are present in the prior art in order for that prior art to anticipate a claim?\nIf not, why not? The following two cases attempt to answer these questions.\n\nIn re Seaborg, 328 F.2d 996 (C.C.P.A. 1964)\nArthur M. Smith, Judge.\nThe application and the claims in issue relate to a new transuranic element having\natomic number 95, now known as Americium (Am). Two isotopes of Americium are disclosed,\nAmericium 241 and 242. Two general methods of synthesizing element 95 are set forth,\nnamely (1) bombardment of plutonium with deuterons or neutrons; and (2) in a neutronic\n\n\x0cNOVELTY\n\n113\n\nreactor operated at a relatively high power level for an extended period of time\n(approximately 100 days). A suitable reactor is said to be that described in Fermi et al.\napplication Serial No. 568,904, filed December 19, 1944, which is now U.S. Patent No.\n2,708,656.\nThe claims in issue read simply:\n1. Element 95.\n2. The isotope of element 95 having the mass number 241.\nThere is but a single ground of rejection involving the above claims, i.e.,\nunpatentability over the Fermi et al. patent, for the reason that element 95 must be\ninherently produced in the operation of the reactor disclosed therein.\nThe Fermi et al. patent discloses several nuclear reactors. The patent does not\nmention elements 95 and 96. The claims in issue were first rejected on the Fermi patent in\nthe examiner\xe2\x80\x99s letter of May 25, 1955.\nAppellant, however, asserts in his brief:\nThe statements are exemplary only. [T]he maximum amount of americium 241\nthat could have been produced in the reactor operated for 100 days at 500\nkilowatts power can be calculated to be 6.15 \xc3\x97 10-9 gram. Thus the reactor could\nhave produced no more than one billionth [sic]14 of a gram of americium-241,\nand this one billionth of a gram would have been distributed throughout forty\ntons of intensely radioactive uranium reactor fuel. This amount of an\nunknown, unconcentrated isotope, if present, would have been undetectable.\nThe solicitor has taken no issue with appellant\xe2\x80\x99s assertion. In fact, the solicitor states\nin his brief:\nThe facts are relatively simple and not actually in dispute. The rejection is not\nbased upon a finding that the patent expressly discloses the formation of the\nclaimed element, but rather upon the conclusion reached that that product is\ninherently produced in the operation of the Fermi reactor.\nThe issue here arises by application of what both the appellant and the solicitor term\nthe \xe2\x80\x9cinherency doctrine,\xe2\x80\x9d which, as we understand it, is a Patent Office doctrine which infers\na lack of novelty in a product if a comparable process for making the product is found to exist\nin the art. When so stated and applied to the facts here this doctrine establishes a broader\nbasis for refusing a patent than is required by the courts in finding anticipation of an issued\npatent. It goes beyond the rule as stated by Judge Learned Hand in Dewey & Almy Chemical\nCo. v. Mimex Co., 124 F.2d 986, 989 (2d Cir. 1942):\n[n.3 in opinion] It would appear that appellant meant \xe2\x80\x98one one-hundred millionth\xe2\x80\x99 rather\nthan \xe2\x80\x98one billionth,\xe2\x80\x99 since 6.15 \xc3\x97 10-9 gram amounts to more than six billionths of a gram.\n14\n\n\x0c114\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nNo doctrine of the patent law is better established than that a prior patent or\nother publication to be an anticipation must bear within its four corners\nadequate directions for the practice of the patent invalidated. If the earlier\ndisclosure offers no more than a starting point for further experiments, if its\nteaching will sometimes succeed and sometimes fail, if it does not inform the\nart without more how to practice the new invention, it has not correspondingly\nenriched the store of common knowledge, and it is not an anticipation.\n\nThe record before us . . . is replete with showings that the claimed product, if it was\nproduced in the Fermi process, was produced in such minuscule amounts and under such\nconditions that its presence was undetectable.\nIn the companion appeal [involving a patent application for element 96, Curium], the\nboard stated what we consider to be the fact here, that:\nThe exhibits submitted do not show that appellant could predict with any\ndegree of definiteness the properties or characteristics of the new elements or\nspecify with any certainty the exact procedures which could be followed,\nwithout the exercise of more than the ordinary skill of the art, to prepare these\nelements. Indeed, in view of the unpredictability both as to the character of the\nproduct elements and of the processes by which they might be achieved, it is\nparticularly reasonable to hold that conception and reduction to practice are\nnecessarily concurrent for an invention of this kind.\nWe also agree with the summary statement in appellant\xe2\x80\x99s brief that:\nThere is no positive evidence that americium was produced inherently in the\nnatural uranium fuel by the operation of the reactor for the times and at the\nintensity mentioned in the exemplary statement relied upon by the Patent\nOffice. The calculations show that the element, if produced, was produced in\nthe most minute quantities. If the one billionth of a gram were produced, it\nwould have been completely undetectable, since it would have been diluted\nwith the 40 tons of intensely radioactive uranium fuel which made up the\nreactor.\nSince we reject the position of the board in affirming the rejection on the Fermi patent,\nthere is no reason to here consider the sufficiency of the Rule 131 affidavits as establishing\nfor appellant a date of invention prior to the date of the Fermi reference.\nFor the foregoing reasons, the decision of the board is reversed.\n\n\x0cNOVELTY\n\n115\n\nSchering Corp. v. Geneva Pharmaceuticals, 339 F.3d 1373 (Fed. Cir. 2003)\nRandall R. Rader, Circuit Judge.\nOn summary judgment, the United States District Court for the District of New Jersey\ndetermined that claims 1 and 3 of U.S. Patent No. 4,659,716 (the \xe2\x80\x99716 patent) are invalid.\nBecause the district court correctly found that U.S. Patent No. 4,282,233 (the \xe2\x80\x99233 patent)\ninherently anticipates claims 1 and 3 of the \xe2\x80\x99716 patent, this court affirms.\nI.\nSchering Corporation owns the \xe2\x80\x99233 and \xe2\x80\x99716 patents on antihistamines.\nAntihistamines inhibit the histamines that cause allergic symptoms. The prior art \xe2\x80\x99233\npatent covers the antihistamine loratadine, the active component of a pharmaceutical that\nSchering markets as CLARITIN\xe2\x84\xa2. Unlike conventional antihistamines when CLARITIN\xe2\x84\xa2\nwas launched, loratadine does not cause drowsiness.\nThe more recent \xe2\x80\x99716 patent at issue in this case covers a metabolite of loratadine\ncalled descarboethoxyloratadine (DCL). A metabolite is the compound formed in the patient\xe2\x80\x99s\nbody upon ingestion of a pharmaceutical. The ingested pharmaceutical undergoes a chemical\nconversion in the digestion process to form a new metabolite compound. The metabolite DCL\nis also a non-drowsy antihistamine. The \xe2\x80\x99716 patent issued in April 1987 and will expire in\nApril 2004 (the \xe2\x80\x99233 patent issued in 1981 and has since expired).\nThe numerous defendants-appellees sought to market generic versions of loratadine\nonce the \xe2\x80\x99233 patent expired. [Under the Hatch\xe2\x80\x93Waxman framework that this casebook\ndescribes in Chapter 11, defendants submitted Abbreviated New Drug Applications to the\nFDA along with \xe2\x80\x9cparagraph IV\xe2\x80\x9d certifications that the \xe2\x80\x99716 patent was invalid. Schering then\nfiled this suit for infringement under 35 U.S.C. \xc2\xa7 271(e)(2)(A).]\nThe district court construed claims 1 and 3 of the \xe2\x80\x99716 patent to cover DCL in all its\nforms, including \xe2\x80\x9cmetabolized within the human body\xe2\x80\x9d and \xe2\x80\x9csynthetically produced in a\npurified and isolated form.\xe2\x80\x9d The parties agreed to that construction. Applying that claim\nconstruction, the district court found that the \xe2\x80\x99233 patent did not expressly disclose DCL.\nNonetheless, the district court also found that DCL was necessarily formed as a metabolite\nby carrying out the process disclosed in the \xe2\x80\x99233 patent. The district court concluded that the\n\xe2\x80\x99233 patent anticipated claims 1 and 3 of the \xe2\x80\x99716 patent under 35 U.S.C. \xc2\xa7 102(b). The district\ncourt therefore granted the appellees\xe2\x80\x99 motions for summary judgment of invalidity. Schering\ntimely appealed . . . .\nII.\nA.\nAt the outset, this court rejects the contention that inherent anticipation requires\nrecognition in the prior art. Precedents of this court have held that inherent anticipation does\nnot require that a person of ordinary skill in the art at the time would have recognized the\n\n\x0c116\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ninherent disclosure. The district court therefore did not err in allowing for later recognition\nof the inherent characteristics of the prior art \xe2\x80\x99233 patent.\nCases dealing with \xe2\x80\x9caccidental, unwitting, and unappreciated\xe2\x80\x9d anticipation also do\nnot show that inherency requires recognition. See Eibel Process Co. v. Minn. & Ontario Paper\nCo., 261 U.S. 45 (1923); Tilghman v. Proctor, 102 U.S. 707 (1880). The patent at issue in\nTilghman claimed a method of forming free fatty acids and glycerine by heating fats with\nwater at high pressure. In Tilghman, the record did not show conclusively that the claimed\nprocess occurred in the prior art. In reviewing the prior art, the Court referred hypothetically\nto possible disclosure of the claimed process. For example, the Court stated \xe2\x80\x9c[w]e do not\nregard the accidental formation of fat acid in Perkins\xe2\x80\x99s steam cylinder . . . (if the scum which\nrose on the water issuing from the ejection pipe was fat acid) as of any consequence in this\ninquiry.\xe2\x80\x9d 102 U.S. at 711.\nApplying an inherency principle in the context of an on sale bar under 35 U.S.C.\n\xc2\xa7 102(b), this court has distinguished Eibel and Tilghman. See Abbott Labs. v. Geneva\nPharms., Inc., 182 F.3d 1315, 1319 (Fed. Cir. 1999) (\xe2\x80\x9cIf a product that is offered for sale\ninherently possesses each of the limitations of the claims, then the invention is on sale,\nwhether or not the parties to the transaction recognize that the product possesses the claimed\ncharacteristics.\xe2\x80\x9d); Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1330 (Fed. Cir. 2001)\n(\xe2\x80\x9c[A]ppreciation of the invention is not a requirement to trigger the statutory [on sale] bar.\xe2\x80\x9d).\nIn the context of accidental anticipation, DCL is not formed accidentally or under\nunusual conditions when loratadine is ingested. The record shows that DCL necessarily and\ninevitably forms from loratadine under normal conditions. DCL is a necessary consequence\nof administering loratadine to patients. The record also shows that DCL provides a useful\nresult, because it serves as an active non-drowsy antihistamine.\nB.\nThis court recognizes that this may be a case of first impression, because the prior art\nsupplies no express description of any part of the claimed subject matter. The prior art \xe2\x80\x99233\npatent does not disclose any compound that is identifiable as DCL. In this court\xe2\x80\x99s prior\ninherency cases, a single prior art reference generally contained an incomplete description of\nthe anticipatory subject matter, i.e., a partial description missing certain aspects. Inherency\nsupplied the missing aspect of the description. Upon proof that the missing description is\ninherent in the prior art, that single prior art reference placed the claimed subject matter in\nthe public domain. This case does not present the issue of a missing feature of the claimed\ninvention. Rather, the new structure in this case, DCL, is not described by the prior \xe2\x80\x99233\npatent.\nBecause inherency places subject matter in the public domain as well as an express\ndisclosure, the inherent disclosure of the entire claimed subject matter anticipates as well as\ninherent disclosure of a single feature of the claimed subject matter. The extent of the\ninherent disclosure does not limit its anticipatory effect. In general, a limitation or the entire\n\n\x0cNOVELTY\n\n117\n\ninvention is inherent and in the public domain if it is the \xe2\x80\x9cnatural result flowing from\xe2\x80\x9d the\nexplicit disclosure of the prior art.\nIn reaching this conclusion, this court is aware of In re Seaborg, 328 F.2d 996 (C.C.P.A.\n1964). In that case, this court\xe2\x80\x99s predecessor considered claims drawn to an isotope of\namericium made by nuclear reaction in light of a prior art patent disclosing a similar nuclear\nreaction process but with no disclosure of the claimed isotope. This court\xe2\x80\x99s predecessor found\nthat the prior art process did not anticipate the claims because the process would have\nproduced at most one billionth of a gram of the isotope in forty tons of radioactive material,\ni.e., the isotope would have been undetectable. In this case, DCL forms in readily detectable\namounts as shown by the extensive record evidence of testing done on humans to verify the\nformation of DCL upon ingestion of loratadine.\nThis court sees no reason to modify the general rule for inherent anticipation in a case\nwhere inherency supplies the entire anticipatory subject matter. The patent law principle\n\xe2\x80\x9cthat which would literally infringe if later in time anticipates if earlier,\xe2\x80\x9d Bristol\xe2\x80\x93Myers\nSquibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1378 (Fed. Cir. 2001), bolsters this\nconclusion. Similarly, \xe2\x80\x9cif granting patent protection on the disputed claim would allow the\npatentee to exclude the public from practicing the prior art, then that claim is anticipated.\xe2\x80\x9d\nAtlas Powder v. Ireco, 190 F.3d 1342, 1346 (Fed. Cir. 1999). \xe2\x80\x9cThe public remains free to make,\nuse, or sell prior art compositions or processes, regardless of whether or not they understand\ntheir complete makeup or the underlying scientific principles which allow them to operate.\nThe doctrine of anticipation by inherency, among other doctrines, enforces that basic\nprinciple.\xe2\x80\x9d Id. at 1348. Thus, inherency operates to anticipate entire inventions as well as\nsingle limitations within an invention.\nTurning to this case, the use of loratadine would infringe claims 1 and 3 of the \xe2\x80\x99716\npatent covering the metabolite DCL. This court has recognized that a person may infringe a\nclaim to a metabolite if the person ingests a compound that metabolizes to form the\nmetabolite. An identical metabolite must then anticipate if earlier in time than the claimed\ncompound.\nC.\nThis court next examines whether Schering\xe2\x80\x99s secret tests of loratadine before the\ncritical date placed DCL in the public domain. Before the critical date, Schering only tested\nloratadine in secret. Thus, according to Schering, \xe2\x80\x9cDCL was not publicly used, or described\nin any printed publication, until after February 15, 1983, the critical date for the \xe2\x80\x98716 patent.\xe2\x80\x9d\nAnticipation does not require the actual creation or reduction to practice of the prior\nart subject matter; anticipation requires only an enabling disclosure. Thus, actual\nadministration of loratadine to patients before the critical date of the \xe2\x80\x99716 patent is\nirrelevant. The \xe2\x80\x99233 patent suffices as an anticipatory prior art reference if it discloses in an\nenabling manner the administration of loratadine to patients.\n\n\x0c118\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nTo qualify as an enabled reference, the \xe2\x80\x99233 patent need not describe how to make\nDCL in its isolated form. The \xe2\x80\x99233 patent need only describe how to make DCL in any form\nencompassed by a compound claim covering DCL, e.g., DCL as a metabolite in a patient\xe2\x80\x99s\nbody. The \xe2\x80\x99233 patent discloses administering loratadine to a patient. A person of ordinary\nskill in the art could practice the \xe2\x80\x99233 patent without undue experimentation. The inherent\nresult of administering loratadine to a patient is the formation of DCL. The \xe2\x80\x99233 patent thus\nprovides an enabling disclosure for making DCL.\nD.\nFinally, this court\xe2\x80\x99s conclusion on inherent anticipation in this case does not preclude\npatent protection for metabolites of known drugs. With proper claiming, patent protection is\navailable for metabolites of known drugs.\nFor example, the metabolite may be claimed in its pure and isolated form, or as a\npharmaceutical composition (e.g., with a pharmaceutically acceptable carrier). The patent\ndrafter could also claim a method of administering the metabolite or the corresponding\npharmaceutical composition. The \xe2\x80\x99233 patent would not provide an enabling disclosure to\nanticipate such claims because, for instance, the \xe2\x80\x99233 patent does not disclose isolation of\nDCL.\nThe \xe2\x80\x99716 patent contains claims 5\xe2\x80\x9313 covering pharmaceutical compositions and\nclaims 14\xe2\x80\x9316 covering methods of treating allergic reactions by administering compounds\nthat include DCL. These claims were not found anticipated by the \xe2\x80\x99233 patent.\nThe district court did not err in finding that the \xe2\x80\x99233 patent discloses administering\nloratadine to a patient, and that DCL forms as a natural result of that administration. The\ndistrict court correctly concluded that DCL is inherent in the prior art. Without any genuine\nissues of material fact, the district court correctly granted summary judgment that claims 1\nand 3 are invalid as anticipated by the \xe2\x80\x99233 patent.\n\nDiscussion Questions: Schering and Seaborg\n1. Distinguishing Seaborg. The court in Schering offers an argument for\ndistinguishing the result in that case from the result in Seaborg. Is the distinction the\nSchering court draws persuasive? Is it compelling from a policy standpoint? Why or why not?\n2. Infringement\xe2\x80\x93Anticipation Symmetry. One of the bedrock principles of patent law\nis the symmetry between infringement and anticipation. Any product that would infringe a\npatent if it postdates the patent should anticipate the patent if it predates the patent. And\nvice versa. Does Schering preserve this symmetry? That is, the Schering court holds that\nloratadine use bars Schering from patenting DCL. If individuals had only started taking\nloratadine after Schering successfully patented DCL, would they infringe the DCL patent?\nDoes Seaborg preserve this symmetry? That is, if Fermi\xe2\x80\x99s reactor were created after Seaborg\nhad patented americium, would use of Fermi\xe2\x80\x99s reactor infringe Seaborg\xe2\x80\x99s patent?\n\n\x0cNOVELTY\n\n119\n\n3. Why Patent an Element? When Fermi\xe2\x80\x99s prior art reactor patent was filed, Fermi\nand Seaborg were working together in Chicago on the Manhattan Project, and Seaborg\xe2\x80\x99s\ngroup had already synthesized americium; it was just being kept secret. Both patents were\nfiled by the Atomic Energy Commission. Why do you think the United States patented these\ninventions? A front-page New York Times story after the C.C.P.A. decision stated: \xe2\x80\x9cAs Dr.\nSeaborg explained, he was \xe2\x80\x98just a name\xe2\x80\x99 that the Atomic Energy Commission was using on\nthe patents. In effect, he said, they are Government patents, taken out to protect the public\nagainst the possibility that some individual would lay a patent claim to the elements and\ntheir production methods and then attempt to force payment of royalties.\xe2\x80\x9d Is this \xe2\x80\x9cdefensive\npatenting\xe2\x80\x9d justification convincing?\n\nPractice Problems: Accidental and Inherent Anticipation\n1. The claims at issue involve \xe2\x80\x9cpreparing a food product rich in glucosinolates,\ncomprising germinated cruciferous seeds\xe2\x80\x9d such as broccoli and cauliflower, and harvesting\nthe resulting sprouts. The inventors did not create a new kind of sprout but were the first to\nrecognize that certain kinds of sprouts are rich in glucosinolates (compounds that purportedly\ndetoxify carcinogens). Are the claims anticipated by prior art describing preparing,\nharvesting, and eating sprouts including broccoli and cauliflower? See In re Cruciferous\nSprout Litig., 301 F.3d 1343 (Fed. Cir. 2002).\n2. The claims at issue cover methods for treating hair loss by applying the chemical\nbimatoprost topically to the scalp. An earlier patent discloses using the same chemical to\ntreat glaucoma by applying eyedrops to the eye. That patent\xe2\x80\x99s disclosure taught that the\napplication of bimatoprost would, among other things, lead to the growth of eyelashes.\nHowever, it did not disclose any other location on the body where bimatoprost might be\napplied, other than the eye. See Allergan v. Apotex, 754 F.3d 952 (Fed. Cir. 2014).\n3. The only claim at issue reads in its entirety: \xe2\x80\x9cCrystalline paroxetine hydrochloride\n[PHC] hemihydrate.\xe2\x80\x9d PHC hemihydrate is a more stable version of the compound PHC, and\nis the active ingredient in the antidepressant drug Paxil. A prior art patent discloses a\nmethod for making PHC, and it is now recognized that practicing this method inevitably\nproduces trace amounts of PHC hemihydrate, although the technology to detect these trace\nlevels did not exist at the time. Is the claim anticipated by this prior art patent? See\nSmithKline Beecham v. Apotex, 403 F.3d 1331 (Fed. Cir. 2005).\n4. The patent claimed methods for removing body hair using a laser. They required\naligning the laser vertically over the hair follicle opening. The prior art is an instruction\nmanual that describes how to remove tattoos using a laser. The manual did not discuss hair\nfollicles, and it did not specify that the laser must always be aligned vertically with the skin.\nIn some situations, however, a user who follows the manual might align the laser vertically\nover a hair follicle opening. See MEHL/Biophile v. Milgraum, 192 F.3d 1362 (Fed. Cir. 1999).\n5. The claims recite \xe2\x80\x9cadministering, to a patient diagnosed as in need of [stroke]\ntreatment or prevention, an inhibitor of the renin-angiotensin system.\xe2\x80\x9d One inhibitor of the\n\n\x0c120\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nrenin-angiotensin system is the compound ramipril. Are the claims anticipated by a paper\ndescribing a protocol for a randomized trial in which ramipril would be administered to over\n9000 patients at high risk for cardiovascular events such as myocardial infarction and\nstroke\xe2\x80\x9d? The study had begun before the critical date, but it was only completed (and the\nresults were only published) after the critical date. The study ultimately found that patients\nwho received ramipril had a statistically significant reduction in the risk of stroke, but again\nthese results were not published until after the patent was filed and are thus irrelevant to\nthe anticipation analysis. See In re Montgomery, 677 F.3d 1375 (Fed. Cir. 2012) (including a\ndissent on the inherency analysis).\n\n\x0cNONOBVIOUSNESS\n\n121\n\n3. Nonobviousness\nAs we\xe2\x80\x99ve discussed, the requirement that patents be granted only on new inventions\nis the bedrock rule of the patent system. But the novelty doctrine is also quite limited: an\ninvention is anticipated only if a single prior art reference discloses all elements of the\nclaimed invention. As you might imagine, many inventions differ only slightly from the prior\nart. And many inventions are predictable combinations of two or more pieces of prior art.\nThese types of inventions would not seem to warrant patent protection for precisely the same\nreason that inventions that fail the test of novelty do not warrant patent protection. The legal\ndoctrine that blocks such variations from being patented is nonobviousness.\nThe policy rationales for nonobviousness largely mirror the rationales for novelty. If\nan invention is so obvious that no true innovation is required to create it, then it is unlikely\nthat a patent is necessary to incentivize its development. See Tun-Jen Chiang, A Cost-Benefit\nApproach to Patent Obviousness, 82 St. John\xe2\x80\x99s L. Rev. 39 (2008); Glynn S. Lunney, Jr., EObviousness, 7 Mich. Telecomm. & Tech. L. Rev. 363 (2001); Michael Abramowicz & John F.\nDuffy, The Inducement Standard of Patentability, 120 Yale L.J. 1590 (2011). If an invention\nwould have been obvious to an ordinary researcher\xe2\x80\x94that is, easily discovered by someone\nwho is not relying on a patent\xe2\x80\x94then awarding a patent would generate social costs (the\ndeadweight loss from the patent) without any corresponding social benefit. In addition, the\nproliferation of patents on obvious inventions would create other types of costs. It is expensive\nand difficult for firms to comb through the stock of existing patents to determine what has\nand has not been patented (and thus what freedom they have to operate). Finally, if firms\nwere able to obtain obvious patents, they might also invest energy in acquiring those valuable\nproperty rights rather than researching new innovations.\nNonobviousness is the key patent doctrine for achieving these policy goals; as the\nSupreme Court stated in Graham v. John Deere, 383 U.S. 1 (1966), the doctrine is intended\nto be a \xe2\x80\x9cmeans of weeding out those inventions which would not be disclosed or devised but\nfor the inducement of a patent.\xe2\x80\x9d But it does not do so directly. In an ideal world, judges and\npatent examiners evaluating obviousness would seek direct evidence regarding whether the\npatent was necessary to the development of the invention. They would examine the costs\nrequired to develop the invention in comparison to what the market for the invention would\nlook like with or without a patent. If the cost of development were sufficiently low and the\nmarket sufficiently robust that the inventor could have turned a profit without a patent, the\ncourt would rule the patent obvious. If, however, the invention was expensive to develop and\nbring to market, and the market was such that the inventor would never have recouped these\ncosts without a patent, then the court would invalidate the patent as obvious.\nAs a doctrinal matter, however, this type of evidence is difficult to obtain and difficult\nfor courts to work with. The costs of invention might be hard to measure, and reconstructing\nwhat a market for a given product would look like without a patent requires substantial\nguesswork. Whether for this reason or others, Congress and the courts have not attempted\n\n\x0c122\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nto pursue this type of inquiry directly. Instead, they have settled on a doctrine that looks\nprimarily at one half of the equation: how costly was it to create the invention in the first\nplace. And rather than examine costs themselves, Congress and the courts have focused on a\nproxy: how much technical skill was required to create the invention in the first place. (We\ncall this a proxy because technical skill is of course one input into the overall cost, but not\nthe only input.) As this chapter will explain, the doctrine of nonobviousness is focused on this\ntechnical question. That is, obviousness is typically framed as a cognitive inquiry, not an\neconomic one. But see Abramowicz & Duffy, supra (arguing that courts can and should shift\ntoward a more economic approach).\n\nA. Applying the Graham Test\nThe relevant statutory section is \xc2\xa7 103 of the Patent Act:\n\n35 U.S.C. \xc2\xa7 103\nA patent for a claimed invention may not be obtained, notwithstanding that\nthe claimed invention is not identically disclosed as set forth in section 102, if\nthe differences between the claimed invention and the prior art are such that\nthe claimed invention as a whole would have been obvious before the effective\nfiling date of the claimed invention to a person having ordinary skill in the art\nto which the claimed invention pertains. Patentability shall not be negated by\nthe manner in which the invention was made.\nUnlike for \xc2\xa7 102, the relevant text of \xc2\xa7 103 was only slightly amended by the 2011\nAmerica Invents Act; the main difference is that for pre-AIA patents, obviousness is assessed\n\xe2\x80\x9cat the time the invention was made\xe2\x80\x9d rather than on \xe2\x80\x9cthe effective filing date.\xe2\x80\x9d Pre-AIA\n\xc2\xa7 103(c) also excluded prior art owned by the same person from the obviousness analysis,\nwhich has been replaced to the same effect with post-AIA \xc2\xa7 102(b)(2)(C) and \xc2\xa7 102(c).\nAs you can see, the nonobviousness statute is not particularly informative; it merely\nstates that obvious inventions cannot be patented. In Graham v. John Deere, 383 U.S. 1\n(1966), the Supreme Court set out what remains the official four-part test for obviousness. A\ncourt attempting to determine whether an invention would have been obvious should:\n1.\n2.\n3.\n4.\n\nDetermine the scope and content of the prior art;\nDetermine the differences between the prior art and the claimed invention;\nDetermine the level of skill of someone skilled in the art (the PHOSITA); and then\nDetermine whether the PHOSITA would have found the invention obvious in light of\nthe prior art.\n\nGraham does not explain how to determine the content of the prior art, but the\nFederal Circuit has concluded that all \xc2\xa7 102 prior art qualifies, including under pre-AIA\n\n\x0cNONOBVIOUSNESS\n\n123\n\n\xc2\xa7 102(e), (f), (g). See, e.g., OddzOn Products v. Just Toys, 122 F.3d 1396, 1403 (Fed. Cir. 1997);\n2 Chisum on Patents \xc2\xa7 5.03[3]. In the colorful \xe2\x80\x9cWinslow Tableau,\xe2\x80\x9d obviousness is evaluated\nby \xe2\x80\x9cpicture[ing] the inventor as working in his shop with the prior art references\xe2\x80\x94which he\nis presumed to know\xe2\x80\x94hanging on the walls around him.\xe2\x80\x9d In re Winslow, 365 F.2d 1017, 1020\n(C.C.P.A. 1966). That means that just like for anticipation, a patent could be judged obvious\nbased on prior art that was not public at the time the inventor created the invention. Imagine\nthat Kathryn invents a widget in 2014 (that may or may not be obvious), just a week after\nJamal files for a patent on a component piece of technology. Jamal\xe2\x80\x99s patent application\nremains secret for 18 months until it is published. But for obviousness purposes, Jamal\xe2\x80\x99s\npatent would be prior art to Kathryn\xe2\x80\x99s invention (under the AIA), even though the patent is\nnot yet published and Kathryn has no way of knowing about it.\nThe one caveat to this rule on prior art is that unlike for anticipation, the scope of the\nprior art for an obviousness analysis is limited to \xe2\x80\x9canalogous\xe2\x80\x9d art. This means that the art\nmust either be \xe2\x80\x9cfrom the same field of endeavor\xe2\x80\x9d or \xe2\x80\x9creasonably pertinent to the problem with\nwhich the inventor is involved.\xe2\x80\x9d In re Bigio, 381 F.3d 1320, 1325 (Fed. Cir. 2004). The \xe2\x80\x9cfield\nof endeavor\xe2\x80\x9d is determined from the patent specification; for example, a toothbrush and a\nhairbrush can be in the same field of endeavor because of their structural similarities. Id.\nSimilarly, an inventor considering a hinge mechanism for laptops would consider hinges from\nother fields\xe2\x80\x94such as in \xe2\x80\x9ca desktop telephone directory, a piano lid, a kitchen cabinet, a\nwashing machine cabinet, a wooden furniture cabinet, or a two-part housing for storing audio\ncassettes\xe2\x80\x9d\xe2\x80\x94to be \xe2\x80\x9creasonably pertinent\xe2\x80\x9d to the problem to be solved. In re Paulsen, 30 F.3d\n1475, 1481 (Fed. Cir. 1994).\nOnce one has determined the scope and content of the prior art, the Graham test is\nno more helpful than the statute. Essentially all of the action occurs at step four, and Graham\nprovided no guidance as to how that analysis is meant to occur. This left lower courts at sea\nfor decades as they attempted to find ways to bring structure to the obviousness inquiry.\nPerhaps the most important legal innovation in response to this uncertainty was the\nFederal Circuit\xe2\x80\x99s development of the \xe2\x80\x9cteaching, suggestion, or motivation\xe2\x80\x9d (TSM) test. The\nFederal Circuit understood quite correctly that many important innovations consist of\ncombinations of prior inventions. In the world of science and technology, progress is typically\nincremental, and nearly everyone stands on the shoulders of giants. The Federal Circuit was\nconcerned that in hindsight even true innovations would appear to be merely obvious\ncombinations of multiple pre-existing inventions, a problem known as hindsight bias.\nAccordingly, before two or more pieces of prior art could be combined to show that an\ninvention was obvious, the Federal Circuit required that there be an explicit teaching,\nsuggestion, or motivation to combine those references. This teaching, suggestion, or\nmotivation had to be something specific\xe2\x80\x94either another piece of prior art that specifically\nsuggested the combination, or something particular in the PHOSITA\xe2\x80\x99s training that would\nlead the PHOSITA to combine the elements. A party could not merely wave its hands at the\nproblem and claim that it would have been obvious for a PHOSITA to try combining the\nexisting prior art.\n\n\x0c124\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nOver the years, the TSM test played a larger and larger role in nonobviousness cases.\nIn many instances, finding multiple pieces of prior art that together contained all the\nelements of the claimed invention was relatively easy; finding an explicit teaching,\nsuggestion, or motivation to combine those elements was frequently much harder. A large\nnumber of cases thus turned on the presence or absence of a TSM. Although this made \xc2\xa7 103\ndecisions more predictable, it also drew criticism as making weak patents too difficult to\ninvalidate, including in academic articles and in reports from the Federal Trade Commission\nand the National Academies. It is against that background that the Supreme Court granted\ncertiorari in KSR v. Teleflex.\n\nKSR International v. Teleflex, 550 U.S. 398 (2007)\nJustice Anthony Kennedy delivered the opinion for a unanimous Court.\nTeleflex Incorporated sued KSR International Company for patent infringement. The\npatent at issue, United States Patent No. 6,237,565, is entitled \xe2\x80\x9cAdjustable Pedal Assembly\nWith Electronic Throttle Control,\xe2\x80\x9d referred to as \xe2\x80\x9cthe Engelgau patent.\xe2\x80\x9d\nClaim 4 of the Engelgau patent describes a mechanism for combining an electronic\nsensor with an adjustable automobile pedal so the pedal\xe2\x80\x99s position can be transmitted to a\ncomputer that controls the throttle in the vehicle\xe2\x80\x99s engine. When Teleflex accused KSR of\ninfringing the Engelgau patent by adding an electronic sensor to one of KSR\xe2\x80\x99s previously\ndesigned pedals, KSR countered that claim 4 was invalid under the Patent Act, 35 U.S.C.\n\xc2\xa7 103, because its subject matter was obvious.\nIn Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17\xe2\x80\x9318 (1966), the Court set\nout a framework for applying the statutory language of \xc2\xa7 103:\nUnder \xc2\xa7 103, the scope and content of the prior art are to be determined;\ndifferences between the prior art and the claims at issue are to be ascertained;\nand the level of ordinary skill in the pertinent art resolved. Against this\nbackground, the obviousness or nonobviousness of the subject matter is\ndetermined. Such secondary considerations as commercial success, long felt\nbut unsolved needs, failure of others, etc., might be utilized to give light to the\ncircumstances surrounding the origin of the subject matter sought to be\npatented.\nSeeking to resolve the question of obviousness with more uniformity and consistency,\nthe Court of Appeals for the Federal Circuit has employed an approach referred to by the\nparties as the \xe2\x80\x9cteaching, suggestion, or motivation\xe2\x80\x9d test (TSM test), under which a patent\nclaim is only proved obvious if \xe2\x80\x9csome motivation or suggestion to combine the prior art\nteachings\xe2\x80\x9d can be found in the prior art, the nature of the problem, or the knowledge of a\nperson having ordinary skill in the art. KSR challenges that test, or at least its application\nin this case. Because the Court of Appeals addressed the question of obviousness in a manner\ncontrary to \xc2\xa7 103 and our precedents, we granted certiorari. We now reverse.\n\n\x0cNONOBVIOUSNESS\n\n125\n\nI\nA\nIn car engines without computer-controlled throttles, the accelerator pedal interacts\nwith the throttle via cable or other mechanical link. The pedal arm acts as a lever rotating\naround a pivot point. In a cable-actuated throttle control the rotation caused by pushing down\nthe pedal pulls a cable, which in turn pulls open valves in the carburetor or fuel injection\nunit. The wider the valves open, the more fuel and air are released, causing combustion to\nincrease and the car to accelerate. When the driver takes his foot off the pedal, the opposite\noccurs as the cable is released and the valves slide closed.\nIn the 1990\xe2\x80\x99s it became more common to install computers in cars to control engine\noperation. Computer-controlled throttles open and close valves in response to electronic\nsignals, not through force transferred from the pedal by a mechanical link. Constant, delicate\nadjustments of air and fuel mixture are possible. The computer\xe2\x80\x99s rapid processing of factors\nbeyond the pedal\xe2\x80\x99s position improves fuel efficiency and engine performance.\nFor a computer-controlled throttle to respond to a driver\xe2\x80\x99s operation of the car, the\ncomputer must know what is happening with the pedal. A cable or mechanical link does not\nsuffice for this purpose; at some point, an electronic sensor is necessary to translate the\nmechanical operation into digital data the computer can understand.\nBefore discussing sensors further we turn to the mechanical design of the pedal itself.\nIn the traditional design a pedal can be pushed down or released but cannot have its position\nin the footwell adjusted by sliding the pedal forward or back. As a result, a driver who wishes\nto be closer or farther from the pedal must either reposition himself in the driver\xe2\x80\x99s seat or\nmove the seat in some way. In cars with deep footwells these are imperfect solutions for\ndrivers of smaller stature. To solve the problem, inventors, beginning in the 1970\xe2\x80\x99s, designed\npedals that could be adjusted to change their location in the footwell. Important for this case\nare two adjustable pedals disclosed in U.S. Patent Nos. 5,010,782 (filed July 28, 1989) (Asano)\nand 5,460,061 (filed Sept. 17, 1993) (Redding). The Asano patent reveals a support structure\nthat houses the pedal so that even when the pedal location is adjusted relative to the driver,\none of the pedal\xe2\x80\x99s pivot points stays fixed. The pedal is also designed so that the force\nnecessary to push the pedal down is the same regardless of adjustments to its location. The\nRedding patent reveals a different, sliding mechanism where both the pedal and the pivot\npoint are adjusted.\nWe return to sensors. Well before Engelgau applied for his challenged patent, some\ninventors had obtained patents involving electronic pedal sensors for computer-controlled\nthrottles. These inventions, such as the device disclosed in U.S. Patent No. 5,241,936 (filed\nSept. 9, 1991) (\xe2\x80\x99936), taught that it was preferable to detect the pedal\xe2\x80\x99s position in the pedal\nassembly, not in the engine. The \xe2\x80\x99936 patent disclosed a pedal with an electronic sensor on a\npivot point in the pedal assembly. U.S. Patent No. 5,063,811 (filed July 9, 1990) (Smith)\ntaught that to prevent the wires connecting the sensor to the computer from chafing and\nwearing out, and to avoid grime and damage from the driver\xe2\x80\x99s foot, the sensor should be put\n\n\x0c126\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\non a fixed part of the pedal assembly rather than in or on the pedal\xe2\x80\x99s footpad. [Eds: As noted\nin Chapter 2, the convention is to refer to a patent-in-suit by its last three digits and a prior\nart patent by the last name of the first inventor, but the Supreme Court often ignores patent\nconventions.]\nIn addition to patents for pedals with integrated sensors inventors obtained patents\nfor self-contained modular sensors. A modular sensor is designed independently of a given\npedal so that it can be taken off the shelf and attached to mechanical pedals of various sorts,\nenabling the pedals to be used in automobiles with computer-controlled throttles. One such\nsensor was disclosed in U.S. Patent No. 5,385,068 (filed Dec. 18, 1992) (\xe2\x80\x99068). In 1994,\nChevrolet manufactured a line of trucks using modular sensors attached to the pedal\nassembly support bracket, adjacent to the pedal and engaged with the pivot shaft about which\nthe pedal rotates in operation.\nThe prior art contained patents involving the placement of sensors on adjustable\npedals as well. For example, U.S. Patent No. 5,819,593 (filed Aug. 17, 1995) (Rixon) discloses\nan adjustable pedal assembly with an electronic sensor for detecting the pedal\xe2\x80\x99s position. In\nthe Rixon pedal the sensor is located in the pedal footpad. The Rixon pedal was known to\nsuffer from wire chafing when the pedal was depressed and released.\nB\nFord Motor Company hired KSR in 1998 to supply an adjustable pedal system for\nautomobiles with cable-actuated throttle controls. KSR developed an adjustable mechanical\npedal for Ford and obtained U.S. Patent No. 6,151,986 (filed July 16, 1999) (\xe2\x80\x99986) for the\ndesign. In 2000, KSR was chosen by General Motors Corporation to supply adjustable pedal\nsystems for Chevrolet and GMC light trucks that used engines with computer-controlled\nthrottles. To make the \xe2\x80\x99986 pedal compatible with the trucks, KSR merely took that design\nand added a modular sensor.\nTeleflex is a rival to KSR in the design and manufacture of adjustable pedals. It is the\nexclusive licensee of the Engelgau patent. Engelgau filed the patent application on August\n22, 2000, as a continuation of a previous application for U.S. Patent No. 6,109,241, which was\nfiled on January 26, 1999. The Engelgau patent discloses an adjustable electronic pedal\ndescribed in the specification as a \xe2\x80\x9csimplified vehicle control pedal assembly that is less\nexpensive, and which uses fewer parts and is easier to package within the vehicle.\xe2\x80\x9d Claim 4\nof the patent, at issue here, describes:\nA vehicle control pedal apparatus comprising:\na support adapted to be mounted to a vehicle structure;\nan adjustable pedal assembly having a pedal arm moveable in for[e] and aft\ndirections with respect to said support;\na pivot for pivotally supporting said adjustable pedal assembly with respect to\nsaid support and defining a pivot axis; and\n\n\x0cNONOBVIOUSNESS\n\n127\n\nan electronic control attached to said support for controlling a vehicle system;\nsaid apparatus characterized by said electronic control being responsive to said\npivot for providing a signal that corresponds to pedal arm position as said pedal\narm pivots about said pivot axis between rest and applied positions wherein\nthe position of said pivot remains constant while said pedal arm moves in fore\nand aft directions with respect to said pivot.\nBefore issuing the Engelgau patent the U.S. Patent and Trademark Office (PTO)\nrejected one of the patent claims that was similar to, but broader than, the present claim 4.\nThe claim did not include the requirement that the sensor be placed on a fixed pivot point.\nThe PTO concluded the claim was an obvious combination of the prior art disclosed in\nRedding and Smith. Redding provided an example of an adjustable pedal, and Smith\nexplained how to mount a sensor on a pedal\xe2\x80\x99s support structure, and the rejected patent claim\nmerely put these two teachings together.\nAlthough the broader claim was rejected, claim 4 was later allowed because it included\nthe limitation of a fixed pivot point, which distinguished the design from Redding\xe2\x80\x99s. Engelgau\nhad not included Asano among the prior art references, and Asano was not mentioned in the\npatent\xe2\x80\x99s prosecution. Thus, the PTO did not have before it an adjustable pedal with a fixed\npivot point.\nKSR refused to enter a royalty arrangement with Teleflex; so Teleflex sued for\ninfringement.\nC\nThe District Court granted summary judgment in KSR\xe2\x80\x99s favor. By direction of 35\nU.S.C. \xc2\xa7 282, an issued patent is presumed valid. The District Court applied Graham\xe2\x80\x99s\nframework to determine whether under summary-judgment standards KSR had overcome\nthe presumption and demonstrated that claim 4 was obvious in light of the prior art in\nexistence when the claimed subject matter was invented. The District Court determined, in\nlight of the expert testimony and the parties\xe2\x80\x99 stipulations, that the level of ordinary skill in\npedal design was \xe2\x80\x9can undergraduate degree in mechanical engineering (or an equivalent\namount of industry experience) [and] familiarity with pedal control systems for vehicles.\xe2\x80\x9d The\ncourt then set forth the relevant prior art, including the patents and pedal designs described\nabove.\nFollowing Graham\xe2\x80\x99s direction, the court compared the teachings of the prior art to the\nclaims of Engelgau. It found \xe2\x80\x9clittle difference.\xe2\x80\x9d Asano taught everything contained in claim 4\nexcept the use of a sensor to detect the pedal\xe2\x80\x99s position and transmit it to the computer\ncontrolling the throttle. That additional aspect was revealed in sources such as the \xe2\x80\x99068\npatent and the sensors used by Chevrolet.\nThe Court of Appeals reversed. It ruled the District Court had not been strict enough\nin applying the [TSM] test, having failed to make \xe2\x80\x9cfinding[s] as to the specific understanding\nor principle within the knowledge of a skilled artisan that would have motivated one with no\n\n\x0c128\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nknowledge of [the] invention . . . to attach an electronic control to the support bracket of the\nAsano assembly.\xe2\x80\x9d The Court of Appeals held that the District Court was incorrect that the\nnature of the problem to be solved satisfied this requirement because unless the \xe2\x80\x9cprior art\nreferences address[ed] the precise problem that the patentee was trying to solve,\xe2\x80\x9d the problem\nwould not motivate an inventor to look at those references.\nHere, the Court of Appeals found, the Asano pedal was designed to solve the \xe2\x80\x9cconstant\nratio problem\xe2\x80\x9d\xe2\x80\x94that is, to ensure that the force required to depress the pedal is the same no\nmatter how the pedal is adjusted\xe2\x80\x94whereas Engelgau sought to provide a simpler, smaller,\ncheaper adjustable electronic pedal. As for Rixon, the court explained, that pedal suffered\nfrom the problem of wire chafing but was not designed to solve it. When the patents were\ninterpreted in this way, the Court of Appeals held, they would not have led a person of\nordinary skill to put a sensor on the sort of pedal described in Asano.\nII\nA\nWe begin by rejecting the rigid approach of the Court of Appeals. Throughout this\nCourt\xe2\x80\x99s engagement with the question of obviousness, our cases have set forth an expansive\nand flexible approach inconsistent with the way the Court of Appeals applied its TSM test\nhere. For over a half century, the Court has held that . . . [t]he combination of familiar\nelements according to known methods is likely to be obvious when it does no more than yield\npredictable results.\nThe principles underlying [prior] cases are instructive when the question is whether\na patent claiming the combination of elements of prior art is obvious. When a work is\navailable in one field of endeavor, design incentives and other market forces can prompt\nvariations of it, either in the same field or a different one. If a person of ordinary skill can\nimplement a predictable variation, \xc2\xa7 103 likely bars its patentability. For the same reason, if\na technique has been used to improve one device, and a person of ordinary skill in the art\nwould recognize that it would improve similar devices in the same way, using the technique\nis obvious unless its actual application is beyond his or her skill.\nFollowing these principles may be more difficult in other cases than it is here because\nthe claimed subject matter may involve more than the simple substitution of one known\nelement for another or the mere application of a known technique to a piece of prior art ready\nfor the improvement. Often, it will be necessary for a court to look to interrelated teachings\nof multiple patents; the effects of demands known to the design community or present in the\nmarketplace; and the background knowledge possessed by a person having ordinary skill in\nthe art, all in order to determine whether there was an apparent reason to combine the known\nelements in the fashion claimed by the patent at issue. To facilitate review, this analysis\nshould be made explicit. As our precedents make clear, however, the analysis need not seek\nout precise teachings directed to the specific subject matter of the challenged claim, for a\ncourt can take account of the inferences and creative steps that a person of ordinary skill in\nthe art would employ.\n\n\x0cNONOBVIOUSNESS\n\n129\n\nB\nWhen it first established the requirement of demonstrating a teaching, suggestion, or\nmotivation to combine known elements in order to show that the combination is obvious, the\nCourt of Customs and Patent Appeals captured a helpful insight. A patent composed of\nseveral elements is not proved obvious merely by demonstrating that each of its elements\nwas, independently, known in the prior art. Although common sense directs one to look with\ncare at a patent application that claims as innovation the combination of two known devices\naccording to their established functions, it can be important to identify a reason that would\nhave prompted a person of ordinary skill in the relevant field to combine the elements in the\nway the claimed new invention does. This is so because inventions in most, if not all,\ninstances rely upon building blocks long since uncovered, and claimed discoveries almost of\nnecessity will be combinations of what, in some sense, is already known.\nHelpful insights, however, need not become rigid and mandatory formulas; and when\nit is so applied, the TSM test is incompatible with our precedents. The obviousness analysis\ncannot be confined by a formalistic conception of the words teaching, suggestion, and\nmotivation, or by overemphasis on the importance of published articles and the explicit\ncontent of issued patents. The diversity of inventive pursuits and of modern technology\ncounsels against limiting the analysis in this way. In many fields it may be that there is little\ndiscussion of obvious techniques or combinations, and it often may be the case that market\ndemand, rather than scientific literature, will drive design trends. Granting patent protection\nto advances that would occur in the ordinary course without real innovation retards progress\nand may, in the case of patents combining previously known elements, deprive prior\ninventions of their value or utility.\nThere is no necessary inconsistency between the idea underlying the TSM test and\nthe Graham analysis. But when a court transforms the general principle into a rigid rule that\nlimits the obviousness inquiry, as the Court of Appeals did here, it errs.\nC\nThe flaws in the analysis of the Court of Appeals relate for the most part to the court\xe2\x80\x99s\nnarrow conception of the obviousness inquiry reflected in its application of the TSM test. In\ndetermining whether the subject matter of a patent claim is obvious, neither the particular\nmotivation nor the avowed purpose of the patentee controls. The Court of Appeals failed to\nrecognize that the problem motivating the patentee may be only one of many addressed by\nthe patent\xe2\x80\x99s subject matter. The question is not whether the combination was obvious to the\npatentee but whether the combination was obvious to a person with ordinary skill in the art.\nUnder the correct analysis, any need or problem known in the field of endeavor at the time\nof invention and addressed by the patent can provide a reason for combining the elements in\nthe manner claimed.\nThe second error of the Court of Appeals lay in its assumption that a person of\nordinary skill attempting to solve a problem will be led only to those elements of prior art\ndesigned to solve the same problem. Common sense teaches, however, that familiar items\n\n\x0c130\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nmay have obvious uses beyond their primary purposes, and in many cases a person of\nordinary skill will be able to fit the teachings of multiple patents together like pieces of a\npuzzle. Regardless of Asano\xe2\x80\x99s primary purpose, the design provided an obvious example of an\nadjustable pedal with a fixed pivot point; and the prior art was replete with patents indicating\nthat a fixed pivot point was an ideal mount for a sensor. The idea that a designer hoping to\nmake an adjustable electronic pedal would ignore Asano because Asano was designed to solve\nthe constant ratio problem makes little sense. A person of ordinary skill is also a person of\nordinary creativity, not an automaton.\nThe same constricted analysis led the Court of Appeals to conclude, in error, that a\npatent claim cannot be proved obvious merely by showing that the combination of elements\nwas \xe2\x80\x9c[o]bvious to try.\xe2\x80\x9d When there is a design need or market pressure to solve a problem and\nthere are a finite number of identified, predictable solutions, a person of ordinary skill has\ngood reason to pursue the known options within his or her technical grasp. If this leads to\nthe anticipated success, it is likely the product not of innovation but of ordinary skill and\ncommon sense. In that instance the fact that a combination was obvious to try might show\nthat it was obvious under \xc2\xa7 103.\nThe Court of Appeals, finally, drew the wrong conclusion from the risk of courts and\npatent examiners falling prey to hindsight bias. A factfinder should be aware, of course, of\nthe distortion caused by hindsight bias and must be cautious of arguments reliant upon ex\npost reasoning. Rigid preventative rules that deny factfinders recourse to common sense,\nhowever, are neither necessary under our case law nor consistent with it.\nIII\nWhen we apply the standards we have explained to the instant facts, claim 4 must be\nfound obvious. We agree with and adopt the District Court\xe2\x80\x99s recitation of the relevant prior\nart and its determination of the level of ordinary skill in the field. As did the District Court,\nwe see little difference between the teachings of Asano and Smith and the adjustable\nelectronic pedal disclosed in claim 4 of the Engelgau patent. A person having ordinary skill\nin the art could have combined Asano with a pedal position sensor in a fashion encompassed\nby claim 4, and would have seen the benefits of doing so.\nThe District Court was correct to conclude that, as of the time Engelgau designed the\nsubject matter in claim 4, it was obvious to a person of ordinary skill to combine Asano with\na pivot-mounted pedal position sensor. There then existed a marketplace that created a\nstrong incentive to convert mechanical pedals to electronic pedals, and the prior art taught a\nnumber of methods for achieving this advance. The proper question to have asked was\nwhether a pedal designer of ordinary skill, facing the wide range of needs created by\ndevelopments in the field of endeavor, would have seen a benefit to upgrading Asano with a\nsensor.\nIn automotive design, as in many other fields, the interaction of multiple components\nmeans that changing one component often requires the others to be modified as well.\nTechnological developments made it clear that engines using computer-controlled throttles\n\n\x0cNONOBVIOUSNESS\n\n131\n\nwould become standard. As a result, designers might have decided to design new pedals from\nscratch; but they also would have had reason to make pre-existing pedals work with the new\nengines. Indeed, upgrading its own pre-existing model led KSR to design the pedal now\naccused of infringing the Engelgau patent.\nFor a designer starting with Asano, the question was where to attach the sensor. The\nconsequent legal question, then, is whether a pedal designer of ordinary skill starting with\nAsano would have found it obvious to put the sensor on a fixed pivot point. The prior art\ndiscussed above leads us to the conclusion that attaching the sensor where both KSR and\nEngelgau put it would have been obvious to a person of ordinary skill.\nThe \xe2\x80\x99936 patent taught the utility of putting the sensor on the pedal device, not in the\nengine. Smith, in turn, explained to put the sensor not on the pedal\xe2\x80\x99s footpad but instead on\nits support structure. And from the known wire-chafing problems of Rixon, and Smith\xe2\x80\x99s\nteaching that \xe2\x80\x9cthe pedal assemblies must not precipitate any motion in the connecting wires,\xe2\x80\x9d\nthe designer would know to place the sensor on a nonmoving part of the pedal structure. The\nmost obvious nonmoving point on the structure from which a sensor can easily detect the\npedal\xe2\x80\x99s position is a pivot point. The designer, accordingly, would follow Smith in mounting\nthe sensor on a pivot, thereby designing an adjustable electronic pedal covered by claim 4.\nJust as it was possible to begin with the objective to upgrade Asano to work with a\ncomputer-controlled throttle, so too was it possible to take an adjustable electronic pedal like\nRixon and seek an improvement that would avoid the wire-chafing problem. Following\nsimilar steps to those just explained, a designer would learn from Smith to avoid sensor\nmovement and would come, thereby, to Asano because Asano disclosed an adjustable pedal\nwith a fixed pivot.\nTeleflex indirectly argues that the prior art taught away from attaching a sensor to\nAsano because Asano in its view is bulky, complex, and expensive. The only evidence Teleflex\nmarshals in support of this argument, however, is the Radcliffe declaration, which merely\nindicates that Asano would not have solved Engelgau\xe2\x80\x99s goal of making a small, simple, and\ninexpensive pedal. What the declaration does not indicate is that Asano was somehow so\nflawed that there was no reason to upgrade it, or pedals like it, to be compatible with modern\nengines. To judge Asano against Engelgau would be to engage in the very hindsight bias\nTeleflex rightly urges must be avoided.\nLike the District Court, finally, we conclude Teleflex has shown no secondary factors\nto dislodge the determination that claim 4 is obvious. Proper application of Graham and our\nother precedents to these facts therefore leads to the conclusion that claim 4 encompassed\nobvious subject matter. As a result, the claim fails to meet the requirement of \xc2\xa7 103.\nWe need not reach the question whether the failure to disclose Asano during the\nprosecution of Engelgau voids the presumption of validity given to issued patents, for claim\n4 is obvious despite the presumption. We nevertheless think it appropriate to note that the\nrationale underlying the presumption\xe2\x80\x94that the PTO, in its expertise, has approved the\nclaim\xe2\x80\x94seems much diminished here.\n\n\x0c132\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nIV\n\nA separate ground the Court of Appeals gave for reversing the order for summary\njudgment was the existence of a dispute over an issue of material fact. We disagree with the\nCourt of Appeals on this point as well. The ultimate judgment of obviousness is a legal\ndetermination. Where, as here, the content of the prior art, the scope of the patent claim, and\nthe level of ordinary skill in the art are not in material dispute, and the obviousness of the\nclaim is apparent in light of these factors, summary judgment is appropriate.\nWe build and create by bringing to the tangible and palpable reality around us new\nworks based on instinct, simple logic, ordinary inferences, extraordinary ideas, and\nsometimes even genius. These advances, once part of our shared knowledge, define a new\nthreshold from which innovation starts once more. And as progress beginning from higher\nlevels of achievement is expected in the normal course, the results of ordinary innovation are\nnot the subject of exclusive rights under the patent laws. Were it otherwise patents might\nstifle, rather than promote, the progress of useful arts. See U.S. Const. art. I, \xc2\xa7 8, cl. 8. These\npremises led to the bar on patents claiming obvious subject matter established in Hotchkiss\nv. Greenwood, 52 U.S. 248 (1850), and codified in \xc2\xa7 103. Application of the bar must not be\nconfined within a test or formulation too constrained to serve its purpose.\nKSR provided convincing evidence that mounting a modular sensor on a fixed pivot\npoint of the Asano pedal was a design step well within the grasp of a person of ordinary skill\nin the relevant art. Its arguments, and the record, demonstrate that claim 4 of the Engelgau\npatent is obvious. In rejecting the District Court\xe2\x80\x99s rulings, the Court of Appeals analyzed the\nissue in a narrow, rigid manner inconsistent with \xc2\xa7 103 and our precedents. The judgment of\nthe Court of Appeals is reversed, and the case is remanded for further proceedings consistent\nwith this opinion.\n\n\x0cNONOBVIOUSNESS\n\n133\n\nKSR Claim Chart Exercise\nTry putting check marks in this chart to indicate which claim elements are present in\neach prior art reference, as well as which elements were in Teleflex\xe2\x80\x99s earlier rejected claim.\nPrior art references\nTeleflex\nClaim 4\n(Engelgau)\n\nAsano\n\nRedding\n\nSmith\n\n\xe2\x80\x99068 &\nChevy\nsensors\n\nRixon\n\nRejected\nTeleflex\nClaim\n\nadjustable\npedal\nfixed pivot\npoint\nelectronic\npedal sensor\nsensor on\nfixed support\n\nIs claim 4 of Teleflex\xe2\x80\x99s patent invalid for lack of novelty? Why? What references did\nthe USPTO use to reject Teleflex\xe2\x80\x99s earlier patent claim? Why didn\xe2\x80\x99t the USPTO reject claim\n4 as an obvious combination of the references relied on by the Supreme Court?\n\nDiscussion Questions: KSR and Nonobviousness\n1. Combining the Prior Art. Although the Supreme Court lowered the bar for finding\na combination of prior art to be obvious, in general it must still be shown that two or more\nreferences together disclose all the limitations of the claim at issue. If a claim limitation is\nmissing from the prior art, it may sometimes be filled in with the PHOSITA\xe2\x80\x99s general\nknowledge or common sense, but the Federal Circuit has \xe2\x80\x9cinvoked common sense to fill in a\nmissing limitation only when the limitation in question was unusually simple and the\ntechnology particularly straightforward.\xe2\x80\x9d DSS Tech. Mgmt. v. Apple, 885 F.3d 1367, 1375\n(Fed. Cir. 2018). Do you think the Supreme Court would view this stringent test for when\ncommon sense may be invoked to supply a missing limitation as consistent with KSR?\n2. Predictability. The Supreme Court repeatedly references the question of whether a\ncombination is \xe2\x80\x9cpredictable\xe2\x80\x9d\xe2\x80\x94as the Court says, predictable combinations and variations are\nobvious and not patentable. What do you think the Court means by \xe2\x80\x9cpredictable\xe2\x80\x9d? Is\npredictability a useful measure for the purpose of the nonobviousness requirement as\ndescribed by the Supreme Court in Graham: a \xe2\x80\x9cmeans of weeding out those inventions which\n\n\x0c134\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nwould not be disclosed or devised but for the inducement of a patent\xe2\x80\x9d? 383 U.S. at 11. For\nexample, should patents be available for inventions that are scientifically predictable but\nthat have a high ratio of development costs to imitation costs, such that they won\xe2\x80\x99t be\ndeveloped without patent protection? Can \xe2\x80\x9cpredictability\xe2\x80\x9d include the kind of market\nuncertainty that sometimes makes patents necessary to induce development?\n3. The Teaching, Suggestion, or Motivation Test. What is the applicability of the TSM\ntest after KSR? The Supreme Court stated that the TSM test is a \xe2\x80\x9chelpful insight\xe2\x80\x9d and that\nthe underlying idea is consistent with Graham but criticized the Federal Circuit\xe2\x80\x99s\ntransformation of the test into a \xe2\x80\x9crigid rule.\xe2\x80\x9d In subsequent cases, the Federal Circuit has\nrequired that a PHOSITA have both a \xe2\x80\x9creasonable expectation of success\xe2\x80\x9d in combining preexisting elements and also \xe2\x80\x9ca motivation to combine\xe2\x80\x9d the references before an invention can\nbe judged as obvious. Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359,\n1367\xe2\x80\x9368 (Fed. Cir. 2016). Consider the two elements of the test separately: is requiring a\n\xe2\x80\x9creasonable expectation of success\xe2\x80\x9d consistent with the Supreme Court\xe2\x80\x99s approach in KSR?\nIs requiring a \xe2\x80\x9cmotivation to combine\xe2\x80\x9d consistent? Note that some version of the TSM test\nwas applied in nearly half of all obviousness decisions in the five years after KSR. See Ryan\nT. Holte & Ted Sichelman, Cycles of Obviousness, 105 Iowa L. Rev. 107, 158 (2019).\nAt the same time, a careful read of these cases suggests that the new \xe2\x80\x9cmotivation to\ncombine\xe2\x80\x9d test \xe2\x80\x9cis hardly a reincarnation of the TSM requirement, both in terms of vigor and\nanalytical structure.\xe2\x80\x9d Jason Rantanen, The Federal Circuit\xe2\x80\x99s New Obviousness\nJurisprudence: An Empirical Study, 16 Stan. Tech. L. Rev. 709 (2013). Rather, post-KSR\ncaselaw is less focused on explicit statements in published materials; more focused on\npredictability, market forces, and the fact that a PHOSITA has some degree of creativity and\ncommon sense; and more cognizant that PHOSITAs understand that the prior art can have\nuses beyond any explicitly stated purposes. See, e.g., Arctic Cat v. Bombardier Recreational\nProducts, 876 F.3d 1350, 1359 (Fed. Cir. 2017) (\xe2\x80\x9c[A] motivation to combine can be found\nexplicitly or implicitly in the prior art references themselves, in market forces, in design\nincentives, or in any need or problem known in the field of endeavor at the time of invention\nand addressed by the patent.\xe2\x80\x9d). Does this change your assessment of the test\xe2\x80\x99s consistency\nwith KSR?\n4. Other Factors for Assessing Obviousness. In addition to emphasizing \xe2\x80\x9cpredictability\xe2\x80\x9d\nand noting that the TSM test may be \xe2\x80\x9chelpful,\xe2\x80\x9d what other guidance does KSR offer on\nperforming an obviousness analysis?\n\xe2\x97\x8f\n\nThe Court resurrected the \xe2\x80\x9cobvious to try\xe2\x80\x9d test: When there are a finite number of\npredictable solutions to a known problem, \xe2\x80\x9cthe fact that a combination was obvious to\ntry might show that it was obvious under \xc2\xa7 103.\xe2\x80\x9d What if it is obvious to try something,\nbut the result is unpredictable and unexpected? See Mark A. Lemley, Expecting the\nUnexpected, 92 Notre Dame L. Rev. 1369 (2017).\n\n\xe2\x97\x8f\n\nDecisionmakers can consider \xe2\x80\x9ccommon sense\xe2\x80\x9d (a phrase KSR uses five times).\n\n\x0cNONOBVIOUSNESS\n\xe2\x97\x8f\n\n135\n\nThe Court quotes Graham\xe2\x80\x99s statement that \xe2\x80\x9c[s]uch secondary considerations as\ncommercial success, long felt but unsolved needs, failure of others, etc., might be\nutilized.\xe2\x80\x9d We discuss these factors in detail in the following section. One secondary\nfactor that seemed important here was advances in collateral technology: KSR notes\nthe relevance of \xe2\x80\x9cdesign incentives and other market forces\xe2\x80\x9d such as the technological\ndevelopments in computing that \xe2\x80\x9ccreated a strong incentive to convert mechanical\npedals to electronic pedals.\xe2\x80\x9d\n\n5. Presumption of Validity. As we noted at the beginning of the section on\npatentability, a granted patent carries a presumption of validity. This requirement is\nstatutory: the first sentence of 35 U.S.C. \xc2\xa7 282 reads, \xe2\x80\x9cA patent shall be presumed valid.\xe2\x80\x9d\nThis presumption is operationalized via the rule that a party seeking to prove that a granted\npatent is invalid must do so by \xe2\x80\x9cclear and convincing evidence.\xe2\x80\x9d Microsoft v. i4i, 564 U.S. 91\n(2011). The most compelling argument for this rule is that a granted patent has already\nundergone review by an expert patent examiner at the USPTO. The presumption of validity,\nand the clear and convincing evidence rule, represent deference to the USPTO\xe2\x80\x99s judgment. If\nwe assume that is the rationale, can you think of a reason why the presumption of validity\nshould not have attached to Teleflex\xe2\x80\x99s patent when evaluating its obviousness over the prior\nart discussed by the Court?\n6. The PHOSITA. In KSR, the Supreme Court takes a more expansive view of the\nPHOSITA than had the Federal Circuit in prior cases. Whereas the Federal Circuit treats\nthe PHOSITA almost as an automaton who will not try combining two prior inventions\nwithout explicitly being told to do so, the Supreme Court describes the PHOSITA as flexible\nand creative\xe2\x80\x94someone who will use \xe2\x80\x9ccommon sense\xe2\x80\x9d and try any combination that is \xe2\x80\x9cobvious\nto try.\xe2\x80\x9d One way to understand this disagreement is as simple divergence over the level of\nskill of someone in the art and what that person is capable of. Is there another way to\nunderstand what the Supreme Court is doing, and why it rejects the Federal Circuit\xe2\x80\x99s\nconstruction of the PHOSITA? Take a look at the Supreme Court\xe2\x80\x99s statement beginning with\n\xe2\x80\x9cThese advances, once part of our shared knowledge . . . .\xe2\x80\x9d What is the Court saying there?\n7. An Identity-Conscious PHOSITA? Should the nonobviousness standard be applied\ndifferently for innovators who face structural barriers to successful innovation, such as by\nusing a \xe2\x80\x9cwoman of ordinary skill in the art\xe2\x80\x9d standard for inventions by women? See Dan L.\nBurk, Diversity Levers, 23 Duke J. Gender L. & Pol\xe2\x80\x99y 25 (2015).\n8. Is Racial Application Nonobvious? Should patents restricting an invention to a\nparticular race be considered nonobvious? In 2005, the FDA approved the drug BiDil to treat\nheart failure in \xe2\x80\x9cself-identified black patients.\xe2\x80\x9d The FDA had previously denied approval of\nthe drug for all patients due to inadequate statistical support, but when the sponsors reexamined the data along racial lines and then ran a new trial on patients who identified as\nAfrican-American, they found a statistically significant effect. The FDA\xe2\x80\x99s decision was\ncontroversial for applying questionable statistical standards (i.e., re-examining data for a\nsubgroup raises concerns about \xe2\x80\x9cp-hacking\xe2\x80\x9d or \xe2\x80\x9cdata fishing\xe2\x80\x9d) in ways that could reinforce\nthe idea that race is biological rather than a social and political construct. See Dorothy E.\n\n\x0c136\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nRoberts, What\xe2\x80\x99s Wrong with Race-Based Medicine?: Genes, Drugs, and Health Disparities, 12\nMinn. J.L. Sci. & Tech. 1 (2011). A patent on using BiDil to treat heart failure in all patients\nexpired in 2007, but the USPTO also granted a later patent claiming the use of BiDil to treat\nheart failure \xe2\x80\x9cin a black patient,\xe2\x80\x9d without defining \xe2\x80\x9cblack.\xe2\x80\x9d The race-based patent did not\nexpire until 2020, providing thirteen additional years of protection. What does the USPTO\xe2\x80\x99s\nconclusion that this claim is nonobvious over the general claim imply about the baseline from\nwhich obviousness is judged? Does the decision seem wrong as a matter of standard patent\nlaw? See Jonathan Kahn, Race-ing Patents/Patenting Race: An Emerging Political\nGeography of Intellectual Property in Biotechnology, 92 Iowa L. Rev. 353 (2007).\n\nPractice Problems: \xc2\xa7 102 Review and \xc2\xa7 103 Warm Up\nIn July 2013, Serena secretly invented a device for harvesting maple syrup.1 Syrup\nproducers have realized that if you stop harvesting sap from a maple tree once it gets below\na certain concentration of sugar, you can sell the resulting syrup for a premium. Old-timers\ncan taste the sap to know the concentration of sugar, but that\xe2\x80\x99s expensive. Serena\xe2\x80\x99s device\nautomates this process using a refractometer, which measures the concentration of sugar in\na liquid. Serena keeps her invention secret and files a patent on December 1, 2013, claiming:\n1. A device for harvesting maple syrup comprising:\n(a) an electronically closable tap for insertion into a maple tree;\n(b) a refractometer connected to said electronically closable tap;\n(c) fastening means for attaching a container to said tap; and\n(d) a container suitable for collecting maple sap attached to said tap by said\nfastening means.\nThe first step of a \xc2\xa7 103 analysis is determining the content of the prior art. You have\ndetermined that the prior art definitely includes these two references:\nA. A refractometer, patented in 1986 and widely available.\nB. A manual tap for maple trees with a hook for hanging a bucket, marketed in 1941.\nDo the following facts create any additional prior art under the relevant \xc2\xa7 102?\nC. A sap-harvesting device invented by Trip in Vermont in June 2009. The sapharvesting device includes an electronically closable tap with a bucket hanging on it\nby a hook; the device is operated by having a knowledgeable maple farmer taste the\nsap and close the tap for a group of nearby trees all at once if the sugar concentration\nis below the relevant threshold. Trip kept his invention secret and didn\xe2\x80\x99t pursue the\nidea further until he filed for a patent on September 1, 2013, which was published in\ndue course.\n\n1\n\nWe thank Nicholson Price for creating the original version of this problem.\n\n\x0cNONOBVIOUSNESS\n\n137\n\nD. An automatic milking system for cows, designed for making all-natural sweet cream\ncheese: it involves an automatic milking machine with an attached bucket, and uses\na refractometer to measure the sugar content of the milk, then shuts off the milking\nmachine when the sugar concentration gets too low. Natalia invented the system in\nGermany at her dairy and cheese farm outside of Frankfurt, where she has proudly\ndemonstrated it to cheese-buyers since 2011. No one has published about or patented\nthis invention.\nIs a court likely to find Serena\xe2\x80\x99s invention obvious under \xc2\xa7 103? What if you subtract three\nyears from all dates, so that Serena\xe2\x80\x99s patent is filed on December 1, 2010, Trip\xe2\x80\x99s device is\ninvented in 2006, and so forth?\n\nPractice Problem: Creating an Obviousness Claim Chart\nIn Chapter 2, you created an anticipation claim chart to show where (if at all) each\nlimitation of a truck-covering system (claim 1 of the \xe2\x80\x99109 patent) could be found in a prior art\nreference (the Cramaro patent). Please add an additional column to your claim chart now for\nanother prior art reference, U.S. Patent No. 3,415,260 (Hall). Do you think claim 1 of the \xe2\x80\x99109\npatent would have been obvious in light of Cramaro and Hall?\nU.S. Patent No. 5,026,109\n\nU.S. Patent No. 3,415,260 (Hall prior art)\n\n1. A retractable segmented\ncover system used with a\ntruck trailer comprising\n(a) a plurality of flexible\ncover sections with\n\n(b) a plurality of\nsubstantially parallel\nsupporting bows spaced\ntherebetween and\n\n\xe2\x80\x9cA plurality of frames or arch members are independently\nmovable between two fixed posts or support members and\neach is maintained in aligned parallelism by four cables,\neach cable being disposed in a Z-pulley arrangement.\xe2\x80\x9d\nAbstract, col. 1, ll. 10\xe2\x80\x9314.\n\n\xe2\x80\x9cReferring now to FIG. 1, it is to be noted that the\nstructure embodies a plurality of frames, as for example,\na first or forward frame and a first rightwardly adjacent\n\n\x0c138\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nframe 61. Other adjacent frames 62, 63, 64 and 65 are\nspaced rearwardly toward a rear frame 66, which frame\nmay be attached to a wall indicated in phantom outline.\xe2\x80\x9d\nCol. 4, ll. 8\xe2\x80\x9314.\n(c) a drive assembly,\n\n(d) wherein each cover\nsection is detachably\nconnected between\nsubstantially parallel\nsupporting bows,\n(e) the bows are slideably\nsupported on the truck\ntrailer and\n(f) at least one bow is fixedly\nconnected to the drive\nassembly such that the cover\nsystem can be extended or\nretracted by the drive\nassembly and\n(g) wherein a cover section\ncan be removed from the\ncover system independent of\nthe other cover sections.\n\nB. Secondary Considerations\nIn addition to scrutinizing the technical details of an invention, in both Graham and\nKSR the Supreme Court referred to \xe2\x80\x9csecondary considerations\xe2\x80\x9d that \xe2\x80\x9cmight be utilized\xe2\x80\x9d to\nassess obviousness. The secondary considerations are external indicators that are thought to\nshed light on the obviousness inquiry and help guard against hindsight bias. The Federal\nCircuit has offered a laundry list of potential secondary considerations, see, e.g., Ecolochem,\nInc. v. S. California Edison Co., 227 F.3d 1361, 1379 (Fed. Cir. 2000); Allergan, Inc. v. Sandoz\nInc., 796 F.3d 1293, 1305 (Fed. Cir. 2015), which can be broken down into what we might call\ntechnical and economic factors. Technical factors include:\n\n\x0cNONOBVIOUSNESS\n\n139\n\n\xe2\x97\x8f\n\nTeaching away. Whether the prior art discouraged the invention, such as by\nsuggesting that the patented combination would not work well.\n\n\xe2\x97\x8f\n\nUnexpected results. Whether there is evidence that experts would not have expected\nthe results of the experiment producing the invention.\n\n\xe2\x97\x8f\n\nFailure of others. Whether other people with skill in the art have tried and failed to\nconstruct the invention or to solve the problem addressed by the invention.\n\n\xe2\x97\x8f\n\nSkepticism. Whether experts initially expressed skepticism or surprise when they\nlearned of the invention.\n\n\xe2\x97\x8f\n\nProfessional approval. Whether the invention received awards or praise from experts\nor professional organizations.\n\n\xe2\x97\x8f\n\nNear-simultaneous invention. Whether the invention was independently created by\nother parties (suggesting that it may not have required great innovation), particularly\nif other inventors disclosed the invention without seeking a patent (suggesting\nobviousness).\n\nThese six considerations all relate to the technology of the invention. The first two\xe2\x80\x94\nteaching away and unexpected results\xe2\x80\x94are directly relevant to determining technologically\nwhether the invention would have been obvious. What the prior art teaches (and whether it\n\xe2\x80\x9cteaches away\xe2\x80\x9d from the invention) is simply part of the inquiry as to the scope and content\nof the prior art. And whether the invention yielded \xe2\x80\x9cunexpected results\xe2\x80\x9d is another way of\nrestating the question as to whether the combination yielded a \xe2\x80\x9cpredictable\xe2\x80\x9d outcome, which\nthe Supreme Court describes as a key to the obviousness inquiry in KSR. Accordingly, these\ntwo considerations should be thought of as part of the primary obviousness inquiry, not as\nsecondary.\nThe latter four considerations are all proxies for whether the invention was obvious,\nrather than direct evidence of the invention\xe2\x80\x99s obviousness or nonobviousness. Accordingly,\nthey are properly understood as true \xe2\x80\x9csecondary\xe2\x80\x9d considerations.\nThe list of \xe2\x80\x9csecondary considerations\xe2\x80\x9d also includes a set of economic factors. We\ndescribe these as economic in the sense that they offer economic proxy evidence as to whether\nthe invention was technically challenging to create. (They are not necessarily any more\nprobative with respect to the overarching economic question of whether the invention would\nhave been created absent patent rights.) Those factors are:\n\xe2\x97\x8f\n\nLong-felt need. Whether there is long-standing demand for the invention or one like\nit.\n\n\xe2\x97\x8f\n\nCopying by others. Whether others have deliberately copied the invention from the\npatent holder.\n\n\xe2\x97\x8f\n\nCommercial success. Whether the invention was commercially successful once\nproduced (on the controversial theory that such success indicates a long-felt need for\n\n\x0c140\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nthe invention, and that if it were obvious how to satisfy that need, someone would\nhave done so earlier).\n\n\xe2\x97\x8f\n\nLicensing activity. Whether competitors in the market have acquiesced to the validity\nof a patent through acceptance of a license.\n\n\xe2\x97\x8f\n\nAdvances in collateral technology. Whether there is evidence that the invention was\nmade possible by a recent change in the cost of invention, the tools available for\ninvention, or market demand, rather than by nonobvious innovation. This\nconsideration can be thought of as an explanation for\xe2\x80\x94or rebuttal to\xe2\x80\x94some of the\npreceding factors.\n\nThe Federal Circuit has emphasized that secondary considerations \xe2\x80\x9cmay often be the\nmost probative and cogent evidence in the record\xe2\x80\x9d and that courts must consider any evidence\nof secondary considerations before reaching an obviousness conclusion. See, e.g., In re\nCyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig., 676 F.3d 1063, 1075\n(Fed. Cir. 2012). However, these are only considerations, and secondary ones at that. Even\nstrong evidence of secondary considerations can sometimes be overborne by a more\nstraightforward technical analysis of the claimed invention and the prior art. The following\ncase provides an example of how the Federal Circuit has dealt with secondary factors.\n\nApple v. Samsung Electronics, 839 F.3d 1034 (Fed. Cir. 2016) (en banc)\nKimberly A. Moore, Circuit Judge.\n[As part of a multinational patent war, Apple sued Samsung for infringement of\nnumerous patent claims, including claim 8 of U.S. Patent No. 8,046,721, which covered the\n\xe2\x80\x9cslide-to-unlock\xe2\x80\x9d iPhone feature that Samsung allegedly copied. A jury found the claim\ninfringed and not invalid, and the district court denied Samsung\xe2\x80\x99s request for judgement as\na matter of law (JMOL) that the claim was obvious. On appeal, a Federal Circuit panel\nreversed the denial of JMOL, and the court took the case en banc without further briefing.]\nThe \xe2\x80\x99721 patent discloses a portable device with a touch-sensitive display that can be\n\xe2\x80\x9cunlocked via gestures\xe2\x80\x9d performed on the screen. The patent teaches that a \xe2\x80\x9cproblem\nassociated with using touch screens on portable devices is the unintentional activation or\ndeactivation of functions due to unintentional contact with the touch screen,\xe2\x80\x9d commonly\nreferred to as \xe2\x80\x9cpocket dialing.\xe2\x80\x9d The \xe2\x80\x99721 patent also describes the importance of making phone\nactivation as \xe2\x80\x9cuser-friendly\xe2\x80\x9d and \xe2\x80\x9cefficient\xe2\x80\x9d as possible. Apple\xe2\x80\x99s expert, Dr. Cockburn,\nexplained that there was a tension between preventing pocket dialing and ease of use: \xe2\x80\x9c[I]t\nhas to work. It has to succeed in preventing accidental activation by mistake. But yet it needs\nto be something that\xe2\x80\x99s easy to do, but not so easy that it can occur by accident, and it succeeds\nin that.\xe2\x80\x9d\nApple asserted claim 8, which depends from claim 7, against several Samsung devices.\nThese claims recite:\n\n\x0cNONOBVIOUSNESS\n\n141\n\n7. A portable electronic device, comprising:\na touch-sensitive display;\nmemory;\none or more processors; and\none or more modules stored in the memory and configured for execution by the\none or more processors, the one or more modules including instructions:\nto detect a contact with the touch-sensitive display at a first predefined\nlocation corresponding to an unlock image;\nto continuously move the unlock image on the touch-sensitive display\nin accordance with the movement of the detected contact while\ncontinuous contact with the touch-sensitive display is maintained,\nwherein the unlock image is a graphical, interactive user-interface\nobject with which a user interacts in order to unlock the device; and\nto unlock the hand-held electronic device if the unlock image is moved\nfrom the first predefined location on the touch screen to a predefined\nunlock region on the touch-sensitive display.\n8. The device of claim 7, further comprising instructions to display visual cues\nto communicate a direction of movement of the unlock image required to unlock\nthe device.\nSamsung argues claim 8 would have been obvious in light of the combination of\nNeonode and Plaisant. \xe2\x80\x9cNeonode\xe2\x80\x9d refers to the Neonode N1 Quickstart Guide. Neonode\ndiscloses a mobile device with a touch-sensitive screen. It explains that a user may unlock\nthe device by pressing the power button. After the user presses the power button, text\nappears instructing the user to \xe2\x80\x9cRight sweep to unlock.\xe2\x80\x9d Sweeping right then unlocks the\nunit.\n\xe2\x80\x9cPlaisant\xe2\x80\x9d refers to a video and corresponding two-page paper published in 1992 titled\n\xe2\x80\x9cTouchscreen Toggle Design\xe2\x80\x9d by Catherine Plaisant and Daniel Wallace. The authors of the\npaper conducted an experiment to determine which controls (\xe2\x80\x9ctoggles\xe2\x80\x9d) users prefer on wallmounted controllers for \xe2\x80\x9centertainment, security, and climate control systems.\xe2\x80\x9d These\ncontrollers were intended to be installed \xe2\x80\x9cflushmounted into the wall or the cabinetry.\xe2\x80\x9d The\nauthors presented six alternative unlocking mechanisms to a group of fifteen undergraduate\nstudents, including a \xe2\x80\x9cslider toggle\xe2\x80\x9d where a user could activate the controller by \xe2\x80\x9cgrab[bing]\nthe pointer and slid[ing] it to the other side.\xe2\x80\x9d The students preferred \xe2\x80\x9ctoggles that are pushed\xe2\x80\x9d\nover \xe2\x80\x9ctoggles that slide,\xe2\x80\x9d and generally ranked the slider fifth of the six alternatives.\nOn appeal, Apple does not contest that, together, Neonode and Plaisant disclose all\nthe elements of claim 8. Rather, the parties dispute whether a person of ordinary skill in the\nart would have been motivated to combine one of the unlocking mechanisms disclosed in\n\n\x0c142\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPlaisant with Neonode. Samsung argues \xe2\x80\x9cthere was no evidence of any kind suggesting that\nPlaisant\xe2\x80\x99s application to a wall-mounted device would lead inventors not to combine Plaisant\nwith Neonode.\xe2\x80\x9d Its expert, Dr. Greenberg, testified that \xe2\x80\x9ca person looking at this would just\nthink it natural to combine these two, as well taking the ideas in Plaisant, the slider, and\nputting them on the Neonode is, is just a very routine thing to think about in terms of\ninteraction design.\xe2\x80\x9d Samsung points to the Plaisant reference which states that sliding\nmovement \xe2\x80\x9cis less likely to be done inadvertently.\xe2\x80\x9d\nApple counters that a skilled artisan designing a mobile phone would not have been\nmotivated to turn to a wall-mounted air conditioning controller to solve the pocket dialing\nproblem. Its expert, Dr. Cockburn, testified that a person of ordinary skill would not have\nbeen naturally motivated to combine Neonode and Plaisant. He also explained to the jury\nthat Plaisant itself discloses that sliding toggles were less preferred than the other switches\ndisclosed. Apple points to Plaisant\xe2\x80\x99s teachings that \xe2\x80\x9csliders were not preferred,\xe2\x80\x9d \xe2\x80\x9csliding is a\nmore complex task,\xe2\x80\x9d and \xe2\x80\x9csliders are more difficult to implement.\xe2\x80\x9d Apple argues there was\nsubstantial evidence for the jury to conclude that there would not have been a motivation to\ncombine Plaisant and Neonode to arrive at the claimed invention.\nBecause the jury found the issue of validity in favor of Apple, we presume it resolved\nthe conflicting expert testimony and found that a skilled artisan would not have been\nmotivated to combine the slider toggle in Plaisant with the cell phone disclosed in Neonode.\nThe question for our review is whether substantial evidence supports this implied fact\nfinding. We conclude that it does. Neonode discloses a mobile phone. Plaisant discloses a wallmounted air conditioning controller. The jury had both references before it. Although\nSamsung presents arguments for combining the two references, these arguments were before\nthe jury. Our job is not to review whether Samsung\xe2\x80\x99s losing position was also supported by\nsubstantial evidence or to weigh the relative strength of Samsung\xe2\x80\x99s evidence against Apple\xe2\x80\x99s\nevidence. We are limited to determining whether there was substantial evidence for the jury\xe2\x80\x99s\nfindings, on the entirety of the record.\n1. The Objective Indicia of Non\xe2\x80\x93Obviousness\nThe Supreme Court explained that various factors \xe2\x80\x9cmay also serve to guard against\nslipping into use of hindsight, and to resist the temptation to read into the prior art the\nteachings of the invention in issue.\xe2\x80\x9d Graham, 383 U.S. at 36. These factors are commonly\nknown as secondary considerations or objective indicia of non-obviousness. Apple introduced\nevidence of industry praise, copying, commercial success, and long-felt need. We presume the\njury found that the evidence was sufficient to establish each by a preponderance of the\nevidence. We find substantial evidence in the record to support each of those findings.\na. Industry Praise\nEvidence that the industry praised a claimed invention or a product that embodies\nthe patent claims weighs against an assertion that the same claimed invention would have\nbeen obvious. Industry participants, especially competitors, are not likely to praise an obvious\n\n\x0cNONOBVIOUSNESS\n\n143\n\nadvance over the known art. Thus, if there is evidence of industry praise of the claimed\ninvention in the record, it weighs in favor of the non-obviousness of the claimed invention.\nThe district court cited numerous internal Samsung documents that both praised\nApple\xe2\x80\x99s slide to unlock feature and indicated that Samsung should modify its own phones to\nincorporate Apple\xe2\x80\x99s slide to unlock feature [such as presentations calling Apple\xe2\x80\x99s slide to\nunlock invention a \xe2\x80\x9ccreative way of solving UI complexity\xe2\x80\x9d and recommending a \xe2\x80\x9cdirection of\nimprovement\xe2\x80\x9d to make Samsung\xe2\x80\x99s phone the \xe2\x80\x9csame as iPhone\xe2\x80\x9d with \xe2\x80\x9cunlocking standard by\nsliding\xe2\x80\x9d]. Such internal documents from the patentee\xe2\x80\x99s top competitor represent important\nadmissions, acknowledging the merits of the patented advance over the then state of the art\nand can be used to establish industry praise. The court also explained that Apple presented\na video at trial showing Steve Jobs unveiling the slide to unlock feature at an Apple event.\nWhen Mr. Jobs swiped to unlock the phone, \xe2\x80\x9cthe audience burst into cheers.\xe2\x80\x9d2\nIn light of this evidence, we find [Samsung\xe2\x80\x99s] argument that the district court cited\nonly generic praise of the iPhone, and not praise tied to the claimed slide to unlock feature,\nis without merit. The jury was presented with substantial evidence of praise in the industry\nthat specifically related to features of the claimed invention, thereby linking that industry\npraise with the patented invention.\nb. Copying\nSamsung does not dispute in its briefing that the jury heard substantial evidence that\nit copied Apple\xe2\x80\x99s slide to unlock feature, nor does it challenge on appeal that this evidence of\ncopying supports a conclusion that claim 8 would not have been obvious. Apple cites the same\nSamsung internal documents for both industry praise and copying, as they show evidence of\nboth. This is substantial evidence of copying by Samsung, and it supports the jury\xe2\x80\x99s verdict\nthat the claimed invention would not have been obvious.\nc. Commercial Success\nIn its opening appellate brief, Samsung also glosses over commercial success, giving\nit one sentence: \xe2\x80\x9cApple made no effort to establish a nexus between commercial success and\nthe subject matter of claim 8.\xe2\x80\x9d Commercial success requires a nexus to the claimed invention.\nWe look to the record to ascertain whether there is substantial evidence for the jury\xe2\x80\x99s fact\nfinding that Apple established a nexus between commercial success and the invention in\nclaim 8.\nAt trial, Apple\xe2\x80\x99s expert, Dr. Cockburn, testified that the iPhone practiced the asserted\nclaim of the \xe2\x80\x99721 patent, and \xe2\x80\x9cclearly there\xe2\x80\x99s been commercial success of the iPhones that use\nthis invention.\xe2\x80\x9d Critically, Apple presented survey evidence that customers would be less\nlikely to purchase a portable device without the slide to unlock feature and would pay less\nfor products without it, thus permitting the jury to conclude that this feature was a key driver\nin the ultimate commercial success of the products. Apple\xe2\x80\x99s Senior Vice President of\n2\n\n[You can see this video for yourself: https://www.youtube.com/watch?v=kx2XpSgeAiY]\n\n\x0c144\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nWorldwide Marketing testified that slide to unlock was the very first feature shown in Apple\xe2\x80\x99s\noriginal iPhone TV commercial, and the jury saw that commercial during the trial. A\nreasonable jury could have found evidence that Apple\xe2\x80\x99s marketing experts elected to\nemphasize the claimed feature as evidence of its importance. It is likewise reasonable to\nconclude that advertising that highlights or focuses on a feature of the invention could\ninfluence customer purchasing decisions. And an inventor of the \xe2\x80\x99721 patent\xe2\x80\x94an Apple Vice\nPresident\xe2\x80\x94confirmed that slide to unlock was important because it \xe2\x80\x9cwould possibly be [a\ncustomer\xe2\x80\x99s] first experience even in a retail environment\xe2\x80\x9d when the customer was \xe2\x80\x9cdeciding\nwhether they want to buy it.\xe2\x80\x9d Finally, the video of the crowd \xe2\x80\x9cburst[ing] into cheers\xe2\x80\x9d when\nSteve Jobs demonstrated the slide to unlock feature supports a conclusion that consumers\nvalued this particular feature.\nThis record overall contains substantial evidence of a nexus between the slide to\nunlock feature and the iPhone\xe2\x80\x99s commercial success, and we are required to give this jury\nfact finding deference. It is not our role to reweigh the evidence or consider what the record\nmight have supported. This commercial success evidence supports the jury\xe2\x80\x99s verdict that the\nclaimed invention would not have been obvious.\nd. Long\xe2\x80\x93Felt Need\nEvidence of a long-felt but unresolved need can weigh in favor of the non-obviousness\nof an invention because it is reasonable to infer the need would not have persisted had the\nsolution been obvious. There is substantial evidence for the jury to have found that there was\na long-felt but unresolved need for a solution to the pocket dialing problem until Apple\xe2\x80\x99s\nclaimed invention, with its slide to unlock feature, solved that problem. Denying JMOL on\nthis issue, the district court cited testimony from Apple\xe2\x80\x99s expert: \xe2\x80\x9cDr. Cockburn\xe2\x80\x99s testimony\nthat phone designers had been trying to solve the problem of accidental activation and the\n\xe2\x80\x98pocket dial problem\xe2\x80\x99 before the iPhone existed, but had only come up with \xe2\x80\x98frustrat[ing]\xe2\x80\x99\nsolutions.\xe2\x80\x9d While the expert discusses particular examples in the first person: \xe2\x80\x9cI have been\nvery frustrated with [the prior art options],\xe2\x80\x9d the jury could still reasonably find that this\ntestimony was probative of a long-felt need.\nThe record [also] contained a document in which Samsung listed all the alternatives\nto the iPhone slide to unlock. Apple\xe2\x80\x99s expert went through several of the alternatives . . . and\nexplained how each of these failed to solve the accidental activation problem. The jury could\nhave reasonably found that this testimony established long-felt unresolved need.\nIn addition, the jury could have found that the same internal Samsung documents\nApple relied upon for industry praise and copying demonstrate that Samsung compared four\nof its own rejected alternative unlock mechanisms to the iPhone slide to unlock mechanism,\nand that Samsung concluded the iPhone slide to unlock was better. The jury could have found\nthat these Samsung documents show that Samsung, Apple\xe2\x80\x99s fiercest competitor, was\nunsuccessfully trying to solve the same problem. This evidence constitutes substantial\nevidence for the jury fact finding that there was a long-felt but unresolved need, which\nApple\xe2\x80\x99s \xe2\x80\x99721 patented invention solved.\n\n\x0cNONOBVIOUSNESS\n\n145\n\n2. Conclusion on Obviousness of the \xe2\x80\x99721 Patent\nWith [KSR\xe2\x80\x99s] principles in mind, we review de novo the ultimate legal determination\nand conclude that it would not have been obvious to a skilled artisan to combine the prior art\nto arrive at the claimed invention.\nCommon sense and real world indicators indicate that to conclude otherwise would be\nto give in to hindsight, to allow the exact ex post reasoning against which the Supreme Court\ncautioned in Graham and KSR. Though the prior art references each relate to touchscreens,\nthe totality of the evidence supports the conclusion that it would not have been obvious for a\nskilled artisan, seeking an unlock mechanism that would be both intuitive to use and solve\nthe pocket dialing problem for cell phones, to look to a wall-mounted controller for an air\nconditioner. The two-page Plaisant paper published in 1992 reported the results of a userpreference survey of fifteen undergraduates on six different computer-based switches. That\na skilled artisan would look to the Plaisant paper directed to a wall-mounted interface screen\nfor appliances and then choose the slider toggle, which the study found rated fifth out of six\noptions in usability, to fulfill a need for an intuitive unlock mechanism that solves the pocket\ndialing problem for cell phones seems far from obvious.\nWe have considered the jury\xe2\x80\x99s implicit fact findings about the teachings of Plaisant\nand Neonode. We have also considered the objective indicia found by the jury which are\nparticularly strong in this case and powerfully weigh in favor of validity. These real world\nindicators of whether the combination would have been obvious to the skilled artisan in this\ncase \xe2\x80\x9ctip the scales of patentability,\xe2\x80\x9d Graham, 383 U.S. at 36, or \xe2\x80\x9cdislodge the determination\nthat claim [8 would have been] obvious,\xe2\x80\x9d KSR, 550 U.S. at 426. Weighing all of the Graham\nfactors, we agree with the district court on the ultimate legal determination that Samsung\nfailed to establish by clear and convincing evidence that claim 8 of the \xe2\x80\x99721 patent would have\nbeen obvious. We affirm the district court\xe2\x80\x99s denial of JMOL.\nTimothy B. Dyk, Circuit Judge, dissenting.\n[Judge Dyk criticized the procedural irregularity of taking a case en banc without\nfurther briefing before turning to \xe2\x80\x9cthe profound changes in the law of obviousness that the\nmajority creates.\xe2\x80\x9d]\nFirst, the majority turns the legal question of obviousness into a factual issue for a\njury to resolve, both as to the sufficiency of the motivation to combine and the significance to\nbe given to secondary considerations. KSR explicitly rejected the contention that obviousness\nis always a matter of fact requiring jury resolution. In KSR, the patentee argued that the\nquestion of motivation to combine was for the jury. The Supreme Court rejected this\ncontention. Here too, \xe2\x80\x9cthe content of the prior art, the scope of the patent claim, and the level\nof ordinary skill in the art are not in material dispute,\xe2\x80\x9d KSR, 550 U.S. at 427, and there is no\nindication that the combination of the relevant prior art does more than yield a predictable\nresult. Yet the majority holds that the question of the sufficiency of the motivation here was\na jury question.\n\n\x0c146\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nSecond, the majority lowers the bar for nonobviousness by refusing to take account of\nthe trivial nature of the two claimed inventions. The slide to unlock feature was known in\nthe prior art (Neonode) and the only innovation is an image associated with the sliding\ngesture from fixed starting to ending points.3 Treating such minimal advances over the prior\nart as nonobvious is contrary to KSR, where the Supreme Court confirmed that the\nobviousness doctrine is designed to ensure that \xe2\x80\x9cthe results of ordinary innovation are not\nthe subject of exclusive rights under the patent laws.\xe2\x80\x9d 550 U.S. at 427. On the face of these\npatents, only ordinary, indeed trivial, innovation is involved.\nThird, the majority concludes that combinations of prior art used to solve a known\nproblem are insufficient to render an invention obvious as a matter of law. According to the\nmajority, there must be evidence of a specific motivation to combine. Both aspects of these\nconclusions are contrary to KSR. Under KSR, the existence of each patented feature in the\nprior art is alone not sufficient to establish obviousness. There must be a reason to make a\ncombination. But KSR holds that the reason may be found as a matter of law in the solution\nto a known problem. KSR was quite clear that the existence of a known problem suffices:\n\xe2\x80\x9c[o]ne of the ways in which a patent\xe2\x80\x99s subject matter can be proved obvious is by noting that\nthere existed at the time of invention a known problem for which there was an obvious\nsolution.\xe2\x80\x9d 550 U.S. at 419\xe2\x80\x9320. \xe2\x80\x9c[W]hen a patent simply arranges old elements with each\nperforming the same function it had been known to perform and yields no more than one\nwould expect from such an arrangement, the combination is obvious.\xe2\x80\x9d Id. at 417. KSR also\nheld, contrary to the majority, that evidence of a specific motivation to combine is not\nrequired. The Court rejected our court\xe2\x80\x99s approach in requiring a \xe2\x80\x9cspecific understanding or\nprinciple\xe2\x80\x9d that creates a specific motivation to combine. In KSR itself, the combination was\nheld obvious despite no \xe2\x80\x9cprecise teachings\xe2\x80\x9d to combine the previous references.\nHere, the inventions combine features known in the prior art. Apple does not dispute\nthat the combination of the prior art Neonode and Plaisant references produces the claimed\ninvention. There is no claim that the combination yielded unpredictable results. The patent\nalso addresses a known problem: ease-of-use and avoidance of inadvertent activation.\nContrary to KSR, the majority now holds that a known problem is not sufficient and that\nthere must be evidence of a specific motivation.\nFourth, the majority errs in cabining the relevant technology in the field of prior art.\nThe majority invites the factfinder to dismiss prior art evidence on the theory that it concerns\na different device than the patented invention, even if the references are directed to solving\nthe same problem and pertain to a related device. For example, the majority holds that the\njury could dismiss the Plaisant reference because it was directed to wall-mounted rather than\nportable devices. The Supreme Court in KSR rejected the theory that prior art addressing\nthe same problem can be dismissed because it concerns a different device. \xe2\x80\x9c[I]f a technique\nhas been used to improve one device, and a person of ordinary skill in the art would recognize\n\n[n.3 in opinion] Courts in other countries [including the UK, the Netherlands, and Germany]\nhave uniformly found the \xe2\x80\x99721 patent invalid.\n3\n\n\x0cNONOBVIOUSNESS\n\n147\n\nthat it would improve similar devices in the same way, using the technique is obvious unless\nits actual application is beyond his or her skill.\xe2\x80\x9d KSR, 550 U.S. at 417.\nThe \xe2\x80\x99721 patent concerns unlocking touchscreen devices. Here, the prior art dismissed\nby the majority concerns the general field of touchscreen devices. The majority errs in two\nrespects. First, the \xe2\x80\x99721 patent is not limited to cell phones or to the cell phone pocket-dialing\nproblem, and indeed makes no reference to a pocket-dialing problem. The \xe2\x80\x99721 patent is\ndirected to portable devices generally, and to ease of use and inadvertent activation with\nrespect to all such devices. Second, the Plaisant prior art was concerned with the same\nproblems as the \xe2\x80\x99721 patent in the field of touch screen devices. Plaisant indicated that the\nstudy\xe2\x80\x99s \xe2\x80\x9cfocus is on providing . . . systems that are easy for the home owner to use.\xe2\x80\x9d Plaisant\nalso indicated that an \xe2\x80\x9cadvantage of the sliding movement is that it is less likely to be done\ninadvertently.\xe2\x80\x9d Plaisant was thus directed to solving the same problem in the same area as\nthe patented invention.\nThis change is evident from comparing the majority\xe2\x80\x99s holding here to our past\njurisprudence. We have previously held that \xe2\x80\x9c[a] reference is reasonably pertinent if, even\nthough it may be in a different field from that of the inventor\xe2\x80\x99s endeavor, [it] logically would\nhave commended itself to an inventor\xe2\x80\x99s attention in considering his problem.\xe2\x80\x9d In re Clay, 966\nF.2d 656, 659 (Fed. Cir. 1992). \xe2\x80\x9cWe therefore have concluded, for example, that an inventor\nconsidering a hinge and latch mechanism for portable computers would naturally look to\nreferences employing other housings, hinges, latches, springs, etc., which in that case came\nfrom areas such as a desktop telephone directory, a piano lid, a kitchen cabinet, a washing\nmachine cabinet, a wooden furniture cabinet, or a two-part housing for storing audio\ncassettes.\xe2\x80\x9d In re ICON Health & Fitness, Inc., 496 F.3d 1374, 1380 (Fed. Cir. 2007). Not only\ndoes the majority alter our jurisprudence with respect to district court proceedings, its\napproach would affect patent examiners who are currently instructed that analogous prior\nart \xe2\x80\x9cdoes not require that the reference be from the same field of endeavor as the claimed\ninvention.\xe2\x80\x9d Manual of Patent Examining Procedure \xc2\xa7 2141.01(a).\nFifth, the majority errs in elevating secondary considerations of nonobviousness\nbeyond their role as articulated by the Supreme Court. Secondary considerations \xe2\x80\x9cwithout\ninvention[ ] will not make patentability.\xe2\x80\x9d Sakraida, 425 U.S. at 278. Thus, when, as here, a\npatent is plainly not inventive, that is, when the prima facie case of obviousness is strong,\nsecondary considerations carry little weight. The majority holds that secondary\nconsiderations must \xe2\x80\x9calways\xe2\x80\x9d be considered and that even a strong case of obviousness\ninvolving small advances in the prior art can be outweighed by secondary considerations. But\nunder Supreme Court authority, secondary considerations are insufficient to outweigh a\nstrong case of obviousness involving small advances over the prior art.\nKSR and Graham assigned a limited role to secondary considerations. KSR required\ninquiry into secondary considerations only \xe2\x80\x9cwhere appropriate.\xe2\x80\x9d 550 U.S. at 415. In Graham,\nsecondary considerations are referred to as factors that \xe2\x80\x9cmight be utilized to give light to the\ncircumstances.\xe2\x80\x9d 383 U.S. at 17. For example, the Graham Court weighed (in evaluating the\nScoggin insecticide sprayer patent) that despite the presence of \xe2\x80\x9clong-felt need in the\n\n\x0c148\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nindustry\xe2\x80\x9d and \xe2\x80\x9cwide commercial success\xe2\x80\x9d of the patentee, \xe2\x80\x9cthese factors do not, in the\ncircumstances of this case, tip the scales of patentability.\xe2\x80\x9d 383 U.S. at 35\xe2\x80\x9336. This was so\nbecause in that case the invention \xe2\x80\x9crest[ed] upon exceedingly small and quite non-technical\nmechanical differences in a device which was old in the art.\xe2\x80\x9d Id. at 36. Similarly, even though\nthe patentee in KSR introduced evidence of commercial success, the Court dismissed it\nbecause it \xe2\x80\x9cconclude[d] Teleflex has shown no secondary factors to dislodge the determination\nthat claim 4 is obvious.\xe2\x80\x9d 550 U.S. at 426.\nThis case also is not a close one. The combination of references, the known problem,\nthe predictable results, and the exceedingly small differences from the prior art make the\ncombination evident and secondary considerations insufficient as a matter of law.\nFinally, even if secondary considerations in this case were legally relevant, the\nmajority fails to compare to the closest prior art to properly assess the innovation over the\nprior art. Secondary considerations must be directed to what is claimed to be inventive. In\nother words, there must be a demonstrated nexus to the claimed invention\xe2\x80\x94a nexus to what\nis new in comparison to the prior art. Furthermore, the proponent of such evidence of\nsecondary considerations, in this case Apple, \xe2\x80\x9cbears the burden of showing that a nexus exists\nbetween the claimed features of the invention and the objective evidence offered to show\nnonobviousness.\xe2\x80\x9d WMS Gaming v. Int\xe2\x80\x99l Game Tech., 184 F.3d 1339, 1359 (Fed. Cir. 1999).\n[Under prior Federal Circuit caselaw,] ascertaining the significance of the innovative\nleap over the prior art using secondary considerations requires a comparison to the closest\nprior art. The majority\xe2\x80\x99s secondary considerations analysis repeatedly compares to inferior\nor non-existent prior art, rather than to the relevant, closest prior art. For example, for\ncommercial success, Apple and the majority rely on survey evidence developed for Apple\xe2\x80\x99s\ndamages case that consumers are more likely to purchase (and pay more for) a phone with a\nslide to unlock feature. However, this is an irrelevant comparison because Neonode provides\na slide-to-unlock feature. There was no showing of nexus between the inventive steps (over\nthe closest prior art) and the surveyed consumer demand. For long-felt but unresolved need,\nthe majority compares to an older Nokia device with a very different non-touchscreen, buttonbased unlocking feature, as well as to Samsung touchscreen unlocking mechanisms that do\nnot have the slide-to-unlock feature of Neonode. The majority also cites Steve Job\xe2\x80\x99s unveiling\nof the slide to unlock feature at an Apple event and the audience\xe2\x80\x99s cheers as evidence of\nindustry praise for the \xe2\x80\x99721 patent. Again, however, Apple provides no evidence that this\npraise was specifically for the \xe2\x80\x99721 patent\xe2\x80\x99s innovative step beyond Neonode or even that the\naudience was comprised of industry experts. The majority thus errs in elevating such\nirrelevant comparisons as providing \xe2\x80\x9cparticularly strong\xe2\x80\x9d and \xe2\x80\x9cpowerful[ ]\xe2\x80\x9d evidence of\nnonobviousness.\nIn summary, the majority decision here materially raises the bar for obviousness by\ndisregarding Supreme Court precedent.\n[Separate dissents by Chief Judge Prost and Judge Reyna are omitted. In 2017, the\nSupreme Court denied Samsung\xe2\x80\x99s cert petition after calling for the views of the Solicitor\n\n\x0cNONOBVIOUSNESS\n\n149\n\nGeneral, who recommended against review. In 2018, Apple and Samsung settled all\nlawsuits\xe2\x80\x94including a suit involving design patents that did make it to the Supreme Court.]\n\nDiscussion Questions: Secondary Considerations\n1. Advantages? What are the advantages to courts of looking to the secondary\nconsiderations as opposed to focusing solely on the technical characteristics of the inventions?\nWhat does a court have to gain from scrutinizing, for instance, the success or failures of other\ninventors or the commercial success of a product instead of looking directly at the technical\naspects of the invention?\n2. The Inferences and Assumptions Underlying Secondary Considerations. The\nweakness of secondary considerations is that they are only proxies for nonobviousness, not\nthe real thing. This means that each secondary consideration relies on background\nassumptions or requires additional information to be made useful. Consider the most\nfrequently used secondary consideration: commercial success. This factor has been criticized\nas \xe2\x80\x9ca poor indicator of patentability because it is indirect; it depends for its effectiveness on\na long chain of inferences, and the links in the chain are often subject to doubt.\xe2\x80\x9d Robert P.\nMerges, Commercial Success and Patent Standards: Economic Perspectives on Innovation, 76\nCalif. L. Rev. 803, 838 (1988). The Federal Circuit has repeatedly emphasized that evidence\nof secondary considerations must have a \xe2\x80\x9cnexus\xe2\x80\x9d to the claimed invention. A nexus is\npresumed to exist \xe2\x80\x9cwhen the patentee shows that the asserted objective evidence is tied to a\nspecific product and that product embodies the claimed features, and is coextensive with\nthem.\xe2\x80\x9d Fox Factory v. SRAM, 944 F.3d 1366, 1373 (Fed. Cir. 2019). To have relevance for the\nobviousness inquiry, the commercial success of a product also must be due to the claimed\ninvention, and that future success must have been apparent to numerous firms before the\ninvention\xe2\x80\x99s development. What else is required before a court can infer nonobviousness from\ncommercial success?\nAre all secondary considerations subject to this critique to the same degree? For each\nof the following considerations, what are those potential confounding variables, and what\nadditional information is necessary to interpret the secondary consideration?\nA. Failure of others, skepticism, professional approval, and near-simultaneous\ninvention? See Merges, supra, at 862 (\xe2\x80\x9cUnlike commercial success, the failure\nof others to make an invention proves directly that parallel research efforts\nwere under way at a number of firms, and that one firm (the patentee) won the\nrace to a common goal.\xe2\x80\x9d). Do you agree with this quote from the Merges article\nthat the failure of others provides direct evidence of nonobviousness?\nB. Long-felt need?\nC. Copying by others and licensing activity?\n\n\x0c150\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n3. Secondary Considerations as Secondary. One case that starkly poses the question\nof how much to weigh the primary and secondary considerations is Ritchie v. Vast Resources,\nInc., 563 F.3d 1334 (Fed. Cir. 2009). This case, decided by Judge Richard Posner sitting by\ndesignation, involved a highly commercially successful invention that seemed technically\ntrivial, but which nobody until the plaintiffs had thought to invent despite the raw materials\nexisting for nearly a century:\nBoth [plaintiff and defendant] firms produce what the parties call \xe2\x80\x9csex\naids\xe2\x80\x9d but are colloquially referred to as \xe2\x80\x9csex toys.\xe2\x80\x9d The devices are generally in\nthe shape of rods of various curvatures and are made out of rubber, plastic,\nglass, or some combination of these materials. Until the plaintiffs began\nmanufacturing their patented sexual devices, glass sexual devices were made\nout of soda-lime glass, the most common form of glass. The plaintiffs\xe2\x80\x99 patent\nclaims [devices made from] \xe2\x80\x9cborosilicate glass,\xe2\x80\x9d [which is] \xe2\x80\x9cresistant to heat,\nchemicals, electricity and bacterial absorptions.\xe2\x80\x9d Borosilicate glass is the glass\nout of which Pyrex glassware was originally made, and is sometimes still made.\nGiven that it has commercial value, as heavily emphasized by the\nplaintiffs, and given that Pyrex has been sold for almost a century, to call its\nuse in a sexual device \xe2\x80\x9cobvious\xe2\x80\x9d may seem the triumph of hindsight over\ninsight. Commercial value is indeed one of the indicia of nonobviousness,\nbecause an invention that has commercial value is likely to come on the market\nvery shortly after the idea constituting the invention (in this case the use of\nborosilicate glass in a sexual device) became obvious; if the invention did not\nappear so soon despite its value in the market, this is some evidence that it\nwasn\xe2\x80\x99t obvious after all. But for a variety of reasons commercial success is\ndeemed a \xe2\x80\x9csecondary\xe2\x80\x9d indicator of nonobviousness. The commercial success of\na product can have many causes unrelated to patentable inventiveness; for\nexample, the commercial success of an \xe2\x80\x9cinvention\xe2\x80\x9d might be due not to the\ninvention itself but to skillful marketing of the product embodying the\ninvention.\nAmong the inventions that the law deems obvious are efforts at routine\nexperimentation with different standard grades of a material used in a\nproduct\xe2\x80\x94standard in the sense that their properties, composition, and method\nof creation are well known, making successful results of the experimentation\npredictable. This is such a case.\nThis case thus exemplifies the Supreme Court\xe2\x80\x99s analysis in KSR. \xe2\x80\x9cIf a\nperson of ordinary skill can implement a predictable variation, \xc2\xa7 103 likely\nbars its patentability. For the same reason, if a technique has been used to\nimprove one device, and a person of ordinary skill in the art would recognize\nthat it would improve similar devices in the same way, using the technique is\nobvious unless its actual application is beyond his or her skill.\xe2\x80\x9d (The last\nsentence describes our case to a tee.)\n\n\x0cNONOBVIOUSNESS\n\n151\n\nIn Ritchie, Judge Posner makes clear that when the secondary considerations cut\nstrongly in one direction and the technical approach to nonobviousness cuts strongly in the\nother, the courts will side with the technical approach. This was particularly remarkable\ngiven the identity of the opinion\xe2\x80\x99s author, perhaps the most famous law and economics\nscholar and judge in history. Do you think this is appropriate? Should the court in Ritchie\nhave given greater credence to the secondary considerations, given how strongly they favored\na finding of nonobviousness?\n4. Other Evidence of Obviousness? Can you think of any evidence not captured by the\nFederal Circuit\xe2\x80\x99s list of potential secondary considerations that might be probative of\nobviousness or nonobviousness?\nJudge Dyk\xe2\x80\x99s dissent notes in a footnote that other countries had uniformly found the\nslide-to-unlock patent invalid; should this be relevant to the assessment by a U.S. court?\nShould courts consider evidence of how \xe2\x80\x9cdistant\xe2\x80\x9d the invention is from the prior art as\ndetermined by algorithmic measures of technological networks? If so, should this be\nconsidered a secondary consideration or direct evidence? See Laura G. Pedraza-Fari\xc3\xb1a &\nRyan Whalen, A Network Theory of Patentability, 87 U. Chi. L. Rev. 63 (2020).\n\nPractice Problems: Post-KSR Federal Circuit Cases on Nonobviousness\nThe following problems are based on real Federal Circuit cases decided after KSR. Do\nyou think the claims at issue are obvious or nonobvious?\n1. Tai Hoon and Eric applied for a patent on a paper shredder with two sensors: a\n\xe2\x80\x9cpresence\xe2\x80\x9d sensor, which will turn on the shredder when it senses the presence of one or more\nsheets of paper; and a \xe2\x80\x9cthickness\xe2\x80\x9d sensor, which will prevent the shredder from operating if\nthe stack of paper inserted is too thick and risks jamming the shredder. The key claim is as\nfollows:\nA shredding machine for shredding sheet material, the machine comprising:\n(a) a feed-aperture;\n(b) an electric cutting mechanism, the feed-aperture being configured to\nreceive multiple sheets and direct said sheets in a feeding direction towards\nthe cutting mechanism for shredding;\n(c) a controller coupled to the cutting mechanism;\n(d) a thickness detector coupled to the controller; and\n(e) a presence sensor along the feed-aperture for detecting a presence of the\nsheet material inserted into the feed-aperture, coupled to the controller,\n(f) wherein the controller will turn the shredder on only when the presence\nsensor detects the presence of at least one sheet of paper inserted into the\nfeed-aperture, and when the thickness detector detects that the paper is\nnot too thick for the shredder.\n\n\x0c152\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPrior art shredders have features including (1) presence sensors that automatically turn on\nthe shredder when paper is present; (2) the ability to sense when a paper jam has occurred\n(by measuring a spike in voltage from the electric motor) and switch off the shredder\xe2\x80\x99s motor\nwith a controller; and (3) thickness sensors that can determine the thickness of a stack of\npaper. See ACCO Brands Corp. v. Fellowes, Inc., 813 F.3d 1361 (Fed. Cir. 2016).\n2. LeapFrog Enterprises, a manufacturer of technology-based learning products for\nchildren, sued Fisher-Price and Mattel for infringement of this patent claim on a device to\nhelp young children read phonetically:\nAn interactive learning device, comprising:\n(a) a sound production device in communication with a plurality of switches\nand including a processor and a memory;\n(b) at least one depiction of a sequence of letters, each letter being associable\nwith a switch; and\n(c) wherein selection of a depicted letter activates an associated switch to\ncommunicate with the processor, causing the sound production device to\ngenerate a signal corresponding to a sound associated with the selected\nletter, the sound being determined by a position of the letter in the\nsequence of letters.\nThe prior art includes (1) a patent describing a learning toy for which pressing any letter\nfrom a word produces the sound of that letter using a phonograph record controlled with an\nelectric motor and (2) a Texas Instruments toy that allows a child to press the first letter of\na word and hear that sound or to press the remaining letters and hear them played together\nusing a processor, memory, and a speaker. At trial, LeapFrog presented substantial evidence\nof commercial success, praise, and long-felt need. See LeapFrog Enterprises v. Fisher-Price,\nInc., 485 F.3d 1157 (Fed. Cir. 2007).\n3. The Wrigley chewing gum company sued Cadbury (the candy company) for\ninfringing its patent on \xe2\x80\x9ccool flavored\xe2\x80\x9d gum:\nA chewing gum composition comprising:\n(a) about 5% to about 95% gum base;\n(b) about 5% to about 95% bulking and sweetening agent; and\n(c) about 0.1% to about 10% flavoring agent wherein the flavoring agent\ncomprises WS-23 and menthol.\nWS-23 is a flavoring agent that, like menthol, produces a \xe2\x80\x9ccool\xe2\x80\x9d sensation. The prior art\nincludes (1) gum with a gum base of 45%; (2) gum with 53% bulking and sweetening agent;\n(3) gum using combinations of menthol and WS-3 (another flavoring agent that produces a\n\xe2\x80\x9ccooling\xe2\x80\x9d effect); and (4) printed publications disclosing that WS-3 and WS-23 are similar\nsubstitutes for menthol. See Wm. Wrigley Jr. Co. v. Cadbury Adams USA LLC, 683 F.3d 1356\n(Fed. Cir. 2012).\n\n\x0cUTILITY & DISCLOSURE\n\n153\n\n4. Utility and Disclosure\nIn the previous chapters, we addressed the question of when an inventor has created\na novel and nonobvious invention that is eligible for patenting. But these are not the only\nrequirements for patentability. An invention must also be useful at the time of filing, and it\nmust be adequately disclosed in the patent document. Four doctrines have evolved to police\nthese requirements: utility, enablement, written description, and best mode.\nAll of these doctrines stem from 35 U.S.C. \xc2\xa7 112(a), which was previously known as\n\xc2\xa7 112, \xc2\xb6 1 before the 2011 America Invents Act added letters to the paragraphs. Pre-AIA\nclaims are governed by the old \xc2\xa7 112, \xc2\xb6 1, but the only difference is the addition of \xe2\x80\x9cor joint\ninventor,\xe2\x80\x9d and we will refer throughout to \xc2\xa7 112(a) for simplicity.\n\n35 U.S.C. \xc2\xa7 112(a)\nThe specification shall contain a written description of the invention, and of\nthe manner and process of making and using it, in such full, clear, concise, and\nexact terms as to enable any person skilled in the art to which it pertains, or\nwith which it is most nearly connected, to make and use the same, and shall\nset forth the best mode contemplated by the inventor or joint inventor of\ncarrying out the invention.\nIn addition, utility depends on \xc2\xa7 101\xe2\x80\x99s requirement that inventions be \xe2\x80\x9cuseful.\xe2\x80\x9d Some\nreferences suggest that utility depends only on \xc2\xa7 101, but the first case below explains how\nthe statutes are linked. As MPEP \xc2\xa7 2107 states: \xe2\x80\x9cA deficiency under the utility prong of 35\nU.S.C. 101 also creates a deficiency under 35 U.S.C. 112(a).\xe2\x80\x9d\nIn short, utility requires that the invention be operable and that it have some\ndemonstrated real-world use at the time of filing. Enablement requires that the patent teach\nthe PHOSITA how to make and use the invention with \xe2\x80\x9cundue experimentation.\xe2\x80\x9d Written\ndescription requires the patent demonstrate that the inventor \xe2\x80\x9cpossessed\xe2\x80\x9d the invention at\nthe time of filing, meaning that the inventor understood that she had invented the invention.\nAnd under the best mode requirement, an inventor must disclose not just a way of practicing\nthe invention, but her preferred way. Best mode is relevant only during prosecution: under\nthe 2011 America Invents Act, \xe2\x80\x9cfailure to disclose the best mode shall not be a basis on which\nany claim of a patent may be canceled or held invalid or otherwise unenforceable.\xe2\x80\x9d Pub. L.\nNo. 112-29, \xc2\xa7 15, 125 Stat. 284 (2011). The other three doctrines\xe2\x80\x94utility, enablement, and\nwritten description\xe2\x80\x94will be discussed in greater detail in the following sections.\nWe discuss these doctirnes together not only because they stem from the same\nstatutory provision but also because each of these doctrines serves\xe2\x80\x94to varying degrees\xe2\x80\x94\nthree distinct policy goals.\n\n\x0c154\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n1. Promoting Knowledge Dissemination. First, these doctrines encourage\ndissemination of scientific knowledge. The benefit of these disclosures is contested\xe2\x80\x94the\nSupreme Court has stated that \xe2\x80\x9csuch additions to the general store of knowledge are of such\nimportance\xe2\x80\x9d that they are worth the \xe2\x80\x9chigh price . . . of exclusive use.\xe2\x80\x9d Kewanee Oil Co. v.\nBicron Corp., 416 US. 470, 481 (1974), but numerous legal scholars have worried that\nscientists do not read patents, both because they are obfuscated with legal jargon and because\nreading patents might lead to increased liability for willful patent infringement. What\npercentage of scientists do you think read patents and find useful information in them? To\ncompare your priors with a recent survey, see Lisa Larrimore Ouellette, Who Reads Patents?,\n35 Nature Biotechnology 421 (2017).\n2. Limiting Premature Patenting. Second, utility, enablement, and written description\nlimit premature patenting based on predictions and speculation. We have already seen how\nthe novelty and nonobviousness requirements encourage inventors to get to the patent office\nearly; these are the doctrines that prevent them from going too early. The fundamental\nproblem of when someone has done enough to merit a new property right \xe2\x80\x9chas bedeviled\nproperty theorists for centuries, as demonstrated by the enduring resonance of the 1805\nproperty case Pierson v. Post. Should the fox belong to the hunter who begins the chase or\nthe one who makes the kill? Should an invention belong to the researcher who begins work\non it or the one who brings it to fruition?\xe2\x80\x9d Lisa Larrimore Ouellette, Pierson, Peer Review,\nand Patent Law, 69 Vand. L. Rev. 1825 (2016). What\xe2\x80\x99s the harm of granting patents before\ninventors have figured out all the details of their invention or what it is good for? When\nshould patent law require inventors to demonstrate that their ideas work in practice?\n3. Limiting Overbroad Claims. Third, and most importantly, these doctrines prevent\noverbroad patents, or patents with claims that are broader in scope than what the inventor\ncontributed to the art. Patent claims have never been limited to exactly what the inventor\nhas done or to the examples listed in the patent specification, but how far beyond the\ninventor\xe2\x80\x99s actual work should patent rights stretch? Consider the following hypothetical:\n[S]uppose an inventor produced a method of curing AIDS using radiation\ntherapy, specifically using X-radiation, and then built a radiation machine that\nimplemented the method. This would be a working embodiment. The ideas that\nunderlie this cure can be broken into many different levels of abstraction, each\nprogressively more specific and narrower in the resulting patent\xe2\x80\x99s scope:\n1. The idea of curing AIDS, covering all cures that might ever be devised.\n2. The idea of curing AIDS by using radiation therapy, covering all cures\nusing any type of radiation but not other methods.\n3. The idea of curing AIDS by using radiation therapy specifically by using\nX-radiation, thereby excluding methods not using X-radiation.\n4. The idea of curing AIDS using radiation therapy specifically by using\nX-radiation and more specifically by using the exact make and model of\nthe patentee\xe2\x80\x99s radiation machine.\n\n\x0cUTILITY & DISCLOSURE\n\n155\n\nAs can be seen from this example, each idea at a different level of abstraction\ncan be accurately described as the \xe2\x80\x9cinvention.\xe2\x80\x9d . . . How this choice is exercised,\nhowever, has tremendous consequences for both the incentives of inventors\nand the rights of subsequent improvers and users.\nTun-Jen Chiang, The Levels of Abstraction Problem in Patent Law, 105 Nw. U. L. Rev. 1097\n(2011). We will see that choosing the right level of abstraction is both a critical policy question\nand one that eludes easy answers.\nAs you read the cases that follow, consider how effectively each of the three doctrines\nserve the goals of promoting knowledge dissemination and limiting premature and overbroad\npatenting. It is also worth noting that these last two considerations are policed by the law of\npatentable subject matter, which we discuss in Chapter 6. As you study the doctrines\ndescribed here and in Chapter 6, you should consider the extent to which they are mutually\nreinforcing or redundant, and whether one of these doctrines accomplishes the desired policy\ngoals better than the other.\n\nA. Utility\nThe utility requirement stems from \xc2\xa7 101\xe2\x80\x99s requirement that inventions be \xe2\x80\x9cuseful\xe2\x80\x9d\nand \xc2\xa7 112(a)\xe2\x80\x99s requirement of disclosure of \xe2\x80\x9cthe manner and process of making and using\xe2\x80\x9d the\ninvention. A claim that is unpatentable for lack of utility is thus deficient under both \xc2\xa7 101\nand \xc2\xa7 112(a). See MPEP \xc2\xa7 2107. Utility is a low bar that\nis usually easily satisfied. If an invention were not\nuseful, who would bother patenting or infringing it?\nThere are three strands of utility cases, of which\nwe will focus only on the third:\n1. Beneficial utility is a now-defunct doctrine that\npreviously imposed limits on illegal, immoral, or socially\nharmful inventions. For example, in Lowell v. Lewis, 15\nF. Cas. 1018 (C.C.D. Mass. 1817), Justice Story said\ninventions \xe2\x80\x9cto poison people, or to promote debauchery,\nor to facilitate private assassination\xe2\x80\x9d would lack utility,\nand subsequent cases frequently concerned gambling\ndevices. But in a case involving a deceptive juice\ndispenser\xe2\x80\x94which created an illusion it was dispensing\nfresh juice when the actual beverage was from\nconcentrate, as shown at right\xe2\x80\x94the Federal Circuit rejected this view: \xe2\x80\x9cCongress never\nintended that the patent laws should displace the police powers of the States, meaning by\nthat term those powers by which the health, good order, peace and general welfare of the\ncommunity are promoted.\xe2\x80\x9d Juicy Whip, Inc. v. Orange Bang, Inc., 185 F.3d 1364, 1368 (Fed.\nCir. 1999) (quoting Webber v. Virginia, 103 U.S. 344, 347\xe2\x80\x9348 (1880)). Courts no longer use\n\n\x0c156\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nutility to assess whether an invention is socially beneficial, although some moral concerns\nhave motivated the growth of a separate doctrine, patentable subject matter, which we will\nconsider later. Do you think beneficial utility doctrine should be revived?\n2. Credible utility requires an invention to be operable\xe2\x80\x94one cannot patent a perpetual\nmotion machine or an invention that simply does not work for its intended purpose. But this\ndoes not mean that patentees must demonstrate that their inventions work. A patent\napplication\xe2\x80\x99s assertion of utility is presumed credible, so examiners have the burden of\nestablishing the incredibility of the asserted utility. The USPTO notes that credible utility\nrejections are \xe2\x80\x9crare\xe2\x80\x9d and limited to cases in which the asserted utility is \xe2\x80\x9cinconsistent with\nknown scientific principles,\xe2\x80\x9d \xe2\x80\x9cthe logic underlying the assertion is seriously flawed,\xe2\x80\x9d or \xe2\x80\x9cthe\nfacts upon which the assertion is based are inconsistent with the logic underlying the\nassertion.\xe2\x80\x9d MPEP \xc2\xa7 2107. Aside from these rare cases, patent law leaves the task of policing\noperability to the market\xe2\x80\x94if an invention does not work, it should have limited commercial\nsuccess. Do you think the USPTO should do more to limit these patents?\n3. Practical utility, also known as specific and substantial utility, requires a disclosed\nuse at the time of filing that is specific to the subject matter claimed and that has a\nsubstantial real-world use, meaning it is useful to the public in its current form, and not\nmerely after further research. For example, the following inventions lack practical utility:\n\xe2\x97\x8f\n\nA method of diagnosing or treating an unspecified disease or condition.\n\n\xe2\x97\x8f\n\nA method of identifying or making a material that itself has no practical utility,\nsuch as a material that is merely an input to further research.\n\n\xe2\x97\x8f\n\nA claim to a polynucleotide whose use is disclosed simply as a \xe2\x80\x9cgene probe\xe2\x80\x9d or\n\xe2\x80\x9cchromosome marker\xe2\x80\x9d to gain further information about underlying genes. See In\nre Fisher, 421 F.3d 1365 (Fed. Cir. 2005).\n\n\xe2\x97\x8f\n\nA research intermediate that will be used to make some final product that itself\nhas no known utility.\n\nNote that unpatentable research intermediates should be distinguished from patentable\nresearch tools. \xe2\x80\x9cMany research tools such as gas chromatographs, screening assays, and\nnucleotide sequencing techniques have a clear, specific and unquestionable utility (e.g., they\nare useful in analyzing compounds). An assessment that focuses on whether an invention is\nuseful only in a research setting thus does not address whether the invention is in fact \xe2\x80\x98useful\xe2\x80\x99\nin a patent sense. Instead, [examiners] must distinguish between inventions that have a\nspecifically identified substantial utility and inventions whose asserted utility requires\nfurther research to identify or reasonably confirm.\xe2\x80\x9d MPEP \xc2\xa7 2107. The requirement of\n\xe2\x80\x9cspecific utility\xe2\x80\x9d also means that the invention has to have utility that is particular to itself\nand not the sort of use to which any object could be put. For instance, an inventor can\xe2\x80\x99t\nestablish utility by pointing out that her new machine can be used as a paperweight.\nWhat is the harm of allowing patents on inventions that do not yet have a specific or\nsubstantial use?\n\n\x0cUTILITY & DISCLOSURE\n\n157\n\nThe following case shows how practical utility doctrine can be applied to limit\npremature patenting in the pharmaceutical context.\n\nIn re \xe2\x80\x99318 Patent Infringement Litigation, 583 F.3d 1317 (Fed. Cir. 2009)1\nTimothy B. Dyk, Circuit Judge.\nJanssen Pharmaceutica N.V., Janssen L.P., and Synaptech, Inc. (\xe2\x80\x9cJanssen\xe2\x80\x9d), appeal\nfrom a final judgment of the United States District Court for the District of Delaware. After\na bench trial, the district court determined that the claims of U.S. Patent No. 4,663,318 were\ninvalid for lack of enablement. We affirm.\nBACKGROUND\nJanssen\xe2\x80\x99s \xe2\x80\x99318 patent claims a method for treating Alzheimer\xe2\x80\x99s disease with\ngalantamine. Claim 1 is representative. It claims \xe2\x80\x9c[a] method of treating Alzheimer\xe2\x80\x99s disease\nand related dementias which comprises administering to a patient suffering from such a\ndisease a therapeutically effective amount of galantamine or a pharmaceutically-acceptable\nacid addition salt thereof.\xe2\x80\x9d The application for the \xe2\x80\x99318 patent was filed on January 15, 1986,\nby Dr. Bonnie Davis, the claimed inventor.\nAt the time of the \xe2\x80\x99318 patent\xe2\x80\x99s application in early 1986, researchers had observed a\ncorrelation between Alzheimer\xe2\x80\x99s disease symptoms and a reduced level of the\nneurotransmitter acetylcholine in the brain. During neurotransmission, acetylcholine is\nreleased by a transmitting neuron and binds to receptors on a receiving neuron. At that time,\ngalantamine, a small molecule compound, was known to inhibit acetylcholinesterase, an\nenzyme that breaks down acetylcholine. Acetylcholinesterase inhibitors like galantamine\nincrease the amount of acetylcholine available for binding to receptors.\nThe specification for the \xe2\x80\x99318 patent was only just over one page in length, and it\nprovided almost no basis for its stated conclusion that it was possible to administer \xe2\x80\x9can\neffective Alzheimer\xe2\x80\x99s disease cognitively-enhancing amount of galantamine.\xe2\x80\x9d The\nspecification provided short summaries of six scientific papers in which galantamine had\nbeen administered to humans or animals. The specification summarized the first paper as\nshowing that administering galantamine with the drug atropine to humans under anesthesia\nraised blood levels of the hormone cortisol, and the second paper as showing that\nadministering galantamine and atropine together during anesthesia also raised levels of\nadrenocorticotropic hormone (\xe2\x80\x9cACTH\xe2\x80\x9d) in humans. There was no explanation of the\n[Eds: This opinion\xe2\x80\x99s unusual caption indicates that multiple cases were consolidated for\nmulti-district litigation (MDL) under 28 U.S.C. \xc2\xa7 1407. MDLs are intended to reduce the burden on\nfederal district courts by consolidating cases involving common questions of fact. MDLs are initiated\nafter parties file a motion to transfer to the Judicial Panel on Multidistrict Litigation, which decides\nwhether to transfer and which judge should oversee the consolidated proceedings. After pretrial\nproceedings, cases that have not been resolved, dismissed, or settled are transferred back to their\noriginal districts for trial.]\n1\n\n\x0c158\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nsignificance of increasing cortisol or ACTH levels, but it was known to those skilled in the art\nin early 1986 that the production of cortisol and ACTH was controlled by the central nervous\nsystem rather than the peripheral nervous system, and that the studies thus suggested that\ngalantamine was able to cross the blood-brain barrier and have effects within the brain.\nThe specification then provided brief summaries of four scientific papers reporting\nbrain effects and positive effects on memory from administering galantamine to animals. The\nfirst paper concluded that galantamine intravenously administered to rabbits affected brain\nwave activity. The second paper concluded that galantamine increased short-term memory\nin dogs. The third and fourth papers concluded that galantamine reversed amnesia in rats\nthat had been induced by administering the drug scopolamine. The specification did not\nsuggest that such scopolamine-induced amnesia was similar to Alzheimer\xe2\x80\x99s disease. The\nspecification did not provide analysis or insight connecting the results of any of these six\nstudies to galantamine\xe2\x80\x99s potential to treat Alzheimer\xe2\x80\x99s disease in humans.\nThe specification noted that another prior art scientific paper described an animal\ntesting model for replicating in animals the acetylcholine deficit and other effects of\nAlzheimer\xe2\x80\x99s disease. The specification agreed that acetylcholine deficiency in animals is a\n\xe2\x80\x9cgood animal model for Alzheimer\xe2\x80\x99s disease in humans\xe2\x80\x9d because the deficiency produces\n\xe2\x80\x9c[n]umerous behavioral deficits, including the inability to learn and retain new information.\xe2\x80\x9d\nThe specification cited the prior art for the conclusion that \xe2\x80\x9c[d]rugs that can normalize these\nabnormalities would have a reasonable expectation of efficacy in Alzheimer\xe2\x80\x99s disease.\xe2\x80\x9d\nHowever, the specification did not refer to any then-existing animal test results involving the\nadministration of galantamine in connection with this animal model of Alzheimer\xe2\x80\x99s disease.\nIn April 1986 an examiner at the United States Patent and Trademark Office rejected\nthe claims in the \xe2\x80\x99318 patent\xe2\x80\x99s application for obviousness in light of the animal studies cited\nin the specification describing the use of galantamine to treat scopolamine-induced amnesia\nand in improving short-term memory.\nIn September 1986 the applicant, Dr. Davis, responded to the obviousness rejection\nby explaining that, because the brains of the animals in the studies cited in the specification\nwere \xe2\x80\x9cnormal\xe2\x80\x9d (rather than having \xe2\x80\x9cphysiological changes\xe2\x80\x9d similar to Alzheimer\xe2\x80\x99s disease),\nthe studies were conducted under \xe2\x80\x9ccircumstances having no relevance to Alzheimer\xe2\x80\x99s\ndisease.\xe2\x80\x9d\nIn addition, Dr. Davis responded by stating that \xe2\x80\x9cexperiments [are] underway using\nanimal models which are expected to show that treatment with galantamine does result in\nan improvement in the condition of those suffering from Alzheimer\xe2\x80\x99s disease,\xe2\x80\x9d and that it was\n\xe2\x80\x9cexpected that data from this experimental work will be available in two to three months and\nwill be submitted to the Examiner promptly thereafter.\xe2\x80\x9d The \xe2\x80\x99318 patent issued on May 5,\n1987. Dr. Davis did not learn the results of the animal testing experiments\xe2\x80\x94which suggested\nthat galantamine could be a promising Alzheimer\xe2\x80\x99s disease treatment\xe2\x80\x94until July 1987.\nThese studies required several months and considerable effort by researchers at the Johns\nHopkins University under the supervision of Dr. Joseph T. Coyle. No such testing results\nwere ever submitted to the PTO.\n\n\x0cUTILITY & DISCLOSURE\n\n159\n\nAfter the \xe2\x80\x99318 patent issued in May 1987, Dr. Davis licensed the patent in November\n1995 to Janssen. In February 2001 Janssen received approval from the Food and Drug\nAdministration (\xe2\x80\x9cFDA\xe2\x80\x9d) for using galantamine to treat mild to moderate Alzheimer\xe2\x80\x99s disease.\nIn February 2005 several generic drug manufacturers filed abbreviated new drug\napplications (\xe2\x80\x9cANDAs\xe2\x80\x9d) and so-called \xe2\x80\x9cParagraph IV\xe2\x80\x9d certifications with the FDA [a\nprocedure discussed in more detail in Chapter 11], and Janssen sued each manufacturer for\ninfringing the \xe2\x80\x99318 patent. The actions were consolidated, the defendants conceded\ninfringement of claims 1 and 4 of the \xe2\x80\x99318 patent, and a bench trial was held in May 2007 on\nthe invalidity issues of anticipation, obviousness, and enablement.\nThe district court concluded that the \xe2\x80\x99318 patent was invalid for lack of enablement\non two distinct grounds. The district court found that the specification did not demonstrate\nutility because relevant animal testing experiments were \xe2\x80\x9cnot finished . . . by the time the\n\xe2\x80\x99318 patent was allowed\xe2\x80\x9d and the specification provided only \xe2\x80\x9cminimal disclosure\xe2\x80\x9d of utility.\n\xe2\x80\x99The district court alternatively found that the specification and claims did not \xe2\x80\x9cteach one of\nskill in the art how to use the claimed method\xe2\x80\x9d because the application \xe2\x80\x9conly surmise[d] how\nthe claimed method could be used\xe2\x80\x9d without providing sufficient galantamine dosage\ninformation. The district court entered judgment in favor of the defendants that the \xe2\x80\x99318\npatent was invalid for lack of enablement.\nDISCUSSION\nEnablement is closely related to the requirement for utility. As we noted in Process\nControl Corp. v. HydReclaim Corp., 190 F.3d 1350, 1358 (Fed. Cir. 1999),\nThe enablement requirement of 35 U.S.C. \xc2\xa7 112, \xc2\xb6 1 requires that the\nspecification adequately discloses to one skilled in the relevant art how to\nmake, or in the case of a process, how to carry out, the claimed invention\nwithout undue experimentation. The utility requirement of 35 U.S.C. \xc2\xa7 101\nmandates that any patentable invention be useful and, accordingly, the subject\nmatter of the claim must be operable. If a patent claim fails to meet the utility\nrequirement because it is not useful or operative, then it also fails to meet the\nhow-to-use aspect of the enablement requirement.\nThe Supreme Court in Brenner v. Manson, 383 U.S. 519, 534\xe2\x80\x9335 (1966), discussing the utility\nrequirement, stated that inventions must have \xe2\x80\x9csubstantial utility\xe2\x80\x9d and \xe2\x80\x9cspecific benefit\nexist[ing] in currently available form.\xe2\x80\x9d\nThe utility requirement prevents mere ideas from being patented. As we noted in\nGenentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1366 (Fed. Cir. 1997), \xe2\x80\x9c[p]atent\nprotection is granted in return for an enabling disclosure of an invention, not for vague\nintimations of general ideas that may or may not be workable. Tossing out the mere germ of\nan idea does not constitute enabling disclosure.\xe2\x80\x9d See also In re Fisher, 421 F.3d 1365, 1373\n(Fed. Cir. 2005) (inventions fail to meet the utility requirement if their \xe2\x80\x9casserted uses\n\n\x0c160\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nrepresent merely hypothetical possibilities, objectives which the claimed [inventions] could\npossibly achieve, but none for which they have been used in the real world\xe2\x80\x9d).\nThe utility requirement also prevents the patenting of a mere research proposal or an\ninvention that is simply an object of research. Again as the Supreme Court stated in Brenner,\n\xe2\x80\x9ca patent is not a hunting license. It is not a reward for the search, but compensation for its\nsuccessful conclusion.\xe2\x80\x9d 383 U.S. at 536. A process or product \xe2\x80\x9cwhich either has no known use\nor is useful only in the sense that it may be an object of scientific research\xe2\x80\x9d is not patentable.\nId. at 535. As we observed in Fisher, inventions do not meet the utility requirement if they\nare \xe2\x80\x9cobjects upon which scientific research could be performed with no assurance that\nanything useful will be discovered in the end.\xe2\x80\x9d 421 F.3d at 1373. Allowing ideas, research\nproposals, or objects only of research to be patented has the potential to give priority to the\nwrong party and to \xe2\x80\x9cconfer power to block off whole areas of scientific development, without\ncompensating benefit to the public.\xe2\x80\x9d Brenner, 383 U.S. at 534.\nTypically, patent applications claiming new methods of treatment are supported by\ntest results. But it is clear that testing need not be conducted by the inventor. In addition,\nhuman trials are not required for a therapeutic invention to be patentable. As we observed\nin In re Brana, \xe2\x80\x9c[w]ere we to require Phase II testing [human trials] in order to prove utility,\nthe associated costs would prevent many companies from obtaining patent protection on\npromising new inventions, thereby eliminating an incentive to pursue . . . potential cures.\xe2\x80\x9d\n51 F.3d 1560, 1568 (Fed. Cir. 1995).\nWe have held that results from animal tests or in vitro experiments2 may be sufficient\nto satisfy the utility requirement. We noted in Cross v. Iizuka that \xe2\x80\x9c[w]e perceive no\ninsurmountable difficulty, under appropriate circumstances, in finding that the first link in\nthe screening chain, in vitro testing, may establish a practical utility for the [pharmaceutical]\ncompound in question\xe2\x80\x9d in order for a patent to issue. 753 F.2d 1040, 1051 (Fed. Cir. 1985).\nWe concluded that in vitro test results for a claimed pharmaceutical compound, combined\nwith animal test results for a structurally similar compound, showed \xe2\x80\x9ca reasonable\ncorrelation between the disclosed in vitro utility and an in vivo activity, and therefore a\nrigorous correlation is not necessary where the disclosure of pharmacological activity is\nreasonable based upon the probative evidence.\xe2\x80\x9d Id. at 1050.\nIn this case, however, neither in vitro test results nor animal test results involving\nthe use of galantamine to treat Alzheimer\xe2\x80\x99s-like conditions were provided. The results from\nthe \xe2\x80\x99318 patent\xe2\x80\x99s proposed animal tests of galantamine for treating symptoms of Alzheimer\xe2\x80\x99s\ndisease were not available at the time of the application, and the district court properly held\nthat they could not be used to establish enablement.\nNor does Janssen contend that the prior art animal testing summarized in the \xe2\x80\x99318\npatent application\xe2\x80\x99s specification established utility. Indeed, both in responding to the\n[n.7 in opinion] \xe2\x80\x9cIn vitro\xe2\x80\x9d experiments are performed in artificial environments outside living\norganisms (such as in a test tube or culture media), while \xe2\x80\x9cin vivo\xe2\x80\x9d experiments are performed within\nliving organisms.\n2\n\n\x0cUTILITY & DISCLOSURE\n\n161\n\nexaminer\xe2\x80\x99s obviousness rejection and in responding to the obviousness defense at trial, the\ninventor (Dr. Davis) and Janssen\xe2\x80\x99s witnesses explicitly stated that the utility of the invention\ncould not be inferred from the prior art testing described in the application. The response of\nthe inventor, Dr. Davis, to the examiner\xe2\x80\x99s obviousness rejection stated, with regard to studies\ncited in the specification showing galantamine\xe2\x80\x99s ability to reverse scopolamine-induced\namnesia in normal rats, that \xe2\x80\x9c[n]othing in this teaching leads to an expectation of utility\nagainst Alzheimer\xe2\x80\x99s disease.\xe2\x80\x9d The response of Dr. Davis also stated that \xe2\x80\x9cpredict[ing] that\ngalantamine would be useful in treating Alzheimer\xe2\x80\x99s disease just because it has been reported\n[in the prior art studies cited in the specification] to have an effect on memory in\ncircumstances having no relevance to Alzheimer\xe2\x80\x99s disease\xe2\x80\x9d would be \xe2\x80\x9cas baseless as a\nprediction that impaired eyesight due to diabetes would respond to devices (eyeglasses) or\ntreatments (eye exercises) known to improve the vision of normal persons.\xe2\x80\x9d\nHowever, Janssen argues that in some circumstances utility may be established\nwithout testing the proposed treatment in the claimed environment or a sufficiently similar\nor predictive environment; that is, Janssen argues that utility may be established by analytic\nreasoning. Although no case has been called to our attention where utility was established\nsimply by analytic reasoning, the PTO\xe2\x80\x99s Manual of Patent Examining Procedure (\xe2\x80\x9cMPEP\xe2\x80\x9d)\nhas recognized that \xe2\x80\x9carguments or reasoning\xe2\x80\x9d may be used to establish an invention\xe2\x80\x99s\ntherapeutic utility.3\nJanssen goes on to argue that the specification here establishes utility by analytic\nreasoning. Relying on trial testimony, Janssen reasons that the selection and description of\nthe prior art tests, while not directly pertinent, \xe2\x80\x9cset[ ] forth the evidence from existing studies\ndemonstrating galantamine\xe2\x80\x99s effects on central nicotinic as well as muscarinic receptors and\nconnect[ed] it to a model for Alzheimer\xe2\x80\x99s therapy rendering those effects therapeutically\nrelevant.\xe2\x80\x9d These insights, however, are nowhere described in the specification. Nor was there\nevidence that someone skilled in the art would infer galantamine\xe2\x80\x99s utility from the\nspecification, even if such inferences could substitute for an explicit description of utility.\nJanssen relies on the testimony of its expert Dr. Coyle, the scientist who later\nsupervised the performance of the animal studies suggested in the specification. He testified\nthat the specification \xe2\x80\x9cconnected the dots\xe2\x80\x9d for galantamine as a potential Alzheimer\xe2\x80\x99s disease\ntreatment. This testimony of Dr. Coyle on which Janssen relies, however, characterized the\nuse of galantamine to treat Alzheimer\xe2\x80\x99s disease as \xe2\x80\x9ca proposal that connected the dots that\nraised very interesting questions and worth the effort to check it out in a model in which both\nnicotinic and muscarinic receptors would come into play.\xe2\x80\x9d Id. (emphases added). Similarly,\nagreement by another of Janssen\xe2\x80\x99s expert witnesses, Dr. Raskind, that a person of ordinary\nskill in the art in early 1986 would have viewed the \xe2\x80\x9cinvention as set forth in the patent as\n[n10 in opinion] As stated in the MPEP, establishing \xe2\x80\x9ca reasonable correlation between\xe2\x80\x9d a\ncompound\xe2\x80\x99s activity and its asserted therapeutic use may involve \xe2\x80\x9cstatistically relevant data\ndocumenting the activity of a compound or composition, arguments or reasoning, documentary\nevidence (e.g., articles in scientific journals), or any combination thereof.\xe2\x80\x9d MPEP \xc2\xa7 2107.03. See also\nFisher, 421 F.3d at 1372 (\xe2\x80\x9cThe MPEP and [PTO Utility] Guidelines are not binding on this court, but\nmay be given judicial notice to the extent they do not conflict with the statute.\xe2\x80\x9d).\n3\n\n\x0c162\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nscientifically grounded\xe2\x80\x9d falls far short of demonstrating that a person of ordinary skill in the\nart would have recognized that the specification conveyed the required assertion of a credible\nutility. In fact, the inventor\xe2\x80\x99s own testimony reveals that an ordinarily skilled artisan would\nnot have viewed the patent\xe2\x80\x99s disclosure as describing the utility of galantamine as a\ntreatment for Alzheimer\xe2\x80\x99s disease: \xe2\x80\x9c[W]hen I submitted this patent, I certainly wasn\xe2\x80\x99t sure,\nand a lot of other people weren\xe2\x80\x99t sure that cholinesterase inhibitors[, a category of agents\nthat includes galantamine,] would ever work.\xe2\x80\x9d\nThus, at the end of the day, the specification, even read in the light of the knowledge\nof those skilled in the art, does no more than state a hypothesis and propose testing to\ndetermine the accuracy of that hypothesis. That is not sufficient. See Rasmusson v.\nSmithKline Beecham Corp., 413 F.3d 1318, 1325 (Fed. Cir. 2005) (\xe2\x80\x9cIf mere plausibility were\nthe test for enablement under section 112, applicants could obtain patent rights to\n\xe2\x80\x98inventions\xe2\x80\x99 consisting of little more than respectable guesses as to the likelihood of their\nsuccess. When one of the guesses later proved true, the \xe2\x80\x98inventor\xe2\x80\x99 would be rewarded the\nspoils instead of the party who demonstrated that the method actually worked. That scenario\nis not consistent with the statutory requirement that the inventor enable an invention rather\nthan merely proposing an unproved hypothesis.\xe2\x80\x9d).\nThe \xe2\x80\x99318 patent\xe2\x80\x99s description of using galantamine to treat Alzheimer\xe2\x80\x99s disease thus\ndoes not satisfy the enablement requirement because the \xe2\x80\x99318 patent\xe2\x80\x99s application did not\nestablish utility.\n[Judge Gajarsa dissented, arguing that the case should be remanded for additional\nfactual findings.]\n\nDiscussion Questions: Utility and Patent Timing\n1. Demonstrating Utility at the Time of Filing. The invention claimed in the \xe2\x80\x99318\npatent\xe2\x80\x94using galantamine to treat Alzheimer\xe2\x80\x99s\xe2\x80\x94did turn out to have a specific and\nsubstantial utility; as the opinion notes, the patent owner received FDA approval for this\npharmaceutical method. And the inventor described how to administer galantamine to\nAlzheimer\xe2\x80\x99s patients so that a PHOSITA could practice the invention. What did she do\nwrong?\n2. Only One Disclosed Utility Is Required. Suppose Dr. Bonnie Davis were the first\nresearcher to discover the compound galantamine, and the first to show that galantamine\nimproves short-term memory in dogs. Could she patent the compound, with a disclosed utility\nof treating short-term memory in dogs? Would such a claim cover use in humans? Should\npharmaceutical compound claims be treated differently from method-of-use claims? See\ngenerally Rebecca S. Eisenberg, The Problem of New Uses, 5 Yale J. Health Pol\xe2\x80\x99y L. & Ethics\n(2005).\n3. Effect on Pharmaceutical R&D. Based on In re \xe2\x80\x99318 Patent Infringement Litigation,\nwhat kind of evidence is needed to patent the use of a drug to treat some disease in humans?\n\n\x0cUTILITY & DISCLOSURE\n\n163\n\nThe court holds that a research hypothesis is not sufficient, but what would be sufficient?\nDoes a patent applicant have to complete full-scale clinical trials showing that the drug is\nsafe and effective? Or is something between a research hypothesis and full-scale clinical trials\nrequired?\nKeep in mind that full-scale clinical trials can be immensely costly (in the tens or\nhundreds of millions of dollars) and take years to complete. If the applicant has filed for a\npatent before the clinical trial begins, the patent term will run during the clinical trial. On\nthe other hand, there can be risk in embarking on a multimillion-dollar clinical trial without\nknowing whether one will obtain a patent in the end. How does the rule in this case affect\nthe effective patent term for pharmaceutical companies? From the perspective of a\npharmaceutical firm, what is the optimal rule about what sorts of tests and evidence are\nrequired before the firm can obtain a patent?\n4. Constructive Reduction to Practice. As we previously discussed in the context of preAIA \xc2\xa7 102(g), one can receive a patent without actually reducing it to practice; that is, without\nactually demonstrating that it works in the real world. It is enough to constructively reduce\nthe invention to practice by filing a patent application that satisfies the disclosure\nrequirements. As \xe2\x80\x99318 Patent Infringement Litigation illustrates, an inventor needs to have\nmore than a plausible hypothesis for a successful constructive reduction to practice; she must\ndemonstrate utility at the time of filing. But she can patent the use of a drug in humans\nwithout ever having administered that drug to a human patient. What are the costs and\nbenefits of permitting constructive reduction to practice?\n5. Prophetic Examples. To assist with constructive reduction to practice, patent\napplicants sometimes include predicted and hypothetical experimental methods and results,\nknown as prophetic or paper examples. MPEP \xc2\xa7 608.01(p) specifies that prophetic examples\nare permitted but \xe2\x80\x9cshould not be described using the past tense.\xe2\x80\x9d Using this tense rule, one\nstudy estimated that 17% of examples in U.S. chemistry and biology patents are prophetic,\nand that almost one-quarter of these patents have at least one prophetic example. Janet\nFreilich, Prophetic Patents, 53 U.C. Davis L. Rev. 663 (2019). For example, the present tense\nused in the following patents for a chemical synthesis, a medical procedure, and a medical\ndevice suggests that the procedures had not been conducted at the time of filing:\n\xe2\x97\x8f\n\nU.S. Patent No. 3,931,205: 2.5 g of 2-(5H-[1]benzopyrano[2,3-b]pyridin-7-yl)acrylic\nacid is dissolved in 20 ml of 0.5 N aqueous sodium hydroxide solution, and 1 g of Raney\nnickel is added. The solution is stirred in a hydrogen stream at ordinary pressure and\ntemperature until absorption of 230 ml of hydrogen is attained. The Raney nickel is\nremoved by filtration, and the filtrate is neutralized with hydrochloric acid. The\nresulting crystalline precipitate is filtered off, washed with water, and recrystallized\nfrom aqueous dioxane to give 1.8 g of 2-(5H-[1]benzopyrano[2,3-b]pyridin-7-yl)\npropionic acid melting at 183\xc2\xb0\xe2\x80\x93184\xc2\xb0C.\n\n\xe2\x97\x8f\n\nU.S. Patent No. 6,869,610: A 46-year-old woman presents with pain localized at the\ndeltoid region due to an arthritic condition. The muscle is not in spasm, nor does it\nexhibit a hypertonic condition. The patient is treated by a bolus injection of between\n\n\x0c164\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nabout 50 units and 200 units of intramuscular botulinum toxin type A. Within 1 to 7\ndays after neurotoxin administration the patient\xe2\x80\x99s pain is substantially alleviated.\nThe duration of significant pain alleviation is from about 2 to about 6 months.\n\n\xe2\x97\x8f\n\nU.S. Patent No. 7,291,497: Each patch [for drawing and sampling 0.1 ml of blood for\nvancomycin] consists of two parts. Micro-needles automatically draw small quantities\nof blood painlessly. A mechanical actuator inserts and withdraws the needle mak[ing]\nseveral measurements after the patch is applied. Needles are produced\nphotolithographically in molds at [the Stanford Nanofabrication Facility]. Blood flows\nthrough the micro-needles into the blood reservoir.\n\nThe third example is drawn from one of many patents granted to the failed Silicon Valley\nbiotech startup Theranos. Given the possibility of confusing patent readers such as scientists,\ninvestors, and foreign patent examiners, is there any good justification for not requiring\nprophetic examples to at least be labeled more clearly? See Janet Freilich & Lisa Larrimore\nOuellette, Science Fiction: Fictitious Experiments in Patents, 364 Science 1036 (2019) (citing\nthe above examples and arguing for clearer labeling). Do you think prophetic examples should\nbe allowed at all, especially as constructive reduction to practice does not require specific,\nnumerical examples that read like actual experiments?\n\nB. Enablement\n35 U.S.C. \xc2\xa7 112(a) requires inventors to describe their inventions \xe2\x80\x9cin such full, clear,\nconcise, and exact terms as to enable any person skilled in the art to which it pertains, or\nwith which it is most nearly connected, to make and use the same.\xe2\x80\x9d To illustrate this doctrine,\nwe provide two cases: Incandescent Lamp, the canonical treatment (of the predecessor to this\nrequirement) from 1895, and Idenix v. Gilead, a 2019 Federal Circuit decision that wiped out\na record-breaking damages award by holding the patent invalid.\n\nThe Incandescent Lamp Patent, 159 U.S. 465 (1895)\nThis was a bill in equity, filed by the Consolidated Electric Light Company against\nthe McKeesport Light Company, to recover damages for the infringement of letters patent\nNo. 317,676, issued May 12, 1885, to the Electro-Dynamic Light Company, assignee of\nSawyer and Man, for an electric light. The defendants justified [their actions] under certain\npatents to Thomas A. Edison, particularly No. 223,898, issued January 27, 1880; denied the\nnovelty and utility of the complainant\xe2\x80\x99s patent; and averred that the same had been\nfraudulently and illegally procured. The real defendant was the Edison Electric Light\nCompany, and the case involved a contest between what are known as the Sawyer and Man\nand the Edison systems of electric lighting.\nIn their application, Sawyer and Man stated that their invention related to \xe2\x80\x9cthat class\nof electric lamps employing an incandescent conductor inclosed in a transparent,\n\n\x0cUTILITY & DISCLOSURE\n\n165\n\nhermetically sealed vessel or chamber, from which oxygen is excluded, and more especially\nto the incandescing conductor, its substance, its form, and its combination with the other\nelements composing the lamp. Its object is to secure a cheap and effective apparatus; and our\nimprovement consists, first, of the combination, in a lamp chamber, composed wholly of glass,\nof an incandescing conductor of carbon made from a vegetable fibrous material, in\ncontradistinction to a similar conductor made from mineral or gas carbon, and also in the\nform of such conductor so made from such vegetable carbon, and combined in the lighting\ncircuit with the exhausted chamber of the lamp.\xe2\x80\x9d\nThe following drawings exhibit the substance of the invention:\n\nThe specification further stated that:\nIn the practice of our invention, we have made use of carbonized paper,\nand also wood carbon. We have also used such conductors or burners of various\nshapes, such as pieces with their lower ends secured to their respective\nsupports, and having their upper ends united so as to form an inverted Vshaped burner. We have also used conductors of varying contours\xe2\x80\x94that is,\nwith rectangular bends instead of curvilinear ones\xe2\x80\x94but we prefer the arch\nshape.\nNo especial description of making the illuminating carbon conductors,\ndescribed in this specification, and making the subject-matter of this\nimprovement, is thought necessary, as any of the ordinary methods of forming\nthe material to be carbonized to the desired shape and size, and carbonizing it\naccording to the methods in practice before the date of this improvement, may\nbe adopted in the practice thereof by any one skilled in the arts appertaining\nto the making of carbons for electric lighting or for other use in the arts.\nThe advantages resulting from the manufacture of the carbon from\nvegetable fibrous or textile material instead of mineral or gas carbon are many.\nAmong them may be mentioned the convenience afforded for cutting and\n\n\x0c166\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nmaking the conductor in the desired form and size, the purity and equality of\nthe carbon obtained, its susceptibility to tempering, both as to hardness and\nresistance, and its toughness and durability.\n\nThe claims were as follows:\n(1) An incandescing conductor for an electric lamp, of carbonized fibrous or\ntextile material, and of an arch or horseshoe shape, substantially as\nhereinbefore set forth.\n(2) The combination, substantially as hereinbefore set forth, of an electric\ncircuit and an incandescing conductor of carbonized fibrous material, included\nin and forming part of said circuit, and a transparent, hermetically sealed\nchamber, in which the conductor is inclosed.\n(3) The incandescing conductor for an electric lamp, formed of carbonized\npaper, substantially as described.\nThe commercial Edison lamp used by the appellee, and which is illustrated below, is\ncomposed of a burner, A, made of carbonized bamboo of a peculiar quality, discovered by Mr.\nEdison to be highly useful for the purpose. This filament of carbon is bent into the form of a\nloop, and its ends are secured by good electrical and mechanical connections to two fine\nplatinum wires, B, B. These wires pass through a glass stem, C, the glass being melted and\nfused upon the platinum wires. A glass globe, D, is fused to the glass stem, C. This glass globe\nhas originally attached to it, at the point d, a glass tube, by means of which a connection is\nmade with highly organized and refined exhausting apparatus, which produces in the globe\na high vacuum, whereupon the glass tube is melted off by a flame, and the globe is closed by\nthe fusion of the glass at the point d.\n\nUpon a hearing in the circuit court, the court held the patent to be invalid, and\ndismissed the bill. Thereupon complainant appealed to this court.\nMr. Justice Brown, after stating the facts in the foregoing language, delivered the\nopinion of the court.\n\n\x0cUTILITY & DISCLOSURE\n\n167\n\nIn order to obtain a complete understanding of the scope of the Sawyer and Man\npatent, it is desirable to consider briefly the state of the art at the time the application was\noriginally made, which was in January, 1880.\nTwo general forms of electric illumination had for many years been the subject of\nexperiments more or less successful, one of which was known as the \xe2\x80\x98arc light,\xe2\x80\x99 produced by\nthe passage of a current of electricity between the points of two carbon pencils placed end to\nend, and slightly separated from each other. This form of light had come into general use as\na means of lighting streets, halls, and other large spaces; but by reason of its intensity, the\nuncertain and flickering character of the light, and the rapid consumption of the carbon\npencils, it was wholly unfitted for domestic use. The second form of illumination is what is\nknown as the \xe2\x80\x98incandescent system,\xe2\x80\x99 and consists generally in the passage of a current of\nelectricity through a continuous strip or piece of refractory material, which is a conductor of\nelectricity, but a poor conductor; in other words, a conductor offering a considerable\nresistance to the flow of the current through it. It was discovered early in this century that\nvarious substances might be heated to a white heat by passing a sufficiently strong current\nof electricity through them. The production of a light in this way does not in any manner\ndepend upon the consumption or wearing away of the conductor, as it does in the arc light.\nFor many years prior to 1880, experiments had been made by a large number of\npersons, in various countries, with a view to the production of an incandescent light which\ncould be made available for domestic purposes, and could compete with gas in the matter of\nexpense. Owing party to a failure to find a proper material, which should burn but not\nconsume, partly to the difficulty of obtaining a perfect vacuum in the globe in which the light\nwas suspended, and partly to a misapprehension of the true principle of incandescent\nlighting, these experiments had not been attended with success. The chief difficulty was that\nthe carbon burners were subject to a rapid disintegration or evaporation, which electricians\nassumed was due to the disrupting action of the electric current, and hence the conclusion\nwas reached that carbon contained in itself the elements of its own destruction, and was not\na suitable material for the burner of an incandescent lamp.\nIt is admitted that the lamp described in the Sawyer and Man patent is no longer in\nuse, and was never a commercial success; that it does not embody the principle of high\nresistance with a small illuminating surface; that it does not have the filament burner of the\nmodern incandescent lamp; and that the lamp manufactured by the complainant, and put\nupon the market, is substantially the Edison lamp; but it is said that, in the conductor used\nby Edison (a particular part of the stem of the bamboo, the peculiar fitness for which purpose\nwas undoubtedly discovered by him), he made use of a fibrous or textile material covered by\nthe patent to Sawyer and Man, and is therefore an infringer. It was admitted, however, that\nthe third claim\xe2\x80\x94for a conductor of carbonized paper\xe2\x80\x94was not infringed.\nThe two main defenses to this patent are (1) that it is defective upon its face, in\nattempting to monopolize the use of all fibrous and textile materials for the purpose of electric\nilluminations; and (2) that Sawyer and Man were not in fact the first to discover that these\nwere better adapted than mineral carbons to such purposes.\n\n\x0c168\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIs the complainant entitled to a monopoly of all fibrous and textile materials for\nincandescent conductors? If the patentees had discovered in fibrous and textile substances a\nquality common to them all, or to them generally, as distinguishing them from other\nmaterials, such as minerals, etc., and such quality or characteristic adapted them peculiarly\nto incandescent conductors, such claim might not be too broad. If, for instance, minerals or\nporcelains had always been used for a particular purpose, and a person should take out a\npatent for a similar article of wood, and woods generally were adapted to that purpose, the\nclaim might not be too broad, though defendant used wood of a different kind from that of\nthe patentee. But if woods generally were not adapted to the purpose, and yet the patentee\nhad discovered a wood possessing certain qualities, which gave it a peculiar fitness for such\npurpose, it would not constitute an infringement for another to discover and use a different\nkind of wood, which was found to contain similar or superior qualities. The present case is\nan apt illustration of this principle. Sawyer and Man supposed they had discovered in\ncarbonized paper the best material for an incandescent conductor. Instead of confining\nthemselves to carbonized paper, as they might properly have done, and in fact did in their\nthird claim, they made a broad claim for every fibrous or textile material, when in fact an\nexamination of over 6,000 vegetable growths showed that none of them possessed the peculiar\nqualities that fitted them for that purpose. Was everybody, then, precluded by this broad\nclaim from making further investigation? We think not.\nThe injustice of so holding is manifest in view of the experiments made, and continued\nfor several months, by Mr. Edison and his assistants, among the different species of vegetable\ngrowth, for the purpose of ascertaining the one best adapted to an incandescent conductor.\nOf these he found suitable for his purpose only about three species of bamboo, one species of\ncane from the valley of the Amazon (impossible to be procured in quantities on account of the\nclimate), and one or two species of fibers from the agave family. Of the special bamboo, the\nwalls of which have a thickness of about 3/8 of an inch, he used only about 20/1000 of an inch\nin thickness. In this portion of the bamboo the fibers are more nearly parallel, the cell walls\nare apparently smallest, and the pithy matter between the fibers is at its minimum. It seems\nthat carbon filaments cannot be made of wood\xe2\x80\x94that is, exogenous vegetable growth\xe2\x80\x94\nbecause the fibers are not parallel, and the longitudinal fibers are intercepted by radial fibers.\nThe cells composing the fibers are all so large that the resulting carbon is very porous and\nfriable. Lamps made of this material proved of no commercial value. After trying as many as\n30 or 40 different woods of exogenous growth, he gave them up as hopeless. But finally, while\nexperimenting with a bamboo strip which formed the edge of a palm-leaf fan, cut into\nfilaments, he obtained surprising results. After microscopic examination of the material, he\ndispatched a man to Japan to make arrangements for securing the bamboo in quantities.\nIt seems that the characteristic of the bamboo which makes it particularly suitable is\nthat the fibers run more nearly parallel than in other species of wood. There is no generic\nquality, however, in vegetable fibers, because they are fibrous, which adapts them to the\npurpose. Indeed, the fibers are rather a disadvantage. If the bamboo grew solid, without\nfibers, but had its peculiar cellular formation, it would be a perfect material, and\nincandescent lamps would last at least six times as long as at present. All vegetable fibrous\ngrowths do not have a suitable cellular structure. In some the cells are so large that they are\n\n\x0cUTILITY & DISCLOSURE\n\n169\n\nvalueless for that purpose. No exogenous, and very few endogenous, growths are suitable.\nThe messenger whom he dispatched to different parts of Japan and China sent him about 40\ndifferent kinds of bamboo, in such quantities as to enable him to make a number of lamps,\nand from a test of these different species he ascertained which was best for the purpose. From\nthis it appears very clearly that there is no such quality common to fibrous and textile\nsubstances generally as makes them suitable for an incandescent conductor, and that the\nbamboo which was finally pitched upon, and is now generally used, was not selected because\nit was of vegetable growth, but because it contained certain peculiarities in its fibrous\nstructure which distinguished it from every other fibrous substance. The question really is\nwhether the imperfectly successful experiments of Sawyer and Man, with carbonized paper\nand wood carbon, conceding all that is claimed for them, authorize them to put under tribute\nthe results of the brilliant discoveries made by others.\nIt is required by Rev. St. \xc2\xa7 4888 [the precursor to today\xe2\x80\x99s 35 U.S.C. \xc2\xa7 112], that the\napplication shall contain \xe2\x80\x9ca written description of the device, and of the manner and process\nof making constructing, compounding, and using it in such full, clear, concise, and exact\nterms as to enable any person, skilled in the art or science to which it appertains or with\nwhich it is most nearly connected, to make, construct, compound, and use the same.\xe2\x80\x9d The\nobject of this is to apprise the public of what the patentee claims as his own, the courts of\nwhat they are called upon to construe, and competing manufacturers and dealers of exactly\nwhat they are bound to avoid. If the description be so vague and uncertain that no one can\ntell, except by independent experiments, how to construct the patented device, the patent is\nvoid.\nIt was said by Mr. Chief Justice Taney in Wood v. Underhill, 46 U.S. (5 How.) 1, 5\n(1857), with respect to a patented compound for the purpose of making brick or tile, which\ndid not give the relative proportions of the different ingredients:\nBut when the specification of a new composition of matter gives only the names\nof the substances which are to be mixed together, without stating any relative\nproportion, undoubtedly it would be the duty of the court to declare the patent\nvoid. And the same rule would prevail where it was apparent that the\nproportions were stated ambiguously and vaguely; for in such cases it would\nbe evident, on the face of the specification, that no one could use the invention\nwithout first ascertaining, by experiment, the exact proportion of the different\ningredients required to produce the result intended to be obtained. . . . And if,\nfrom the nature and character of the ingredients to be used, they are not\nsusceptible of such exact description, the inventor is not entitled to a patent.\nSo in Tyler v. Boston, 74 U.S. (7 Wall.) 327 (1868), wherein the plaintiff professed to\nhave discovered a combination of fusel oil with the mineral and earthy oils, constituting a\nburning fluid, the patentee stated that the exact quantity of fusel oil which is necessary to\nproduce the most desirable compound must be determined by experiment. And the Court\nobserved: \xe2\x80\x9cWhere a patent is claimed for such a discovery, it should state the component parts\n\n\x0c170\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nof the new manufacture claimed with clearness and precision, and not leave a person\nattempting to use the discovery to find it out by experiment.\xe2\x80\x9d\nApplying this principle to the patent under consideration, how would it be possible for\na person to know what fibrous or textile material was adapted to the purpose of an\nincandescent conductor, except by the most careful and painstaking experimentation? If, as\nbefore observed, there were some general quality, running through the whole fibrous and\ntextile kingdom, which distinguished it from every other, and gave it a peculiar fitness for\nthe particular purpose, the man who discovered such quality might justly be entitled to a\npatent; but that is not the case here. An examination of materials of this class carried on for\nmonths revealed nothing that seemed to be adapted to the purpose; and even the carbonized\npaper and wood carbons specified in the patent, experiments with which first suggested their\nincorporation therein, were found to be so inferior to the bamboo, afterwards discovered by\nEdison, that the complainant was forced to abandon its patent in that particular, and take\nup with the material discovered by its rival. Under these circumstances, to hold that one who\nhad discovered that a certain fibrous or textile material answered the required purpose\nshould obtain the right to exclude everybody from the whole domain of fibrous and textile\nmaterials, and thereby shut out any further efforts to discover a better specimen of that class\nthan the patentee had employed, would be an unwarranted extension of his monopoly, and\noperate rather to discourage than to promote invention. If Sawyer and Man had discovered\nthat a certain carbonized paper would answer the purpose, their claim to all carbonized paper\nwould, perhaps, not be extravagant; but the fact that paper happens to belong to the fibrous\nkingdom did not invest them with sovereignty over this entire kingdom, and thereby\npractically limit other experimenters to the domain of minerals.\n[W]e are all agreed that the claims of this patent, with the exception of the third, are\ntoo indefinite to be the subject of a valid monopoly.\nFor the reasons above stated, the decree of the circuit court is affirmed.\n\nIdenix Pharmaceuticals v. Gilead Sciences, 941 F.3d 1149 (Fed. Cir. 2019)\nSharon Prost, Chief Judge.\nI\nThis appeal stems from Idenix\xe2\x80\x99s December 2013 patent infringement suit against\nGilead. At the time of the suit, both Idenix and Gilead were researching and developing drugs\nfor treatment of the hepatitis C virus (\xe2\x80\x9cHCV\xe2\x80\x9d). HCV is a leading cause of chronic liver disease,\ninfecting hundreds of millions of people worldwide, and accounting for tens of thousands of\ndeaths per year in the United States alone. Idenix alleged that the imminent Food and Drug\nAdministration approval, and launch, of Gilead\xe2\x80\x99s HCV treatment drug sofosbuvir [sold under\n\n\x0cUTILITY & DISCLOSURE\n\n171\n\nthe brand name Sovaldi] would infringe Idenix\xe2\x80\x99s U.S. Pat. No. 7,608,597.4\nFollowing years of litigation, Chief Judge Stark held a two-week jury trial in\nDecember 2016. Gilead stipulated to infringement under the district court\xe2\x80\x99s claim\nconstruction but argued that the \xe2\x80\x99597 patent was invalid for failure to meet the written\ndescription and enablement requirements. The jury found for Idenix, upholding the validity\nof the patent and awarding [a record-breaking $2.54 billion in] damages. After trial, Gilead\nfiled a renewed motion for JMOL with respect to written description and enablement. The\ndistrict court denied the motion with respect to written description but granted JMOL on\nenablement, holding the \xe2\x80\x99597 patent invalid.\nII\nEnablement requires that \xe2\x80\x9cthe specification teach those in the art to make and use\nthe invention without undue experimentation.\xe2\x80\x9d In re Wands, 858 F.2d 731, 737 (Fed. Cir.\n1988). A claim is not enabled when, \xe2\x80\x9cat the effective filing date of the patent, one of ordinary\nskill in the art could not practice their full scope without undue experimentation.\xe2\x80\x9d Wyeth &\nCordis Corp. v. Abbott Labs., 720 F.3d 1380, 1384 (Fed. Cir. 2013).\nIII\nThe \xe2\x80\x99597 patent claims a method of treating HCV by administering nucleoside\ncompounds having a specific chemical structure. The nucleosides claimed in the \xe2\x80\x99597 patent\ncontain a sugar ring having five carbon atoms, numbered 1' (one prime) to 5' (five prime), as\nwell as a base. At each carbon, substituent atoms or groups of atoms can be added in either\nthe \xe2\x80\x9cup\xe2\x80\x9d or \xe2\x80\x9cdown\xe2\x80\x9d position. This structure is illustrated below, with a hydroxyl group (OH)\nshown attached at the 2'-down and 3'-down positions:\n\nThe parties\xe2\x80\x99 arguments focus on the presence of various possible substituents at the\n2'-up and 2'-down positions.\nIdenix argues that the key to its invention, and to treatment of HCV, is the use of 2'methyl-up nucleosides: nucleosides \xe2\x80\x9chaving a methyl substitution (\xe2\x80\x98CH3\xe2\x80\x99) at the 2' \xe2\x80\x98up\xe2\x80\x99 position\n\n[Eds: Idenix was purchased by Merck in 2014, which then dropped Idenix\xe2\x80\x99s HCV candidate\nuprifosbuvir in 2017 after poor clinical trial results.]\n4\n\n\x0c172\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nof the molecule\xe2\x80\x99s sugar ring,\xe2\x80\x9d illustrated below.\n\n[It is not necessary to have a deep understanding of chemical structures to understand\nthe legal issue in this case. In the structures above, known as \xe2\x80\x9cnucleosides,\xe2\x80\x9d the five places\nwhere lines intersect with labels 1' to 5' represent carbon atoms, and they can have additional\nmolecules attached to them (known as \xe2\x80\x9csubstituents\xe2\x80\x9d) pointing \xe2\x80\x9cup\xe2\x80\x9d or \xe2\x80\x9cdown.\xe2\x80\x9d The 2' carbon\nhas a methyl in the up position (CH3, or one carbon and three hydrogens) and a hydroxyl in\nthe down position (OH, or one oxygen and one hydrogen). This case is about the many other\nmolecules that can be attached while keeping the methyl in the 2'-up position.]\nGilead argues that this characterization is overly broad, as the \xe2\x80\x99597 patent provides\nno guidance in determining which of the billions of potential 2'-methyl-up nucleosides are\neffective in treating HCV. According to Gilead, the \xe2\x80\x99597 patent primarily describes 2'-methylup nucleosides that have a hydroxyl group (OH) at the 2'-down position. But Gilead\xe2\x80\x99s accused\nproduct has fluorine (F), not OH, at the 2'-down position. According to Gilead, the \xe2\x80\x99597 patent\ncannot enable the full scope of effective 2'-methyl-up nucleosides at least because its accused\nembodiment, 2'-methyl-up 2'-fluoro-down, is not disclosed in or enabled by the specification.\nThe only independent claim of the \xe2\x80\x99597 patent recites:\n1. A method for the treatment of a hepatitis C virus infection, comprising\nadministering an effective amount of a purine or pyrimidine \xce\xb2-D-2'-methylribofuranosyl nucleoside or a phosphate thereof, or a pharmaceutically\nacceptable salt or ester thereof.\nThe district court construed the structural limitation \xe2\x80\x9c\xce\xb2-D-2'-methyl-ribofuranosyl\nnucleoside\xe2\x80\x9d to require \xe2\x80\x9ca methyl group in the 2' up position and non-hydrogen substituents\nat the 2' down and 3' down positions.\xe2\x80\x9d Thus, while the claim requires methyl at the 2'-up\nposition, it allows nearly any imaginable substituent at the 2'-down position.\nAt Idenix\xe2\x80\x99s urging, the district court also construed the preamble, \xe2\x80\x9c[a] method for the\ntreatment of a hepatitis C virus infection,\xe2\x80\x9d as a narrowing functional limitation. In\ncombination with the requirement to administer an \xe2\x80\x9ceffective amount,\xe2\x80\x9d this claim language\n\xe2\x80\x9climit[s] the scope of the claims to the use of some set of compounds that are effective for\ntreatment of HCV.\xe2\x80\x9d\nNeither party challenges the district court\xe2\x80\x99s claim constructions in this appeal. Claim\n\n\x0cUTILITY & DISCLOSURE\n\n173\n\n1, therefore, encompasses any nucleoside meeting both the structural limitations (including\na methyl group at 2'-up) and the functional limitations (efficacy in treating HCV). It is\nundisputed, however, that there are billions of potential 2'-methyl-up nucleosides. The key\nenablement question is whether a person of ordinary skill in the art would know, without\nundue experimentation, which 2'-methyl-up nucleosides would be effective for treating HCV.\nWe conclude that they would not. Taking into account the evidence presented at trial, a\nreasonable jury would not have had a legally sufficient basis to find otherwise.\nIn analyzing undue experimentation, we consider the factors first enumerated in In\nre Wands:\n(1) the quantity of experimentation necessary;\n(2) how routine any necessary experimentation is in the relevant field;\n(3) whether the patent discloses specific working examples of the claimed invention;\n(4) the amount of guidance presented in the patent;\n(5) the nature and predictability of the field;\n(6) the level of ordinary skill; and\n(7) the scope of the claimed invention.\nSee Wands, 858 F.2d at 737. The parties agree that the level of ordinary skill in the art is\nhigh, but dispute the impact of the remaining factors. We discuss each in turn.\nA\nWe agree with the district court that the quantity of experimentation required to\ndetermine which 2'-methyl-up nucleosides meet claim 1 is very high, which favors a finding\nof non-enablement. The evidence presented to the jury could not support any other finding.\nAt trial, Gilead presented expert testimony that because the claim allows for nearly any\nsubstituent to be attached at any position (other than 2'-up), a person of ordinary skill in the\nart would understand that \xe2\x80\x9cbillions and billions\xe2\x80\x9d of compounds literally meet the structural\nlimitations of the claim.\nIdenix did not dispute that math, but argued to the jury that this approach was merely\n\xe2\x80\x9ctheoretical,\xe2\x80\x9d because a person of ordinary skill in the art (\xe2\x80\x9cPOSA\xe2\x80\x9d) would not attach\nsubstituents at random. Instead, Idenix argued, a POSA would know to \xe2\x80\x9ctake into account\nthe patent as a whole\xe2\x80\x9d to focus on a \xe2\x80\x9csignificantly smaller\xe2\x80\x9d set of candidate compounds. The\ndistrict court accepted this argument, but concluded that even taking into account the\nknowledge and approach of a POSA, the candidate compounds number \xe2\x80\x9clikely[ ] millions or\nat least many, many thousands.\xe2\x80\x9d\nOn the evidence presented, a reasonable jury could only have concluded that at least\n\xe2\x80\x9cmany, many thousands\xe2\x80\x9d of candidate compounds exist. Idenix\xe2\x80\x99s evidence, which supports at\n\n\x0c174\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nbest an unspecified number \xe2\x80\x9csignificantly smaller\xe2\x80\x9d than \xe2\x80\x9cbillions,\xe2\x80\x9d could not lead a reasonable\njury to any other conclusion. Idenix\xe2\x80\x99s counsel conceded that in its \xe2\x80\x9cbest case,\xe2\x80\x9d considering the\nknowledge of a POSA, the structural limitations still encompass \xe2\x80\x9csome number of thousands\xe2\x80\x9d\nof compounds.\nThis conclusion is supported by the \xe2\x80\x99597 patent itself, which discloses enormous\nquantities of 2'-methyl-up nucleosides that would need to be tested for efficacy against HCV.\nThe specification contains 18 Formulas, each of which is represented by a diagram with\nvariables at multiple positions. For example, Formula XVII, described as the \xe2\x80\x9celeventh\nprincipal embodiment,\xe2\x80\x9d provides: [a complicated chemical structure with a methyl group as\none of two dozen possible substituents at 2'-up].\nEven limiting this formula only to its 2'-methyl-up variations, however, the formula\nprovides more than a dozen options at the [5'] position, more than a dozen independent\noptions at the 2'-down position, more than a dozen independent options at the 3'-down\nposition, and multiple independent options for the base.\nAs the district court meticulously calculated, this formula alone discloses more than\n7,000 unique configurations of 2'-methyl-up nucleosides. Other formulas in the specification\nprovide equally large numbers of compounds. Idenix argues that a POSA would have focused\non only a narrow subset of billions of possible candidates, but the jury was not free to adopt\na number lower than the many, many thousands of configurations identified as \xe2\x80\x9cprincipal\nembodiments\xe2\x80\x9d in the patent itself. Testing the compounds in the specification alone for\nefficacy against HCV requires enough experimentation for this factor to weigh in favor of\nnon-enablement.\nIdenix relatedly argues that a POSA would understand the \xe2\x80\x9cfocus\xe2\x80\x9d of the claim to be\n\xe2\x80\x9cthe inhibition of the NS5B polymerase\xe2\x80\x9d to effectively cure HCV. Therefore, Idenix argues, a\nPOSA would know which candidates were likely to inhibit NS5B, and would test only those,\nresulting in a \xe2\x80\x9cpredictable and manageable\xe2\x80\x9d group of candidate compounds. This argument\nimproperly attempts to narrow the claim to only those nucleosides that would inhibit the\nNS5B polymerase. But the district court\xe2\x80\x99s claim construction, not challenged in this appeal,\nmade clear that \xe2\x80\x9cas a matter of law, NS5B activity is not a claim limitation.\xe2\x80\x9d\nMoreover, it would be improper to rely on a POSA\xe2\x80\x99s knowledge of NS5B to fill the gaps\nin the specification. \xe2\x80\x9cIt is the specification, not the knowledge of one skilled in the art, that\nmust supply the novel aspects of an invention in order to constitute adequate enablement.\xe2\x80\x9d\nGenentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1366 (Fed. Cir. 1997). Idenix\xe2\x80\x99s attempt\nto treat NS5B as a claim limitation, based on the knowledge of a POSA, would be an\nimpermissible end-run around the requirement to enable the full scope of the claim.5\nAt oral argument here on appeal, Idenix presented an additional theory for why little\nor no experimentation was required. According to Idenix, \xe2\x80\x9cthe jury could have concluded that\n[n.6 in opinion] Idenix does not argue that the full scope of the claim includes only compounds\nthat inhibit NS5B polymerase. Nor could it, as the \xe2\x80\x99597 patent describes treating HCV in other ways.\n5\n\n\x0cUTILITY & DISCLOSURE\n\n175\n\nall 2'-methyl-up ribonucleosides were active against the hepatitis C virus, so that the\nnumbers don\xe2\x80\x99t matter. Screening [of each candidate for efficacy against HCV] was irrelevant.\xe2\x80\x9d\nWe do not agree that the evidence presented could have supported this conclusion. Indeed,\nIdenix\xe2\x80\x99s own evidence contradicts it.\nAt trial, Idenix\xe2\x80\x99s expert agreed that the field of modifying nucleosides for anti-HCV\nactivity was \xe2\x80\x9cin its infancy\xe2\x80\x9d and \xe2\x80\x9cunpredictable.\xe2\x80\x9d Another of Idenix\xe2\x80\x99s experts testified that\nscreening was performed to \xe2\x80\x9cactually cut down on the number of compounds, by removing all\nin-active ones to a few interesting ones.\xe2\x80\x9d A third Idenix expert testified that \xe2\x80\x9cyou don\xe2\x80\x99t know\nwhether or not a nucleoside will have activity against HCV until you make it and test it.\xe2\x80\x9d\nAnd at oral argument on the post-trial motions, Idenix\xe2\x80\x99s counsel agreed that \xe2\x80\x9cnot all 2' methyl\nup ribonucleosides will be effective to treat HCV,\xe2\x80\x9d and therefore screening was necessary. In\nlight of this evidence, and this concession, no reasonable jury could have concluded that all\n2'-methyl-up nucleosides were effective against HCV or that no screening was needed.\nBecause the claims of the \xe2\x80\x99597 patent encompass at least many, many thousands of 2'methyl-up nucleosides which need to be screened for HCV efficacy, the quantity of\nexperimentation needed is large and weighs in favor of non-enablement.\nB\nThe district court concluded that a reasonable jury could only find that many\ncandidate nucleosides would need to be synthesized before they could be screened, as not all\ncandidate nucleosides were available for purchase. We agree.\nWe do agree with Idenix, however, that a jury could have found that the synthesis of\nan individual compound was largely routine. Gilead argued that synthesis was difficult,\npresenting the jury with evidence of an Idenix scientist who repeatedly tried and failed to\nsynthesize 2'-methyl-up 2'-fluoro-down, which is the nucleoside at issue in Gilead\xe2\x80\x99s accused\nproduct. Idenix countered this with evidence of a scientist at a Gilead subsidiary who\nproduced a 2'-methyl-up 2'-fluoro-down compound \xe2\x80\x9cin relatively short order.\xe2\x80\x9d As a reviewing\ncourt, we are mindful that we may not weigh the evidence, determine the credibility of\nwitnesses, or substitute our version of facts for the jury\xe2\x80\x99s version. In light of this conflicting\ntestimony, a reasonable jury was entitled to conclude that a POSA could synthesize this\nparticular compound in relatively short order.\nBecause a jury could only have found that synthesis of many 2'-methyl-up nucleosides\nwas necessary, but could have concluded that synthesis of an individual nucleoside was\nlargely routine, this factor weighs against a finding of non-enablement.\nC\nWe analyze the presence of working examples and the amount of guidance presented\nin the specification together. Idenix argues that these factors weigh against non-enablement\nbecause the specification \xe2\x80\x9cidentifies the \xe2\x80\x98key\xe2\x80\x99 modification (2'-methyl-up)\xe2\x80\x9d and contains\n\xe2\x80\x9cworking examples of active 2'-methyl-up ribonucleosides that were tested.\xe2\x80\x9d We disagree.\n\n\x0c176\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIdenix contends that the \xe2\x80\x99597 patent provides meaningful guidance as to which\nnucleosides meet the functional limitations of the claim because it identifies the \xe2\x80\x9ckey\xe2\x80\x9d\nmodification of 2'-methyl-up. That is insufficient. An enabling disclosure must \xe2\x80\x9cbe\ncommensurate in scope with the claim.\xe2\x80\x9d In re Hyatt, 708 F.2d 712, 714 (Fed. Cir. 1983).\nClaim 1 requires more than just an identification of 2'-methyl-up: it requires identification of\nwhich 2'-methyl-up nucleosides will effectively treat HCV. Without specific guidance on that\npoint, the specification provides \xe2\x80\x9conly a starting point, a direction for further research.\xe2\x80\x9d ALZA\nCorp. v. Andrx Pharm., LLC, 603 F.3d 935, 941 (Fed. Cir. 2010). That guidance is absent\nfrom the \xe2\x80\x99597 specification.\nIdenix argues that the \xe2\x80\x99597 patent provides this guidance because a POSA would\nunderstand NS5B to be the \xe2\x80\x9ctarget\xe2\x80\x9d enzyme or would understand that the modified\nnucleoside must have \xe2\x80\x9ceither the natural \xe2\x80\x93OH (hydroxyl) or a mimicking substitute at 2'down.\xe2\x80\x9d But reliance on a POSA is insufficient to meet the enablement requirement. A patent\nowner is \xe2\x80\x9crequired to provide an enabling disclosure in the specification; it cannot simply rely\non the knowledge of a person of ordinary skill to serve as a substitute for the missing\ninformation in the specification.\xe2\x80\x9d ALZA, 603 F.3d at 941. Even if we credit Idenix\xe2\x80\x99s position\nthat a POSA would look for compounds that would \xe2\x80\x9ctarget\xe2\x80\x9d NS5B, the specification fails to\nprovide an enabling disclosure. It is not enough to identify a \xe2\x80\x9ctarget\xe2\x80\x9d to be the subject of\nfuture testing. A specification that requires a POSA to \xe2\x80\x9cengage in an iterative, trial-and-error\nprocess to practice the claimed invention\xe2\x80\x9d does not provide an enabling disclosure. Id.\nIt is true that the specification contains some data showing working examples of 2'methyl-up nucleosides with efficacy against HCV. As discussed, however, the specification\nalone encompasses tens if not hundreds of thousands of \xe2\x80\x9cpreferred\xe2\x80\x9d 2'-methyl-up nucleosides\nthat would need to be tested for efficacy against HCV. In the face of that broad disclosure,\nfour examples on a single sugar are insufficient to support enablement. Where, as here,\nworking examples are present but are \xe2\x80\x9cvery narrow, despite the wide breadth of the claims\nat issue,\xe2\x80\x9d this factor weighs against enablement. Enzo Biochem, Inc. v. Calgene, Inc., 188\nF.3d 1362, 1374 (Fed. Cir. 1999).\nBecause the \xe2\x80\x99597 patent fails to provide meaningful guidance as to which 2'-methylup nucleosides are or are not effective against HCV, and because the only working examples\nprovided are exceedingly narrow relative to the claim scope, these two factors weigh in favor\nof non-enablement.\nD\nBased on the testimony presented at trial, a reasonable jury could only have concluded\nthat the use of modified nucleosides to treat HCV was an unpredictable art. Gilead\xe2\x80\x99s experts\ntestified at trial that the art was \xe2\x80\x9chighly unpredictable\xe2\x80\x9d because \xe2\x80\x9cin the nucleoside area . . .\nthe smallest change can have a dramatic effect not only on the activity of that compound but\non the toxicity of the compound. So nothing is predictable.\xe2\x80\x9d\nIdenix\xe2\x80\x99s experts also testified at trial that the field was new and unpredictable. On\ncross-examination, Idenix\xe2\x80\x99s expert admitted that at the time the \xe2\x80\x99597 patent was invented,\n\n\x0cUTILITY & DISCLOSURE\n\n177\n\nthe field of \xe2\x80\x9cmodified nucleosides activity for HCV\xe2\x80\x9d was \xe2\x80\x9cin its infancy.\xe2\x80\x9d He also admitted\nthat, even as late as 2012, it was \xe2\x80\x9cunpredictable to make a compound and determine whether\nor not it is active\xe2\x80\x9d against HCV. Another of Idenix\xe2\x80\x99s witnesses confirmed that \xe2\x80\x9cyou don\xe2\x80\x99t know\nwhether or not a nucleoside will have activity against HCV until you make it and test it.\xe2\x80\x9d\nIn light of both parties\xe2\x80\x99 testimony that the art was unpredictable, this factor could\nonly weigh in favor of non-enablement. See In re Fisher, 427 F.2d 833, 839 (C.C.P.A. 1970)\n(\xe2\x80\x9cIn cases involving unpredictable factors, such as most chemical reactions and physiological\nactivity, the scope of enablement obviously varies inversely with the degree of\nunpredictability of the factors involved.\xe2\x80\x9d).\nE\nFor largely the same reasons discussed with respect to the quantity of\nexperimentation factor, we conclude that the scope of the claims could only support a finding\nof non-enablement. On appeal, Idenix makes two arguments specifically directed to this\nfactor. Neither is persuasive.\nFirst, Idenix argues that \xe2\x80\x9c[w]hen required to take all of the claim limitations into\naccount, Gilead\xe2\x80\x99s witnesses described the claims as embracing only a \xe2\x80\x98small\xe2\x80\x99 number of\ncompounds.\xe2\x80\x9d This analysis is backwards. Gilead\xe2\x80\x99s expert testified that, in order for the \xe2\x80\x99597\npatent to teach which 2'-methyl-up nucleosides effectively treat HCV, the patent would need\nto detail \xe2\x80\x9chow to get from a large number [of candidate compounds] to a relatively speaking\nsmall number [of effective compounds].\xe2\x80\x9d In other words, the \xe2\x80\x99597 patent leaves a POSA\nsearching for a needle in a haystack to determine which of the \xe2\x80\x9clarge number\xe2\x80\x9d of 2'-methylup nucleosides falls into the \xe2\x80\x9csmall\xe2\x80\x9d group of candidates that effectively treats HCV. The size\ndisparity between those two groups requires significant experimentation, which weighs\nagainst enablement, not for it.\nSecond, Idenix argues that the claim is not broad because \xe2\x80\x9cevidence showed that the\nPOSA, with common sense, the claims, and the specification as guidance, would focus on a\nnarrow set of candidates.\xe2\x80\x9d This factor, however, considers the scope of the claim as written,\nnot just the subset of the claim that a POSA might practice. Idenix does not, and cannot,\nargue that the scope of the claim is actually limited to this narrow set of candidates. \xe2\x80\x9c[A]s a\nmatter of law, NS5B activity is not a claim limitation.\xe2\x80\x9d We therefore conclude that the\nbreadth of the claims weighs in favor of non-enablement.\nF\nWeighing each of these factors, we conclude as a matter of law that the \xe2\x80\x99597 patent is\ninvalid for lack of enablement. The immense breadth of screening required to determine\nwhich 2'-methyl-up nucleosides are effective against HCV can only be described as undue\nexperimentation.\nOur decision in Wyeth and Cordis Corp. v. Abbott Laboratories compels this\nconclusion, and as the district court correctly acknowledged, the similarities between that\ncase and this one are striking. In Wyeth, as here, we considered a claim that encompassed\n\n\x0c178\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n\xe2\x80\x9cmillions of compounds made by varying the substituent groups,\xe2\x80\x9d while only a \xe2\x80\x9csignificantly\nsmaller\xe2\x80\x9d subset of those compounds would have the claimed \xe2\x80\x9cfunctional effects.\xe2\x80\x9d 720 F.3d at\n1384. We then credited the patent owner\xe2\x80\x99s argument that, based on the knowledge of a POSA,\nthe number of candidate compounds to be tested could be as little as \xe2\x80\x9ctens of thousands.\xe2\x80\x9d Id.\nat 1384\xe2\x80\x9385. In both cases, scientific testimony confirmed that practicing the full scope of the\nclaims would require synthesizing and screening tens of thousands of candidate compounds\nfor the claimed efficacy.\nNotwithstanding the fact that screening an individual compound for effectiveness was\nconsidered \xe2\x80\x9croutine,\xe2\x80\x9d we concluded as a matter of law in Wyeth that the claim was not enabled\nbecause there were \xe2\x80\x9cat least tens of thousands of candidate compounds\xe2\x80\x9d and \xe2\x80\x9cit would be\nnecessary to first synthesize and then screen each candidate compound.\xe2\x80\x9d Id. at 1385\xe2\x80\x9386. As\nwe explicitly stated: \xe2\x80\x9cThe remaining question is whether having to synthesize and screen\neach of at least tens of thousands of candidate compounds constitutes undue\nexperimentation. We hold that it does.\xe2\x80\x9d Id. at 1385. That principle controls here. A reasonable\njury could only have concluded that there were at least many, many thousands of candidate\ncompounds, many of which would require synthesis and each of which would require\nscreening. That constitutes undue experimentation.\n[The Federal Circuit also held that the \xe2\x80\x99597 patent is invalid for lack of written\ndescription; this section of the opinion is excerpted below. A dissent by Judge Pauline\nNewman is omitted. She would have construed the claim more narrowly to require hydroxyl\ngroups at the 2'-down position, such that Gilead\xe2\x80\x99s product (with fluorine rather than hydroxyl\nat 2'-down) would not be within the scope of the claims.]\n\nDiscussion Questions: Enablement\n1. Species and Genus Claims. The patentees in the above cases did make inventions\nthat worked\xe2\x80\x94Sawyer and Mann made light bulbs with filaments of carbonized paper and\nwood carbon, and Idenix provided working examples of specific chemicals with some evidence\nof efficacy against HCV. In both cases, the problem was that the patentees invented a\nparticular type of invention\xe2\x80\x94a species\xe2\x80\x94and then tried to patent a broader class of\ninventions\xe2\x80\x94a genus. What could these inventors have claimed, based on the work they\nactually did? Can you write a claim or set of claims for them that would have been valid?\nWhat would the inventors have to have discovered\xe2\x80\x94or, for that matter, what would\nhave to be true about the relevant technology\xe2\x80\x94for them to patent the entire genus\n(carbonized fibrous and textile materials in Incandescent Light Bulb and the genus of\nthousands of chemicals in Idenix)? After all of his experiments, would it have been possible\nfor Edison to patent all fibrous and textile materials? If Idenix\xe2\x80\x99s claim covered only the\nspecies made by Gilead, would the result be the same?\n2. The Differential Treatment of Uses and Products. Recall from our discussion in\nChapter 1 that a patent on a product will cover all uses of that product, whether or not they\nwere known to the patentee. So, if Pfizer patents sildenafil citrate thinking it will function\n\n\x0cUTILITY & DISCLOSURE\n\n179\n\nas a hypertension medication, and it turns out to treat erectile dysfunction instead (as was\nthe case for Viagra), Pfizer\xe2\x80\x99s patent will cover the use of sildenafil citrate to treat erectile\ndysfunction just as much as it would any other use. However, the same broad rule does not\napply to products themselves. If Sawyer and Mann patent the particular type of carbonized\nvegetable material that they have used, that does not entitle them to a patent on all other\ntypes of carbonized vegetable materials. What is the reason for this discrepancy? It is easy to\nunderstand why Sawyer and Mann should only be allowed to patent the particular type of\nlight bulb they have invented. But why should Pfizer be allowed to patent sildenafil citrate\nin such a way as to cover every conceivable use for the drug, as opposed to limiting their\npatent to the uses they discovered?\n3. Trade Secrets and Enablement. It is common for patentees to patent some aspects\nof their inventions while keeping other aspects as trade secrets. Google patented PageRank\xe2\x80\x94\nthe method of ranking search results based on the number and quality of links each website\nreceives\xe2\x80\x94but has kept most of its search algorithm details as a trade secret; pharmaceutical\nmanufacturers often have numerous patents on each drug but keep manufacturing details as\ntrade secrets. Could the USPTO or the courts require greater disclosure of some trade secrets\nunder the enablement doctrine? For an argument that many patents on complex biologic\ndrugs fail enablement because they do not provide enough details for reproduction, see\nGregory N. Mandel, Industry\xe2\x80\x99s Unintended Admission that Biotech Patents Fail Enablement,\n11 Va. J.L. & Tech. 8 (2006).\n4. Deposit Requirements, Biological Materials, and Computer Code. Sometimes, a\nwritten description alone is not enough to enable a PHOSITA to make and use the invention\nwithout undue experimentation because specialized materials are required. Since 1970,\ncourts have found that disclosure of living materials such as microorganisms or cultured cells\ncan be satisfied by placing samples of these materials in a public depository, and the\nBudapest Treaty of 1977 set out requirements for internationally recognized depositories.\nThere are three such depositories in the United States\xe2\x80\x94in Illinois, Maine, and Virginia\xe2\x80\x94\nfrom which anyone may request samples for fees ranging from $40 to $330. Biological\ndepositories are not heavily used by patentees; a GAO study found that only 0.6% of patents\ngranted in the last three months of 1999 were supported by deposits. Similarly, inventors\nmay submit computer code along with their applications\xe2\x80\x94known as a \xe2\x80\x9ccomputer program\nlisting appendix\xe2\x80\x9d\xe2\x80\x94but only about 0.1% of patents include such an appendix. Should the\nUSPTO require deposit more often? Do you think patent examiners are well equipped to\ndetermine when a deposit is needed to legally enable an invention?\n\nApplying the Undue Experimentation Standard: Excerpts from MPEP \xc2\xa7 2164\nThe fact that experimentation may be complex does not necessarily make it undue, if\nthe art typically engages in such experimentation. The determination that \xe2\x80\x9cundue\nexperimentation\xe2\x80\x9d would have been needed to make and use the claimed invention is not a\nsingle, simple factual determination. Rather, it is a conclusion reached by weighing all the\nabove noted factual considerations [from In re Wands, as quoted in Idenix].\n\n\x0c180\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAn applicant need not have actually reduced the invention to practice prior to filing.\nLack of a working example, however, is a factor to be considered, especially in a case involving\nan unpredictable and undeveloped art. For a claimed genus, representative examples\ntogether with a statement applicable to the genus as a whole will ordinarily be sufficient if\none skilled in the art (in view of level of skill, state of the art and the information in the\nspecification) would expect the claimed genus could be used in that manner without undue\nexperimentation.\nThe scope of the required enablement varies inversely with the degree of predictability\ninvolved, but even in unpredictable arts, a disclosure of every operable species is not required.\nA single embodiment may provide broad enablement in cases involving predictable factors,\nsuch as mechanical or electrical elements. In cases involving unpredictable factors, such as\nmost chemical reactions and physiological activity, more may be required. This is because it\nis not reasonably predictable from the disclosure of one species, what other species will work.\nExample of Reasonable Experimentation: In United States v. Telectronics, Inc., 857\nF.2d 778 (Fed. Cir. 1988), the court reversed the findings of the district court for lack of clear\nand convincing proof that undue experimentation was needed. The court ruled that since one\nembodiment (stainless steel electrodes) and the method to determine dose/response was set\nforth in the specification, the specification was enabling. The question of time and expense of\nsuch studies, approximately $50,000 and 6-12 months standing alone, failed to show undue\nexperimentation.\nExample of Unreasonable Experimentation: In In re Ghiron, 442 F.2d 985 (C.C.P.A.\n1971), functional \xe2\x80\x9cblock diagrams\xe2\x80\x9d were insufficient to enable a person skilled in the art to\npractice the claimed invention with only a reasonable degree of experimentation because the\nclaimed invention required a \xe2\x80\x9cmodification to prior art overlap computers,\xe2\x80\x9d and because\n\xe2\x80\x9cmany of the components which appellants illustrate as rectangles in their drawing\nnecessarily are themselves complex assemblages. It is common knowledge that many months\nor years elapse from the announcement of a new computer by a manufacturer before the first\nprototype is available. This does not bespeak of a routine operation but of extensive\nexperimentation and development work.\xe2\x80\x9d\nThe presence of inoperative embodiments within the scope of a claim does not\nnecessarily render a claim nonenabled. The standard is whether a skilled person could\ndetermine which embodiments that were conceived, but not yet made, would be inoperative\nor operative with expenditure of no more effort than is normally required in the art. Atlas\nPowder Co. v. E.I. du Pont de Nemours & Co., 750 F.2d 1569 (Fed. Cir. 1984). A disclosure of\na large number of operable embodiments and the identification of a single inoperative\nembodiment did not render a claim broader than the enabled scope because undue\nexperimentation was not involved in determining those embodiments that were operable. In\nre Angstadt, 537 F.2d 498 (C.C.P.A. 1976). However, claims reading on significant numbers\nof inoperative embodiments would render claims nonenabled when the specification does not\nclearly identify the operative embodiments and undue experimentation is involved in\ndetermining those that are operative.\n\n\x0cUTILITY & DISCLOSURE\n\n181\n\nC. Written Description\nAs we explained in Chapter 1, the process of patent examination can involve an\nextended back-and-forth between the inventor and the USPTO. During that time, the\ninventor cannot add \xe2\x80\x9cnew matter\xe2\x80\x9d to her specification (without losing her priority date), but\nshe can\xe2\x80\x94and often must\xe2\x80\x94amend her claims. While this is taking place, many savvy patent\napplicants keep tabs on what their competitors are doing and what new products they might\nbe placing on the market. The applicant, whose patent is still being examined by the USPTO,\ncan then amend her claims to explicitly cover competitors\xe2\x80\x99 products. In addition, because\npatent applications remain secret for 18 months, the very fact of the patent\xe2\x80\x99s existence can\nremain a surprise to competitors until the patent is issued (or shortly beforehand). Imagine\na competitor\xe2\x80\x99s unpleasant surprise when the patent is published and the competitor realizes\nthat there exists a patent that is specially designed to cover her new product.\nWe hope it goes without saying that this is not how the patent system is supposed to\nwork. Applicants should be required to claim what they have actually invented, not whatever\ninventions of others they can retrofit into their own patents. The Federal Circuit addressed\nthis concern by turning to written description doctrine, which had previously played only a\nsmall role in adjudicating patent validity. As we noted at the start of this chapter, the written\ndescription requirement limits patent claims to what the inventor actually invented at the\ntime of filing, or in other words, what inventions the inventor \xe2\x80\x9cpossessed.\xe2\x80\x9d The Federal\nCircuit leveraged this requirement as a check on patents that seemed to claim territory that\nthe inventor had not obviously invented, based on what was disclosed in the specification. In\nthat respect, written description is a close cousin of enablement. Both doctrines govern the\nclaim breadth that a given specification can be used to support.\nAs you read the following cases, one question to consider is what work the written\ndescription doctrine is doing that the enablement doctrine could not perform.\n\nGentry Gallery v. Berkline, 134 F.3d 1473 (Fed. Cir. 1998)\nAlan D. Lourie, Circuit Judge.\nThe Gentry Gallery appeals from the judgment of the United States District Court for\nthe District of Massachusetts holding that the Berkline Corporation does not infringe U.S.\nPatent 5,064,244. Berkline cross-appeals from the decision that the patent was not shown to\nbe invalid. [B]ecause the court clearly erred in finding that the written description portion of\nthe specification supported certain of the broader claims asserted by Gentry, we reverse the\ndecision that those claims are not invalid under 35 U.S.C. \xc2\xa7 112, \xc2\xb6 1 (1994).\nBACKGROUND\nGentry owns the \xe2\x80\x99244 patent, which is directed to a unit of a sectional sofa in which\ntwo independent reclining seats (\xe2\x80\x9crecliners\xe2\x80\x9d) face in the same direction. Sectional sofas are\n\n\x0c182\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ntypically organized in an L-shape with \xe2\x80\x9carms\xe2\x80\x9d at the exposed ends of the linear sections.\nAccording to the patent specification, because recliners usually have had adjustment controls\non their arms, sectional sofas were able to contain two recliners only if they were located at\nthe exposed ends of the linear sections. Due to the typical L-shaped configuration of sectional\nsofas, the recliners therefore faced in different directions. Such an arrangement was \xe2\x80\x9cnot\nusually comfortable when the occupants are watching television because one or both\noccupants must turn their heads to watch the same [television] set. Furthermore, the\nseparation of the two reclining seats at opposite ends of a sectional sofa is not comfortable or\nconducive to intimate conversation.\xe2\x80\x9d\nThe invention of the patent solved this supposed dilemma by, inter alia, placing a\n\xe2\x80\x9cconsole\xe2\x80\x9d between two recliners which face in the same direction. This console \xe2\x80\x9caccommodates\nthe controls for both reclining seats,\xe2\x80\x9d thus eliminating the need to position each recliner at\nan exposed end of a linear section. Accordingly, both recliners can then be located on the same\nlinear section allowing two people to recline while watching television and facing in the same\ndirection. Claim 1, which is the broadest claim of the patent, reads in relevant part:\nA sectional sofa comprising:\na pair of reclining seats disposed in parallel relationship with one another in a\ndouble reclining seat sectional sofa section being without an arm at one end\n...,\neach of said reclining seats having a backrest and seat cushions and movable\nbetween upright and reclined positions . . . ,\na fixed console disposed in the double reclining seat sofa section between the\npair of reclining seats and with the console and reclining seats together\ncomprising a unitary structure,\nsaid console including an armrest portion for each of the reclining seats; said\narm rests remaining fixed when the reclining seats move from one to another\nof their positions,\nand a pair of control means, one for each reclining seat; mounted on the double\nreclining seat sofa section . . . .\n\xe2\x80\x99244 patent; col. 4, l. 66 to col. 5, ll. 1-27 (emphasis added). Claims 9, 10, 12\xe2\x80\x9315, and 19\xe2\x80\x9321\nare directed to a sectional sofa in which the control means are specifically located on the\nconsole. [Eds: A figure from the patent is shown below.]\n\n\x0cUTILITY & DISCLOSURE\n\n183\n\nIn 1991, Gentry filed suit alleging that Berkline infringed the patent by\nmanufacturing and selling sectional sofas having two recliners facing in the same direction.\nIn the allegedly infringing sofas, the recliners were separated by a seat which has a back\ncushion that may be pivoted down onto the seat, so that the seat back may serve as a tabletop\nbetween the recliners. The district court granted Berkline\xe2\x80\x99s motion for summary judgment of\nnon-infringement, but denied its motions for summary judgment of invalidity and\nunenforceability.\nDISCUSSION\nBerkline argues that claims 1\xe2\x80\x938, 11, and 16\xe2\x80\x9318 are invalid because they are directed\nto sectional sofas in which the location of the recliner controls is not limited to the console.\nAccording to Berkline, because the patent only describes sofas having controls on the console\nand an object of the invention is to provide a sectional sofa \xe2\x80\x9cwith a console . . . that\naccommodates the controls for both the reclining seats,\xe2\x80\x9d the claimed sofas are not described\nwithin the meaning of \xc2\xa7 112, \xc2\xb6 1. Berkline also relies on [the inventor] Sproule\xe2\x80\x99s testimony\nthat \xe2\x80\x9clocating the controls on the console is definitely the way we solved [the problem of\nbuilding sectional sofa with parallel recliners] on the original group [of sofas].\xe2\x80\x9d Gentry\nresponds that the disclosure represents only Sproule\xe2\x80\x99s preferred embodiment, in which the\ncontrols are on the console, and therefore supports claims directed to a sofa in which the\ncontrols may be located elsewhere. Gentry relies on Ethicon Endo\xe2\x80\x93Surgery, Inc. v. United\nStates Surgical Corp., 93 F.3d 1572, 1582 n.7 (Fed. Cir. 1996), and In re Rasmussen, 650 F.2d\n1212, 1214 (C.C.P.A. 1981), for the proposition that an applicant need not describe more than\none embodiment of a broad claim to adequately support that claim.\nWe agree with Berkline that the patent\xe2\x80\x99s disclosure does not support claims in which\nthe location of the recliner controls is other than on the console. Whether a specification\ncomplies with the written description requirement of \xc2\xa7 112, \xc2\xb6 1, is a question of fact, which\nwe review for clear error on appeal from a bench trial. To fulfill the written description\nrequirement, the patent specification \xe2\x80\x9cmust clearly allow persons of ordinary skill in the art\nto recognize that [the inventor] invented what is claimed.\xe2\x80\x9d In re Gosteli, 872 F.2d 1008, 1012\n\n\x0c184\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n(Fed. Cir. 1989). An applicant complies with the written description requirement \xe2\x80\x9cby\ndescribing the invention, with all its claimed limitations.\xe2\x80\x9d Lockwood v. American Airlines,\nInc., 107 F.3d 1565, 1572 (1997).\nIt is a truism that a claim need not be limited to a preferred embodiment. However,\nin a given case, the scope of the right to exclude may be limited by a narrow disclosure. For\nexample, as we have recently held, a disclosure of a television set with a keypad, connected\nto a central computer with a video disk player did not support claims directed to \xe2\x80\x9can\nindividual terminal containing a video disk player.\xe2\x80\x9d See id. (stating that claims directed to a\n\xe2\x80\x9cdistinct invention from that disclosed in the specification\xe2\x80\x9d do not satisfy the written\ndescription requirement); see also Regents of the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d\n1559, 1568 (Fed. Cir. 1997) (stating that the case law does \xe2\x80\x9cnot compel the conclusion that a\ndescription of a species always constitutes a description of a genus of which it is a part\xe2\x80\x9d).\nIn this case, the original disclosure clearly identifies the console as the only possible\nlocation for the controls. It provides for only the most minor variation in the location of the\ncontrols, noting that the control \xe2\x80\x9cmay be mounted on top or side surfaces of the console rather\nthan on the front wall . . . without departing from this invention.\xe2\x80\x9d No similar variation beyond\nthe console is even suggested. Additionally, the only discernible purpose for the console is to\nhouse the controls. As the disclosure states, identifying the only purpose relevant to the\nconsole, \xe2\x80\x9c[a]nother object of the present invention is to provide . . . a console positioned\nbetween [the reclining seats] that accommodates the controls for both of the reclining seats.\xe2\x80\x9d\nThus, locating the controls anywhere but on the console is outside the stated purpose of the\ninvention. Moreover, consistent with this disclosure, Sproule\xe2\x80\x99s broadest original claim was\ndirected to a sofa comprising, inter alia, \xe2\x80\x9ccontrol means located upon the center console to\nenable each of the pair of reclining seats to move separately between the reclined and upright\npositions.\xe2\x80\x9d Finally, although not dispositive, because one can add claims to a pending\napplication directed to adequately described subject matter, Sproule admitted at trial that\nhe did not consider placing the controls outside the console until he became aware that some\nof Gentry\xe2\x80\x99s competitors were so locating the recliner controls. Accordingly, when viewed in\nits entirety, the disclosure is limited to sofas in which the recliner control is located on the\nconsole.\nGentry\xe2\x80\x99s reliance on Ethicon is misplaced. It is true, as Gentry observes, that we noted\nthat \xe2\x80\x9can applicant is generally allowed claims, when the art permits, which cover more than\nthe specific embodiment shown.\xe2\x80\x9d Ethicon, 93 F.3d at 1582 n.7. However, we were also careful\nto point out in that opinion that the applicant \xe2\x80\x9cwas free to draft claim[s] broadly (within the\nlimits imposed by the prior art) to exclude the lockout\xe2\x80\x99s exact location as a limitation of the\nclaimed invention\xe2\x80\x9d only because he \xe2\x80\x9cdid not consider the precise location of the lockout to be\nan element of his invention.\xe2\x80\x9d Id. Here, as indicated above, it is clear that Sproule considered\nthe location of the recliner controls on the console to be an essential element of his invention.\nAccordingly, his original disclosure serves to limit the permissible breadth of his later-drafted\nclaims.\n\n\x0cUTILITY & DISCLOSURE\n\n185\n\nSimilarly, In re Rasmussen does not support Gentry\xe2\x80\x99s position. In that case, our\npredecessor court restated the uncontroversial proposition that \xe2\x80\x9ca claim may be broader than\nthe specific embodiment disclosed in a specification.\xe2\x80\x9d 650 F.2d at 1215. However, the court\nalso made clear that \xe2\x80\x9c[a]n applicant is entitled to claims as broad as the prior art and his\ndisclosure will allow.\xe2\x80\x9d Id. at 1214 (emphasis added). The claims at issue in Rasmussen, which\nwere limited to the generic step of \xe2\x80\x9cadheringly applying\xe2\x80\x9d one layer to an adjacent layer,\nsatisfied the written description requirement only because \xe2\x80\x9cone skilled in the art who read\n[the] specification would understand that it is unimportant how the layers are adhered, so\nlong as they are adhered.\xe2\x80\x9d Here, on the contrary, one skilled in the art would clearly\nunderstand that it was not only important, but essential to Sproule\xe2\x80\x99s invention, for the\ncontrols to be on the console.\nIn sum, the cases on which Gentry relies do not stand for the proposition that an\napplicant can broaden his claims to the extent that they are effectively bounded only by the\nprior art. Rather, they make clear that claims may be no broader than the supporting\ndisclosure, and therefore that a narrow disclosure will limit claim breadth. Here, Sproule\xe2\x80\x99s\ndisclosure unambiguously limited the location of the controls to the console. Accordingly, the\ndistrict court clearly erred in finding that he was entitled to claims in which the recliner\ncontrols are not located on the console. We therefore reverse the judgment that claims 1\xe2\x80\x938,\n11, and 16\xe2\x80\x9318, were not shown to be invalid.\n\nDiscussion Questions: Gentry Gallery\n1. Why Not Enablement? Recall that enablement requires that the specification teach\nthe PHOSITA how to make and use the invention without \xe2\x80\x9cundue experimentation.\xe2\x80\x9d Why\ndidn\xe2\x80\x99t the court simply invalidate Gentry\xe2\x80\x99s claim as not enabled? What additional information\nwould you need to know in order to judge whether the claim is enabled?\n2. Gentry\xe2\x80\x99s Best Argument. If you were Gentry\xe2\x80\x99s attorney, what is the best defense you\ncould have offered to save the patent\xe2\x80\x99s validity? How would you have tried to describe the\nlanguage in the specification describing the controls on the console?\n3. Sproule\xe2\x80\x99s Inspiration. At some point, Sproule (the inventor) considered placing the\ncontrols somewhere other than the console. When was this? What gave him the idea? What\nis the significance of this fact for the case? If Sproule had come to the idea of placing the\ncontrols on the console after the patent was filed, but for separate reasons, do you think the\ncase would have come out the same way?\n4. Claim Amendment. When Sproule decided to amend his claim to permit the controls\nto be anywhere on the invention (not just on the console), why did he not simply amend his\nspecification as well to match the breadth of his claims? What would have been the downside\nof taking that approach?\n5. The Expansion of Written Description. As we noted at the beginning of this section,\nwritten description originally evolved to police claim amendments introduced during\n\n\x0c186\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nprosecution. Is there anything special about claim amendments that justifies limiting the\ndoctrine to that context? Is anything in the doctrine naturally self-limiting? As the cases\nbelow indicate, over time the Federal Circuit has applied the written description doctrine\neven where no claim amendment is at issue.\n\nAriad Pharmaceuticals v. Eli Lilly, 598 F.3d 1336 (Fed. Cir. 2010) (en banc)\nAlan D. Lourie, Circuit Judge.\nAriad Pharmaceuticals, Inc., Massachusetts Institute of Technology, the Whitehead\nInstitute for Biomedical Research, and the President and Fellows of Harvard College\n(collectively, \xe2\x80\x9cAriad\xe2\x80\x9d) brought suit against Eli Lilly & Company (\xe2\x80\x9cLilly\xe2\x80\x9d) in the United States\nDistrict Court for the District of Massachusetts, alleging infringement of U.S. Patent\n6,410,516 (\xe2\x80\x9cthe \xe2\x80\x99516 patent\xe2\x80\x9d). After trial, at which a jury found infringement, but found none\nof the asserted claims invalid, a panel of this court reversed the district court\xe2\x80\x99s denial of\nLilly\xe2\x80\x99s motion for judgment as a matter of law (\xe2\x80\x9cJMOL\xe2\x80\x9d) and held the asserted claims invalid\nfor lack of written description.\nAriad petitioned for rehearing en banc, challenging this court\xe2\x80\x99s interpretation of 35\nU.S.C. \xc2\xa7 112 as containing a separate written description requirement. Because of the\nimportance of the issue, we granted Ariad\xe2\x80\x99s petition. We now reaffirm that \xc2\xa7 112 contains a\nwritten description requirement separate from enablement, and we again reverse the district\ncourt\xe2\x80\x99s denial of JMOL and hold the asserted claims of the \xe2\x80\x99516 patent invalid for failure to\nmeet the statutory written description requirement.\nBACKGROUND\nThe \xe2\x80\x99516 patent relates to the regulation of gene expression by the transcription factor\nNF-\xce\xbaB [nuclear factor kappa B]. The inventors discovered that NF-\xce\xbaB normally exists in cells\nas an inactive complex with a protein inhibitor, named \xe2\x80\x9cI\xce\xbaB\xe2\x80\x9d (\xe2\x80\x9cInhibitor of kappa B\xe2\x80\x9d), and is\nactivated by extracellular stimuli, such as bacterial-produced lipopolysaccha rides, through\na series of biochemical reactions that release it from I\xce\xbaB. Once free of its inhibitor, NF-\xce\xbaB\ntravels into the cell nucleus where it binds to and activates the transcription of genes\ncontaining a NF-\xce\xbaB recognition site. The activated genes (e.g., certain cytokines), in turn help\nthe body to counteract the extracellular assault. The production of cytokines can, however,\nbe harmful in excess. Thus the inventors recognized that artificially interfering with NF-\xce\xbaB\nactivity could reduce the harmful symptoms of certain diseases, and they filed a patent\napplication on April 21, 1989, disclosing their discoveries and claiming methods for\nregulating cellular responses to external stimuli by reducing NF-\xce\xbaB activity in a cell.\nAriad brought suit against Lilly on June 25, 2002, the day the \xe2\x80\x99516 patent issued.\nAriad alleged infringement of claims 80, 95, 144, and 145 by Lilly\xe2\x80\x99s Evista and Xigris\npharmaceutical products. [Representative claim 80], rewritten to include the claims from\nwhich [it] depend[s], [is] as follows:\n\n\x0cUTILITY & DISCLOSURE\n\n187\n\n80. [A method for modifying effects of external influences on a eukaryotic cell,\nwhich external influences induce NF-\xce\xbaB-mediated intracellular signaling, the\nmethod comprising altering NF-\xce\xbaB activity in the cells such that NF-\xce\xbaBmediated effects of external influences are modified, wherein NF-\xce\xbaB activity in\nthe cell is reduced] wherein reducing NF-\xce\xbaB activity comprises reducing\nbinding of NF-\xce\xbaB to NF-\xce\xbaB recognition sites on genes which are\ntranscriptionally regulated by NF-\xce\xbaB.\nThe claims are thus genus claims, encompassing the use of all substances that achieve the\ndesired result of reducing the binding of NF-\xce\xbaB to NF-\xce\xbaB recognition sites. Furthermore, the\nclaims, although amended during prosecution, use language that corresponds to language\npresent in the priority application. The specification also hypothesizes three types of\nmolecules with the potential to reduce NF-\xce\xbaB activity in cells: decoy, dominantly interfering,\nand specific inhibitor molecules.\nDISCUSSION\nI.\nA.\nAs in any case involving statutory interpretation, we begin with the language of the\nstatute itself. Section 112, first paragraph, reads as follows:\nThe specification shall contain a written description of the invention, and\nof the manner and process of making and using it, in such full, clear,\nconcise, and exact terms as to enable any person skilled in the art to which\nit pertains, or with which it is most nearly connected, to make and use the\nsame, and shall set forth the best mode contemplated by the inventor of\ncarrying out his invention.\nAccording to Ariad, a plain reading of the statute reveals two components: a written\ndescription (i) of the invention, and (ii) of the manner and process of making and using it. Yet\nthose two components, goes Ariad\xe2\x80\x99s argument, must be judged by the final prepositional\nphrase; both written descriptions must be \xe2\x80\x9cin such full, clear, concise, and exact terms as to\nenable any person skilled in the art . . . to make and use the same.\xe2\x80\x9d\nAriad argues that its interpretation best follows the rule of English grammar that\nprepositional phrases (here, \xe2\x80\x9cof the invention,\xe2\x80\x9d \xe2\x80\x9cof the manner and process of making and\nusing it,\xe2\x80\x9d and \xe2\x80\x9cin such full, clear, concise, and exact terms\xe2\x80\x9d) modify another word in the\nsentence (here, \xe2\x80\x9cwritten description\xe2\x80\x9d), and that it does not inexplicably ignore the comma\nafter \xe2\x80\x9cmaking and using it\xe2\x80\x9d or sever the \xe2\x80\x9cdescription of the invention\xe2\x80\x9d from the requirement\nthat it be in \xe2\x80\x9cfull, clear, concise, and exact terms,\xe2\x80\x9d leaving the description without a legal\nstandard.\nAriad also argues that earlier versions of the Patent Act support its interpretation.\nSpecifically, Ariad contends that the first Patent Act, adopted in 1790, and its immediate\n\n\x0c188\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nsuccessor, adopted in 1793, required a written description of the invention that accomplished\ntwo purposes: (i) to distinguish the invention from the prior art, and (ii) to enable a person\nskilled in the art to make and use the invention.6 Ariad then asserts that when Congress\nassigned the function of defining the invention to the claims in 1836, Congress amended the\nwritten description requirement so that it served a single purpose: enablement.7\nLilly disagrees, arguing that \xc2\xa7 112, first paragraph, contains three separate\nrequirements. Specifically, Lilly parses the statute as follows:\n(1) \xe2\x80\x9cThe specification shall contain a written description of the invention, and\xe2\x80\x9d\n(2) \xe2\x80\x9cThe specification shall contain a written description . . . of the manner and\nprocess of making and using it, in such full, clear, concise, and exact terms as\nto enable any person skilled in the art to which it pertains, or with which it is\nmost nearly connected, to make and use the same, and\xe2\x80\x9d\n(3) \xe2\x80\x9cThe specification . . . shall set forth the best mode contemplated by the\ninventor of carrying out the invention.\xe2\x80\x9d\nLilly argues that Ariad\xe2\x80\x99s construction ignores a long line of judicial precedent\ninterpreting the statute\xe2\x80\x99s predecessors to contain a separate written description requirement,\nan interpretation Congress adopted by reenacting the current language of \xc2\xa7 112, first\nparagraph, without significant amendment.\nWe agree with Lilly and read the statute to give effect to its language that the\nspecification \xe2\x80\x9cshall contain a written description of the invention\xe2\x80\x9d and hold that \xc2\xa7 112, first\nparagraph, contains two separate description requirements: a \xe2\x80\x9cwritten description [i] of the\ninvention, and [ii] of the manner and process of making and using [the invention].\xe2\x80\x9d 35 U.S.C.\n\xc2\xa7 112, \xc2\xb6 1 (emphasis added).\n[W]e see nothing in the statute\xe2\x80\x99s language or grammar that unambiguously dictates\nthat the adequacy of the \xe2\x80\x9cwritten description of the invention\xe2\x80\x9d must be determined solely by\nwhether that description identifies the invention so as to enable one of skill in the art to make\nand use it. The prepositional phrase \xe2\x80\x9cin such full, clear, concise, and exact terms as to enable\nany person skilled in the art . . . to make and use the same\xe2\x80\x9d modifies only \xe2\x80\x9cthe written\ndescription . . . of the manner and process of making and using [the invention],\xe2\x80\x9d as Lilly\n6 [n.1 in opinion] Section 3 of the 1793 Patent Act provided, in relevant part: \xe2\x80\x9c[E]very inventor,\nbefore he can receive a patent shall . . . deliver a written description of his invention, and of the manner\nof using, or process of compounding the same, in such full, clear and exact terms, as to distinguish the\nsame from all other things before known, and to enable any person skilled in the art or science, of\nwhich it is a branch, or with which it is most nearly connected, to make, compound, and use the same.\xe2\x80\x9d\n\n[n.2 in opinion] Section 6 of the 1836 Patent Act provided, in relevant part: \xe2\x80\x9c[B]efore any\ninventor shall receive a patent for any such new invention or discovery, he shall deliver a written\ndescription of his invention or discovery, and of the manner and process of making, constructing, using,\nand compounding the same, in such full, clear, and exact terms, avoiding unnecessary prolixity, as to\nenable any person skilled in the art or science to which it appertains, or with which it is most nearly\nconnected, to make, construct, compound, and use the same.\xe2\x80\x9d\n7\n\n\x0cUTILITY & DISCLOSURE\n\n189\n\nargues, without violating the rules of grammar. That the adequacy of the description of the\nmanner and process of making and using the invention is judged by whether that description\nenables one skilled in the art to make and use the same follows from the parallelism of the\nlanguage.\nWhile Ariad agrees there is a requirement to describe the invention, a few amici\nappear to suggest that the only description requirement is a requirement to describe\nenablement. If Congress had intended enablement to be the sole description requirement of\n\xc2\xa7 112, first paragraph, the statute would have been written differently. Specifically, Congress\ncould have written the statute to read, \xe2\x80\x9cThe specification shall contain a written description\nof the invention, in such full, clear, concise, and exact terms as to enable any person skilled\nin the art . . . to make and use the same,\xe2\x80\x9d or \xe2\x80\x9cThe specification shall contain a written\ndescription of the manner and process of making and using the invention, in such full, clear,\nconcise, and exact terms as to enable any person skilled in the art . . . to make and use the\nsame.\xe2\x80\x9d Under the amicis\xe2\x80\x99 construction a portion of the statute\xe2\x80\x94either \xe2\x80\x9cand of the manner\nand process of making and using it\xe2\x80\x9d or \xe2\x80\x9c[a written description] of the invention\xe2\x80\x9d\xe2\x80\x94becomes\nsurplusage, violating the rule of statutory construction that Congress does not use\nunnecessary words.\nB.\n[Discussion of Supreme Court precedent omitted.]\nC.\nIn addition to the statutory language and Supreme Court precedent supporting the\nexistence of a written description requirement separate from enablement, stare decisis\nimpels us to uphold it now. Ariad acknowledges that this has been the law for over forty\nyears, and to change course now would disrupt the settled expectations of the inventing\ncommunity, which has relied on it in drafting and prosecuting patents, concluding licensing\nagreements, and rendering validity and infringement opinions. As the Supreme Court stated\nin admonishing this court, we \xe2\x80\x9cmust be cautious before adopting changes that disrupt the\nsettled expectations of the inventing community.\xe2\x80\x9d Festo Corp. v. Shoketsu Kinzoku Kogyo\nKabushiki Co., 535 U.S. 772, 739 (2002). If the law of written description is to be changed,\ncontrary to sound policy and the uniform holdings of this court, the settled expectations of\nthe inventing and investing communities, and PTO practice, such a decision would require\ngood reason and would rest with Congress.\nD.\n[Discussion of prior Court of Claims and Patent Appeals precedent omitted.]\nE.\nIn contrast to amended claims, the parties have more divergent views on the\napplication of a written description requirement to original claims. Ariad argues that Regents\nof the University of California v. Eli Lilly & Co., 119 F.3d 1559 (Fed. Cir. 1997), extended the\n\n\x0c190\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nrequirement beyond its proper role of policing priority as part of enablement and transformed\nit into a heightened and unpredictable general disclosure requirement in place of\nenablement. Rather, Ariad argues, the requirement to describe what the invention is does\nnot apply to original claims because original claims, as part of the original disclosure,\nconstitute their own written description of the invention. Thus, according to Ariad, as long\nas the claim language appears in ipsis verbis in the specification as filed, the applicant has\nsatisfied the requirement to provide a written description of the invention.\nLilly responds that the written description requirement applies to all claims and\nrequires that the specification objectively demonstrate that the applicant actually invented\xe2\x80\x94\nwas in possession of\xe2\x80\x94the claimed subject matter. Lilly argues that \xc2\xa7 112 contains no basis\nfor applying a different standard to amended versus original claims and that applying a\nseparate written description requirement to original claims keeps inventors from claiming\nbeyond their inventions and thus encourages innovation in new technological areas by\npreserving patent protection for actual inventions.\nAgain we agree with Lilly. If it is correct to read \xc2\xa7 112, first paragraph, as containing\na requirement to provide a separate written description of the invention, as we hold here,\nAriad provides no principled basis for restricting that requirement to establishing priority.\nCertainly nothing in the language of \xc2\xa7 112 supports such a restriction; the statute does not\nsay \xe2\x80\x9cThe specification shall contain a written description of the invention for purposes of\ndetermining priority.\xe2\x80\x9d And although the issue arises primarily in cases involving priority,\nCongress has not so limited the statute, and neither will we.\nFurthermore, while it is true that original claims are part of the original specification,\nIn re Gardner, 480 F.2d 879, 879 (C.C.P.A. 1973), that truism fails to address the question\nwhether original claim language necessarily discloses the subject matter that it claims. Ariad\nbelieves so, arguing that original claims identify whatever they state, e.g., a perpetual motion\nmachine, leaving only the question whether the applicant has enabled anyone to make and\nuse such an invention. We disagree that this is always the case. Although many original\nclaims will satisfy the written description requirement, certain claims may not. For example,\na generic claim may define the boundaries of a vast genus of chemical compounds, and yet\nthe question may still remain whether the specification, including original claim language,\ndemonstrates that the applicant has invented species sufficient to support a claim to a genus.\nThe problem is especially acute with genus claims that use functional language to define the\nboundaries of a claimed genus. In such a case, the functional claim may simply claim a\ndesired result, and may do so without describing species that achieve that result. But the\nspecification must demonstrate that the applicant has made a generic invention that achieves\nthe claimed result and do so by showing that the applicant has invented species sufficient to\nsupport a claim to the functionally-defined genus.\nRecognizing this, we held in Eli Lilly that an adequate written description of a claimed\ngenus requires more than a generic statement of an invention\xe2\x80\x99s boundaries. 119 F.3d at 1568.\nThe patent at issue in Eli Lilly claimed a broad genus of cDNAs purporting to encode many\ndifferent insulin molecules, and we held that its generic claim language to \xe2\x80\x9cvertebrate insulin\n\n\x0cUTILITY & DISCLOSURE\n\n191\n\ncDNA\xe2\x80\x9d or \xe2\x80\x9cmammalian insulin cDNA\xe2\x80\x9d failed to describe the claimed genus because it did not\ndistinguish the genus from other materials in any way except by function, i.e., by what the\ngenes do, and thus provided \xe2\x80\x9conly a definition of a useful result rather than a definition of\nwhat achieves that result.\xe2\x80\x9d Id.\nWe held that a sufficient description of a genus instead requires the disclosure of\neither a representative number of species falling within the scope of the genus or structural\nfeatures common to the members of the genus so that one of skill in the art can \xe2\x80\x9cvisualize or\nrecognize\xe2\x80\x9d the members of the genus. Id. at 1568\xe2\x80\x9369. We explained that an adequate written\ndescription requires a precise definition, such as by structure, formula, chemical name,\nphysical properties, or other properties, of species falling within the genus sufficient to\ndistinguish the genus from other materials. Id. at 1568. We have also held that functional\nclaim language can meet the written description requirement when the art has established\na correlation between structure and function. See Enzo, 323 F.3d at 964 (quoting 66 Fed. Reg.\n1099 (Jan. 5, 2001)). But merely drawing a fence around the outer limits of a purported genus\nis not an adequate substitute for describing a variety of materials constituting the genus and\nshowing that one has invented a genus and not just a species.\nIn fact, this case similarly illustrates the problem of generic claims. The claims here\nrecite methods encompassing a genus of materials achieving a stated useful result, i.e.,\nreducing NF-\xce\xbaB binding to NF-\xce\xbaB recognition sites in response to external influences. But\nthe specification does not disclose a variety of species that accomplish the result. Thus, as\nindicated infra, that specification fails to meet the written description requirement by\ndescribing only a generic invention that it purports to claim.\nF.\nSince its inception, this court has consistently held that \xc2\xa7 112, first paragraph,\ncontains a written description requirement separate from enablement, and we have\narticulated a \xe2\x80\x9cfairly uniform standard,\xe2\x80\x9d which we now affirm. Specifically, the description\nmust \xe2\x80\x9cclearly allow persons of ordinary skill in the art to recognize that [the inventor]\ninvented what is claimed.\xe2\x80\x9d In other words, the test for sufficiency is whether the disclosure\nof the application relied upon reasonably conveys to those skilled in the art that the inventor\nhad possession of the claimed subject matter as of the filing date.\nThe term \xe2\x80\x9cpossession,\xe2\x80\x9d however, has never been very enlightening. It implies that as\nlong as one can produce records documenting a written description of a claimed invention,\none can show possession. But the hallmark of written description is disclosure. Thus,\n\xe2\x80\x9cpossession as shown in the disclosure\xe2\x80\x9d is a more complete formulation. Yet whatever the\nspecific articulation, the test requires an objective inquiry into the four corners of the\nspecification from the perspective of a person of ordinary skill in the art. Based on that\ninquiry, the specification must describe an invention understandable to that skilled artisan\nand show that the inventor actually invented the invention claimed.\nThis inquiry, as we have long held, is a question of fact. There are, however, a few\nbroad principles that hold true across all cases. We have made clear that the written\n\n\x0c192\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ndescription requirement does not demand either examples or an actual reduction to practice;\na constructive reduction to practice that in a definite way identifies the claimed invention\ncan satisfy the written description requirement. Conversely, we have repeatedly stated that\nactual \xe2\x80\x9cpossession\xe2\x80\x9d or reduction to practice outside of the specification is not enough. Rather,\nas stated above, it is the specification itself that must demonstrate possession. And while the\ndescription requirement does not demand any particular form of disclosure, a description\nthat merely renders the invention obvious does not satisfy the requirement.\nWe also reject the characterization, cited by Ariad, of the court\xe2\x80\x99s written description\ndoctrine as a \xe2\x80\x9csuper enablement\xe2\x80\x9d standard for chemical and biotechnology inventions. The\ndoctrine never created a heightened requirement to provide a nucleotide-by-nucleotide\nrecitation of the entire genus of claimed genetic material; it has always expressly permitted\nthe disclosure of structural features common to the members of the genus.\nPerhaps there is little difference in some fields between describing an invention and\nenabling one to make and use it, but that is not always true of certain inventions, including\nchemical and chemical-like inventions. Thus, although written description and enablement\noften rise and fall together, requiring a written description of the invention plays a vital role\nin curtailing claims that do not require undue experimentation to make and use, and thus\nsatisfy enablement, but that have not been invented, and thus cannot be described. For\nexample, a propyl or butyl compound may be made by a process analogous to a disclosed\nmethyl compound, but, in the absence of a statement that the inventor invented propyl and\nbutyl compounds, such compounds have not been described and are not entitled to a patent.\nSee In re DiLeone, 58 C.C.P.A. 925 (1971) (\xe2\x80\x9c[C]onsider the case where the specification\ndiscusses only compound A and contains no broadening language of any kind. This might\nvery well enable one skilled in the art to make and use compounds B and C; yet the class\nconsisting of A, B and C has not been described.\xe2\x80\x9d).\nThe written description requirement also ensures that when a patent claims a genus\nby its function or result, the specification recites sufficient materials to accomplish that\nfunction\xe2\x80\x94a problem that is particularly acute in the biological arts.8 See Guidelines for\nExamination of Patent Applications Under the 35 U.S.C. 112, 1, \xe2\x80\x9cWritten Description\xe2\x80\x9d\nRequirement, 66 Fed. Reg. 1099, 1105\xe2\x80\x9306 (Jan. 5, 2001). This situation arose not only in Eli\nLilly but again in University of Rochester v. G.D. Searle & Co., Inc., 358 F.3d 916 (Fed. Cir.\n2004). In Rochester, we held invalid claims directed to a method of selectively inhibiting the\nCOX\xe2\x80\x932 enzyme by administering a non-steroidal compound that selectively inhibits the\nCOX\xe2\x80\x932 enzyme. Id. at 918. We reasoned that because the specification did not describe any\nspecific compound capable of performing the claimed method and the skilled artisan would\nnot be able to identify any such compound based on the specification\xe2\x80\x99s function description,\nthe specification did not provide an adequate written description of the claimed invention.\n[n.5 in opinion] The record does not reflect how often the PTO rejects claims as enabled but\nnot described, but the government believes the number to be high. At least one example has made it\nto this court in recent years, In re Alonso, in which the PTO found claims to a method of treating a\ntumor by administering an effective amount of an antibody that recognizes the tumor enabled but, as\nwe affirmed, not adequately described. 545 F.3d 1015, 1021\xe2\x80\x9322, 1022 n.6. (Fed. Cir. 2008).\n8\n\n\x0cUTILITY & DISCLOSURE\n\n193\n\nId. at 927\xe2\x80\x9328. Such claims merely recite a description of the problem to be solved while\nclaiming all solutions to it and, as in Eli Lilly and Ariad\xe2\x80\x99s claims, cover any compound later\nactually invented and determined to fall within the claim\xe2\x80\x99s functional boundaries\xe2\x80\x94leaving it\nto the pharmaceutical industry to complete an unfinished invention.\nThat research hypotheses do not qualify for patent protection possibly results in some\nloss of incentive, although Ariad presents no evidence of any discernable impact on the pace\nof innovation or the number of patents obtained by universities. But claims to research plans\nalso impose costs on downstream research, discouraging later invention. The goal is to get\nthe right balance, and the written description doctrine does so by giving the incentive to\nactual invention and not \xe2\x80\x9cattempt[s] to preempt the future before it has arrived.\xe2\x80\x9d Fiers v.\nRevel, 984 F.2d 1164, 1171 (Fed. Cir. 1993). As this court has repeatedly stated, the purpose\nof the written description requirement is to \xe2\x80\x9censure that the scope of the right to exclude, as\nset forth in the claims, does not overreach the scope of the inventor\xe2\x80\x99s contribution to the field\nof art as described in the patent specification.\xe2\x80\x9d Rochester, 358 F.3d at 920. It is part of the\nquid pro quo of the patent grant and ensures that the public receives a meaningful disclosure\nin exchange for being excluded from practicing an invention for a period of time.\nII.\nThe \xe2\x80\x99516 patent must adequately describe the claimed methods for reducing NF-\xce\xbaB\nactivity, including adequate description of the molecules that Ariad admits are necessary to\nperform the methods. The specification of the \xe2\x80\x99516 patent hypothesizes three classes of\nmolecules potentially capable of reducing NF-\xce\xbaB activity: specific inhibitors, dominantly\ninterfering molecules, and decoy molecules. We review the specification\xe2\x80\x99s disclosure of each\nin turn to determine whether there is substantial evidence to support the jury\xe2\x80\x99s verdict that\nthe written description evidenced that the inventor possessed the claimed invention.\nSpecific inhibitors are molecules that are \xe2\x80\x9cable to block (reduce or eliminate) NF-\xce\xbaB\nbinding\xe2\x80\x9d to DNA in the nucleus. \xe2\x80\x99516 patent col.37 ll.44\xe2\x80\x9345. The only example of a specific\ninhibitor given in the specification is I-\xce\xbaB, a naturally occurring molecule whose function is\nto hold NF-\xce\xbaB in an inactive state until the cell receives certain external influences. Nearly\nall of Ariad\xe2\x80\x99s evidence regarding the disclosure of I-\xce\xbaB relies upon figure 43. Ariad\xe2\x80\x99s expert,\nDr. Kadesch, testified that figure 43 discloses the sequence of DNA that encodes I-\xce\xbaB and\nrelied on this disclosure with regard to his opinion that the written description requirement\nwas satisfied by disclosure of specific inhibitor molecules. But as Ariad admits, figure 43 was\nnot disclosed until 1991. Because figure 43 was not in the 1989 application, neither it nor Dr.\nKadesch\xe2\x80\x99s testimony regarding it can offer substantial evidence for the jury determination.\nThe only other testimony of Dr. Kadesch with regard to I-\xce\xbaB was that it existed in 1989 and\nthat one of ordinary skill could through experimentation isolate natural I-\xce\xbaB. In the context\nof this invention, a vague functional description and an invitation for further research does\nnot constitute written disclosure of a specific inhibitor.\nDominantly interfering molecules are \xe2\x80\x9ca truncated form of the NF-\xce\xbaB molecule.\xe2\x80\x9d \xe2\x80\x99516\npatent col.38 l.11. The specification provides no example molecules of this class. Moreover,\nthe specification acknowledges that dominantly interfering molecules can work only \xe2\x80\x9cif the\n\n\x0c194\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nDNA binding domain and the DNA polymerase domain of NF-\xce\xbaB are spatially distinct in the\nmolecule.\xe2\x80\x9d Id. at col.38 ll.9\xe2\x80\x9310 (emphasis added). The jury also heard Dr. Kadesch\xe2\x80\x99s testimony\nthat \xe2\x80\x9cit is a fair representation\xe2\x80\x9d that \xe2\x80\x9cthe \xe2\x80\x99516 patent itself doesn\xe2\x80\x99t disclose in its text that the\nDNA binding domain and the RNA preliminary activating domain of NF-\xce\xbaB are, in fact,\nseparable or spatially distinct.\xe2\x80\x9d Considering that the inventors of the \xe2\x80\x99516 patent discovered\nNF-\xce\xbaB, if they did not know whether the two domains are distinct, one of ordinary skill in\nthe art was at best equally ignorant. Perhaps one of ordinary skill could discover this\ninformation, but this does not alter our conclusion that the description of the dominantly\ninterfering molecules \xe2\x80\x9cjust represents a wish, or arguably a plan\xe2\x80\x9d for future research. Nor is\nit sufficient, as Ariad argues, that \xe2\x80\x9cskilled workers actually practiced this teaching soon after\nthe 1989 application was filed.\xe2\x80\x9d\nDecoy molecules are \xe2\x80\x9cdesigned to mimic a region of the gene whose expression would\nnormally be induced by NF-\xce\xbaB. In this case, NF-\xce\xbaB would bind the decoy, and thus, not be\navailable to bind its natural target.\xe2\x80\x9d \xe2\x80\x99516 patent col.37 ll.51\xe2\x80\x9354. Like the other two classes of\nmolecules, decoy molecules are presented hypothetically, but unlike the other two classes of\nmolecules, the specification proposes example structures for decoy molecules. As Dr. Kadesch\nexplained, because the specification discloses specific example sequences, there is little doubt\nthat the specification adequately described the actual molecules to one of ordinary skill in\nthe art. Yet this does not answer the question whether the specification adequately describes\nusing those molecules to reduce NF-\xce\xbaB activity. The full extent of the specification\xe2\x80\x99s\ndisclosure of a method that reduces NF-\xce\xbaB activity using decoy molecules is that NF-\xce\xbaB\n\xe2\x80\x9cwould bind the decoy\xe2\x80\x9d and thereby, \xe2\x80\x9cnegative regulation can be effected.\xe2\x80\x9d Id. at col.37 ll.50\xe2\x80\x93\n54. Prophetic examples are routinely used in the chemical arts, and they certainly can be\nsufficient to satisfy the written description requirement. But this disclosure is not so much\nan \xe2\x80\x9cexample\xe2\x80\x9d as it is a mere mention of a desired outcome. As Dr. Latchman pointed out,\nthere is no descriptive link between the table of decoy molecules and reducing NF\xe2\x80\x93\xce\xbaB activity.\nWhatever thin thread of support a jury might find in the decoy-molecule hypothetical\nsimply cannot bear the weight of the vast scope of these generic claims. Here, the specification\nat best describes decoy molecule structures and hypothesizes with no accompanying\ndescription that they could be used to reduce NF-\xce\xbaB activity. Yet the asserted claims are far\nbroader. We therefore conclude that the jury lacked substantial evidence for its verdict that\nthe asserted claims were supported by adequate written description, and thus hold the\nasserted claims invalid.\n\nIdenix Pharmaceuticals v. Gilead Sciences, 941 F.3d 1149 (Fed. Cir. 2019)\n[The previous casebook section on enablement contained an edited portion of this\nopinion in which the Federal Circuit affirmed the district court\xe2\x80\x99s grant of judgment as a\nmatter of law (JMOL) that patent 7,608,597 is invalid for lack of enablement. In this portion\nof the opinion, the Federal Circuit reverses the district court\xe2\x80\x99s denial of JMOL on written\ndescription and holds that the patent is also invalid on this basis.]\n\n\x0cUTILITY & DISCLOSURE\n\n195\n\nWe separately address the district court\xe2\x80\x99s denial of JMOL on the issue of written\ndescription. The Patent Act contains a written description requirement distinct from the\nenablement requirement. 35 U.S.C. \xc2\xa7 112; see Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d\n1336, 1340 (Fed. Cir. 2010) (en banc). To fulfill the written description requirement, a patent\nowner \xe2\x80\x9cmust convey with reasonable clarity to those skilled in the art that, as of the filing\ndate sought, he or she was in possession of the invention, and demonstrate that by disclosure\nin the specification of the patent.\xe2\x80\x9d Carnegie Mellon Univ. v. Hoffmann-La Roche Inc., 541\nF.3d 1115, 1122 (Fed. Cir. 2008). That test \xe2\x80\x9crequires an objective inquiry into the four corners\nof the specification from the perspective of a person of ordinary skill in the art.\xe2\x80\x9d Ariad, 598\nF.3d at 1351.\nThe question in this case is whether the \xe2\x80\x99597 patent demonstrates that the inventor\nwas in possession of those 2'-methyl-up nucleosides that fall within the boundaries of the\nclaim (i.e., are effective against HCV), but are not encompassed by the explicit formulas or\nexamples provided in the specification. The parties focus in particular on whether the\nspecification demonstrates possession of the 2'-methyl-up 2'-fluoro-down nucleosides that are\nthe basis for Gilead\xe2\x80\x99s accused product.\nThere is no dispute that neither the \xe2\x80\x99597 patent nor any of its predecessor applications\ndiscloses a 2'-methyl-up 2'-fluoro-down nucleoside, including in any formulas or examples.\nNor is there any dispute as to why. Idenix only came up with the methyl up fluoro down\nembodiment a year or so after the application was filed. Idenix argues instead that its claims\nare directed to the entire genus of 2'-methyl-up compounds for treating HCV, and are enabled\nby the disclosure of a number of examples, without needing to disclose each species of\nnucleoside.\nIdenix is correct that generally a genus can be sufficiently disclosed by \xe2\x80\x9ceither a\nrepresentative number of species falling within the scope of the genus or structural features\ncommon to the members of the genus so that one of skill in the art can visualize or recognize\nthe members of the genus.\xe2\x80\x9d Ariad, 598 F.3d at 1350. We have alternatively described this\ninquiry as \xe2\x80\x9clooking for blaze marks which single out particular trees\xe2\x80\x9d in a forest, rather than\nsimply \xe2\x80\x9cpointing to trees.\xe2\x80\x9d See Fujikawa v. Wattanasin, 93 F.3d 1559, 1570 (Fed. Cir. 1996).\nIn this case, we hold that the \xe2\x80\x99597 patent is invalid for lack of written description, as\nit fails to provide sufficient blaze marks to direct a POSA to the specific subset of 2'-methylup nucleosides that are effective in treating HCV. The patent provides eighteen position-byposition formulas describing \xe2\x80\x9cprincipal embodiments\xe2\x80\x9d of compounds that may treat HCV.\nHowever, the specification provides no indication that any nucleosides outside of those\ndisclosed in its formulas could be effective to treat HCV\xe2\x80\x94much less any indication as to\nwhich of those undisclosed nucleosides would be effective. \xe2\x80\x9cA written description of an\ninvention involving a chemical genus, like a description of a chemical species, \xe2\x80\x98requires a\nprecise definition, such as by structure, formula, [or] chemical name\xe2\x80\x99 of the claimed subject\nmatter sufficient to distinguish it from other materials.\xe2\x80\x9d Bos. Sci. Corp. v. Johnson &\nJohnson, 647 F.3d 1353, 1363 (Fed. Cir. 2011) (quoting Regents of the Univ. of Cal. v. Eli Lilly\n& Co., 119 F.3d 1559, 1568 (Fed. Cir. 1997)). The \xe2\x80\x99597 patent provides adequate written\n\n\x0c196\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ndescription for the compounds within its formulas. The specification, however, provides no\nmethod of distinguishing effective from ineffective compounds for the compounds reaching\nbeyond the formulas disclosed in the \xe2\x80\x99597 patent.\nIdenix argues that it provides \xe2\x80\x9cabundant traditional blazemarks for the claims\xe2\x80\x94\nworking examples, formulas, data, synthesis routes, and the target.\xe2\x80\x9d Each of these suffer\nfrom the same flaw. They provide lists or examples of supposedly effective nucleosides, but\ndo not explain what makes them effective, or why. As a result, a POSA is deprived of any\nmeaningful guidance into what compounds beyond the examples and formulas, if any, would\nprovide the same result. In the absence of that guidance, the listed examples and formulas\ncannot provide adequate written description support for undisclosed nucleosides that also\nhappens to treat HCV. The written description requirement specifically defends against such\nattempts to \xe2\x80\x9ccover any compound later actually invented and determined to fall within the\nclaim\xe2\x80\x99s functional boundaries.\xe2\x80\x9d See Ariad, 598 F.3d at 1353.\nWe are mindful of Ariad\xe2\x80\x99s caution that written description does not require \xe2\x80\x9ca\nnucleotide-by-nucleotide recitation of the entire genus.\xe2\x80\x9d Id. at 1352. The purpose of that rule\nis to allow relatively few representative examples or formulas to support a claim on a\nstructurally similar genus. It does not extend to this case, where the specification lists tens\nor hundreds of thousands of possible nucleosides, substituent-by-substituent, with dozens of\ndistinct stereochemical structures, and yet the compound in question is conspicuously absent.\nThe absence of 2'-fluoro-down is indeed conspicuous. Seven of the provided formulas\npermit 2'-methyl-up. All seven formulas explicitly list fluorine as a possibility at other\npositions, including 2'-up. Yet not one of them includes fluorine at 2'-down, despite each\nlisting more than a dozen possible substituents at that position. This is true even though the\nformulas include every other recited halogen at both positions.\nFurther, to the extent Idenix argues that, although not disclosed, a POSA would have\nknown to include fluorine at 2'-down based on its similarities to other halogens, that is\ninsufficient for written description. \xe2\x80\x9c[A] description that merely renders the invention\nobvious does not satisfy\xe2\x80\x9d the written description requirement. Ariad, 598 F.3d at 1352.\nWe therefore disagree with Idenix\xe2\x80\x99s characterization that \xe2\x80\x9cthe specification plainly\nembraces the use of the [2'-fluoro-down] embodiment.\xe2\x80\x9d In light of the conspicuous absence of\nthat compound, a POSA would not \xe2\x80\x9cvisualize or recognize the members of the genus\xe2\x80\x9d as\nincluding 2'-fluoro-down, and the specification could not demonstrate to a POSA that the\ninventor had possession of that embodiment at the time of filing. Ariad, 598 F.3d at 1350.\n\nApplying the Possession Test: Excerpts from MPEP \xc2\xa7 2163\n[The following excerpts from MPEP \xc2\xa7 2163 are from guidance for applying the written\ndescription doctrine to original claims; the MPEP offers additional guidance for evaluating\nnew or amended claims. As MPEP \xc2\xa7 2163 emphasizes, these guidelines \xe2\x80\x9cdo not constitute\n\n\x0cUTILITY & DISCLOSURE\n\n197\n\nsubstantive rulemaking and hence do not have the force and effect of law,\xe2\x80\x9d but they reflect\nthe USPTO\xe2\x80\x99s effort to summarize relevant caselaw.]\nWhether the specification shows that the applicant was in possession of the claimed\ninvention is not a single, simple determination, but rather is a factual determination reached\nby considering a number of factors. Factors to be considered in determining whether there is\nsufficient evidence of possession include the level of skill and knowledge in the art, partial\nstructure, physical and/or chemical properties, functional characteristics alone or coupled\nwith a known or disclosed correlation between structure and function, and the method of\nmaking the claimed invention. Disclosure of any combination of such identifying\ncharacteristics that distinguish the claimed invention from other materials and would lead\none of skill in the art to the conclusion that the applicant was in possession of the claimed\nspecies is sufficient.\nIn most technologies which are mature, and wherein the knowledge and level of skill\nin the art is high, a written description question should not be raised for claims present in\nthe application when originally filed, even if the specification discloses only a method of\nmaking the invention and the function of the invention. In contrast, for inventions in\nemerging and unpredictable technologies, or for inventions characterized by factors not\nreasonably predictable which are known to one of ordinary skill in the art, more evidence is\nrequired to show possession.\nThe written description requirement for a claimed genus may be satisfied through\nsufficient description of a representative number of species by actual reduction to practice,\nreduction to drawings, or by disclosure of relevant, identifying characteristics, i.e., structure\nor other physical and/or chemical properties, by functional characteristics coupled with a\nknown or disclosed correlation between function and structure, or by a combination of such\nidentifying characteristics, sufficient to show the applicant was in possession of the claimed\ngenus.\nA \xe2\x80\x9crepresentative number of species\xe2\x80\x9d means that the species which are adequately\ndescribed are representative of the entire genus. Thus, when there is substantial variation\nwithin the genus, one must describe a sufficient variety of species to reflect the variation\nwithin the genus. The disclosure of only one species encompassed within a genus adequately\ndescribes a claim directed to that genus only if the disclosure indicates that the patentee has\ninvented species sufficient to constitute the genus. \xe2\x80\x9cA patentee will not be deemed to have\ninvented species sufficient to constitute the genus by virtue of having disclosed a single\nspecies when . . . the evidence indicates ordinary artisans could not predict the operability in\nthe invention of any species other than the one disclosed.\xe2\x80\x9d In re Curtis, 354 F.3d 1347 (Fed.\nCir. 2004).\nThe Federal Circuit has explained that a specification cannot always support\nexpansive claim language and satisfy the requirements of 35 U.S.C. \xc2\xa7 112 \xe2\x80\x9cmerely by clearly\ndescribing one embodiment of the thing claimed.\xe2\x80\x9d LizardTech v. Earth Resource Mapping,\nInc., 424 F.3d 1336 (Fed. Cir. 2005). The issue is whether a person skilled in the art would\nunderstand the applicant to have invented, and been in possession of, the invention as\n\n\x0c198\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nbroadly claimed. In LizardTech, claims to a generic method of making a seamless discrete\nwavelet transformation (DWT) were held invalid because the specification taught only one\nparticular method for making a seamless DWT and there was no evidence that the\nspecification contemplated a more generic method.\nFor inventions in an unpredictable art, adequate written description of a genus which\nembraces widely variant species cannot be achieved by disclosing only one species within the\ngenus. Instead, the disclosure must adequately reflect the structural diversity of the claimed\ngenus, either through the disclosure of sufficient species that are \xe2\x80\x9crepresentative of the full\nvariety or scope of the genus,\xe2\x80\x9d or by the establishment of \xe2\x80\x9ca reasonable structure-function\ncorrelation.\xe2\x80\x9d Such correlations may be established \xe2\x80\x9cby the inventor as described in the\nspecification,\xe2\x80\x9d or they may be \xe2\x80\x9cknown in the art at the time of the filing date.\xe2\x80\x9d AbbVie\nDeutschland GmbH v. Janssen Biotech, Inc., 759 F.3d 1285 (Fed. Cir. 2014).\n\nDiscussion Questions: Written Description\n1. More on the Expansion of Written Description. As we discussed above, the written\ndescription doctrine originally evolved to focus on opportunistic claim amendments, but it\nhas expanded in cases like Ariad and Idenix to include situations where applicants claimed\ntoo broadly in their original applications. Are you convinced by the argument in Ariad that\nit is necessary to apply a robust written description requirement that is distinct from\nenablement in cases where the claims were not amended? In both Gentry-type cases and\nAriad-type cases, the doctrinal test is the same: Does the specification convey to the\nPHOSITA that the inventor possessed the full scope of the claim as of the filing date? In cases\nlike Gentry, lack of possession is demonstrated by amendment of the claim to cover inventions\nthe inventor did not seem to have in mind at the time of filing. How does the \xe2\x80\x9cpossession\xe2\x80\x9d test\nwork in Ariad and Idenix? How would a challenger to the patent demonstrate that the\ninventor lacked possession?\nNote that the MPEP states that \xe2\x80\x9ca written description question should not be raised\nfor claims present in the application when originally filed\xe2\x80\x9d with respect to \xe2\x80\x9ctechnologies which\nare mature,\xe2\x80\x9d whereas it is appropriate to apply the written description requirement to claims\npresent in the original application in the context of new and emerging technologies. Why do\nyou think that is? Does it shed light on the more general question of whether the written\ndescription requirement should remain applicable to claims present in the original\napplication, and why the courts believe that it does?\n2. Early-Stage Biomedical Inventions. Many of the important Ariad-type written\ndescription cases\xe2\x80\x94including Ariad, Idenix, and Regents of the University of California v. Eli\nLilly & Co., 119 F.3d 1559 (Fed. Cir. 1997)\xe2\x80\x94have involved early-stage biomedical inventions.\nIs there something special about chemistry and biotechnology that makes it more difficult for\ninventors in these fields to demonstrate possession of broad claims at the time of filing? Is it\nrelevant that the inventions at issue in these cases often involve research conducted at\nuniversities? Unlike typical pharmaceutical patent infringement cases, in which a brand-\n\n\x0cUTILITY & DISCLOSURE\n\n199\n\nname manufacturer of a biomedical product asserts patents to prevent generic competitors\nfrom entering the market, these cases all involve patent assertion against brand-name\nmanufacturers. (Remember that brand name manufacturers are firms that are typically in\nthe business of researching and developing new drugs and then patenting them; generic firms\ndo not conduct independent research and typically enter the market after the patent on a\nbrand-name drug has expired or is invalid.) Can you think of reasons why so many of these\ncases involve the assertion of patents based on university research against brand-name\npharmaceutical manufacturers? Do you think that affects how courts view these cases?\n3. Enough Species to Support a Genus. The MPEP notes repeatedly that the\ndescription of a single species is not enough to support a claim to a genus unless the single\nspecies is representative of the full genus. Instead, the specification must \xe2\x80\x9cadequately reflect\nthe structural diversity of the claimed genus\xe2\x80\x9d through \xe2\x80\x9cthe disclosure of sufficient species\nthat are \xe2\x80\x98representative of the full variety or scope of the genus.\xe2\x80\x99\xe2\x80\x9d What does this mean with\nrespect to a claim for a very large genus? Or how about a genus in which not all of the species\nare operative?\nFor instance, imagine a claim that would cover any operable member of a genus of\nthousands of structurally similar chemical compounds. Suppose that only approximately 10%\nof the species of that genus are operable. Someone skilled in the art could quickly and easily\nidentify a handful of operable species, and any given species could be tested to determine\nwhether it is operable relatively quickly. However, testing the entire genus to determine\nwhich of the many species are operable and which are not would be tremendously timeconsuming and expensive. Should this claim be patentable? In other words, is it enough if\nsomeone skilled in the art could determine a substantial number of operative species, more\nthan enough to make the invention work for its intended purpose? Or is it necessary for\npatentability that someone skilled in the art be able to determine the precise boundaries of\nthe genus, including which species are included and not included? For an argument that\nclaims of this sort should be patentable, see Dmitry Karshtedt, Mark A. Lemley & Sean B.\nSeymore, The Death of the Genus Claim, Harv. J.L. & Tech. (forthcoming).\n\nNote on Distinguishing Utility, Enablement, and Written Description\nBy now, you may be wondering about how best to understand the distinction between\nenablement, written description, and utility. If the relationship (and distinctions) between\nthese doctrines seem confusing or unclear, do not despair! You are not alone. The Federal\nCircuit devoted a substantial portion of its Ariad opinion to explaining the difference, and\nthat is hardly the last word on the subject. Note the MPEP\xe2\x80\x99s discussion above, with respect\nto written description, of the relationship between a claim to a genus and a specification that\ndiscloses one or more species. That analysis is not much different than the analysis one would\nuse for enablement. If you had read those MPEP paragraphs without knowing whether the\nMPEP was discussing enablement or written description, it may have been difficult or\nimpossible to guess which doctrine it was referring to.\n\n\x0c200\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nHere is a very simple formulation for understanding the difference between these\ndoctrines: Written description requires that you describe the thing you are trying to claim\nwith specificity, such that you can prove that you actually knew what you were inventing and\nare now patenting. Enablement requires that you teach someone how to make and use the\nthing. Utility requires that you show that the thing is useful. In this respect, the best way to\nunderstand Gentry is that the inventor never described the thing he was trying to patent\xe2\x80\x94\nnamely, dual recliners with the controls somewhere other than the console\xe2\x80\x94in the\nspecification. This is why that claim fails for lack of written description. But it could very\nwell be that a PHOSITA would know how to construct dual recliners with controls somewhere\nother than the console\xe2\x80\x94maybe the art of recliner construction is well understood?\xe2\x80\x94even if\nthe specification does not describe that embodiment. That is why the claim was not invalid\nfor lack of enablement.\nLet\xe2\x80\x99s explore this point further with some hypothetical claims. Suppose an inventor\nclaims \xe2\x80\x9ctreating cancer with a compound selected from set X\xe2\x80\x9d where X is a list of 10,000\ncompounds. The specification explicitly lists all 10,000 compounds, but it is not necessarily\nthe case that any given compound in the set will actually treat cancer. This area of technology\nis unpredictable, and a PHOSITA cannot know whether a particular compound from the list\nwill treat cancer without first testing it in a process that involves undue experimentation. It\nmight be that a few thousand of the compounds will treat cancer, or a few dozen of them, or\nnone. Is this claim invalid, and if so, under what doctrine?\nFor starters, the claim is invalid for lack of utility under the logic of In re \xe2\x80\x99318, because\nthe inventor has not demonstrated that the claim is useful the time it was filed. Without\nknowing for certain whether even a single compound will treat cancer, there is no\ndemonstrated utility. If there were evidence that most of the compounds would be effective\nat treating cancer due to some common structural feature, then the patent would have\ndemonstrated utility. But as described, it falls short on this dimension.\nThe claim is also invalid for lack of enablement because (by hypothesis) it would\nrequire undue experimentation on the part of a PHOSITA to determine which embodiments\nwork and don\xe2\x80\x99t work. This is a canonical example of having invented a species and trying to\nclaim the genus, as in the Incandescent Lamp case. If, however, a machine existed that could\nmanufacture and screen all 10,000 compounds for efficacy against cancer in a single day,\nthen it would no longer require undue experimentation to determine which do and do not\nwork. Accordingly, the claim would be enabled.\nFinally, the claim would also be invalid for lack of written description. The invention\nis claimed in functional terms: the claim is for treating cancer with any compounds from set\nX that can be used to treat cancer. This leaves open the question of which compounds actually\ntreat cancer and which do not. Recall that written description requires the inventor to\ndescribe the thing that she is attempting to claim. In order to successfully describe the thing,\nyou have to describe the boundary between what is the thing and what is not the thing. The\nproblem for this inventor is that the claim might actually include only a few species in the\n10,000-species genus (set X), and if the inventor hasn\xe2\x80\x99t explained which species are actually\n\n\x0cUTILITY & DISCLOSURE\n\n201\n\nincluded in the claim and which are not, then she has not successfully identified the thing\nshe is trying to claim. By way of even more extreme illustration, imagine claiming \xe2\x80\x9ctreating\ncancer with any chemical known to humans that effectively treats cancer,\xe2\x80\x9d and then listing\nall chemicals known to humans in the specification. It would be implausible to argue that the\npatent describes the thing it is claiming with specificity, as required by written description\ndoctrine.\nWith this in mind, consider the three types of molecules at issue in Ariad: specific\ninhibitors, dominantly interfering molecules, and decoy molecules. Suppose that instead of\nclaiming all methods for reducing NF-\xce\xbaB activity, the Ariad patent had separately claimed\nthe use of each of these types of molecules. Could written description still be used to reject\neach of those hypothetical claims? What about enablement and utility?\nThere is an argument that a claim using the decoy molecules would have satisfied the\nwritten description requirement. As Ariad explains, the patent specification did describe the\ndecoy molecules by structure, formula, or physical properties. By disclosing the decoy\nmolecules, the specification necessarily disclosed reducing NF-\xce\xbaB activity with the decoy\nmolecules, because the means of that reduction is simply to administer the decoy molecules\nto a person. Where the specification failed is that it did not provide any evidence that\nadministering decoy molecules would actually reduce NF-\xce\xbaB activity. That constitutes a\nfailure to satisfy the utility requirement. It might also constitute a lack of enablement,\ndepending on whether the specification adequately disclosed how to produce the decoy\nmolecules.\nNow consider how the enablement and written description interact with \xe2\x80\x9ccomprising\xe2\x80\x9d\nclaims. Imagine a claim for a chair, as follows:\n1. An object for supporting a human body, comprising a substantially flat\nsurface sized to accommodate a human posterior, and three legs supporting\nsaid surface.\n(This example is borrowed from Jeffrey A. Lefstin, Ph.D., The Formal Structure of Patent\nLaw and the Limits of Enablement, 23 Berkeley Tech. L.J. 1141, 1169 (2008).) Imagine that\nthe specification describes how to make a three-legged wooden stool, 1 foot in diameter and\n1 foot tall.\nThis claim is drafted broadly enough to cover stools with more than three legs, chairs\nwith backs, and non-wooden stools/chairs. For that matter, if someone constructed a chair\nwith three legs that had a seat-warmer powered by a cold fusion reactor, it would still infringe\nthis claim. Can a claim that is broad enough to cover a chair with a cold fusion reactor\npossibly be enabled by a specification that only mentions wooden stools?\nThe answer is yes, and the reason is that the law of enablement does not require the\ninventor to enable \xe2\x80\x9cunclaimed elements\xe2\x80\x9d\xe2\x80\x94namely, those elements that are not mentioned in\nthe claim (but could be part of an infringing device via the \xe2\x80\x9ccomprising\xe2\x80\x9d term). See Matthew\xe2\x80\x99s\nAnnotated Patent Digest \xc2\xa7 20:48 (\xe2\x80\x9cWhile the disclosure must enable the practice of the\n\n\x0c202\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nclaimed invention, disclosure of unclaimed aspects of the invention is generally not\nrequired.\xe2\x80\x9d); id. \xc2\xa7 22:34 (\xe2\x80\x9cThe written-description requirement generally does not require a\ndescription of unclaimed aspects of the invention, unless those aspects are critical to the\nclaimed invention.\xe2\x80\x9d).\nThis may seem like an odd rule, but it is inherent to the idea of allowing the\n\xe2\x80\x9ccomprising\xe2\x80\x9d transition word to capture future inventions that have additional elements. If\nan inventor had to enable every conceivable permutation of an invention every time she used\nthe word \xe2\x80\x9ccomprising,\xe2\x80\x9d that word would simply no longer be useable. Some challenger would\nalways be able to imagine a variant on the patented invention that includes an element the\ninventor did not enable (\xe2\x80\x9cIt\xe2\x80\x99s a Swiffer with a nuclear reactor!\xe2\x80\x9d) and thereby invalidate the\nclaim. Perhaps, then, the issue is that the word \xe2\x80\x9ccomprising\xe2\x80\x9d is too powerful. Maybe this\nclaim for a three-legged stool shouldn\xe2\x80\x99t cover a much more advanced invention that uses cold\nfusion. That argument has force, but it would represent a sea change from a doctrine that\nhas always permitted broad, pioneering patents that cover both early embodiments of an\ninvention and more advanced later ones that depend on the pioneering work\xe2\x80\x94at least for\ntwenty years. And without the word \xe2\x80\x9ccomprising,\xe2\x80\x9d a subsequent inventor could always add\nan irrelevant additional feature and evade the patent.9 In any event, the law on this point is\nrelatively clear.\nSo now suppose these are the claims:\n1. An object for supporting a human body, comprising a substantially flat\nsurface sized to accommodate a human posterior, and three legs supporting\nsaid surface.\n2. The object of claim 1, further comprising a seat warmer powered by nuclear\nfusion.\nImagine that the specification still includes just has the single embodiment, a threelegged wooden stool.\nAre there \xc2\xa7 112 problems with any of these claims? Claim 2 is surely invalid for lack\nof enablement, and it might also be invalid for lack of written description unless the claim\nwas part of the original application (in which case the claim language itself might\ndemonstrate possession at the time of filing).\nHow about claim 1? Claim 2 is necessarily narrower than claim 1, because it is a\ndependent claim. If the patent does not enable claim 2, the narrower claim, then how could\nit possibly enable claim 1? Or, put in reverse, if claim 1 (the broader claim) is enabled, then\nmust it not be the case that claim 2 (the narrower claim) is also enabled? Indeed, the USPTO\nhas taken exactly this position and treated as axiomatic the idea that if a broader claim is\n\nEnterprising students who have read ahead may realize that the doctrine of equivalents\nwould be an alternative means of capturing subsequent inventions that differ only trivially, but that\ndoctrine would then raise the same sorts of enablement questions.\n9\n\n\x0cUTILITY & DISCLOSURE\n\n203\n\nenabled, the narrower claim must be as well. Ex parte Forstova, No. 1998-0667, 2002 WL\n32349992 3 (B.P.A.I. Apr. 11, 2002).\nAs you have probably realized, this rule of enablement runs headlong into the rule\n(described above) that an inventor need not enable unclaimed elements. See Matthew\xe2\x80\x99s\nAnnotated Patent Digest \xc2\xa7 20:45.75 (\xe2\x80\x9cThis proposition\xe2\x80\x94if the dependent claim is not enabled,\nthe independent claim must also not be enabled\xe2\x80\x94may, in some instances, be in tension with\nanother aspect of enablement law, namely, that only one mode of an invention needs to be\nenabled in a manner that permits one of skill in the art to practice the full scope of the claimed\ninvention without undue experimentation.\xe2\x80\x9d). One of these two rules has to give.\nThe rule that should give is the one that if the dependent claim is not enabled, the\nindependent claim is not enabled either. As we explained above, there is a strong reason,\ngrounded in patent policy, for the rule that unclaimed elements need not be enabled: the\nalternative would be to eliminate the word \xe2\x80\x9ccomprising\xe2\x80\x9d from the lexicon and render patent\nclaims much weaker. The enablement rule about dependent claims, by contrast, is a pure\nformalism that makes logical sense given the patent structure but leads to absurd results. It\nis clear that claim 1 would be valid without claim 2; why should the addition of claim 2 all of\na sudden render claim 1 invalid? It\xe2\x80\x99s not as if claim 2 has changed either the meaning of claim\n1 or the content of the specification. For this reason, we believe that the USPTO should\nsimply let go of the rule that invalidating a dependent claim for lack of enablement\nnecessarily means invalidating its independent claim. Each claim should be judged on its\nown merit, and the patentee need not enable unclaimed elements.\n\nPractice Problems: Utility, Enablement, and Written Description\nDo you think any of the claims below are invalid under any of the doctrines discussed\nin this chapter? These are not simplified cases\xe2\x80\x94the facts and claims are drawn from recent\nFederal Circuit cases, some of which involve complex technologies\xe2\x80\x94but you now have the\ndoctrinal tools to tackle them.\n1. The claims at issue recite a method of treating restenosis, the renarrowing of an\nartery. For example:\nA method of treating restenosis in a mammal . . . which comprises\nadministering an antirestenosis effective amount of rapamycin . . . .\n\xe2\x80\x9cRapamycin\xe2\x80\x9d is a genus that, in this case, includes tens of thousands of chemical compounds,\nmost of which have not been synthesized. The specification discloses a rapamycin species\ncalled sirolimus, which is naturally produced by a bacterium, and it discloses in vitro and in\nvivo test data showing that sirolimus has the desired antirestenosis effect. The defendants\nsell a different species of rapamycin that also has an antirestenosis effect. See Wyeth & Cordis\nCorp. v. Abbott Laboratories, 720 F.3d 1380 (Fed. Cir. 2013).\n\n\x0c204\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n2. The claims are directed to the chemical compound dutasteride, which has medical\nuses such as treating enlarged prostate glands. For example:\n[Dutasteride] or a pharmaceutically acceptable solvate thereof.\nThe specification defines a \xe2\x80\x9csolvate\xe2\x80\x9d by its structure\xe2\x80\x94a complex of dutasteride molecules and\nmolecules from a liquid \xe2\x80\x9csolvent\xe2\x80\x9d\xe2\x80\x94as well as by the process of creating that structure\xe2\x80\x94\ndissolving dutasteride in the solvent. The universe of solvents thought to be pharmaceutically\nacceptable (i.e., suitable for administering to patients) was well known and relatively small,\nthough testing whether each solvate will allow the dutasteride to be effectively received by\npatients takes about a week. The patent provides one example of forming a solvate by\ndissolving dutasteride in liquid propylene glycol. See GlaxoSmithKline LLC v. Banner\nPharmacaps, Inc., 744 F.3d 725 (Fed. Cir. 2014).\n3. The patented technology is a \xe2\x80\x9chandguard\xe2\x80\x9d system for attaching ancillary devices\nlike laser systems to a rifle barrel without damaging the barrel. The specification discloses\nthat the handguard system, surrounding the barrel, is supported by two points: the \xe2\x80\x9creceiver\nsleeve\xe2\x80\x9d and the \xe2\x80\x9cbarrel nut.\xe2\x80\x9d The specification also discloses an invention where the receiver\nsleeve provides complete support for the handguard. The patentee obtained a reissue patent\nclaiming a handguard system supported only at the barrel nut. Atlantic Research Marketing\nSystems, Inc. v. Troy, 659 F.3d 1345 (Fed. Cir. 2011).\n4. The patent discloses a \xe2\x80\x9ctri-layer tunnel junction,\xe2\x80\x9d which is an electronic device used\nin computer memory storage systems. The asserted claims cover any tri-layer tunnel junction\nwherein \xe2\x80\x9capplying a small magnitude of electromagnetic energy to the junction . . . causes a\nchange in the resistance by at least 10% at room temperature.\xe2\x80\x9d The specification teaches that\nthe inventors\xe2\x80\x99 best efforts achieved a change in resistance of 11.8% at room temperature. The\nspecification also notes that the fundamental science of the tunnel junction had been known\nfor many years, and a twenty-year-old publication predicted that an \xe2\x80\x9cideal\xe2\x80\x9d tunnel junction\ncould yield around a 24% change in resistance, but past efforts had not produced effective use\nof the phenomenon. During prosecution, the inventors achieved resistance changes of 18%\nand stated that there was not a clear theoretical upper limit. A tunnel junction with a 120%\nresistive change was achieved over ten years later, and 604% junctions were achieved a few\nyears after that. MagSil Corp. v. Hitachi Glob. Storage Techs., Inc., 687 F.3d 1377 (Fed. Cir.\n2012).\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n205\n\n5. Definiteness and Functional Claiming\nThe previous chapter described the patentability requirements of \xc2\xa7 112(a), which\nensure that the claims are commensurate in scope with the specification. In this chapter, we\nturn to \xc2\xa7 112(b), which requires patent claims to be sufficiently definite that a PHOSITA can\nunderstand what they cover:\n\n35 U.S.C. \xc2\xa7 112(b)\nThe specification shall conclude with one or more claims particularly pointing\nout and distinctly claiming the subject matter which the inventor or a joint\ninventor regards as the invention.\nAny claim that fails to satisfy this requirement is invalid as indefinite. As with \xc2\xa7 112(a), preAIA claims are governed by the old \xc2\xa7 112, \xc2\xb6 2 rather than \xc2\xa7 112(b), but there are no\nsubstantive differences, so we focus on \xc2\xa7 112(b) for simplicity.\nThe policy tradeoff embedded in \xc2\xa7 112(b) is straightforward: Clearer claims provide\nbetter notice to others of what they cover, allowing competitors to more easily determine\nwhether they are infringing and preventing patent applicants from engaging in creative\nreinterpretation of vague claim language in later litigation. But language is inherently\nimprecise, and too strict a demand of clarity raises drafting costs for patentees and risks\ninvalidating claims for technicalities, lowering incentives for innovation. Have any of the\nclaims we have encountered so far seemed insufficiently definite to you?\nAlthough many claims could be written more clearly, claim definiteness has been a\nrelatively toothless requirement for much of its history. The first section of this chapter\nexamines the legal standard for definiteness, which was revised by the Supreme Court in\nNautilus v. Biosig Instruments, 572 U.S. 898 (2014). We then turn to the area in which the\nclaim definiteness requirement has had the most bite: claims with means-plus-function claim\nelements under \xc2\xa7 112(f) (or \xc2\xa7 112, \xc2\xb6 6 for pre-AIA claims).\n\nA. The Standard for Definiteness\nNautilus v. Biosig Instruments, 572 U.S. 898 (2014)\nJustice Ruth Bader Ginsburg delivered the opinion of the Court.\nThe Patent Act requires that a patent specification \xe2\x80\x9cconclude with one or more claims\nparticularly pointing out and distinctly claiming the subject matter which the applicant\n\n\x0c206\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nregards as [the] invention.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 112, \xc2\xb6 2. This case, involving a heart-rate monitor\nused with exercise equipment, concerns the proper reading of the statute\xe2\x80\x99s clarity and\nprecision demand. According to the Federal Circuit, a patent claim passes the \xc2\xa7 112, \xc2\xb6 2\nthreshold so long as the claim is \xe2\x80\x9camenable to construction,\xe2\x80\x9d and the claim, as construed, is\nnot \xe2\x80\x9cinsolubly ambiguous.\xe2\x80\x9d We conclude that the Federal Circuit\xe2\x80\x99s formulation, which\ntolerates some ambiguous claims but not others, does not satisfy the statute\xe2\x80\x99s definiteness\nrequirement. In place of the \xe2\x80\x9cinsolubly ambiguous\xe2\x80\x9d standard, we hold that a patent is invalid\nfor indefiniteness if its claims, read in light of the specification delineating the patent, and\nthe prosecution history, fail to inform, with reasonable certainty, those skilled in the art\nabout the scope of the invention. Expressing no opinion on the validity of the patent-in-suit,\nwe remand, instructing the Federal Circuit to decide the case employing the standard we\nhave prescribed.\nI\nAuthorized by the Constitution \xe2\x80\x9c[t]o promote the Progress of Science and useful Arts,\nby securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries,\xe2\x80\x9d\nArt. I, \xc2\xa7 8, cl. 8, Congress has enacted patent laws rewarding inventors with a limited\nmonopoly. \xe2\x80\x9cTh[at] monopoly is a property right,\xe2\x80\x9d and \xe2\x80\x9clike any property right, its boundaries\nshould be clear.\xe2\x80\x9d Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 730\n(2002). Thus, when Congress enacted the first Patent Act in 1790, it directed that patent\ngrantees file a written specification \xe2\x80\x9ccontaining a description . . . of the thing or things . . .\ninvented or discovered,\xe2\x80\x9d which \xe2\x80\x9cshall be so particular\xe2\x80\x9d as to \xe2\x80\x9cdistinguish the invention or\ndiscovery from other things before known and used.\xe2\x80\x9d Act of Apr. 10, 1790, \xc2\xa7 2, 1 Stat. 110.\nThe patent laws have retained this requirement of definiteness even as the focus of\npatent construction has shifted. Under early patent practice in the United States, we have\nrecounted, it was the written specification that \xe2\x80\x9crepresented the key to the patent.\xe2\x80\x9d Markman\nv. Westview Instruments, 517 U.S. 370, 379 (1996). Eventually, however, patent applicants\nbegan to set out the invention\xe2\x80\x99s scope in a separate section known as the \xe2\x80\x9cclaim.\xe2\x80\x9d The Patent\nAct of 1870 expressly conditioned the receipt of a patent on the inventor\xe2\x80\x99s inclusion of one or\nmore such claims, described with particularity and distinctness. See Act of July 8, 1870, \xc2\xa7 26,\n16 Stat. 201 (to obtain a patent, the inventor must \xe2\x80\x9cparticularly point out and distinctly claim\nthe part, improvement, or combination which [the inventor] claims as his invention or\ndiscovery\xe2\x80\x9d).\nThe 1870 Act\xe2\x80\x99s definiteness requirement survives today, largely unaltered. Section\n112 of the Patent Act of 1952, applicable to this case, requires the patent applicant to conclude\nthe specification with \xe2\x80\x9cone or more claims particularly pointing out and distinctly claiming\nthe subject matter which the applicant regards as his invention.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 112, \xc2\xb6 2. A lack\nof definiteness renders invalid \xe2\x80\x9cthe patent or any claim in suit.\xe2\x80\x9d \xc2\xa7 282, \xc2\xb6 2(3).1\n\n[n.1 in opinion] In the Leahy\xe2\x80\x93Smith America Invents Act, Pub. L. 112\xe2\x80\x9329, 125 Stat. 284,\nenacted in 2011, Congress amended several parts of the Patent Act. Those amendments modified\n1\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n207\n\nII\nA\nThe patent in dispute, U.S. Patent No. 5,337,753, issued to Dr. Gregory Lekhtman in\n1994 and assigned to respondent Biosig Instruments, Inc., concerns a heart-rate monitor for\nuse during exercise. Previous heart-rate monitors, the patent asserts, were often inaccurate\nin measuring the electrical signals accompanying each heartbeat (electrocardiograph or ECG\nsignals). The inaccuracy was caused by electrical signals of a different sort, known as\nelectromyogram or EMG signals, generated by an exerciser\xe2\x80\x99s skeletal muscles when, for\nexample, she moves her arm, or grips an exercise monitor with her hand. These EMG signals\ncan \xe2\x80\x9cmask\xe2\x80\x9d ECG signals and thereby impede their detection.\nDr. Lekhtman\xe2\x80\x99s invention claims to improve on prior art by eliminating that\nimpediment. The invention focuses on a key difference between EMG and ECG waveforms:\nwhile ECG signals detected from a user\xe2\x80\x99s left hand have a polarity opposite to that of the\nsignals detected from her right hand, EMG signals from each hand have the same polarity.\nThe patented device works by measuring equalized EMG signals detected at each hand and\nthen using circuitry to subtract the identical EMG signals from each other, thus filtering out\nthe EMG interference.\nAs relevant here, the \xe2\x80\x99753 patent describes a heart-rate monitor contained in a hollow\ncylindrical bar that a user grips with both hands, such that each hand comes into contact\nwith two electrodes, one \xe2\x80\x9clive\xe2\x80\x9d and one \xe2\x80\x9ccommon.\xe2\x80\x9d The device is illustrated in figure 1 of the\npatent, reproduced [below].\n\nClaim 1 of the \xe2\x80\x99753 patent, which contains the limitations critical to this dispute, refers\nto a \xe2\x80\x9cheart rate monitor for use by a user in association with exercise apparatus and/or\nexercise procedures.\xe2\x80\x9d The claim \xe2\x80\x9ccomprise[s],\xe2\x80\x9d among other elements, an \xe2\x80\x9celongate member\xe2\x80\x9d\n(cylindrical bar) with a display device; \xe2\x80\x9celectronic circuitry including a difference amplifier\xe2\x80\x9d;\nand, on each half of the cylindrical bar, a live electrode [9 and 13 in fig. 1] and a common\n\xc2\xa7\xc2\xa7 112 and 282 in minor respects not pertinent here. In any event, the amended versions of those\nprovisions are inapplicable to patent applications filed before September 16, 2012.\n\n\x0c208\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nelectrode [11 and 15] \xe2\x80\x9cmounted . . . in spaced relationship with each other.\xe2\x80\x9d The claim sets\nforth additional elements, including that the cylindrical bar is to be held in such a way that\neach of the user\xe2\x80\x99s hands \xe2\x80\x9ccontact[s]\xe2\x80\x9d both electrodes on each side of the bar. Further, the EMG\nsignals detected by the two electrode pairs are to be \xe2\x80\x9cof substantially equal magnitude and\nphase\xe2\x80\x9d so that the difference amplifier will \xe2\x80\x9cproduce a substantially zero [EMG] signal\xe2\x80\x9d upon\nsubtracting the signals from one another.\nB\nThe dispute between the parties arose in the 1990\xe2\x80\x99s, when Biosig allegedly disclosed\nthe patented technology to StairMaster Sports Medical Products, Inc. According to Biosig,\nStairMaster, without ever obtaining a license, sold exercise machines that included Biosig\xe2\x80\x99s\npatented technology, and petitioner Nautilus, Inc., continued to do so after acquiring the\nStairMaster brand. In 2004, based on these allegations, Biosig brought a patent infringement\nsuit against Nautilus in the U.S. District Court for the Southern District of New York.\nWith Biosig\xe2\x80\x99s lawsuit launched, Nautilus asked the U.S. Patent and Trademark Office\n(PTO) to reexamine the \xe2\x80\x99753 patent. The reexamination proceedings centered on whether the\npatent was anticipated or rendered obvious by prior art\xe2\x80\x94principally, a patent issued in 1984\nto an inventor named Fujisaki, which similarly disclosed a heart-rate monitor using two pairs\nof electrodes and a difference amplifier. Endeavoring to distinguish the \xe2\x80\x99753 patent from prior\nart, Biosig submitted a declaration from Dr. Lekhtman. The declaration attested, among\nother things, that the \xe2\x80\x99753 patent sufficiently informed a person skilled in the art how to\nconfigure the detecting electrodes so as \xe2\x80\x9cto produce equal EMG [signals] from the left and\nright hands.\xe2\x80\x9d Although the electrodes\xe2\x80\x99 design variables\xe2\x80\x94including spacing, shape, size, and\nmaterial\xe2\x80\x94cannot be standardized across all exercise machines, Dr. Lekhtman explained, a\nskilled artisan could undertake a \xe2\x80\x9ctrial and error\xe2\x80\x9d process of equalization. This would entail\nexperimentation with different electrode configurations in order to optimize EMG signal\ncancellation. In 2010, the PTO issued a determination confirming the patentability of the\n\xe2\x80\x99753 patent\xe2\x80\x99s claims.\nIn 2011, the District Court conducted a hearing to determine the proper construction\nof the patent\xe2\x80\x99s claims, including the claim term \xe2\x80\x9cin spaced relationship with each other.\xe2\x80\x9d\nAccording to Biosig, that \xe2\x80\x9cspaced relationship\xe2\x80\x9d referred to the distance between the live\nelectrode and the common electrode in each electrode pair. Nautilus, seizing on Biosig\xe2\x80\x99s\nsubmissions to the PTO during the reexamination, maintained that the \xe2\x80\x9cspaced relationship\xe2\x80\x9d\nmust be a distance \xe2\x80\x9cgreater than the width of each electrode.\xe2\x80\x9d The District Court ultimately\nconstrued the term to mean \xe2\x80\x9cthere is a defined relationship between the live electrode and\nthe common electrode on one side of the cylindrical bar and the same or a different defined\nrelationship between the live electrode and the common electrode on the other side of the\ncylindrical bar,\xe2\x80\x9d without any reference to the electrodes\xe2\x80\x99 width.\nNautilus moved for summary judgment, arguing that the term \xe2\x80\x9cspaced relationship,\xe2\x80\x9d\nas construed, was indefinite under \xc2\xa7 112, \xc2\xb6 2. The District Court granted the motion. Those\nwords, the District Court concluded, \xe2\x80\x9cdid not tell [the court] or anyone what precisely the\nspace should be,\xe2\x80\x9d or even supply \xe2\x80\x9cany parameters\xe2\x80\x9d for determining the appropriate spacing.\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n209\n\nThe Federal Circuit reversed and remanded. A claim is indefinite, the majority\nopinion stated, \xe2\x80\x9conly when it is \xe2\x80\x98not amenable to construction\xe2\x80\x99 or \xe2\x80\x98insolubly ambiguous.\xe2\x80\x99\xe2\x80\x9d\nUnder that standard, the majority determined, the \xe2\x80\x99753 patent survived indefiniteness\nreview. Considering first the \xe2\x80\x9cintrinsic evidence\xe2\x80\x9d\xe2\x80\x94i.e., the claim language, the specification,\nand the prosecution history\xe2\x80\x94the majority discerned [that] these sources of meaning make\nplain that the distance separating the live and common electrodes on each half of the bar\n\xe2\x80\x9ccannot be greater than the width of a user\xe2\x80\x99s hands\xe2\x80\x9d; that is so \xe2\x80\x9cbecause claim 1 requires the\nlive and common electrodes to independently detect electrical signals at two distinct points\nof a hand.\xe2\x80\x9d Furthermore, the majority noted, the intrinsic evidence teaches that this distance\ncannot be \xe2\x80\x9cinfinitesimally small, effectively merging the live and common electrodes into a\nsingle electrode with one detection point.\xe2\x80\x9d\nWe granted certiorari, and now vacate and remand.\nIII\nA\nAlthough the parties here disagree on the dispositive question\xe2\x80\x94does the \xe2\x80\x99753 patent\nwithstand definiteness scrutiny\xe2\x80\x94they are in accord on several aspects of the \xc2\xa7 112, \xc2\xb6 2\ninquiry. First, definiteness is to be evaluated from the perspective of someone skilled in the\nrelevant art. Second, in assessing definiteness, claims are to be read in light of the patent\xe2\x80\x99s\nspecification and prosecution history. Third, definiteness is measured from the viewpoint of\na person skilled in the art at the time the patent was filed.\nThe parties differ, however, in their articulations of just how much imprecision \xc2\xa7 112,\n\xc2\xb6 2 tolerates. In Nautilus\xe2\x80\x99 view, a patent is invalid when a claim is \xe2\x80\x9cambiguous, such that\nreaders could reasonably interpret the claim\xe2\x80\x99s scope differently.\xe2\x80\x9d Biosig and the Solicitor\nGeneral would require only that the patent provide reasonable notice of the scope of the\nclaimed invention.\nSection 112, we have said, entails a \xe2\x80\x9cdelicate balance.\xe2\x80\x9d Festo, 535 U.S. at 731. On the\none hand, the definiteness requirement must take into account the inherent limitations of\nlanguage. Some modicum of uncertainty, the Court has recognized, is the \xe2\x80\x9cprice of ensuring\nthe appropriate incentives for innovation.\xe2\x80\x9d Id., at 732. One must bear in mind, moreover, that\npatents are \xe2\x80\x9cnot addressed to lawyers, or even to the public generally,\xe2\x80\x9d but rather to those\nskilled in the relevant art. Carnegie Steel Co. v. Cambria Iron Co., 185 U.S. 403, 437 (1902).\nAt the same time, a patent must be precise enough to afford clear notice of what is\nclaimed, thereby \xe2\x80\x9cappris[ing] the public of what is still open to them.\xe2\x80\x9d Markman, 517 U.S. at\n373. Otherwise there would be \xe2\x80\x9c[a] zone of uncertainty which enterprise and experimentation\nmay enter only at the risk of infringement claims.\xe2\x80\x9d United Carbon Co. v. Binney & Smith Co.,\n317 U.S. 228, 236 (1942). And absent a meaningful definiteness check, we are told, patent\napplicants face powerful incentives to inject ambiguity into their claims. See Federal Trade\nCommission, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with\nCompetition 85 (2011) (quoting testimony that [the] patent system fosters \xe2\x80\x9can incentive to be\n\n\x0c210\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nas vague and ambiguous as you can with your claims\xe2\x80\x9d and \xe2\x80\x9cdefer clarity at all costs\xe2\x80\x9d).\nEliminating that temptation is in order, and \xe2\x80\x9cthe patent drafter is in the best position to\nresolve the ambiguity in . . . patent claims.\xe2\x80\x9d Halliburton Energy Servs., Inc. v. M\xe2\x80\x93I LLC, 514\nF.3d 1244, 1255 (Fed. Cir. 2008).\nTo determine the proper office of the definiteness command, therefore, we must\nreconcile concerns that tug in opposite directions. Cognizant of the competing concerns, we\nread \xc2\xa7 112, \xc2\xb6 2 to require that a patent\xe2\x80\x99s claims, viewed in light of the specification and\nprosecution history, inform those skilled in the art about the scope of the invention with\nreasonable certainty. The definiteness requirement, so understood, mandates clarity, while\nrecognizing that absolute precision is unattainable. The standard we adopt accords with\nopinions of this Court stating that \xe2\x80\x9cthe certainty which the law requires in patents is not\ngreater than is reasonable, having regard to their subject-matter.\xe2\x80\x9d Minerals Separation,\nLtd. v. Hyde, 242 U.S. 261, 270 (1916). See also United Carbon, 317 U.S. at 236 (\xe2\x80\x9cclaims must\nbe reasonably clear-cut\xe2\x80\x9d); Markman, 517 U.S. at 389 (claim construction calls for \xe2\x80\x9cthe\nnecessarily sophisticated analysis of the whole document,\xe2\x80\x9d and may turn on evaluations of\nexpert testimony).\nB\nIn resolving Nautilus\xe2\x80\x99 definiteness challenge, the Federal Circuit asked whether the\n\xe2\x80\x99753 patent\xe2\x80\x99s claims were \xe2\x80\x9camenable to construction\xe2\x80\x9d or \xe2\x80\x9cinsolubly ambiguous.\xe2\x80\x9d Those\nformulations can breed lower court confusion, for they lack the precision \xc2\xa7 112, \xc2\xb6 2 demands.\nIt cannot be sufficient that a court can ascribe some meaning to a patent\xe2\x80\x99s claims; the\ndefiniteness inquiry trains on the understanding of a skilled artisan at the time of the patent\napplication, not that of a court viewing matters post hoc. To tolerate imprecision just short of\nthat rendering a claim \xe2\x80\x9cinsolubly ambiguous\xe2\x80\x9d would diminish the definiteness requirement\xe2\x80\x99s\npublic-notice function and foster the innovation-discouraging \xe2\x80\x9czone of uncertainty,\xe2\x80\x9d United\nCarbon, 317 U.S. at 236, against which this Court has warned.\nAppreciating that \xe2\x80\x9cterms like \xe2\x80\x98insolubly ambiguous\xe2\x80\x99 may not be felicitous,\xe2\x80\x9d Biosig\nargues the phrase is a shorthand label for a more probing inquiry that the Federal Circuit\napplies in practice. But although this Court does not \xe2\x80\x9cmicromanag[e] the Federal Circuit\xe2\x80\x99s\nparticular word choice\xe2\x80\x9d in applying patent-law doctrines, we must ensure that the Federal\nCircuit\xe2\x80\x99s test is at least \xe2\x80\x9cprobative of the essential inquiry.\xe2\x80\x9d Warner\xe2\x80\x93Jenkinson Co. v. Hilton\nDavis Chemical Co., 520 U.S. 17, 40 (1997). Falling short in that regard, the expressions\n\xe2\x80\x9cinsolubly ambiguous\xe2\x80\x9d and \xe2\x80\x9camenable to construction\xe2\x80\x9d permeate the Federal Circuit\xe2\x80\x99s recent\ndecisions concerning \xc2\xa7 112, \xc2\xb6 2\xe2\x80\x99s requirement. We agree with Nautilus and its amici that\nsuch terminology can leave courts and the patent bar at sea without a reliable compass.2\n\n[n.10 in opinion] The Federal Circuit suggests that a permissive definiteness standard\n\xe2\x80\x9caccord[s] respect to the statutory presumption of patent validity.\xe2\x80\x9d 715 F.3d 891, 902 (Fed. Cir. 2013).\nAs the parties appear to agree, however, this presumption of validity does not alter the degree of clarity\nthat \xc2\xa7 112, \xc2\xb6 2 demands from patent applicants; to the contrary, it incorporates that definiteness\n2\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n211\n\nIV\nBoth here and in the courts below, the parties have advanced conflicting arguments\nas to the definiteness of the claims in the \xe2\x80\x99753 patent. Nautilus maintains that the claim term\n\xe2\x80\x9cspaced relationship\xe2\x80\x9d is open to multiple interpretations reflecting markedly different\nunderstandings of the patent\xe2\x80\x99s scope, as exemplified by the disagreement among the\nmembers of the Federal Circuit panel. Biosig responds that \xe2\x80\x9cspaced relationship,\xe2\x80\x9d read in\nlight of the specification and as illustrated in the accompanying drawings, delineates the\npermissible spacing with sufficient precision.\n\xe2\x80\x9c[M]indful that we are a court of review, not of first view,\xe2\x80\x9d Cutter v. Wilkinson, 544\nU.S. 709, 718, n.7 (2005), we decline to apply the standard we have announced to the\ncontroversy between Nautilus and Biosig. As we have explained, the Federal Circuit invoked\na standard more amorphous than the statutory definiteness requirement allows. We\ntherefore follow our ordinary practice of remanding so that the Court of Appeals can\nreconsider, under the proper standard, whether the relevant claims in the \xe2\x80\x99753 patent are\nsufficiently definite.\n\nDiscussion Questions: Nautilus\n1. Is \xe2\x80\x9cSpaced Relationship\xe2\x80\x9d Indefinite? On remand, the Federal Circuit stated that \xe2\x80\x9cwe\nmay now steer by the bright star of \xe2\x80\x98reasonable certainty,\xe2\x80\x99 rather than the unreliable compass\nof \xe2\x80\x98insoluble ambiguity\xe2\x80\x99\xe2\x80\x9d and concluded that the claim is not indefinite because \xe2\x80\x9ca skilled\nartisan would understand the inherent parameters of the invention as provided in the\nintrinsic evidence.\xe2\x80\x9d Biosig Instruments v. Nautilus, 783 F.3d 1374, 1379, 1384 (Fed. Cir.\n2015). Do you agree? What would have been the benefits and costs of requiring more precise\nlanguage, such as stating that the electrodes must be mounted \xe2\x80\x9cbetween 0.1 and 6.0 inches\napart\xe2\x80\x9d?\n2. Is \xe2\x80\x9cReasonable Certainty\xe2\x80\x9d Indefinite? The new \xe2\x80\x9creasonable certainty\xe2\x80\x9d standard for\nindefiniteness can be criticized as indefinite itself, but can you think of a better legal\nstandard? Nautilus asked the Court to hold that claims are invalid if they are \xe2\x80\x9cambiguous,\nsuch that readers could reasonably interpret the claim\xe2\x80\x99s scope differently.\xe2\x80\x9d During oral\nargument, Justice Sotomayor asked:\n\nrequirement by reference. See \xc2\xa7 282, \xc2\xb6 2(3) (defenses to infringement actions include \xe2\x80\x9c[i]nvalidity of\nthe patent or any claim in suit for failure to comply with . . . any requirement of [\xc2\xa7 112]\xe2\x80\x9d).\nThe parties nonetheless dispute whether factual findings subsidiary to the ultimate issue of\ndefiniteness trigger the clear-and-convincing-evidence standard and, relatedly, whether deference is\ndue to the PTO\xe2\x80\x99s resolution of disputed issues of fact. We leave these questions for another day. The\ncourt below treated definiteness as \xe2\x80\x9ca legal issue [the] court reviews without deference,\xe2\x80\x9d 715 F.3d, at\n897, and Biosig has not called our attention to any contested factual matter\xe2\x80\x94or PTO determination\nthereof\xe2\x80\x94pertinent to its infringement claims.\n\n\x0c212\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nNow, I have a really big problem, which is we as Justices disagree on the\nmeaning of things all the time, and one side will say, this is perfectly clear from\nthe text of the statute, from its history, from its context. And we do all the\nstatutory tools, and there will be one or more of us who will come out and say,\nno, we think it\xe2\x80\x99s a different interpretation. Would we have any valid patents in\nthe world if that\xe2\x80\x99s the standard that we adopt?\n\nNautilus\xe2\x80\x99s lawyer didn\xe2\x80\x99t have a good response; do you?\nOn the other hand, the Justices also gave patent owner Biosig a hard time for its\nargument. Biosig supported the Federal Circuit\xe2\x80\x99s old standard that claims are indefinite only\nif \xe2\x80\x9cinsolubly ambiguous\xe2\x80\x9d but supported a \xe2\x80\x9creasonable certainty\xe2\x80\x9d standard as long as it was\nclear that claims like theirs are reasonably certain. The Justices worried that claims would\nnever be indefinite under such a standard. As Justice Scalia noted, \xe2\x80\x9cThere\xe2\x80\x99s never more than\none correct construction. . . . I mean, we always have to come up with an answer. . . . Have\nyou ever heard of a court that says, well, you know, it could mean either one of these? It\xe2\x80\x99s a\ntie!\xe2\x80\x9d If you were Biosig\xe2\x80\x99s lawyer, how would you respond?\nAlthough the Justices complained at oral argument that \xe2\x80\x9creasonable certainty\xe2\x80\x9d is \xe2\x80\x9cnot\nmuch of a test,\xe2\x80\x9d this is the standard they settled on. Could you do better?\n3. Indefiniteness Rejections During Examination. Nautilus was an appeal from a\npatent litigation suit involving a granted patent rather than an appeal from the USPTO\xe2\x80\x99s\nrejection of a patent application during examination. If an examiner rejects a claim for\nindefiniteness, the applicant can amend the claim to impose greater clarity. Given this, do\nyou think the indefiniteness standard should be the same during prosecution and litigation?\nBefore Nautilus was decided, Judge Dyk of the Federal Circuit argued that \xe2\x80\x9c[c]onstruing\nambiguous and poorly drafted claims continues to be the principal task that our court faces\nin patent cases\xe2\x80\x9d and that the USPTO should take a more active role in policing claim drafting\nby \xe2\x80\x9creject[ing] applications when the claims are not clear.\xe2\x80\x9d Timothy B. Dyk, Ten Prescriptions\nfor What Ails Patent Law, 17 Stan. Tech. L. Rev. 345 (2014).\nThe USPTO previously used \xe2\x80\x9ca lower threshold of ambiguity\xe2\x80\x9d such that a claim was\nindefinite when \xe2\x80\x9camenable to two or more plausible constructions,\xe2\x80\x9d Ex parte Miyazaki, 89\nU.S.P.Q.2d 1207 (B.P.A.I. 2008), or \xe2\x80\x9cwhen it contains words or phrases whose meaning is\nunclear,\xe2\x80\x9d In re Packard, 751 F.3d 1307 (Fed. Cir. 2014). Does Nautilus specify the standard\nexaminers should apply? See Lisa Larrimore Ouellette & Jonathan Masur, How Will\nNautilus Affect Indefiniteness at the PTO?, Patently-O (June 5, 2014),\nhttps://patentlyo.com/patent/2014/06/nautilus-affect-indefiniteness.html. In 2017, the PTAB\ndecided in a precedential opinion that it would follow the \xe2\x80\x9cmeaning is unclear\xe2\x80\x9d standard in\nthe examination context, Ex Parte McAward, 2017 WL 3947829 (P.T.A.B. 2017), and a 2021\nmemo from the USPTO Director later clarified that the PTAB \xe2\x80\x9cshall follow Nautilus in AIA\npost-grant proceedings.\xe2\x80\x9d However, nonprecedential PTAB opinions in examination appeals\nstill cite a variety of standards (including the \xe2\x80\x9cinsolubly ambiguous\xe2\x80\x9d standard!), illustrating\nthe difficulty of quality control.\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n213\n\nIf claims do not meet the legal standard for indefiniteness during examination, should\nexaminers ask applicants to clarify the meaning of any claim terms in the prosecution record?\nExaminers may \xe2\x80\x9crequire information that does not directly support a rejection,\xe2\x80\x9d Star Fruits\nv. United States, 393 F.3d 1277 (Fed. Cir. 2005) (citing 37 C.F.R. \xc2\xa7 1.105), although they do\nnot generally use this authority to clarify claim terms that were not found indefinite.\n4. Inherently Ambiguous Claim Terms. In our experience, students new to patent law\ntend to be quicker than examiners or the courts at identifying claims that seem insufficiently\ndefinite. Claims are routinely granted and upheld even when they contain approximations\n(like \xe2\x80\x9cabout,\xe2\x80\x9d \xe2\x80\x9cessentially,\xe2\x80\x9d \xe2\x80\x9csubstantially\xe2\x80\x9d), references to objects of variable size (like \xe2\x80\x9cso\ndimensioned as to be insertable\xe2\x80\x9d into an automobile), open-ended numerical ranges (like \xe2\x80\x9cless\nthan X%\xe2\x80\x9d), and the very common phrase \xe2\x80\x9can effective amount\xe2\x80\x9d (meaning an amount effective\nfor accomplishing some stated purpose). See MPEP \xc2\xa7 2173. Should the indefiniteness\nstandard be further revised to prevent applicants from using this kind of inherently\nambiguous language?\n\nPractice Problems: Applying the Nautilus Indefiniteness Standard\nIn general, one cannot assess indefiniteness just by looking at the claim\xe2\x80\x94it is also\nimportant to consider the specification, and expert testimony may be necessary to determine\nwhether a claim provides reasonable certainty to a PHOSITA. In this sense, the definiteness\ndetermination provides a preview of the claim construction process we will consider in\nChapter 8. (Indeed, definiteness is most often resolved as part of the claim construction\nprocess.) The following examples provide simplified claims and relevant context from recent\nFederal Circuit cases. Do you think the underlined claim terms render the claims indefinite?\n1. The asserted claims are directed to light emitting diodes (LEDs) with improved heat\ndissipation. The claims require \xe2\x80\x9ca thermally conductive elongated core\xe2\x80\x9d that draws heat from\nthe LEDs and dissipates it into the air. The accused infringer argues that \xe2\x80\x9celongated\xe2\x80\x9d is\nindefinite because the specification does not use the term \xe2\x80\x9celongated\xe2\x80\x9d or describe the core\xe2\x80\x99s\ndimensions. The patentee responds that \xe2\x80\x9celongated\xe2\x80\x9d refers to whether a core was long enough\nto pull heat away from the LEDs. During prosecution, the patentee distinguished two prior\nart references with extended cores as not containing an \xe2\x80\x9celongated\xe2\x80\x9d element. GE Lighting\nSolutions v. Lights of America, 663 F. App\xe2\x80\x99x 938 (Fed. Cir. 2016).\n2. The patent-in-suit is directed to a lawn mower with improved flow control baffles.\nA baffle is a metal structure under the mower deck that directs air flow and grass clippings\nduring operation. The asserted claim requires a \xe2\x80\x9cflow control baffle\xe2\x80\x9d to have an \xe2\x80\x9celongated\nand substantially straight baffle portion\xe2\x80\x9d between two \xe2\x80\x9carcuate baffle portions,\xe2\x80\x9d as illustrated\nin the side view below. The accused infringer argues that \xe2\x80\x9celongated and substantially\nstraight\xe2\x80\x9d provides no objective standard for whether a baffle portion is straight enough or\nlong enough to be covered by the claim. The patentee responds that a PHOSITA would\nunderstand the term to mean the baffle portion is long enough to transition between the\n\n\x0c214\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\narcuate portions and straight relative to the other components. Exmark Manufacturing v.\nBriggs & Stratton Power Products, 879 F.3d 1332 (Fed. Cir. 2018).\n\n3. The asserted claims cover multilayer capacitors\xe2\x80\x94electrical components that store\nand release energy\xe2\x80\x94with a \xe2\x80\x9cfringe-effect capacitance\xe2\x80\x9d between two contacts that is \xe2\x80\x9ccapable\nof being determined by measurement in terms of a standard unit.\xe2\x80\x9d The specification discloses\na method of measuring capacitance called insertion loss testing that was well known in the\nart. The accused infringer argues that the claim is indefinite because the insertion loss\nmethod had not previously been applied to measure fringe-effect capacitance, and the\nspecification provides no guidance on how to do this. The patent owner\xe2\x80\x99s expert testified that\na PHOSITA would be able to develop a test methodology for this purpose. Presidio\nComponents v. American Technical Ceramics, 875 F.3d 1369 (Fed. Cir. 2017).\n4. The claims at issue are directed to a method of manufacturing a polymer \xe2\x80\x9chaving a\nmolecular weight of about 5 to 9 kilodaltons.\xe2\x80\x9d A kilodalton is a widely used unit of atomic\nmass. Both the patent owner and accused infringer agree that the claim term \xe2\x80\x9cmolecular\nweight\xe2\x80\x9d could refer to any of three measures of a polymer\xe2\x80\x99s molecular weight: peak average\nmolecular weight (Mp), number average molecular weight (Mn), and weight average molecular\nweight (Mw). Each measure is calculated in a different manner, and the patent provides no\nguidance on which to use. During prosecution of two continuation patents of the patent-insuit, the patentee overcame indefiniteness rejections from the USPTO\xe2\x80\x94in one case by\ndefining \xe2\x80\x9cmolecular weight\xe2\x80\x9d as Mw, and in the other by defining it as Mp. The response\ndefining \xe2\x80\x9cmolecular weight\xe2\x80\x9d as Mw, included a scientific error. Teva Pharmaceuticals v.\nSandoz, 789 F.3d 1335 (Fed. Cir. 2015).\n5. The claimed invention addresses the problem of website visitors being lured away\nfrom a host website by clicking an advertisement. Under the system disclosed in the patent,\nwhen a visitor clicks an advertising link, they are taken to a composite website that displays\nthe product information from the third-party advertiser, but retains the host website\xe2\x80\x99s \xe2\x80\x9clook\nand feel,\xe2\x80\x9d which \xe2\x80\x9cgives the viewer of the page the impression that she is viewing pages served\nby the host\xe2\x80\x9d website. Here is a simplified version of the claim:\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n215\n\nA system serving web pages offering commercial opportunities comprising:\n(a) a computer store containing data, for each of a plurality of first web pages,\ndefining a plurality of look and feel elements corresponding to the plurality of\nfirst web pages, wherein each of the first web pages displays at least one active\nlink associated with a commerce object associated with a buying opportunity\nof a selected one of a plurality of merchants;\n(b) a computer server coupled to the computer store and programmed to:\n(i) receive from the web browser of a computer user a signal indicating\nactivation of one of the links displayed by one of the first web pages; and\n(ii) automatically generate and transmit to the web browser a second web page\nthat displays: information associated with the commerce object associated with\nthe link that has been activated, and the plurality of look and feel elements\ncorresponding to the source page.\nThe specification describes \xe2\x80\x9clook and feel elements\xe2\x80\x9d as \xe2\x80\x9cincluding logos, colors, page layout,\nnavigation systems, frames, \xe2\x80\x98mouse-over\xe2\x80\x99 effects, or other elements that are consistent\nthrough some or all of a host\xe2\x80\x99s website.\xe2\x80\x9d The patent owner\xe2\x80\x99s expert testified that a skilled\nartisan would interpret these \xe2\x80\x9cother elements\xe2\x80\x9d as elements such as headers, footers, fonts,\nand images. Is \xe2\x80\x9clook and feel elements\xe2\x80\x9d indefinite? DDR Holdings, LLC v. Hotels.com, L.P.,\n773 F.3d 1245, 1260 (Fed. Cir. 2014).\n6. The patents-in-suit are directed to an \xe2\x80\x9cattention manager for occupying the\nperipheral attention of a person in the vicinity of a display device.\xe2\x80\x9d The specification has two\nprimary embodiments: a \xe2\x80\x9cwallpaper\xe2\x80\x9d embodiment that displays images in spatial portions of\nthe screen not occupying the user\xe2\x80\x99s primary attention, and a \xe2\x80\x9cscreensaver\xe2\x80\x9d embodiment that\ndisplays images after detecting an idle period. The relevant claims include the following step:\n. . . providing to the content display system a set of instructions for enabling\nthe content display system to selectively display, in an unobtrusive manner\nthat does not distract a user of the display device or an apparatus associated\nwith the display device from a primary interaction with the display device or\napparatus, an image or images generated from a set of content data . . .\nThe accused infringer argues that the \xe2\x80\x9cunobtrusive manner\xe2\x80\x9d phrase is indefinite because it\nis highly subjective. The patentee responds that it is sufficiently defined through its\nrelationship to the wallpaper embodiment. Interval Licensing LLC v. AOL, Inc., 766 F.3d\n1364 (Fed. Cir. 2014).\n\n\x0c216\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nB. Definiteness for Means-Plus-Function Claim Elements\nAs noted at the end of Chapter 1, \xc2\xa7 112(f) (known as \xc2\xa7 112 \xc2\xb6 6 for pre-AIA claims)\ngives patent drafters the option to write claim elements in terms of the function they perform\nrather than what they are, such as a \xe2\x80\x9ca means for fastening\xe2\x80\x9d rather than \xe2\x80\x9ca button.\xe2\x80\x9d\n\n35 U.S.C. \xc2\xa7 112(f)\nAn element in a claim for a combination may be expressed as a means or step\nfor performing a specified function without the recital of structure, material,\nor acts in support thereof, and such claim shall be construed to cover the\ncorresponding structure, material, or acts described in the specification and\nequivalents thereof.\nClaim limitations written in functional terms are known as means-plus-function elements.\nWriting a claim element in functional terms can be beneficial for patentees who do not want\nto list all the means for performing that function in their claim, but under \xc2\xa7 112(f), this\nbenefit comes at the cost of narrowing claim scope: means-plus-function elements cover only\nthe corresponding structure in the specification (and equivalents). \xe2\x80\x9cStructure\xe2\x80\x9d is a term of\nart for whatever performs the claimed function. In some cases, like the button that is a means\nfor fastening, the structure is something tangible. But the structure for a means-plusfunction claim element need not be a physical structure; for example, the structure for a\nsoftware function is the corresponding algorithm. If there is no corresponding structure, the\nclaim is invalid for indefiniteness under \xc2\xa7 112(b).\nImportantly, it is not generally true that claim terms are limited to the specific\nexamples in the application. As we will discuss in more detail in Chapter 8 on claim\nconstruction, the Federal Circuit has repeatedly emphasized that courts should \xe2\x80\x9cavoid\nimporting limitations from the specification into the claims.\xe2\x80\x9d Phillips v. AWH Corp., 415 F.3d\n1303, 1323 (Fed. Cir. 2005) (en banc). But means-plus-function claim elements are an\nexception to this general rule: when \xc2\xa7 112(f) is triggered, importing limitations from the\nspecification is required.\nConsider a hypothetical claim directed to a novel sneaker. Rather than expressing one\nof the claim elements as \xe2\x80\x9cshoelaces,\xe2\x80\x9d the patentee could express this element as \xe2\x80\x9ca means for\nsecuring the shoe around a foot.\xe2\x80\x9d Under \xc2\xa7 112(f), this \xe2\x80\x9cmeans for securing\xe2\x80\x9d element would\nthen be construed to cover the corresponding structure in the specification. If the specification\nexplains that \xe2\x80\x9cthe shoe may be secured around a foot using traditional closure mechanisms\nsuch as shoelaces or velcro,\xe2\x80\x9d then the \xe2\x80\x9cmeans for securing\xe2\x80\x9d element is construed to cover\nshoelaces, velcro, and their equivalents\xe2\x80\x94and thus would not cover no-tie elastic systems or\nmechanical systems that allow users to adjust shoe fit by turning a knob. If the specification\ndoes not mention any means for securing the shoe, then the claim is invalid for indefiniteness.\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n217\n\nAnalyzing functional claims for indefiniteness thus involves two steps: (1) Is there a\nmeans-plus-function element triggering \xc2\xa7 112(f)? (2) If so, does that means-plus-function\nelement have corresponding structure in the specification? If not, the claim is invalid for\nindefiniteness under \xc2\xa7 112(b). We consider these steps in turn.\n\n1. Does \xc2\xa7 112(f) Apply to a Claim Limitation?\nBefore 2015, the inquiry into whether a claim limitation should be construed under\n\xc2\xa7 112(f) focused on whether the limitation employed the word \xe2\x80\x9cmeans.\xe2\x80\x9d Use of \xe2\x80\x9cmeans\xe2\x80\x9d\ncreated a presumption that \xc2\xa7 112(f) applied; failure to use \xe2\x80\x9cmeans\xe2\x80\x9d created a \xe2\x80\x9cstrong\xe2\x80\x9d\npresumption that \xc2\xa7 112(f) did not apply. Claim drafters responded by replacing \xe2\x80\x9cmeans\xe2\x80\x9d with\ngeneric terms like \xe2\x80\x9cmodule,\xe2\x80\x9d \xe2\x80\x9cmechanism,\xe2\x80\x9d \xe2\x80\x9celement,\xe2\x80\x9d or \xe2\x80\x9cdevice\xe2\x80\x9d in an effort to achieve\nbroader claims without the restrictions of \xc2\xa7 112(f). In 2015, the Federal Circuit decided en\nbanc that a \xe2\x80\x9cstrong\xe2\x80\x9d presumption for elements not using \xe2\x80\x9cmeans\xe2\x80\x9d was unwarranted.\nWilliamson v. Citrix Online, LLC, 792 F.3d 1339, 1349 (Fed. Cir. 2015). There is still a\npresumption that \xe2\x80\x9cmeans\xe2\x80\x9d triggers \xc2\xa7 112(f) and the absence of \xe2\x80\x9cmeans\xe2\x80\x9d does not, but it can\nbe overcome. A claim limitation does not trigger \xc2\xa7 112(f) if \xe2\x80\x9cthe words of the claim are\nunderstood by persons of ordinary skill in the art to have a sufficiently definite meaning as\nthe name for structure.\xe2\x80\x9d Id.\nThe invention at issue in Williamson v. Citrix was a system for a virtual classroom\npurporting to provide \xe2\x80\x9cthe benefits of classroom interaction without the detrimental effects\nof complicated hardware or software, or the costs and inconvenience of convening in a\nseparate place.\xe2\x80\x9d (Little did the inventor know how valuable this field would become in 2020!)\nOne limitation of the claims was a \xe2\x80\x9cdistributed learning control module for receiving\ncommunications transmitted between the presenter and the audience member computer\nsystems and for relaying the communications to an intended receiving computer system and\nfor coordinating the operation of the streaming data module.\xe2\x80\x9d The Federal Circuit held that\n\xe2\x80\x9cdistributed learning control module\xe2\x80\x9d should be construed under \xc2\xa7 112, \xc2\xb6 6 because \xe2\x80\x9c\xe2\x80\x98module\xe2\x80\x99\nis simply a generic description for software or hardware that performs a specified function\xe2\x80\x9d\nand none of the surrounding claim language \xe2\x80\x9cimpart[s] structure into the term \xe2\x80\x98module.\xe2\x80\x99\xe2\x80\x9d Id.\nat 1350\xe2\x80\x9351.\nThe result in Williamson would have been different if \xe2\x80\x9cdistributed learning control\nmodule\xe2\x80\x9d had a well understood meaning in the computer technology field. As summarized by\nthe USPTO in MPEP \xc2\xa7 2181:\nIf persons of ordinary skill in the art reading the specification\nunderstand the term to have a sufficiently definite meaning as the name for\nthe structure that performs the function, even when the term covers a broad\nclass of structures or identifies the structures by their function (e.g., \xe2\x80\x9cfilters,\xe2\x80\x9d\n\xe2\x80\x9cbrakes,\xe2\x80\x9d \xe2\x80\x9cclamp,\xe2\x80\x9d \xe2\x80\x9cscrewdriver,\xe2\x80\x9d and \xe2\x80\x9clocks\xe2\x80\x9d), 35 U.S.C. \xc2\xa7 112(f) will not apply.\nThe term is not required to denote a specific structure or a precise physical\nstructure to avoid the application of 35 U.S.C. \xc2\xa7 112(f). The following are\n\n\x0c218\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nexamples of structural terms that have been found not to invoke 35 U.S.C.\n\xc2\xa7 112(f) or pre-AIA \xc2\xa7 112, \xc2\xb6 6: \xe2\x80\x9ccircuit,\xe2\x80\x9d \xe2\x80\x9cdigital detector,\xe2\x80\x9d \xe2\x80\x9cdetent mechanism,\xe2\x80\x9d\n\xe2\x80\x9creciprocating member,\xe2\x80\x9d \xe2\x80\x9cconnector assembly,\xe2\x80\x9d \xe2\x80\x9cperforation,\xe2\x80\x9d \xe2\x80\x9csealingly\nconnected joints,\xe2\x80\x9d and \xe2\x80\x9ceyeglass hanger member.\xe2\x80\x9d It is important to remember\nthat there are no absolutes in the determination of terms used as a substitute\nfor \xe2\x80\x9cmeans\xe2\x80\x9d that serve as generic placeholders. The examiner must carefully\nconsider the term in light of the specification and the commonly accepted\nmeaning in the technological art. Every application will turn on its own facts.\nA limitation will not invoke 35 U.S.C. \xc2\xa7 112(f) if there is a structural\nmodifier that further describes the term \xe2\x80\x9cmeans\xe2\x80\x9d or the generic placeholder.\nFor example, although a generic placeholder like \xe2\x80\x9cmechanism\xe2\x80\x9d standing alone\nmay invoke \xc2\xa7 112(f) when coupled with a function, it will not invoke \xc2\xa7 112(f)\nwhen it is preceded by a structural modifier (e.g., \xe2\x80\x9cdetent mechanism\xe2\x80\x9d).\nGreenberg v. Ethicon Endo-Surgery, 91 F.3d 1580 (Fed. Cir. 1996) (holding that\nthe term \xe2\x80\x9cdetent mechanism\xe2\x80\x9d did not invoke \xc2\xa7 112, \xc2\xb6 6 because the structural\nmodifier \xe2\x80\x9cdetent\xe2\x80\x9d denotes a type of structural device with a generally\nunderstood meaning in the mechanical arts). By contrast, a generic placeholder\n(e.g., \xe2\x80\x9cmechanism,\xe2\x80\x9d \xe2\x80\x9celement,\xe2\x80\x9d \xe2\x80\x9cmember\xe2\x80\x9d) coupled with a function may invoke\n\xc2\xa7 112(f) when it is preceded by a non-structural modifier that does not have\nany generally understood structural meaning in the art (e.g., \xe2\x80\x9ccolorant\nselection mechanism,\xe2\x80\x9d \xe2\x80\x9clever moving element,\xe2\x80\x9d or \xe2\x80\x9cmovable link member\xe2\x80\x9d).\nTo determine whether a word, term, or phrase coupled with a function\ndenotes structure, examiners may check whether: (1) the specification provides\na description sufficient to inform one of ordinary skill in the art that the term\ndenotes structure; (2) general and subject matter specific dictionaries provide\nevidence that the term has achieved recognition as a noun denoting structure;\nand/or (3) the prior art provides evidence that the term is an art-recognized\nstructure to perform the claimed function. It is necessary to decide on an\nelement-by-element basis whether 35 U.S.C. \xc2\xa7 112(f) applies.\n\nIn short, what matters is whether the claim is written in such a way that a PHOSITA can\ntell what the claim element is, or if the PHOSITA could only tell what the claim element does.\nIf a claim element could equally have been written in the form \xe2\x80\x9ca means for [performing a\nfunction]\xe2\x80\x9d or \xe2\x80\x9ca [function] means,\xe2\x80\x9d such as \xe2\x80\x9ca means for fastening\xe2\x80\x9d or \xe2\x80\x9ca fastening means,\xe2\x80\x9d\nthis indicates that the claim element is only telling a PHOSITA what the element does. In\nsuch a case, it is a means-plus function element. And if it is a means-plus-function element,\nit is limited to the corresponding structure in the specification (or is indefinite if there is no\ncorresponding structure).\nThis means that if the claim term is \xe2\x80\x9ca fastening thing-a-ma-bob,\xe2\x80\x9d the relevant\nquestion is whether the term \xe2\x80\x9cthing-a-ma-bob\xe2\x80\x9d itself conveys some kind of structure to a\nPHOSITA, or whether it is simply a generic placeholder for \xe2\x80\x9cmeans.\xe2\x80\x9d If it conveys some kind\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n219\n\nof structure, this is not a means-plus-function element. If it is simply a generic placeholder,\nit is a means-plus-function element.\n\nPractice Problem: Does \xc2\xa7 112(f) Apply?\nConsider the cutlery apparatus at right, which combines a fork, spoon,\nand knife so that a person may eat and cut his food using one hand. The fork\nis on a retractable shaft, and the knife blade is on the bottom edge of the\nspoon. When activated, the spoon/knife combination rotates about the fork to\ncut the food item in which the fork is impaled. The first patent claim reads:\n1. A cutlery apparatus comprising:\n(a) a cutlery handle;\n(b) a fork movably engaged with the cutlery handle; and\n(c) a means for cutting disposed adjacent to the fork and rotatably\nattached to the cutlery handle.\nDoes \xc2\xa7 112(f) apply to \xe2\x80\x9ca means for cutting\xe2\x80\x9d? Would your analysis differ if \xe2\x80\x9ca\nmeans for cutting\xe2\x80\x9d in element (c) were replaced with the following language?3\n2. \xe2\x80\x9ca device configured for cutting\xe2\x80\x9d\n3. \xe2\x80\x9ca knife blade\xe2\x80\x9d\n4. \xe2\x80\x9ca knife blade means for cutting\xe2\x80\x9d\n\n2. Does a \xc2\xa7 112(f) Limitation Have a Corresponding Structure?\nIf a claim limitation triggers \xc2\xa7 112(f), it must be supported by a corresponding\nstructure in the specification, or else it is indefinite under \xc2\xa7 112(b). The structure \xe2\x80\x9cmust be\ndisclosed in the written description in such a manner that one skilled in the art will know\nand understand what structure corresponds to the means limitation.\xe2\x80\x9d Atmel Corp. v. Info.\nStorage Devices, 198 F.3d 1374, 1382 (Fed. Cir. 1999). Claims with means-plus-function\nelements are far more likely than claims drafted in other formats to be held indefinite. See\nJohn R. Allison & Lisa Larrimore Ouellette, How Courts Adjudicate Patent Definiteness and\nDisclosure, 65 Duke L.J. 609 (2016).\nWhether a means-plus-function claim element has a disclosed structure is closely\nrelated to the question of whether it is adequately described and enabled under \xc2\xa7 112(a), but\nthe issues are distinct: \xe2\x80\x9cThe inquiry is whether one of skill in the art would understand the\nspecification itself to disclose a structure, not simply whether that person would be capable\nof implementing a structure.\xe2\x80\x9d Biomedino v. Waters Techs., 490 F.3d 946 (Fed. Cir. 2007). For\n3\n\nSee https://www.uspto.gov/sites/default/files/documents/112f_cbt_slides.pdf (slide 21 et seq.).\n\n\x0c220\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nexample, a disclosure that an invention \xe2\x80\x9cmay be controlled by known differential pressure,\nvalving and control equipment\xe2\x80\x9d was not a disclosure of structure corresponding to the claimed\n\xe2\x80\x9ccontrol means for automatically operating valves,\xe2\x80\x9d even though this may have been\nsufficient to enable a PHOSITA to practice the invention. Id.\nInterpreting claim elements as triggering \xc2\xa7 112(f) and requiring a corresponding\nstructure has played a particularly important role in limiting broad software patent claims\nthat are written in functional terms. For computer-implemented inventions, the Federal\nCircuit has held that the specification must disclose an algorithm for performing the claimed\nfunction. A general-purpose microprocessor \xe2\x80\x9ccan serve as structure for a computerimplemented function only where the claimed function is \xe2\x80\x98coextensive\xe2\x80\x99 with a microprocessor\nitself,\xe2\x80\x9d such as for \xe2\x80\x9creceiving,\xe2\x80\x9d \xe2\x80\x9cstoring,\xe2\x80\x9d and \xe2\x80\x9cprocessing\xe2\x80\x9d data. EON Corp. IP Holdings v.\nAT&T Mobility, 785 F.3d 616, 622 (Fed. Cir. 2015). Otherwise, an algorithm is required,\nwhich may be expressed \xe2\x80\x9cin any understandable terms including as a mathematical formula,\nin prose, in a flow chart, or in any other manner that provides sufficient structure.\xe2\x80\x9d MPEP\n\xc2\xa7 2181.\nIn a prominent case, Aristocrat Technologies v. International Game Technology, 521\nF.3d 1328 (Fed. Cir. 2008), the Federal Circuit held a claim directed to an electronic slot\nmachine to be indefinite because the \xe2\x80\x9cgame control means\xe2\x80\x9d lacked corresponding structure:\nAristocrat contends that the language of claim 1 referring to \xe2\x80\x9cthe game\ncontrol means being arranged to pay a prize when a predetermined\ncombination of symbols is displayed in a predetermined arrangement of symbol\npositions selected by a player\xe2\x80\x9d implicitly discloses an algorithm for the\nmicroprocessor. That is, when the winning combination of symbols is\ndisplayed, the program should pay a prize. But that language simply describes\nthe function to be performed, not the algorithm by which it is performed.\nAristocrat\xe2\x80\x99s real point is that devising an algorithm to perform that function\nwould be within the capability of one of skill in the art, and therefore it was\nnot necessary for the patent to designate any particular algorithm to perform\nthe claimed function. As we have noted above, however, that argument is\ncontrary to this court\xe2\x80\x99s law. . . .\nFinally, Aristocrat contends that \xe2\x80\x9cthe written description delineates\nwhat constitutes \xe2\x80\x98appropriate programming\xe2\x80\x99 through the disclosed\nembodiments of the invention.\xe2\x80\x9d Again, however, the description of the\nembodiments is simply a description of the outcome of the claimed functions,\nnot a description of the structure, i.e., the computer programmed to execute a\nparticular algorithm. In making this argument, Aristocrat relies on Figure 1\nand Table 1 from the patent, which provide examples of how player selections\ntranslate to possible winning combinations. The corresponding portion of the\nwritten description contains mathematical descriptions of how many winning\ncombinations would be produced. Aristocrat refers to these examples as\n\xe2\x80\x9calgorithms.\xe2\x80\x9d The figures, tables, and related discussion, however, are not\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n221\n\nalgorithms. They are simply examples of the results of the operation of an\nunspecified algorithm. Like the mathematical equation set forth in claim 1,\nthese combinations of figures and tables are, at best, a description of the\nclaimed function of the means-plus-function claim. Aristocrat has elected to\nclaim using section 112 paragraph 6 and therefore must disclose corresponding\nstructure. It has disclosed, at most, pictorial and mathematical ways of\ndescribing the claimed function of the game control means. That is not enough\nto transform the disclosure of a general-purpose microprocessor into the\ndisclosure of sufficient structure.\nMany software patents have been invalidated under the same logic as Aristocrat, but\nsome commentators have argued for more vigorous enforcement of these requirements.\nConsider the argument from Mark A. Lemley, Software Patents and the Return of Functional\nClaiming, 2013 Wis. L. Rev. 905 (2013):\nIt is broad functional claiming of software inventions that is arguably\nresponsible for most of the well-recognized problems with software patents.\nWriting software can surely be an inventive act, and not all new programs or\nprogramming techniques are obvious to outside observers. So some software\ninventions surely qualify for patent protection. Even if there are too many\nsoftware patents, the patent thicket and patent troll problems won\xe2\x80\x99t go away\nif we simply reduce the number of software patents somewhat. And while the\nlack of clear boundaries is a very real problem, the most important problem a\nproduct-making software company faces today is not suits over claims with\nunclear boundaries but suits over claims that purport to cover any possible\nway of achieving a goal. The fact that there are lots of patents with broad\nclaims purporting to cover those goals creates a patent thicket. And while the\nbreadth of those claims should (and does) make them easier to invalidate, the\nlegal deck is stacked against companies who seek to invalidate overbroad\npatent claims.\nThis is a problem primarily in software. We wouldn\xe2\x80\x99t permit in any\nother area of technology the sorts of claims that appear in thousands of\ndifferent software patents. Pharmaceutical inventors don\xe2\x80\x99t claim \xe2\x80\x9can\narrangement of atoms that cures cancer,\xe2\x80\x9d asserting their patent against any\nchemical, whatever its form, that achieves that purpose. Indeed, the whole idea\nseems ludicrous. . . . But in software, as we will see, claims of just that form\nare everywhere.\nWhile there are some arguments in favor of broad functional claims in\nsoftware, they are insufficient to justify the costs they impose. As it did\nseventy-five years ago, the law should rein in efforts to claim to own a goal\nitself rather than a particular means of achieving that goal. Doing so should\nnot require legislative action; it is enough to interpret existing Section 112(f)\nin light of the realities of software and modern patent practice. And so, with\n\n\x0c222\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\none fell swoop\xe2\x80\x94without changing the patent statute and without invalidating\nexisting patents\xe2\x80\x94we may be able to solve most of the software patent problem.\n\nDo you agree with Professor Lemley that there is a software patent problem? If so, do you\nagree that a stricter interpretation of \xc2\xa7 112(f) would help address it? In the next chapter, we\nwill discuss patentable subject matter, a doctrine that has ballooned in recent years in part\nto deal with a perceived problem with software patents of dubious validity asserted by \xe2\x80\x9cpatent\ntrolls.\xe2\x80\x9d As you learn about patentable subject matter, consider whether you think\nindefiniteness is a better tool to address these policy concerns.\n\nPractice Problem: Definiteness and Functional Claims\nYour firm\xe2\x80\x99s client, Life360, makes a smartphone application that allows users to see\nwhere their friends and family are on a private map, stay in touch with group and one-to-one\nmessaging, and get help in an emergency. Life360 has been sued for infringement of patent\n7,031,728, which has an effective filing date in 2004. As explained in the abstract, the\ninvention allows \xe2\x80\x9ccellular phone users to monitor each other\xe2\x80\x99s location and status, to initiate\ncellular phone calls by touching a symbol on the display screen with a stylus or finger which\ncan also include conferencing calling.\xe2\x80\x9d Here is the asserted claim:\n3. A communication system to provide a cellular phone network for a group of\nparticipants, each of the participants having an individual portable cellular\nphone that includes a CPU and a GPS navigational system that can accurately\ndetermine the location of each cellular phone, each of the cellular phones in the\ncommunications net of participants containing:\n(a) said CPU and memory;\n(b) a touch screen display;\n(c) a symbol generator in said CPU that can generate symbols that represent\neach of the participants\xe2\x80\x99 cell phones in the communication network on the\ntouch screen display;\n(d) a database that stores the individual telephone numbers related to each of\nthe symbols;\n(e) cellular phone call initiating software in said CPU connected to the\ntelephone number database and the symbols on the touch screen display,\nwhereby touching an individual symbol will automatically initiate a cellular\nphone telephone call to the user represented by the symbol; and\n(f) said display including databases that display geographical information that\nincludes showing the geographical location of each of the symbols representing\nparticipants in the communication network, fixed locations, and entered items\nof interest.\n\n\x0cDEFINITENESS & FUNCTIONAL CLAIMING\n\n223\n\nA partner at your law firm has asked you to work with another junior associate to see\nif there is a viable challenge to this claim\xe2\x80\x99s validity using 35 U.S.C. \xc2\xa7 112(b), (f). How would\nyou analyze this problem? Below are figure 1 from the \xe2\x80\x99728 patent and the most relevant\nexcerpts from the specification.\nThe heart of the invention lies in the software\napplications provided in the system. Mounted\ninside housing 12 as part of the PDA is the\ndisplay function screen and the CPU. The CPU\nincludes databases that provide for a\ngeographical map and georeferenced entities\nthat is shown as display portion 16 b that\nincludes as part of the display various areas of\ninterest in the particular local map section.\n\nReferring now to the drawings and, in\nparticular, FIG. 1, the present invention is\nshown generally at 10 that includes a small\nhandheld cellular phone/PDA communications\nsystem in housing 12 that includes an on/off\npower switch 19, a microphone 38, and an LCD\ndisplay 16 that is also a touch screen system.\nThe small area 16 a is the Navigation Bar that\ndepicts the telephone, GPS and other status\ndata and the active software. With the touch\nscreen system, the screen symbols are entered\nthrough GPS inputs or by the operator using a\nstylus or finger 14 by manipulatively directing\nthe stylus or finger 14 to literally touch display\nscreen 16.\nPDA/cellular phone units such as these are\ncurrently on sale and sold as a complete unit\n(or with an external connected GPS) that can\nbe used for cellular telephone calls and sending\ncellular SMS and TCP/IP or other messages\nusing the PDA\xe2\x80\x99s display and computer.\n\nWhen looking at FIG. 1, permanent\ngeographical locations and buildings are\nshown. For example, the police station is shown\nand when the symbol is touched by the stylus\nor finger, the latitude and longitude of the\nsymbol\xe2\x80\x99s location, as shown in display section\n16 c, is displayed at the bottom left of the\nscreen. The bottom right side of display 16 c is\na multifunction inset area that can contain a\nvariety of information including: a) a list of the\ncommunication link participants; b) a list of\nreceived messages; c) a map, aerial photograph\nor satellite image with an indication of the\nzoom and off set location of the main map\ndisplay, which is indicated by a square that\ndepicts the area actually displayed in the main\ngeographical screen 16 b; d) applicable status\ninformation; and e) a list of the communication\nnet participants.\nAlso shown on the display screen 16,\nspecifically the geographical display 16 b, is a\npair of different looking symbols 30 and 34, a\nsmall triangle and a small square, which are\nnot labeled. These symbols 30 and 34 can\nrepresent communication net cellular phone\nusers in the displayed geographical area that\nare part of the overall cellular phone\ncommunications net used in this invention\nwherein each of the users has a similar cellular\nphone to the one shown in FIG. 1. The latitude\nand longitude of symbol 30 is associated within\na database along with a specific phone number.\nThe screen display 16 b, which is a touch\n\n\x0c224\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nscreen, provides x and y coordinates of the\nscreen 16 b to the CPU\xe2\x80\x99s software. The software\nhas an algorithm that relates the x and y\ncoordinates to latitude and longitude and can\naccess a communications net participant\xe2\x80\x99s\nsymbol or an entity\xe2\x80\x99s symbol as being the one\nclosest to that point.\nIn order to initiate a telephone call to the\ncellular phone user represented by symbol\n(triangle) 30 at a specific GPS provided latitude\nand longitude which has been sent to the\ncellular phone shown in FIG. 1, the operator or\ninitiator of what we call cellular phone one in\nFIG. 1 can take the stylus or finger 14, touch\nthe triangle 30 with the stylus or finger, and\nthen touch a \xe2\x80\x9ccall\xe2\x80\x9d software switch from a\n\nmatrix of displayed switches that will overlay\nthe display area 16 c and immediately the\ncellular phone one will initiate a cellular phone\ntelephone call to the cellular phone user at the\nlocation shown that represents symbol 30. A\nsecond cellular phone user is represented by\nsymbol 34 which is a small square but could be\nany shape or icon to represent an individual\ncellular phone unit in the display area. The\nring 32 around symbol 30 indicates that the\nsymbol has been touched and that a telephone\ncall can be initiated by touching the soft switch\nthat says \xe2\x80\x9ccall.\xe2\x80\x9d When this is done, the\ntelephone call is placed. Another type of\nsymbolic display can indicate that the call is in\neffect.\n\nSee Advanced Ground Info. Sys., Inc. v. Life360, Inc., 830 F.3d 1341 (Fed. Cir. 2016).\n\n\x0cPATENTABLE SUBJECT MATTER\n\n225\n\n6. Patentable Subject Matter\nConsider the patentability doctrines covered thus far. To be valid, a patent must claim\nan invention that is new and nonobvious. The invention must be useful. It must be described\nin the specification such that a person skilled in the art would know how to make and use it.\nThe claims must provide reasonable certainty as to what they cover. One might imagine that\nwould be it; so long as a patent satisfied those requirements, it would be considered valid.\nYet this has never been the law. U.S. patent law has always required that an invention\nalso fall into one or more statutory categories. Even if an invention is new and useful, if it\ndoes not fit within one of those categories, it cannot be patented. This is called the doctrine\nof \xe2\x80\x9cpatentable subject matter.\xe2\x80\x9d Section 101 of the Patent Act provides the relevant statutory\nlanguage:\n\n35 U.S.C. \xc2\xa7 101\nWhoever invents or discovers any new and useful process, machine,\nmanufacture, or composition of matter, or any new and useful improvement\nthereof, may obtain a patent therefor, subject to the conditions and\nrequirements of this title.\nAs a matter of the plain text, it is hard to imagine any invention that does not fall into\nthe broad categories of \xe2\x80\x9cprocess, machine, manufacture, or composition of matter.\xe2\x80\x9d For\nstarters, what physical substance is not a \xe2\x80\x9ccomposition of matter\xe2\x80\x9d? Even atoms, the building\nblocks of matter, are themselves compositions of other matter\xe2\x80\x94protons, neutrons, and\nelectrons. Protons and neutrons are themselves compositions of quarks. And when it comes\nto intangible inventions, what type of invention could not be described as a \xe2\x80\x9cprocess\xe2\x80\x9d? In\naddition, the statutory text indicates that patents should be available for those who merely\n\xe2\x80\x9cdiscover[]\xe2\x80\x9d something new and useful. Congress has enacted separate bars on patenting\ninventions \xe2\x80\x9cuseful solely in the utilization of special nuclear material or atomic energy in an\natomic weapon,\xe2\x80\x9d 42 U.S.C. \xc2\xa7 2181(a), and inventions \xe2\x80\x9cdirected to or encompassing a human\norganism,\xe2\x80\x9d America Invents Act, Pub. L. No. 112-29, \xc2\xa7 33(a), 125 Stat. 284 (2011). But the\nPatent Act itself imposes no apparent limits.\nThe broad text notwithstanding, the courts have long recognized several implicit\nexceptions to the statutory categories of patentable subject matter. The Supreme Court has\nheld that \xe2\x80\x9claws of nature,\xe2\x80\x9d \xe2\x80\x9cnatural phenomena,\xe2\x80\x9d and \xe2\x80\x9cabstract ideas\xe2\x80\x9d cannot be patented,\neven if they are new and useful. In recent years the boundaries of these categories have\nexpanded, and in some areas of technology the limitations on patentable subject matter have\nbecome much more important. This shift has taken place across four recent Supreme Court\ncases over a five-year period: Bilski v. Kappos, 561 U.S. 593 (2010); Mayo Collaborative\nServices v. Prometheus Laboratories, 566 U.S. 66 (2012); Association for Molecular Pathology\n\n\x0c226\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nv. Myriad Genetics, Inc., 569 U.S. 576 (2013); and Alice Corp. v. CLS Bank, 573 U.S. 208\n(2014). We will read the last three of those cases below. Those cases have had a dramatic\nimpact on the patentability of a range of inventions, particularly computer- and internetrelated methods.\nWhat purpose is served by these exclusions from patentable subject matter? The\nSupreme Court has framed the doctrine in utilitarian terms, asserting that laws of nature,\nnatural phenomena, and abstract ideas \xe2\x80\x9care the basic tools of scientific and technological\nwork\xe2\x80\x9d and that patents on these tools \xe2\x80\x9cmight tend to impede innovation more than it would\ntend to promote it.\xe2\x80\x9d Alice, 573 U.S. at 216. There is little empirical support for these empirical\njudgments, and many commentators have expressed skepticism that the doctrine of\npatentable subject matter can accomplish patent law\xe2\x80\x99s utilitarian goals better than the other\ndoctrines we have covered so far. Patentable subject matter has enabled faster patent\ninvalidations, as the legal issues can often be resolved on a motion to dismiss without the\nneed for expensive discovery, but stakeholders are divided on whether this is a good thing.\nTo implement the patentable subject matter exclusions, the Supreme Court has\ncreated a new two-step test, known as the \xe2\x80\x9cAlice/Mayo test\xe2\x80\x9d after the two cases in which it\nwas developed. That test operates as follows:\n\xe2\x97\x8f\n\nStep 1: Determine whether the claim in question is \xe2\x80\x9cdirected to\xe2\x80\x9d a natural law, product\nof nature, or abstract idea. If the claim is not directed to one of these exemptions, the\nclaim is patentable subject matter under \xc2\xa7 101.\n\n\xe2\x97\x8f\n\nStep 2: If the claim is directed to one of the exempt categories, remove the natural\nlaw, product of nature, or abstract idea from the claim and examine what remains. If\nthe rest of the claim includes an \xe2\x80\x9cinventive concept\xe2\x80\x9d such that the claim as a whole\n\xe2\x80\x9camounts to significantly more\xe2\x80\x9d than a patent on the ineligible concept, the claim is\npatentable under \xc2\xa7 101.1\n\nOf course, this simple statement of the two-step test raises as many questions as it\nanswers, including what it means for a claim to be \xe2\x80\x9cdirected to\xe2\x80\x9d a natural law, product of\nnature, or abstract idea, and what it means for a claim to include an \xe2\x80\x9cinventive concept.\xe2\x80\x9d This\nchapter explores the law of patentable subject matter and attempts to answer those\nquestions. It also examines the extent to which this doctrine constrains patenting in various\ntechnological fields. We will begin with patents on laws of nature and products of nature, and\nthen we consider abstract ideas.\nAs you read these cases and materials, consider the following questions: What is the\ndoctrine of patentable subject matter accomplishing that the doctrines of novelty,\nnonobviousness, utility, and sufficient disclosure are not? What additional purposes or\npolicies is it serving, and what policies or purposes might it be hindering? If answering these\nIn USPTO materials such as the MPEP, these two steps are referred to as \xe2\x80\x9cStep 2A\xe2\x80\x9d and\n\xe2\x80\x9cStep 2B,\xe2\x80\x9d with \xe2\x80\x9cStep 1\xe2\x80\x9d being the initial question of whether the claim is to a process, machine,\nmanufacture, or composition of matter. We will instead use the terminology of the courts.\n1\n\n\x0cPATENTABLE SUBJECT MATTER\n\n227\n\nquestions seems challenging, you are not alone. Patentable subject matter is probably the\nmost contentious patent law doctrine today, with many advocating for judicial or legislative\nrevision. But the Supreme Court has repeatedly denied certiorari in other patentable subject\nmatter cases, and a push for legislative reform died in 2019 after a failure to reach\nstakeholder consensus. As you read this chapter, consider whether you think patentable\nsubject matter reform is warranted.\n\nA. Laws of Nature, Natural Phenomena, and Products of\nNature\nThe modern story of patentable subject matter begins with Bilski v. Kappos, 561 U.S.\n593 (2010), in which the Supreme Court reaffirmed that abstract ideas are unpatentable. But\nBilski did not provide a workable test for determining the limits of patentable subject matter.\nThe Court took up that problem two years later in Mayo Collaborative Services v. Prometheus\nLaboratories, 566 U.S. 66 (2012).\nMayo concerned a patent on a medical diagnostic method, which implicates the\npatentable subject matter exception for \xe2\x80\x9claws of nature.\xe2\x80\x9d In this section, we take up the law\ngoverning laws of nature, beginning with Mayo, followed by the subcategory of \xe2\x80\x9cproducts of\nnature.\xe2\x80\x9d Cases involving these types of inventions make up a small but important fraction of\nall of the patentable subject matter cases adjudicated by the federal courts over the past five\nyears. (The majority involve the exception for \xe2\x80\x9cabstract ideas,\xe2\x80\x9d which we take up in the next\nsection.) But more importantly, these cases were the initial vehicle for the most important\ndoctrinal development in patent law of the past several decades. Mayo is the case in which\nthat development first picked up steam.\n\nMayo Collaborative Services v. Prometheus Laboratories, 566 U.S. 66 (2012)\nJustice Stephen Breyer delivered the opinion of the Court.\nThe Court has long held that [\xc2\xa7 101] contains an important implicit exception. \xe2\x80\x9c[L]aws\nof nature, natural phenomena, and abstract ideas\xe2\x80\x9d are not patentable. Diamond v. Diehr, 450\nU.S. 175 (1981); see also O\xe2\x80\x99Reilly v. Morse, 15 How. 62 (1854). Thus, the Court has written\nthat \xe2\x80\x9ca new mineral discovered in the earth or a new plant found in the wild is not patentable\nsubject matter. Likewise, Einstein could not patent his celebrated law that E=mc2; nor could\nNewton have patented the law of gravity. Such discoveries are \xe2\x80\x98manifestations of . . . nature,\nfree to all men and reserved exclusively to none.\xe2\x80\x99\xe2\x80\x9d Diamond v. Chakrabarty, 447 U.S. 303,\n309 (1980).\n\xe2\x80\x9cPhenomena of nature, though just discovered, mental processes, and abstract\nintellectual concepts are not patentable, as they are the basic tools of scientific and\ntechnological work.\xe2\x80\x9d Gottschalk v. Benson, 409 U.S. 63 (1972). And monopolization of those\n\n\x0c228\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ntools through the grant of a patent might tend to impede innovation more than it would tend\nto promote it.\nThe Court has recognized, however, that too broad an interpretation of this\nexclusionary principle could eviscerate patent law. For all inventions at some level embody,\nuse, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. Thus,\nin Diehr the Court pointed out that \xe2\x80\x9ca process is not unpatentable simply because it contains\na law of nature or a mathematical algorithm.\xe2\x80\x9d 450 U.S. at 187. It added that \xe2\x80\x9can application\nof a law of nature or mathematical formula to a known structure or process may well be\ndeserving of patent protection.\xe2\x80\x9d Id. at 187.\nStill, as the Court has also made clear, to transform an unpatentable law of nature\ninto a patent-eligible application of such a law, one must do more than simply state the law\nof nature while adding the words \xe2\x80\x9capply it.\xe2\x80\x9d See, e.g., Benson, supra, at 71\xe2\x80\x9372.\nThe case before us lies at the intersection of these basic principles. It concerns patent\nclaims covering processes that help doctors who use thiopurine drugs to treat patients with\nautoimmune diseases determine whether a given dosage level is too low or too high. The\nclaims purport to apply natural laws describing the relationships between the concentration\nin the blood of certain thiopurine metabolites and the likelihood that the drug dosage will be\nineffective or induce harmful side effects. We must determine whether the claimed processes\nhave transformed these unpatentable natural laws into patent-eligible applications of those\nlaws. We conclude that they have not done so and that therefore the processes are not\npatentable.\nOur conclusion rests upon an examination of the particular claims before us in light\nof the Court\xe2\x80\x99s precedents. Those cases warn us against interpreting patent statutes in ways\nthat make patent eligibility \xe2\x80\x9cdepend simply on the draftsman\xe2\x80\x99s art\xe2\x80\x9d without reference to the\n\xe2\x80\x9cprinciples underlying the prohibition against patents for [natural laws].\xe2\x80\x9d Parker v. Flook,\n437 U.S. 584, 593 (1978). They warn us against upholding patents that claim processes that\ntoo broadly pre-empt the use of a natural law. Morse, supra, at 112\xe2\x80\x93120; Benson, supra, at\n71\xe2\x80\x9372. And they insist that a process that focuses upon the use of a natural law also contain\nother elements or a combination of elements, sometimes referred to as an \xe2\x80\x9cinventive concept,\xe2\x80\x9d\nsufficient to ensure that the patent in practice amounts to significantly more than a patent\nupon the natural law itself. Flook, supra, at 594; see also Bilski v. Kappos, 561 U.S. 593, at\n610\xe2\x80\x9311 (\xe2\x80\x9c[T]he prohibition against patenting abstract ideas cannot be circumvented by\nattempting to limit the use of the formula to a particular technological environment or adding\ninsignificant postsolution activity.\xe2\x80\x9d).\nWe find that the process claims at issue here do not satisfy these conditions. In\nparticular, the steps in the claimed processes (apart from the natural laws themselves)\ninvolve well-understood, routine, conventional activity previously engaged in by researchers\nin the field. At the same time, upholding the patents would risk disproportionately tying up\nthe use of the underlying natural laws, inhibiting their use in the making of further\ndiscoveries.\n\n\x0cPATENTABLE SUBJECT MATTER\n\n229\n\nI\nA\nThe patents before us concern the use of thiopurine drugs in the treatment of\nautoimmune diseases, such as Crohn\xe2\x80\x99s disease and ulcerative colitis. When a patient ingests\na thiopurine compound, his body metabolizes the drug, causing metabolites to form in his\nbloodstream. Because the way in which people metabolize thiopurine compounds varies, the\nsame dose of a thiopurine drug affects different people differently, and it has been difficult\nfor doctors to determine whether for a particular patient a given dose is too high, risking\nharmful side effects, or too low, and so likely ineffective.\nAt the time the discoveries embodied in the patents were made, scientists already\nunderstood that the levels in a patient\xe2\x80\x99s blood of certain metabolites, including, in particular,\n6\xe2\x80\x93thioguanine and its nucleotides (6\xe2\x80\x93TG) and 6\xe2\x80\x93methyl\xe2\x80\x93mercaptopurine (6\xe2\x80\x93MMP), were\ncorrelated with the likelihood that a particular dosage of a thiopurine drug could cause harm\nor prove ineffective. But those in the field did not know the precise correlations between\nmetabolite levels and likely harm or ineffectiveness. The patent claims at issue here set forth\nprocesses embodying researchers\xe2\x80\x99 findings that identified these correlations with some\nprecision.\nMore specifically, the patents\xe2\x80\x94U.S. Patent No. 6,355,623 and U.S. Patent No.\n6,680,302\xe2\x80\x94embody findings that concentrations in a patient\xe2\x80\x99s blood of 6\xe2\x80\x93TG or of 6\xe2\x80\x93MMP\nmetabolite beyond a certain level (400 and 7,000 picomoles (pmol) per 8\xc3\x97108 red blood cells,\nrespectively) indicate that the dosage is likely too high for the patient, while concentrations\nin the blood of 6\xe2\x80\x93TG metabolite lower than a certain level (about 230 pmol per 8\xc3\x97108 red\nblood cells) indicate that the dosage is likely too low to be effective.\nThe patent claims seek to embody this research in a set of processes. Like the Federal\nCircuit we take as typical claim 1 of the \xe2\x80\x99623 patent, which describes one of the claimed\nprocesses as follows:\nA method of optimizing therapeutic efficacy for treatment of an immunemediated gastrointestinal disorder, comprising:\n(a) administering a drug providing 6\xe2\x80\x93thioguanine to a subject having said\nimmune-mediated gastrointestinal disorder; and\n(b) determining the level of 6\xe2\x80\x93thioguanine in said subject having said immunemediated gastrointestinal disorder,\nwherein the level of 6\xe2\x80\x93thioguanine less than about 230 pmol per 8\xc3\x97108 red\nblood cells indicates a need to increase the amount of said drug subsequently\nadministered to said subject and\n\n\x0c230\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nwherein the level of 6\xe2\x80\x93thioguanine greater than about 400 pmol per 8\xc3\x97108 red\nblood cells indicates a need to decrease the amount of said drug subsequently\nadministered to said subject.\n\nFor present purposes we may assume that the other claims in the patents do not differ\nsignificantly from claim 1.\nB\nRespondent, Prometheus Laboratories, Inc., is the sole and exclusive licensee of the\n\xe2\x80\x99623 and \xe2\x80\x99302 patents. It sells diagnostic tests that embody the processes the patents describe.\nFor some time petitioners, Mayo Clinic Rochester and Mayo Collaborative Services\n(collectively Mayo), bought and used those tests. But in 2004 Mayo announced that it\nintended to begin using and selling its own test\xe2\x80\x94a test using somewhat higher metabolite\nlevels to determine toxicity (450 pmol per 8\xc3\x97108 for 6\xe2\x80\x93TG and 5,700 pmol per 8\xc3\x97108 for 6\xe2\x80\x93\nMMP). Prometheus then brought this action claiming patent infringement.\n[The district court found Mayo\xe2\x80\x99s test infringing but granted summary judgment for\nMayo on the grounds that the claims were not patent eligible. The Federal Circuit reversed,\nand the Supreme Court granted certiorari.]\nII\nPrometheus\xe2\x80\x99 patents set forth laws of nature\xe2\x80\x94namely, relationships between\nconcentrations of certain metabolites in the blood and the likelihood that a dosage of a\nthiopurine drug will prove ineffective or cause harm. Claim 1, for example, states that if the\nlevels of 6\xe2\x80\x93TG in the blood (of a patient who has taken a dose of a thiopurine drug) exceed\nabout 400 pmol per 8\xc3\x97108 red blood cells, then the administered dose is likely to produce toxic\nside effects. While it takes a human action (the administration of a thiopurine drug) to trigger\na manifestation of this relation in a particular person, the relation itself exists in principle\napart from any human action. The relation is a consequence of the ways in which thiopurine\ncompounds are metabolized by the body\xe2\x80\x94entirely natural processes. And so a patent that\nsimply describes that relation sets forth a natural law.\nThe question before us is whether the claims do significantly more than simply\ndescribe these natural relations. To put the matter more precisely, do the patent claims add\nenough to their statements of the correlations to allow the processes they describe to qualify\nas patent-eligible processes that apply natural laws? We believe that the answer to this\nquestion is no.\nA\nIf a law of nature is not patentable, then neither is a process reciting a law of nature,\nunless that process has additional features that provide practical assurance that the process\nis more than a drafting effort designed to monopolize the law of nature itself. A patent, for\nexample, could not simply recite a law of nature and then add the instruction \xe2\x80\x9capply the law.\xe2\x80\x9d\nEinstein, we assume, could not have patented his famous law by claiming a process consisting\n\n\x0cPATENTABLE SUBJECT MATTER\n\n231\n\nof simply telling linear accelerator operators to refer to the law to determine how much\nenergy an amount of mass has produced (or vice versa). Nor could Archimedes have secured\na patent for his famous principle of flotation by claiming a process consisting of simply telling\nboat builders to refer to that principle in order to determine whether an object will float.\nWhat else is there in the claims before us? The process that each claim recites tells\ndoctors interested in the subject about the correlations that the researchers discovered. In\ndoing so, it recites an \xe2\x80\x9cadministering\xe2\x80\x9d step, a \xe2\x80\x9cdetermining\xe2\x80\x9d step, and a \xe2\x80\x9cwherein\xe2\x80\x9d step. These\nadditional steps are not themselves natural laws but neither are they sufficient to transform\nthe nature of the claim.\nFirst, the \xe2\x80\x9cadministering\xe2\x80\x9d step simply refers to the relevant audience, namely, doctors\nwho treat patients with certain diseases with thiopurine drugs. That audience is a preexisting audience; doctors used thiopurine drugs to treat patients suffering from autoimmune\ndisorders long before anyone asserted these claims. In any event, the \xe2\x80\x9cprohibition against\npatenting abstract ideas cannot be circumvented by attempting to limit the use of the formula\nto a particular technological environment.\xe2\x80\x9d Bilski, supra, at 610\xe2\x80\x9311.\nSecond, the \xe2\x80\x9cwherein\xe2\x80\x9d clauses simply tell a doctor about the relevant natural laws, at\nmost adding a suggestion that he should take those laws into account when treating his\npatient. That is to say, these clauses tell the relevant audience about the laws while trusting\nthem to use those laws appropriately where they are relevant to their decisionmaking (rather\nlike Einstein telling linear accelerator operators about his basic law and then trusting them\nto use it where relevant).\nThird, the \xe2\x80\x9cdetermining\xe2\x80\x9d step tells the doctor to determine the level of the relevant\nmetabolites in the blood, through whatever process the doctor or the laboratory wishes to use.\nAs the patents state, methods for determining metabolite levels were well known in the art.\nIndeed, scientists routinely measured metabolites as part of their investigations into the\nrelationships between metabolite levels and efficacy and toxicity of thiopurine compounds.\nThus, this step tells doctors to engage in well-understood, routine, conventional activity\npreviously engaged in by scientists who work in the field. Purely \xe2\x80\x9cconventional or obvious\xe2\x80\x9d\n\xe2\x80\x9c[pre]-solution activity\xe2\x80\x9d is normally not sufficient to transform an unpatentable law of nature\ninto a patent-eligible application of such a law. Flook, 437 U.S. at 590.\nFourth, to consider the three steps as an ordered combination adds nothing to the\nlaws of nature that is not already present when the steps are considered separately. Anyone\nwho wants to make use of these laws must first administer a thiopurine drug and measure\nthe resulting metabolite concentrations, and so the combination amounts to nothing\nsignificantly more than an instruction to doctors to apply the applicable laws when treating\ntheir patients.\nThe upshot is that the three steps simply tell doctors to gather data from which they\nmay draw an inference in light of the correlations. To put the matter more succinctly, the\nclaims inform a relevant audience about certain laws of nature; any additional steps consist\nof well-understood, routine, conventional activity already engaged in by the scientific\n\n\x0c232\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ncommunity; and those steps, when viewed as a whole, add nothing significant beyond the\nsum of their parts taken separately. For these reasons we believe that the steps are not\nsufficient to transform unpatentable natural correlations into patentable applications of\nthose regularities.\nB\n1\nA more detailed consideration of the controlling precedents reinforces our conclusion.\nThe cases most directly on point are Diehr and Flook, two cases in which the Court reached\nopposite conclusions about the patent eligibility of processes that embodied the equivalent of\nnatural laws. The Diehr process (held patent eligible) set forth a method for molding raw,\nuncured rubber into various cured, molded products. The process used a known mathematical\nequation, the Arrhenius equation, to determine when (depending upon the temperature\ninside the mold, the time the rubber had been in the mold, and the thickness of the rubber)\nto open the press. It consisted in effect of the steps of: (1) continuously monitoring the\ntemperature on the inside of the mold, (2) feeding the resulting numbers into a computer,\nwhich would use the Arrhenius equation to continuously recalculate the mold-opening time,\nand (3) configuring the computer so that at the appropriate moment it would signal \xe2\x80\x9ca device\xe2\x80\x9d\nto open the press. Diehr, 450 U.S. at 177\xe2\x80\x9379.\nThe Court pointed out that the basic mathematical equation, like a law of nature, was\nnot patentable. But it found the overall process patent eligible because of the way the\nadditional steps of the process integrated the equation into the process as a whole. Those\nsteps included \xe2\x80\x9cinstalling rubber in a press, closing the mold, constantly determining the\ntemperature of the mold, constantly recalculating the appropriate cure time through the use\nof the formula and a digital computer, and automatically opening the press at the proper\ntime.\xe2\x80\x9d Id. at 187. It nowhere suggested that all these steps, or at least the combination of\nthose steps, were in context obvious, already in use, or purely conventional. And so the\npatentees did not \xe2\x80\x9cseek to pre-empt the use of [the] equation,\xe2\x80\x9d but sought \xe2\x80\x9conly to foreclose\nfrom others the use of that equation in conjunction with all of the other steps in their claimed\nprocess.\xe2\x80\x9d Ibid. These other steps apparently added to the formula something that in terms of\npatent law\xe2\x80\x99s objectives had significance\xe2\x80\x94they transformed the process into an inventive\napplication of the formula.\nThe process in Flook (held not patentable) provided a method for adjusting \xe2\x80\x9calarm\nlimits\xe2\x80\x9d in the catalytic conversion of hydrocarbons. Certain operating conditions (such as\ntemperature, pressure, and flow rates), which are continuously monitored during the\nconversion process, signal inefficiency or danger when they exceed certain \xe2\x80\x9calarm limits.\xe2\x80\x9d\nThe claimed process amounted to an improved system for updating those alarm limits\nthrough the steps of: (1) measuring the current level of the variable, e.g., the temperature;\n(2) using an apparently novel mathematical algorithm to calculate the current alarm limits;\nand (3) adjusting the system to reflect the new alarm-limit values. 437 U.S. at 585\xe2\x80\x9387.\n\n\x0cPATENTABLE SUBJECT MATTER\n\n233\n\nThe Court, as in Diehr, pointed out that the basic mathematical equation, like a law\nof nature, was not patentable. But it characterized the claimed process as doing nothing other\nthan \xe2\x80\x9cprovid[ing] a[n unpatentable] formula for computing an updated alarm limit.\xe2\x80\x9d Id. at\n586. Unlike the process in Diehr, it did not \xe2\x80\x9cexplain how the variables used in the formula\nwere to be selected, nor did the [claim] contain any disclosure relating to chemical processes\nat work or the means of setting off an alarm or adjusting the alarm limit.\xe2\x80\x9d Diehr, supra, at\n192, n.14. And so the other steps in the process did not limit the claim to a particular\napplication. Moreover, \xe2\x80\x9c[t]he chemical processes involved in catalytic conversion of\nhydrocarbons[,] . . . the practice of monitoring the chemical process variables, the use of alarm\nlimits to trigger alarms, the notion that alarm limit values must be recomputed and\nreadjusted, and the use of computers for \xe2\x80\x98automatic monitoring-alarming\xe2\x80\x99\xe2\x80\x9d were all \xe2\x80\x9cwell\nknown,\xe2\x80\x9d to the point where, putting the formula to the side, there was no \xe2\x80\x9cinventive concept\xe2\x80\x9d\nin the claimed application of the formula. Flook, supra, at 594. \xe2\x80\x9c[P]ost-solution activity\xe2\x80\x9d that\nis purely \xe2\x80\x9cconventional or obvious,\xe2\x80\x9d the Court wrote, \xe2\x80\x9ccan[not] transform an unpatentable\nprinciple into a patentable process.\xe2\x80\x9d Id. at 589.\nThe claim before us presents a case for patentability that is weaker than the (patenteligible) claim in Diehr and no stronger than the (unpatentable) claim in Flook. Beyond\npicking out the relevant audience, namely, those who administer doses of thiopurine drugs,\nthe claim simply tells doctors to: (1) measure (somehow) the current level of the relevant\nmetabolite, (2) use particular (unpatentable) laws of nature (which the claim sets forth) to\ncalculate the current toxicity/inefficacy limits, and (3) reconsider the drug dosage in light of\nthe law. These instructions add nothing specific to the laws of nature other than what is wellunderstood, routine, conventional activity, previously engaged in by those in the field. And\nsince they are steps that must be taken in order to apply the laws in question, the effect is\nsimply to tell doctors to apply the law somehow when treating their patients. The process in\nDiehr was not so characterized; that in Flook was characterized in roughly this way.\n2\nOther cases offer further support for the view that simply appending conventional\nsteps, specified at a high level of generality, to laws of nature, natural phenomena, and\nabstract ideas cannot make those laws, phenomena, and ideas patentable. This Court has\npreviously discussed in detail an English case, Neilson, which involved a patent claim that\nposed a legal problem very similar to the problem now before us. The patent applicant there\nasserted a claim\nfor the improved application of air to produce heat in fires, forges, and\nfurnaces, where a blowing apparatus is required. [The invention] was to be\napplied as follows: The blast or current of air produced by the blowing\napparatus was to be passed from it into an air-vessel or receptacle made\nsufficiently strong to endure the blast; and through or from that vessel or\nreceptacle by means of a tube, pipe, or aperture into the fire, the receptacle be\nkept artificially heated to a considerable temperature by heat externally\napplied.\n\n\x0c234\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nMorse, 15 How., at 114\xe2\x80\x93115. The English court concluded that the claimed process did more\nthan simply instruct users to use the principle that hot air promotes ignition better than cold\nair, since it explained how the principle could be implemented in an inventive way. Baron\nParke wrote (for the court):\nIt is very difficult to distinguish [Neilson\xe2\x80\x99s claim] from the specification of a\npatent for a principle, and this at first created in the minds of some of the court\nmuch difficulty; but after full consideration, we think that the plaintiff does\nnot merely claim a principle, but a machine embodying a principle, and a very\nvaluable one. We think the case must be considered as if the principle being\nwell known, the plaintiff had first invented a mode of applying it by a\nmechanical apparatus to furnaces; and his invention then consists in this\xe2\x80\x94by\ninterposing a receptacle for heated air between the blowing apparatus and the\nfurnace. In this receptacle he directs the air to be heated by the application of\nheat externally to the receptacle, and thus he accomplishes the object of\napplying the blast, which was before of cold air, in a heated state to the furnace.\nNeilson v. Harford, Webster\xe2\x80\x99s Patent Cases, at 371. Thus, the claimed process included not\nonly a law of nature but also several unconventional steps (such as inserting the receptacle,\napplying heat to the receptacle externally, and blowing the air into the furnace) that confined\nthe claims to a particular, useful application of the principle.\nIn Bilski the Court considered claims covering a process for hedging risks of price\nchanges by, for example, contracting to purchase commodities from sellers at a fixed price,\nreflecting the desire of sellers to hedge against a drop in prices, while selling commodities to\nconsumers at a fixed price, reflecting the desire of consumers to hedge against a price\nincrease. One claim described the process; another reduced the process to a mathematical\nformula. 561 U.S. at 599. The Court held that the described \xe2\x80\x9cconcept of hedging\xe2\x80\x9d was \xe2\x80\x9can\nunpatentable abstract idea.\xe2\x80\x9d Id. at 611. The fact that some of the claims limited hedging to\nuse in commodities and energy markets and specified that \xe2\x80\x9cwell-known random analysis\ntechniques [could be used] to help establish some of the inputs into the equation\xe2\x80\x9d did not\nundermine this conclusion, for \xe2\x80\x9cFlook established that limiting an abstract idea to one field\nof use or adding token postsolution components did not make the concept patentable.\xe2\x80\x9d Id. at\n612.\nFinally, in Benson the Court considered the patentability of a mathematical process\nfor converting binary-coded decimal numerals into pure binary numbers on a general purpose\ndigital computer. The claims \xe2\x80\x9cpurported to cover any use of the claimed method in a generalpurpose digital computer of any type.\xe2\x80\x9d 409 U.S. at 64, 65. The Court recognized that \xe2\x80\x9ca novel\nand useful structure created with the aid of knowledge of scientific truth\xe2\x80\x9d might be\npatentable. Id. at 67. But it held that simply implementing a mathematical principle on a\nphysical machine, namely, a computer, was not a patentable application of that principle.\nFor the mathematical formula had \xe2\x80\x9cno substantial practical application except in connection\nwith a digital computer.\xe2\x80\x9d Benson, supra, at 71. Hence the claim (like the claims before us)\n\n\x0cPATENTABLE SUBJECT MATTER\n\n235\n\nwas overly broad; it did not differ significantly from a claim that just said \xe2\x80\x9capply the\nalgorithm.\xe2\x80\x9d\n3\nThe Court has repeatedly emphasized this last mentioned concern, a concern that\npatent law not inhibit further discovery by improperly tying up the future use of laws of\nnature. Thus, in Morse the Court set aside as unpatentable Samuel Morse\xe2\x80\x99s general claim for\n\xe2\x80\x9cthe use of the motive power of the electric or galvanic current . . . however developed, for\nmaking or printing intelligible characters, letters, or signs, at any distances,\xe2\x80\x9d 15 How. at 86.\nThe Court explained:\nFor aught that we now know some future inventor, in the onward march of\nscience, may discover a mode of writing or printing at a distance by means of\nthe electric or galvanic current, without using any part of the process or\ncombination set forth in the plaintiff\xe2\x80\x99s specification. His invention may be less\ncomplicated\xe2\x80\x94less liable to get out of order\xe2\x80\x94less expensive in construction, and\nin its operation. But yet if it is covered by this patent the inventor could not\nuse it, nor the public have the benefit of it without the permission of this\npatentee.\nId. at 113. Similarly, in Benson the Court said that the claims before it were \xe2\x80\x9cso abstract and\nsweeping as to cover both known and unknown uses of the [mathematical formula].\xe2\x80\x9d 409 U.S.\nat 67, 68. In Bilski the Court pointed out that to allow \xe2\x80\x9cpetitioners to patent risk hedging\nwould pre-empt use of this approach in all fields.\xe2\x80\x9d 561 U.S. at 612. And in Flook the Court\nexpressed concern that the claimed process was simply \xe2\x80\x9ca formula for computing an updated\nalarm limit,\xe2\x80\x9d which might \xe2\x80\x9ccover a broad range of potential uses.\xe2\x80\x9d 437 U.S. at 586.\nThese statements reflect the fact that, even though rewarding with patents those who\ndiscover new laws of nature and the like might well encourage their discovery, those laws\nand principles, considered generally, are \xe2\x80\x9cthe basic tools of scientific and technological work.\xe2\x80\x9d\nBenson, supra, at 67. And so there is a danger that the grant of patents that tie up their use\nwill inhibit future innovation premised upon them, a danger that becomes acute when a\npatented process amounts to no more than an instruction to \xe2\x80\x9capply the natural law,\xe2\x80\x9d or\notherwise forecloses more future invention than the underlying discovery could reasonably\njustify.\nThe laws of nature at issue here are narrow laws that may have limited applications,\nbut the patent claims that embody them nonetheless implicate this concern. They tell a\ntreating doctor to measure metabolite levels and to consider the resulting measurements in\nlight of the statistical relationships they describe. In doing so, they tie up the doctor\xe2\x80\x99s\nsubsequent treatment decision whether that treatment does, or does not, change in light of\nthe inference he has drawn using the correlations. And they threaten to inhibit the\ndevelopment of more refined treatment recommendations (like that embodied in Mayo\xe2\x80\x99s test)\nthat combine Prometheus\xe2\x80\x99 correlations with later discovered features of metabolites, human\nphysiology or individual patient characteristics. The \xe2\x80\x9cdetermining\xe2\x80\x9d step too is set forth in\n\n\x0c236\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nhighly general language covering all processes that make use of the correlations after\nmeasuring metabolites, including later discovered processes that measure metabolite levels\nin new ways.\nWe need not, and do not, now decide whether were the steps at issue here less\nconventional, these features of the claims would prove sufficient to invalidate them. For here,\nas we have said, the steps add nothing of significance to the natural laws themselves. Unlike,\nsay, a typical patent on a new drug or a new way of using an existing drug, the patent claims\ndo not confine their reach to particular applications of those laws. The presence here of the\nbasic underlying concern that these patents tie up too much future use of laws of nature\nsimply reinforces our conclusion that the processes described in the patents are not patent\neligible, while eliminating any temptation to depart from case law precedent.\nIII\nWe have considered several further arguments in support of Prometheus\xe2\x80\x99 position.\nBut they do not lead us to adopt a different conclusion. First, the Federal Circuit, in upholding\nthe patent eligibility of the claims before us, relied on this Court\xe2\x80\x99s determination that\n\xe2\x80\x9c[t]ransformation and reduction of an article \xe2\x80\x98to a different state or thing\xe2\x80\x99 is the clue to the\npatentability of a process claim that does not include particular machines.\xe2\x80\x9d Benson, supra, at\n70\xe2\x80\x9371. It reasoned that the claimed processes are therefore patent eligible, since they involve\ntransforming the human body by administering a thiopurine drug and transforming the blood\nby analyzing it to determine metabolite levels.\nThe first of these transformations, however, is irrelevant. As we have pointed out, the\n\xe2\x80\x9cadministering\xe2\x80\x9d step simply helps to pick out the group of individuals who are likely\ninterested in applying the law of nature. And the second step could be satisfied without\ntransforming the blood, should science develop a totally different system for determining\nmetabolite levels that did not involve such a transformation. Regardless, in stating that the\n\xe2\x80\x9cmachine-or-transformation\xe2\x80\x9d test is an \xe2\x80\x9cimportant and useful clue\xe2\x80\x9d to patentability, we have\nneither said nor implied that the test trumps the \xe2\x80\x9claw of nature\xe2\x80\x9d exclusion. Bilski, 561 U.S.\nat 603. That being so, the test fails here.\nSecond, Prometheus argues that, because the particular laws of nature that its patent\nclaims embody are narrow and specific, the patents should be upheld. Thus, it encourages us\nto draw distinctions among laws of nature based on whether or not they will interfere\nsignificantly with innovation in other fields now or in the future.\nBut the underlying functional concern here is a relative one: how much future\ninnovation is foreclosed relative to the contribution of the inventor. A patent upon a narrow\nlaw of nature may not inhibit future research as seriously as would a patent upon Einstein\xe2\x80\x99s\nlaw of relativity, but the creative value of the discovery is also considerably smaller. And, as\nwe have previously pointed out, even a narrow law of nature (such as the one before us) can\ninhibit future research.\n\n\x0cPATENTABLE SUBJECT MATTER\n\n237\n\nIn any event, our cases have not distinguished among different laws of nature\naccording to whether or not the principles they embody are sufficiently narrow. And this is\nunderstandable. Courts and judges are not institutionally well suited to making the kinds of\njudgments needed to distinguish among different laws of nature. And so the cases have\nendorsed a bright-line prohibition against patenting laws of nature, mathematical formulas,\nand the like, which serves as a somewhat more easily administered proxy for the underlying\n\xe2\x80\x9cbuilding-block\xe2\x80\x9d concern.\nThird, the Government argues that virtually any step beyond a statement of a law of\nnature itself should transform an unpatentable law of nature into a potentially patentable\napplication sufficient to satisfy \xc2\xa7 101\xe2\x80\x99s demands. The Government does not necessarily\nbelieve that claims that (like the claims before us) extend just minimally beyond a law of\nnature should receive patents. But in its view, other statutory provisions\xe2\x80\x94those that insist\nthat a claimed process be novel, 35 U.S.C. \xc2\xa7 102, that it not be obvious in light of prior art,\n\xc2\xa7 103, and that it be \xe2\x80\x9cfull[y], clear[ly], concise[ly], and exact[ly]\xe2\x80\x9d described, \xc2\xa7 112\xe2\x80\x94can\nperform this screening function. In particular, it argues that these claims likely fail for lack\nof novelty under \xc2\xa7 102.\nThis approach, however, would make the \xe2\x80\x9claw of nature\xe2\x80\x9d exception to \xc2\xa7 101\npatentability a dead letter. The approach is therefore not consistent with prior law. The\nrelevant cases rest their holdings upon \xc2\xa7 101, not later sections.\nWe recognize that, in evaluating the significance of additional steps, the \xc2\xa7 101 patenteligibility inquiry and, say, the \xc2\xa7 102 novelty inquiry might sometimes overlap. But that need\nnot always be so. And to shift the patent-eligibility inquiry entirely to these later sections\nrisks creating significantly greater legal uncertainty, while assuming that those sections can\ndo work that they are not equipped to do.\nWhat role would laws of nature, including newly discovered (and \xe2\x80\x9cnovel\xe2\x80\x9d) laws of\nnature, play in the Government\xe2\x80\x99s suggested \xe2\x80\x9cnovelty\xe2\x80\x9d inquiry? Intuitively, one would suppose\nthat a newly discovered law of nature is novel. The Government, however, suggests in effect\nthat the novelty of a component law of nature may be disregarded when evaluating the\nnovelty of the whole. But \xc2\xa7\xc2\xa7 102 and 103 say nothing about treating laws of nature as if they\nwere part of the prior art when applying those sections. And studiously ignoring all laws of\nnature when evaluating a patent application under \xc2\xa7\xc2\xa7 102 and 103 would make all inventions\nunpatentable because all inventions can be reduced to underlying principles of nature which,\nonce known, make their implementation obvious.\nSection 112 requires only a \xe2\x80\x9cwritten description of the invention . . . in such full, clear,\nconcise, and exact terms as to enable any person skilled in the art . . . to make and use the\nsame.\xe2\x80\x9d It does not focus on the possibility that a law of nature (or its equivalent) that meets\nthese conditions will nonetheless create the kind of risk that underlies the law of nature\nexception, namely the risk that a patent on the law would significantly impede future\ninnovation.\n\n\x0c238\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThese considerations lead us to decline the Government\xe2\x80\x99s invitation to substitute\n\xc2\xa7\xc2\xa7 102, 103, and 112 inquiries for the better established inquiry under \xc2\xa7 101.\nFourth, Prometheus, supported by several amici, argues that a principle of law\ndenying patent coverage here will interfere significantly with the ability of medical\nresearchers to make valuable discoveries, particularly in the area of diagnostic research.\nThat research, which includes research leading to the discovery of laws of nature, is\nexpensive; it \xe2\x80\x9cha[s] made the United States the world leader in this field\xe2\x80\x9d; and it requires\nprotection.\nOther medical experts, however, argue strongly against a legal rule that would make\nthe present claims patent eligible, invoking policy considerations that point in the opposite\ndirection. The American Medical Association, the American College of Medical Genetics, the\nAmerican Hospital Association, the American Society of Human Genetics, the Association of\nAmerican Medical Colleges, the Association for Molecular Pathology, and other medical\norganizations tell us that if \xe2\x80\x9cclaims to exclusive rights over the body\xe2\x80\x99s natural responses to\nillness and medical treatment are permitted to stand, the result will be a vast thicket of\nexclusive rights over the use of critical scientific data that must remain widely available if\nphysicians are to provide sound medical care.\xe2\x80\x9d\nWe do not find this kind of difference of opinion surprising. Patent protection is, after\nall, a two-edged sword. On the one hand, the promise of exclusive rights provides monetary\nincentives that lead to creation, invention, and discovery. On the other hand, that very\nexclusivity can impede the flow of information that might permit, indeed spur, invention, by,\nfor example, raising the price of using the patented ideas once created, requiring potential\nusers to conduct costly and time-consuming searches of existing patents and pending patent\napplications, and requiring the negotiation of complex licensing arrangements. At the same\ntime, patent law\xe2\x80\x99s general rules must govern inventive activity in many different fields of\nhuman endeavor, with the result that the practical effects of rules that reflect a general effort\nto balance these considerations may differ from one field to another.\nIn consequence, we must hesitate before departing from established general legal\nrules lest a new protective rule that seems to suit the needs of one field produce unforeseen\nresults in another. And we must recognize the role of Congress in crafting more finely tailored\nrules where necessary. Cf. 35 U.S.C. \xc2\xa7\xc2\xa7 161\xe2\x80\x93164 (special rules for plant patents). We need\nnot determine here whether, from a policy perspective, increased protection for discoveries of\ndiagnostic laws of nature is desirable.\nFor these reasons, we conclude that the patent claims at issue here effectively claim\nthe underlying laws of nature themselves. The claims are consequently invalid. And the\nFederal Circuit\xe2\x80\x99s judgment is reversed.\n\n\x0cPATENTABLE SUBJECT MATTER\n\n239\n\nDiscussion Questions: Mayo\n1. Two-Step Test. Patent law\xe2\x80\x94and law in general\xe2\x80\x94is full of multi-part tests in which\nvarious factors are balanced against one another. For instance, the rules governing whether\na particular document constitutes a printed publication are properly described as a multipart test. It is worth noting, however, that Mayo sets forth what is properly understood as a\nmulti-step test. The answers to Step 1 and Step 2 of the Mayo test are not weighed against\none another to arrive at a final result. Rather, a court must proceed sequentially through the\ntwo steps of the Mayo test. If the claim \xe2\x80\x9cpasses\xe2\x80\x9d the test at either step\xe2\x80\x94either because it is\nnot directed to a law of nature, product of nature, or abstract idea at Step 1, or because it\ncontains an inventive concept at Step 2\xe2\x80\x94then the claim is valid under \xc2\xa7 101.\n2. Pre-Mayo Precedents. Prior to Bilski and Mayo, the leading precedents on patenting\nabstract ideas and laws of nature were Benson, Flook, and Diehr, all of which are discussed\nat some length in the Mayo opinion. If you hadn\xe2\x80\x99t read Mayo and were examining the law as\nit stood before 2012, what would you say was the distinction between the cases that led the\nSupreme Court to hold the claims invalid in Benson and Flook and valid in Diehr? What was\nit about the invention in Diehr that rendered the claim patentable? Is the Mayo Court\xe2\x80\x99s basis\nfor differentiating these cases credible? Can you think of anything else that might distinguish\nDiehr from Benson and Flook? (If you find them challenging to distinguish, you are not alone.)\n3. Searching for an Inventive Concept. What do you think the Court means by\n\xe2\x80\x9cinventive concept?\xe2\x80\x9d Is that meant to be synonymous with \xe2\x80\x9cnovel and nonobvious,\xe2\x80\x9d or does\nthe Court intend something else? If the Court means \xe2\x80\x9cnovel and nonobvious,\xe2\x80\x9d why didn\xe2\x80\x99t it\nuse those words?\nIn many inventions such as the one in Mayo, the natural law or abstract idea is itself\nthe inventive concept. That is, the natural relationship at issue in Mayo was completely\nunknown in the art until the inventors discovered it. Why should this not be enough to make\nthe claim patentable? Why require inventors to develop two inventive concepts: the natural\nlaw itself, and something besides the natural law?\n4. The Draftsman\xe2\x80\x99s Art. Suppose you were given a chance to redraft the claims in Mayo\nin light of what you now know of the doctrine. Is there a way to redraft the claims to make\nthem patentable? Or is the invention simply unpatentable no matter how the claims are\ndrawn?\n5. Do We Need Patentable Subject Matter Limits? What is the doctrine of patentable\nsubject matter accomplishing that the doctrines of novelty, nonobviousness, utility, etc. would\nnot? What value is it adding? If your answer is that we should not grant patents on basic\nbuilding blocks of nature (including laws of nature, which we will discuss below), why not? Is\nit improper to grant these types of patents, and if so, why? Would it harm the progress of\ninnovation to grant them, and if so, why?\nFor instance, suppose someone were able to obtain a patent on a basic scientific law\nor principle. Would this inhibit the progress of science and technology? Obviously, a patent\n\n\x0c240\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nhas no value if it is not exploited commercially. Wouldn\xe2\x80\x99t the patent owner have an incentive\nto license the patented technology as broadly as possible? Under what circumstances might\nwe expect licensing efforts to fail or fall short?\n\nAssociation for Molecular Pathology v. Myriad Genetics, 569 U.S. 576 (2013)\nJustice Clarence Thomas delivered the opinion of the Court.\nRespondent Myriad Genetics, Inc., discovered the precise location and sequence of two\nhuman genes, mutations of which can substantially increase the risks of breast and ovarian\ncancer. Myriad obtained a number of patents based upon its discovery. This case involves\nclaims from three of them and requires us to resolve whether a naturally occurring segment\nof deoxyribonucleic acid (DNA) is patent eligible under 35 U.S.C. \xc2\xa7 101 by virtue of its\nisolation from the rest of the human genome. We also address the patent eligibility of\nsynthetically created DNA known as complementary DNA (cDNA), which contains the same\nprotein-coding information found in a segment of natural DNA but omits portions within the\nDNA segment that do not code for proteins. For the reasons that follow, we hold that a\nnaturally occurring DNA segment is a product of nature and not patent eligible merely\nbecause it has been isolated, but that cDNA is patent eligible because it is not naturally\noccurring.\nI\nA\nThe human genome consists of approximately 22,000 genes packed into 23 pairs of\nchromosomes. Each \xe2\x80\x9ccross-bar\xe2\x80\x9d in the DNA helix consists of two chemically joined\nnucleotides. The possible nucleotides are adenine (A), thymine (T), cytosine (C), and guanine\n(G), each of which binds naturally with another nucleotide: A pairs with T; C pairs with G.\nSequences of DNA nucleotides contain the information necessary to create strings of amino\nacids, which in turn are used in the body to build proteins. Only some DNA nucleotides,\nhowever, code for amino acids; these nucleotides are known as \xe2\x80\x9cexons.\xe2\x80\x9d Nucleotides that do\nnot code for amino acids, in contrast, are known as \xe2\x80\x9cintrons.\xe2\x80\x9d\nDNA\xe2\x80\x99s informational sequences and the processes that create mRNA, amino acids,\nand proteins occur naturally within cells. Scientists can, however, extract DNA from cells\nusing well known laboratory methods. These methods allow scientists to isolate specific\nsegments of DNA\xe2\x80\x94for instance, a particular gene or part of a gene\xe2\x80\x94which can then be\nfurther studied, manipulated, or used. It is also possible to create DNA synthetically through\nprocesses similarly well known in the field of genetics. One such method begins with an\nmRNA molecule and uses the natural bonding properties of nucleotides to create a new,\nsynthetic DNA molecule. The result is the inverse of the mRNA\xe2\x80\x99s inverse image of the original\nDNA, with one important distinction: Because the natural creation of mRNA involves splicing\nthat removes introns, the synthetic DNA created from mRNA also contains only the exon\n\n\x0cPATENTABLE SUBJECT MATTER\n\n241\n\nsequences. This synthetic DNA created in the laboratory from mRNA is known as\ncomplementary DNA (cDNA).\nB\nThis case involves patents filed by Myriad after it made one such medical\nbreakthrough. Myriad discovered the precise location and sequence of what are now known\nas the BRCA1 and BRCA2 genes. Mutations in these genes can dramatically increase an\nindividual\xe2\x80\x99s risk of developing breast and ovarian cancer.\nOnce it found the location and sequence of the BRCA1 and BRCA2 genes, Myriad\nsought and obtained a number of patents. [The following claims are representative.] The first\nclaim [of Patent No. 5,747,282] asserts a patent on \xe2\x80\x9c[a]n isolated DNA coding for a BRCA1\npolypeptide,\xe2\x80\x9d which has \xe2\x80\x9cthe amino acid sequence set forth in SEQ ID NO:2.\xe2\x80\x9d SEQ ID NO:2\nsets forth a list of 1,863 amino acids that the typical BRCA1 gene encodes. Put differently,\nclaim 1 asserts a patent claim on the DNA code that tells a cell to produce the string of BRCA1\namino acids listed in SEQ ID NO:2.\nClaim 2 of the \xe2\x80\x99282 patent operates similarly. It claims \xe2\x80\x9c[t]he isolated DNA of claim 1,\nwherein said DNA has the nucleotide sequence set forth in SEQ ID NO:1.\xe2\x80\x9d Like SEQ ID NO:2,\nSEQ ID NO:1 sets forth a long list of data, in this instance the sequence of cDNA that codes\nfor the BRCA1 amino acids listed in claim 1. Importantly, SEQ ID NO:1 lists only the cDNA\nexons in the BRCA1 gene, rather than a full DNA sequence containing both exons and\nintrons. As a result, the Federal Circuit recognized that claim 2 asserts a patent on the cDNA\nnucleotide sequence listed in SEQ ID NO:1, which codes for the typical BRCA1 gene.\nClaim 5 of the \xe2\x80\x99282 patent claims a subset of the data in claim 1. In particular, it\nclaims \xe2\x80\x9c[a]n isolated DNA having at least 15 nucleotides of the DNA of claim 1.\xe2\x80\x9d The practical\neffect of claim 5 is to assert a patent on any series of 15 nucleotides that exist in the typical\nBRCA1 gene. Because the BRCA1 gene is thousands of nucleotides long, even BRCA1 genes\nwith substantial mutations are likely to contain at least one segment of 15 nucleotides that\ncorrespond to the typical BRCA1 gene.\nII\nA\nWe have \xe2\x80\x9clong held that [\xc2\xa7 101] contains an important implicit exception: Laws of\nnature, natural phenomena, and abstract ideas are not patentable.\xe2\x80\x9d Mayo v. Prometheus, 566\nU.S. 66, 70 (2012). As the Court has explained, without this exception, there would be\nconsiderable danger that the grant of patents would \xe2\x80\x9ctie up\xe2\x80\x9d the use of such tools and thereby\n\xe2\x80\x9cinhibit future innovation premised upon them.\xe2\x80\x9d Id. at 86. The rule against patents on\nnaturally occurring things is not without limits, however, for \xe2\x80\x9call inventions at some level\nembody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract\nideas,\xe2\x80\x9d and \xe2\x80\x9ctoo broad an interpretation of this exclusionary principle could eviscerate patent\nlaw.\xe2\x80\x9d Id. at 71. As we have recognized before, patent protection strikes a delicate balance\n\n\x0c242\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nbetween creating \xe2\x80\x9cincentives that lead to creation, invention, and discovery\xe2\x80\x9d and \xe2\x80\x9cimpeding\nthe flow of information that might permit, indeed spur, invention.\xe2\x80\x9d Id. at 92.\nB\nIt is undisputed that Myriad did not create or alter any of the genetic information\nencoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed\nin nature before Myriad found them. Nor did Myriad create or alter the genetic structure of\nDNA. Instead, Myriad\xe2\x80\x99s principal contribution was uncovering the precise location and\ngenetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. The\nquestion is whether this renders the genes patentable.\nMyriad recognizes that our decision in Diamond v. Chakrabarty is central to this\ninquiry. In Chakrabarty, scientists added four plasmids to a bacterium, which enabled it to\nbreak down various components of crude oil. 447 U.S. 303, 305 & n.1 (1980). The Court held\nthat the modified bacterium was patentable. It explained that the patent claim was \xe2\x80\x9cnot to a\nhitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or\ncomposition of matter\xe2\x80\x94a product of human ingenuity having a distinctive name, character\n[and] use.\xe2\x80\x9d Id. at 309\xe2\x80\x9310. The Chakrabarty bacterium was new \xe2\x80\x9cwith markedly different\ncharacteristics from any found in nature\xe2\x80\x9d due to the additional plasmids and resultant\n\xe2\x80\x9ccapacity for degrading oil.\xe2\x80\x9d Id. at 305 n.1, 310. In this case, by contrast, Myriad did not create\nanything. To be sure, it found an important and useful gene, but separating that gene from\nits surrounding genetic material is not an act of invention.\nGroundbreaking, innovative, or even brilliant discovery does not by itself satisfy the\n\xc2\xa7 101 inquiry. In Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), this\nCourt considered a composition patent that claimed a mixture of naturally occurring strains\nof bacteria that helped leguminous plants take nitrogen from the air and fix it in the soil. The\nCourt held that the composition was not patent eligible because the patent holder did not\nalter the bacteria in any way. His patent claim thus fell squarely within the law of nature\nexception. So do Myriad\xe2\x80\x99s. Myriad found the location of the BRCA1 and BRCA2 genes, but\nthat discovery, by itself, does not render the BRCA genes \xe2\x80\x9cnew . . . composition[s] of matter,\xe2\x80\x9d\n\xc2\xa7 101, that are patent eligible.\nIndeed, Myriad\xe2\x80\x99s patent descriptions highlight the problem with its claims. For\nexample, a section of the \xe2\x80\x99282 patent\xe2\x80\x99s Detailed Description of the Invention indicates that\nMyriad found the location of a gene associated with increased risk of breast cancer and\nidentified mutations of that gene that increase the risk. In subsequent language Myriad\nexplains that the location of the gene was unknown until Myriad found it among the\napproximately eight million nucleotide pairs contained in a subpart of chromosome 17.\nMyriad seeks to import these extensive research efforts into the \xc2\xa7 101 patent-eligibility\ninquiry. But extensive effort alone is insufficient to satisfy the demands of \xc2\xa7 101.\nNor are Myriad\xe2\x80\x99s claims saved by the fact that isolating DNA from the human genome\nsevers chemical bonds and thereby creates a nonnaturally occurring molecule. Myriad\xe2\x80\x99s\n\n\x0cPATENTABLE SUBJECT MATTER\n\n243\n\nclaims are simply not expressed in terms of chemical composition, nor do they rely in any\nway on the chemical changes that result from the isolation of a particular section of DNA.\nInstead, the claims understandably focus on the genetic information encoded in the BRCA1\nand BRCA2 genes. If the patents depended upon the creation of a unique molecule, then a\nwould-be infringer could arguably avoid at least Myriad\xe2\x80\x99s patent claims on entire genes (such\nas claims 1 and 2 of the \xe2\x80\x99282 patent) by isolating a DNA sequence that included both the\nBRCA1 or BRCA2 gene and one additional nucleotide pair. Such a molecule would not be\nchemically identical to the molecule \xe2\x80\x9cinvented\xe2\x80\x9d by Myriad. But Myriad obviously would resist\nthat outcome because its claim is concerned primarily with the information contained in the\ngenetic sequence, not with the specific chemical composition of a particular molecule.\nFinally, Myriad argues that the PTO\xe2\x80\x99s past practice of awarding gene patents is\nentitled to deference, citing J.E.M. Ag Supply, Inc. v. Pioneer Hi\xe2\x80\x93Bred Int\xe2\x80\x99l, Inc., 534 U.S.\n124 (2001). We disagree. Undercutting the PTO\xe2\x80\x99s practice, the United States argued in the\nFederal Circuit and in this Court that isolated DNA was not patent eligible under \xc2\xa7 101 and\nthat the PTO\xe2\x80\x99s practice was not \xe2\x80\x9ca sufficient reason to hold that isolated DNA is patenteligible.\xe2\x80\x9d These concessions weigh against deferring to the PTO\xe2\x80\x99s determination.2\nC\ncDNA does not present the same obstacles to patentability as naturally occurring,\nisolated DNA segments. As already explained, creation of a cDNA sequence from mRNA\nresults in an exons-only molecule that is not naturally occurring.3 Petitioners concede that\ncDNA differs from natural DNA in that \xe2\x80\x9cthe non-coding regions have been removed.\xe2\x80\x9d They\nnevertheless argue that cDNA is not patent eligible because \xe2\x80\x9c[t]he nucleotide sequence of\ncDNA is dictated by nature, not by the lab technician.\xe2\x80\x9d That may be so, but the lab technician\nunquestionably creates something new when cDNA is made. cDNA retains the naturally\noccurring exons of DNA, but it is distinct from the DNA from which it was derived. As a\nresult, cDNA is not a \xe2\x80\x9cproduct of nature\xe2\x80\x9d and is patent eligible under \xc2\xa7 101, except insofar as\nvery short series of DNA may have no intervening introns to remove when creating cDNA.\nIn that situation, a short strand of cDNA may be indistinguishable from natural DNA.\n\n2\n\n[n.7 in opinion] Myriad also argues that we should uphold its patents so as not to disturb the\nreliance interests of patent holders like itself. Concerns about reliance interests arising from PTO\ndeterminations, insofar as they are relevant, are better directed to Congress.\n3\n\n[n.8 in opinion] Some viruses rely on an enzyme called reverse transcriptase to reproduce by\ncopying RNA into cDNA. In rare instances, a side effect of a viral infection of a cell can be the random\nincorporation of fragments of the resulting cDNA, known as a pseudogene, into the genome. Such\npseudogenes serve no purpose; they are not expressed in protein creation because they lack genetic\nsequences to direct protein expression. Perhaps not surprisingly, given pseudogenes\xe2\x80\x99 apparently\nrandom origins, petitioners have failed to demonstrate that the pseudogene consists of the same\nsequence as the BRCA1 cDNA. The possibility that an unusual and rare phenomenon might randomly\ncreate a molecule similar to one created synthetically through human ingenuity does not render a\ncomposition of matter nonpatentable.\n\n\x0c244\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nIII\n\nIt is important to note what is not implicated by this decision. First, there are no\nmethod claims before this Court. Had Myriad created an innovative method of manipulating\ngenes while searching for the BRCA1 and BRCA2 genes, it could possibly have sought a\nmethod patent. But the processes used by Myriad to isolate DNA were well understood by\ngeneticists at the time of Myriad\xe2\x80\x99s patents and are not at issue in this case.\nSimilarly, this case does not involve patents on new applications of knowledge about\nthe BRCA1 and BRCA2 genes. Nor do we consider the patentability of DNA in which the\norder of the naturally occurring nucleotides has been altered. Scientific alteration of the\ngenetic code presents a different inquiry, and we express no opinion about the application of\n\xc2\xa7 101 to such endeavors. We merely hold that genes and the information they encode are not\npatent eligible under \xc2\xa7 101 simply because they have been isolated from the surrounding\ngenetic material.\nJustice Antonin Scalia, concurring in part and concurring in the judgment.\nI join the judgment of the Court, and all of its opinion except Part I\xe2\x80\x93A and some\nportions of the rest of the opinion going into fine details of molecular biology. I am unable to\naffirm those details on my own knowledge or even my own belief. It suffices for me to affirm,\nhaving studied the opinions below and the expert briefs presented here, that the portion of\nDNA isolated from its natural state sought to be patented is identical to that portion of the\nDNA in its natural state; and that complementary DNA (cDNA) is a synthetic creation not\nnormally present in nature.\n\nDiscussion Questions: Myriad\n1. What Distinguishes cDNA? Why does the Court hold that cDNA strands are\npatentable and isolated DNA strands are not? In what way or ways are those two products\ndifferent? Do they perform different functions? Which of them, if either, is different from\nwhat appears in nature? Are they different structurally from each other, and if so, in what\nway?\nWhat is the distinction between the mixture of bacteria found unpatentable in Funk\nBrothers and the cDNA found patentable in Myriad? Why couldn\xe2\x80\x99t the cDNA be characterized\nas a mixture or rearrangement of existing natural substances (the base pairs) and held\npatentable on those grounds?\nLook back at footnote 8, which indicates that viruses can create cDNA strands in\nnature. In that footnote, the Court notes that it is only a \xe2\x80\x9cpossibility\xe2\x80\x9d that the relevant cDNA\nstrand was created in nature by a virus at some point. Suppose it could be proven that a virus\nrandomly created the BRCA cDNA strand once, in a small town in Nevada, at 6:34 pm on a\nFriday in October. Should that affect the patentability of the invention? What if it could be\nshown that a virus regularly created the BRCA cDNA strand?\n\n\x0cPATENTABLE SUBJECT MATTER\n\n245\n\n2. Should Generalist Judges Decide Technical Patent Cases? Justice Scalia\xe2\x80\x99s\nconcurrence in Myriad involves the problems faced by generalist judges (and justices) in\nadjudicating patent cases. What should we make of that concurrence? Do we think the\nproblem Justice Scalia describes will be more acute in patentable subject matter cases than\nin other types of patent cases? Is this a reason to rethink our approach to judging patent\ncases?\n3. Do Patentee Reliance Interests Matter? One argument that Myriad made in defense\nof its patents was that it had relied upon the patentability of DNA molecules when\nconstructing its business. As we noted above, DNA had been patentable for many years prior\nto the Myriad decision. Do these reliance interests constitute a good argument in favor of\nleaving the law as it is? Under what circumstances should reliance interests such as these\nplay a role in judicial decision-making, if at all? See Jonathan S. Masur & Adam K. Mortara,\nPatents, Property, and Prospectivity, 71 Stan. L. Rev. 963 (2019).\n4. Are Products of Nature Different from Laws of Nature? Are the doctrinal rules that\nthe Supreme Court laid down to govern products of nature (in Myriad) and the rules that it\nlaid down to govern laws of nature (in Mayo) the same or different? If they appear to be\ndifferent, can you devise a way to unify them? In Alice v. CLS Bank, which we will read in\nthe next section, the Supreme Court states that the two-step Mayo/Alice test is now the test\nfor evaluating all patentable subject matter issues. Why do you think the Court didn\xe2\x80\x99t apply\nthis test in Myriad?\n5. Myriad\xe2\x80\x99s Impact on Innovation. There have been few evidence-based studies before\nor after Myriad on the impact of patents on DNA-related research, largely because\nresearchers cannot observe the counterfactual world in which patent eligibility rules were\ndifferent. Even before Myriad, the number of gene patents granted each year was declining\nsince a peak in 1999, including because the 1990 Human Genome Project led to the\nsequencing of most genes by the early 2000s. Although researchers have not been able to\ndetermine whether the prospect of gene patents (or the absence of that incentive post-Myriad)\ncaused any measurable change in R&D, they have used pre-Myriad data to study the effect\nof existing gene patents on follow-on innovation on those genes, including scientific\npublications and the use of genes in pharmaceutical clinical trials and diagnostic tests. Using\na clever empirical design to identify the causal effect of patents, Bhaven Sampat and Heidi\nWilliams determined that \xe2\x80\x9cgene patents have had no quantitatively important effect on\nfollow-on innovation.\xe2\x80\x9d Bhaven Sampat & Heidi L. Williams, How Do Patents Affect Followon Innovation? Evidence from the Human Genome, 109 Am. Econ. Rev. 203 (2019). What does\nthis result make you think of the Supreme Court\xe2\x80\x99s view that Myriad\xe2\x80\x99s patents \xe2\x80\x9cwould \xe2\x80\x98tie up\xe2\x80\x99\nthe use of [genes] and thereby inhibit future innovation\xe2\x80\x9d?\n6. The Morality of Patenting Human Genes and Biological Samples. Are there special\nconcerns raised by the fact that Myriad was seeking to patent part of the human genome?\nWas there a risk that Myriad might sue people who had the BRCA gene in their own bodies?\nIs it problematic for Myriad to \xe2\x80\x9cown\xe2\x80\x9d the rights to the basic building blocks of human\ngenetics? Do you think these concerns figured into the Supreme Court\xe2\x80\x99s decision, or should\n\n\x0c246\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthey have? If your answer to either of these last questions is \xe2\x80\x9cyes,\xe2\x80\x9d do you think the Court\xe2\x80\x99s\ndecision to allow only the cDNA patents effectively solves the problem?\nAre similar concerns raised with patents derived from biological samples? The\nImmortal Life of Henrietta Lacks, a best-selling book with a film adaptation by Oprah\nWinfrey, tells the history of Henrietta Lacks, a Black woman whose cancer cells were cultured\nwithout her knowledge or consent in 1951, shortly before her death. The resulting HeLa cell\nline is still used for medical research, and although the cells themselves were not patented,\nthere are thousands of U.S. patents involving HeLa cells. Should an invention\xe2\x80\x99s origins in\nbiological samples affect its patentability? Should people who provide valuable genetic\nresources receive any IP rights in those resources or other forms of compensation?\n\nNatural Alternatives Int\xe2\x80\x99l v. Creative Compounds, 918 F.3d 1338 (Fed. Cir. 2019)\nKimberly A. Moore, Circuit Judge.\nBACKGROUND\nNatural Alternatives owns a number of patents that relate to dietary supplements\ncontaining beta-alanine and have substantially similar specifications. Beta-alanine is an\namino acid [i.e., one of 20 naturally occurring building blocks of proteins encoded by DNA].\nTogether with histidine, another amino acid, it can form dipeptides [two linked amino acids]\nthat are found in muscles. The dipeptides are involved in the regulation of intra-cellular pH\nduring muscle contraction and development of fatigue, and variations in dipeptide\nconcentrations affect the anaerobic work capacity of individual athletes [i.e., how much\nintense exercise athletes can do without getting oxygen to their cells]. One of these dipeptides\nis carnosine, which contributes to hydronium ion buffering. During certain sustained\nexercise, hydronium ions and lactate can accumulate and severely reduce intracellular pH.\nThe reduced pH interferes with the creatine-phosphorylcreatine system, a part of the process\nby which energy is generated in cells, particularly muscle cells. The claimed patents generally\nrelate to the use of beta-alanine in a dietary supplement to increase the anaerobic working\ncapacity of muscle and other tissue. [Eds: It is not necessary to understand the details of\nbiochemistry to understand this case; the key point is simply that the inventors discovered\nthat taking beta-alanine as a dietary supplement improves athletic performance.]\nI.\nSeveral of the asserted patents claim methods of treatment using beta-alanine (\xe2\x80\x9cthe\nMethod Claims\xe2\x80\x9d). Claim 1 of the \xe2\x80\x99596 patent and claim 1 of the \xe2\x80\x99865 patent have been treated\nas representative of the claims in those patents. Claim 1 of the \xe2\x80\x99596 patent recites:\n1. A method of regulating hydronium ion concentrations in a human tissue\ncomprising:\nproviding an amount of beta-alanine to blood or blood plasma effective to\nincrease beta-alanylhistidine dipeptide synthesis in the human tissue; and\n\n\x0cPATENTABLE SUBJECT MATTER\n\n247\n\nexposing the tissue to the blood or blood plasma, whereby the concentration of\nbeta-alanylhistidine is increased in the human tissue.\nClaim 1 of the \xe2\x80\x99865 patent recites:\n1. A method of increasing anaerobic working capacity in a human subject, the\nmethod comprising:\na) providing to the human subject an amount of an amino acid to blood or blood\nplasma effective to increase beta-alanylhistidine dipeptide synthesis in the\ntissue, wherein said amino acid is at least one of:\ni) beta-alanine that is not part of a dipeptide, polypeptide or\noligopeptide;\nii) an ester of beta-alanine that is not part of a dipeptide, polypeptide or\noligopeptide; or\niii) an amide of beta-alanine that is not part of a dipeptide, polypeptide\nor oligopeptide; and\nb) exposing the tissue to the blood or blood plasma, whereby the concentration\nof beta-alanylhistidine is increased in the tissue,\nwherein the amino acid is provided through a dietary supplement.\nNatural Alternatives\xe2\x80\x99 proposed construction of the \xe2\x80\x9ceffective\xe2\x80\x9d limitations is to\n\xe2\x80\x9celevates beta-alanine above natural levels to cause an increase in the synthesis of betaalanylhistidine dipeptide in the tissue.\xe2\x80\x9d It defines \xe2\x80\x9cdietary supplement\xe2\x80\x9d as \xe2\x80\x9can addition to the\nhuman diet, which is not a natural or conventional food, which effectively increases athletic\nperformance when administered to the human over a period of time.\xe2\x80\x9d It also defines\n\xe2\x80\x9cincreasing anaerobic working capacity\xe2\x80\x9d as \xe2\x80\x9cincreasing the amount of work performed by a\nmuscle under lactate producing conditions.\xe2\x80\x9d\nThe district court held both claims are directed to natural laws. It held claim 1 of the\n\xe2\x80\x99865 patent is directed to the natural law that \xe2\x80\x9cingesting certain levels of beta-alanine, a\nnatural substance, will increase the carnosine concentration in human tissue and, thereby,\nincrease the anaerobic working capacity in a human.\xe2\x80\x9d It held claim 1 of the \xe2\x80\x99596 patent is\ndirected to the natural law that \xe2\x80\x9cingesting certain levels of beta-alanine, a natural substance,\nwill increase the carnosine concentration in human tissue and, thereby, aid in regulating\nhydronium ion concentration in the tissue.\xe2\x80\x9d We do not agree.\nAdministering certain quantities of beta-alanine to a human subject alters that\nsubject\xe2\x80\x99s natural state. Specifically, homeostasis is overcome, and the subject\xe2\x80\x99s body will\nproduce greater levels of creatine. This, in turn, results in specific physiological benefits for\nathletes engaged in certain intensive exercise. The claims not only embody this discovery,\nthey require that an infringer actually administer the dosage form claimed in the manner\n\n\x0c248\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nclaimed, altering the athlete\xe2\x80\x99s physiology to provide the described benefits. These are\ntreatment claims and as such they are patent eligible.\nAs we explained in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals\nInternational Ltd., 887 F.3d 1117 (Fed. Cir. 2018), claims that are directed to particular\nmethods of treatment are patent eligible. The claims in Vanda involved a method of treating\npatients with schizophrenia that first required performing a genetic test to determine if a\npatient was a CYPD2D6 performer. Based on the results of that test, a particular dose of\niloperidone was selected and internally administered. As a result, the risk of QTc\nprolongation, a dangerous side effect, was decreased. We held that the claims were not\ndirected to a natural relationship between iloperidone, CYP2D6 metabolism, and QTc\nprolongation. While we acknowledged that the inventors had recognized the underlying\nrelationships, we explained that those were not what was claimed. Instead, the claims were\ndirected to a patent-eligible method of using iloperidone to treat schizophrenia, a specific\nmethod of treatment for specific patients using a specific compound at specific doses to\nachieve a specific outcome.\nUnlike the claims held ineligible in Mayo, which required only the observation of a\nnatural law, the Vanda claims required a doctor to affirmatively administer a drug to alter a\npatient\xe2\x80\x99s condition from their natural state. In Mayo, the discovery underlying the claims\nwas that when blood levels were above a certain level harmful effects were more likely and\nwhen they were below another level the drug\xe2\x80\x99s beneficial effects were lost. Nothing in the\nclaim required any application of that discovery beyond the steps that must be taken in order\nto apply the laws in question. The claims at issue in Mayo involved administering a prior art\ndrug to a subject and determining the level of drug metabolite in that subject. The claims\nfurther provided that particular levels of measured metabolite indicated a need to increase\nor decrease the amount of drug subsequently administered to the subject. The claims did not,\nhowever, require any actual action be taken based on the measured level of metabolite. The\nclaim, therefore, \xe2\x80\x9cwas not a treatment claim,\xe2\x80\x9d because \xe2\x80\x9cit was not limited to instances in\nwhich the doctor actually decreases (or increases) the dosage level.\xe2\x80\x9d Vanda, 887 F.3d at 1136.\nThis was expressly recognized in Mayo, which distinguished the Mayo claim from \xe2\x80\x9ca typical\npatent on a new drug or a new way of using an existing drug,\xe2\x80\x9d because the Mayo claim did\nnot \xe2\x80\x9cconfine [its] reach to particular applications\xe2\x80\x9d of the natural laws relied upon. 566 U.S.\nat 87 (emphasis added). Such claims rely on the relationship between the administration of\nthe drug and the physiological effects in the patient. The fact that the human body responds\nto the treatment through biochemical processes does not convert the claim into an ineligible\none.\nThe Method Claims are directed to patent eligible new ways of using an existing\nproduct, beta-alanine, [and] they are treatment claims. This falls clearly within the scope of\n\xc2\xa7 101, which allows for patents on \xe2\x80\x9cany new and useful process,\xe2\x80\x9d including \xe2\x80\x9ca new use of a\nknown . . . composition of matter, or material.\xe2\x80\x9d 35 U.S.C. \xc2\xa7\xc2\xa7 100(b), 101. As the Supreme\nCourt explained in Mayo, such patents on a new use of an existing drug are \xe2\x80\x9ctypical.\xe2\x80\x9d 566\nU.S. at 87.\n\n\x0cPATENTABLE SUBJECT MATTER\n\n249\n\nWhile the Method Claims have similarities to the claims found ineligible in Mayo, as\nthey utilize an underlying natural law, this is not sufficient to establish that they are directed\nto that law. In Mayo, the Court held the claims did not do significantly more than simply\ndescribe the natural \xe2\x80\x9crelationships between concentrations of certain metabolites in the blood\nand the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm.\xe2\x80\x9d\nThe Method Claims similarly rely on the relationships between the administration of betaalanine and beta-alanylhistidine dipeptide synthesis, but under Natural Alternatives\xe2\x80\x99\nconstructions, the Method Claims require specific steps be taken in order to bring about a\nchange in a subject, altering the subject\xe2\x80\x99s natural state. Unlike the claims in Mayo, the\nMethod Claims at issue are treatment claims.\nLike the claims in Vanda, the Method Claims contain specific elements that clearly\nestablish they are doing more than simply reciting a natural law. Like the Vanda claims,\nwhich specify a patient population to be treated, the Method Claims specify particular results\nto be obtained by practicing the method. Claim 1 of the \xe2\x80\x99596 patent is directed to a \xe2\x80\x9cmethod\nof regulating hydronium ion concentrations in a human tissue,\xe2\x80\x9d and claim 1 of the \xe2\x80\x99865 patent\nis directed to a \xe2\x80\x9cmethod of increasing anaerobic working capacity in a human subject.\xe2\x80\x9d\nSimilarly, both the Vanda claims and the Method Claims specify a compound to be\nadministered to achieve the claimed result. Claim 1 of the \xe2\x80\x99596 patent achieves the result\nthrough the administration of the specific compound beta-alanine, and claim 1 of the \xe2\x80\x99865\npatent requires use of one of the three specified forms of beta-alanine. The claims in Vanda\nfurther specified the dosages of the compound to be administered. The Method Claims\nlikewise contain a dosage limitation by virtue of the \xe2\x80\x9ceffective\xe2\x80\x9d limitation. As we looked to\nthe specification in Vanda to determine the significance of the dosing ranges, here, the\nspecification provides a method for calculating dosage based on a subject\xe2\x80\x99s weight. This goes\nfar beyond merely stating a law of nature, and instead sets forth a particular method of\ntreatment.\nSimilarly, the fact that the active ingredient in the supplement is a molecule that\noccurs in nature and is consumed as part of the human diet also does not alter our analysis.4\nCreative Compounds argues that, if it were discovered that beta-alanine or another natural\ncompound can be used to treat or cure Alzheimer\xe2\x80\x99s or some other disease, the method for\ndoing so would not be patent eligible. That is not the case before us. That flies in the face of\nthe Patent Act, which expressly permits patenting a new use of an existing product. The\nSupreme Court has also rejected the idea that claims to methods making use of natural\nproducts are equivalent to claims to the natural products themselves. See Ass\xe2\x80\x99n for Molecular\nPathology v. Myriad Genetics, Inc., 569 U.S. 576, 595 (2013) (distinguishing between method\nclaims for manipulating genes and claims to the genes); Funk Brothers Seed Co. v. Kalo\n[n.2 in opinion] The U.S. Patent and Trademark Office has adopted guidance on how\nexaminers should determine whether a claim is eligible under \xc2\xa7 101 and provided examples of eligible\nand ineligible claims. Under these guidelines, a claim to a practical application of a natural product to\ntreat a particular disease is patent eligible. The parties dispute the persuasiveness of this document\nand the weight we should afford it under Skidmore v. Swift & Co., 323 U.S. 134 (1944). The issue\nbefore us is a matter of law and the result is clear, thus this is not a case in which Skidmore deference\nwould affect the outcome.\n4\n\n\x0c250\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nInoculant Co., 333 U.S. 127, 130 (1948) (\xe2\x80\x9cWe do not have presented the question whether the\nmethods of selecting and testing the non-inhibitive strains are patentable. We have here only\nproduct claims.\xe2\x80\x9d). Moreover, while beta-alanine may exist in nature, Natural Alternatives\nhas argued that the quantities being administered do not, and that the claimed consumption\ngreatly exceeds natural levels.\nThe Method Claims at issue are treatment claims. They cover using a natural product\nin unnatural quantities to alter a patient\xe2\x80\x99s natural state, to treat a patient with specific\ndosages outlined in the patents. We hold, therefore, that the Method Claims are not directed\nto ineligible subject matter.\nII.\nThe district court also considered the patent eligibility of a number of claims to dietary\nsupplements (\xe2\x80\x9cthe Product Claims\xe2\x80\x9d). The parties and the district court treated claim 6 of the\n\xe2\x80\x99376 patent and claim 1 of the \xe2\x80\x99084 patent as representative of the claims in those patents.\nClaim 6 of the \xe2\x80\x99376 patent depends on claims 1 and 5.\nTurning to the Product Claims before us, claim 6 of the \xe2\x80\x99376 patent depends on claims\n1 and 5.\n1. A composition, comprising:\nglycine; and\na) an amino acid selected from the group consisting of a beta-alanine, an\nester of a beta-alanine, and an amide of a beta-alanine, or\nb) a di-peptide selected from the group consisting of a beta-alanine dipeptide and a beta-alanylhistidine di-peptide.\n5. The composition of claim 1, wherein the composition is a dietary supplement\nor a sports drink.\n6. The composition of claim 5, wherein the dietary supplement or sports drink\nis a supplement for humans.\nClaim 1 of the \xe2\x80\x99084 patent recites:\n1. A human dietary supplement, comprising a beta-alanine in a unit dosage of\nbetween about 0.4 grams to 16 grams, wherein the supplement provides a unit\ndosage of beta-alanine.\nAlthough beta-alanine is a natural product, the Product Claims are not directed to\nbeta-alanine. A claim to a manufacture or composition of matter made from a natural product\nis not directed to the natural product where it has different characteristics and \xe2\x80\x9cthe potential\nfor significant utility.\xe2\x80\x9d See Diamond v. Chakrabarty, 447 U.S. 303, 310 (1980). Just as the\nMethod Claims are directed to specific methods of treatment that employ a natural law, the\n\n\x0cPATENTABLE SUBJECT MATTER\n\n251\n\nProduct Claims are directed to specific treatment formulations that incorporate natural\nproducts, but they have different characteristics and can be used in a manner that betaalanine as it appears in nature cannot.\nIn the Product Claims, beta-alanine and glycine are incorporated into particular\ndosage forms. Claim 6 of the \xe2\x80\x99376 patent is directed to a \xe2\x80\x9cdietary supplement or sports drink\xe2\x80\x9d\nthat uses a combination of glycine and one of the specified forms of beta-alanine. Under\nNatural Alternatives\xe2\x80\x99 claim constructions, the quantity of beta-alanine must be sufficient to\n\xe2\x80\x9ceffectively increase[] athletic performance,\xe2\x80\x9d and the specification provides a method for\ndetermining such an amount. Similarly, the \xe2\x80\x9cdietary supplement\xe2\x80\x9d in claim 1 of the \xe2\x80\x99084\npatent uses the product beta-alanine at a dosage of \xe2\x80\x9cbetween about 0.4 grams to 16 grams\xe2\x80\x9d\nto \xe2\x80\x9ceffectively increase[] athletic performance.\xe2\x80\x9d In each case, the natural products have been\nisolated and then incorporated into a dosage form with particular characteristics. At this\nstage in the litigation, it has been sufficiently alleged that these characteristics provide\nsignificant utility, as the claimed dosage forms can be used to increase athletic performance\nin a way that naturally occurring beta-alanine cannot. Accordingly, neither claim is directed\nto ineligible subject matter.\nMoreover, even though claim 6 contains a combination of glycine and beta-alanine,\nboth of which are natural products, that is not necessarily sufficient to establish that the\nclaimed combination is \xe2\x80\x9cdirected to\xe2\x80\x9d ineligible subject matter. The Court\xe2\x80\x99s decision in Funk\nBrothers does not stand for the proposition that any combination of ineligible subject matter\nis itself ineligible. In Funk Brothers, the Court held that claims to a mixture of two naturally\noccurring bacteria were not patent eligible where each bacteria species in the claimed\ncombination \xe2\x80\x9cha[d] the same effect it always had,\xe2\x80\x9d and the \xe2\x80\x9ccombination of species produce[d]\n. . . no enlargement of the range of their utility.\xe2\x80\x9d 333 U.S. at 131. The combination of the\nbacteria into the same package did \xe2\x80\x9cnot improve in any way their natural function.\xe2\x80\x9d Here, as\nCreative Compounds\xe2\x80\x99 counsel acknowledged at oral argument, the record indicates that the\nclaimed combination of glycine and beta-alanine could have synergistic effects allowing for\noutcomes that the individual components could not have. Given that this is the pleading\nstage, we would have to accept this statement as true even if it were just an allegation in the\npleadings. Instead, what we have goes far beyond that, including a statement in an article\nattached to an expert report explaining that \xe2\x80\x9cone of insulin\xe2\x80\x99s effects is to increase amino acid\n(such as beta-alanine) into our cells,\xe2\x80\x9d a statement in the specification that \xe2\x80\x9c[i]t may be that\nglycine enhances insulin sensitivity,\xe2\x80\x9d and an expert declaration explaining that direct\nsupplementation of a different amino acid had no effect unless \xe2\x80\x9cco-supplemented with glucose\nor other compounds increasing the concentration of insulin in circulation.\xe2\x80\x9d All of these\nsuggest that when combined the beta-alanine and glycine have effects that are greater than\nthe sum of the parts. At a minimum, there are sufficient factual allegations to render\njudgment on the pleadings inappropriate. Accordingly, given the factual allegations, these\nclaims would still survive a motion for judgment on the pleadings at the first step of the Alice\ntest.\nFinally, even if the Product Claims were directed to ineligible subject matter,\njudgment on the pleadings would still be inappropriate under step two. Like claim 1 of the\n\n\x0c252\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n\xe2\x80\x99865 patent, the Product Claims contain a dietary supplement limitation, with the same\nproposed construction. As we explained with regard to the Method Claims, the specification\ndoes not contain language supporting the idea that this limitation was well-understood,\nroutine, and conventional. The language in the specification does not support this\nproposition, and patentee\xe2\x80\x99s claim construction contradicts Creative Compounds\xe2\x80\x99 position, so\nsuch a determination may not be made on a motion for judgment on the pleadings.\n\nDiscussion Questions: Natural Alternatives\n1. Diagnostics Versus Treatments. The Federal Circuit\xe2\x80\x99s holding that the method\nclaims in Natural Alternatives rests quite heavily on the distinction the court draws between\ndiagnostic methods (which are not patentable) and treatment methods (which are\npatentable). The court first drew this distinction in Vanda Pharmaceuticals, which is cited\nheavily in Natural Alternatives. Vanda is a highly complex case about a pharmaceutical drug;\nNatural Alternatives, the case we chose to include in this book, is about a sports drink. What\ncan we say, except: you\xe2\x80\x99re welcome. Do you think this line between diagnostics and\ntreatments is tenable? Is there anything in the Mayo opinion that would support or\nundermine the Federal Circuit\xe2\x80\x99s rule that treatments are patentable and diagnostics are not?\nWhat if the claim is to a new diagnostic followed by an old treatment, where the treatment\ndosage and other details aren\xe2\x80\x99t adjusted in light of the diagnostic?\nRelatedly, do you think the Mayo patent was properly classified by the Federal Circuit\nas a diagnostic patent? The dissent in Vanda criticized the characterization of the Mayo\ninvention as a diagnostic because the representative claim was to \xe2\x80\x9c[a] method of optimizing\ntherapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder\xe2\x80\x9d that\nincluded \xe2\x80\x9cadministering a drug\xe2\x80\x9d to a patient with this disorder. The Vanda majority\nresponded that the Mayo claim was not a treatment claim because \xe2\x80\x9ca doctor . . . could violate\nthe patent even if he did not actually alter his treatment decision in the light of the test\xe2\x80\x9d such\nthat the claim would \xe2\x80\x9ctie up the doctor\xe2\x80\x99s subsequent treatment decision whether that\ntreatment does, or does not, change in light of the inference he has drawn using the\ncorrelations.\xe2\x80\x9d The Mayo court also noted that \xe2\x80\x9cunlike, say, a typical patent on a new drug or\na new way of using an existing drug, the patent claims do not confine their reach to particular\napplications of those laws.\xe2\x80\x9d Which view do you find more convincing as a legal matter? As a\npolicy matter?\n2. What About Myriad? In Natural Alternatives, the Federal Circuit cites the earlier\nSupreme Court cases Chakrabarty and Funk Brothers but does not cite Myriad in its\ndiscussion of the product claims. Why do you think that is? Is that approach justified? Is the\ncourt\xe2\x80\x99s result consistent with Myriad?\n\n\x0cPATENTABLE SUBJECT MATTER\n\n253\n\nApplying the Two-Step Test to \xe2\x80\x9cNature\xe2\x80\x9d Claims: MPEP \xc2\xa7 2106\nThe Supreme Court first announced the two-step test for patentable subject matter in\n2012 in Mayo: (1) Is the claim directed to an ineligible concept? (2) If so, what else is there?\nIs there an inventive concept that amounts to significantly more than a patent on the\nineligible concept? Needless to say, that left a great deal of prior Supreme Court caselaw on\npatentable subject matter that had been decided using other tests. The following table\nillustrates how the Supreme Court has attempted to retrofit its earlier patentable subject\nmatter (PSM) precedents (including abstract ideas, laws of nature, and products of nature)\ninto this new two-step test. (Please note that we are only describing how the Supreme Court\nhas characterized these old cases, not endorsing it.)\nCase\n\n1. Ineligible concept?\n\n2. What else?\n\nPSM?\n\nNeilson\n(Eng. 1841)\n\nhot air promotes ignition\nbetter than cold air\n\nunconventional steps\nimplemented in inventive\nway\n\nYES\n\nFunk Bros.\n(1948)\n\nmixture of naturally\noccurring bacteria\n\nnothing; combination did\nnot improve natural\nfunction\n\nNO\n\nBenson\n(1972)\n\nbinary-to-digital conversion\n\nimplemented on a\ncomputer, but that is only\npractical use\n\nNO\n\nFlook\n(1978)\n\nnew formula for alarm\nlimits in chemical reaction\n\nwell known chemical\nprocess & use of computers\n\nNO\n\nChakrabarty\n(1980)\n\nNO (genetically modified\nbacterium is not natural)\n\nN/A\n\nYES\n\nDiehr\n(1981)\n\nArrhenius equation (already novel rubber curing\nknown)\napparatus\n\nYES\n\nBilski\n(2010)\n\nrisk hedging\n\nNO\n\nMayo\n(2012)\n\nrelationship between\nconventional\nmetabolite concentrations & \xe2\x80\x9cadministering\xe2\x80\x9d and\nthiopurine dose\n\xe2\x80\x9cdetermining\xe2\x80\x9d steps\n\nMyriad\n(2013)\nisolated DNA\n\nisolated DNA is a product of\nnature\n\nnothing; claim is to natural NO\nproduct itself\n\nMyriad\n(2013)\ncDNA\n\nNO (synthetic cDNA is not\nnatural)\n\nN/A\n\nlimited to a few markets\n\nNO\n\nYES\n\n\x0c254\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAs the Supreme Court noted in Mayo, \xe2\x80\x9call inventions at some level embody, use,\nreflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.\xe2\x80\x9d Even a\nclaim to a standard spring-loaded mousetrap could be characterized as directed to the\nabstract idea of catching mice, or the natural laws involving the physics of springs and\nmechanical forces. But the Court recognized that \xe2\x80\x9ctoo broad an interpretation of this\nexclusionary principle could eviscerate patent law.\xe2\x80\x9d Given the malleability of the two-step\ntest, we think patent lawyers should always at least consider whether a claim is patentable\nsubject matter. And figuring out whether a claim is more analogous to those that have\nsurvived the Mayo test or those that have failed requires some creativity and good lawyering.\nThe difficulties of applying this complicated framework led to widespread complaints\nabout inconsistency in USPTO examination decisions involving patentable subject matter.\nTo help patent examiners apply this doctrine, the USPTO has issued extensive guidance to\nexaminers. Although the Federal Circuit has not yet granted any deference to the USPTO\xe2\x80\x99s\ninterpretation of substantive patent law, this guidance is a useful resource for students\nlooking for more examples of how the USPTO explains Federal Circuit caselaw to non-lawyer\npatent examiners. As you read the following MPEP excerpts, consider whether they are a\nfaithful summary of current law.\nThe USPTO has divided Mayo Step 1 into two prongs: a claim is only \xe2\x80\x9cdirected to\xe2\x80\x9d an\nineligible concept if it (1) \xe2\x80\x9crecites\xe2\x80\x9d an ineligible concept (as opposed to merely \xe2\x80\x9cinvolving\xe2\x80\x9d an\nexception) and (2) fails to integrate that concept into a \xe2\x80\x9cpractical application.\xe2\x80\x9d MPEP\n\xc2\xa7 2106.04 explains the recite vs. involve distinction as follows:\nAn example of a claim that recites a judicial exception is \xe2\x80\x9cA machine\ncomprising elements that operate in accordance with F = ma.\xe2\x80\x9d This claim sets\nforth the principle that force equals mass times acceleration (F = ma) and\ntherefore recites a law of nature exception. Because F = ma represents a\nmathematical formula, the claim could alternatively be considered as reciting\nan abstract idea. Because this claim recites a judicial exception, it requires\nfurther analysis. An example of a claim that merely involves, or is based on,\nan exception is a claim to \xe2\x80\x9cA teeter-totter comprising an elongated member\npivotably attached to a base member, having seats and handles attached at\nopposing sides of the elongated member.\xe2\x80\x9d This claim is based on the concept of\na lever pivoting on a fulcrum, which involves the natural principles of\nmechanical advantage and the law of the lever. However, this claim does not\nrecite these natural principles and therefore is not directed to a judicial\nexception. Thus, the claim is eligible without further analysis.\nThe USPTO then explains the application of this Mayo Step 1 test to \xe2\x80\x9cnature\xe2\x80\x9d claims:\n[N]ot every claim describing a natural ability or quality of a product, or\ndescribing a natural process, necessarily recites a law of nature or natural\nphenomenon. Thus, in a claimed method of treating cancer with chemotherapy,\nthe cancer cells\xe2\x80\x99 inability to survive chemotherapy is not considered to be a law\nof nature. Similarly, in a claimed method of treating headaches with aspirin,\n\n\x0cPATENTABLE SUBJECT MATTER\n\n255\n\nthe human body\xe2\x80\x99s natural response to aspirin is not considered to be a law of\nnature. These claims are accordingly eligible unless they recite another\nexception. Similarly, a method of producing a new compound is not directed to\nthe individual components\xe2\x80\x99 ability to combine to form the new compound.\nEven if a claim does recite a law of nature or natural phenomenon, it\nmay still be eligible. For example, claims reciting a naturally occurring\nrelationship between a patient\xe2\x80\x99s genotype and the risk of QTc prolongation (a\nlaw of nature) were held eligible as not \xe2\x80\x9cdirected to\xe2\x80\x9d that relationship because\nthey also recited a step of treating the patient with an amount of a particular\nmedication that was tailored to the patient\xe2\x80\x99s genotype. Vanda Pharms., 887\nF.3d at 1134-36. This particular treatment step applied the natural\nrelationship in a manner that integrated it into a practical application.\nThe MPEP further emphasizes that for products of nature, the key question at Mayo Step 1\nis whether the nature-based product limitations in the claim have \xe2\x80\x9cmarkedly different\ncharacteristics\xe2\x80\x9d from naturally occurring products.\nIf a claim is directed to an ineligible concept at Step 1, it is necessary to move to Step\n2: determining whether the rest of the claim includes an \xe2\x80\x9cinventive concept\xe2\x80\x9d that adds\n\xe2\x80\x9csignificantly more\xe2\x80\x9d to the ineligible concept. Mayo emphasized that it is not enough to add\n\xe2\x80\x9cwell-understood, routine, conventional activity\xe2\x80\x9d or to merely tell someone \xe2\x80\x9cto apply the law.\xe2\x80\x9d\nMerely applying the concept in a particular field of use is also insufficient. Although the\nUSPTO emphasizes that \xe2\x80\x9cthe search for an inventive concept should not be confused with a\nnovelty or non-obviousness determination,\xe2\x80\x9d there are overlaps: if what remains after\nremoving the ineligible concept from the claim is nonobvious, then it likely passes Step 2.\n\nPractice Problems: Laws of Nature and Products of Nature\nConsider the following claims. Do you think these claims involve patentable subject\nmatter? If you will need more technical information to answer the question, explain what\ninformation you will need.\n1. The patented invention was a method for detecting genetic abnormalities in a fetus.\nPrior to the invention of this method, the only known way of obtaining a genetic sample from\na fetus was to draw amniotic fluid directly from the pregnant person\xe2\x80\x99s uterus, in a method\nknown as amniocentesis. This method was considered dangerous because it involved poking\na long needle into the pregnant person\xe2\x80\x99s uterus, near the fetus. The key to this invention was\nthe groundbreaking discovery that some of the fetus\xe2\x80\x99s nucleic acid circulates in the\nbloodstream of the pregnant person (known as cell-free fetal DNA). A doctor could thus draw\nblood from the pregnant person, separate out and amplify the fetus\xe2\x80\x99s DNA using conventional\nmethods, and run genetic tests on the fetus\xe2\x80\x99s DNA. The claim reads:\nA method for detecting a paternally inherited nucleic acid of fetal origin\nperformed on a maternal serum or plasma sample from a pregnant female,\n\n\x0c256\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nwhich method comprises amplifying a paternally inherited nucleic acid from\nthe serum or plasma sample and detecting the presence of a paternally\ninherited nucleic acid of fetal origin in the sample.\n\nAriosa Diagnostics v. Sequenom, 788 F.3d 1371 (Fed Cir 2015).\n2. The invention is a method of repeatedly freezing liver cells (hepatocytes) in such a\nmanner that they can be unfrozen and then used for transplant or other medical purposes.\nThe individual steps of freezing and thawing were known, but prior to this invention,\nscientists had believed that liver cells could not survive multiple freeze-thaw cycles. The\nclaim reads:\nA method of producing a desired preparation of multi-cryopreserved\nhepatocytes, said hepatocytes being capable of being frozen and thawed at least\ntwo times, and in which greater than 70% of the hepatocytes of said\npreparation are viable after the final thaw, said method comprising:\n(a) subjecting hepatocytes that have been frozen and thawed to density\ngradient fractionation to separate viable hepatocytes from nonviable\nhepatocytes,\n(b) recovering the separated viable hepatocytes, and\n(c) cryopreserving the recovered viable hepatocytes . . . .\nRapid Litigation Management v. CellzDirect, 827 F.3d 1042 (Fed. Cir. 2016).\n3. When an artery is damaged or inflamed, the body releases the enzyme\nmyeloperoxidase (MPO). Methods of detecting MPO were known, but the inventors\ndiscovered that MPO is an indicator of a patient\xe2\x80\x99s risk of cardiovascular disease. The claim\nreads:\nA method of assessing the risk of requiring medical intervention in a patient\nwho is presenting with chest pain, comprising:\n(a) characterizing the levels of myeloperoxidase (MPO) activity, MPO mass, or\nboth, respectively in the bodily sample from the human patient, wherein said\nbodily sample is blood or a blood derivative,\n(b) wherein a patient whose levels of MPO activity, MPO mass, or both is\ncharacterized as being elevated in comparison to levels of MPO activity, MPO\nmass or both in a comparable bodily samples obtained from individuals in a\ncontrol population is at risk of requiring medical intervention to prevent the\noccurrence of an adverse cardiac event within the next six months.\nCleveland Clinic v. True Health Diagnostics, 859 F.3d 1352 (Fed Cir. 2017).\n\n\x0cPATENTABLE SUBJECT MATTER\n\n257\n\n4. Some of you may remember the creation of Dolly, the famous cloned sheep. That\nwas the invention: a perfect genetic clone of a living animal. The claim reads as follows:\nA live-born clone of a pre-existing, non-embryonic, donor mammal, wherein the\nmammal is selected from cattle, sheep, pigs, and goats.\nIn re Roslin Institute (Edinburgh), 750 F.3d 1333 (Fed. Cir. 2014).\n5. The invention is a method for taking a person\xe2\x80\x99s temperature by scanning across\ntheir skin (typically the forehead). The technology for reading temperature from the skin was\nwell known, but prior to this invention, scientists thought skin temperature could not be\nsystematically correlated with body temperature. The inventors discovered the relationship\nbetween skin temperature and internal body temperature. The patent described the newly\ncalculated coefficient for translating skin measurements into body temperature readings. If\nyou\xe2\x80\x99ve had your temperature taken by scanning your forehead (perhaps during the COVID19 pandemic), you\xe2\x80\x99ve used the technology described in this patent. The claim reads:\nA method of detecting human body temperature comprising making at least\nthree radiation readings per second while moving a radiation detector to scan\nacross a region of skin over an artery to electronically determine a body\ntemperature approximation, distinct from skin surface temperature.\nExergen v. Kaz, 725 F. App\xe2\x80\x99x 959 (Fed. Cir. 2018).\n6. This invention related to the cell-free fetal DNA invention from problem 1. One of\nthe technical hurdles in examining fetal DNA was separating it from the DNA of the pregnant\nindividual, with which it was mixed. The inventors discovered that the fragments of fetal\nDNA present in the pregnant person\xe2\x80\x99s bloodstream were typically very small, generally less\nthan 500 base pairs. The invention is a method of separating fetal blood from the pregnant\nindividual\xe2\x80\x99s blood by discriminating among DNA fragments based on size. The claim reads:\nA method for preparing a deoxyribonucleic acid (DNA) fraction from a pregnant\nhuman female useful for analyzing a genetic locus involved in a fetal\nchromosomal aberration, comprising:\n(a) extracting DNA from a substantially cell-free sample of blood plasma or\nblood serum of a pregnant human female to obtain extracellular circulatory\nfetal and maternal DNA fragments;\n(b) producing a fraction of the DNA extracted in (a) by: (i) size discrimination\nof extracellular circulatory DNA fragments, and (ii) selectively removing\nthe DNA fragments greater than approximately 500 base pairs, wherein\nthe DNA fraction after (b) comprises a plurality of genetic loci of the\nextracellular circulatory fetal and maternal DNA; and\n(c) analyzing a genetic locus in the fraction of DNA produced in (b).\nIllumina, Inc. v. Ariosa Diagnostics, Inc., 967 F.3d 1319 (Fed. Cir. 2020).\n\n\x0c258\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nB. Abstract Ideas\nIn the wake of Mayo and Myriad, questions remained (at least in the minds of Federal\nCircuit judges) over the scope and application of the Mayo test. In particular, patents\ninvolving abstract ideas quickly emerged as the most important set of \xc2\xa7 101 cases and\noccupied the majority of the courts\xe2\x80\x99 attention. This trend has continued; a study of all\npatentable subject matter cases decided by the federal courts in 2015\xe2\x80\x9319 found that 90% were\nin the software and information technology industries, which largely involve abstract ideas\nrather than laws of nature. Mark A. Lemley & Samantha Zyontz, Does Alice Target Patent\nTrolls?, J. Empirical Legal Stud. (forthcoming 2021). After Mayo, the Federal Circuit was\ntorn about how (or whether) to apply that case in the context of abstract ideas, and the\nSupreme Court\xe2\x80\x99s 2010 abstract ideas decision in Bilski v. Kappos was not entirely helpful.\nThis culminated in the en banc Federal Circuit deadlocking six-to-six (and producing five\nseparate opinions) in a case concerning computerized methods for managing financial\nsettlement risk. That case was Alice v. CLS Bank. And when a circuit court of appeals sitting\nen banc deadlocks and cannot issue a controlling opinion, the Supreme Court has little choice\nbut to take the case.\n\nAlice Corp. v. CLS Bank Int\xe2\x80\x99l, 573 U.S. 208 (2014)\nJustice Thomas delivered the opinion of the Court.\nThe patents at issue in this case disclose a computer-implemented scheme for\nmitigating \xe2\x80\x9csettlement risk\xe2\x80\x9d (i.e., the risk that only one party to a financial transaction will\npay what it owes) by using a third-party intermediary. The question presented is whether\nthese claims are patent eligible under 35 U.S.C. \xc2\xa7 101, or are instead drawn to a patentineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of\nintermediated settlement, and that merely requiring generic computer implementation fails\nto transform that abstract idea into a patent-eligible invention. We therefore affirm the\njudgment of the United States Court of Appeals for the Federal Circuit.\nI\nA\nPetitioner Alice Corporation is the assignee of several patents that disclose schemes\nto manage certain forms of financial risk. The claims at issue relate to a computerized scheme\nfor mitigating \xe2\x80\x9csettlement risk\xe2\x80\x9d\xe2\x80\x94i.e., the risk that only one party to an agreed-upon financial\nexchange will satisfy its obligation. In particular, the claims are designed to facilitate the\nexchange of financial obligations between two parties by using a computer system as a thirdparty intermediary. The intermediary creates \xe2\x80\x9cshadow\xe2\x80\x9d credit and debit records (i.e., account\nledgers) that mirror the balances in the parties\xe2\x80\x99 real-world accounts at \xe2\x80\x9cexchange\ninstitutions\xe2\x80\x9d (e.g., banks). The intermediary updates the shadow records in real time as\ntransactions are entered, allowing \xe2\x80\x9conly those transactions for which the parties\xe2\x80\x99 updated\n\n\x0cPATENTABLE SUBJECT MATTER\n\n259\n\nshadow records indicate sufficient resources to satisfy their mutual obligations.\xe2\x80\x9d At the end\nof the day, the intermediary instructs the relevant financial institutions to carry out the\n\xe2\x80\x9cpermitted\xe2\x80\x9d transactions in accordance with the updated shadow records, thus mitigating the\nrisk that only one party will perform the agreed-upon exchange.\nIn sum, the patents in suit claim (1) the foregoing method for exchanging obligations\n(the method claims), (2) a computer system configured to carry out the method for exchanging\nobligations (the system claims), and (3) a computer-readable medium containing program\ncode for performing the method of exchanging obligations (the media claims). All of the claims\nare implemented using a computer; the system and media claims expressly recite a computer,\nand the parties have stipulated that the method claims require a computer as well.\nII\n\xe2\x80\x9cWe have long held that [\xc2\xa7 101] contains an important implicit exception: Laws of\nnature, natural phenomena, and abstract ideas are not patentable.\xe2\x80\x9d Ass\xe2\x80\x99n for Molecular\nPathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013) (internal quotation marks and\nbrackets omitted). We have interpreted \xc2\xa7 101 and its predecessors in light of this exception\nfor more than 150 years. Bilski v. Kappos, 561 U.S. 593; see also O\xe2\x80\x99Reilly v. Morse, 15 How.\n62 (1854); Le Roy v. Tatham, 14 How. 156 (1853).\nWe have described the concern that drives this exclusionary principle as one of preemption. See, e.g., Bilski, at 611\xe2\x80\x9312 (upholding the patent \xe2\x80\x9cwould pre-empt use of this\napproach in all fields, and would effectively grant a monopoly over an abstract idea\xe2\x80\x9d). Laws\nof nature, natural phenomena, and abstract ideas are \xe2\x80\x9cthe basic tools of scientific and\ntechnological work.\xe2\x80\x9d Myriad, 569 U.S. at 589. \xe2\x80\x9c[M]onopolization of those tools through the\ngrant of a patent might tend to impede innovation more than it would tend to promote it,\xe2\x80\x9d\nthereby thwarting the primary object of the patent laws. Mayo v. Prometheus, 566 U.S. 66,\n71 (2012); see U.S. Const. art. I, \xc2\xa7 8, cl. 8 (Congress \xe2\x80\x9cshall have Power . . . To promote the\nProgress of Science and useful Arts\xe2\x80\x9d). We have \xe2\x80\x9crepeatedly emphasized this . . . concern that\npatent law not inhibit further discovery by improperly tying up the future use of\xe2\x80\x9d these\nbuilding blocks of human ingenuity. Mayo, 566 U.S. at 85 (citing Morse, 15 How. at 113).\nAt the same time, we tread carefully in construing this exclusionary principle lest it\nswallow all of patent law. At some level, \xe2\x80\x9call inventions . . . embody, use, reflect, rest upon,\nor apply laws of nature, natural phenomena, or abstract ideas.\xe2\x80\x9d Id. at 71. Thus, an invention\nis not rendered ineligible for patent simply because it involves an abstract concept.\n\xe2\x80\x9c[A]pplication[s]\xe2\x80\x9d of such concepts \xe2\x80\x9cto a new and useful end,\xe2\x80\x9d we have said, remain eligible\nfor patent protection. Gottschalk v. Benson, 409 U.S. 63, 67 (1972).\nAccordingly, in applying the \xc2\xa7 101 exception, we must distinguish between patents\nthat claim the \xe2\x80\x9cbuildin[g] block[s]\xe2\x80\x9d of human ingenuity and those that integrate the building\nblocks into something more, Mayo, 566 U.S. at 89, thereby \xe2\x80\x9ctransform[ing]\xe2\x80\x9d them into a\npatent-eligible invention, id. at 72. The former \xe2\x80\x9cwould risk disproportionately tying up the\nuse of the underlying\xe2\x80\x9d ideas, id. at 73, and are therefore ineligible for patent protection. The\n\n\x0c260\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nlatter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly\ngranted under our patent laws.\nIII\nIn Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012),\nwe set forth a framework for distinguishing patents that claim laws of nature, natural\nphenomena, and abstract ideas from those that claim patent-eligible applications of those\nconcepts. First, we determine whether the claims at issue are directed to one of those patentineligible concepts. If so, we then ask, \xe2\x80\x9c[w]hat else is there in the claims before us?\xe2\x80\x9d To answer\nthat question, we consider the elements of each claim both individually and \xe2\x80\x9cas an ordered\ncombination\xe2\x80\x9d to determine whether the additional elements \xe2\x80\x9ctransform the nature of the\nclaim\xe2\x80\x9d into a patent-eligible application. We have described step two of this analysis as a\nsearch for an \xe2\x80\x9cinventive concept\xe2\x80\x9d\xe2\x80\x94i.e., an element or combination of elements that is\n\xe2\x80\x9csufficient to ensure that the patent in practice amounts to significantly more than a patent\nupon the [ineligible concept] itself.\xe2\x80\x9d\nA\nWe must first determine whether the claims at issue are directed to a patent-ineligible\nconcept. We conclude that they are: These claims are drawn to the abstract idea of\nintermediated settlement.\nThe \xe2\x80\x9cabstract ideas\xe2\x80\x9d category embodies \xe2\x80\x9cthe longstanding rule that \xe2\x80\x98[a]n idea of itself\nis not patentable.\xe2\x80\x99\xe2\x80\x9d Benson, 409 U.S. at 67. In Benson, for example, this Court rejected as\nineligible patent claims involving an algorithm for converting binary-coded decimal numerals\ninto pure binary form, holding that the claimed patent was \xe2\x80\x9cin practical effect . . . a patent\non the algorithm itself.\xe2\x80\x9d 409 U.S. at 71\xe2\x80\x9372. And in Parker v. Flook, 437 U.S. 584, 594\xe2\x80\x9395\n(1978), we held that a mathematical formula for computing \xe2\x80\x9calarm limits\xe2\x80\x9d in a catalytic\nconversion process was also a patent-ineligible abstract idea.\nWe most recently addressed the category of abstract ideas in Bilski v. Kappos, 561\nU.S. 593 (2010). The claims at issue in Bilski described a method for hedging against the\nfinancial risk of price fluctuations. Claim 1 recited a series of steps for hedging risk,\nincluding: (1) initiating a series of financial transactions between providers and consumers\nof a commodity; (2) identifying market participants that have a counterrisk for the same\ncommodity; and (3) initiating a series of transactions between those market participants and\nthe commodity provider to balance the risk position of the first series of consumer\ntransactions. Claim 4 \xe2\x80\x9cpu[t] the concept articulated in claim 1 into a simple mathematical\nformula.\xe2\x80\x9d The remaining claims were drawn to examples of hedging in commodities and\nenergy markets.\n\xe2\x80\x9c[A]ll members of the Court agree[d]\xe2\x80\x9d that the patent at issue in Bilski claimed an\n\xe2\x80\x9cabstract idea.\xe2\x80\x9d Id. at 609; see also id. at 619 (Stevens, J., concurring in judgment).\nSpecifically, the claims described \xe2\x80\x9cthe basic concept of hedging, or protecting against risk.\xe2\x80\x9d\nThe Court explained that \xe2\x80\x9c[h]edging is a fundamental economic practice long prevalent in\n\n\x0cPATENTABLE SUBJECT MATTER\n\n261\n\nour system of commerce and taught in any introductory finance class.\xe2\x80\x9d The concept of hedging\nas recited by the claims in suit was therefore a patent-ineligible \xe2\x80\x9cabstract idea, just like the\nalgorithms at issue in Benson and Flook.\xe2\x80\x9d Id. at 611.\nIt follows from our prior cases, and Bilski in particular, that the claims at issue here\nare directed to an abstract idea. Petitioner\xe2\x80\x99s claims involve a method of exchanging financial\nobligations between two parties using a third-party intermediary to mitigate settlement risk.\nThe intermediary creates and updates \xe2\x80\x9cshadow\xe2\x80\x9d records to reflect the value of each party\xe2\x80\x99s\nactual accounts held at \xe2\x80\x9cexchange institutions,\xe2\x80\x9d thereby permitting only those transactions\nfor which the parties have sufficient resources. At the end of each day, the intermediary\nissues irrevocable instructions to the exchange institutions to carry out the permitted\ntransactions.\nOn their face, the claims before us are drawn to the concept of intermediated\nsettlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in\nBilski, the concept of intermediated settlement is \xe2\x80\x9ca fundamental economic practice long\nprevalent in our system of commerce.\xe2\x80\x9d The use of a third-party intermediary (or \xe2\x80\x9cclearing\nhouse\xe2\x80\x9d) is also a building block of the modern economy. Thus, intermediated settlement, like\nhedging, is an \xe2\x80\x9cabstract idea\xe2\x80\x9d beyond the scope of \xc2\xa7 101.\nIn any event, we need not labor to delimit the precise contours of the \xe2\x80\x9cabstract ideas\xe2\x80\x9d\ncategory in this case. It is enough to recognize that there is no meaningful distinction between\nthe concept of risk hedging in Bilski and the concept of intermediated settlement at issue\nhere. Both are squarely within the realm of \xe2\x80\x9cabstract ideas\xe2\x80\x9d as we have used that term.\nB\nBecause the claims at issue are directed to the abstract idea of intermediated\nsettlement, we turn to the second step in Mayo\xe2\x80\x99s framework. We conclude that the method\nclaims, which merely require generic computer implementation, fail to transform that\nabstract idea into a patent-eligible invention.\n1\nAt Mayo step two, we must examine the elements of the claim to determine whether\nit contains an \xe2\x80\x9cinventive concept\xe2\x80\x9d sufficient to \xe2\x80\x9ctransform\xe2\x80\x9d the claimed abstract idea into a\npatent-eligible application. A claim that recites an abstract idea must include \xe2\x80\x9cadditional\nfeatures\xe2\x80\x9d to ensure \xe2\x80\x9cthat the [claim] is more than a drafting effort designed to monopolize the\n[abstract idea].\xe2\x80\x9d Mayo made clear that transformation into a patent-eligible application\nrequires \xe2\x80\x9cmore than simply stat[ing] the [abstract idea] while adding the words \xe2\x80\x98apply it.\xe2\x80\x99\xe2\x80\x9d\nThe introduction of a computer into the claims does not alter the analysis at Mayo\nstep two. In Benson, for example, we considered a patent that claimed an algorithm\nimplemented on \xe2\x80\x9ca general-purpose digital computer.\xe2\x80\x9d 409 U.S. at 64. Because the algorithm\nwas an abstract idea, the claim had to supply a \xe2\x80\x9cnew and useful\xe2\x80\x9d application of the idea in\norder to be patent eligible. But the computer implementation did not supply the necessary\ninventive concept; the process could be \xe2\x80\x9ccarried out in existing computers long in use.\xe2\x80\x9d Id. We\n\n\x0c262\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\naccordingly \xe2\x80\x9cheld that simply implementing a mathematical principle on a physical machine,\nnamely a computer, [i]s not a patentable application of that principle.\xe2\x80\x9d Mayo, 566 U.S. at 84\n(citing Benson, 409 U.S. at 64).\nFlook is to the same effect. There, we examined a computerized method for using a\nmathematical formula to adjust alarm limits for certain operating conditions (e.g.,\ntemperature and pressure) that could signal inefficiency or danger in a catalytic conversion\nprocess. 437 U.S. at 585\xe2\x80\x9386. Once again, the formula itself was an abstract idea, and the\ncomputer implementation was purely conventional. 437 U.S. at 594 (noting that the \xe2\x80\x9cuse of\ncomputers for \xe2\x80\x98automatic monitoring-alarming\xe2\x80\x99\xe2\x80\x9d was \xe2\x80\x9cwell known\xe2\x80\x9d). In holding that the\nprocess was patent ineligible, we rejected the argument that \xe2\x80\x9cimplement[ing] a principle in\nsome specific fashion\xe2\x80\x9d will \xe2\x80\x9cautomatically fal[l] within the patentable subject matter of \xc2\xa7 101.\xe2\x80\x9d\nId. at 593. Thus, \xe2\x80\x9cFlook stands for the proposition that the prohibition against patenting\nabstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a\nparticular technological environment.\xe2\x80\x9d Bilski, 561 U.S. at 610\xe2\x80\x9311.\nIn Diamond v. Diehr, 450 U.S. 175 (1981), by contrast, we held that a computerimplemented process for curing rubber was patent eligible, but not because it involved a\ncomputer. The claim employed a \xe2\x80\x9cwell-known\xe2\x80\x9d mathematical equation, but it used that\nequation in a process designed to solve a technological problem in \xe2\x80\x9cconventional industry\npractice.\xe2\x80\x9d The invention in Diehr used a \xe2\x80\x9cthermocouple\xe2\x80\x9d to record constant temperature\nmeasurements inside the rubber mold\xe2\x80\x94something \xe2\x80\x9cthe industry ha[d] not been able to\nobtain.\xe2\x80\x9d The temperature measurements were then fed into a computer, which repeatedly\nrecalculated the remaining cure time by using the mathematical equation. These additional\nsteps, we recently explained, \xe2\x80\x9ctransformed the process into an inventive application of the\nformula.\xe2\x80\x9d Mayo, 566 U.S. at 81. In other words, the claims in Diehr were patent eligible\nbecause they improved an existing technological process, not because they were implemented\non a computer.\nThese cases demonstrate that the mere recitation of a generic computer cannot\ntransform a patent-ineligible abstract idea into a patent-eligible invention. Stating an\nabstract idea \xe2\x80\x9cwhile adding the words \xe2\x80\x98apply it\xe2\x80\x99\xe2\x80\x9d is not enough for patent eligibility. Mayo,\n566 U.S. at 72. Nor is limiting the use of an abstract idea \xe2\x80\x9cto a particular technological\nenvironment.\xe2\x80\x9d Bilski, 561 U.S. at 610\xe2\x80\x9311. Stating an abstract idea while adding the words\n\xe2\x80\x9capply it with a computer\xe2\x80\x9d simply combines those two steps, with the same deficient result.\nThus, if a patent\xe2\x80\x99s recitation of a computer amounts to a mere instruction to \xe2\x80\x9cimplemen[t]\xe2\x80\x9d\nan abstract idea \xe2\x80\x9con . . . a computer,\xe2\x80\x9d Mayo, 566 U.S. at 84, that addition cannot impart\npatent eligibility. This conclusion accords with the pre-emption concern that undergirds our\n\xc2\xa7 101 jurisprudence. Given the ubiquity of computers, wholly generic computer\nimplementation is not generally the sort of \xe2\x80\x9cadditional featur[e]\xe2\x80\x9d that provides any \xe2\x80\x9cpractical\nassurance that the process is more than a drafting effort designed to monopolize the [abstract\nidea] itself.\xe2\x80\x9d\nThe fact that a computer \xe2\x80\x9cnecessarily exist[s] in the physical, rather than purely\nconceptual, realm,\xe2\x80\x9d is beside the point. There is no dispute that a computer is a tangible\n\n\x0cPATENTABLE SUBJECT MATTER\n\n263\n\nsystem (in \xc2\xa7 101 terms, a \xe2\x80\x9cmachine\xe2\x80\x9d), or that many computer-implemented claims are\nformally addressed to patent-eligible subject matter. But if that were the end of the \xc2\xa7 101\ninquiry, an applicant could claim any principle of the physical or social sciences by reciting a\ncomputer system configured to implement the relevant concept. Such a result would make\nthe determination of patent eligibility \xe2\x80\x9cdepend simply on the draftsman\xe2\x80\x99s art,\xe2\x80\x9d Flook, 437\nU.S. at 593, thereby eviscerating the rule that \xe2\x80\x9c[l]aws of nature, natural phenomena, and\nabstract ideas are not patentable.\xe2\x80\x9d\n2\nThe representative method claim in this case recites the following steps: (1) \xe2\x80\x9ccreating\xe2\x80\x9d\nshadow records for each counterparty to a transaction; (2) \xe2\x80\x9cobtaining\xe2\x80\x9d start-of-day balances\nbased on the parties\xe2\x80\x99 real-world accounts at exchange institutions; (3) \xe2\x80\x9cadjusting\xe2\x80\x9d the shadow\nrecords as transactions are entered, allowing only those transactions for which the parties\nhave sufficient resources; and (4) issuing irrevocable end-of-day instructions to the exchange\ninstitutions to carry out the permitted transactions. Petitioner principally contends that the\nclaims are patent eligible because these steps \xe2\x80\x9crequire a substantial and meaningful role for\nthe computer.\xe2\x80\x9d As stipulated, the claimed method requires the use of a computer to create\nelectronic records, track multiple transactions, and issue simultaneous instructions; in other\nwords, \xe2\x80\x9c[t]he computer is itself the intermediary.\xe2\x80\x9d\nIn light of the foregoing, the relevant question is whether the claims here do more\nthan simply instruct the practitioner to implement the abstract idea of intermediated\nsettlement on a generic computer. They do not.\nTaking the claim elements separately, the function performed by the computer at each\nstep of the process is \xe2\x80\x9c[p]urely conventional.\xe2\x80\x9d Using a computer to create and maintain\n\xe2\x80\x9cshadow\xe2\x80\x9d accounts amounts to electronic recordkeeping\xe2\x80\x94one of the most basic functions of a\ncomputer. See, e.g., Benson, 409 U.S. at 65 (noting that a computer \xe2\x80\x9coperates . . . upon both\nnew and previously stored data\xe2\x80\x9d). The same is true with respect to the use of a computer to\nobtain data, adjust account balances, and issue automated instructions; all of these computer\nfunctions are \xe2\x80\x9cwell-understood, routine, conventional activit[ies]\xe2\x80\x9d previously known to the\nindustry. In short, each step does no more than require a generic computer to perform generic\ncomputer functions.\nConsidered \xe2\x80\x9cas an ordered combination,\xe2\x80\x9d the computer components of petitioner\xe2\x80\x99s\nmethod \xe2\x80\x9cad[d] nothing . . . that is not already present when the steps are considered\nseparately.\xe2\x80\x9d Viewed as a whole, petitioner\xe2\x80\x99s method claims simply recite the concept of\nintermediated settlement as performed by a generic computer. The method claims do not, for\nexample, purport to improve the functioning of the computer itself. Nor do they effect an\nimprovement in any other technology or technical field. Instead, the claims at issue amount\nto \xe2\x80\x9cnothing significantly more\xe2\x80\x9d than an instruction to apply the abstract idea of intermediated\nsettlement using some unspecified, generic computer. Under our precedents, that is not\n\xe2\x80\x9cenough\xe2\x80\x9d to transform an abstract idea into a patent-eligible invention.\n\n\x0c264\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nC\n\nPetitioner\xe2\x80\x99s claims to a computer system and a computer-readable medium fail for\nsubstantially the same reasons. Petitioner conceded below that its media claims rise or fall\nwith its method claims. As to its system claims, petitioner emphasizes that those claims recite\n\xe2\x80\x9cspecific hardware\xe2\x80\x9d configured to perform \xe2\x80\x9cspecific computerized functions.\xe2\x80\x9d But what\npetitioner characterizes as specific hardware\xe2\x80\x94a \xe2\x80\x9cdata processing system\xe2\x80\x9d with a\n\xe2\x80\x9ccommunications controller\xe2\x80\x9d and \xe2\x80\x9cdata storage unit,\xe2\x80\x9d for example\xe2\x80\x94is purely functional and\ngeneric. Nearly every computer will include a \xe2\x80\x9ccommunications controller\xe2\x80\x9d and \xe2\x80\x9cdata storage\nunit\xe2\x80\x9d capable of performing the basic calculation, storage, and transmission functions\nrequired by the method claims. As a result, none of the hardware recited by the system claims\n\xe2\x80\x9coffers a meaningful limitation beyond generally linking \xe2\x80\x98the use of the [method] to a\nparticular technological environment,\xe2\x80\x99 that is, implementation via computers.\xe2\x80\x9d\nPut another way, the system claims are no different from the method claims in\nsubstance. The method claims recite the abstract idea implemented on a generic computer;\nthe system claims recite a handful of generic computer components configured to implement\nthe same idea. This Court has long warned against interpreting \xc2\xa7 101 in ways that make\npatent eligibility depend simply on the draftsman\xe2\x80\x99s art. Holding that the system claims are\npatent eligible would have exactly that result.\nJustice Sotomayor, with whom Justice Ginsburg and Justice Breyer join, concurring.\nI adhere to the view that any \xe2\x80\x9cclaim that merely describes a method of doing business\ndoes not qualify as a \xe2\x80\x98process' under \xc2\xa7 101.\xe2\x80\x9d Bilski v. Kappos, 561 U.S. 593, 614 (2010)\n(Stevens, J., concurring in judgment); see also In re Bilski, 545 F.3d 943, 972 (Fed. Cir. 2008)\n(Dyk, J., concurring) (\xe2\x80\x9cThere is no suggestion in any of the early [English] consideration of\nprocess patents that processes for organizing human activity were or ever had been\npatentable\xe2\x80\x9d). As in Bilski, however, I further believe that the method claims at issue are\ndrawn to an abstract idea. I therefore join the opinion of the Court.\n\nDiscussion Questions: Alice\n1. The Alice/Mayo Test. Do you think the test that the Supreme Court uses in Alice is\ndifferent from or the same as the test used in Mayo? If it is the same, why do you think the\nSupreme Court felt the need to grant certiorari in Alice? Was it merely the fact the Federal\nCircuit was deadlocked, or was there something more?\n2. Justifying Patentable Subject Matter Exceptions. The Supreme Court reiterates that\nthe concern underlying its implicit exceptions to the statutory categories of patent eligibility\nis \xe2\x80\x9cpreemption\xe2\x80\x9d: the idea that tying up \xe2\x80\x9cthe basic tools of scientific and technological work . . .\nmight tend to impede innovation more than it would tend to promote it.\xe2\x80\x9d As we noted at the\nbeginning of this chapter, this reads as an empirical, utilitarian judgment that such patents\nshould be denied because they do not provide a net benefit to society. In making judgments\nsuch as these, should courts also consider the wide array of non-patent innovation incentives\n\n\x0cPATENTABLE SUBJECT MATTER\n\n265\n\nwhen setting patent policy? Or should they confine themselves to scrutinizing the effects of\npatent law in isolation? See Lisa Larrimore Ouellette, Patentable Subject Matter and\nNonpatent Innovation Incentives, 5 U.C. Irvine L. Rev. 1115 (2015).\nIn addition, many of the parties arguing for robust exceptions to patent eligibility have\nbeen motivated more by noneconomic moral concerns than by utilitarian ones. For instance,\nthe challengers to the gene patent claims in Myriad argued that claims on human genes\ncommodified human life and impinged on rights of privacy. Some of the parties challenging\nsoftware claims in cases like Bilski and Alice argued that the claims should be invalidated\nbecause of the expressive value of freedom in computer programming. Many aspects of\nsoftware are considered \xe2\x80\x9cexpressive\xe2\x80\x9d and thus protectable under copyright law. Cf. Google v.\nOracle, 141 S. Ct. 1183 (2021) (holding that Google\xe2\x80\x99s copying of Oracle\xe2\x80\x99s Java Application\nProgramming Interface is copyright fair use). What role should these different values play in\npatent law?\n3. The Draftsman\xe2\x80\x99s Art. Suppose you were given a chance to redraft the claims in Alice\nin light of what you now know of the doctrine. Is there a way to redraft the claims to make\nthem patentable? Or is the invention simply unpatentable no matter how the claims are\ndrawn?\n\nEnfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016)\nTodd M. Hughes, Circuit Judge.\nEnfish sued Microsoft for infringement of several patents related to a \xe2\x80\x9cself-referential\xe2\x80\x9d\ndatabase. On summary judgment, the district court found all claims invalid as ineligible\nunder \xc2\xa7 101. Enfish appeals. We find that the claims are not directed to an abstract idea, so\nwe reverse the summary judgment based on \xc2\xa7 101.\nI\nMicrosoft develops and sells a variety of software products, including the product\nADO.NET. At least through the late 1990s and early 2000s, Enfish developed and sold\nsoftware products, including a new type of database program.\nEnfish received U.S. Patent 6,151,604 and U.S. Patent 6,163,775 in late 2000. The\n\xe2\x80\x99604 and \xe2\x80\x99775 patents are directed to an innovative logical model for a computer database. A\nlogical model is a model of data for a computer database explaining how the various elements\nof information are related to one another. Contrary to conventional logical models, the\npatented logical model includes all data entities in a single table, with column definitions\nprovided by rows in that same table.\nThis \xe2\x80\x9cself-referential\xe2\x80\x9d property can be best understood in contrast with the more\nstandard \xe2\x80\x9crelational\xe2\x80\x9d model. With the relational model, each entity (i.e., each type of thing)\nthat is modeled is provided in a separate table. For instance, a relational model for a\ncorporate file repository might include the following tables:\n\n\x0c266\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\ndocument table,\nperson table,\ncompany table.\n\nThe document table might contain information about documents stored on the file repository,\nthe person table might contain information about authors of the documents, and the company\ntable might contain information about the companies that employ the persons. Using this\nrelational model, if a database were to store information about a document called proj.doc, a\nperson called Scott Wlaschin, and a company called DEXIS, then the result might be:\n\nTo indicate that Scott Wlaschin is the author of proj.doc and that he is employed by\nDEXIS, the relational model uses relationships as follows:\n\nHere, the top-most relationship explains that the value for \xe2\x80\x9cAuthor\xe2\x80\x9d in the Document\ntable refers to the \xe2\x80\x9cID\xe2\x80\x9d column of the Person table. Because the row for proj.doc has AUTHOR\n\n\x0cPATENTABLE SUBJECT MATTER\n\n267\n\n= 1, the row in the Person table that has ID = 1 is the author of proj.doc. By this technique,\nthe relational model captures information about each type of entity in a separate table, with\nrelationships between those tables informing the relationships between rows in different\ntables.\nThe patented self-referential model has two features that are not found in the\nrelational model: first the self-referential model can store all entity types in a single table,\nand second the self-referential model can define the table\xe2\x80\x99s columns by rows in that same\ntable. For example, a self-referential model corresponding to the example relational model\ndiscussed above might look like the following:\n\nThis self-referential table stores the same information that is stored by the example\nrelational model shown above. However, all of the information about documents, persons,\nand companies are stored in a single table.\nFurther, an additional row is included in the self-referential table: the row beginning\nwith ID = # 4. Such a row with TYPE = \xe2\x80\x9cfield\xe2\x80\x9d is a special row, because it defines\ncharacteristics of a column in that same table. In this case, the row with ID = # 4 corresponds\nto the penultimate column, which is denoted by also marking that column with the ID of # 4.\nThe row with ID = # 4 defines a single characteristic of the corresponding column, viz., its\nlabel. Because the row with ID = # 4 has LABEL = \xe2\x80\x9cEmployed By,\xe2\x80\x9d we know that the\ncorresponding column is labeled \xe2\x80\x9cEmployed By,\xe2\x80\x9d as seen in the penultimate column. In other\nsituations, the row might define other characteristics of the column, such as the type of data\nthat the column can hold, e.g., text, integer numbers, or decimal numbers. Because the patent\ndescribes a model where the table\xe2\x80\x99s columns are defined by rows in that same table, it is \xe2\x80\x9cselfreferential.\xe2\x80\x9d\nThe patents teach that multiple benefits flow from this design. First, the patents\ndisclose an indexing technique that allows for faster searching of data than would be possible\nwith the relational model. Second, the patents teach that the self-referential model allows for\nmore effective storage of data other than structured text, such as images and unstructured\ntext.\nFinally, the patents teach that the self-referential model allows more flexibility in\nconfiguring the database. For instance, the database could be launched with no or only\nminimal column definitions. Then, as a new attribute of information is encountered, such as\nan email address, an \xe2\x80\x9cEmail\xe2\x80\x9d column could be added simply by inserting a new row of TYPE\n= \xe2\x80\x9cfield\xe2\x80\x9d and LABEL = \xe2\x80\x9cemail.\xe2\x80\x9d\nIn 2012, Enfish filed suit against Microsoft in district court in California, alleging that\nMicrosoft\xe2\x80\x99s ADO.NET product infringes the \xe2\x80\x99604 and \xe2\x80\x99775 patents. ADO.NET provides an\n\n\x0c268\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ninterface by which software applications can store, retrieve, and otherwise manipulate data\nstored in a database. [The district court found five claims, including representative claim 17\nof the \xe2\x80\x99604 patent, invalid under \xc2\xa7 101.]\nThis court, as well as the Supreme Court, has long grappled with the exception [to\n\xc2\xa7 101] that \xe2\x80\x9c[l]aws of nature, natural phenomena, and abstract ideas are not patentable.\xe2\x80\x9d\nAss\xe2\x80\x99n for Molecular Pathology v. Myriad Genetics, 569 U.S. 576 (2013) (quoting Mayo\nCollaborative Servs. v. Prometheus Labs., 566 U.S. 66 (2012)). Supreme Court precedent\ninstructs us to \xe2\x80\x9cfirst determine whether the claims at issue are directed to a patent-ineligible\nconcept.\xe2\x80\x9d Alice Corp. v. CLS Bank Int\xe2\x80\x99l, 573 U.S. 208 (2014). If this threshold determination\nis met, we move to the second step of the inquiry and \xe2\x80\x9cconsider the elements of each claim\nboth individually and \xe2\x80\x98as an ordered combination\xe2\x80\x99 to determine whether the additional\nelements \xe2\x80\x98transform the nature of the claim\xe2\x80\x99 into a patent-eligible application.\xe2\x80\x9d Id.\nThe Supreme Court has not established a definitive rule to determine what\nconstitutes an \xe2\x80\x9cabstract idea\xe2\x80\x9d sufficient to satisfy the first step of the Mayo/Alice inquiry.\nRather, both this court and the Supreme Court have found it sufficient to compare claims at\nissue to those claims already found to be directed to an abstract idea in previous cases. For\ninstance, fundamental economic and conventional business practices are often found to be\nabstract ideas, even if performed on a computer.\nIn setting up the two-stage Mayo/Alice inquiry, the Supreme Court has declared: \xe2\x80\x9cWe\nmust first determine whether the claims at issue are directed to a patent-ineligible concept.\xe2\x80\x9d\nAlice, 573 U.S. at 218. That formulation plainly contemplates that the first step of the inquiry\nis a meaningful one, i.e., that a substantial class of claims are not directed to a patentineligible concept. The \xe2\x80\x9cdirected to\xe2\x80\x9d inquiry, therefore, cannot simply ask whether the claims\ninvolve a patent-ineligible concept, because essentially every routinely patent-eligible claim\ninvolving physical products and actions involves a law of nature and/or natural\nphenomenon\xe2\x80\x94after all, they take place in the physical world. Rather, the \xe2\x80\x9cdirected to\xe2\x80\x9d\ninquiry applies a stage-one filter to claims, considered in light of the specification, based on\nwhether their character as a whole is directed to excluded subject matter.\nThe Supreme Court has suggested that claims \xe2\x80\x9cpurport[ing] to improve the\nfunctioning of the computer itself,\xe2\x80\x9d or \xe2\x80\x9cimprov[ing] an existing technological process\xe2\x80\x9d might\nnot succumb to the abstract idea exception. See Alice, 573 U.S. at 223\xe2\x80\x93225. While it is true\nthat the Court discussed improvements to computer-related technology in the second step of\nits analysis in Alice, that was because the Court did not need to discuss the first step of its\nanalysis at any considerable length.\nWe do not read Alice to broadly hold that all improvements in computer-related\ntechnology are inherently abstract and, therefore, must be considered at step two. Indeed,\nsome improvements in computer-related technology when appropriately claimed are\nundoubtedly not abstract, such as a chip architecture, an LED display, and the like. Nor do\nwe think that claims directed to software, as opposed to hardware, are inherently abstract.\nTherefore, we find it relevant to ask whether the claims are directed to an improvement to\n\n\x0cPATENTABLE SUBJECT MATTER\n\n269\n\ncomputer functionality versus being directed to an abstract idea, even at the first step of the\nAlice analysis.\nFor that reason, the first step in the Alice inquiry in this case asks whether the focus\nof the claims is on the specific asserted improvement in computer capabilities (i.e., the selfreferential table for a computer database) or, instead, on a process that qualifies as an\n\xe2\x80\x9cabstract idea\xe2\x80\x9d for which computers are invoked merely as a tool. In Bilski and Alice and\nvirtually all of the computer-related \xc2\xa7 101 cases we have issued in light of those Supreme\nCourt decisions, it was clear that the claims were of the latter type\xe2\x80\x94requiring that the\nanalysis proceed to the second step of the Alice inquiry, which asks if nevertheless there is\nsome inventive concept in the application of the abstract idea. In this case, however, the plain\nfocus of the claims is on an improvement to computer functionality itself, not on economic or\nother tasks for which a computer is used in its ordinary capacity.\nAccordingly, we find that the claims at issue in this appeal are not directed to an\nabstract idea within the meaning of Alice. Rather, they are directed to a specific improvement\nto the way computers operate, embodied in the self-referential table. Specifically, claim 17 of\nthe \xe2\x80\x99604 patent recites:\nA data storage and retrieval system for a computer memory, comprising:\nmeans for configuring said memory according to a logical table, said\nlogical table including:\na plurality of logical rows, each said logical row including an object\nidentification number (OID) to identify each said logical row, each said\nlogical row corresponding to a record of information;\na plurality of logical columns intersecting said plurality of logical rows\nto define a plurality of logical cells, each said logical column including\nan OID to identify each said logical column; and\nmeans for indexing data stored in said table.\nThe district court construed the \xe2\x80\x9cmeans for configuring\xe2\x80\x9d language as requiring a fourstep algorithm:5\n1. Create, in a computer memory, a logical table that need not be stored\ncontiguously in the computer memory, the logical table being comprised of rows\nand columns, the rows corresponding to records, the columns corresponding to\nfields or attributes, the logical table being capable of storing different kinds of\nrecords.\n[n.3 in opinion] Construction of a means-plus-function limitation includes two steps. First,\nthe court must determine the claimed function. Second, the court must identify the corresponding\nstructure in the written description of the patent that performs the function. And the corresponding\nstructure for a function performed by a software algorithm is the algorithm itself.\n5\n\n\x0c270\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n2. Assign each row and column an object identification number (OID) that,\nwhen stored as data, can act as a pointer to the associated row or column and\nthat can be of variable length between databases.\n3. For each column, store information about that column in one or more rows,\nrendering the table self-referential, the appending, to the logical table, of new\ncolumns that are available for immediate use being possible through the\ncreation of new column definition records.\n4. In one or more cells defined by the intersection of the rows and columns,\nstore and access data, which can include structured data, unstructured data,\nor a pointer to another row.\n\nThe district court concluded that the claims were directed to the abstract idea of\n\xe2\x80\x9cstoring, organizing, and retrieving memory in a logical table\xe2\x80\x9d or, more simply, \xe2\x80\x9cthe concept\nof organizing information using tabular formats.\xe2\x80\x9d Likewise, Microsoft urges the court to view\nthe claims as being directed to \xe2\x80\x9cthe concepts of organizing data into a logical table with\nidentified columns and rows where one or more rows are used to store an index or information\ndefining columns.\xe2\x80\x9d However, describing the claims at such a high level of abstraction and\nuntethered from the language of the claims all but ensures that the exceptions to \xc2\xa7 101\nswallow the rule. See Alice, 573 U.S. at 217 (noting that \xe2\x80\x9cwe tread carefully in construing this\nexclusionary principle [of laws of nature, natural phenomena, and abstract ideas] lest it\nswallow all of patent law\xe2\x80\x9d).\nHere, the claims are not simply directed to any form of storing tabular data, but\ninstead are specifically directed to a self-referential table for a computer database. For claim\n17, this is reflected in step three of the \xe2\x80\x9cmeans for configuring\xe2\x80\x9d algorithm described above.\nThe necessity of describing the claims in such a way is underscored by the specification\xe2\x80\x99s\nemphasis that \xe2\x80\x9cthe present invention comprises a flexible, self-referential table that stores\ndata.\xe2\x80\x9d Moreover, our conclusion that the claims are directed to an improvement of an existing\ntechnology is bolstered by the specification\xe2\x80\x99s teachings that the claimed invention achieves\nother benefits over conventional databases, such as increased flexibility, faster search times,\nand smaller memory requirements.\nIn finding that the claims were directed simply to \xe2\x80\x9cthe concept of organizing\ninformation using tabular formats,\xe2\x80\x9d the district court oversimplified the self-referential\ncomponent of the claims and downplayed the invention\xe2\x80\x99s benefits. The court determined that\nthe patents\xe2\x80\x99 self-referential concept could be satisfied by creating a table with a simple header\nrow. But that is simply not the case. For example, step three of the algorithm described above\nexplains that the table stores information related to each column in rows of that very same\ntable, such that new columns can be added by creating new rows in the table.\nMoreover, we are not persuaded that the invention\xe2\x80\x99s ability to run on a generalpurpose computer dooms the claims. Unlike the claims at issue in Alice or, more recently in\nVersata Development Group v. SAP America, Inc., 793 F.3d 1306 (Fed. Cir. 2015), which\nMicrosoft alleges to be especially similar to the present case, the claims here are directed to\n\n\x0cPATENTABLE SUBJECT MATTER\n\n271\n\nan improvement in the functioning of a computer. In contrast, the claims at issue in Alice\nand Versata can readily be understood as simply adding conventional computer components\nto well-known business practices. See Alice, 573 U.S. at 222\xe2\x80\x93226; Versata Dev. Grp., 793 F.3d\nat 1333\xe2\x80\x9334 (computer performed \xe2\x80\x9cpurely conventional\xe2\x80\x9d steps to carry out claims directed to\nthe \xe2\x80\x9cabstract idea of determining a price using organization and product group hierarchies\xe2\x80\x9d);\nsee also Mortgage Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1324\xe2\x80\x9325 (Fed.\nCir. 2016) (claims attaching generic computer components to perform \xe2\x80\x9canonymous loan\nshopping\xe2\x80\x9d not patent eligible); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 714\xe2\x80\x9317 (Fed.\nCir. 2014) (claims applying an exchange of advertising for copyrighted content to the\nInternet); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354\xe2\x80\x9355 (Fed. Cir. 2014) (claims\nadding generic computer functionality to the formation of guaranteed contractual\nrelationships). And unlike the claims here that are directed to a specific improvement to\ncomputer functionality, the patent-ineligible claims at issue in other cases recited use of an\nabstract mathematical formula on any general purpose computer, see Gottschalk v. Benson,\n409 U.S. 63 (1972), or recited a purely conventional computer implementation of a\nmathematical formula, see Parker v. Flook, 437 U.S. 584, 594 (1978), or recited generalized\nsteps to be performed on a computer using conventional computer activity, see Internet\nPatents, 790 F.3d at 1348\xe2\x80\x9349 (claims directed to abstract idea of maintaining computer state\nwithout recitation of specific activity used to generate that result).\nSimilarly, that the improvement is not defined by reference to \xe2\x80\x9cphysical\xe2\x80\x9d components\ndoes not doom the claims. To hold otherwise risks resurrecting a bright-line machine-ortransformation test, cf. Bilski v. Kappos, 561 U.S. 593, 604 (2010) (\xe2\x80\x9cThe machine-ortransformation test is not the sole test for deciding whether an invention is a patent-eligible\n\xe2\x80\x98process.\xe2\x80\x99\xe2\x80\x9d), or creating a categorical ban on software patents, cf. id. at 603 (\xe2\x80\x9cThis Court has\nnot indicated that the existence of these well-established exceptions gives the Judiciary carte\nblanche to impose other limitations that are inconsistent with the text and the statute\xe2\x80\x99s\npurpose and design.\xe2\x80\x9d). Much of the advancement made in computer technology consists of\nimprovements to software that, by their very nature, may not be defined by particular\nphysical features but rather by logical structures and processes. We do not see in Bilski or\nAlice, or our cases, an exclusion to patenting this large field of technological progress.\nBecause the claims are not directed to an abstract idea under step one of the Alice\nanalysis, we do not need to proceed to step two of that analysis. We recognize that, in other\ncases involving computer-related claims, there may be close calls about how to characterize\nwhat the claims are directed to. In such cases, an analysis of whether there are arguably\nconcrete improvements in the recited computer technology could take place under step two.\nHere, though, we think it is clear for the reasons stated that the claims are not directed to an\nabstract idea, and so we stop at step one. We conclude that the claims are patent-eligible.\n\n\x0c272\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nChargePoint v. SemaConnect, 920 F.3d 759 (Fed. Cir. 2019)\nSharon Prost, Chief Judge.\nI\nThe technology at issue in this patent infringement case pertains to charging stations\nfor electric vehicles. The battery in an electric vehicle is recharged by connecting the vehicle\nto an electrical outlet. At the time the patent application was filed, this process \xe2\x80\x9ctypically\nrequire[d] hours and [was] often done overnight or while the electric vehicle [was] parked for\na significant time.\xe2\x80\x9d U.S. Patent No. 8,138,715 col. 1 ll. 24\xe2\x80\x9326.\nGenerally, the supply of electricity available from a power grid may vary, and in some\ncases the grid may lack sufficient electricity to meet demand. During such periods, supply to\ncertain customers or services may be reduced based on a preplanned load prioritization\nscheme. The idea of reducing electricity consumption during periods of high demand is one\nform of what is referred to as \xe2\x80\x9cdemand response.\xe2\x80\x9d Demand response may also involve\nincreasing demand during periods when demand is low compared to supply, by reducing the\ncost of electricity.\nChargePoint contends that its inventors created improved charging stations that\naddress the various needs inherent in electric vehicle charging. This was accomplished by\ncreating networked charging stations. According to ChargePoint, this network connectivity\nallows the stations to be managed from a central location, allows drivers to locate charging\nstations in advance, and allows all users to interact intelligently with the electricity grid.\nChargePoint sued SemaConnect for infringement [of four patents] in December 2017.\nThe district court granted SemaConnect\xe2\x80\x99s motion to dismiss under Rule 12(b)(6) with\nprejudice, holding each asserted claim ineligible for patenting under \xc2\xa7 101.\nII\nSubject matter eligibility under \xc2\xa7 101 may be determined at the Rule 12(b)(6) stage of\na case. Aatrix Software, 882 F.3d at 1125. Dismissal at this early stage, however, is\nappropriate \xe2\x80\x9conly when there are no factual allegations that, taken as true, prevent resolving\nthe eligibility question as a matter of law.\xe2\x80\x9d Id.\nIn analyzing whether the claims are patent eligible, we employ the two-step analysis\narticulated in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66\n(2012), and further delineated in Alice Corp. v. CLS Bank Int\xe2\x80\x99l, 573 U.S. 208 (2014). \xe2\x80\x9cFirst,\nwe determine whether the claims at issue are directed to one of those patent-ineligible\nconcepts.\xe2\x80\x9d Alice, 573 U.S. at 217. If the claims are directed to a patent ineligible concept, we\nbegin the \xe2\x80\x9csearch for an \xe2\x80\x98inventive concept\xe2\x80\x99\xe2\x80\x94i.e., an element or combination of elements that\nis \xe2\x80\x98sufficient to ensure that the patent in practice amounts to significantly more than a patent\nupon the [ineligible concept] itself.\xe2\x80\x99\xe2\x80\x9d Id. at 217\xe2\x80\x9318.\n\n\x0cPATENTABLE SUBJECT MATTER\n\n273\n\nA\nClaims 1 and 2 of the \xe2\x80\x99715 patent are both apparatus claims. They recite:\n1. An apparatus, comprising:\na control device to turn electric supply on and off to enable and disable\ncharge transfer for electric vehicles;\na transceiver to communicate requests for charge transfer with a\nremote server and receive communications from the remote server via\na data control unit that is connected to the remote server through a\nwide area network; and\na controller, coupled with the control device and the transceiver, to\ncause the control device to turn the electric supply on based on\ncommunication from the remote server.\n2. The apparatus of claim 1, further comprising an electrical coupler to make\na connection with an electric vehicle, wherein the control device is to turn\nelectric supply on and off by switching the electric coupler on and off.\nIt is clear from the language of claim 1 that the claim involves an abstract idea\xe2\x80\x94\nnamely, the abstract idea of communicating requests to a remote server and receiving\ncommunications from that server, i.e., communication over a network. But at step one, \xe2\x80\x9cit is\nnot enough to merely identify a patent-ineligible concept underlying the claim; we must\ndetermine whether that patent-ineligible concept is what the claim is \xe2\x80\x98directed to.\xe2\x80\x99\xe2\x80\x9d Thales\nVisionix v. United States, 850 F.3d 1343, 1349 (Fed. Cir. 2017). We therefore continue our\nanalysis to determine whether the focus of claim 1, as a whole, is the abstract idea. As\nexplained below, we conclude that it is.\nWhile the \xc2\xa7 101 inquiry must focus on the language of the asserted claims themselves,\nthe specification may nonetheless be useful in illuminating whether the claims are \xe2\x80\x9cdirected\nto\xe2\x80\x9d the identified abstract idea. For example, in some cases the \xe2\x80\x9cdirected to\xe2\x80\x9d inquiry may\nrequire claim construction, which will often involve consideration of the specification.\nThe \xe2\x80\x9cdirected to\xe2\x80\x9d inquiry may also involve looking to the specification to understand\n\xe2\x80\x9cthe problem facing the inventor\xe2\x80\x9d and, ultimately, what the patent describes as the invention.\nFor example, in In re TLI Communications we held ineligible a claim to a method for\nrecording and administering digital images using a phone. 823 F.3d 607, 610 (Fed. Cir. 2016).\nIn our step one analysis, we explained that \xe2\x80\x9cthe problem facing the inventor was not how to\ncombine a camera with a cellular telephone, how to transmit images via a cellular network,\nor even how to append classification information to that data.\xe2\x80\x9d Id. at 612. Instead, quoting\nthe specification, we explained that \xe2\x80\x9cthe inventor sought to \xe2\x80\x98provid[e] for recording,\nadministration and archiving of digital images simply, fast and in such way that the\ninformation therefore may be easily tracked.\xe2\x80\x99\xe2\x80\x9d Id. We also pointed to the specification to\nexplain why the tangible components recited in the method claim were merely \xe2\x80\x9cconduit[s] for\n\n\x0c274\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthe abstract idea.\xe2\x80\x9d Id. at 612. We reached that conclusion in part because the specification\n\xe2\x80\x9cfail[ed] to provide any technical details for the tangible components, but instead\npredominately describe[d] the system and methods in purely functional terms.\xe2\x80\x9d Id.\nIn this case, ChargePoint has not expressed a need for claim construction, so we need\nnot look to the specification for that purpose. We do, however, view the specification as useful\nin understanding \xe2\x80\x9cthe problem facing the inventor\xe2\x80\x9d as well as what the patent describes as\nthe invention. Here, the specification suggests that claim 1 is directed to the abstract idea of\ncommunication over a network to interact with a device connected to the network. The\nproblem identified by the patentee, as stated in the specification, was the lack of a\ncommunication network that would allow drivers, businesses, and utility companies to\ninteract efficiently with the charging stations. For example, the specification states that\n\xe2\x80\x9c[t]here is a need for a communication network which facilitates finding the recharging\nfacility, controlling the facility, and paying for the electricity consumed.\xe2\x80\x9d Looking to future\nneeds, the specification anticipates that \xe2\x80\x9cthere will be a need for a system for collection of\ntaxes and consumption information.\xe2\x80\x9d From these statements, it is clear that the problem\nperceived by the patentee was a lack of a communication network for these charging stations,\nwhich limited the ability to efficiently operate them from a business perspective.\nThe specification also makes clear\xe2\x80\x94by what it states and what it does not\xe2\x80\x94that the\ninvention of the \xe2\x80\x99715 patent is the idea of network-controlled charging stations. Notably, the\nspecification never suggests that the charging station itself is improved from a technical\nperspective, or that it would operate differently than it otherwise could. Nor does the\nspecification suggest that the invention involved overcoming some sort of technical difficulty\nin adding networking capability to the charging stations.\nIn short, looking at the problem identified in the patent, as well as the way the patent\ndescribes the invention, the specification suggests that the invention of the patent is nothing\nmore than the abstract idea of communication over a network for interacting with a device,\napplied to the context of electric vehicle charging stations. Although this is not necessarily\ndispositive of the \xe2\x80\x9cdirected to\xe2\x80\x9d inquiry, it strongly suggests that the abstract idea identified\nin claim 1 may indeed be the focus of that claim.\nWith these indications from the specification in mind, we return to the claim language\nitself to consider the extent to which the claim would preempt building blocks of science and\ntechnology. See Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1369\n(Fed. Cir. 2015) (\xe2\x80\x9cAt step one of the Alice framework, it is often useful to determine the\nbreadth of the claims in order to determine whether the claims extend to cover a \xe2\x80\x98fundamental\n. . . practice long prevalent in our system.\xe2\x80\x99\xe2\x80\x9d (quoting Alice, 573 U.S. at 219)). We agree with\nSemaConnect that, based on the claim language, claim 1 would preempt the use of any\nnetworked charging stations.\nThe breadth of the claim language here illustrates why any reliance on the\nspecification in the \xc2\xa7 101 analysis must always yield to the claim language. Even a\nspecification full of technical details about a physical invention may nonetheless conclude\nwith claims that claim nothing more than the broad law or abstract idea underlying the\n\n\x0cPATENTABLE SUBJECT MATTER\n\n275\n\nclaims, thus preempting all use of that law or idea. This was the case in O\xe2\x80\x99Reilly v. Morse, 56\nU.S. 62 (1853). In Morse, the Court upheld claims related to the details of Samuel Morse\xe2\x80\x99s\ninvention of the electromagnetic telegraph, but invalidated a claim for the use of\n\xe2\x80\x9celectromagnetism, however developed for marking or printing intelligible characters, signs,\nor letters, at any distances.\xe2\x80\x9d Id. at 112. The Court expressed concern that such a broad claim\nwould cover any application of printing at a distance via electromagnetism regardless of\nwhether those applications used the invention in the patent.\nA similar scenario arose in Wyeth v. Stone, 30 F. Cas. 723 (C.C.D. Mass. 1840). There,\nthe patent described the inventor\xe2\x80\x99s machine for cutting ice in great detail. But Justice Story,\nriding circuit, held that one claim effectively \xe2\x80\x9cclaim[ed] an exclusive title to the art of cutting\nice by means of any power, other than human power.\xe2\x80\x9d Id. at 727. He reasoned that \xe2\x80\x9c[s]uch a\nclaim is utterly unmaintainable\xe2\x80\x9d because \xe2\x80\x9c[i]t is a claim for an art or principle in the abstract,\nand not for any particular method or machinery, by which ice is to be cut.\xe2\x80\x9d Id.\nAs we explained in Interval Licensing LLC v. AOL, Inc., in Morse and Wyeth, each\ninventor \xe2\x80\x9clost a claim that encompassed all solutions for achieving a desired result\xe2\x80\x9d because\nthose claims \xe2\x80\x9cwere drafted in such a result-oriented way that they amounted to encompassing\nthe \xe2\x80\x98principle in the abstract\xe2\x80\x99 no matter how implemented.\xe2\x80\x9d 896 F.3d 1335, 1343 (Fed. Cir.\n2018). In our view, this is effectively what ChargePoint has done in this case. Even if\nChargePoint\xe2\x80\x99s specification had provided, for example, a technical explanation of how to\nenable communication over a network for device interaction (which, as discussed above, it\ndid not), the claim language here would not require those details. Instead, the broad claim\nlanguage would cover any mechanism for implementing network communication on a\ncharging station, thus preempting the entire industry\xe2\x80\x99s ability to use networked charging\nstations. This confirms that claim 1 is indeed \xe2\x80\x9cdirected to\xe2\x80\x9d the abstract idea of communication\nover a network to interact with network-attached devices.\nWe conclude our \xe2\x80\x9cdirected to\xe2\x80\x9d analysis by addressing ChargePoint\xe2\x80\x99s argument that\nthe claims asserted are patent eligible because the claimed invention \xe2\x80\x9cbuild[s] a better\nmachine.\xe2\x80\x9d We are not persuaded. Claim 1 indicates that the abstract idea is associated with\na physical machine that is quite tangible\xe2\x80\x94an electric vehicle charging station. Claim 2 goes\nfurther, explaining that a vehicle may be connected to the apparatus via an electrical coupler.\nBut as the Supreme Court indicated in Alice, whether a device is \xe2\x80\x9ca tangible system (in \xc2\xa7 101\nterms, a \xe2\x80\x98machine\xe2\x80\x99)\xe2\x80\x9d is not dispositive. See 573 U.S. at 224. Resolving the \xc2\xa7 101 inquiry based\non such an argument \xe2\x80\x9cwould make the determination of patent eligibility \xe2\x80\x98depend simply on\nthe draftsman\xe2\x80\x99s art.\xe2\x80\x99\xe2\x80\x9d Id. at 224.\nIn short, the inventors here had the good idea to add networking capabilities to\nexisting charging stations to facilitate various business interactions. But that is where they\nstopped, and that is all they patented. We therefore hold that claim 1 is \xe2\x80\x9cdirected to\xe2\x80\x9d an\nabstract idea.\nAs to dependent claim 2, the additional limitation of an \xe2\x80\x9celectrical coupler to make a\nconnection with an electric vehicle\xe2\x80\x9d does not alter our step one analysis. The character of\n\n\x0c276\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nclaim 2, as a whole, remains directed to the abstract idea of communication over a network\nto interact with a device, applied in the context of charging stations.\n[Two other asserted apparatus claims, claims 1 and 8 of Patent No. 8,432,131, are\nsimilar to the \xe2\x80\x99715 claims.]\nChargePoint contends that claims 1 and 8 of the \xe2\x80\x99131 patent teach \xe2\x80\x9ca charging station\nwith improved technical features that enable it to adjust the amount of electricity delivered\nto cars based on demand-response communications with utilities.\xe2\x80\x9d To the extent ChargePoint\nis arguing that modification itself is an improvement, nothing in the specification explains\nfrom a technical perspective how that modification occurs. And the fact that the electricity\nflow is modified based on demand response principles does nothing to make this claim\ndirected to something other than the abstract idea. Demand response is itself an abstract\nconcept\xe2\x80\x94a familiar business choice to alter terms of dealing to help match supply and\ndemand. As we have said before, \xe2\x80\x9c[a]dding one abstract idea . . . to another abstract idea . . .\ndoes not render the claim non-abstract.\xe2\x80\x9d RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322,\n1327 (Fed. Cir. 2017). We therefore conclude that claims 1 and 8 are also directed to the\nabstract idea of communicating over a network.\nB\nAt step two of the Alice inquiry\xe2\x80\x94the search for an inventive concept\xe2\x80\x94we \xe2\x80\x9cconsider\nthe elements of each claim both individually and \xe2\x80\x98as an ordered combination\xe2\x80\x99 to determine\nwhether the additional elements \xe2\x80\x98transform the nature of the claim\xe2\x80\x99 into a patent-eligible\napplication.\xe2\x80\x9d Id. at 217. \xe2\x80\x9c[P]atentees who adequately allege their claims contain inventive\nconcepts survive a \xc2\xa7 101 eligibility analysis under Rule 12(b)(6).\xe2\x80\x9d Aatrix Software, 882 F.3d\nat 1126\xe2\x80\x9327.\nWhere a claim is directed to an abstract idea, the claim must include \xe2\x80\x9cadditional\nfeatures to ensure that the [claim] is more than a drafting effort designed to monopolize the\n[abstract idea].\xe2\x80\x9d Alice, 573 U.S. at 221. These additional features cannot simply be \xe2\x80\x9cwellunderstood, routine, conventional activit[ies] previously known to the industry.\xe2\x80\x9d Id. Indeed,\nadding novel or non-routine components is not necessarily enough to survive a \xc2\xa7 101\nchallenge. Instead, the inventive concept must be \xe2\x80\x9csufficient to ensure that the patent in\npractice amounts to significantly more\xe2\x80\x9d than a patent on the abstract idea. See Mayo, 566\nU.S. at 72\xe2\x80\x9373.\nWhether a claim \xe2\x80\x9csupplies an inventive concept that renders a claim \xe2\x80\x98significantly\nmore\xe2\x80\x99 than an abstract idea to which it is directed is a question of law\xe2\x80\x9d that may include\nunderlying factual determinations. BSG Tech LLC v. Buyseasons, Inc., 899 F.3d 1281, 1290\n(Fed. Cir. 2018). For example, within the overall step two analysis, \xe2\x80\x9cwhether a claim element\nor combination of elements is well-understood, routine and conventional to a skilled artisan\nin the relevant field is a question of fact\xe2\x80\x9d that \xe2\x80\x9cmust be proven by clear and convincing\nevidence.\xe2\x80\x9d Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).\n\n\x0cPATENTABLE SUBJECT MATTER\n\n277\n\nHere, ChargePoint argues that it presented sufficient factual allegations to preclude\ndismissal at the Rule 12(b)(6) stage. Specifically, ChargePoint argues that its patents\nrepresent an unconventional solution to technological problems in the field, and thus contain\nan inventive concept.\nThe problems in the art identified by ChargePoint are, generally: the sparse\navailability of charging stations and the need for more widespread stations; the need for a\ncommunication network that facilitates finding an available charging station, controlling the\nstation, and paying for electricity; and the need for real time communication to effectively\nimplement demand response and vehicle-to-grid transfer.\nChargePoint contends that it solved these problems in an unconventional way\nthrough: (a) the ability to turn electric supply on based on communications from a remote\nserver; (b) a \xe2\x80\x9cnetwork-controlled\xe2\x80\x9d charging system; and (c) a charging station that receives\ncommunication from a remote server, including communications made to implement a\ndemand response policy.\nIn essence, the alleged \xe2\x80\x9cinventive concept\xe2\x80\x9d that solves problems identified in the field\nis that the charging stations are network-controlled. But network control is the abstract idea\nitself, and \xe2\x80\x9ca claimed invention\xe2\x80\x99s use of the ineligible concept to which it is directed cannot\nsupply the inventive concept that renders the invention \xe2\x80\x98significantly more\xe2\x80\x99 than that\nineligible concept.\xe2\x80\x9d BSG Tech, 899 F.3d at 1290.\nTurning to claims 1 and 8 of the \xe2\x80\x99131 patent, ChargePoint contends that these claims\ncapture technical improvements related to demand response. ChargePoint disputes the\ndistrict court\xe2\x80\x99s conclusion that \xe2\x80\x9cthe combination of connecting generic networking equipment\nto a charging device to carry out a demand response plan already existed and was wellunderstood, routine, and conventional.\xe2\x80\x9d But, as the district court pointed out, the\n\xe2\x80\x9cBackground of the Invention\xe2\x80\x9d section of the specification demonstrates that demand\nresponse has been in use in other consumer services, such as with air conditioning and\nlighting, which may be reduced during periods of high demand. Indeed, demand response is\nsimply a familiar business choice of terms of dealing to help match supply and demand. This\ncannot supply an inventive concept in this case.\nDespite ChargePoint\xe2\x80\x99s reliance on BASCOM Glob. Internet Servs., Inc. v. AT&T\nMobility LLC, 827 F.3d 1341 (Fed. Cir. 2016), the claims in this case do not improve the\ntechnology the way the claims in BASCOM did. There, the patent improved prior art content\nfiltering solutions by making them more dynamic, thus using software to improve the\nperformance of the computer system itself. Id. at 1351. Here, the claims do nothing to improve\nhow charging stations function; instead, the claims merely add generic networking\ncapabilities to those charging stations and say \xe2\x80\x9capply it.\xe2\x80\x9d See Alice, 573 U.S. at 223. This is\nsimply an \xe2\x80\x9cabstract-idea-based solution implemented with generic technical components in a\nconventional way.\xe2\x80\x9d BASCOM, 827 F.3d at 1351.\nIn short, we agree with SemaConnect that the only possible inventive concept in the\nasserted claims is the abstract idea itself. ChargePoint, of course, disagrees with this\n\n\x0c278\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ncharacterization, arguing that its patents claim \xe2\x80\x9ccharging stations enabled to use networks,\nnot the network connectivity itself.\xe2\x80\x9d But the specification gives no indication that the\npatented invention involved how to add network connectivity to these charging stations in\nan unconventional way. From the claims and the specification, it is clear that network\ncommunication is the only possible inventive concept. Because this is the abstract idea itself,\nthis cannot supply the inventive concept at step two. The claims are therefore ineligible.\nFor the foregoing reasons, we affirm the district court\xe2\x80\x99s determination that claims 1\nand 2 of the \xe2\x80\x99715 patent, claims 1 and 8 of the \xe2\x80\x99131 patent [and the other asserted claims\nomitted from the discussion above] are ineligible under \xc2\xa7 101.\n\nUSPTO Guidance on Abstract Ideas: MPEP \xc2\xa7 2106\nAs noted above, the USPTO has issued extensive guidance to help patent examiners\nevaluate patentable subject matter, collected in MPEP \xc2\xa7 2106. The Federal Circuit has not\ngranted deference to this guidance, and the USPTO generally reads the caselaw as more\nfavorable to patent eligibility than a neutral observer of the Federal Circuit might find it to\nbe. Nonetheless, it is a helpful conceptual framework for approaching this complicated\ndoctrine.\nThe USPTO notes that \xe2\x80\x9cthe courts have declined to define abstract ideas,\xe2\x80\x9d though it\nis clear that \xe2\x80\x9csoftware and business methods are not excluded categories.\xe2\x80\x9d The agency has\norganized abstract ideas identified in the caselaw into three groups:\n1. Mathematical concepts: e.g., the binary conversion procedure in Benson, the\nmathematical formula for calculating an alarm limit in Flook, the Arrhenius equation\nin Diehr, the mathematical formula for hedging in Bilski\n2. Certain methods of organizing human activity:\n\xe2\x97\x8b\n\nfundamental economic principles or practices (e.g., hedging, insurance,\nmitigating risk, a method of price optimization, rules for a wagering game)\n\n\xe2\x97\x8b\n\ncommercial or legal interactions (e.g., agreements in the form of contracts,\nlegal obligations, marketing or sales activities or behaviors, business relations)\n\n\xe2\x97\x8b\n\nmanaging personal behavior or relationships or interactions between people\n(e.g., social activities, teaching, and following rules or instructions)\n\n3. Mental processes: concepts that can practically be performed in the human mind\n(including an observation, evaluation, judgment, opinion)\nAs with laws of nature, a claim is not \xe2\x80\x9cdirected to\xe2\x80\x9d an abstract idea if it merely involves\nrather than recites that idea. See, e.g., Thales Visionix, Inc. v. United States, 850 F.3d 1343\n(Fed. Cir. 2017) (determining that the claims to a method of using data from inertial sensors\nto more accurately calculate the position of an object on a moving platform did not merely\n\n\x0cPATENTABLE SUBJECT MATTER\n\n279\n\nrecite \xe2\x80\x9cthe abstract idea of using mathematical equations for determining the relative\nposition of a moving object to a moving reference frame\xe2\x80\x9d).\nAgain, as with laws of nature, even if a claim recites an abstract idea, the USPTO\ncautions that it is not \xe2\x80\x9cdirected to\xe2\x80\x9d the idea at Alice/Mayo Step 1 if it integrates the idea into\na practical application. It is not enough, however, to merely recite the words \xe2\x80\x9capply it\xe2\x80\x9d (or an\nequivalent), to add insignificant extra-solution activity, or to merely link the use of the\nexception to a particular technological environment. Limitations that may have integrated\nan idea into a practical application include improving the functioning of a computer,\nimplementing the idea with a particular machine or manufacture that is integral to the claim,\nor effecting a transformation or reduction of a particular article to a different state or thing.\nNote that tangible implementation does not guarantee eligibility, nor does intangibility doom\nthe claims. With the caveat that this \xe2\x80\x9cintegrates into a practical application\xe2\x80\x9d gloss has not\nbeen endorsed by the Federal Circuit, MPEP \xc2\xa7 2106.04(d) offers these examples of whether a\nclaim integrates an idea into a practical application:\nIn Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161 (Fed. Cir. 2019), the\nclaims were to methods for electronically processing paper checks, all of which\ncontained limitations setting forth receiving merchant transaction data from a\nmerchant, crediting a merchant\xe2\x80\x99s account, and receiving and scanning paper\nchecks after the merchant\xe2\x80\x99s account is credited.\nIn part one of the Alice/Mayo test, the Federal Circuit determined that\nthe claims were directed to the abstract idea of crediting the merchant\xe2\x80\x99s\naccount before the paper check is scanned. The court first determined that the\nrecited limitations of \xe2\x80\x9ccrediting a merchant\xe2\x80\x99s account as early as possible while\nelectronically processing a check\xe2\x80\x9d is a \xe2\x80\x9clong-standing commercial practice.\xe2\x80\x9d The\nFederal Circuit then continued with its analysis under part one of the\nAlice/Mayo test finding that the claims are not directed to an improvement in\nthe functioning of a computer or an improvement to another technology. In\nparticular, the court determined that the claims \xe2\x80\x9cdid not improve the technical\ncapture of information from a check to create a digital file or the technical step\nof electronically crediting a bank account\xe2\x80\x9d nor did the claims \xe2\x80\x9cimprove how a\ncheck is scanned.\xe2\x80\x9d This analysis is equivalent to the Office\xe2\x80\x99s analysis of\ndetermining that the exception is not integrated into a practical application\n[such that they are directed to an abstract idea at Alice/Mayo Step 1 and must\nbe evaluated at Alice/Mayo Step 2 to determine if they are valid].\nIn Finjan Inc. v. Blue Coat Systems, Inc., 879 F.3d 1299 (Fed. Cir. 2018),\nthe claimed invention was a method of virus scanning that scans an application\nprogram, generates a security profile identifying any potentially suspicious\ncode in the program, and links the security profile to the application program.\nThe Federal Circuit noted that the recited virus screening was an\nabstract idea, and that merely performing virus screening on a computer does\nnot render the claim eligible. The court then continued with its analysis under\n\n\x0c280\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\npart one of the Alice/Mayo test by reviewing the patent\xe2\x80\x99s specification, which\ndescribed the claimed security profile as identifying both hostile and\npotentially hostile operations. The court noted that the security profile thus\nenables the invention to protect the user against both previously unknown\nviruses and \xe2\x80\x9cobfuscated code,\xe2\x80\x9d as compared to traditional virus scanning,\nwhich only recognized the presence of previously-identified viruses. The\nsecurity profile also enables more flexible virus filtering and greater user\ncustomization. The court identified these benefits as improving computer\nfunctionality, and verified that the claims recite additional elements (e.g.,\nspecific steps of using the security profile in a particular way) that reflect this\nimprovement. Accordingly, the court held the claims eligible as not being\ndirected to the recited abstract idea. This analysis is equivalent to the Office\xe2\x80\x99s\nanalysis of determining that the additional elements integrate the judicial\nexception into a practical application [and that the claims are thus patent\neligible].\n\nIf a claim isn\xe2\x80\x99t directed to an ineligible concept at Step 1, then it is patent eligible. But\nif it is directed to an ineligible concept, we move to Step 2: the search for an \xe2\x80\x9cinventive\nconcept\xe2\x80\x9d that adds \xe2\x80\x9csignificantly more\xe2\x80\x9d to the ineligible concept. Limitations courts have\nfound to not add \xe2\x80\x9csignificantly more\xe2\x80\x9d include adding the words \xe2\x80\x9capply it,\xe2\x80\x9d adding insignificant\nextra-solution activity, or linking the exception to a particular technological environment.\nLimitations that have qualified as \xe2\x80\x9csignificantly more\xe2\x80\x9d include improving the functioning of\na computer, implementing the idea with a particular machine, or transforming a particular\narticle to a different state or thing.\nBut wait\xe2\x80\x94aren\xe2\x80\x99t these Step 2 considerations the same ones the USPTO suggested\nconsidering for the \xe2\x80\x9cpractical application\xe2\x80\x9d prong of Step 1? Indeed they are! Nonetheless, the\nUSPTO is correct that the Federal Circuit uses similar considerations at both steps of the\nAlice/Mayo test, and the choice of whether to resolve a given case at Step 1 or Step 2 is often\nbefuddling to even careful students of Federal Circuit caselaw. All we can suggest is to\nstrongly consider making arguments in the alternative in patentable subject matter briefs\n(or exam answers).\n\nAmerican Axle and the State of Federal Circuit Law on Patentable Subject Matter\nAs the foregoing should make clear, determining whether a claim is \xe2\x80\x9cdirected to\xe2\x80\x9d an\nineligible concept, and separating the ineligible concept from the rest of the claim, is not a\ntrivial exercise. All of science and technology relies at some level on abstract ideas and laws\nof nature. Distinguishing between claims that effectively claim those abstract ideas (and are\nthus unpatentable), and claims that merely draw upon them at some higher level of\nabstraction (and are thus patentable), is a task that frequently divides even the expert judges\nof the Federal Circuit.\n\n\x0cPATENTABLE SUBJECT MATTER\n\n281\n\nThe most recent instance of this is American Axle v. Neapco Holdings, 967 F.3d 1285,\n1290 (Fed. Cir. 2020). The case involves a process for manufacturing driveline shafts, which\nare a part used in automobiles (and other motorized vehicles) to transfer power from the\nengine to the wheels. Driveline shafts spin very quickly and, as a result, can begin to vibrate\nrapidly. This may cause damage to the automobile and its drivetrain, and so one of the goals\nwithin the industry is to produce driveline shafts that will dampen any potential vibration.\nThe patentee claimed to have invented a means of manufacturing a hollow driveline shaft\nwith a liner inside the shaft that could be \xe2\x80\x9ctuned\xe2\x80\x9d (that is, adjusted) to dampen vibrations\nmore effectively. Here is one claim from the patent:\n22. A method for manufacturing a shaft assembly of a driveline system, the\ndriveline system further including a first driveline component and a second\ndriveline component, the shaft assembly being adapted to transmit torque\nbetween the first driveline component and the second driveline component, the\nmethod comprising:\nproviding a hollow shaft member;\ntuning a mass and a stiffness of at least one liner, and\ninserting the at least one liner into the shaft member;\nwherein the at least one liner is a tuned resistive absorber for attenuating shell\nmode vibrations and wherein the at least one liner is a tuned reactive absorber\nfor attenuating bending mode vibrations.\nThe challenging aspect of this claim is that it relies quite explicitly on a natural law:\na driveline shaft with a liner that has been tuned in the proper manner will not vibrate as\nmuch when rotated. This fact derives from the physical laws of motion governing different\ntypes of materials. On the other hand, the claim is directed toward a highly tangible type of\ntechnology that has existed for decades: the manufacturing of automobile driveline shafts. It\nis not a software or business method patent, the types of inventions to which the Courts have\nmost aggressively applied \xc2\xa7 101 law. In addition, the patent does not seem to be trying to\nclaim the law of nature writ large, but instead is only claiming its application in a particular\nengineering context.\nThe Federal Circuit panel held claim 22 invalid under Mayo as directed at a natural\nlaw. Id. at 1299. The full Federal Circuit, by a tie vote of 6-6, then elected not to rehear the\ncase en banc, leaving the panel opinion undisturbed. 966 F.3d 1347 (Fed. Cir. 2020). This\ndenial of rehearing en banc generated no fewer than five separate opinions from the twelve\nFederal Circuit judges. The patentee has now filed for certiorari, the Supreme Court has\nrequested the views of the Solicitor General, and a variety of interested parties have filed\namicus briefs. It will be worth watching to see whether the Supreme Court takes this\nopportunity to clarify the law it made in Mayo and Alice.\n\n\x0c282\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPractice Problems: Abstract Ideas\nConsider the following claims. Do you think these claims involve patentable subject\nmatter under Alice? If you will need more technical information to answer the question,\nexplain what information you will need.\n1. The invention was a method for sorting emails between various users and various\nmailboxes. The user could design a system of rules that would direct certain emails to certain\nmailboxes or folders based on the identity of the sender, the subject of the email, or other\ncharacteristics. The claim reads:\nA post office for receiving and redistributing email messages on a computer\nnetwork, the post office comprising:\n(a) a receipt mechanism that receives an e-mail message from a sender, the email message having at least one specified recipient;\n(b) a database of business rules, each business rule specifying an action for\ncontrolling the delivery of an e-mail message as a function of an attribute of\nthe e-mail message;\n(c) a rule engine coupled to receive an e-mail message from the receipt\nmechanism and coupled to the database to selectively apply the business rules\nto the e-mail message to determine from selected ones of the business rules a\nset of actions to be applied to the e-mail message . . . .\nIntellectual Ventures v. Symantec, 838 F.3d 1307 (Fed. Cir. 2016).\n2. The invention is an automated method of creating digitally animated characters\nthat can lip sync to music more convincingly. The invention involved a database of how\npeople\xe2\x80\x99s lips move when they are making a variety of different sounds. When the song called\nfor a particular type of sound, the method would load the proper visual image from the\ndatabase and display it for the digitally animated character. The claim reads:\nA method for automatically animating lip synchronization and facial\nexpression of three-dimensional characters comprising:\n(a) obtaining a first set of rules that define output morph weight set stream as\na function of phoneme sequence and time of said phoneme sequence;\n(b) obtaining a timed data file of phonemes having a plurality of sub-sequences;\n(c) generating an intermediate stream of output morph weight sets and a\nplurality of transition parameters between two adjacent morph weight sets by\nevaluating said plurality of sub-sequences against said first set of rules;\n\n\x0cPATENTABLE SUBJECT MATTER\n\n283\n\n(d) generating a final stream of output morph weight sets at a desired frame\nrate from said intermediate stream of output morph weight sets and said\nplurality of transition parameters; and\n(e) applying said final stream of output morph weight sets to a sequence of\nanimated characters to produce lip synchronization and facial expression\ncontrol of said animated characters.\nMcRO v. Bandai Namco Games Am., 837 F.3d 1299 (Fed. Cir. 2016).\n3. The invention was technology used to stream video to online users. A user would\nsend a video to the streaming service, which would convert the video into a streaming format\nand then associate it with a picture that represented the video, so that the picture could be\nembedded in a website. The claim reads:\nA method of streaming a video to users over a network, the method comprising\nthe steps of: receiving, by a receiving computer via a web page, a video file sent\nby a user on a second computer on a network; executing, by the receiving\ncomputer, in response to receiving the video file, an automated function\nautomatically performing each of:\n(a) converting the video file into a streaming video file comprising a streaming\nvideo format, the video file being converted independent from receiving a\ncommand to perform such conversion from the user;\n(b) generating an identification tag comprising a video frame image\nrepresenting a subject matter of the streaming video file and identifying the\nstreaming video file; and\n(c) embedding the identification tag comprising the video frame image into a\nweb page for serving the streaming video file to one or more users on one or\nmore computers on the network.\nVideoShare v. Google, 2016 WL 4137524 (D. Del. Aug. 2, 2016), aff\xe2\x80\x99d, 695 F. App\xe2\x80\x99x 577 (Fed.\nCir. 2016).\n4. Prior art computer memory systems lacked versatility because they were designed\nand optimized based on the specific type of processor selected for use in that system.\nThe invention purports to overcome these deficiencies by creating a memory system with\nprogrammable operational characteristics that can be tailored for use with multiple different\nprocessors without the accompanying reduction in performance. The patent includes a\nmicrofiche appendix with 263 frames of computer code, but it is unclear whether a PHOSITA\nwould understand how this code relates to the claimed programmable operational\ncharacteristics. The claim reads:\nA computer memory system connectable to a processor and having one or more\nprogrammable operational characteristics, said characteristics being defined\n\n\x0c284\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nthrough configuration by said computer based on the type of said processor,\nwherein said system is connectable to said processor by a bus, said system\ncomprising:\n(a) a main memory connected to said bus; and\n(b) a cache connected to said bus;\n(c) wherein a programmable operational characteristic of said system\ndetermines a type of data stored by said cache.\n\nVisual Memory v. NVIDIA, 867 F.3d 1253 (Fed. Cir. 2017).\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n285\n\n7. Inventorship and Double Patenting\nIn addition to satisfying the patentability requirements covered thus far, a patent also\nmust correctly name the inventor or joint inventors\xe2\x80\x94the individual people who contributed\nthe ideas behind one or more of the claims. Failure to correctly name inventors renders a\npatent invalid, although mistakes can be corrected if the error was made in good faith.\nInventorship also matters because under both pre- and post-AIA \xc2\xa7 102, an inventor\xe2\x80\x99s\nown earlier patent application is not prior art against her before publication the way it is\nagainst third parties. But courts have developed a separate doctrine\xe2\x80\x94double patenting\xe2\x80\x94to\nprevent an inventor from improperly extending the effective exclusivity period of the earlier\napplication.\nIn this chapter, we first explain the law of inventorship and how finding omitted\ninventors can be used as a litigation strategy, and then we turn to double patenting.\n\nA. Inventorship\nThe correct inventors for a patent are those individuals who contributed to the\nconception of at least one claim in the patent. As we explained in Chapter 2, invention begins\nwith conception, or the formation of a definite and permanent idea of the complete and\noperative invention. Invention then concludes with reduction to practice, which is\naccomplished either by making the invention and ascertaining that it works for its intended\npurpose (actual reduction to practice) or filing an enabling patent application (constructive\nreduction to practice). For inventorship purposes, reduction to practice is irrelevant\xe2\x80\x94a\nperson who contributes to reduction to practice but not to conception is not an inventor.\nThe following statutory provisions govern inventors and joint inventors and their\ndefault ownership rights:\n\n35 U.S.C. \xc2\xa7 116 \xe2\x80\x93 Inventors\n(a) Joint Inventions.\xe2\x80\x94 When an invention is made by two or more persons jointly,\nthey shall apply for patent jointly and each make the required oath [unless\nthey are deceased, incapacitated, unable to be found, or are required to assign\nthe invention but have refused to file an inventor\xe2\x80\x99s oath]. Inventors may apply\nfor a patent jointly even though (1) they did not physically work together or at\nthe same time, (2) each did not make the same type or amount of contribution,\nor (3) each did not make a contribution to the subject matter of every claim of\nthe patent.\n\n\x0c286\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n(b) Omitted Inventor.\xe2\x80\x94 If a joint inventor refuses to join in an application for\npatent or cannot be found or reached after diligent effort, the application may\nbe made by the other inventor on behalf of himself and the omitted inventor.\nThe Director, on proof of the pertinent facts and after such notice to the omitted\ninventor as he prescribes, may grant a patent to the inventor making the\napplication, subject to the same rights which the omitted inventor would have\nhad if he had been joined. The omitted inventor may subsequently join in the\napplication.\n(c) Correction of Errors in Application.\xe2\x80\x94 Whenever through error a person is\nnamed in an application for patent as the inventor, or through error an\ninventor is not named in an application, the Director may permit the\napplication to be amended accordingly, under such terms as he prescribes.\n\n35 U.S.C. \xc2\xa7 256 \xe2\x80\x93 Correction of Named Inventor\n(a) Correction.\xe2\x80\x94 Whenever through error a person is named in an issued patent\nas the inventor, or through error an inventor is not named in an issued patent,\nthe Director may, on application of all the parties and assignees, with proof of\nthe facts and such other requirements as may be imposed, issue a certificate\ncorrecting such error.\n(b) Patent Valid if Error Corrected.\xe2\x80\x94 The error of omitting inventors or naming\npersons who are not inventors shall not invalidate the patent in which such\nerror occurred if it can be corrected as provided in this section. The court before\nwhich such matter is called in question may order correction of the patent on\nnotice and hearing of all parties concerned and the Director shall issue a\ncertificate accordingly.\n\n35 U.S.C. \xc2\xa7 262 \xe2\x80\x93 Joint Owners\nIn the absence of any agreement to the contrary, each of the joint owners of a\npatent may make, use, offer to sell, or sell the patented invention within the\nUnited States, or import the patented invention into the United States,\nwithout the consent of and without accounting to the other owners.\nFailure to correctly identify inventors has consequences. First, it can result in the\nrejection of a patent application or invalidation of a granted patent if inventorship is not\ncorrected. Second, and more importantly, it can change ownership of the patent. By default,\neach inventor is a co-owner with the right to license the patent independently, so correcting\na patent to add an omitted inventor also adds a new owner to the patent. Consider how\ngeneric pharmaceutical manufacturers that wanted to produce a patented HIV drug used\ninventorship rules in the following case.\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n287\n\nBurroughs Wellcome v. Barr Laboratories, 40 F.3d 1223 (Fed. Cir. 1994)\nHaldane Mayer, Circuit Judge.\nBurroughs Wellcome Co. is the owner of six United States patents that cover various\npreparations of 3\xe2\x80\x99\xe2\x80\x93azidothymidine (AZT) and methods for using that drug in the treatment\nof persons infected with the human immunodeficiency virus (HIV). Each of these patents\nnames the same five inventors\xe2\x80\x94Janet Rideout, David Barry, Sandra Lehrman, Martha St.\nClair, and Phillip Furman (Burroughs Wellcome inventors)\xe2\x80\x94all of whom were employed by\nBurroughs Wellcome at the time the inventions were alleged to have been conceived. The\ndefendants-appellants concede that all five are properly named as inventors on the patents.\nIn mid\xe2\x80\x931984, scientists discovered that AIDS was caused by a retrovirus known\n[today] as HIV. After the identification of HIV, Burroughs Wellcome began to search for a\ncure, screening compounds for antiretroviral activity using two murine (or mouse)\nretroviruses.\nAt about this time, scientists at the National Institutes of Health (NIH), led by Samuel\nBroder, were looking for effective AIDS therapies as well. Unlike Burroughs Wellcome,\nBroder and his colleagues used live HIV, and were able to develop a test that could\ndemonstrate a compound\xe2\x80\x99s effectiveness against HIV in humans using a unique line of T-cell\nclones. The NIH scientists began to seek compounds from private pharmaceutical companies\nfor screening in their cell line. After Burroughs Wellcome contacted Broder in the fall of 1984,\nhe agreed to accept compounds from Burroughs Wellcome under code for testing against live\nHIV.\nBurroughs Wellcome\xe2\x80\x99s Rideout selected AZT and a number of other compounds for\ntesting in the murine screens on October 29, 1984. The tests, performed at Burroughs\nWellcome facilities by St. Clair, showed that AZT had significant activity against both murine\nretroviruses at low concentrations. In light of these positive results, the Burroughs Wellcome\ninventors met on December 5, 1984, to discuss patenting the use of AZT in the treatment of\nAIDS. Burroughs Wellcome\xe2\x80\x99s patent committee thereafter recommended that the company\nprepare a patent application for future filing. By February 6, 1985, the company had\nprepared a draft application for filing in the United Kingdom. The draft disclosed using AZT\nto treat patients infected with HIV, and set out various pharmaceutical formulations of the\ncompound in an effective dosage range to treat HIV infection.\nTwo days earlier, on February 4, 1985, Burroughs Wellcome had sent a sample of AZT,\nidentified only as Compound S, to Broder at NIH. In an accompanying letter, Lehrman told\nBroder of the results of the murine retrovirus tests and asked that he screen the compound\nfor activity against HIV in the [NIH\xe2\x80\x99s unique] cell line. Another NIH scientist, Hiroaka\nMitsuya, performed the test in mid-February 1985, and found that Compound S was active\nagainst HIV. Broder informed Lehrman of the results by telephone on February 20, 1985.\nBurroughs Wellcome filed its patent application in the United Kingdom on March 16, 1985\n[and subsequently filed U.S. patent applications claiming priority to this first application].\n\n\x0c288\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAfter Burroughs Wellcome learned that AZT was active against HIV, it began the\nprocess of obtaining Food and Drug Administration (FDA) approval for AZT as an AIDS\ntherapy. As a part of the clinical trials leading to FDA approval, Broder and another NIH\nscientist, Robert Yarchoan, conducted a Phase I human patient study which showed that\ntreatment with AZT could result in an increase in the patient\xe2\x80\x99s T-cell count. Broder reported\nthis result to Lehrman on July 23, 1985. In 1987, the FDA approved AZT for marketing by\nBurroughs Wellcome; Burroughs Wellcome markets the drug for treatment of HIV infection\nunder the trademark Retrovir.\nOn March 19, 1991, Barr Laboratories, Inc. (Barr) sought FDA approval to\nmanufacture and market a generic version of AZT. As part of the process, Barr certified to\nthe FDA that Burroughs Wellcome\xe2\x80\x99s patents were invalid or were not infringed by the product\ndescribed in its ANDA. After Barr informed Burroughs Wellcome of its action, Burroughs\nWellcome commenced this case for patent infringement against Barr on May 14, 1991,\nalleging technical infringement of its patents under 35 U.S.C. \xc2\xa7 271(e)(2)(A). [After\nNovopharm filed its own generic application and was sued by Burroughs Wellcome, the suits\nwere consolidated.]\nBarr filed a counterclaim under 35 U.S.C. \xc2\xa7 256 (1988) seeking correction of the\npatents to list Broder and Mitsuya as coinventors. Barr admitted that its AZT product would\ninfringe the patents, but contended that it did not because Barr had obtained a license to\nmanufacture and sell AZT from the government, which should be deemed the owner of the\ninterest of coinventors Broder and Mitsuya in the AZT patents.\nThe district court granted Burroughs Wellcome\xe2\x80\x99s motion for judgment as a matter of\nlaw against all of the defendants, concluding that the Burroughs Wellcome inventors had\nconceived of the subject matter of the inventions at some time before February 6, 1985,\nwithout the assistance of Broder, Mitsuya, or Yarchoan. The court rejected the arguments of\nBarr and Novopharm that they should be allowed to present evidence that the Burroughs\nWellcome inventors had no reasonable belief that the inventions would actually work\xe2\x80\x94that\nAZT was in fact active against HIV\xe2\x80\x94until they were told the results of the NIH testing.\nDiscussion\nThe arguments of both Barr and Novopharm are directed to when the inventors\nconceived the invention. Burroughs Wellcome says it was before they learned the results of\nthe NIH tests; Barr and Novopharm say that confirmation of the inventions\xe2\x80\x99 operability,\nwhich came from the NIH tests, was an essential part of the inventive process. If Burroughs\nWellcome is right, then the patents name the proper inventors, they are not invalid, and the\nappellants are liable for infringement. If Barr and Novopharm are correct, then Broder,\nMitsuya, and Yarchoan should have been named as joint inventors and the resolution of\nBurroughs Wellcome\xe2\x80\x99s infringement suits is premature.\nA joint invention is the product of a collaboration between two or more persons\nworking together to solve the problem addressed. 35 U.S.C. \xc2\xa7 116 (1988); Kimberly\xe2\x80\x93Clark\nCorp. v. Procter & Gamble Distrib. Co., 973 F.2d 911, 917 (Fed. Cir. 1992). People may be\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n289\n\njoint inventors even though they do not physically work on the invention together or at the\nsame time, and even though each does not make the same type or amount of contribution. 35\nU.S.C. \xc2\xa7 116. The statute does not set forth the minimum quality or quantity of contribution\nrequired for joint inventorship.\nConception is the touchstone of inventorship, the completion of the mental part of\ninvention. It is \xe2\x80\x9cthe formation in the mind of the inventor, of a definite and permanent idea\nof the complete and operative invention, as it is hereafter to be applied in practice.\xe2\x80\x9d Hybritech\nInc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376 (Fed. Cir. 1986). Conception is\ncomplete only when the idea is so clearly defined in the inventor\xe2\x80\x99s mind that only ordinary\nskill would be necessary to reduce the invention to practice, without extensive research or\nexperimentation. Because it is a mental act, courts require corroborating evidence of a\ncontemporaneous disclosure that would enable one skilled in the art to make the invention.\nThus, the test for conception is whether the inventor had an idea that was definite\nand permanent enough that one skilled in the art could understand the invention; the\ninventor must prove his conception by corroborating evidence, preferably by showing a\ncontemporaneous disclosure. An idea is definite and permanent when the inventor has a\nspecific, settled idea, a particular solution to the problem at hand, not just a general goal or\nresearch plan he hopes to pursue. The conception analysis necessarily turns on the inventor\xe2\x80\x99s\nability to describe his invention with particularity. Until he can do so, he cannot prove\npossession of the complete mental picture of the invention. These rules ensure that patent\nrights attach only when an idea is so far developed that the inventor can point to a definite,\nparticular invention.\nBut an inventor need not know that his invention will work for conception to be\ncomplete. He need only show that he had the idea; the discovery that an invention actually\nworks is part of its reduction to practice.\nBarr and Novopharm suggest that the inventor\xe2\x80\x99s definite and permanent idea must\ninclude a reasonable expectation that the invention will work for its intended purpose. They\nargue that this expectation is of paramount importance when the invention deals with\nuncertain or experimental disciplines, where the inventor cannot reasonably believe an idea\nwill be operable until some result supports that conclusion. Without some experimental\nconfirmation, they suggest, the inventor has only a hope or an expectation, and has not yet\nconceived the invention in sufficiently definite and permanent form. But this is not the law.\nAn inventor\xe2\x80\x99s belief that his invention will work or his reasons for choosing a particular\napproach are irrelevant to conception.\nIt is undoubtedly true that \xe2\x80\x9c[i]n some instances, an inventor is unable to establish a\nconception until he has reduced the invention to practice through a successful experiment.\xe2\x80\x9d\nAmgen v. Chugai Pharmaceutical, 927 F.2d 1200, 1206 (Fed. Cir. 1991). But in such cases, it\nis not merely because the field is unpredictable; the alleged conception fails because it is\nincomplete. Then the event of reduction to practice in effect provides the only evidence to\ncorroborate conception of the invention.\n\n\x0c290\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nUnder these circumstances, the reduction to practice can be the most definitive\ncorroboration of conception, for where the idea is in constant flux, it is not definite and\npermanent. A conception is not complete if the subsequent course of experimentation,\nespecially experimental failures, reveals uncertainty that so undermines the specificity of the\ninventor\xe2\x80\x99s idea that it is not yet a definite and permanent reflection of the complete invention\nas it will be used in practice. It is this factual uncertainty, not the general uncertainty\nsurrounding experimental sciences, that bears on the problem of conception.\nWe emphasize that we do not hold that a person is precluded from being a joint\ninventor simply because his contribution to a collaborative effort is experimental. Instead,\nthe qualitative contribution of each collaborator is the key\xe2\x80\x94each inventor must contribute to\nthe joint arrival at a definite and permanent idea of the invention as it will be used in\npractice.\nNor do we suggest that a bare idea is all that conception requires. The idea must be\ndefinite and permanent in the sense that it involves a specific approach to the particular\nproblem at hand. It must also be sufficiently precise that a skilled artisan could carry out the\ninvention without undue experimentation. And, of course, the alleged conception must be\nsupported by corroborating evidence.\n[Five of the patents at issue] encompass compositions and methods of using AZT to\ntreat AIDS. The Burroughs Wellcome inventors claim conception of these inventions prior to\nthe NIH experiments, based on the draft British patent application. That document is not\nitself a conception, for conception occurs in the inventors\xe2\x80\x99 minds, not on paper. The draft\nsimply corroborates the claim that they had formulated a definite and permanent idea of the\ninventions by the time it was prepared.\nThe Burroughs Wellcome inventors set out with the general goal of finding a method\nto treat AIDS, but by the time Broder confirmed that AZT was active against HIV, they had\nmore than a general hope or expectation. They had thought of the particular antiviral agent\nwith which they intended to address the problem, and had formulated the idea of the\ninventions to the point that they could express it clearly in the form of a draft patent\napplication, which Barr and Novopharm concede would teach one skilled in the art to practice\nthe inventions. The draft expressly discloses the intended use of AZT to treat AIDS. It sets\nout the compound\xe2\x80\x99s structure, which, along with at least one method of preparation, was\nalready well known. The draft also discloses in detail both how to prepare a pharmaceutical\nformulation of AZT and how to use it to treat a patient infected with HIV. The listed dosages,\ndose forms, and routes of administration conform to those eventually approved by the FDA.\nThe draft shows that the idea was clearly defined in the inventors\xe2\x80\x99 minds; all that remained\nwas to reduce it to practice\xe2\x80\x94to confirm its operability and bring it to market.\nAn examination of the events that followed the preparation of Burroughs Wellcome\xe2\x80\x99s\ndraft confirms the soundness of the conception. Broder and Mitsuya received from Burroughs\nWellcome a group of compounds, known to Broder and Mitsuya only by code names, selected\nfor testing by the Burroughs Wellcome inventors. They then tested those compounds for\nactivity against HIV in their patented cell line. The test results revealed for the first time\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n291\n\nthat one of the compounds, later revealed to be AZT, was exceptionally active against the\nvirus.\nHere, though, the testing was brief, simply confirming the operability of what the\ndraft application disclosed. True, the science surrounding HIV and AIDS was unpredictable\nand highly experimental at the time the Burroughs Wellcome scientists made the inventions.\nBut what matters for conception is whether the inventors had a definite and permanent idea\nof the operative inventions. In this case, no prolonged period of extensive research,\nexperiment, and modification followed the alleged conception. By all accounts, what followed\nwas simply the normal course of clinical trials that mark the path of any drug to the\nmarketplace.\nThat is not to say, however, that the NIH scientists merely acted as a \xe2\x80\x9cpair of hands\xe2\x80\x9d\nfor the Burroughs Wellcome inventors. Broder and Mitsuya exercised considerable skill in\nconducting the tests, using their patented cell line to model the responses of human cells\ninfected with HIV. Lehrman did suggest initial concentrations to Broder, but she hardly\ncontrolled the conduct of the testing, which necessarily involved interpretation of results for\nwhich Broder and Mitsuya, and very few others, were uniquely qualified. But because the\ntesting confirmed the operability of the inventions, it showed that the Burroughs Wellcome\ninventors had a definite and permanent idea of the inventions. It was part of the reduction\nto practice and inured to the benefit of Burroughs Wellcome.\nBarr and Novopharm allege error in the district court\xe2\x80\x99s refusal to hear their evidence\nof the poor predictive value of the murine retrovirus screens for activity against HIV.\nRegardless of the predictive value of the murine tests, however, the record shows that soon\nafter those tests, the inventors determined, for whatever reason, to use AZT as a treatment\nfor AIDS, and they prepared a draft patent application that specifically set out the inventions,\nincluding an enabling disclosure. Obviously, enablement and conception are distinct issues,\nand one need not necessarily meet the enablement standard of 35 U.S.C. \xc2\xa7 112 to prove\nconception. But the enabling disclosure does suffice in this case to confirm that the inventors\nhad concluded the mental part of the inventive process\xe2\x80\x94that they had arrived at the final,\ndefinite idea of their inventions, leaving only the task of reduction to practice to bring the\ninventions to fruition.\nThe question is not whether Burroughs Wellcome reasonably believed that the\ninventions would work for their intended purpose, the focus of the evidence offered by Barr\nand Novopharm, but whether the inventors had formed the idea of their use for that purpose\nin sufficiently final form that only the exercise of ordinary skill remained to reduce it to\npractice. Whether or not Burroughs Wellcome believed the inventions would in fact work\nbased on the mouse screens is irrelevant.\nWe do not know precisely when the inventors conceived their inventions, but the\nrecord shows that they had done so by the time they prepared the draft patent application\nthat thoroughly and particularly set out the inventions as they would later be used. The\ndistrict court correctly ruled that on this record, the NIH scientists were not joint inventors\nof these inventions.\n\n\x0c292\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n[For the sixth patent, which claimed the use of AZT to increase a patient\xe2\x80\x99s T-cell count,\nthe Federal Circuit vacated the district court\xe2\x80\x99s judgment because the record did not support\nresolution as a matter of law of whether the inventors had this definite and permanent idea\nin mind. Judge Lourie dissented from this portion of the opinion, concluding that increasing\na patient\xe2\x80\x99s T-cell count was an inherent result of practicing the other patents.]\n\nDiscussion Questions: Inventorship\n1. AZT and the HIV/AIDS Crisis. The federal government was not a party to this\nlawsuit, but they played an important role. What was their role, and why do you think they\nwere siding with the generic manufacturers Barr Laboratories and Novopharm? Is it relevant\nthat this litigation occurred at the height of the HIV/AIDS epidemic and involved one of the\nfirst antiretroviral drugs that was effective at treating the disease? What role do you think\npatents should play in the middle of a public health crisis?\nDoes your answer differ for patents in other countries? As we will discuss in Chapter\n20, the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)\nrequires all but the least-developed nations to protect the IP rights of all 164 TRIPS members.\nMost pharmaceuticals are patented around the world. In the 2013 documentary Fire in the\nBlood, which depicts barriers to access to low-cost HIV/AIDS drugs in Africa, activist Zackie\nAchmat noted that it took nearly 40 years for the U.S. government to put apartheid South\nAfrica on a sanctions watch list, but it took less than three years to put democratic South\nAfrica on a sanctions watch list for importing generic AIDS drugs in violation of patent laws.\nIs patent law a good tool for improving access to medicines, in the United States or\nabroad? Should judges faced with a technical legal question about inventorship\xe2\x80\x94as in\nBurroughs Wellcome\xe2\x80\x94consider the broader policy concerns at stake? If so, how?\n2. The Different Standards of Patent Inventorship and Scientific Authorship. As\nBurroughs Wellcome explains, a researcher who contributes only to the reduction to practice\nof an invention is not an inventor. But under the norms of scientific authorship, such a\nresearcher often would be included as an author on a corresponding paper. Here is the first\npaper on the in vitro results using NIH\xe2\x80\x99s patented cell line:\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n293\n\nThe first author, Hiroaki Mitsuya, is the NIH scientist who ran the tests, and the last author,\nSamuel Broder, is the leader of the NIH group, in keeping with common authorship norms\nin many scientific fields. Why do you think the standards for inventorship and authorship\ndiffer? Should they?\nOne study found that junior or female scientists who are named as authors on a paper\nare more likely to be excluded as inventors on the corresponding patent than their senior or\nmale counterparts. Francesco Lissoni, Fabio Montobbio & Lorenzo Zirulia, Misallocation of\nScientific Credit: The Role of Hierarchy and Preferences, 6 Indus. & Corp. Change 1471\n(2020). How would you explain this result?\n3. Joint Inventorship Rules as a Penalty Default? As explained above, by default, joint\ninventors are co-owners of any resulting patent. Each may independently exploit and license\nthe patent, with no duty to obtain consent from other co-owners or to share patent-related\nincome. In most cases, inventors contract around this default by assigning their interest to\ntheir employers. And when separate individuals or firms collaborate on a project, it is\ngenerally under a joint development agreement that specifies ownership of any resulting\nintellectual property. If co-inventors of a valuable patent do not contract around the default\nownership rules, what would you expect to happen if each inventor seeks to maximize profits?\nDo you think they want to be in this default situation? If not, inventorship rules might be\nreferred to as a \xe2\x80\x9cpenalty default rule\xe2\x80\x9d: a rule that most parties would find undesirable, and\nthat thus encourages them to contract around the rule. Can you think of why this default\nrule might be justified from a social welfare perspective? What kind of inventors might be\ndisadvantaged by this rule?\n4. The History of Black Inventorship in the United States. As discussed in Chapter 1,\nsome scholars have argued that patent law has democratized innovation throughout U.S.\nhistory, although inventors from disadvantaged groups still face barriers to successfully\nreceiving rewards from the patent system. Shontavia Johnson recounts the history of Black\ninventorship in the United States, shedding light on the many legal and practical barriers\nBlack inventors have faced, and highlighting how they have been innovating nonetheless\nthroughout the centuries.\nOne quintessential example of early American ingenuity is the story of\nBenjamin Montgomery, who was born into slavery in Virginia in 1819 and later\nsold in Mississippi to Joseph Davis, the brother of Jefferson Davis. While\nenslaved in Mississippi, Montgomery invented a certain type of boat propeller\nwith significant utility for those who depended on steamboats to deliver goods\nalong the waterways. Montgomery could not receive a patent for the invention\nas he was a slave and not considered a citizen. Nonetheless, Montgomery found\nsuccess. He operated a general store on the plantation, built relationships, and\ncontinued to innovate. He eventually earned enough money to purchase his\nwife\xe2\x80\x99s freedom. After the Civil War ended, he also purchased the plantation he\nworked on as a slave and became one of the wealthiest planters in Mississippi.\n...\n\n\x0c294\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nDuring these early American years, free black Americans were also\ninventing and contributing to the country\xe2\x80\x99s transition into a land of innovation.\nThomas Jennings, the first known black patentee, was born free and\nsuccessfully patented a dry cleaning method in 1821. This proved to be\nlucrative for him, as the ability to exclude others from making and selling his\ninvention led Jennings to own one of New York City\xe2\x80\x99s largest clothing stores.\n[H]e used the profits from his patented invention to free the rest of his family\nfrom slavery. . . .\nAnother black inventor, Norbert Rillieux, revolutionized industry both\ndomestically and abroad. Rillieux was born free in Louisiana in 1806 and\nstudied engineering in France. Because of his intelligence, he became the\nyoungest person ever\xe2\x80\x94at age 24\xe2\x80\x94to serve as an applied mechanics instructor\nat L\xe2\x80\x99\xc3\x89cole Centrale, a prestigious French institution. Rillieux ultimately\napplied for and received four U.S. patents related to sugar refining once he\nreturned to America. His inventions transformed the industry, and he became\nthe most celebrated engineer in Louisiana at the time.\n\nShontavia Jackson Johnson, The Colorblind Patent System and Black Inventors, 11\nLandslide 16 (2019).\nThese entrepreneurs succeeded despite huge structural barriers. The racism of the\nearly U.S. patent system is perhaps most prominently illustrated by an odious 1858 opinion\nissued by Attorney General Jeremiah Black. As recently summarized by Kara Swanson:\nHe needed only three sentences to explain that an invention by an enslaved\ninventor could not be patented. The Attorney General relied on the Supreme\nCourt\xe2\x80\x99s holding the previous year in Dred Scott v. Sandford that African\nAmericans were not citizens, whether free or enslaved. Without the ability to\nswear an oath of citizenship, enslaved persons could not apply for patents. This\nreasoning also placed free African Americans outside the bounds of patent law.\nKara W. Swanson, Race and Selective Legal Memory: Reflections on Invention of a Slave, 120\nColum. L. Rev. 1077 (2020).\nWhat should be done to account for the harms perpetrated by these rules? Should the\nUSPTO attempt to track down the Black inventors who were denied patents prior to the\nThirteenth Amendment and add them as named inventors to the patents that issued based\non their work? Should there be other efforts to memorialize the inventors who were denied\npatents? Should the U.S. government attempt to calculate the value of these inventions and\npay reparations to the descendants of their true inventors? Is this type of harm best\naddressed inside or outside of the patent system?\n5. AI Inventors? Can a computer qualify as an inventor? In 2019, the Artificial\nInventor Project filed a patent application in several jurisdictions with the inventor listed as\na computer program known as DABUS (Device for the Autonomous Bootstrapping of Unified\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n295\n\nSentience). The academic spearheading this test case argued that recognizing AI inventors\nwill incentivize development of inventive AI systems. See Ryan Abbott, The Reasonable\nRobot: Artificial Intelligence and the Law (2020). The USPTO, European Patent Office, and\nUK Intellectual Property Office refused to recognize DABUS as an inventor. If DABUS\ncannot be an inventor, is there a proper inventor for this patent application? Or does the\ninvention have no inventor, which would make it unpatentable?\nDo you think inventorship doctrine should be revised to account for inventions where\nan entity other than a natural person contributed to conception? When the USPTO requested\ncomments on this issue in 2019, the \xe2\x80\x9cvast majority\xe2\x80\x9d responded that no revision is needed, and\nmany questioned the premise that state-of-the-art AI could conceive an invention. See\nUSPTO, Public Views on Artificial Intelligence and Intellectual Property Policy (2020),\nhttps://www.uspto.gov/sites/default/files/documents/USPTO_AI-Report_2020-10-07.pdf.\n\nB. Double Patenting\nPatent inventorship rules are also important for applying a final patentability\ndoctrine: a prohibition on \xe2\x80\x9cdouble patenting.\xe2\x80\x9d As explained in Chapter 2, patents and patent\napplications are generally prior art as of the date they are filed, as long as they are eventually\npublished. For example, suppose Sof\xc3\xada is a researcher at IBM who invents a new\nsemiconductor design. If IBM files a patent application on January 1, 2020, which is\npublished in due course on July 1, 2021, the application is prior art against most applications\nfiled after January 1, 2020 under post-AIA \xc2\xa7 102(a)(2). But \xc2\xa7 102(a)(2) applies only to a second\npatent application that \xe2\x80\x9cnames another inventor,\xe2\x80\x9d and there is also an exception under\n\xc2\xa7 102(b)(2)(C) for a second application \xe2\x80\x9cowned by the same person or subject to an obligation\nof assignment to the same person.\xe2\x80\x9d Thus, what is to prevent Sof\xc3\xada and IBM from filing the\nexact same application on February 1, 2021?\nThe same problem arises pre-AIA. If IBM files the first patent application on January\n1, 2010, and it is published on July 1, 2011, it is generally prior art against applications filed\nafter January 1, 2010 under pre-AIA \xc2\xa7 102(e). But pre-AIA \xc2\xa7 102(e) applies only to patents\nand patent applications filed \xe2\x80\x9cby another,\xe2\x80\x9d meaning not filed by the exact same combination\nof inventors and assignee (known as the \xe2\x80\x9cinventive entity\xe2\x80\x9d). It thus would not apply to a\nsecond application filed by IBM on February 1, 2011, with Sof\xc3\xada as the named inventor.\nAgain, nothing in \xc2\xa7 102 prevents IBM from obtaining identical patents with different\nexpiration dates.\nIBM could not use this tactic to extend the patent term indefinitely\xe2\x80\x94once the earlier\napplication is published (typically at 18 months after filing), it is prior art as of the\npublication date under post-AIA \xc2\xa7 102(a)(1) or pre-AIA \xc2\xa7 102(a) and (b). But it could obtain\nan 18-month extension. And the problem was even more significant before 1995, when the\npatent term was 17 years from issuance rather than 20 years from filing, such that delaying\nprosecution of one of the patent applications would result in a very long effective patent term.\n\n\x0c296\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nTo address this concern, courts have developed the doctrine of double patenting, which\ncomes in two flavors. \xe2\x80\x9cSame-invention\xe2\x80\x9d double patenting prohibits an inventor from receiving\ntwo patents on the same invention. \xe2\x80\x9cObviousness-type\xe2\x80\x9d double patenting prohibits an\ninventor from receiving a patent on an obvious variation of her earlier patent unless she files\na \xe2\x80\x9cterminal disclaimer\xe2\x80\x9d such that both patents expire at the same time. In both cases, the\nlater-expiring patent is the one that is invalid.\nFor an illustration of how terminal disclaimers work, consider the cover pages of the\nfollowing two patents, both from the inventorship case excerpted earlier in this chapter,\nBurroughs Wellcome v. Barr Laboratories, 40 F.3d 1223 (Fed. Cir. 1994). The \xe2\x80\x99232 patent was\nfiled before June 8, 1995, so it expired 17 years from issuance, on February 9, 2005. For the\n\xe2\x80\x99750 patent, before you look at the answer in the footnote, try to figure out: When was the\neffective filing date, and when did it expire?1\n\nThe \xe2\x80\x99750 patent was actually filed on October 20, 1987, but it is a continuation of the \xe2\x80\x99232\npatent that was filed September 17, 1985, so that\xe2\x80\x99s the effective filing date. It issued April 4, 1989, so\nwould normally expire April 4, 2006, but it has disclaimed patent term after February 9, 2005. Both\npatents expire on the same day.\n1\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n297\n\nSame Invention Double Patenting\nSame-invention double patenting is also known as statutory double patenting because\nit is (weakly) grounded in the language of 35 U.S.C. \xc2\xa7 101, which states that an inventor \xe2\x80\x9cmay\nobtain a patent\xe2\x80\x9d (emphasis added). See In re Longi, 759 F.2d 887, 892 (Fed. Cir. 1985).\nDetermining whether two claims are directed to the same invention parallels the elementby-element analysis we have performed when assessing novelty. The Federal Circuit\xe2\x80\x99s\npredecessor court has summarized the doctrine:\n35 U.S.C. \xc2\xa7 101 prevents two patents from issuing on the same invention. As\nwe have said many times, \xe2\x80\x9cinvention\xe2\x80\x9d here means what is defined by the\nclaims. A good test, and probably the only objective test, for \xe2\x80\x9csame invention,\xe2\x80\x9d\nis whether one of the claims could be literally infringed without literally\ninfringing the other. If it could be, the claims do not define identically the same\ninvention. If it is determined that the same invention is being claimed twice,\n35 U.S.C. \xc2\xa7 101 forbids the grant of the second patent, regardless of the\npresence or absence of a terminal disclaimer.\nIn re Vogel, 422 F.2d 438, 441 (C.C.P.A. 1970) (emphasis added).\n\n\x0c298\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nObviousness-Type Double Patenting\nObviousness-type double patenting is also known as non-statutory double patenting\nbecause it \xe2\x80\x9cis a judicially created doctrine grounded in public policy (a policy reflected in the\npatent statute) rather than based purely on the precise terms of the statute.\xe2\x80\x9d Longi, 759 F.2d\nat 892. Obviousness-type double patenting prevents an inventor from obtaining a second\npatent that is an obvious variation on an earlier one. The test is similar to the \xc2\xa7 103 analysis,\nexcept that it is only the claims of the earlier patent that are prior art:\nThe doctrine of obviousness-type double patenting is intended to\nprevent the extension of the term of a patent by prohibiting the issuance of the\nclaims in a second patent not patentably distinct from the claims of the first\npatent. A later patent claim is not patentably distinct from an earlier claim if\nthe later claim is obvious over, or anticipated by, the earlier claim.\nAs a general rule, obviousness-type double patenting determinations\nturn on a comparison between a patentee\xe2\x80\x99s earlier and later claims, with the\nearlier patent\xe2\x80\x99s written description considered only to the extent necessary to\nconstrue its claims. This is so because the nonclaim portion of the earlier\npatent ordinarily does not qualify as prior art against the patentee and because\nobviousness-type double patenting is concerned with the improper extension of\nexclusive rights\xe2\x80\x94rights conferred and defined by the claims. The focus of the\nobviousness-type double patenting doctrine thus rests on preventing a\npatentee from claiming an obvious variant of what it has previously claimed,\nnot what it has previously disclosed.\nEli Lilly & Co. v. Teva Parenteral Medicines, 689 F.3d 1368, 1376, 1378\xe2\x80\x9379 (Fed. Cir. 2012).\nThe Federal Circuit has emphasized two justifications for this doctrine. \xe2\x80\x9cThe first is\nto prevent unjustified timewise extension of the right to exclude granted by a patent no\nmatter how the extension is brought about. The second rationale is to prevent multiple\ninfringement suits by different assignees asserting essentially the same patented invention.\xe2\x80\x9d\nIn re Hubbell, 709 F.3d 1140, 1145 (Fed. Cir. 2013).\nWhen the two patents involved in an obviousness-type double patenting rejection or\ninvalidation are commonly owned, the problem can be cured by filing a terminal disclaimer\non the later-expiring patent, which effectively causes it to expire at the same time as the\nearlier patent. 35 U.S.C. \xc2\xa7 253(b) states that \xe2\x80\x9cany patentee or applicant may disclaim or\ndedicate to the public the entire term, or any terminal part of the term, of the patent granted\nor to be granted.\xe2\x80\x9d A terminal disclaimer can be filed to overcome the invalidation of a patent\nfor obviousness-type double patenting during litigation. Eli Lilly, 689 F.3d at 1375. (Why\ncan\xe2\x80\x99t other validity problems be cured during litigation?)\nHowever, the terminal disclaimer fixes the problem \xe2\x80\x9conly for and during such period\nthat said patent is commonly owned with the application or patent which formed the basis\nfor the judicially created double patenting\xe2\x80\x9d or, if created under a joint research agreement,\n\n\x0cINVENTORSHIP & DOUBLE PATENTING\n\n299\n\n\xe2\x80\x9conly for and during such period that said patent and the patent, or any patent granted on\nthe application, which formed the basis for the double patenting are not separately enforced.\xe2\x80\x9d\n37 C.F.R. \xc2\xa7 1.321(c)-(d). Terminal disclaimers can thus complicate sales of patent portfolios\nbecause if the patents are sold separately, the patent with the terminal disclaimer would\nbecome unenforceable.\n\nDiscussion Questions: Double Patenting\n1. Why Treat an Inventor\xe2\x80\x99s Own Earlier Patent Applications Differently? The\ncomplicated doctrine of double patenting evolved because post-AIA \xc2\xa7 102(a)(2) and pre-AIA\n\xc2\xa7 102(e) apply only to patent applications filed by \xe2\x80\x9canother.\xe2\x80\x9d Why are an inventor\xe2\x80\x99s own prior\npatent filings exempted from these provisions? Once an inventor has filed one patent, she\xe2\x80\x94\nand she alone\xe2\x80\x94can file additional patents that claim obvious improvements on the first\npatent until the first patent is published. One justification may be to encourage the inventor\nto file the first patent early, without worrying about whether it might prevent her from\npatenting later work. Do you find this convincing?\n2. Obviousness in Light of the Claims? When judging whether an inventor is engaged\nin obviousness-type double patenting, why do courts look only to the claims of the prior patent\nand not the specification? Suppose an inventor filed for a second patent with claims that were\nobvious in light of the specification of the first patent. If that first patent belonged to any\nother party, the second patent would be invalid as obvious. But under these rules, the same\ninventor can obtain a second patent on the same material. Does that seem appropriate? Are\nthere, or should there be, boundaries on this doctrine that prevent such sequential patenting?\n\n\x0c300\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPractice Problem: Inventorship, Double Patenting, and \xc2\xa7 102 Review\nGiven the facts below, does anyone receive a patent on the widget? Unless otherwise\nspecified, all patent applications are published in due course.\n\xe2\x97\x8f\n\nJan. 2005: Juting conceives of a new invention, the widget, but isn\xe2\x80\x99t sure that it will\nwork for its intended purpose or how to test it.\n\n\xe2\x97\x8f\n\nJan. 2006: Darryl conceives of the widget and reduces it to practice.\n\n\xe2\x97\x8f\n\nJan. 2007: Jamar conceives of the widget, reduces it to practice, and starts using it\nsecretly and commercially.\n\n\xe2\x97\x8f\n\nMar. 2008: Daisuke conceives of the widget and submits a paper explaining why it\nwould work to Journal of Inventions. It is accepted and sent to the printers in\nDecember 2008 and received by subscribers in February 2009.\n\n\xe2\x97\x8f\n\nJune 2008: Jamar files a patent application claiming the widget.\n\n\xe2\x97\x8f\n\nJan. 2009: Juting meets Elisa, who knows how to test the widget and confirms that it\nworks. Elisa also shows that they can make widgets out of vibranium, which is a not\ninsignificant but obvious improvement.\n\n\xe2\x97\x8f\n\nApr. 2009: At a party, Elisa demonstrates a widget to 30 friends, including Alex, none\nof whom had ever seen a widget before.\n\n\xe2\x97\x8f\n\nJune 2009: Alex files a patent application claiming widgets.\n\n\xe2\x97\x8f\n\nSept. 2009: Juting and Elisa file a patent application claiming widgets.\n\n\xe2\x97\x8f\n\nNov. 2009: Jamar abandons his patent application.\n\n\xe2\x97\x8f\n\nDec. 2009: Juting and Elisa file a new patent application claiming vibranium widgets.\n\n\xe2\x97\x8f\n\nJan. 2010: Darryl recalls his earlier idea and files a patent application claiming\nwidgets.\n\n\x0cINFRINGEMENT\n\n301\n\nIII. Infringement\nThe principal right that accompanies a valid patent is the right to exclude others from\nmaking, using, selling, or importing the patented invention. If a patent owner believes that\nanother is engaging in such activity, the owner may sue the other party for patent\ninfringement. At its heart, the infringement allegation is simple: the alleged infringer is\nmaking, using, selling, or importing a good or process that meets all of the limitations of the\npatent claim. The first step of any infringement analysis, then, is to understand what the\nclaims of the patent mean.\nIn fact, interpreting the patent claims is the first step to nearly all of the patentability\ndoctrines we described in the previous chapters as well. It is impossible to determine whether\na patent claim is novel, or nonobvious, or satisfies the written description or enablement\nrequirements without first interpreting the claim and determining, as a legal matter, what\nit means. Even the doctrine of patentable subject matter, which is often adjudicated before\nthe patent claims are fully interpreted, relies on understanding what the claims mean, at\nleast in broad strokes. The process of claim interpretation, or \xe2\x80\x9cclaim construction,\xe2\x80\x9d is thus at\nthe heart of nearly all of patent law. Nonetheless, we have saved it for this point in the book.\nThe reason is that it is essential to understand what makes a patent claim valid in order to\nunderstand what is at stake in claim construction. Additionally, the Federal Circuit has\n\xe2\x80\x9cemphasized the importance of the context provided by an [infringement] analysis of the\naccused device when ruling on claim construction and the problems presented by construing\nclaims in the absence of such context.\xe2\x80\x9d Jang v. Bos. Sci. Corp., 532 F.3d 1330, 1337 (Fed. Cir.\n2008).\nAccordingly, we discuss the law of claim construction in Chapter 8 before turning\ndirectly to patent infringement in Chapters 9\xe2\x80\x9311. Infringement comes in two general flavors:\n\xe2\x80\x9cdirect\xe2\x80\x9d and \xe2\x80\x9cindirect.\xe2\x80\x9d In a case involving direct infringement, the claim is that the accused\ndevice includes all of the elements of the claim, either \xe2\x80\x9cliterally\xe2\x80\x9d (meaning the element is\nactually present) or as an \xe2\x80\x9cequivalent\xe2\x80\x9d (meaning the accused device has a feature that is\nequivalent to the claim element). Indirect infringement involves the claim that one party is\nfacilitating the infringement of another party. Thus, in a case of indirect infringement, the\nactual infringer may be \xe2\x80\x9coff screen\xe2\x80\x9d\xe2\x80\x94meaning not a party to the lawsuit. The following table\nprovides an overview of the statutes governing infringement that will be discussed in\nsubsequent chapters.\nAs we will see, the law of infringement employs many of the same concepts and\ndoctrinal rules as the law of validity. But there are a variety of new doctrines and additional\nwrinkles, which we will explore in detail. First, a discussion of rules surrounding claim\nconstruction.\n\n\x0c302\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nType of Infringement\n\nOverview\n\n9. Direct\n(\xc2\xa7 271(a))\n\n\xc2\xa7 271(a) provides strict liability for any entity that\n\xe2\x80\x9cmakes, uses, offers to sell, or sells any patented\ninvention, within the United States or imports into the\nUnited States any patented invention.\xe2\x80\x9d Direct\ninfringement can be literal, requiring every claim\nelement to be met (mirroring the anticipation analysis)\nor infringement under the doctrine of equivalents, if for\nevery claim element, the infringing device or method\nhas an element performing the same function in the\nsame way for the same result.\n\n10. Indirect\n(\xc2\xa7 271(b)-(c))\n\nAn entity can also be indirectly liable under \xc2\xa7 271(b) for\ninducing another entity to directly infringe, or under\n\xc2\xa7 271(c) for contributing to another entity\xe2\x80\x99s direct\ninfringement by selling something especially adapted\nfor use in an infringement. Indirect liability requires\nknowledge of (or willful blindness to) the patent.\n\n11(A). Divided\n(\xc2\xa7 271(a), (e)-(g))\n\nWhen multiple entities perform different steps of a\nmethod patent, there is direct infringement only if a\nsingle entity directs or controls the performance or\nwhere the actors form a joint enterprise. There cannot\nbe indirect infringement without direct infringement.\n\n11(B). Cross-Border\n(\xc2\xa7 271(f)-(g))\n\nAlthough there is generally a presumption against\nextraterritorial application of U.S. law, entities are\nliable under \xc2\xa7 271(f) for exporting \xe2\x80\x9ccomponents of a\npatented invention\xe2\x80\x9d so as to induce their combination\nabroad, or where the components are especially\nadapted for use in an infringement abroad. And\nentities are liable under \xc2\xa7 271(g) for importing, offering\nto sell, selling, or using within the United States a\nproduct made abroad by a process patented in the\nUnited States.\n\n11(C). Government\n(\xc2\xa7 271(h), 28 U.S.C. \xc2\xa7 1498(a))\n\nThe federal government can be sued only for patent\ndamages under \xc2\xa7 1498(a), with damages calculated by\nthe Court of Federal Claims, not for an injunction.\nState governments can generally be sued only for an\ninjunction, not damages.\n\n11(D). Pharmaceutical\n(\xc2\xa7 271(e))\n\nUnder the 1984 Hatch-Waxman Act for small-molecule\ndrugs and the 2011 Biologics Price Competition and\nInnovation Act for biologic drugs, a generic firm\xe2\x80\x99s FDA\napplication to market a patent-protected drug allows\nthe brand-name firm to commence patent litigation.\n\n\x0cCLAIM CONSTRUCTION\n\n303\n\n8. Claim Construction\nAs we noted above, many critical patent doctrines turn on the meaning of the patent\nclaims. Claim language can be complex or ambiguous, which makes their interpretation\nessential. In the 1996 case Markman v. Westview Instruments, 517 U.S. 370, the Supreme\nCourt held that claim construction is a legal question to be decided by the judge, not the jury.\nThis followed from the fact that a patent is a legal document, issued by the government, and\nthus analogous to a statute. In most patent trials, the district judge will solicit briefing on\ncontested claim construction issues relatively early in the proceeding and will typically hold\na hearing\xe2\x80\x94sometimes referred to as a \xe2\x80\x9cMarkman\xe2\x80\x9d hearing\xe2\x80\x94to decide those issues. For\ninstance, the Northern District of California, which includes Silicon Valley and is the site of\nmany patent trials, has a set of local rules governing patent cases.1 Those local rules provide\nthat the parties to a patent dispute must first notify one another of the patent claims that\nthey believe are infringed or invalid, and then within fourteen days must notify one another\nand the court of any claim terms the parties believe need to be construed by the court. The\ncourt will then construe the claims before deciding any motions for summary judgment on\ninvalidity or infringement. This means that the court\xe2\x80\x99s single construction of the claims will\ngovern all parts of the case to come, including all issues related to validity (anticipation,\nobviousness, enablement, written description, etc.) and all issues related to infringement.\nThere are a variety of sources of meaning a court can draw upon when construing a\npatent\xe2\x80\x99s claims. First, of course, is the text and context of the claim language itself. A court\ncan also look to the patent specification and the patent\xe2\x80\x99s prosecution history\xe2\x80\x94the record of\ncommunications with the USPTO during the application process\xe2\x80\x94as guides to meaning.\nTogether, these three sources of meaning are referred to as \xe2\x80\x9cintrinsic evidence,\xe2\x80\x9d because they\nare intrinsic to the patent itself. Courts can also turn to \xe2\x80\x9cextrinsic\xe2\x80\x9d sources of information as\nto the patent\xe2\x80\x99s meaning, including dictionaries, scientific and technical papers and treatises,\nand even expert testimony.2 The relationship between these different sources of meaning,\nand which should take precedence when they conflict, is the subject of the case that follows.\nWe then provide opportunities to practice these claim construction rules in the very next\nchapter, Chapter 9, which concerns direct patent infringement.\n\nThe Northern District patent rules are available at https://www.cand.uscourts.gov/wpcontent/uploads/local-rules/patent-local-rules/Patent_Local_Rules_11-2020.pdf.\n1\n\nAlthough claim interpretation is a question of law, the value and meaning of extrinsic sources\nwill sometimes raise underlying issues of fact, as when a court must evaluate the testimony of a party\xe2\x80\x99s\nexpert who has testified about the meaning of the claims. These issues of fact, like all issues of fact,\nare reviewed by the courts of appeal with deference to the district court\xe2\x80\x99s findings. Teva Pharms. USA,\nInc. v. Sandoz, Inc., 574 U.S. 318 (2015).\n2\n\n\x0c304\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPhillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc)\nWilliam C. Bryson, Circuit Judge.\nEdward H. Phillips invented modular, steel-shell panels that can be welded together\nto form vandalism-resistant walls. The panels are especially useful in building prisons\nbecause they are load-bearing and impact-resistant, while also insulating against fire and\nnoise. Mr. Phillips obtained a patent on the invention, U.S. Patent No. 4,677,798, [and sued\nAWH Corp. for infringement].\nWith regard to the patent infringement issue, the district court focused on the\nlanguage of claim 1, which recites \xe2\x80\x9cfurther means disposed inside the shell for increasing its\nload bearing capacity comprising internal steel baffles extending inwardly from the steel\nshell walls.\xe2\x80\x9d [The district court held that AWH\xe2\x80\x99s walls did not include \xe2\x80\x9cbaffles\xe2\x80\x9d because the\ninternal panels were at a 90-degree angle to the wall face, and the \xe2\x80\x99798 patent shows baffles\nonly at other angles. The court granted summary judgment of noninfringement.]\n[On appeal, a divided Federal Circuit panel affirmed. In the majority, Judge Alan\nLourie, joined by Judge Pauline Newman, sustained the judgment of noninfringement. In\ndissent, Judge Timothy Dyk would have reversed on the basis that nothing in the\nspecification limited \xe2\x80\x9cbaffles\xe2\x80\x9d to less than its \xe2\x80\x9cplain meaning,\xe2\x80\x9d which included baffles at\n90 degrees. The Federal Circuit agreed to hear the appeal en banc.]\nI\nClaim 1 of the \xe2\x80\x99798 patent is representative of the asserted claims with respect to the\nuse of the term \xe2\x80\x9cbaffles.\xe2\x80\x9d It recites:\nBuilding modules adapted to fit together for construction of fire, sound and\nimpact resistant security barriers and rooms for use in securing records and\npersons, comprising in combination, an outer shell . . . , sealant means . . . and\nfurther means disposed inside the shell for increasing its load bearing capacity\ncomprising internal steel baffles extending inwardly from the steel shell walls.\nAs a preliminary matter, we agree with the panel that the term \xe2\x80\x9cbaffles\xe2\x80\x9d is not meansplus-function language that invokes 35 U.S.C. \xc2\xa7 112, paragraph 6. To be sure, the claim refers\nto \xe2\x80\x9cmeans disposed inside the shell for increasing its load bearing capacity,\xe2\x80\x9d a formulation\nthat would ordinarily be regarded as invoking the means-plus-function claim format.\nHowever, the claim specifically identifies \xe2\x80\x9cinternal steel baffles\xe2\x80\x9d as structure that performs\nthe recited function of increasing the shell\xe2\x80\x99s load-bearing capacity. In contrast to the \xe2\x80\x9cload\nbearing means\xe2\x80\x9d limitation, the reference to \xe2\x80\x9cbaffles\xe2\x80\x9d does not use the word \xe2\x80\x9cmeans,\xe2\x80\x9d and we\nhave held that the absence of that term creates a rebuttable presumption that section 112,\nparagraph 6, does not apply.\nMeans-plus-function claiming applies only to purely functional limitations that do not\nprovide the structure that performs the recited function. While the baffles in the \xe2\x80\x99798 patent\nare clearly intended to perform several functions, the term \xe2\x80\x9cbaffles\xe2\x80\x9d is nonetheless structural;\n\n\x0cCLAIM CONSTRUCTION\n\n305\n\nit is not a purely functional placeholder in which structure is filled in by the specification.\nThe claims and the specification unmistakably establish that the \xe2\x80\x9csteel baffles\xe2\x80\x9d refer to\nparticular physical apparatus. The claim characterizes the baffles as \xe2\x80\x9cextend[ing] inwardly\xe2\x80\x9d\nfrom the steel shell walls, which plainly implies that the baffles are structures. The\nspecification likewise makes clear that the term \xe2\x80\x9csteel baffles\xe2\x80\x9d refers to particular internal\nwall structures and is not simply a general description of any structure that will perform a\nparticular function. Because the term \xe2\x80\x9cbaffles\xe2\x80\x9d is not subject to section 112, paragraph 6, we\nagree with the panel that the district court erred by limiting the term to corresponding\nstructures disclosed in the specification and their equivalents. Accordingly, we must\ndetermine the correct construction of the structural term \xe2\x80\x9cbaffles,\xe2\x80\x9d as used in the \xe2\x80\x99798 patent.\nII\nThe first paragraph of section 112 of the Patent Act, 35 U.S.C. \xc2\xa7 112, states that the\nspecification\nshall contain a written description of the invention, and of the manner and\nprocess of making and using it, in such full, clear, concise, and exact terms as\nto enable any person skilled in the art to which it pertains . . . to make and\nuse the same . . .\nThe second paragraph of section 112 provides that the specification\nshall conclude with one or more claims particularly pointing out and distinctly\nclaiming the subject matter which the applicant regards as his invention.\nThose two paragraphs of section 112 frame the issue of claim interpretation for us.\nThe second paragraph requires us to look to the language of the claims to determine what\n\xe2\x80\x9cthe applicant regards as his invention.\xe2\x80\x9d On the other hand, the first paragraph requires that\nthe specification describe the invention set forth in the claims. The principal question that\nthis case presents to us is the extent to which we should resort to and rely on a patent\xe2\x80\x99s\nspecification in seeking to ascertain the proper scope of its claims.\nA\nIt is a \xe2\x80\x9cbedrock principle\xe2\x80\x9d of patent law that \xe2\x80\x9cthe claims of a patent define the\ninvention to which the patentee is entitled the right to exclude.\xe2\x80\x9d Because the patentee is\nrequired to \xe2\x80\x9cdefine precisely what his invention is,\xe2\x80\x9d the [Supreme] Court [has] explained, it\nis \xe2\x80\x9cunjust to the public, as well as an evasion of the law, to construe it in a manner different\nfrom the plain import of its terms.\xe2\x80\x9d White v. Dunbar, 119 U.S. 47, 52 (1886).\nWe have frequently stated that the words of a claim \xe2\x80\x9care generally given their\nordinary and customary meaning.\xe2\x80\x9d Vitronics v. Conceptronic, 90 F.3d 1576, 1582 (Fed. Cir.\n1996). We have made clear, moreover, that the ordinary and customary meaning of a claim\nterm is the meaning that the term would have to a person of ordinary skill in the art in\nquestion at the time of the invention, i.e., as of the effective filing date of the patent\napplication.\n\n\x0c306\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThe inquiry into how a person of ordinary skill in the art understands a claim term\nprovides an objective baseline from which to begin claim interpretation. That starting point\nis based on the well-settled understanding that inventors are typically persons skilled in the\nfield of the invention and that patents are addressed to and intended to be read by others of\nskill in the pertinent art.\nImportantly, the person of ordinary skill in the art is deemed to read the claim term\nnot only in the context of the particular claim in which the disputed term appears, but in the\ncontext of the entire patent, including the specification.\nB\nIn some cases, the ordinary meaning of claim language as understood by a person of\nskill in the art may be readily apparent even to lay judges, and claim construction in such\ncases involves little more than the application of the widely accepted meaning of commonly\nunderstood words. In such circumstances, general purpose dictionaries may be helpful. In\nmany cases that give rise to litigation, however, determining the ordinary and customary\nmeaning of the claim requires examination of terms that have a particular meaning in a field\nof art. Because the meaning of a claim term as understood by persons of skill in the art is\noften not immediately apparent, and because patentees frequently use terms\nidiosyncratically, the court looks to \xe2\x80\x9cthose sources available to the public that show what a\nperson of skill in the art would have understood disputed claim language to mean.\xe2\x80\x9d Innova,\n381 F.3d at 1116. Those sources include \xe2\x80\x9cthe words of the claims themselves, the remainder\nof the specification, the prosecution history, and extrinsic evidence concerning relevant\nscientific principles, the meaning of technical terms, and the state of the art.\xe2\x80\x9d Id.\n1\nQuite apart from the written description and the prosecution history, the claims\nthemselves provide substantial guidance as to the meaning of particular claim terms.\nTo begin with, the context in which a term is used in the asserted claim can be highly\ninstructive. To take a simple example, the claim in this case refers to \xe2\x80\x9csteel baffles,\xe2\x80\x9d which\nstrongly implies that the term \xe2\x80\x9cbaffles\xe2\x80\x9d does not inherently mean objects made of steel.\nOther claims of the patent in question, both asserted and unasserted, can also be\nvaluable sources of enlightenment as to the meaning of a claim term. Because claim terms\nare normally used consistently throughout the patent, the usage of a term in one claim can\noften illuminate the meaning of the same term in other claims. Differences among claims can\nalso be a useful guide in understanding the meaning of particular claim terms. For example,\nthe presence of a dependent claim that adds a particular limitation gives rise to a\npresumption that the limitation in question is not present in the independent claim.\n2\nThe claims, of course, do not stand alone. Rather, they are part of \xe2\x80\x9ca fully integrated\nwritten instrument,\xe2\x80\x9d Markman, 52 F.3d at 978, consisting principally of a specification that\n\n\x0cCLAIM CONSTRUCTION\n\n307\n\nconcludes with the claims. For that reason, claims \xe2\x80\x9cmust be read in view of the specification,\nof which they are a part.\xe2\x80\x9d Id. at 979. As we stated in Vitronics v. Conceptronic, the\nspecification \xe2\x80\x9cis always highly relevant to the claim construction analysis. Usually, it is\ndispositive; it is the single best guide to the meaning of a disputed term.\xe2\x80\x9d 90 F.3d 1576, 1582\n(Fed. Cir. 1996).\nThe importance of the specification in claim construction derives from its statutory\nrole. The close kinship between the written description and the claims is enforced by the\nstatutory requirement that the specification describe the claimed invention in \xe2\x80\x9cfull, clear,\nconcise, and exact terms.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 112.\nConsistent with that general principle, our cases recognize that the specification may\nreveal a special definition given to a claim term by the patentee that differs from the meaning\nit would otherwise possess. In such cases, the inventor\xe2\x80\x99s lexicography governs. In other cases,\nthe specification may reveal an intentional disclaimer, or disavowal, of claim scope by the\ninventor. In that instance as well, the inventor has dictated the correct claim scope, and the\ninventor\xe2\x80\x99s intention, as expressed in the specification, is regarded as dispositive.\n3\nIn addition to consulting the specification, we have held that a court \xe2\x80\x9cshould also\nconsider the patent\xe2\x80\x99s prosecution history, if it is in evidence.\xe2\x80\x9d Markman, 52 F.3d at 980. The\nprosecution history, which we have designated as part of the \xe2\x80\x9cintrinsic evidence,\xe2\x80\x9d consists of\nthe complete record of the proceedings before the PTO and includes the prior art cited during\nthe examination of the patent. Like the specification, the prosecution history provides\nevidence of how the PTO and the inventor understood the patent. Furthermore, like the\nspecification, the prosecution history was created by the patentee in attempting to explain\nand obtain the patent. Yet because the prosecution history represents an ongoing negotiation\nbetween the PTO and the applicant, rather than the final product of that negotiation, it often\nlacks the clarity of the specification and thus is less useful for claim construction purposes.\nNonetheless, the prosecution history can often inform the meaning of the claim language by\ndemonstrating how the inventor understood the invention and whether the inventor limited\nthe invention in the course of prosecution, making the claim scope narrower than it would\notherwise be.\nC\nAlthough we have emphasized the importance of intrinsic evidence in claim\nconstruction, we have also authorized district courts to rely on extrinsic evidence, which\n\xe2\x80\x9cconsists of all evidence external to the patent and prosecution history, including expert and\ninventor testimony, dictionaries, and learned treatises.\xe2\x80\x9d Markman, 52 F.3d at 980. However,\nwhile extrinsic evidence \xe2\x80\x9ccan shed useful light on the relevant art,\xe2\x80\x9d we have explained that\nit is \xe2\x80\x9cless significant than the intrinsic record in determining \xe2\x80\x98the legally operative meaning\nof claim language.\xe2\x80\x99\xe2\x80\x9d C.R. Bard, Inc. v. U.S. Surgical Corp., 388 F.3d 858, 862 (Fed. Cir. 2004).\n\n\x0c308\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nWithin the class of extrinsic evidence, the court has observed that dictionaries and\ntreatises can be useful in claim construction. We have especially noted the help that technical\ndictionaries may provide to a court \xe2\x80\x9cto better understand the underlying technology\xe2\x80\x9d and the\nway in which one of skill in the art might use the claim terms. Vitronics, 90 F.3d at 1584 n.6.\nBecause dictionaries, and especially technical dictionaries, endeavor to collect the accepted\nmeanings of terms used in various fields of science and technology, those resources have been\nproperly recognized as among the many tools that can assist the court in determining the\nmeaning of particular terminology to those of skill in the art of the invention.\nWe have also held that extrinsic evidence in the form of expert testimony can be useful\nto a court for a variety of purposes, such as to provide background on the technology at issue,\nto explain how an invention works, to ensure that the court\xe2\x80\x99s understanding of the technical\naspects of the patent is consistent with that of a person of skill in the art, or to establish that\na particular term in the patent or the prior art has a particular meaning in the pertinent\nfield. However, conclusory, unsupported assertions by experts as to the definition of a claim\nterm are not useful to a court.\nWe have viewed extrinsic evidence in general as less reliable than the patent and its\nprosecution history in determining how to read claim terms, for several reasons. First,\nextrinsic evidence by definition is not part of the patent and does not have the specification\xe2\x80\x99s\nvirtue of being created at the time of patent prosecution for the purpose of explaining the\npatent\xe2\x80\x99s scope and meaning. Second, while claims are construed as they would be understood\nby a hypothetical person of skill in the art, extrinsic publications may not be written by or for\nskilled artisans and therefore may not reflect the understanding of a skilled artisan in the\nfield of the patent. Third, extrinsic evidence consisting of expert reports and testimony is\ngenerated at the time of and for the purpose of litigation and thus can suffer from bias that\nis not present in intrinsic evidence. Fourth, there is a virtually unbounded universe of\npotential extrinsic evidence of some marginal relevance that could be brought to bear on any\nclaim construction question. In the course of litigation, each party will naturally choose the\npieces of extrinsic evidence most favorable to its cause, leaving the court with the\nconsiderable task of filtering the useful extrinsic evidence from the fluff. Finally, undue\nreliance on extrinsic evidence poses the risk that it will be used to change the meaning of\nclaims in derogation of the \xe2\x80\x9cindisputable public records consisting of the claims, the\nspecification and the prosecution history, thereby undermining the public notice function of\npatents.\nIII\nAlthough the principles outlined above have been articulated on numerous occasions,\nsome of this court\xe2\x80\x99s cases have suggested a somewhat different approach to claim\nconstruction, in which the court has given greater emphasis to dictionary definitions of claim\nterms and has assigned a less prominent role to the specification and the prosecution history.\nThe leading case in this line is Texas Digital Systems, Inc. v. Telegenix, Inc., 308 F.3d 1193\n(Fed. Cir. 2002).\n\n\x0cCLAIM CONSTRUCTION\n\n309\n\nA\nIn Texas Digital, the court noted that \xe2\x80\x9cdictionaries, encyclopedias and treatises are\nparticularly useful resources to assist the court in determining the ordinary and customary\nmeanings of claim terms.\xe2\x80\x9d 308 F.3d at 1202. Those texts, the court explained, are \xe2\x80\x9cobjective\nresources that serve as reliable sources of information on the established meanings that\nwould have been attributed to the terms of the claims by those of skill in the art,\xe2\x80\x9d and they\n\xe2\x80\x9cdeserve no less fealty in the context of claim construction\xe2\x80\x9d than in any other area of law. Id.\nat 1203. The court added that because words often have multiple dictionary meanings, the\nintrinsic record must be consulted to determine which of the different possible dictionary\nmeanings is most consistent with the use of the term in question by the inventor. If more\nthan one dictionary definition is consistent with the use of the words in the intrinsic record,\nthe court stated, \xe2\x80\x9cthe claim terms may be construed to encompass all such consistent\nmeanings.\xe2\x80\x9d Id.\nThe Texas Digital court further explained that the patent\xe2\x80\x99s specification and\nprosecution history must be consulted to determine if the patentee has used \xe2\x80\x9cthe words [of\nthe claim] in a manner clearly inconsistent with the ordinary meaning reflected, for example,\nin a dictionary definition.\xe2\x80\x9d 308 F.3d at 1204. The court identified two circumstances in which\nsuch an inconsistency may be found. First, the court stated, \xe2\x80\x9cthe presumption in favor of a\ndictionary definition will be overcome where the patentee, acting as his or her own\nlexicographer, has clearly set forth an explicit definition of the term different from its\nordinary meaning.\xe2\x80\x9d Id. Second, \xe2\x80\x9cthe presumption also will be rebutted if the inventor has\ndisavowed or disclaimed scope of coverage, by using words or expressions of manifest\nexclusion or restriction, representing a clear disavowal of claim scope.\xe2\x80\x9d Id.\nThe Texas Digital court explained that it advanced the methodology set forth in that\nopinion in an effort to combat what this court has termed \xe2\x80\x9cone of the cardinal sins of patent\nlaw\xe2\x80\x94reading a limitation from the written description into the claims,\xe2\x80\x9d SciMed Life Sys., 242\nF.3d at 1340. The court concluded that it is improper to consult \xe2\x80\x9cthe written description and\nprosecution history as a threshold step in the claim construction process, before any effort is\nmade to discern the ordinary and customary meanings attributed to the words themselves.\xe2\x80\x9d\nTexas Digital, 308 F.3d at 1204.\nB\nAlthough the concern expressed by the court in Texas Digital was valid, the\nmethodology it adopted placed too much reliance on extrinsic sources such as dictionaries,\ntreatises, and encyclopedias and too little on intrinsic sources, in particular the specification\nand prosecution history. While the court noted that the specification must be consulted in\nevery case, it suggested a methodology for claim interpretation in which the specification\nshould be consulted only after a determination is made, whether based on a dictionary,\ntreatise, or other source, as to the ordinary meaning or meanings of the claim term in dispute.\nEven then, recourse to the specification is limited to determining whether the specification\nexcludes one of the meanings derived from the dictionary, whether the presumption in favor\nof the dictionary definition of the claim term has been overcome by \xe2\x80\x9can explicit definition of\n\n\x0c310\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthe term different from its ordinary meaning,\xe2\x80\x9d or whether the inventor \xe2\x80\x9chas disavowed or\ndisclaimed scope of coverage, by using words or expressions of manifest exclusion or\nrestriction, representing a clear disavowal of claim scope.\xe2\x80\x9d 308 F.3d at 1204. In effect, the\nTexas Digital approach limits the role of the specification in claim construction to serving as\na check on the dictionary meaning of a claim term if the specification requires the court to\nconclude that fewer than all the dictionary definitions apply, or if the specification contains\na sufficiently specific alternative definition or disavowal. That approach, in our view,\nimproperly restricts the role of the specification in claim construction.\nAssigning such a limited role to the specification, and in particular requiring that any\ndefinition of claim language in the specification be express, is inconsistent with our rulings\nthat the specification is \xe2\x80\x9cthe single best guide to the meaning of a disputed term,\xe2\x80\x9d and that\nthe specification \xe2\x80\x9cacts as a dictionary when it expressly defines terms used in the claims or\nwhen it defines terms by implication.\xe2\x80\x9d Vitronics, 90 F.3d at 1582.\nThe main problem with elevating the dictionary to such prominence is that it focuses\nthe inquiry on the abstract meaning of words rather than on the meaning of claim terms\nwithin the context of the patent. Properly viewed, the \xe2\x80\x9cordinary meaning\xe2\x80\x9d of a claim term is\nits meaning to the ordinary artisan after reading the entire patent. Yet heavy reliance on the\ndictionary divorced from the intrinsic evidence risks transforming the meaning of the claim\nterm to the artisan into the meaning of the term in the abstract, out of its particular context,\nwhich is the specification. Thus, there may be a disconnect between the patentee\xe2\x80\x99s\nresponsibility to describe and claim his invention, and the dictionary editors\xe2\x80\x99 objective of\naggregating all possible definitions for particular words.\nThe problem is that if the district court starts with the broad dictionary definition in\nevery case and fails to fully appreciate how the specification implicitly limits that definition,\nthe error will systematically cause the construction of the claim to be unduly expansive. The\nrisk of systematic overbreadth is greatly reduced if the court instead focuses at the outset on\nhow the patentee used the claim term in the claims, specification, and prosecution history,\nrather than starting with a broad definition and whittling it down. Thus, the use of the\ndictionary may extend patent protection beyond what should properly be afforded by the\ninventor\xe2\x80\x99s patent.\nEven technical dictionaries or treatises, under certain circumstances, may suffer from\nsome of these deficiencies. There is no guarantee that a term is used in the same way in a\ntreatise as it would be by the patentee. In fact, discrepancies between the patent and treatises\nare apt to be common because the patent by its nature describes something novel.\nMoreover, different dictionaries may contain somewhat different sets of definitions for\nthe same words. A claim should not rise or fall based upon the preferences of a particular\ndictionary editor, or the court\xe2\x80\x99s independent decision, uninformed by the specification, to rely\non one dictionary rather than another.\nAs we have noted above, however, we do not intend to preclude the appropriate use of\ndictionaries. Dictionaries or comparable sources are often useful to assist in understanding\n\n\x0cCLAIM CONSTRUCTION\n\n311\n\nthe commonly understood meaning of words and have been used both by our court and the\nSupreme Court in claim interpretation. A dictionary definition has the value of being an\nunbiased source \xe2\x80\x9caccessible to the public in advance of litigation.\xe2\x80\x9d Vitronics, 90 F.3d at 1585.\nWe also acknowledge that the purpose underlying the Texas Digital line of cases\xe2\x80\x94to\navoid the danger of reading limitations from the specification into the claim\xe2\x80\x94is sound.\nMoreover, we recognize that the distinction between using the specification to interpret the\nmeaning of a claim and importing limitations from the specification into the claim can be a\ndifficult one to apply in practice. However, the line between construing terms and importing\nlimitations can be discerned with reasonable certainty and predictability if the court\xe2\x80\x99s focus\nremains on understanding how a person of ordinary skill in the art would understand the\nclaim terms. For instance, although the specification often describes very specific\nembodiments of the invention, we have repeatedly warned against confining the claims to\nthose embodiments. In particular, we have expressly rejected the contention that if a patent\ndescribes only a single embodiment, the claims of the patent must be construed as being\nlimited to that embodiment. That is not just because section 112 of the Patent Act requires\nthat the claims themselves set forth the limits of the patent grant, but also because persons\nof ordinary skill in the art rarely would confine their definitions of terms to the exact\nrepresentations depicted in the embodiments.\nTo avoid importing limitations from the specification into the claims, it is important\nto keep in mind that the purposes of the specification are to teach and enable those of skill in\nthe art to make and use the invention and to provide a best mode for doing so. One of the best\nways to teach a person of ordinary skill in the art how to make and use the invention is to\nprovide an example of how to practice the invention in a particular case. Much of the time,\nupon reading the specification in that context, it will become clear whether the patentee is\nsetting out specific examples of the invention to accomplish those goals, or whether the\npatentee instead intends for the claims and the embodiments in the specification to be strictly\ncoextensive. The manner in which the patentee uses a term within the specification and\nclaims usually will make the distinction apparent.\nIn the end, there will still remain some cases in which it will be hard to determine\nwhether a person of skill in the art would understand the embodiments to define the outer\nlimits of the claim term or merely to be exemplary in nature. While that task may present\ndifficulties in some cases, we nonetheless believe that attempting to resolve that problem in\nthe context of the particular patent is likely to capture the scope of the actual invention more\naccurately than either strictly limiting the scope of the claims to the embodiments disclosed\nin the specification or divorcing the claim language from the specification.\nIV\nA\nThe critical language of claim 1 of the \xe2\x80\x99798 patent\xe2\x80\x94\xe2\x80\x9cfurther means disposed inside\nthe shell for increasing its load bearing capacity comprising internal steel baffles extending\ninwardly from the steel shell walls\xe2\x80\x9d\xe2\x80\x94imposes three clear requirements with respect to the\n\n\x0c312\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nbaffles. First, the baffles must be made of steel. Second, they must be part of the load-bearing\nmeans for the wall section. Third, they must be pointed inward from the walls. Both parties,\nstipulating to a dictionary definition, also conceded that the term \xe2\x80\x9cbaffles\xe2\x80\x9d refers to objects\nthat check, impede, or obstruct the flow of something. The intrinsic evidence confirms that a\nperson of skill in the art would understand that the term \xe2\x80\x9cbaffles,\xe2\x80\x9d as used in the \xe2\x80\x99798 patent,\nwould have that generic meaning.\nThe other claims of the \xe2\x80\x99798 patent specify particular functions to be served by the\nbaffles. For example, dependent claim 2 states that the baffles may be \xe2\x80\x9coriented with the\npanel sections disposed at angles for deflecting projectiles such as bullets able to penetrate\nthe steel plates.\xe2\x80\x9d The inclusion of such a specific limitation on the term \xe2\x80\x9cbaffles\xe2\x80\x9d in claim 2\nmakes it likely that the patentee did not contemplate that the term \xe2\x80\x9cbaffles\xe2\x80\x9d already\ncontained that limitation. Independent claim 17 further supports that proposition. It states\nthat baffles are placed \xe2\x80\x9cprojecting inwardly from the outer shell at angles tending to deflect\nprojectiles that penetrate the outer shell.\xe2\x80\x9d That limitation would be unnecessary if persons\nof skill in the art understood that the baffles inherently served such a function. Dependent\nclaim 6 provides an additional requirement for the baffles, stating that \xe2\x80\x9cthe internal baffles\nof both outer panel sections overlap and interlock at angles providing deflector panels\nextending from one end of the module to the other.\xe2\x80\x9d If the baffles recited in claim 1 were\ninherently placed at specific angles, or interlocked to form an intermediate barrier, claim 6\nwould be redundant.\nThe specification further supports the conclusion that persons of ordinary skill in the\nart would understand the baffles recited in the \xe2\x80\x99798 patent to be load-bearing objects that\nserve to check, impede, or obstruct flow. At several points, the specification discusses\npositioning the baffles so as to deflect projectiles. The patent states that one advantage of the\ninvention over the prior art is that \xe2\x80\x9c[t]here have not been effective ways of dealing with these\npowerful impact weapons with inexpensive housing.\xe2\x80\x9d While that statement makes clear the\ninvention envisions baffles that serve that function, it does not imply that in order to qualify\nas baffles within the meaning of the claims, the internal support structures must serve the\nprojectile-deflecting function in all the embodiments of all the claims. The specification must\nteach and enable all the claims, and the section of the written description discussing the use\nof baffles to deflect projectiles serves that purpose for claims 2, 6, 17, and 23, which\nspecifically claim baffles that deflect projectiles.\nThe specification discusses several other purposes served by the baffles. For example,\nthe baffles are described as providing structural support. The patent states that one way to\nincrease load-bearing capacity is to use \xe2\x80\x9cat least in part inwardly directed steel baffles 15,\n16.\xe2\x80\x9d The baffle 16 is described as a \xe2\x80\x9cstrengthening triangular baffle.\xe2\x80\x9d Importantly, Figures 4\nand 6 do not show the baffles as part of an \xe2\x80\x9cintermediate interlocking, but not solid, internal\nbarrier.\xe2\x80\x9d In those figures, the baffle 16 simply provides structural support for one of the walls,\nas depicted below:\n\n\x0cCLAIM CONSTRUCTION\n\n313\n\nOther uses for the baffles are listed in the specification as well. In Figure 7, the\noverlapping flanges \xe2\x80\x9cprovide for overlapping and interlocking the baffles to produce\nsubstantially an intermediate barrier wall between the opposite [wall] faces\xe2\x80\x9d:\n\nThose baffles thus create small compartments that can be filled with either sound and\nthermal insulation or rock and gravel to stop projectiles. By separating the interwall area\ninto compartments (see, e.g., compartment 55 in Figure 7), the user of the modules can choose\ndifferent types of material for each compartment, so that the module can be \xe2\x80\x9ceasily custom\ntailored for the specific needs of each installation.\xe2\x80\x9d When material is placed into the wall\nduring installation, the baffles obstruct the flow of material from one compartment to another\nso that this \xe2\x80\x9ccustom tailoring\xe2\x80\x9d is possible.\nThe fact that the written description of the \xe2\x80\x99798 patent sets forth multiple objectives\nto be served by the baffles recited in the claims confirms that the term \xe2\x80\x9cbaffles\xe2\x80\x9d should not\nbe read restrictively to require that the baffles in each case serve all of the recited functions.\nWe have held that \xe2\x80\x9c[t]he fact that a patent asserts that an invention achieves several\n\n\x0c314\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nobjectives does not require that each of the claims be construed as limited to structures that\nare capable of achieving all of the objectives.\xe2\x80\x9d Liebel\xe2\x80\x93Flarsheim v. Medrad, 358 F.3d 898, 908\n(Fed. Cir. 2004). Although deflecting projectiles is one of the advantages of the baffles of the\n\xe2\x80\x99798 patent, the patent does not require that the inward extending structures always be\ncapable of performing that function. Accordingly, we conclude that a person of skill in the art\nwould not interpret the disclosure and claims of the \xe2\x80\x99798 patent to mean that a structure\nextending inward from one of the wall faces is a \xe2\x80\x9cbaffle\xe2\x80\x9d if it is at an acute or obtuse angle,\nbut is not a \xe2\x80\x9cbaffle\xe2\x80\x9d if it is disposed at a right angle.\nB\nInvoking the principle that \xe2\x80\x9cclaims should be so construed, if possible, as to sustain\ntheir validity,\xe2\x80\x9d Rhine v. Casio, Inc., 183 F.3d 1342, 1345 (Fed. Cir. 1999), AWH argues that\nthe term \xe2\x80\x9cbaffles\xe2\x80\x9d should be given a restrictive meaning because if the term is not construed\nrestrictively, the asserted claims would be invalid.\nWhile we have acknowledged the maxim that claims should be construed to preserve\ntheir validity, we have not applied that principle broadly, and we have certainly not endorsed\na regime in which validity analysis is a regular component of claim construction. Instead, we\nhave limited the maxim to cases in which \xe2\x80\x9cthe court concludes, after applying all the available\ntools of claim construction, that the claim is still ambiguous.\xe2\x80\x9d Liebel\xe2\x80\x93Flarsheim, 358 F.3d at\n911. In such cases, we have looked to whether it is reasonable to infer that the PTO would\nnot have issued an invalid patent, and that the ambiguity in the claim language should\ntherefore be resolved in a manner that would preserve the patent\xe2\x80\x99s validity.\nIn this case, the claim term at issue is not ambiguous. Thus, it can be construed\nwithout the need to consider whether one possible construction would render the claim\ninvalid while the other would not. The doctrine of construing claims to preserve their validity,\na doctrine of limited utility in any event, therefore has no applicability here.\nIn sum, we reject AWH\xe2\x80\x99s arguments in favor of a restrictive definition of the term\n\xe2\x80\x9cbaffles.\xe2\x80\x9d Because we disagree with the district court\xe2\x80\x99s claim construction, we reverse the\nsummary judgment of noninfringement. In light of our decision on claim construction, it is\nnecessary to remand the infringement claims to the district court for further proceedings.\n[Judge Lourie, joined by Judge Newman (the original panel majority), wrote\nseparately to \xe2\x80\x9cfully join the portion of the court\xe2\x80\x99s opinion resolving the relative weights of\nspecification and dictionaries in interpreting patent claims\xe2\x80\x9d but dissenting from the decision\nto reverse and remand for reconsideration of the infringement claims; he would have affirmed\nthe judgment of noninfringement. Judge Mayer dissented, arguing that claim construction\nshould not be treated as a matter of law and that the Federal Circuit should defer to the\ndistrict court\xe2\x80\x99s construction.]\n\n\x0cCLAIM CONSTRUCTION\n\n315\n\nDiscussion Questions: Phillips v. AWH\n1. Competing Lines of Precedent. As Phillips explains, prior to that decision there were\ntwo competing lines of precedent describing different approaches to claim construction. One\nline, known as the \xe2\x80\x9ccontextual,\xe2\x80\x9d \xe2\x80\x9cholistic,\xe2\x80\x9d or \xe2\x80\x9cspecification-first\xe2\x80\x9d approach and most closely\nassociated with Vitronics v. Conceptronic, 90 F.3d 1576 (Fed. Cir. 1996), emphasized intrinsic\nevidence, particularly the specification. The other, known as the \xe2\x80\x9ctextual,\xe2\x80\x9d \xe2\x80\x9cprocedural,\xe2\x80\x9d or\n\xe2\x80\x9cdictionary-first\xe2\x80\x9d approach and most closely associated with Texas Digital Systems, Inc. v.\nTelegenix, Inc., 308 F.3d 1193 (Fed. Cir. 2002), emphasized the plain meaning of the text of\nthe claims as interpreted using dictionaries and other sources of extrinsic evidence. Phillips,\nwhich was decided en banc, decided the matter in favor of the Vitronics approach. It is\nnonetheless striking that it took the Federal Circuit 23 years\xe2\x80\x94from its creation in 1982 until\n2005\xe2\x80\x94to attempt to settle what seems like a fundamental question. Can you think of reasons\nwhy the court might have let this issue linger for so long? What, if anything, does this episode\ntell us about the merits of having a single, specialized court of appeals deciding all patent\ncases?\n2. The Relationship Between the Specification and the Claims. The Phillips court\nemphasized that \xe2\x80\x9cthe specification is the single best guide to the meaning of a disputed term.\xe2\x80\x9d\nBut it also stated that courts must \xe2\x80\x9cavoid importing limitations from the specification into\nthe claims\xe2\x80\x9d or \xe2\x80\x9climiting the scope of the claims to the embodiments.\xe2\x80\x9d How is a court supposed\nto do both of these things? Suppose, for instance, that a claim calls for making a particular\nelement from \xe2\x80\x9cmetal,\xe2\x80\x9d but the specification discusses only zinc, iron, and cadmium as possible\nmetals. How should a court decide whether to read the claim\xe2\x80\x99s reference to \xe2\x80\x9cmetal\xe2\x80\x9d as\nencompassing only those three metals, or whether it should be read to capture every type of\nmetal? How did the Phillips court go about making this decision?\nNote in addition that there is a canon of patent claim construction that courts should\nconstrue claims so as to render them valid. Construing a claim more broadly than the\nspecification, as in the example of a claim for \xe2\x80\x9cmetal\xe2\x80\x9d above, could leave it vulnerable to a\nwritten description or enablement challenge. Should this canon of claim construction militate\nin favor of restricting the scope of a claim to the embodiments described in the specification?\nOr would that run afoul of the Phillips court\xe2\x80\x99s admonition against importing limitations from\nthe specification into the claims?\n3. The Road Not Taken. Suppose Phillips had been decided under the now-discarded\nTexas Digital framework. Do you think it would have come out differently? What sources\nwould the court have looked to, and in what direction would they have pointed?\n4. Types of Extrinsic Evidence. The Phillips court largely paints the various types of\nextrinsic evidence with a broad brush. But in reality, there are potentially significant\ndifferences between technical materials (treatises, papers, and the like), general dictionaries,\nexpert testimony, and other types of extrinsic evidence that might be offered in court. Which\nof these sorts of evidence do you think are most reliable and should carry the greatest weight\nwith a court? Does it depend on the type of patent claim at issue?\n\n\x0c316\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n5. Canons of Claim Construction. The Federal Circuit has developed a number of\nguidelines for interpreting patent claims, which are analogous to the canons of statutory\ninterpretation courts use when evaluating statutes. A sampling of these canons is provided\nbelow. What weight do you think each of these canons receives after Phillips? What weight\nshould each canon receive?\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\xe2\x80\xa2\n\n\xe2\x80\xa2\n\nClaims should be construed objectively from the perspective of a PHOSITA at the\ntime of filing.\nClaims should be construed consistently for assessing validity and infringement.\nIntrinsic evidence should be considered first, starting with the claim language,\nthen looking at the specification, and concluding with the prosecution history.\nClaim terms should be construed based on their ordinary meaning.\nThe full scope of ordinary meaning applies unless intrinsic evidence suggests a\nnarrower definition.\nDictionaries, particularly technical dictionaries or treatises, may be useful guides\nto ordinary meaning.\nWhen dictionaries conflict, the specification and prosecution history will be needed\nto determine which definition should apply.\nA patentee may be her own lexicographer, using definitions different from the\nordinary meaning.\nDifferent claims are presumed to have different meanings.\nDifferent words in the same claim are presumed to have different meanings.\nNo claim limitation should be rendered meaningless.\nA given claim term is presumed to have the same meaning in different claims.\nClaim terms must be construed in light of the specification.\nThe specification in which the claim resides is preferred, but related applications\n(including provisionals, parents, and foreign counterparts) may be used.\nMaterial incorporated by reference may be considered as intrinsic evidence.\nThe purpose of the invention may be considered when construing claims.\nClaims should not be redrafted by reading in limitations from the specification or\nby expanding claim scope to cover embodiments in the specification.\nIf the specification lists a preferred embodiment, a claim should generally be\nconstrued so that the preferred embodiment is within the claim scope.\nIf the patentee has a commercial embodiment of the invention, it should not be\nused when construing claims.\nA patentee may disclaim claim scope in the specification or prosecution history,\nincluding by disparaging aspects of prior art devices or distinguishing the claimed\ninvention from prior art.\nClaims in an issued patent should be construed to preserve validity if possible.\n\n6. Did Phillips Change Anything? An empirical study of every Federal Circuit claim\nconstruction decision from 1995 to 2007 concluded that Phillips had little effect on whether\nFederal Circuit panels adopted a more contextual or textual methodology. R. Polk Wagner &\nLee Petherbridge, Did Phillips Change Anything? Empirical Analysis of the Federal Circuit\xe2\x80\x99s\n\n\x0cCLAIM CONSTRUCTION\n\n317\n\nClaim Construction Jurisprudence, in Intellectual Property and the Common Law\n(Shyamkrishna Balganesh, ed. 2013). Even though Phillips nominally resolved the debate in\nfavor of the contextualists, if you are representing a client that benefits from a more textualist\napproach, what language from Phillips would you quote in your brief?\nIn addition, why do you think Phillips had only a small effect on the methodology used\nby Federal Circuit panels? Do you think it is caused by some feature of the Federal Circuit,\nor is it inherent to patent cases in some fashion? Or do you think this is just typical circuit\nbehavior, and we should expect to see it in other contexts across other courts as well?\n7. The \xe2\x80\x9cBroadest Reasonable Interpretation.\xe2\x80\x9d The methodology outlined in Phillips\napplies when a claim in a granted patent is being litigated in federal district court or in the\ncourse of an IPR or other USPTO-based review. But when a patent application that has not\nyet resulted in an issued patent is being examined by the USPTO, the agency\xe2\x80\x94including\nboth the examiner and the PTAB, if the examiner\xe2\x80\x99s decision is appealed\xe2\x80\x94does not use\nPhillips to interpret the claim. Instead, the agency gives the claim what is known as its\n\xe2\x80\x9cbroadest reasonable interpretation.\xe2\x80\x9d This is just what it sounds like\xe2\x80\x94the USPTO interprets\nthe claim as broadly as reasonably possible. This means that a claim might have one meaning\nduring examination and another during litigation. In addition, a broader claim is of course\nmore likely to be held invalid for anticipation, obviousness, or lack of enablement or written\ndescription, and this will make the claim less likely to pass muster during examination. Do\nyou think it makes sense for the USPTO and the federal courts to use different modes of\nclaim interpretation? What are the advantages of doing so? The downsides?\n\n\x0c318\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n9. Direct Infringement\nWith an understanding of claim construction in place, we now turn to direct\ninfringement. As noted above, direct infringement is governed by 35 U.S.C. \xc2\xa7 271(a), which\nstates:\n[W]hoever without authority makes, uses, offers to sell, or sells any patented\ninvention, within the United States or imports into the United States any\npatented invention during the term of the patent therefor, infringes the patent.\nDirect infringement is in many respects the inverse of anticipation and obviousness. Most\nimportantly, just as with anticipation, the \xe2\x80\x9call-elements rule\xe2\x80\x9d applies. Just as invalidity\nrequires an element-by-element comparison between a single piece of prior art and the patent\nclaim, direct infringement requires an element-by-element comparison between the patent\nclaim and the accused device. If you know how to interpret a claim, and you know how to\napply the all-elements rule, then you know how to perform a direct infringement analysis.\n\nA. Literal Infringement\nThe first subspecies of direct infringement is literal infringement. In a case of literal\ninfringement, every element of the patent claim is literally present in the accused device. The\nsymmetry between literal infringement and anticipation has given rise to the patent maxim,\n\xe2\x80\x9cthat which infringes if later, anticipates if earlier.\xe2\x80\x9d Miller v. Eagle Mfg. Co., 151 U.S. 186\n(1894). In other words, any literally infringing device would anticipate the patent if it\npredated the patent; any real-world piece of prior art that anticipates the patent would\nliterally infringe if it postdated the patent.\nBetween the claim construction doctrine from the previous section and your\nknowledge of the all-elements rule from the doctrine of anticipation, you have all of the tools\nnecessary to conduct a literal infringement analysis. The following exercises, based on\nFederal Circuit cases, offer opportunities to apply those tools. For each of them, consider the\navailable facts. What claim construction arguments would you make on behalf of the\npatentee? On behalf of the accused infringer?\n\nExercise Based on Unique Concepts, Inc. v. Brown, 939 F.2d 1558 (Fed. Cir. 1991)\nPatented invention: Plaintiff Unique Concepts is the exclusive licensee of the \xe2\x80\x99260\npatent, which is directed to an \xe2\x80\x9cassembly of border pieces\xe2\x80\x9d used to attach a fabric wall\ncovering to a wall, as shown in Figure 2 from the patent. Claim 1 of the patent reads:\n\n\x0cDIRECT INFRINGEMENT\n\n319\n\nAn assembly of border pieces for creating a framework\nattachable to a wall or other flat surface for mounting\na fabric sheet which is cut to dimensions at least\nsufficient to cover the surface, said assembly\ncomprising linear border pieces and right angle corner\nborder pieces which are arranged in end-to-end\nrelation to define a framework that follows the\nperimeter of the area to be covered, each piece\nincluding [a number of additional elements].\nAccused devices: Unique has sued Kevin Brown,\nalleging that his products infringe claim 1. Brown argues\nthat his products do not infringe because they do not have\ncorner pieces which were preformed at a right angle,\ninstead employing two linear pieces which are each\nmitered, i.e., cut at a 45-degree angle, and then placed\ntogether to form a right angle (as shown). Thus, he argues\nthat his products do not have the required \xe2\x80\x9cright angle\ncorner border pieces.\xe2\x80\x9d\nSpecification: The drawings show only preformed corner pieces and no mitered\npieces, and the specification repeatedly refers to the preformed pieces in the drawings as\n\xe2\x80\x9ccorner pieces\xe2\x80\x9d or \xe2\x80\x9cright angle border pieces.\xe2\x80\x9d The specification does once refer to \xe2\x80\x9cimprovised\ncorner pieces\xe2\x80\x9d as an alternative:\nInstead of using preformed right-angle corner pieces of the type previously\ndisclosed, one may improvise corner pieces by miter-cutting the ends of a pair\nof short linear border pieces at right angles to each other. The advantage of\nsuch corner pieces resides in the fact that linear pieces may be mass-produced\nat low cost by continuous extrusion, whereas preformed corner pieces must be\nmolded or otherwise fabricated by more expensive techniques. On the other\nhand, a preformed corner piece is somewhat easier for a do-it-yourselfer to\nwork with.\nProsecution history: The examiner rejected the original claim 1, which also referred\nto \xe2\x80\x9cright angle corner border pieces,\xe2\x80\x9d as unpatentable over references with preformed corners.\nIn response, the applicant amended the claim and argued against the references, stating that\nthe invention \xe2\x80\x9cgreatly simplifies the mounting of a fabric covering\xe2\x80\x9d such that an \xe2\x80\x9camateur\xe2\x80\x9d\ncan do it because \xe2\x80\x9cthe fabric need not be cut so precisely\xe2\x80\x9d\xe2\x80\x94the fabric only has to be cut\nroughly to size, and the excess can be stuffed in the storage channel. The attorney and\nexaminer then had an unrecorded telephone interview, following which the examiner\ncanceled certain claims, including claim 9:\n9. An assembly as set forth in claim 1, wherein said right-angle corner pieces\nare formed by a pair of short linear pieces whose ends are mitered . . .\n\n\x0c320\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThe reason for its cancelation is unclear; Brown\xe2\x80\x99s expert said that it was because \xe2\x80\x9cit\nwas simply not something that a do-it-yourselfer could do.\xe2\x80\x9d The amended claim 1 was\nallowed.\n\nExercise Based on Brookhill-Wilk 1 v. Intuitive Surgical, 334 F.3d 1294 (Fed. Cir. 2003)\nPatented Invention: Plaintiff Brookhill is the owner of the \xe2\x80\x99003 patent, which is\ndirected to systems and methods for performing robotic surgery. The systems and methods\nuse robotic surgical tools and telecommunication links to permit a surgeon to operate from a\n\xe2\x80\x9cremote location beyond a range of direct manual contact.\xe2\x80\x9d Claim 10 of the \xe2\x80\x99003 patent reads:\nA surgical system, comprising: an endoscopic instrument; camera means on\nsaid endoscopic instrument for obtaining video images of internal body tissues\ninside a patient\xe2\x80\x99s body via said endoscopic instrument; transmission means\noperatively connected to said camera means for transmitting, over an\nelectromagnetic signaling link to a remote location beyond a range of direct\nmanual contact with said patient\xe2\x80\x99s body and said endoscopic instrument, a\nvideo signal encoding said video image;\nreceiver means for receiving actuator control signals from said remote\nlocation via said electromagnetic signaling link;\na surgical instrument insertable into the patient\xe2\x80\x99s body and movable\nrelative to the patient\xe2\x80\x99s body and said endoscopic instrument; and\nrobot actuator means operatively connected to said surgical instrument\nand said receiver means for actuating said surgical instrument in\nresponse to the actuator control signals received by said receiver means\n\nfrom said remote location.\nAccused Device: Brookhill has sued Intuitive, claiming that Intuitive\xe2\x80\x99s da Vinci\nrobotic surgical system infringes the \xe2\x80\x99003 patent. The surgeon in the da Vinci system is\nlocated in the same operating room as the patient. The parties have agreed that if Claim 10\nis found to not cover instances where the surgeon is located in the same operating room as\nthe patient, the court would be required to find that the patent is not infringed.\nSpecification: The written description in the \xe2\x80\x99003 patent explains that an endoscopic\ninstrument and a surgical instrument may each be placed within hollow tubes, inserted\nthrough a small incision in the abdominal wall of a patient, and thereby reach the surgical\nsite. The endoscope remotely transmits to a computer that generates an image of the internal\nbody tissues of the patient on a monitor. The specification sets forth no specific parameters\nas to the distance between the surgeon and patient but teaches generally that a surgeon\nusing the disclosed assembly may operate without directly touching the patient, the surgical\ninstruments, or the endoscope.\n\n\x0cDIRECT INFRINGEMENT\n\n321\n\nThe specification further states that the advantage of the invention is that it allows a\nsurgeon to operate at some distance, possibly across the world, from the operating room in\nwhich the patient is located. The description of the preferred embodiment is as follows:\nIt is to be understood, of course, that surgeons and other personnel are present\nin the operating room at the time of surgery to oversee and supervise the\nproper operation of the equipment. These personnel may communicate with\nthe remote surgeon via computers and telecommunications links and/or\nthrough other telecommunications or electromagnetic signaling linkages such\nas the telephone network.\nThe Objects of the Invention section of the specification describes the invention as\n\xe2\x80\x9creduc[ing] surgical costs\xe2\x80\x9d and \xe2\x80\x9cfacilitat[ing] the performance of operations by surgeons from\nall over the world.\xe2\x80\x9d\nThe Background section states that in traditional settings, \xe2\x80\x9cthe surgeon is always\npresent in the operating room to manipulate the surgical instruments.\xe2\x80\x9d\nDictionary Terms: The word \xe2\x80\x9cremote\xe2\x80\x9d has the following possible meanings in\nWebster\xe2\x80\x99s Third New International Dictionary:\n1. \xe2\x80\x9cseparated by intervals greater than usual\xe2\x80\x9d\n2. \xe2\x80\x9cfar apart . . . far removed; not near; far; distant\xe2\x80\x9d\nProsecution History: Claim 10 originally used the phrase \xe2\x80\x9cremote location beyond\na range of direct visual contact.\xe2\x80\x9d The patent examiner rejected this phrase as too indefinite\nbecause \xe2\x80\x9cthe range of direct visual contact may be different for certain operators of the system\nand this cannot be given weight in the claims.\xe2\x80\x9d To overcome the indefiniteness rejection,\nBrookhill replaced the word \xe2\x80\x9cvisual\xe2\x80\x9d with the word \xe2\x80\x9cmanual.\xe2\x80\x9d In support of this change,\nBrookhill stated that the amended text \xe2\x80\x9cmeans that the remote location is beyond the arm\xe2\x80\x99s\nreach of the patient. Inasmuch as an arm\xe2\x80\x99s length is a well understood difference, it is\nbelieved that the remote location is sufficiently defined for purposes of the Patent Statute.\xe2\x80\x9d\nBrookhill further stated that \xe2\x80\x9c[t]his amendment clarifies that a remote operator who is\ngenerating actuator control signals . . . is so far from the patient and the endoscopic\ninstrument as to be unable to manipulate the instrument at the patient\xe2\x80\x99s side.\xe2\x80\x9d The examiner\nsubsequently allowed the claims and the patent issued.\n\nExercise Based on K-2 Corp. v. Salomon S.A., 191 F.3d 1356 (Fed. Cir. 1999)\nPatented Invention: Plaintiff K-2 Corp. is the owner of the \xe2\x80\x99466 patent, which is\ndirected to an in-line roller skate that has a soft, pliable inner \xe2\x80\x9cbootie\xe2\x80\x9d surrounded in certain\nareas by molded plastic or straps affixed to the base of the skate. This allows the wearer\xe2\x80\x99s\nfoot to breathe and forms the skate, as shown in Figure 1 from the patent below. Claim 1 of\nthe patent reads:\n\n\x0c322\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nIn an in-line roller skate having an upper shoe portion\nand a lower frame portion . . . a non-rigid shoe portion\nadapted to receive and substantially enclose the entire\nfoot of the skater . . . support means positioned adjacent\nselected areas of said non-rigid shoe portion for providing\nsupport to aid the skater in maintaining said in-line\nroller skate in a substantially vertical position . . . and a\nbase portion, . . . said non-rigid shoe portion being\n\npermanently affixed to said base portion at least at said\ntoe area and said heel area for substantially preventing\nmovement therebetween at least in a horizontal plane,\nwherein at least a portion of said non-rigid shoe portion\nextends continuously from said base portion to at least\nthe top of said ankle support cuff.\nAccused Devices: K-2 Corp. has sued\nSalomon S.A., alleging their products infringe upon\nclaim 1 of the \xe2\x80\x99466 patent. Salomon makes an inline\nskate (called the TR skate) which includes a soft inner\nbootie fastened to the lower, rigid plastic frame of the\nskate by the use of rivets and a screw in the toe area,\nand by a removable hex-head screw in the heel area.\nSalomon argues that the use of a removable screw in\nthe heel area of the TR skate does not meet the\n\xe2\x80\x9cpermanently affixed\xe2\x80\x9d limitation found in claim 1 of\nthe \xe2\x80\x99466 patent.\nSpecification: In the specification, a rivet is\ncited as a conventional fastening means to accomplish\na permanent connection.\nProsecution History: There is a prior art reference, called the Johnson reference,\nwhich is a patent that discloses an in-line skate with an easily removable upper shoe portion\naffixed at the toe and mid-foot with a \xe2\x80\x9cdetachable\xe2\x80\x9d connection. K-2 noted in its patent\napplication that an advantage of the \xe2\x80\x9cpermanently affixed\xe2\x80\x9d connection was that it avoided\nthe \xe2\x80\x9csliding heel\xe2\x80\x9d problem of the Johnson reference, where the shoe slid in the horizontal\ndimension. The examiner rejected prior K-2 claims in light of the Johnson reference, and K2 added the \xe2\x80\x9cpermanently affixed\xe2\x80\x9d language in response. A second prior art reference, the\nFrench reference, teaches a soft upper bootie attached to the skate base with screws at the\ntoe and the heel. During a telephone conference between the examiner and K-2, K-2 cited the\nFrench reference to the examiner. K-2 then explained that it had added the phrase \xe2\x80\x9cat least\nat said toe area and heel area\xe2\x80\x9d in response to that reference.\n\n\x0cDIRECT INFRINGEMENT\n\n323\n\nB. Infringement by Equivalents\nThe doctrine of literal infringement suffers from the same limitation as the doctrine\nof novelty: if even a single element of a claim is not present in the accused device, the device\ndoes not infringe. This raises the possibility that a potential infringer could evade liability\nsimply by making minor, immaterial changes to her products. Consider, for instance, the\nbaffles in Phillips, and suppose that the court had held that the claim did not cover rightangled baffles. Is a right-angled baffle really all that different from a baffle at 89 degrees, or\n91 degrees? Does it make sense to condition the patentee\xe2\x80\x99s ability to win her lawsuit on\nwhether the accused device has such a miniscule difference?\nThe doctrine of equivalents exists to fill this gap. The doctrine of equivalents is in\nmany ways the analogue of the doctrine of obviousness; or, put another way, the doctrine of\nequivalents is to literal infringement as obviousness is to anticipation. With respect to\nvalidity, there are some inventions that are not anticipated, because there is no single piece\nof prior art that contains all of the necessary elements, but nonetheless add so little to the\nexisting state of knowledge that it would do more harm than good to allow them to be\npatented. The law of obviousness exists to block patents in these circumstances. Similarly,\nthere are some accused devices that do not literally infringe, because they do not possess\nevery element of the asserted claim, but are nonetheless so similar to the asserted claim that\nit would seem contrary to the goals of the patent system not to hold that they infringe. The\ndoctrine of equivalents exists to allow patentees to establish infringement in these\ncircumstances.\nImportantly, the all-elements rule still applies in cases involving the doctrine of\nequivalents. It is not enough for a court (or jury) just to eyeball the patent claim and the\naccused device and conclude that they\xe2\x80\x99re equivalent to one another. Rather, the court must\nconsider the elements of the patent claim one-by-one, as in a case of literal infringement. For\neach element, the court must determine whether the element is literally present in the\naccused device, whether an equivalent to the element is present in the accused device, or\nneither. A court can \xe2\x80\x9cmix and match\xe2\x80\x9d literal infringement and infringement by the\nequivalents\xe2\x80\x94it could find that some elements are literally present and others are present as\nequivalents\xe2\x80\x94and this is sufficient for a finding of infringement. But of course if any claim\nelement is neither literally present in the accused device nor present as an equivalent, then\nthe device does not infringe the claim.\n\nDetermining Equivalency\nWhat is the legal standard for determining whether part of an accused device to be\n\xe2\x80\x9cequivalent\xe2\x80\x9d to a claim element? The primary legal standard is the \xe2\x80\x9cfunction-way-result\xe2\x80\x9d test,\nsometimes known as the \xe2\x80\x9ctriple identity\xe2\x80\x9d test. As the name would indicate, this test involves\nconsidering whether the feature of the accused device in question:\n1. performs substantially the same function as the claim element;\n\n\x0c324\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n2. in substantially the same way as the claim element;\n3. yielding substantially the same result as the claim element.\n\nSee, e.g., Abbott Laboratories v. Sandoz, Inc., 566 F.3d 1282, 1296 (Fed. Cir. 2009). The\nFederal Circuit also sometimes uses another test, called the \xe2\x80\x9cinsubstantial differences\xe2\x80\x9d test.\nAs this name should indicate, for purposes of this test the question is simply whether the\ndifferences between the claim element and the feature of the accused device are\n\xe2\x80\x9cinsubstantial\xe2\x80\x9d or not. Id.\nThe function-way-result test is widely accepted as the better test for mechanical\ninventions. Warner-Jenkinson Co., Inc. v. Hilton Davis Chem. Co., 520 U.S. 17, 39 (1997).\nNonetheless, the Federal Circuit will occasionally use the insubstantial differences test when\nevaluating other types of inventions. Our view, however, is that the insubstantial differences\ntest is question-begging: what is the standard for when a difference is substantial or\ninsubstantial? The test adds nothing to the requirement that the device and the claim\nelement be \xe2\x80\x9cequivalent.\xe2\x80\x9d Accordingly, we recommend that practitioners focus on the functionway-result test, though it is worth being aware of the alternative.\nThe function-way-result test will necessarily involve a highly technical and factspecific analysis of the claim and accused device at issue. Equivalence is a question of fact for\nthe jury, Sage Products, Inc. v. Devon Industries, Inc., 126 F.3d 1420, 1423 (Fed. Cir. 1997),\nwhich is often decided through testimony by dueling experts.\n\nProsecution History Estoppel\nAs you know, patent applicants often amend their claims during patent prosecution.\nThese amendments change the scope of what the claims literally encompass, of course. In\naddition, these claim amendments have long been understood to restrict the scope of what a\npatentee can later claim as an equivalent to a claim element as well. For instance, suppose\nthat a patent applicant starts with a claim that includes a \xe2\x80\x9cgear.\xe2\x80\x9d Imagine that the patent\nexaminer rejects this claim on the grounds that there is prior art that similarly includes a\ngear, made of wood. The patentee amends her claim to specify that the invention must include\na \xe2\x80\x9cmetal gear,\xe2\x80\x9d in order to avoid the prior art. Suppose then that someone else begins selling\nthe same invention, but with a gear made from stone. The patentee cannot later claim that a\n\xe2\x80\x9cstone gear\xe2\x80\x9d is an equivalent to her \xe2\x80\x9cmetal gear.\xe2\x80\x9d She is estopped from claiming this\nequivalent because she amended the claim. This is known as the doctrine of \xe2\x80\x9cprosecution\nhistory estoppel.\xe2\x80\x9d See Warner-Jenkinson Co., Inc. v. Hilton Davis Chem. Co., 520 U.S. 17, 2931 (1997).\nThis \xe2\x80\x9cmetal gear\xe2\x80\x9d example presents an easy case in two respects. First, the patentee\namended the claim due to existing prior art. Amendments made because of prior art have\nlong been thought to trigger the doctrine of prosecution history estoppel. But what about\namendments made for other reasons, or for no discernable reason? Do all amendments trigger\nprosecution history estoppel, or only some? Second, the amendment directly implicated the\nequivalent that the patent owner later tried to claim. That is, the patentee amended the\n\n\x0cDIRECT INFRINGEMENT\n\n325\n\nelement to specify a particular material (metal), and then later tried to claim another type of\nmaterial (stone). The amendment thus could not be more relevant to the putative equivalent,\nand the case for applying the doctrine of prosecution history estoppel could not be stronger.\nBut what if the amendment is not so closely connected with the equivalent the patent owner\nis trying to recapture? Should amending a claim element bar a patent owner from recapturing\nall potential equivalents to the element, or only some elements? Those are the questions the\nSupreme Court took up in Festo.\n\nFesto Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002)\nJustice Anthony Kennedy delivered the opinion of the Court.\nThis case requires us to address once again the relation between two patent law\nconcepts, the doctrine of equivalents and the rule of prosecution history estoppel. The Court\nconsidered the same concepts in Warner\xe2\x80\x93Jenkinson Co. v. Hilton Davis Chemical Co., 520\nU.S. 17 (1997), and reaffirmed that a patent protects its holder against efforts of copyists to\nevade liability for infringement by making only insubstantial changes to a patented\ninvention. At the same time, we appreciated that by extending protection beyond the literal\nterms in a patent the doctrine of equivalents can create substantial uncertainty about where\nthe patent monopoly ends. If the range of equivalents is unclear, competitors may be unable\nto determine what is a permitted alternative to a patented invention and what is an\ninfringing equivalent.\nTo reduce the uncertainty, Warner\xe2\x80\x93Jenkinson acknowledged that competitors may\nrely on the prosecution history, the public record of the patent proceedings. In some cases the\nPatent and Trademark Office (PTO) may have rejected an earlier version of the patent\napplication on the ground that a claim does not meet a statutory requirement for\npatentability. 35 U.S.C. \xc2\xa7 132. When the patentee responds to the rejection by narrowing his\nclaims, this prosecution history estops him from later arguing that the subject matter covered\nby the original, broader claim was nothing more than an equivalent. Competitors may rely\non the estoppel to ensure that their own devices will not be found to infringe by equivalence.\nIn the decision now under review the Court of Appeals for the Federal Circuit held\nthat by narrowing a claim to obtain a patent, the patentee surrenders all equivalents to the\namended claim element. Petitioner asserts this holding departs from past precedent in two\nrespects. First, it applies estoppel to every amendment made to satisfy the requirements of\nthe Patent Act and not just to amendments made to avoid pre-emption by an earlier\ninvention, i.e., the prior art. Second, it holds that when estoppel arises, it bars suit against\nevery equivalent to the amended claim element.\nWe granted certiorari to consider these questions.\n\n\x0c326\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nI\n\nPetitioner Festo Corporation owns two patents for an improved magnetic rodless\ncylinder, a piston-driven device that relies on magnets to move objects in a conveying system.\nThe device has many industrial uses and has been employed in machinery as diverse as\nsewing equipment and the Thunder Mountain ride at Disney World. Although the precise\ndetails of the cylinder\xe2\x80\x99s operation are not essential here, the prosecution history must be\nconsidered.\nPetitioner\xe2\x80\x99s patent applications, as often occurs, were amended during the prosecution\nproceedings. The application for the first patent, the Stoll Patent (U.S. Patent No. 4,354,125),\nwas amended after the patent examiner rejected the initial application because the exact\nmethod of operation was unclear and some claims were made in an impermissible way. (They\nwere multiply dependent.) 35 U.S.C. \xc2\xa7 112. The inventor, Dr. Stoll, submitted a new\napplication designed to meet the examiner\xe2\x80\x99s objections and also added certain references to\nprior art. The second patent, the Carroll Patent (U.S. Patent No. 3,779,401), was also\namended during a reexamination proceeding. The prior art references were added to this\namended application as well. Both amended patents added a new limitation\xe2\x80\x94that the\ninventions contain a pair of sealing rings, each having a lip on one side, which would prevent\nimpurities from getting on the piston assembly. The amended Stoll Patent added the further\nlimitation that the outer shell of the device, the sleeve, be made of a magnetizable material.\nAfter Festo began selling its rodless cylinder, respondents (SMC) entered the market\nwith a device similar, but not identical, to the ones disclosed by Festo\xe2\x80\x99s patents. SMC\xe2\x80\x99s\ncylinder, rather than using two one-way sealing rings, employs a single sealing ring with a\ntwo-way lip. Furthermore, SMC\xe2\x80\x99s sleeve is made of a nonmagnetizable alloy. SMC\xe2\x80\x99s device\ndoes not fall within the literal claims of either patent, but petitioner contends that it is so\nsimilar that it infringes under the doctrine of equivalents.\nSMC contends that Festo is estopped from making this argument because of the\nprosecution history of its patents. The sealing rings and the magnetized alloy in the Festo\nproduct were both [claimed] for the first time in the amended applications. In SMC\xe2\x80\x99s view,\nthese amendments narrowed the earlier applications, surrendering alternatives that are the\nvery points of difference in the competing devices\xe2\x80\x94the sealing rings and the type of alloy\nused to make the sleeve. As Festo narrowed its claims in these ways in order to obtain the\npatents, says SMC, Festo is now estopped from saying that these features are immaterial\nand that SMC\xe2\x80\x99s device is an equivalent of its own.\nThe United States District Court for the District of Massachusetts disagreed. It held\nthat Festo\xe2\x80\x99s amendments were not made to avoid prior art, and therefore the amendments\nwere not the kind that give rise to estoppel. A panel of the Court of Appeals for the Federal\nCircuit affirmed. We granted certiorari, vacated, and remanded in light of our intervening\ndecision in Warner\xe2\x80\x93Jenkinson. The Court of Appeals ordered rehearing en banc to address\nquestions that had divided its judges since our decision in Warner\xe2\x80\x93Jenkinson.\n\n\x0cDIRECT INFRINGEMENT\n\n327\n\nThe en banc court reversed, holding that prosecution history estoppel barred Festo\nfrom asserting that the accused device infringed its patents under the doctrine of equivalents.\nThe court held, with only one judge dissenting, that estoppel arises from any amendment\nthat narrows a claim to comply with the Patent Act, not only from amendments made to avoid\nprior art. More controversial in the Court of Appeals was its further holding [with four judges\ndissenting]: When estoppel applies, it stands as a complete bar against any claim of\nequivalence for the element that was amended. Previous decisions had held that prosecution\nhistory estoppel constituted a flexible bar, foreclosing some, but not all, claims of equivalence,\ndepending on the purpose of the amendment and the alterations in the text. The court\nconcluded, however, that this case-by-case approach has proved unworkable. In the court\xe2\x80\x99s\nview a complete-bar rule, under which estoppel bars all claims of equivalence to the narrowed\nelement, would promote certainty in the determination of infringement cases.\nII\nThe patent laws \xe2\x80\x9cpromote the Progress of Science and useful Arts\xe2\x80\x9d by rewarding\ninnovation with a temporary monopoly. U.S. Const., Art. I, \xc2\xa7 8, cl. 8. The monopoly is a\nproperty right; and like any property right, its boundaries should be clear. This clarity is\nessential to promote progress, because it enables efficient investment in innovation. A patent\nholder should know what he owns, and the public should know what he does not. For this\nreason, the patent laws require inventors to describe their work in \xe2\x80\x9cfull, clear, concise, and\nexact terms,\xe2\x80\x9d 35 U.S.C. \xc2\xa7 112, as part of the delicate balance the law attempts to maintain\nbetween inventors, who rely on the promise of the law to bring the invention forth, and the\npublic, which should be encouraged to pursue innovations, creations, and new ideas beyond\nthe inventor\xe2\x80\x99s exclusive rights.\nUnfortunately, the nature of language makes it impossible to capture the essence of a\nthing in a patent application. The inventor who chooses to patent an invention and disclose\nit to the public, rather than exploit it in secret, bears the risk that others will devote their\nefforts toward exploiting the limits of the patent\xe2\x80\x99s language. The language in the patent\nclaims may not capture every nuance of the invention or describe with complete precision the\nrange of its novelty. If patents were always interpreted by their literal terms, their value\nwould be greatly diminished. Unimportant and insubstantial substitutes for certain elements\ncould defeat the patent, and its value to inventors could be destroyed by simple acts of\ncopying. For this reason, the clearest rule of patent interpretation, literalism, may conserve\njudicial resources but is not necessarily the most efficient rule. The scope of a patent is not\nlimited to its literal terms but instead embraces all equivalents to the claims described.\nIt is true that the doctrine of equivalents renders the scope of patents less certain. It\nmay be difficult to determine what is, or is not, an equivalent to a particular element of an\ninvention. If competitors cannot be certain about a patent\xe2\x80\x99s extent, they may be deterred from\nengaging in legitimate manufactures outside its limits, or they may invest by mistake in\ncompeting products that the patent secures. In addition the uncertainty may lead to wasteful\nlitigation between competitors, suits that a rule of literalism might avoid. These concerns\nwith the doctrine of equivalents, however, are not new. Each time the Court has considered\n\n\x0c328\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthe doctrine, it has acknowledged this uncertainty as the price of ensuring the appropriate\nincentives for innovation, and it has affirmed the doctrine over dissents that urged a more\ncertain rule. When the Court in Winans v. Denmead first adopted what has become the\ndoctrine of equivalents, it stated that \xe2\x80\x9c[t]he exclusive right to the thing patented is not\nsecured, if the public are at liberty to make substantial copies of it, varying its form or\nproportions.\xe2\x80\x9d 56 U.S. 330, 343 (1854). The dissent argued that the Court had sacrificed the\nobjective of \xe2\x80\x9c[f]ul[l]ness, clearness, exactness, preciseness, and particularity, in the\ndescription of the invention.\xe2\x80\x9d Id. at 347 (opinion of Campbell, J.).\nThe debate continued in Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S.\n605 (1950), where the Court reaffirmed the doctrine. Graver Tank held that patent claims\nmust protect the inventor not only from those who produce devices falling within the literal\nclaims of the patent but also from copyists who \xe2\x80\x9cmake unimportant and insubstantial\nchanges and substitutions in the patent which, though adding nothing, would be enough to\ntake the copied matter outside the claim, and hence outside the reach of law.\xe2\x80\x9d Id. at 607.\nJustice Black, in dissent, objected that under the doctrine of equivalents a competitor \xe2\x80\x9ccannot\nrely on what the language of a patent claims. He must be able, at the peril of heavy\ninfringement damages, to forecast how far a court relatively unversed in a particular\ntechnological field will expand the claim\xe2\x80\x99s language . . . .\xe2\x80\x9d Id. at 617.\nMost recently, in Warner\xe2\x80\x93Jenkinson, the Court reaffirmed that equivalents remain a\nfirmly entrenched part of the settled rights protected by the patent. A unanimous opinion\nconcluded that if the doctrine is to be discarded, it is Congress and not the Court that should\ndo so:\n[T]he lengthy history of the doctrine of equivalents strongly supports\nadherence to our refusal in Graver Tank to find that the Patent Act conflicts\nwith that doctrine. Congress can legislate the doctrine of equivalents out of\nexistence any time it chooses. The various policy arguments now made by both\nsides are thus best addressed to Congress, not this Court. 520 U.S. at 28.\nIII\nProsecution history estoppel requires that the claims of a patent be interpreted in\nlight of the proceedings in the PTO during the application process. Estoppel is a \xe2\x80\x9crule of\npatent construction\xe2\x80\x9d that ensures that claims are interpreted by reference to those \xe2\x80\x9cthat have\nbeen cancelled or rejected.\xe2\x80\x9d Schriber\xe2\x80\x93Schroth Co. v. Cleveland Trust Co., 311 U.S. 211, 220\xe2\x80\x93\n21 (1940). The doctrine of equivalents allows the patentee to claim those insubstantial\nalterations that were not captured in drafting the original patent claim but which could be\ncreated through trivial changes. When, however, the patentee originally claimed the subject\nmatter alleged to infringe but then narrowed the claim in response to a rejection, he may not\nargue that the surrendered territory comprised unforeseen subject matter that should be\ndeemed equivalent to the literal claims of the issued patent.\nA rejection indicates that the patent examiner does not believe the original claim could\nbe patented. While the patentee has the right to appeal, his decision to forgo an appeal and\n\n\x0cDIRECT INFRINGEMENT\n\n329\n\nsubmit an amended claim is taken as a concession that the invention as patented does not\nreach as far as the original claim. Were it otherwise, the inventor might avoid the PTO\xe2\x80\x99s\ngatekeeping role and seek to recapture in an infringement action the very subject matter\nsurrendered as a condition of receiving the patent.\nProsecution history estoppel ensures that the doctrine of equivalents remains tied to\nits underlying purpose. Where the original application once embraced the purported\nequivalent but the patentee narrowed his claims to obtain the patent or to protect its validity,\nthe patentee cannot assert that he lacked the words to describe the subject matter in\nquestion. The doctrine of equivalents is premised on language\xe2\x80\x99s inability to capture the\nessence of innovation, but a prior application describing the precise element at issue\nundercuts that premise. In that instance the prosecution history has established that the\ninventor turned his attention to the subject matter in question, knew the words for both the\nbroader and narrower claim, and affirmatively chose the latter.\nA\nThe first question in this case concerns the kinds of amendments that may give rise\nto estoppel. Petitioner argues that estoppel should arise when amendments are intended to\nnarrow the subject matter of the patented invention, for instance, amendments to avoid prior\nart, but not when the amendments are made to comply with requirements concerning the\nform of the patent application. In Warner\xe2\x80\x93Jenkinson we recognized that prosecution history\nestoppel does not arise in every instance when a patent application is amended. Our \xe2\x80\x9cprior\ncases have consistently applied prosecution history estoppel only where claims have been\namended for a limited set of reasons,\xe2\x80\x9d such as \xe2\x80\x9cto avoid the prior art, or otherwise to address\na specific concern\xe2\x80\x94such as obviousness\xe2\x80\x94that arguably would have rendered the claimed\nsubject matter unpatentable.\xe2\x80\x9d 520 U.S. at 30\xe2\x80\x9332. While we made clear that estoppel applies\nto amendments made for a \xe2\x80\x9csubstantial reason related to patentability,\xe2\x80\x9d id. at 33, we did not\npurport to define that term or to catalog every reason that might raise an estoppel. Indeed,\nwe stated that even if the amendment\xe2\x80\x99s purpose were unrelated to patentability, the court\nmight consider whether it was the kind of reason that nonetheless might require resort to\nthe estoppel doctrine. Id. at 40\xe2\x80\x9341.\nPetitioner is correct that estoppel has been discussed most often in the context of\namendments made to avoid the prior art. It does not follow, however, that amendments for\nother purposes will not give rise to estoppel. Prosecution history may rebut the inference that\na thing not described was indescribable. That rationale does not cease simply because the\nnarrowing amendment, submitted to secure a patent, was for some purpose other than\navoiding prior art.\nWe agree with the Court of Appeals that a narrowing amendment made to satisfy any\nrequirement of the Patent Act may give rise to an estoppel. As that court explained, a number\nof statutory requirements must be satisfied before a patent can issue. The claimed subject\nmatter must be useful, novel, and not obvious. 35 U.S.C. \xc2\xa7\xc2\xa7 101\xe2\x80\x93103. In addition, the patent\napplication must describe, enable, and set forth the best mode of carrying out the invention.\n\xc2\xa7 112.\n\n\x0c330\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPetitioner contends that amendments made to comply with \xc2\xa7 112 concern the form of\nthe application and not the subject matter of the invention. The PTO might require the\napplicant to clarify an ambiguous term, to improve the translation of a foreign word, or to\nrewrite a dependent claim as an independent one. In these cases, petitioner argues, the\napplicant has no intention of surrendering subject matter and should not be estopped from\nchallenging equivalent devices. While this may be true in some cases, petitioner\xe2\x80\x99s argument\nconflates the patentee\xe2\x80\x99s reason for making the amendment with the impact the amendment\nhas on the subject matter.\nEstoppel arises when an amendment is made to secure the patent and the amendment\nnarrows the patent\xe2\x80\x99s scope. If a \xc2\xa7 112 amendment is truly cosmetic, then it would not narrow\nthe patent\xe2\x80\x99s scope or raise an estoppel. On the other hand, if a \xc2\xa7 112 amendment is necessary\nand narrows the patent\xe2\x80\x99s scope\xe2\x80\x94even if only for the purpose of better description\xe2\x80\x94estoppel\nmay apply. A patentee who narrows a claim as a condition for obtaining a patent disavows\nhis claim to the broader subject matter, whether the amendment was made to avoid the prior\nart or to comply with \xc2\xa7 112. We must regard the patentee as having conceded an inability to\nclaim the broader subject matter or at least as having abandoned his right to appeal a\nrejection. In either case estoppel may apply.\nB\nPetitioner concedes that the limitations at issue\xe2\x80\x94the sealing rings and the\ncomposition of the sleeve\xe2\x80\x94were made for reasons related to \xc2\xa7 112, if not also to avoid the\nprior art. Our conclusion that prosecution history estoppel arises when a claim is narrowed\nto comply with \xc2\xa7 112 gives rise to the second question presented: Does the estoppel bar the\ninventor from asserting infringement against any equivalent to the narrowed element or\nmight some equivalents still infringe? The Court of Appeals held that prosecution history\nestoppel is a complete bar, and so the narrowed element must be limited to its strict literal\nterms. Based upon its experience the Court of Appeals decided that the flexible-bar rule is\nunworkable because it leads to excessive uncertainty and burdens legitimate innovation. For\nthe reasons that follow, we disagree with the decision to adopt the complete bar.\nThough prosecution history estoppel can bar a patentee from challenging a wide range\nof alleged equivalents made or distributed by competitors, its reach requires an examination\nof the subject matter surrendered by the narrowing amendment. The complete bar avoids\nthis inquiry by establishing a per se rule; but that approach is inconsistent with the purpose\nof applying the estoppel in the first place\xe2\x80\x94to hold the inventor to the representations made\nduring the application process and to the inferences that may reasonably be drawn from the\namendment. By amending the application, the inventor is deemed to concede that the patent\ndoes not extend as far as the original claim. It does not follow, however, that the amended\nclaim becomes so perfect in its description that no one could devise an equivalent. After\namendment, as before, language remains an imperfect fit for invention. The narrowing\namendment may demonstrate what the claim is not; but it may still fail to capture precisely\nwhat the claim is. There is no reason why a narrowing amendment should be deemed to\nrelinquish equivalents unforeseeable at the time of the amendment and beyond a fair\n\n\x0cDIRECT INFRINGEMENT\n\n331\n\ninterpretation of what was surrendered. Nor is there any call to foreclose claims of\nequivalence for aspects of the invention that have only a peripheral relation to the reason the\namendment was submitted. The amendment does not show that the inventor suddenly had\nmore foresight in the drafting of claims than an inventor whose application was granted\nwithout amendments having been submitted. It shows only that he was familiar with the\nbroader text and with the difference between the two. As a result, there is no more reason for\nholding the patentee to the literal terms of an amended claim than there is for abolishing the\ndoctrine of equivalents altogether and holding every patentee to the literal terms of the\npatent.\nIn Warner\xe2\x80\x93Jenkinson we struck the appropriate balance by placing the burden on the\npatentee to show that an amendment was not for purposes of patentability:\nWhere no explanation is established, however, the court should presume that\nthe patent application had a substantial reason related to patentability for\nincluding the limiting element added by amendment. In those circumstances,\nprosecution history estoppel would bar the application of the doctrine of\nequivalents as to that element.\nId. at 33.\nWhen the patentee is unable to explain the reason for amendment, estoppel not only\napplies but also \xe2\x80\x9cbar[s] the application of the doctrine of equivalents as to that element.\xe2\x80\x9d Id.\nThese words do not mandate a complete bar; they are limited to the circumstance where \xe2\x80\x9cno\nexplanation is established.\xe2\x80\x9d They do provide, however, that when the court is unable to\ndetermine the purpose underlying a narrowing amendment\xe2\x80\x94and hence a rationale for\nlimiting the estoppel to the surrender of particular equivalents\xe2\x80\x94the court should presume\nthat the patentee surrendered all subject matter between the broader and the narrower\nlanguage.\nJust as Warner\xe2\x80\x93Jenkinson held that the patentee bears the burden of proving that an\namendment was not made for a reason that would give rise to estoppel, we hold here that the\npatentee should bear the burden of showing that the amendment does not surrender the\nparticular equivalent in question. This is the approach advocated by the United States, and\nwe regard it to be sound. The patentee, as the author of the claim language, may be expected\nto draft claims encompassing readily known equivalents. A patentee\xe2\x80\x99s decision to narrow his\nclaims through amendment may be presumed to be a general disclaimer of the territory\nbetween the original claim and the amended claim. There are some cases, however, where\nthe amendment cannot reasonably be viewed as surrendering a particular equivalent. The\nequivalent may have been unforeseeable at the time of the application; the rationale\nunderlying the amendment may bear no more than a tangential relation to the equivalent in\nquestion; or there may be some other reason suggesting that the patentee could not\nreasonably be expected to have described the insubstantial substitute in question. In those\ncases the patentee can overcome the presumption that prosecution history estoppel bars a\nfinding of equivalence.\n\n\x0c332\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThis presumption is not, then, just the complete bar by another name. Rather, it\nreflects the fact that the interpretation of the patent must begin with its literal claims, and\nthe prosecution history is relevant to construing those claims. When the patentee has chosen\nto narrow a claim, courts may presume the amended text was composed with awareness of\nthis rule and that the territory surrendered is not an equivalent of the territory claimed. In\nthose instances, however, the patentee still might rebut the presumption that estoppel bars\na claim of equivalence. The patentee must show that at the time of the amendment one skilled\nin the art could not reasonably be expected to have drafted a claim that would have literally\nencompassed the alleged equivalent.\nIV\nOn the record before us, we cannot say petitioner has rebutted the presumptions that\nestoppel applies and that the equivalents at issue have been surrendered. Petitioner concedes\nthat the limitations at issue\xe2\x80\x94the sealing rings and the composition of the sleeve\xe2\x80\x94were made\nin response to a rejection for reasons under \xc2\xa7 112, if not also because of the prior art\nreferences. As the amendments were made for a reason relating to patentability, the question\nis not whether estoppel applies but what territory the amendments surrendered. While\nestoppel does not effect a complete bar, the question remains whether petitioner can\ndemonstrate that the narrowing amendments did not surrender the particular equivalents\nat issue. On these questions, SMC may well prevail, for the sealing rings and the composition\nof the sleeve both were noted expressly in the prosecution history. These matters, however,\nshould be determined in the first instance by further proceedings in the Court of Appeals or\nthe District Court.\nThe judgment of the Federal Circuit is vacated, and the case is remanded for further\nproceedings consistent with this opinion.\n\nDiscussion Questions: Festo\n1. The Policy Behind the Doctrine of Equivalents. What are the policy objectives that\nthe law seeks to achieve using the doctrine of equivalents? What are the tradeoffs involved\nin this doctrine? That is, what values or policy objectives are being sacrificed by having a\ndoctrine of equivalents?\n2. Substantial Reasons Related to Patentability. The Festo Court holds that all\namendments to address substantial reasons related to patentability give rise to the\npresumption of prosecution history estoppel. What do you think the Court means by a\n\xe2\x80\x9csubstantial reason related to patentability?\xe2\x80\x9d What reason might a patentee have for\namending a claim, or what rule might force a patentee to amend a claim, that wouldn\xe2\x80\x99t fall\nin this category? Not giving a reason is insufficient to avoid the presumption: the Court notes\nthat \xe2\x80\x9c[w]here no explanation is established [for an amendment], the court should presume\nthat the patent application had a substantial reason related to patentability.\xe2\x80\x9d\n\n\x0cDIRECT INFRINGEMENT\n\n333\n\n3. The Flexible Bar. The Court opts for a \xe2\x80\x9cflexible\xe2\x80\x9d bar, rather than a complete bar.\nThis means that even if a presumption of prosecution history estoppel applies to a claim\namendment, the patentee can rebut that presumption. The Court says that there are two\ncategories of situations in which an amendment will not bar subsequent equivalents to a\nclaim element. The first category is if the equivalent was unforeseeable\xe2\x80\x94that is, the patent\napplicant could not have anticipated the equivalent and thus could not have drafted a claim\nthat would encompass it at the time the claim was being amended. The second category is if\nthe rationale underlying the amendment was \xe2\x80\x9ctangential\xe2\x80\x9d to the equivalent that the patent\nowner seeks to capture. Consider the following examples:\n(a) Gabrielle applies for a patent on an invention that involves a \xe2\x80\x9cgear\xe2\x80\x9d with \xe2\x80\x9cteeth.\xe2\x80\x9d\nDuring prosecution, the patent examiner rejects the patent on the basis of prior art\ninvolving a gear that has five teeth. Gabrielle then revises her claim element such\nthat it reads \xe2\x80\x9cgear with six teeth.\xe2\x80\x9d Marco then begins producing the same invention,\nbut the gear in his invention has eight teeth. Can Gabrielle argue that Marco\xe2\x80\x99s gear\nis an equivalent to hers, or is she barred by the doctrine of prosecution history\nestoppel?\n(b) Imagine the same patent with the same prosecution history as (a) above. This time,\nhowever, Marco\xe2\x80\x99s invention uses a gear with six \xe2\x80\x9clinks.\xe2\x80\x9d In a gear of this type, a link\nis similar (though not identical) to a tooth. Can Gabrielle argue that Marco\xe2\x80\x99s gear is\nan equivalent to hers, or is she barred by the doctrine of prosecution history estoppel?\n(c) Imagine that Ellen invents a chemical reaction that operates at a \xe2\x80\x9cpH between 6\nand 10.\xe2\x80\x9d During prosecution, the patent examiner rejects the patent on the basis of\nprior art that operates at a pH of 9.5. Ellen then amends her claim element to specify\nthat the invention must operate at a pH between \xe2\x80\x9c6 and 9.\xe2\x80\x9d Michael then begins\nproducing the same invention, except that his operates at a pH of 9.2. Can Ellen argue\nthat Michael\xe2\x80\x99s invention is equivalent to hers, or is she barred by the doctrine of\nprosecution history estoppel?\n(d) Imagine the same patent with the same prosecution history as (c) above. This time,\nhowever, Michael\xe2\x80\x99s invention operates at a pH of 5. Can Ellen argue that Michael\xe2\x80\x99s\ninvention is equivalent to hers, or is she barred by the doctrine of prosecution history\nestoppel? See Biagro W. Sales, Inc. v. Grow More, Inc., 423 F.3d 1296 (Fed. Cir. 2005).\n(e) Imagine that Alysia obtains a patent on a \xe2\x80\x9cmicrofluidic system,\xe2\x80\x9d which is a device\nthat uses microscopic channels\xe2\x80\x94the width of a hair\xe2\x80\x94to carry fluids. During\nprosecution, Alysia amends her patent claim to specify that the channels be \xe2\x80\x9cnonflourinated\xe2\x80\x9d (that is, that they contain no flourine) and thus will not react with the\nfluid being carried through the channels, which is flourinated. This amendment was\nmade to distinguish the invention from prior art that used a different method to avoid\nhaving the channel react chemically with the fluid it is carrying. The accused device\nis a similar microfluidic system that contains 0.02% Kynar, a non-reactive resin that\ncontains de minimis amounts of fluorine. Can Alysia argue that the accused device is\n\n\x0c334\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nequivalent to hers, or is she barred by the doctrine of prosecution history estoppel?\nSee Bio-Rad Laboratories, Inc. v. 10X Genomics Inc., 967 F.3d 1353 (Fed. Cir. 2020).\n\n4. The Boundaries of a Claim Element. Recall that the doctrine of prosecution history\nestoppel only applies to the particular claim element that has been amended, not to the entire\nclaim. Accordingly, determining when a claim element begins and ends can be critical to the\nprosecution history estoppel analysis. For instance, consider the pH element described in\nexample (d) above. If the pH range is actually two elements\xe2\x80\x94one element requiring a pH\ngreater than 6 and one element requiring a pH less than 9\xe2\x80\x94then the first element (the lower\nend of the range) was never amended, and prosecution history estoppel does not apply. How\nwould a court decide in such a case whether the pH range is one element or two elements?\nFor that matter, suppose the claim were written to require that \xe2\x80\x9cthe chemical reaction\noperate at a pH above 6, and also that the chemical reaction operate at a pH below 9.\xe2\x80\x9d That\nformulation is, of course, functionally identical to requiring that it operate at a \xe2\x80\x9cpH above 6\nand below 9.\xe2\x80\x9d Should a court treat those two claims differently? Would it be justified in\nconstruing the first version of the claim to involve two separate pH elements and the second\nversion of the claim to involve just one pH element? If you think that the court should\nconstrue both versions of the claim to involve just one pH element, what principles should\nguide a court in deciding how many elements a claim contains and what each of those\nelements are?\n5. The Policy Behind Prosecution History Estoppel. Festo\xe2\x80\x99s patent claim calls for two\nsealing rings with one lip each, while the accused device (which Festo argues is equivalent)\nhas one sealing ring with two lips. Maybe two rings with one lip are equivalent to one ring\nwith two lips, or maybe they aren\xe2\x80\x99t; that is a question for the function-way-result test. But\nFesto was never allowed to argue that they are equivalent because (on remand) it was barred\nby prosecution history estoppel. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd.,\n344 F.3d 1359 (Fed. Cir. 2003); Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd.,\n493 F.3d 1368 (Fed. Cir. 2007). (It only required two more Federal Circuit opinions, two\nadditional petitions for certiorari, a few more district court opinions, and six additional\nyears.)\nNow, if there is prior art that includes a single ring with two lips, it would seem\nimproper to allow Festo to capture that claim scope. Either two rings are the same as one\nring, in which case Festo\xe2\x80\x99s patent should probably be invalid as obvious, or they are not, in\nwhich case Festo\xe2\x80\x99s patent is probably not infringed. (There is not perfect symmetry between\nobviousness and the doctrine of equivalents, as there is with anticipation and literal\ninfringement, but it\xe2\x80\x99s relatively close.) But a court could determine the best way to interpret\nthe patent, and whether the claim is infringed, on its own, without referring to what occurred\nduring examination or what claim scope Festo might have surrendered. It might be that Festo\nsurrendered claim scope (one ring with two lips) entirely unnecessarily.\nIn fact, prosecution history estoppel is really only relevant when the equivalent that\na patentee wants to claim is not part of the prior art. After all, prosecution history estoppel\noperates to prevent a patentee from claiming an equivalent precisely when the patentee could\n\n\x0cDIRECT INFRINGEMENT\n\n335\n\nhave written a claim to literally cover that equivalent, and when that claim would have been\nvalid and infringed. If the claim would not have been valid, there is no point to prosecution\nhistory estoppel.\nIn addition, keep in mind that prosecution history estoppel only operates when there\nhas been an amendment. If Festo had originally drafted its claim to include two rings, each\nwith one lip, the doctrine of prosecution history estoppel would not apply. In other words,\nFesto could have had precisely the same patent issued, but without implicating the doctrine\nof prosecution history estoppel, if it had written the claims to include sealing rings in the first\nplace. Why should it matter how Festo arrived at the claim that was eventually issued? Why\nshould otherwise identical claims be treated differently, just because one was amended\nduring prosecution and one was not?\n6. The Doctrine of Equivalents and Claim Construction. The key policy objective of the\ndoctrine of equivalents\xe2\x80\x94preventing infringers from evading the literal claim language by\ninsubstantial changes\xe2\x80\x94can often also be addressed through claim construction. That is, a\ncourt could simply construe claims slightly more capaciously to include minor variants,\nrather than construing claims narrowly and forcing the patent owner to rely on the doctrine\nof equivalents. Some scholars have suggested that after Markman v. Westview, claim\nconstruction eclipsed the doctrine of equivalents in importance. See John R. Allison & Mark\nA. Lemley, The (Unnoticed) Demise of the Doctrine of Equivalents, 59 Stan. L. Rev. 955 (2007);\nDavid L. Schwartz, Explaining the Demise of the Doctrine of Equivalents, 26 Berkeley Tech.\nL.J. 1157 (2011). What are the advantages and disadvantages of addressing these policy\nconcerns through each doctrine?\n\nAdditional Limitations on Equivalents\n1. The Disclosure-Dedication Rule. In Johnson & Johnston Associates v. R.E. Service,\n285 F.3d 1046 (Fed. Cir. 2002), the plaintiff\xe2\x80\x99s claim included, as one element, a \xe2\x80\x9csheet of\naluminum.\xe2\x80\x9d The specification disclosed that the invention could be made with other metals\nas well, including steel and nickel. The defendant produced a similar invention, except for\nthe fact that it used a sheet of steel rather than aluminum, and the plaintiff sued for\ninfringement under the doctrine of equivalents. The Federal Circuit held that the patentee\ncould not capture steel as an equivalent because, by disclosing the use of steel but not\nclaiming it, it had placed the use of steel into the public domain:\n[W]hen a patent drafter discloses but declines to claim subject matter, as in\nthis case, this action dedicates that unclaimed subject matter to the public.\nApplication of the doctrine of equivalents to recapture subject matter\ndeliberately left unclaimed would conflict with the primacy of the claims in\ndefining the scope of the patentee\xe2\x80\x99s exclusive right.\nId. at 1054.\n\n\x0c336\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThere is a certain logic to this decision, in that the claims do define the scope of the\npatentee\xe2\x80\x99s property right, and the specification does constitute a public disclosure that can\noperate as prior art. But if this doctrine were applied with full force, it would effectively\neliminate the doctrine of equivalents. Anything disclosed in the specification and not claimed\nwould be part of the public domain, and the patentee could not capture it as an equivalent;\nand if an equivalent were not disclosed in the specification, claiming it would create\nenablement and written description problems. The patentee\xe2\x80\x99s claims would only encompass\nwhat was disclosed in the specification and claimed\xe2\x80\x94in other words, the patentee\xe2\x80\x99s only\noption would be literal infringement.\nHowever, the Federal Circuit has since moved to limit the force of this doctrine. In\nsubsequent cases, the court held that the rule\ndoes not mean that any generic reference in a written specification necessarily\ndedicates all members of that particular genus to the public. Rather, the\ndisclosure must be of such specificity that one of ordinary skill in the art could\nidentify the subject matter that had been disclosed and not claimed.\nAdditionally, this court [has] further clarified that before unclaimed subject\nmatter is deemed to have been dedicated to the public, that unclaimed subject\nmatter must have been identified by the patentee as an alternative to a claim\nlimitation.\nSanDisk Corp. v. Kingston Tech. Co., Inc., 695 F.3d 1348, 1363\xe2\x80\x9364 (Fed. Cir. 2012).\nAccordingly, if the patentee in Johnson & Johnston had simply mentioned that \xe2\x80\x9cother metals\xe2\x80\x9d\ncould be made to work in the invention, it seems likely that the court would have permitted\nit to argue that steel was an equivalent. It was naming steel, specifically, that barred the\npatentee.\nThink back to Unique Concepts. Could the patent owner have argued that mitered\ncorner pieces were equivalent to preformed corner pieces, and thus that the accused device\ninfringed under the doctrine of equivalents? Why or why not?\n2. The Ensnarement Doctrine. Another doctrine that exists to police the reach of the\ndoctrine of equivalents is called \xe2\x80\x9censnarement.\xe2\x80\x9d \xe2\x80\x9cEnsnarement bars a patentee from\nasserting a scope of equivalency that would encompass, or \xe2\x80\x98ensnare,\xe2\x80\x99 the prior art.\xe2\x80\x9d DePuy\nSpine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1322 (Fed. Cir. 2009). That is,\na patentee cannot claim that a claim has a particular scope via the doctrine of equivalents if\na claim that had the same scope via literal infringement would be anticipated or obvious.\nThis requirement makes a great deal of sense: if a claim drafted to cover a certain scope\nliterally would be invalid, the patentee should not be allowed to capture the same scope\nthrough equivalents. One might even think that this doctrine would be an axiomatic part of\nthe doctrine of equivalents, but patent law has bestowed upon it its own name.\nFor instance, DePuy Spine involved a claim for a medical device in which a screw was\nconnected to a \xe2\x80\x9cspherically-shaped\xe2\x80\x9d portion of the device. The accused device connected the\nscrew to a \xe2\x80\x9cconically-shaped\xe2\x80\x9d portion of the device instead. The patentee claimed that a device\n\n\x0cDIRECT INFRINGEMENT\n\n337\n\nwith a conically-shaped portion was an equivalent to its claim. To evaluate this argument,\nthe Federal Circuit first formulated a hypothetical claim that covered the accused device by\nsubstituting the word \xe2\x80\x9cconically\xe2\x80\x9d for \xe2\x80\x9cspherically.\xe2\x80\x9d It then determined that this hypothetical\nclaim would not have been obvious in light of prior art. Id. at 1329. Accordingly, the doctrine\nof ensnarement did not apply, and the patentee was permitted to argue that the accused\ndevice infringed under the doctrine of equivalents.\n\n\x0c338\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAn Infringement\xe2\x80\x93Validity Flow Chart\nWith the addition of infringement by the equivalents, we have now introduced a\nsignificant number of moving pieces into the infringement analysis. The doctrine of\nprosecution history estoppel itself has two steps, and that does not include the doctrine of\nequivalents analysis itself, much less any other step in the process of determining validity\nand infringement. In order to help sort through the many steps in adjudicating a patent, we\noffer the following highly simplified flow chart:\n\n\x0cINDIRECT INFRINGEMENT\n\n339\n\n10. Indirect Infringement\nThus far, we have been discussing what is known as \xe2\x80\x9cdirect infringement\xe2\x80\x9d: the party\nsued for infringement is a party that has made, used, or sold the patented invention. But\nthere are some cases in which the patent holder might want to sue a party that has merely\nfacilitated the infringement, rather than the party that has directly infringed. For instance,\nrecall the Swiffer patent from Chapter 1. Suppose a company sells standard mops, along with\ninstructions describing how to convert those standard mops into Swiffers. The company\nknows full well\xe2\x80\x94indeed, intends\xe2\x80\x94that individuals will purchase its mops and convert them\ninto Swiffers. Can the owner of the Swiffer patent sue this mop company, or may it only sue\nthe individual customers who build their own Swiffers? Or, for instance, imagine that a third\nfirm sells specially designed reservoirs of cleaning fluid that are meant to be combined with\nthe mops when they are made into Swiffers. Can the patent owner sue this company that is\nmaking specialty parts?\nThis is similar to the concept of \xe2\x80\x9caiding and abetting\xe2\x80\x9d liability from criminal law: there\nare instances in which another party has performed a sufficiently critical function in helping\nto further the infringement that there is a basis for holding that party liable as well. This is\nknown as \xe2\x80\x9cindirect infringement.\xe2\x80\x9d\nIndirect infringement comes in two flavors: inducement, which is governed by 35\nU.S.C. \xc2\xa7 271(b), and contributory infringement, which is governed by 35 U.S.C. \xc2\xa7 271(c).\n(Recall that ordinary direct infringement falls under 35 U.S.C. \xc2\xa7 271(a).) Here is the relevant\nstatutory text:\n\n35 U.S.C. \xc2\xa7 271\n(b) Whoever actively induces infringement of a patent shall be liable as an\ninfringer.\n(c) Whoever offers to sell or sells within the United States or imports into the\nUnited States a component of a patented machine, manufacture, combination\nor composition, or a material or apparatus for use in practicing a patented\nprocess, constituting a material part of the invention, knowing the same to be\nespecially made or especially adapted for use in an infringement of such patent,\nand not a staple article or commodity of commerce suitable for substantial\nnoninfringing use, shall be liable as a contributory infringer.\nThese statutory sections raise two principal questions that the cases below will\naddress. First, what types of actions will trigger liability? And second, what level of\nknowledge is required of the indirect infringer? In the hypothetical examples above, does the\ncompany that manufactures reservoirs of cleaning solution have to know that its customers\n\n\x0c340\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nwill use its product to build make-shift Swiffers? Does it have to know that they will be\ninfringing the Swiffer patent? As you consider these doctrinal questions, you should be\nthinking about what purpose the doctrines of inducement and contributory infringement are\nmeant to serve, and why direct infringement is not sufficient by itself.\nFor ease of explication, we will take these statutory sections out of order. We begin\nbelow with a case on \xc2\xa7 271(c) contributory infringement (Aro II) before turning to a case on\n\xc2\xa7 271(b) inducement (Sanofi v. Watson).\n\nA. Contributory Infringement\nAro Manufacturing v. Convertible Top Replacement (\xe2\x80\x9cAro II\xe2\x80\x9d), 377 U.S. 476 (1964)\nMr. Justice Brennan delivered the opinion of the Court.\nRespondent Convertible Top Replacement Co., Inc., (CTR) acquired by assignment\nfrom the Automobile Body Research Corporation (AB) all rights for the territory of\nMassachusetts in United States Patent No. 2,569,724, known as the Mackie-Duluk patent.\nThis is a combination patent covering a top-structure for automobile \xe2\x80\x9cconvertibles.\xe2\x80\x9d\nStructures embodying the patented combination were included in 1952\xe2\x80\x931954 models of\nconvertibles manufactured by the General Motors Corporation and the Ford Motor Company.\nThey were included in the General Motors cars by authority of a license granted to General\nMotors by AB; Ford, however, had no license during the 1952\xe2\x80\x931954 period, and no authority\nwhatever under the patent until July 21, 1955, when it entered into an agreement with AB;\nFord\xe2\x80\x99s manufacture and sale of the automobiles in question therefore infringed the patent.\nPetitioner Aro Manufacturing Co., Inc. (Aro), which is not licensed under the patent, produces\nfabric components designed as replacements for worn out fabric portions of convertible tops;\nunlike the other elements of the top structure, which ordinarily are usable for the life of the\ncar, the fabric portion normally wears out and requires replacement after about three years\nof use. Aro\xe2\x80\x99s fabrics are specially tailored for installation in particular models of convertibles,\nand these have included the 1952\xe2\x80\x931954 General Motors and Ford models equipped with the\nMackie-Duluk top-structures.\nCTR brought this action against Aro in 1956 to enjoin the alleged infringement and\ncontributory infringement, and to obtain an accounting, with respect to replacement fabrics\nmade and sold by Aro for use in both the General Motors and the Ford cars embodying the\npatented structures. The interlocutory judgment entered for CTR by the District Court for\nthe District of Massachusetts and affirmed by the Court of Appeals for the First Circuit was\nreversed here. Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336 (\xe2\x80\x9cAro I\xe2\x80\x9d). Our\ndecision dealt, however, only with the General Motors and not with the Ford cars. Like the\nCourt of Appeals, we treated CTR\xe2\x80\x99s right to relief as depending wholly upon the question\nwhether replacement of the fabric portions of the convertible tops constituted infringing\n\xe2\x80\x9creconstruction\xe2\x80\x9d or permissible \xe2\x80\x9crepair\xe2\x80\x9d of the patented combination. The lower courts had\n\n\x0cINDIRECT INFRINGEMENT\n\n341\n\nheld it to constitute \xe2\x80\x9creconstruction,\xe2\x80\x9d making the car owner for whom it was performed a\ndirect infringer and Aro, which made and sold the replacement fabric, a contributory\ninfringer; we disagreed and held that it was merely \xe2\x80\x9crepair.\xe2\x80\x9d The reconstruction-repair\ndistinction is decisive, however, only when the replacement is made in a structure whose\noriginal manufacture and sale have been licensed by the patentee, as was true only of the\nGeneral Motors cars; when the structure is unlicensed, as was true of the Ford cars, the\ntraditional rule is that even repair constitutes infringement. Thus, the District Court had\nbased its ruling for CTR with respect to the Ford cars on the alternative ground that, even if\nreplacement of the fabric portions constituted merely repair, the car owners were still guilty\nof direct infringement, and Aro of contributory infringement, as to these unlicensed and\nhence infringing structures. This aspect of the case was not considered or decided by our\nopinion in Aro I.\nOn remand, however, another judge in the District Court read our opinion as requiring\nthe dismissal of CTR\xe2\x80\x99s complaint as to the Ford as well as the General Motors cars, and\nentered judgment accordingly. CTR appealed the dismissal insofar as it applied to the Ford\ncars, and the Court of Appeals reinstated the judgment in favor of CTR to the extent. In our\nview the Court of Appeals was correct in holding that its \xe2\x80\x9cprevious decision in this case was\nnot reversed insofar as unlicensed Ford cars are concerned.\xe2\x80\x9d However, we granted certiorari\nto consider the issue that had not been decided in Aro I: whether Aro is liable for contributory\ninfringement, under 35 U.S.C. \xc2\xa7 271(c), with respect to its manufacture and sale of\nreplacement fabrics for the Ford cars.\nCTR contends, and the Court of Appeals held, that since Ford infringed the patent by\nmaking and selling the top-structures without authority from the patentee, persons who\npurchased the automobiles from Ford likewise infringed by using and repairing the\nstructures; and hence Aro, by supplying replacement fabrics specially designed to be utilized\nin such infringing repair, was guilty of contributory infringement under 35 U.S.C. \xc2\xa7 271(c).\nIn Aro I, 365 U.S. at 341-42, the Court said:\nIt is admitted that petitioners (Aro) know that the purchasers intend to use\nthe fabric for replacement purposes on automobile convertible tops which are\ncovered by the claims of respondent\xe2\x80\x99s combination patent, and such\nmanufacture and sale with that knowledge might well constitute contributory\ninfringement under \xc2\xa7 271(c), if, but only if, such a replacement by the\npurchaser himself would in itself constitute a direct infringement under\n\xc2\xa7 271(a), for it is settled that if there is no direct infringement of a patent there\ncan be no contributory infringement. . . . It is plain that \xc2\xa7 271(c)\xe2\x80\x94a part of the\nPatent Code enacted in 1952\xe2\x80\x94made no change in the fundamental precept\nthat there can be no contributory infringement in the absence of a direct\ninfringement. That section defines contributory infringement in terms of direct\ninfringement\xe2\x80\x94namely the sale of a component of a patented combination or\nmachine for use \xe2\x80\x9cin an infringement of such patent.\xe2\x80\x9d And \xc2\xa7 271(a) of the new\nPatent Code, which defines \xe2\x80\x9cinfringement,\xe2\x80\x9d left intact the entire body of case\nlaw on direct infringement. The determinative question, therefore, comes down\n\n\x0c342\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nto whether the car owner would infringe the combination patent by replacing\nthe worn-out fabric element of the patented convertible top on his car . . . .\n\nSimilarly here, to determine whether Aro committed contributory infringement, we must\nfirst determine whether the car owners, by replacing the worn-out fabric element of the\npatented top-structures, committed direct infringement. We think it clear, under \xc2\xa7 271(a) of\nthe Patent Code and the \xe2\x80\x9centire body of case law on direct infringement\xe2\x80\x9d which that section\n\xe2\x80\x9cleft intact,\xe2\x80\x9d that they did.\nSection 271(a) provides that \xe2\x80\x9cwhoever without authority makes, uses or sells any\npatented invention . . . infringes the patent.\xe2\x80\x9d It is not controverted\xe2\x80\x94nor could it be\xe2\x80\x94that\nFord infringed by making and selling cars embodying the patented top-structures without\nany authority from the patentee. If Ford had had such authority, its purchasers would not\nhave infringed by using the automobiles, for it is fundamental that sale of a patented article\nby the patentee or under his authority carries with it an \xe2\x80\x9cimplied license to use.\xe2\x80\x9d Adams v.\nBurke, 84 U.S. (17 Wall.) 453, 456 (1873). But with Ford lacking authority to make and sell,\nit could by its sale of the cars confer on the purchasers no implied license to use, and their\nuse of the patented structures was thus \xe2\x80\x9cwithout authority\xe2\x80\x9d and infringing under \xc2\xa7 271(a).1\nNot only does that provision explicitly regard an unauthorized user of a patented invention\nas an infringer, but it has often and clearly been held that unauthorized use, without more,\nconstitutes infringement.\nIf the owner\xe2\x80\x99s use infringed, so also did his repair of the top-structure, as by replacing\nthe worn-out fabric component. Where use infringes, repair does also, for it perpetuates the\ninfringing use. Consequently replacement of worn-out fabric components with fabrics sold by\nAro, held in Aro I to constitute \xe2\x80\x9crepair\xe2\x80\x9d rather than \xe2\x80\x9creconstruction\xe2\x80\x9d and thus to be\npermissible in the case of licensed General Motors cars, was not permissible here in the case\nof unlicensed Ford cars. Here, as was not the case in Aro I, the direct infringement by the car\nowners that is prerequisite to contributory infringement by Aro was unquestionably\nestablished.\nWe turn next to the question whether Aro, as supplier of replacement fabrics for use\nin the infringing repair by the Ford car owners, was a contributory infringer under \xc2\xa7 271(c)\nof the Patent Code. We think Aro was indeed liable under this provision.\nSuch a result would plainly have obtained under the contributory-infringement case\nlaw that \xc2\xa7 271(c) was intended to codify. Indeed, most of the law was established in cases\nwhere, as here, suit was brought to hold liable for contributory infringement a supplier of\nreplacement parts specially designed for use in the repair of infringing articles. In Union Tool\nCo. v. Wilson, 259 U.S. 107, 113-14 (1922), the Court held that where use of the patented\nmachines themselves was not authorized, \xe2\x80\x9cThere was, consequently, no implied license to use\nthe spare parts in these machines. As such use, unless licensed, clearly constituted an\n[n.5 in opinion] We have no need to consider whether the car owners, if sued for infringement\nby the patentee, would be entitled to indemnity from Ford on a breach of warranty theory. In fact they\nwere not sued, and were released from liability by the agreement between Ford and AB.\n1\n\n\x0cINDIRECT INFRINGEMENT\n\n343\n\ninfringement, the sale of the spare parts to be so used violated the injunction [enjoining\ninfringement].\xe2\x80\x9d As early as 1897, Circuit Judge Taft, as he then was, thought it \xe2\x80\x9cwell settled\xe2\x80\x9d\nthat \xe2\x80\x9cwhere one makes and sells one element of a combination covered by a patent with the\nintention and for the purpose of bringing about its use in such a combination he is guilty of\ncontributory infringement and is equally liable to the patentee with him who in fact organizes\nthe complete combination.\xe2\x80\x9d Thomson-Houston Elec. Co. v. Ohio Brass Co., 80 F. 712, 721 (6th\nCir. 1897).\nIn enacting \xc2\xa7 271(c), Congress clearly succeeded in its objective of codifying this case\nlaw. The language of the section fits perfectly Aro\xe2\x80\x99s activity of selling \xe2\x80\x9ca component of a\npatented . . . combination . . . , constituting a material part of the invention, . . . especially\nmade or especially adapted for use in an infringement of such patent and not a staple article\nor commodity of commerce suitable for substantial noninfringing use.\xe2\x80\x9d Indeed, this is the\nalmost unique case in which the component was hardly suitable for any noninfringing use.2\nOn this basis both the District Court originally and the Court of Appeals in the instant case\nheld that Aro was a contributory infringer within the precise letter of \xc2\xa7 271(c).\nHowever, the language of \xc2\xa7 271(c) presents a question, apparently not noticed by the\nparties or the courts below, concerning the element of knowledge that must be brought home\nto Aro before liability can be imposed. It is only sale of a component of a patented combination\n\xe2\x80\x9cknowing the same to be especially made or especially adapted for use in an infringement of\nsuch patent\xe2\x80\x9d that is contributory infringement under the statute. Was Aro \xe2\x80\x9cknowing\xe2\x80\x9d within\nthe statutory meaning because\xe2\x80\x94as it admits, and as the lower courts found\xe2\x80\x94it knew that\nits replacement fabrics were especially designed for use in the 1952\xe2\x80\x931954 Ford convertible\ntops and were not suitable for other use? Or does the statute require a further showing that\nAro knew that the tops were patented, and knew also that Ford was not licensed under the\npatent so that any fabric replacement by a Ford car owner constituted infringement?\nOn this question a majority of the Court is of the view that \xc2\xa7 271(c) does require a\nshowing that the alleged contributory infringer knew that the combination for which his\ncomponent was especially designed was both patented and infringing.3 With respect to many\nof the replacement-fabric sales involved in this case, Aro clearly had such knowledge. For by\nletter dated January 2, 1954, AB informed Aro that it held the Mackie-Duluk patent; that it\n\n2 [n.7 in opinion] Aro\xe2\x80\x99s factory manager admitted that the fabric replacements in question not\nonly were specially designed for the Ford convertibles but would not, to his knowledge, fit the topstructures of any other cars.\n\n[n.8 in opinion] This view is held by The Chief Justice and Justices Black, Douglas, Clark,\nand White. [Eds: The only one of these five Justices to join Justice Brennan\xe2\x80\x99s majority opinion is\nJustice White; the others join Justice Black in a dissent, which argues that consumers and repairmen\nshould never be liable for direct infringement, and especially not here, where the patent owner has\nalready recovered for past infringements from Ford.] Justices Harlan, Brennan, Stewart and Goldberg\ndissent from this interpretation of the statute. They are of the view that the knowledge Congress\nmeant to require was simply knowledge that the component was especially designed for use in a\ncombination and was not a staple article suitable for substantial other use, and not knowledge that\nthe combination was either patented or infringing.\n3\n\n\x0c344\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nhad granted a license under the patent to General Motors but to no one else; and that \xe2\x80\x9cIt is\nobvious, from the foregoing and from an inspection of the convertible automobile sold by the\nFord Motor Company, that anyone selling ready-made replacement fabrics for these\nautomobiles would be guilty of contributory infringement of said patent.\xe2\x80\x9d Thus the Court\xe2\x80\x99s\ninterpretation of the knowledge requirement affords Aro no defense with respect to\nreplacement-fabric sales made after January 2, 1954. It would appear that the overwhelming\nmajority of the sales were in fact made after that date, since the oldest of the cars were 1952\nmodels and since the average life of a fabric top is said to be three years. With respect to any\nsales that were made before that date, however, Aro cannot be held liable in the absence of a\nshowing that at that time it had already acquired the requisite knowledge that the Ford car\ntops were patented and infringing. When the case is remanded, a finding of fact must be\nmade on this question by the District Court, and, unless Aro is found to have had such prior\nknowledge, the judgment imposing liability must be vacated as to any sales made before\nJanuary 2, 1954. As to subsequent sales, however, we hold, in agreement with the lower\ncourts, that Aro is liable for contributory infringement within the terms of \xc2\xa7 271(c).\n[In omitted portions of the majority opinion, the Court held that the July 21, 1955\nsettlement between Ford and AB resolving their past and future patent disputes also\nprevented Aro from being liable for replacement fabric sales made after this agreement. Aro\nis thus liable only for earlier sales, although a plurality of the Court suggested that the 1955\nagreement \xe2\x80\x9cdoes have the effect of limiting the amount that CTR can recover for the preagreement infringement, and probably of precluding recovery of anything more than nominal\ndamages.\xe2\x80\x9d The plurality opined that \xe2\x80\x9cafter a patentee has collected from or on behalf of a\ndirect infringer damages sufficient to put him in the position he would have occupied had\nthere been no infringement, he cannot thereafter collect actual damages from a person liable\nonly for contributing to the same infringement.\xe2\x80\x9d A concurrence by Justice White and a dissent\nby Justice Black are omitted.]\n\nDiscussion Questions: Aro II\n1. Direct Infringement as a Prerequisite. Toward the beginning of the opinion, the\nCourt quotes a lengthy excerpt from its predecessor case (Aro I) in which it held that \xe2\x80\x9cif there\nis no direct infringement of a patent there can be no contributory infringement.\xe2\x80\x9d This is a\ncritical axiom of patent law, and one that remains in the law to the present day. But why\nshould it be the case? Why not allow a patent owner to sue a party that is attempting to\ncontribute to another\xe2\x80\x99s infringement, even if that attempt is unsuccessful?\n2. Repair vs. Reconstruction. Why is there a difference between \xe2\x80\x9crepair\xe2\x80\x9d and\n\xe2\x80\x9creconstruction,\xe2\x80\x9d and why does it mean the GM cars aren\xe2\x80\x99t at issue? Why is it clear that Ford\nand its customers are directly infringing?\n3. The Lawsuit\xe2\x80\x99s Targets. Given that Ford and its customers are directly infringing,\nwhy isn\xe2\x80\x99t CTR suing them, rather than suing Aro? Start with the customers\xe2\x80\x94why can\xe2\x80\x99t CTR\nsimply sue them (and only them) for their acts of infringement? If suing the customers is not\n\n\x0cINDIRECT INFRINGEMENT\n\n345\n\na good option, why can\xe2\x80\x99t CTR simply sue Ford? What does it have to gain from suing Aro\ninstead of (or in addition to) Ford?\n4. Noninfringing Uses? What work is the provision that excludes liability for\n\xe2\x80\x9csubstantial noninfringing uses\xe2\x80\x9d meant to do? What is the paradigm case of a substantial\nnoninfringing use? What about the sales to owners of GM cars? Those were noninfringing\nuses. Could Aro have argued that it shouldn\xe2\x80\x99t be liable because the sales to GM owners are a\n\xe2\x80\x9csubstantial noninfringing use?\xe2\x80\x9d Why or why not?\n5. Knowledge of What? The Aro II Court imposes a high knowledge requirement before\na party can be liable for contributory infringement. Direct infringement (under \xc2\xa7 271(a)) is\nstrict liability. Even criminal law almost never requires that a party have knowledge of the\nlegal status of one\xe2\x80\x99s actions, as opposed to the fact that one is taking the actions in the first\nplace. Why do you think the Court imposes such a high knowledge standard here? How do\nwe know that Aro had the necessary knowledge, and when did it acquire that knowledge?\nCan Aro be held liable for any acts of infringement that occurred before it acquired the\nnecessary knowledge?\n6. Strategic Behavior in Light of the Knowledge Requirement. What incentives does\nthe requirement that contributory infringement be \xe2\x80\x9cknowing\xe2\x80\x9d create for parties such as Aro\nthat might be liable as contributory infringers? Does Aro have an incentive to search for\npatents they might be infringing? What about the patent holder\xe2\x80\x94what obligations does this\nimpose on it?\nSuppose contributory infringement were strict liability, as direct infringement is.\nWhat costs and benefits, and for which parties, would that rule create, compared with the\nrule requiring knowledge? Suppose that you represented a firm, such as Aro, that might be\nliable as a contributory infringer but is no longer protected by the requirement of knowledge.\nWhat advice would you give to the firm\xe2\x80\x99s managers? What options does the firm have?\nWhy is the statute\xe2\x80\x99s knowledge requirement ambiguous, and how does the Court\nresolve the ambiguity? (Don\xe2\x80\x99t skip footnote 8! Who is authoring this opinion, and what does\nhe think on this point? What are the pros and cons of the two views as a policy matter?) As\nof what date does Aro have the necessary knowledge?\n\nB. Inducement\nSanofi v. Watson Labs. Inc., 875 F.3d 636 (Fed. Cir. 2017)\nRichard Taranto, Circuit Judge.\nSanofi owns U.S. Patent Nos. 8,318,800 and 8,410,167, which describe and claim\ncompositions and uses of the cardiovascular drug dronedarone. The \xe2\x80\x99800 patent, which\nexpires in 2019, claims pharmaceutical compositions containing dronedarone. The \xe2\x80\x99167\n\n\x0c346\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\npatent, which expires in 2029, claims methods of reducing hospitalization by administering\ndronedarone to patients having specified characteristics. Sanofi received approval in mid2009 for New Drug Application No. 022425 for 400 mg tablets of dronedarone, sold as\nMultaq\xc2\xae. Both the \xe2\x80\x99800 and the \xe2\x80\x99167 patents are listed in the Food and Drug Administration\xe2\x80\x99s\npublication Approved Drug Products with Therapeutic Equivalence Evaluations (the \xe2\x80\x9cOrange\nBook\xe2\x80\x9d) as patents claiming either Multaq\xc2\xae or a method of using Multaq\xc2\xae.\nWatson Laboratories Inc. and Sandoz Inc., hoping to market generic versions of\nMultaq\xc2\xae, filed abbreviated new drug applications with the Food and Drug Administration.\nBoth firms certified, under 21 U.S.C. \xc2\xa7 355(j)(2)(A)(vii)(IV), their beliefs that the \xe2\x80\x99167 and\n\xe2\x80\x99800 patents were invalid and/or that the manufacture, use, and sale of the proposed generic\ndrugs would not infringe either patent. Upon receiving notice of the paragraph IV\ncertifications, Sanofi sued Watson and Sandoz for infringement of the two patents under 35\nU.S.C. \xc2\xa7 271(e)(2)(A). [Eds: These procedures for initiating pharmaceutical patent litigation\nare explained in more detail at the end of Chapter 11.]\nAfter a three-day bench trial, the district court ruled in crucial respects for Sanofi. As\nto the \xe2\x80\x99167 patent, the court made the following rulings of relevance here: Sanofi proved that\nWatson\xe2\x80\x99s and Sandoz\xe2\x80\x99s sale of their proposed generic drugs, with their proposed labels, would\ninduce physicians to infringe all but one of the asserted claims; and Watson and Sandoz did\nnot prove that any of the asserted claims were invalid for obviousness. [The district court also\nfound the \xe2\x80\x99800 composition patent directly infringed.]\nI\n[Five clinical trials involving dronedarone are relevant to the inducement issue. The\nfirst two trials, EURIDIS and ADONIS, primarily found that dronedarone reduced the\nrecurrence of a heart problem known as atrial fibrillation. They also found, in a \xe2\x80\x9cpost hoc\nanalysis\xe2\x80\x9d of an issue the studies were not designed to address, that the drug reduced\nhospitalization and death. Two additional studies, ANDROMEDA and PALLAS, had to be\nterminated early due to adverse results.]\n[The fifth study,] called ATHENA, was designed to address the potential for clinical\nbenefits of dronedarone that the EURIDIS/ADONIS researchers had identified in their posthoc analysis. ATHENA involved administration of dronedarone to patients who had a recent\nhistory of atrial fibrillation and/or flutter and at least one of several specified characteristics\nbelieved to be associated with cardiovascular risk. The study assessed differences in\ncardiovascular hospitalization or death (secondarily, in hospitalization or death regardless of\ncause) between patients given dronedarone and patients given a placebo. The study produced\npositive results for dronedarone. Those results led to the filings that resulted in the \xe2\x80\x99167\npatent and to the FDA\xe2\x80\x99s approval of Multaq\xc2\xae.\nThe \xe2\x80\x99167 patent claims methods of reducing cardiovascular hospitalization by\nadministering dronedarone to patients meeting conditions mirroring those stated in the\nATHENA trial. Claim 1 is representative:\n\n\x0cINDIRECT INFRINGEMENT\n\n347\n\nA method of decreasing a risk of cardiovascular hospitalization in a patient,\nsaid method comprising administering to said patient an effective amount of\ndronedarone or a pharmaceutically acceptable salt thereof, twice a day with a\nmorning and an evening meal, wherein said patient does not have severe heart\nfailure, (i) wherein severe heart failure is indicated by: a) NYHA Class IV heart\nfailure or b) hospitalization for heart failure within the last month; and (ii)\nwherein said patient has a history of, or current, paroxysmal or persistent nonpermanent atrial fibrillation or flutter; and (iii) wherein the patient has at\nleast one cardiovascular risk factor selected from the group consisting of:\ni. an age greater than or equal to 75;\nii. hypertension;\niii. diabetes;\niv. a history of cerebral stroke or of systemic embolism;\nv. a left atrial diameter greater than or equal to 50 mm; and\nvi. a left ventricular ejection fraction less than 40%.\n\xe2\x80\x99167 patent, col. 28, line 64 through col. 29, line 15.\nThe extensive information (the \xe2\x80\x9clabel\xe2\x80\x9d) that Sanofi includes along with its Multaq\xc2\xae\nproduct\xe2\x80\x94which Watson and Sandoz propose to use for their generic versions without any\nchange material to this case\xe2\x80\x94relies on the key studies described above. Section 1 of the label,\nas revised in March 2014, is titled \xe2\x80\x9cIndications and Usage.\xe2\x80\x9d It provides (emphasis and\nbrackets in original):\nMultaq\xc2\xae is indicated to reduce the risk of hospitalization for atrial fibrillation\nin patients in sinus rhythm with a history of paroxysmal or persistent atrial\nfibrillation (AF) [see Clinical Studies (14)].\nThat sentence says that Multaq\xc2\xae is indicated for use in certain patients and refers to section\n14 on \xe2\x80\x9cClinical Studies\xe2\x80\x9d for identification of those patients. Section 14 primarily describes the\nATHENA study (section 14.1), but also contains a short description of the EURIDIS and\nADONIS studies (section 14.2). And it refers to two studies that had to be terminated early\nbecause of negative results in their patient pools: the ANDROMEDA study (section 14.3) and\nthe PALLAS study (section 14.4).\nBoth Watson and Sandoz plan to market their generic versions of Multaq\xc2\xae with the\nsame labeling, including sections 1 and 14. See AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042,\n1045\xe2\x80\x9346 (Fed. Cir. 2010) (explaining that, in general, an applicant for an abbreviated new\ndrug application must \xe2\x80\x9cshow that \xe2\x80\x98the labeling proposed for the new drug is the same as the\nlabeling approved for the listed drug.\xe2\x80\x99\xe2\x80\x9d (quoting 21 U.S.C. \xc2\xa7 355(j)(2)(A)(v))).\n\n\x0c348\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nII\n\nWatson and Sandoz challenge the district court\xe2\x80\x99s inducement finding as to the \xe2\x80\x99167\npatent [as well as other omitted issues].\nUnder 35 U.S.C. \xc2\xa7 271(b), \xe2\x80\x9c[w]hoever actively induces infringement of a patent shall\nbe liable as an infringer.\xe2\x80\x9d Here, the district court found, the inducing act will be the\nmarketing by Watson and Sandoz of their generic dronedarone drugs with the label described\nabove. And the induced act will be the administration of dronedarone by medical providers\nto patients meeting the criteria set forth in the \xe2\x80\x99167 patent claims.\n\xe2\x80\x9cIn contrast to direct infringement, liability for inducing infringement attaches only\nif the defendant knew of the patent and that \xe2\x80\x98the induced acts constitute patent\ninfringement.\xe2\x80\x99\xe2\x80\x9d Commil USA, LLC v. Cisco Sys., Inc., 575 U.S. 632 (2015) (quoting GlobalTech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766 (2011)). Neither of those two knowledge\nrequirements is disputed here. If and when Watson and Sandoz receive FDA approval and\nmarket dronedarone with the label at issue, they will know of the \xe2\x80\x99167 patent (they already\ndo) and that a medical provider\xe2\x80\x99s administration of the drug to the claimed class of patients\nis an act of infringement (which Watson and Sandoz do not dispute).\nThe dispute in this case involves an aspect of the connection between the marketing\nand the medical providers\xe2\x80\x99 infringement that is different from the two knowledge\nrequirements and is inherent in the word \xe2\x80\x9cinduce\xe2\x80\x9d as it has been understood in this area. The\nSupreme Court stated the following in Global-Tech:\nThe term \xe2\x80\x9cinduce\xe2\x80\x9d means \xe2\x80\x9c[t]o lead on; to influence; to prevail on; to move by\npersuasion or influence.\xe2\x80\x9d The addition of the adverb \xe2\x80\x98actively\xe2\x80\x99 suggests that the\ninducement must involve the taking of affirmative steps to bring about the\ndesired result.\n563 U.S. at 760 (quoting Webster\xe2\x80\x99s New International Dictionary (2d ed. 1945)). The\npurposeful-causation connotation of that language is reinforced by the Court\xe2\x80\x99s statement:\n\xe2\x80\x9cWhen a person actively induces another to take some action, the inducer obviously knows\nthe action that he or she wishes to bring about.\xe2\x80\x9d Id.\nFurther reinforcement is found in the Supreme Court\xe2\x80\x99s discussion of inducement of\ncopyright infringement in Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 545 U.S. 913,\n936\xe2\x80\x9337 (2005), which the Court in Global-Tech cited in discussing patent infringement. In\nGrokster, the Court explained that inducement is present where \xe2\x80\x9c\xe2\x80\x98active steps . . . taken to\nencourage direct infringement,\xe2\x80\x99 such as advertising an infringing use or instructing how to\nengage in an infringing use, show an affirmative intent that the product be used to infringe.\xe2\x80\x9d\n545 U.S. at 936. The Court cited, for support, this court\xe2\x80\x99s decision in Water Techs. Corp. v.\nCalco, Ltd., which focused on intent and noted that intent is a factual determination that\nmay rest on circumstantial evidence. 850 F.2d 660, 668 (Fed. Cir. 1988). The Supreme Court\nin Grokster held: \xe2\x80\x9cone who distributes a device with the object of promoting its use to infringe\ncopyright, as shown by clear expression or other affirmative steps taken to foster\n\n\x0cINDIRECT INFRINGEMENT\n\n349\n\ninfringement, is liable for the resulting acts of infringement by third parties.\xe2\x80\x9d 545 U.S. at\n936\xe2\x80\x9337.\nThis court has accordingly explained that, for a court to find induced infringement,\n\xe2\x80\x9c[i]t must be established that the defendant possessed specific intent to encourage another\xe2\x80\x99s\ninfringement.\xe2\x80\x9d DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc in\nrelevant part). The court has articulated certain necessary conditions: the plaintiff must show\n\xe2\x80\x9cthat the alleged infringer\xe2\x80\x99s actions induced infringing acts and that he knew or should have\nknown his actions would induce actual infringements.\xe2\x80\x9d DSU Med., 471 F.3d at 1306. And the\ncourt has repeatedly explained that, for the finder of fact to find the required intent to\nencourage, \xe2\x80\x9c[w]hile proof of intent is necessary, direct evidence is not required; rather,\ncircumstantial evidence may suffice.\xe2\x80\x9d Id. When proof of intent to encourage depends on the\nlabel accompanying the marketing of a drug, \xe2\x80\x9c[t]he label must encourage, recommend, or\npromote infringement.\xe2\x80\x9d Takeda Pharm. USA, Inc. v. West-Ward Pharm. Corp., 785 F.3d 625,\n631 (Fed. Cir. 2015).\nIn this case, the district court relied on those standards. And, applying those\nstandards, the court found that Sanofi had proven intentional encouragement of\ninfringement of the [\xe2\x80\x99167] claims. We review the district court\xe2\x80\x99s finding of inducement based\non encouragement and inferred intent for clear error. See AstraZeneca LP v. Apotex, Inc., 633\nF.3d 1042, 1056 (Fed. Cir. 2010). We find no such error.\nThe label itself has a short \xe2\x80\x9cIndications and Usage\xe2\x80\x9d section, one sentence long. It\nstates what dronedarone is indicated for: it \xe2\x80\x9cis indicated to reduce the risk of hospitalization\nfor atrial fibrillation.\xe2\x80\x9d And it states which patients are covered by this indication: \xe2\x80\x9cpatients\nin sinus rhythm with a history of paroxysmal or persistent atrial fibrillation (AF) [see Clinical\nStudies (14)].\xe2\x80\x9d The reference to the Clinical Studies section (14) of the label expressly directs\nthe reader to that section for elaboration of the class of patients for whom the drug is\nindicated to achieve the stated objective, i.e., reduced hospitalization. Section 14 leads with\nand features a subsection on the ATHENA study, which sets forth the positive results,\nrelating to reduced hospitalization, for patients having the risk factors written into the \xe2\x80\x99167\npatent. And it is only the ATHENA subsection\xe2\x80\x94not any of the three other brief subsections\xe2\x80\x94\nthat identifies a class of patients as having been shown to achieve reduced hospitalization\nfrom use of dronedarone. The EURIDIS/ADONIS subsection says nothing about reduced\nhospitalization; and the ANDROMEDA and PALLAS subsections are negative warnings,\ndescribing studies that had to be terminated early because of adverse results. The label thus\ndirects medical providers to information identifying the desired benefit for only patients with\nthe patent-claimed risk factors.\nThere was considerable testimony that this label encourages\xe2\x80\x94and would be known\nby Watson and Sandoz to encourage\xe2\x80\x94administration of the drug to those patients, thereby\ncausing infringement. Approximately 77% of Multaq\xc2\xae prescriptions have actually been\nwritten for patients with the claimed risk factors. Moreover, Dr. Kim, an expert for Sanofi,\ntestified that a person of ordinary skill in the art would read the drug label and understand\nthat the only FDA-approved use of dronedarone came out of the ATHENA trial, and that a\n\n\x0c350\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nphysician would find \xe2\x80\x9cclear encouragement\xe2\x80\x9d from the label to use dronedarone in a manner\nthat infringes the \xe2\x80\x99167 patent, especially in light of label\xe2\x80\x99s description of the ANDROMEDA\nstudy, which warns of the safety concerns of using dronedarone on patients other than those\nfor whom the ATHENA trial showed reduced hospitalization. Dr. Zusman, who testified for\nWatson and Sandoz, agreed that persons of skill in the art \xe2\x80\x9clook to drug labels, in part, for\ninformation about the use of the drug in special or specific populations, and that it is\nimportant for the [person of skill] to look at the label\xe2\x80\x99s indications section to see if a drug is\nindicated for administration to patients of certain characteristics with a certain intent.\xe2\x80\x9d On\nthe record in this case, the district court could draw the required inducement inferences.\nWatson and Sandoz contend that, because Multaq\xc2\xae has substantial noninfringing uses\nnot forbidden by the proposed labels, the district court could not permissibly find intent to\nencourage an infringing use. But there is no legal or logical basis for the suggested limitation\non inducement. Section 271(b), on inducement, does not contain the \xe2\x80\x9csubstantial\nnoninfringing use\xe2\x80\x9d restriction of section 271(c), on contributory infringement. And the core\nholding of Grokster, a copyright decision that drew expressly on patent and other inducement\nlaw, is precisely that a person can be liable for inducing an infringing use of a product even\nif the product has substantial noninfringing uses (like the peer-to-peer software product at\nissue there, which was capable of infringing and non-infringing uses). 545 U.S. at 934\xe2\x80\x9337.\nThere is no basis for a different inducement rule for drug labels.\nThe content of the label in this case permits the inference of specific intent to\nencourage the infringing use. As noted above, inducement law permits the required factual\ninferences about intended effects to rest on circumstantial evidence in appropriate\ncircumstances. Moreover, in AstraZeneca v. Apotex, the court upheld an inducement finding\nwithout the kind of explicit limiting commands that Watson and Sandoz suggest a label must\ncontain. 633 F.3d at 1058\xe2\x80\x9360. In Eli Lilly & Co. v. Teva Parenteral Medicines, Inc., the court\nstated that \xe2\x80\x9c[d]epending on the clarity of the [drug label\xe2\x80\x99s] instructions, the decision to\ncontinue seeking FDA approval of those instructions may be sufficient evidence of specific\nintent to induce infringement.\xe2\x80\x9d 845 F.3d 1357, 1368\xe2\x80\x9369 (Fed. Cir. 2017). Unlike in Takeda,\nthe inference in the present case is based on interpreting the label\xe2\x80\x99s express statement of\nindications of use and the internally referred-to elaboration of those indications. See 785 F.3d\n625. And this case is not like Vita-Mix Corp v. Basic Holding, Inc., in which the defendant,\nin its (non-pharmaceutical) product instructions, encouraged a noninfringing use in a way\nthat showed an intent to discourage infringement. 581 F.3d 1317, 1328\xe2\x80\x9329 (Fed. Cir. 2009).\nThe evidence in this case supports the finding of intentional encouragement of infringing use\nand, therefore, of inducement.\n\nNote on Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011)\nSunbeam hired Global-Tech to produce a deep fryer meeting certain specifications.\nGlobal-Tech purchased a deep fryer produced by another company and, without telling its\npatent attorney that it was copying an existing product, asked its attorney to investigate\nwhether there were any patents covering the invention. The attorney failed to locate the\n\n\x0cINDIRECT INFRINGEMENT\n\n351\n\npatent, Global-Tech produced the invention, and\xe2\x80\x94having induced Sunbeam to sell the\ninfringing product\xe2\x80\x94was sued by the patent owner for inducement.\nThe problem for the patent owner was the difficulty in proving knowledge. GlobalTech was aware of the potential that the deep fryer it was copying might be covered by a\npatent, but it and its attorney never located the actual patent. Could Global-Tech be said to\nhave known of the patent\xe2\x80\x99s existence?\nIn an 8-1 decision, the Supreme Court held that Global-Tech was liable for inducement\nbecause it had engaged in \xe2\x80\x9cwillful blindness\xe2\x80\x9d:\nWhile the Courts of Appeals articulate the doctrine of willful blindness in\nslightly different ways, all appear to agree on two basic requirements: (1) The\ndefendant must subjectively believe that there is a high probability that a fact\nexists and (2) the defendant must take deliberate actions to avoid learning of\nthat fact. We think these requirements give willful blindness an appropriately\nlimited scope that surpasses recklessness and negligence. Under this\nformulation, a willfully blind defendant is one who takes deliberate actions to\navoid confirming a high probability of wrongdoing and who can almost be said\nto have actually known the critical facts.\nGlobal-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 769-70 (2011).\nThe best way to understand Global-Tech is as a slight expansion on the long-standing\nrequirement that the indirect infringer have knowledge of the infringement. After GlobalTech, willful blindness will suffice. And though Global-Tech did not involve contributory\ninfringement under \xc2\xa7 271(c), we can be almost certain that willful blindness will suffice for\ncontributory infringement liability as well. What do you think motivated the court\xe2\x80\x99s\nexpansion of the knowledge standard? If the Court had not elected to adopt a \xe2\x80\x9cwillful\nblindness\xe2\x80\x9d standard, would the patent holder have lost the case? If you were Global-Tech\xe2\x80\x99s\nlawyer, what would you have argued in defense of your client?\nIt is notable that before Global-Tech, the Supreme Court had never definitively\ndecided whether willful blindness (or its close cousin, \xe2\x80\x9cdeliberate indifference\xe2\x80\x9d) was sufficient\nto satisfy a statutory requirement of knowledge, though several circuits had found it to be.\nSee U.S. v. Jacobs, 475 F.2d 270 (2d Cir. 1973); U.S. v. Giovannetti, 919 F.2d 1223 (7th Cir.\n1990); U.S. v. Jewell, 532 F.2d 697 (9th Cir. 1976); U.S. v. Glick, 710 F.2d 639 (10th Cir.\n1983). In his Global-Tech dissent, Justice Kennedy took the Court to task for reaching a\ndecision so critical to criminal law in a civil case, without the benefit of briefing from the\ncriminal bar. Glob.-Tech, 563 U.S. at 774 (Kennedy, dissenting). This has been something of\na quixotic quest on Justice Kennedy\xe2\x80\x99s part. Thirty-five years earlier, when he was \xe2\x80\x9cmerely\xe2\x80\x9d\nJudge Kennedy of the Ninth Circuit, he penned a dissent in an en banc case arguing against\nthe adoption of willful blindness as a substitute for knowledge in that circuit. Jewell, 532\nF.2d at 705 (Kennedy, dissenting). However, Justice Kennedy was not able to convince a\nmajority of the Ninth Circuit\xe2\x80\x94or even a single additional Supreme Court justice\xe2\x80\x94to side\nwith him.\n\n\x0c352\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nDiscussion Questions: Inducement\n1. Inducement and \xe2\x80\x9cSkinny\xe2\x80\x9d Labels. The outcome in Sanofi is driven by the contents\nof the label that Sandoz and Watson planned to place on the drug. That label directly\nreferenced patented methods. Accordingly, it was reasonable to believe that a doctor who\nread the label might be induced to practice the patented method. As the opinion notes, Sandoz\nand Watson had little choice in the matter: under most circumstances, the FDA requires\ngeneric drug labels to mirror the label on the brand-name drug, and Sanofi\xe2\x80\x99s label included\nthe reference to the patented method.\nHowever, under certain circumstances, a generic manufacturer is permitted to use a\nso-called \xe2\x80\x9cskinny\xe2\x80\x9d label that describes some but not other potential uses for the drug. See 21\nU.S.C. \xc2\xa7 355(j)(2)(A)(viii). Generic manufacturers employ these skinny labels in order to\navoid precisely the problem that confronted Sandoz and Watson: manufacturing a drug where\nthe patent on the chemical has expired, but one method of using the drug remains patented.\nIn GlaxoSmithKline v. Teva Pharmaceuticals, 976 F.3d 1347 (Fed. Cir. 2020), the Federal\nCircuit (over a dissent from Chief Judge Sharon Prost) held that Teva had induced\ninfringement of a patented method despite its use of a skinny label that did not indicate the\npatented method. Part of the court\xe2\x80\x99s reasoning was that the label indicated that the generic\ndrug was chemically and therapeutically identical to the branded drug (as it must be), and\nthat doctors would have known to use the branded drug to practice the patented method.\nDoes this seem like the right outcome? How direct or explicit should a manufacturer\xe2\x80\x99s\nlabeling have to be before the manufacturer becomes liable for inducing infringement?\nThe Federal Circuit panel that originally decided the case has granted Sandoz\xe2\x80\x99s\nmotion for rehearing, and so there may be a new opinion in the case, or it may eventually go\nen banc. (We will keep you posted!)\n2. What Constitutes Inducement? Recall that 35 U.S.C. \xc2\xa7 271(b) requires not just\ninducement but \xe2\x80\x9cactive inducement.\xe2\x80\x9d As Sanofi makes clear, providing a label that references\na patented method is enough to constitute active inducement. What other sorts of activities\nare sufficient to constitute active infringement? Consider the following problems; which of\nthese cases should give rise to inducement liability?\n(a) A firm sells a medical device used to practice a patented method and provides\ninstructions for how to use that product in the patented manner. See C.R. Bard,\nInc. v. Adv. Cardiovascular Sys., Inc., 911 F.2d 670 (Fed. Cir. 1990).\n(b) A firm floods the market with devices that cut vegetables into spiral curls\nbefore a patent issues on the device. Once the patent is issued, the firm stops\nselling the device. However, all of the customers who purchased the device are\nnow direct infringers each time they make use of it. See Nat\xe2\x80\x99l Presto Indus.,\nInc. v. W. Bend Co., 76 F.3d 1185, 1196 (Fed. Cir. 1996).\n(c) One semiconductor firm provides technical support to another semiconductor\nfirm that is engaged in direct infringement. That technical support includes\n\n\x0cINDIRECT INFRINGEMENT\n\n353\n\noffering technical presentations to the direct infringer on how to use the\ninfringing technology and helping to troubleshoot problems that the direct\ninfringer has with the technology. See MEMC Elec. Materials, Inc. v.\nMitsubishi Materials Silicon Corp., 420 F.3d 1369, 1372 (Fed. Cir. 2005).\n3. The Targets of an Indirect Infringement Suit. Why do you think Sanofi bothered to\nsue Sandoz and Watson? Why not just sue the direct infringers, the people who are using the\ndrug in a manner that violates the \xe2\x80\x99167 patent? After all, it is easier to prove direct\ninfringement than indirect infringement because direct infringement is strict liability. More\ngenerally, why does indirect liability exist if there is always also a direct infringer\xe2\x80\x94isn\xe2\x80\x99t it\nredundant?\n4. The Difference Between Contributory Infringement and Inducement. Were Sandoz\nand Watson liable as contributory infringers under \xc2\xa7 271(c)? It\xe2\x80\x99s not likely, because the drug\nthey planned to sell had substantial noninfringing uses. So this case provides an example of\nparties who are liable for inducement without being liable as contributory infringers.\nContributory infringement also requires that the infringer sell or import a component of a\npatented invention (or something used in practicing a patented method). Accordingly, a party\ncould be liable for inducing infringement by providing instructions for practicing a patented\nmethod without being liable for contributory infringement if it did not sell anything.\nBut now consider the converse. Is it possible to be liable as a contributory infringer\nwithout also being liable as an inducer? Consider what Aro was doing: it manufactured and\nsold fabric pieces that could only be used in an infringing manner. So far as we know, it did\nnot provide instructions for how to use those pieces or otherwise urge anyone to use them to\ninfringe. But what could Aro have possibly expected the purchasers to do with the fabric other\nthan infringe? Is manufacturing and selling the fabric enough, by itself, to constitute\ninducement? More generally, can a party ever be a contributory infringer under \xc2\xa7 271(c)\nwithout inducing infringement under \xc2\xa7 271(b)? Has contributory infringement become\nentirely redundant? Liability for inducement does require a showing of specific intent to cause\ninfringement that isn\xe2\x80\x99t required for contributory infringement, but this intent can often be\ninferred from the kind of circumstantial evidence that gave rise to liability in Global-Tech.\n5. Letters from Counsel and Commil v. Cisco. Both contributory infringement and\ninducement depend on the indirect infringer having knowledge of both the patent and the\nfact that it is infringing the patent. But of course the mere fact that there is a patent does not\nmean that infringement is taking place. The patent might be invalid, or the patent\xe2\x80\x99s claim\nterms might be best construed in such a way that the patent is not infringed. Even if a\npotential indirect infringer has knowledge of the existence of a patent, it would seem that a\nreasonably grounded good faith belief that the patent is not infringed should defeat a claim\nof indirect infringement.\nBased on this understanding, firms at risk of indirect infringement liability have long\nsolicited \xe2\x80\x9copinion letters\xe2\x80\x9d from law firms stating that, in the opinion of the attorney drafting\n\n\x0c354\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthe letter, the patent is invalid or not infringed.4 If the letter is credible, it can defeat the\nknowledge requirement for indirect infringement. That is, even if the letter is wrong, and the\ncourt holds that the patent is valid and infringed (by the direct infringer), the indirect\ninfringer might still escape liability because it lacks the necessary knowledge. What sorts of\nincentives do you think this doctrine creates for the law firms hired to produce opinion\nletters? Is it in the client\xe2\x80\x99s interest for the law firm to produce the most honest, accurate\nletter possible? What limits a potential infringer\xe2\x80\x99s ability to shop for a favorable letter, or\nwhat might limit a law firm\xe2\x80\x99s ability to write a letter in bad faith that reaches a legal\nconclusion the firm does not believe?\nIn Commil USA, LLC v. Cisco Systems, Inc., 135 S. Ct. 1920 (2015), the Supreme\nCourt held that while a good faith belief that the patent was not infringed was a valid defense\nagainst a charge of indirect infringement, a good faith belief that the patent was invalid was\nnot. Wrote the Court:\nThe question the Court confronts today concerns whether a defendant\xe2\x80\x99s belief\nregarding patent validity is a defense to a claim of induced infringement. It is\nnot. The scienter element for induced infringement concerns infringement;\nthat is a different issue than validity. Section 271(b) requires that the\ndefendant \xe2\x80\x9cactively induce[d] infringement.\xe2\x80\x9d That language requires intent to\n\xe2\x80\x9cbring about the desired result,\xe2\x80\x9d which is infringement. And because\ninfringement and validity are separate issues under the Act, belief regarding\nvalidity cannot negate the scienter required under \xc2\xa7 271(b).\nId. at 1928. Accordingly, for an opinion letter to be valuable, the letter must state that the\npatent is not infringed. A belief that the patent is invalid is unhelpful to the accused indirect\ninfringer (unless that belief happens to be true).\nDoes the Court\xe2\x80\x99s rule make any sense? In dissent, Justice Scalia wrote: \xe2\x80\x9cTo talk of\ninfringing an invalid patent is to talk nonsense. . . . Because only valid patents can be\ninfringed, anyone with a good-faith belief in a patent\xe2\x80\x99s invalidity necessarily believes the\npatent cannot be infringed.\xe2\x80\x9d Id. at 1931. What is the best defense you can offer for the\ndistinction the Court draws between infringement and invalidity? What incentives will this\ncreate for the lawyers who draft opinion letters after Commil? How will such an attorney be\ninclined to interpret a patent\xe2\x80\x99s claims\xe2\x80\x94broadly or narrowly?\nCommil was decided in the shadow of a perceived problem with non-practicing entities\n(or, less charitably, \xe2\x80\x9cpatent trolls\xe2\x80\x9d) asserting weak (i.e., very likely to be invalid) patents.\nThese patents were often drafted with implausibly broad claims, so the best defense to them\nwas frequently to claim that they were invalid, rather than that they were not infringed.\nEven if the patent troll was likely to lose at trial, the troll could often settle the lawsuit for\nAn accused infringer will typically seek an opinion letter from a law firm other than the firm\nthat will represent it at trial, in order to be able to disclose the letter to the court without appearing\nto waive its attorney-client privilege. A thorough opinion letter by a reputable firm can cost $10,000\xe2\x80\x93\n$25,000, and firms often view them as a means of cultivating business with potential new clients.\n4\n\n\x0cINDIRECT INFRINGEMENT\n\n355\n\nnuisance value. And given the high cost of patent lawsuits, nuisance value could be quite\nsubstantial\xe2\x80\x94tens or even hundreds of thousands of dollars. Cisco and other troll defendants\nhad relied on opinion letters asserting invalidity as a defense against trolls, an avenue that\nthis opinion foreclosed. In its opinion, the Court went so far as to mention the problem of\npatent trolls explicitly. It explained that patent defendants could use other procedural tools\nto defend themselves against shakedowns from trolls, including requesting Rule 11 sanctions\nor attorneys\xe2\x80\x99 fees (which we will discuss in Chapter 16) in response to frivolous lawsuits. Do\nyou think these are equally effective mechanisms?\n6. Other Indicators of Knowledge. A letter from counsel is of course not the only means\nby which an accused indirect infringer can defeat the requirement of knowledge. If the\naccused infringer obtains a favorable preliminary ruling in a case, which seems likely to\ndispose of the case in the infringer\xe2\x80\x99s favor, that too can eliminate the knowledge necessary to\nbe liable. At the same time, the preliminary ruling has to be plausible, and the alleged\ninfringer has to actually believe that it is likely to win the case! In one recent case, the\ndefendant obtained a very favorable claim construction that, if it had stood, would have\nessentially disposed of the case in the defendant\xe2\x80\x99s favor. However, the claim construction was\nself-evidently flawed, and the district court later withdrew it and substituted a construction\nless favorable to the defendant. The Federal Circuit held that the defendant could point to\nthe initial claim construction as a piece of evidence indicating that it lacked the necessary\nknowledge while that claim construction was in effect. But the plaintiff was still entitled to\nargue on remand that the defendant did not and could not have believed the claim\nconstruction was correct and thus might still have the necessary knowledge. As the court\nexplained, the defendant \xe2\x80\x9cmight have believed that the March 2011 claim-construction ruling\nwas erroneous (though reasonable) and would likely be reversed (as it was in 2013).\xe2\x80\x9d TecSec,\nInc. v. Adobe Inc., 978 F.3d 1278, 1287 (Fed. Cir. 2020).\nThis result stemmed from the fact that the knowledge standard is inherently\nsubjective, rather than objective. Id. at 1286-87. Even if the defendant has an objectively\nstrong argument that the patent is not infringed, the defendant can still be held liable if it\nnonetheless believes that the patent is being infringed. And even if the defendant has an\nobjectively weak argument that the patent is not infringed, the defendant cannot be held\nliable if it believes that the patent is not infringed. (For the many infringers that are\ncorporations, the relevant state of mind is the state of mind of whomever is making decisions\nfor the corporation.) At the same time, American courts do not administer truth serum or lie\ndetector tests to key witnesses, and it is rare that the CEO of a corporation will Tweet that\nshe is aware that the corporation is inducing infringement. Accordingly, it is typically\nnecessary to rely on objective facts and circumstances\xe2\x80\x94including the strength of the letter\nfrom counsel or judicial decision being relied upon\xe2\x80\x94when judging even subjective states of\nmind.\n\n\x0c356\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n11. Other Infringement Issues\nThe majority of patent infringement cases will fall under the ordinary rules for direct\nand indirect patent infringement that were discussed in Chapters 9 and 10. But in some\ncases, an entity will engage in conduct that seems to undermine the patent right but doesn\xe2\x80\x99t\nfall within these rules. In this chapter, we discuss the law that has evolved to cover four such\nsituations: (A) divided infringement, where different entities carry out different steps of a\nmethod patent; (B) cross-border infringement, where some of the infringing conduct occurs\noverseas; (C) government infringement, where the infringing entity has sovereign immunity;\nand (D) pharmaceutical infringement, where specialized statutory frameworks allow\nresolution of patent disputes before an infringing product is on the market.\n\nA. Divided Infringement\nImagine a widget, covered by an existing patent, that is assembled in two different\nlocations. A firm in California builds half of the widget and then ships it to a firm in Illinois,\nwhere the remainder of the widget is assembled. Despite the fact that the widget was\nassembled in two different places, by two different firms, there is still a direct infringer: the\nIllinois firm, which completed the widget. Indeed, when an infringing product is created,\nthere will always be a direct infringer: the party that put the final components in place, thus\ncreating the full invention.\nBut the same is not necessarily true for a patented method. Suppose that the\nCalifornia firm performs some steps of a patented method, and then the Illinois firm performs\nthe remaining steps of the patented method. All of the elements of the claim have been\nperformed (by someone), but no single party has performed all of the steps. Thus, it would\nseem that there is no direct infringer. And as the Supreme Court explained in Aro II (in the\nprevious chapter), without a direct infringer there can be no indirect infringer. Is it possible,\nthen, that no one can be held liable for infringing the patent?\nThis is what is known as the \xe2\x80\x9cdivided infringement problem\xe2\x80\x9d: all the elements of the\nclaim have been met, but not by any single party that can obviously be held responsible. This\nissue has taken on much greater significance in the age of internet-based firms and internet\npatents, because it is easier for two or more firms to coordinate to perform the steps of a\npatented process. In fact, most interactive apps and websites require the user to take some\nactions and the app\xe2\x80\x99s owner or operator to take some actions in order for the app to perform\nits stated functions. Think about posting a tweet on Twitter, checking your account balance\nwith a banking app, or uploading a photo to Instagram\xe2\x80\x94the app does not function without\nactions by both the user and the firm that built the app. Depending upon how a patent\ncovering this type of invention is written, it is entirely possible that the users and the app\xe2\x80\x99s\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n357\n\nfirm might collectively be performing all of the steps of the process, without any one entity\nperforming all of them itself.\nWhen this is the case, should any party be held liable for infringement? If so, what\ntype of infringement, and on what basis? This is the question that the Federal Circuit, and\nthen the Supreme Court, and then the Federal Circuit again, confronted in Limelight v.\nAkamai.\n\nLimelight Networks v. Akamai Techs., 572 U.S. 915 (2014)\nJustice Alito delivered the opinion of the Court.\nThis case presents the question whether a defendant may be liable for inducing\ninfringement of a patent under 35 U.S.C. \xc2\xa7 271(b) when no one has directly infringed the\npatent under \xc2\xa7 271(a) or any other statutory provision. The statutory text and structure and\nour prior case law require that we answer this question in the negative. We accordingly\nreverse the Federal Circuit, which reached the opposite conclusion.\nI\nA\nRespondent the Massachusetts Institute of Technology is the assignee of U.S. Patent\nNo. 6,108,703 (\xe2\x80\x99703 patent), which claims a method of delivering electronic data using a\n\xe2\x80\x9ccontent delivery network,\xe2\x80\x9d or \xe2\x80\x9cCDN.\xe2\x80\x9d Respondent Akamai Technologies, Inc., is the exclusive\nlicensee. Proprietors of Web sites, known as \xe2\x80\x9ccontent providers,\xe2\x80\x9d contract with Akamai to\ndeliver their Web sites\xe2\x80\x99 content to individual Internet users. The \xe2\x80\x99703 patent provides for the\ndesignation of certain components of a content provider\xe2\x80\x99s Web site (often large files, such as\nvideo or music files) to be stored on Akamai\xe2\x80\x99s servers and accessed from those servers by\nInternet users. The process of designating components to be stored on Akamai\xe2\x80\x99s servers is\nknown as \xe2\x80\x9ctagging.\xe2\x80\x9d By \xe2\x80\x9caggregat[ing] the data demands of multiple content providers with\ndiffering peak usage patterns and serv[ing] that content from multiple servers in multiple\nlocations,\xe2\x80\x9d as well as by delivering content from servers located in the same geographic area\nas the users who are attempting to access it, Akamai is able to increase the speed with which\nInternet users access the content of its customers\xe2\x80\x99 Web sites.\nPetitioner Limelight Networks, Inc., also operates a CDN and carries out several of\nthe steps claimed in the \xe2\x80\x99703 patent. But instead of tagging those components of its customers\xe2\x80\x99\nWeb sites that it intends to store on its servers (a step included in the \xe2\x80\x99703 patent), Limelight\nrequires its customers to do their own tagging. Respondents claim that Limelight \xe2\x80\x9cprovides\ninstructions and offers technical assistance\xe2\x80\x9d to its customers regarding how to tag, but the\nrecord is undisputed that Limelight does not tag the components to be stored on its servers.\n\n\x0c358\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nB\n\nIn 2006, respondents sued Limelight, claiming patent infringement. The case was\ntried to a jury, which found that Limelight had committed infringement and awarded more\nthan $40 million in damages. [The district court granted Limelight\xe2\x80\x99s motion for judgment as\na matter of law in light of Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008), which\nheld that direct infringement requires a defendant to either perform each step of a claimed\nmethod itself, or to exercise control or direction over performance of the steps it does not itself\nperform. A Federal Circuit panel affirmed.]\nThe Federal Circuit granted en banc review and reversed. The en banc court found it\nunnecessary to revisit its \xc2\xa7 271(a) direct infringement case law. Instead, it concluded that the\n\xe2\x80\x9cevidence could support a judgment in [respondents\xe2\x80\x99] favor on a theory of induced\ninfringement\xe2\x80\x9d under \xc2\xa7 271(b). This was true, the court explained, because \xc2\xa7 271(b) liability\narises when a defendant carries out some steps constituting a method patent and encourages\nothers to carry out the remaining steps\xe2\x80\x94even if no one would be liable as a direct infringer\nin such circumstances, because those who performed the remaining steps did not act as\nagents of, or under the direction or control of, the defendant. The Court of Appeals did not\ndispute that \xe2\x80\x9cthere can be no indirect infringement without direct infringement,\xe2\x80\x9d but it\nexplained that \xe2\x80\x9c[r]equiring proof that there has been direct infringement . . . is not the same\nas requiring proof that a single party would be liable as a direct infringer.\xe2\x80\x9d\nLimelight sought certiorari, which we granted.\nII\nNeither the Federal Circuit nor respondents dispute the proposition that liability for\ninducement must be predicated on direct infringement. One might think that this simple\ntruth is enough to dispose of this appeal. But the Federal Circuit reasoned that a defendant\ncan be liable for inducing infringement under \xc2\xa7 271(b) even if no one has committed direct\ninfringement within the terms of \xc2\xa7 271(a) (or any other provision of the patent laws), because\ndirect infringement can exist independently of a violation of these statutory provisions.\nThe Federal Circuit\xe2\x80\x99s analysis fundamentally misunderstands what it means to\ninfringe a method patent. A method patent claims a number of steps; under this Court\xe2\x80\x99s case\nlaw, the patent is not infringed unless all the steps are carried out. The Federal Circuit held\nin Muniauction that a method\xe2\x80\x99s steps have not all been performed as claimed by the patent\nunless they are all attributable to the same defendant, either because the defendant actually\nperformed those steps or because he directed or controlled others who performed them. See\n532 F.3d at 1329\xe2\x80\x9330. Assuming without deciding that the Federal Circuit\xe2\x80\x99s holding in\nMuniauction is correct, there has simply been no infringement of the method in which\nrespondents have staked out an interest, because the performance of all the patent\xe2\x80\x99s steps is\nnot attributable to any one person. And, as both the Federal Circuit and respondents admit,\nwhere there has been no direct infringement, there can be no inducement of infringement\nunder \xc2\xa7 271(b).\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n359\n\nThe Federal Circuit\xe2\x80\x99s contrary view would deprive \xc2\xa7 271(b) of ascertainable standards.\nIf a defendant can be held liable under \xc2\xa7 271(b) for inducing conduct that does not constitute\ninfringement, then how can a court assess when a patent holder\xe2\x80\x99s rights have been invaded?\nSection 271(f)(1) reinforces our reading of \xc2\xa7 271(b). That subsection imposes liability\non a party who \xe2\x80\x9csupplies or causes to be supplied in or from the United States all or a\nsubstantial portion of the components of a patented invention . . . in such manner as to\nactively induce the combination of such components outside of the United States in a manner\nthat would infringe the patent if such combination occurred within the United States\xe2\x80\x9d\n(emphasis added). As this provision illustrates, when Congress wishes to impose liability for\ninducing activity that does not itself constitute direct infringement, it knows precisely how\nto do so. The courts should not create liability for inducement of non-infringing conduct where\nCongress has elected not to extend that concept.\nThe Federal Circuit seems to have adopted the view that Limelight induced\ninfringement on the theory that the steps that Limelight and its customers perform would\ninfringe the \xe2\x80\x99703 patent if all the steps were performed by the same person. But we have\nalready rejected the notion that conduct which would be infringing in altered circumstances\ncan form the basis for contributory infringement, and we see no reason to apply a different\nrule for inducement. In Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), a\nmanufacturer produced components of a patented machine and then exported those\ncomponents overseas to be assembled by its foreign customers.1 (The assembly by the foreign\ncustomers did not violate U.S. patent laws.) In both Deepsouth and this case, the conduct that\nthe defendant induced or contributed to would have been infringing if committed in altered\ncircumstances: in Deepsouth if the machines had been assembled in the United States, and\nin this case if performance of all of the claimed steps had been attributable to the same\nperson. In Deepsouth, we rejected the possibility of contributory infringement because the\nmachines had not been assembled in the United States, and direct infringement had\nconsequently never occurred. Similarly, in this case, performance of all the claimed steps\ncannot be attributed to a single person, so direct infringement never occurred. Limelight\ncannot be liable for inducing infringement that never came to pass.\nRespondents, like the Federal Circuit, criticize our interpretation of \xc2\xa7 271(b) as\npermitting a would-be infringer to evade liability by dividing performance of a method\npatent\xe2\x80\x99s steps with another whom the defendant neither directs nor controls. We\nacknowledge this concern. Any such anomaly, however, would result from the Federal\nCircuit\xe2\x80\x99s interpretation of \xc2\xa7 271(a) in Muniauction. A desire to avoid Muniauction\xe2\x80\x99s natural\nconsequences does not justify fundamentally altering the rules of inducement liability that\nthe text and structure of the Patent Act clearly require\xe2\x80\x94an alteration that would result in\nits own serious and problematic consequences, namely, creating for \xc2\xa7 271(b) purposes some\nfree-floating concept of \xe2\x80\x9cinfringement\xe2\x80\x9d both untethered to the statutory text and difficult for\nthe lower courts to apply consistently.\n\n1\n\n[n.4 in opinion] Section 271(f) now prohibits the exporter\xe2\x80\x99s conduct at issue in Deepsouth.\n\n\x0c360\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nIII\n\nRespondents ask us to review the merits of the Federal Circuit\xe2\x80\x99s Muniauction rule for\ndirect infringement under \xc2\xa7 271(a). We decline to do so today.\nIn the first place, the question presented is clearly focused on \xc2\xa7 271(b), not \xc2\xa7 271(a).\nWe granted certiorari on the following question: \xe2\x80\x9cWhether the Federal Circuit erred in\nholding that a defendant may be held liable for inducing patent infringement under 35 U.S.C.\n\xc2\xa7 271(b) even though no one has committed direct infringement under \xc2\xa7 271(a).\xe2\x80\x9d The question\npresupposes that Limelight has not committed direct infringement under \xc2\xa7 271(a). And since\nthe question on which we granted certiorari did not involve \xc2\xa7 271(a), petitioner did not\naddress that important issue in its opening brief. Our decision on the \xc2\xa7 271(b) question\nnecessitates a remand to the Federal Circuit, and on remand, the Federal Circuit will have\nthe opportunity to revisit the \xc2\xa7 271(a) question if it so chooses.\n\nThe Aftermath of Akamai\nOn remand, the Federal Circuit did not take the hint. The Federal Circuit panel\nignored the Supreme Court\xe2\x80\x99s rather unsubtle suggestion that it rethink the Muniauction\ndoctrine, which the Supreme Court had identified as the source of the problem, and\nreaffirmed the Muniauction rule that one party was responsible for another party\xe2\x80\x99s actions\nonly when there was (1) a joint enterprise or (2) direct supervisory control.\nThat view did not stand long, however. The Federal Circuit quickly took the case en\nbanc and issued the following opinion:\n\nAkamai Techs. v. Limelight Networks, 797 F.3d 1020 (Fed. Cir. 2015) (en banc)\nPer Curiam.\nThis case was returned to us by the United States Supreme Court, noting \xe2\x80\x9cthe\npossibility that [we] erred by too narrowly circumscribing the scope of \xc2\xa7 271(a)\xe2\x80\x9d and\nsuggesting that we \xe2\x80\x9cwill have the opportunity to revisit the \xc2\xa7 271(a) question.\xe2\x80\x9d We hereby\navail ourselves of that opportunity.\nSitting en banc, we unanimously set forth the law of divided infringement under 35\nU.S.C. \xc2\xa7 271(a). We conclude that, in this case, substantial evidence supports the jury\xe2\x80\x99s\nfinding that Limelight Networks, Inc. directly infringes U.S. Patent 6,108,703 under \xc2\xa7 271(a).\nWe therefore reverse the district court\xe2\x80\x99s grant of judgment of noninfringement as a matter of\nlaw.\nI. Divided Infringement\nDirect infringement under \xc2\xa7 271(a) occurs where all steps of a claimed method are\nperformed by or attributable to a single entity. See BMC Res., Inc. v. Paymentech, L.P., 498\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n361\n\nF.3d 1373, 1379\xe2\x80\x9381 (Fed. Cir. 2007). Where more than one actor is involved in practicing the\nsteps, a court must determine whether the acts of one are attributable to the other such that\na single entity is responsible for the infringement. We will hold an entity responsible for\nothers\xe2\x80\x99 performance of method steps in two sets of circumstances: (1) where that entity directs\nor controls others\xe2\x80\x99 performance, and (2) where the actors form a joint enterprise.\nTo determine if a single entity directs or controls the acts of another, we continue to\nconsider general principles of vicarious liability. In the past, we have held that an actor is\nliable for infringement under \xc2\xa7 271(a) if it acts through an agent (applying traditional agency\nprinciples) or contracts with another to perform one or more steps of a claimed method. We\nconclude, on the facts of this case, that liability under \xc2\xa7 271(a) can also be found when an\nalleged infringer conditions participation in an activity or receipt of a benefit upon\nperformance of a step or steps of a patented method and establishes the manner or timing of\nthat performance. Cf. Metro\xe2\x80\x93Goldwyn\xe2\x80\x93Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930\n(2005) (stating that an actor \xe2\x80\x9cinfringes vicariously by profiting from direct infringement\xe2\x80\x9d if\nthat actor has the right and ability to stop or limit the infringement). In those instances, the\nthird party\xe2\x80\x99s actions are attributed to the alleged infringer such that the alleged infringer\nbecomes the single actor chargeable with direct infringement. Whether a single actor directed\nor controlled the acts of one or more third parties is a question of fact, reviewable on appeal\nfor substantial evidence, when tried to a jury.\nAlternatively, where two or more actors form a joint enterprise, all can be charged\nwith the acts of the other, rendering each liable for the steps performed by the other as if\neach is a single actor. A joint enterprise requires proof of four elements:\n(1) an agreement, express or implied, among the members of the group;\n(2) a common purpose to be carried out by the group;\n(3) a community of pecuniary interest in that purpose, among the members;\nand\n(4) an equal right to a voice in the direction of the enterprise, which gives an\nequal right of control.\nRestatement (Second) of Torts \xc2\xa7 491 cmt. c. As with direction or control, whether actors\nentered into a joint enterprise is a question of fact, reviewable on appeal for substantial\nevidence.\nWe believe these approaches to be most consistent with the text of \xc2\xa7 271(a), the\nstatutory context in which it appears, the legislative purpose behind the Patent Act, and our\npast case law. Section 271(a) is not limited solely to principal-agent relationships, contractual\narrangements, and joint enterprise, as the vacated panel decision held. Rather, to determine\ndirect infringement, we consider whether all method steps can be attributed to a single entity.\n\n\x0c362\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nII. Application to the Facts of this Case\n\nThe facts of this case need not be repeated in detail once again, but the following\nconstitutes the basic facts. In 2006, Akamai Technologies, Inc. filed a patent infringement\naction against Limelight alleging infringement of several patents, including the \xe2\x80\x99703 patent.\nThe case proceeded to trial, at which the parties agreed that Limelight\xe2\x80\x99s customers\xe2\x80\x94not\nLimelight\xe2\x80\x94perform the \xe2\x80\x9ctagging\xe2\x80\x9d and \xe2\x80\x9cserving\xe2\x80\x9d steps in the claimed methods. For example,\nas for claim 34 of the \xe2\x80\x99703 patent, Limelight performs every step save the \xe2\x80\x9ctagging\xe2\x80\x9d step, in\nwhich Limelight\xe2\x80\x99s customers tag the content to be hosted and delivered by Limelight\xe2\x80\x99s content\ndelivery network. After the close of evidence, the district judge instructed the jury that\nLimelight is responsible for its customers\xe2\x80\x99 performance of the tagging and serving method\nsteps if Limelight directs or controls its customers\xe2\x80\x99 activities. The jury found that Limelight\ninfringed claims 19, 20, 21, and 34 of the \xe2\x80\x99703 patent. Following post-trial motions, the district\ncourt [granted Limelight\xe2\x80\x99s motion for judgment of noninfringement as a matter of law].\nWe reverse and reinstate the jury verdict. The jury heard substantial evidence from\nwhich it could find that Limelight directs or controls its customers\xe2\x80\x99 performance of each\nremaining method step, such that all steps of the method are attributable to Limelight.\nSpecifically, Akamai presented substantial evidence demonstrating that Limelight\nconditions its customers\xe2\x80\x99 use of its content delivery network upon its customers\xe2\x80\x99 performance\nof the tagging and serving steps, and that Limelight establishes the manner or timing of its\ncustomers\xe2\x80\x99 performance. We review the evidence supporting \xe2\x80\x9cconditioning use of the content\ndelivery network\xe2\x80\x9d and \xe2\x80\x9cestablishing the manner or timing of performance\xe2\x80\x9d in turn.\nFirst, the jury heard evidence that Limelight requires all of its customers to sign a\nstandard contract. The contract delineates the steps customers must perform if they use the\nLimelight service. These steps include tagging and serving content. As to tagging, Limelight\xe2\x80\x99s\nform contract provides: \xe2\x80\x9cCustomer shall be responsible for identifying via the then current\n[Limelight] process all [URLs] of the Customer Content to enable such Customer Content to\nbe delivered by the [Limelight network].\xe2\x80\x9d In addition, the contract requires that Limelight\xe2\x80\x99s\ncustomers \xe2\x80\x9cprovide [Limelight] with all cooperation and information reasonably necessary\nfor [Limelight] to implement the [Content Delivery Service].\xe2\x80\x9d As for the serving step, the form\ncontract states that Limelight is not responsible for failures in its content delivery network\ncaused by its customers\xe2\x80\x99 failure to serve content. If a customer\xe2\x80\x99s server is down, Limelight\xe2\x80\x99s\ncontent delivery network need not perform. Thus, if Limelight\xe2\x80\x99s customers wish to use\nLimelight\xe2\x80\x99s product, they must tag and serve content. Accordingly, substantial evidence\nindicates that Limelight conditions customers\xe2\x80\x99 use of its content delivery network upon its\ncustomers\xe2\x80\x99 performance of the tagging and serving method steps.\nSubstantial evidence also supports finding that Limelight established the manner or\ntiming of its customers\xe2\x80\x99 performance. Upon completing a deal with Limelight, Limelight\nsends its customer a welcome letter instructing the customer how to use Limelight\xe2\x80\x99s service.\nIn particular, the welcome letter tells the customer that a Technical Account Manager\nemployed by Limelight will lead the implementation of Limelight\xe2\x80\x99s services. The welcome\nletter also contains a hostname assigned by Limelight that the customer \xe2\x80\x9cintegrate[s] into\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n363\n\n[its] webpages.\xe2\x80\x9d This integration process includes the tagging step. Moreover, Limelight\nprovides step-by-step instructions to its customers telling them how to integrate Limelight\xe2\x80\x99s\nhostname into its webpages if the customer wants to act as the origin for content. If\nLimelight\xe2\x80\x99s customers do not follow these precise steps, Limelight\xe2\x80\x99s service will not be\navailable. Limelight\xe2\x80\x99s Installation Guidelines give Limelight customers further information\non tagging content. Lastly, the jury heard evidence that Limelight\xe2\x80\x99s engineers continuously\nengage with customers\xe2\x80\x99 activities. Initially, Limelight\xe2\x80\x99s engineers assist with installation and\nperform quality assurance testing. The engineers remain available if the customer\nexperiences any problems. In sum, Limelight\xe2\x80\x99s customers do not merely take Limelight\xe2\x80\x99s\nguidance and act independently on their own. Rather, Limelight establishes the manner and\ntiming of its customers\xe2\x80\x99 performance so that customers can only avail themselves of the\nservice upon their performance of the method steps.\nWe conclude that the facts Akamai presented at trial constitute substantial evidence\nfrom which a jury could find that Limelight directed or controlled its customers\xe2\x80\x99 performance\nof each remaining method step. As such, substantial evidence supports the jury\xe2\x80\x99s verdict that\nall steps of the claimed methods were performed by or attributable to Limelight. Therefore,\nLimelight is liable for direct infringement.\n\nDiscussion Questions: Divided Infringement\n1. Expansion of Liability. Under the new Federal Circuit rule, a party is responsible\nfor the actions of another if it \xe2\x80\x9cconditions participation in an activity or receipt of a benefit\nupon performance of a step or steps of a patented method and establishes the manner or\ntiming of that performance.\xe2\x80\x9d Why do you think the Federal Circuit chose this language and\nthis rule? What sort of conduct is it attempting to reach? Which sorts of parties will be most\nobviously captured by the new rule?\n2. Direct or Indirect Infringement? At the end of the day, is Limelight a direct or\nindirect infringer? Does it matter? How do you think firms in Limelight\xe2\x80\x99s position viewed the\noutcome of this case?\n3. Alternatives. Suppose the Federal Circuit had declined to revisit Muniauction.\nAkamai would have lost this case, of course, but what about similarly situated parties going\nforward? If you were advising a company like Akamai\xe2\x80\x94or, for that matter, any firm\ndesigning an app\xe2\x80\x94can you think of a way of drafting your claims to circumvent the divided\ninfringement problem? Could Akamai\xe2\x80\x99s claims have been drafted to hold Limelight liable,\neven though some of the steps essential to the invention were performed by a different party?\nIf your answer to the prior question is \xe2\x80\x9cyes,\xe2\x80\x9d and you believe that claims could be\ndrafted to capture Limelight\xe2\x80\x99s actions even under the old law, do you think the Federal\nCircuit\xe2\x80\x99s en banc decision in Limelight was necessary? Would the Federal Circuit have been\nbetter off leaving the law as it stood and relying on patent applicants to draft better claims?\n\n\x0c364\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPractice Problems: Divided Infringement\nConsider the following claims and allegedly infringing conduct involving more than\none party. For each claim:\n(a) Is either party liable for infringement after Akamai v. Limelight?\n(b) Would either party have been liable for infringement under Muniauction, before Akamai\nwas decided?\n(c) If your answer to (b) is \xe2\x80\x9cno,\xe2\x80\x9d can you figure out a way to redraft the claim such that one\nparty would be liable?\nClaim 1: A method of treating a sprained ankle, comprising applying a weak\nelectric current to the affected area for fifteen minutes, then waiting three\nhours, then soaking the affected area in warm water for two hours.\nIn practice, a doctor applies the weak electric current to a patient\xe2\x80\x99s ankle during an outpatient procedure; the patient then goes home and later soaks the ankle in warm water.\nClaim 2: A method for sharing photos over the internet, comprising\ndesignating the photos to be shared, uploading those photos to a central server,\ndesignating the people with whom the photos will be shared, notifying those\npeople, and then allowing those individuals to download the photos from the\nserver.\nIn practice, a software company builds the app that allows the user to designate and upload\nphotos, supplies the server to be used in this process, and then allows the designated\nindividuals to download photos from the server. Individual users perform the remaining\nsteps.\n\nB. Cross-Border Infringement\nOne of the key principles of private international law is territoriality: the idea that a\nstate\xe2\x80\x99s laws only have force within the state\xe2\x80\x99s boundaries. In general, there is a strong\npresumption against the extraterritorial application of U.S. law. Patent law is no exception.\nIn Brown v. Duchesne, 60 U.S. 183, 195 (1856), the Supreme Court stated that the\nConstitution\xe2\x80\x99s IP Clause grants a power that \xe2\x80\x9cis domestic in its character, and necessarily\nconfined within the limits of the United States.\xe2\x80\x9d The patentee\xe2\x80\x99s rights \xe2\x80\x9ccannot extend beyond\nthe limits to which the law itself is confined.\xe2\x80\x9d Id.\nBut the original conception of territoriality, which limited legal effects to geographic\nboundaries, was created when the effects of commercial behavior were largely local. Over\ntime, the United States has adopted the \xe2\x80\x9ceffects doctrine,\xe2\x80\x9d under which its laws may reach\nforeign conduct that has substantial effects within the United States. As patentable goods\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n365\n\nhave increasingly crossed national borders, this controversial expansion in the reach of U.S.\nlaw has occurred in patent law as well. In this section, we examine two recent additions to\nthe patent infringement statute: \xc2\xa7 271(f), which creates liability for exporting \xe2\x80\x9ccomponents\xe2\x80\x9d\nof a patented invention for \xe2\x80\x9ccombination\xe2\x80\x9d abroad, and \xc2\xa7 271(g), which creates liability for\nimporting, offering to sell, selling, or using within the United States a product made abroad\nby a process patented in the United States.\nThe direct patent infringement statute we have discussed so far, 35 U.S.C. \xc2\xa7 271(a),\nis limited to \xe2\x80\x9cwhoever without authority makes, uses, offers to sell, or sells any patented\ninvention, within the United States or imports into the United States\xe2\x80\x9d (emphasis added).\nPerforming a patented process or assembling a patented device outside the United States is\nnot an infringement under this statute. Thus, when a manufacturer was sued under \xc2\xa7 271(a)\nin 1967 for selling parts of a patented shrimp deveining machine for assembly and use abroad,\nthe Supreme Court held that this was not a \xc2\xa7 271(a) infringement. Deepsouth Packing Co. v.\nLaitram Corp., 406 U.S. 518 (1972). The Court stated that it would require \xe2\x80\x9ca clear\ncongressional indication of intent\xe2\x80\x9d to extend U.S. patent law \xe2\x80\x9cbeyond the limits of the United\nStates.\xe2\x80\x9d Id. at 531.\nCongress responded with such a clear indication of intent in 1984 by enacting \xc2\xa7 271(f)\nto create liability for this kind of activity:\n\n35 U.S.C. \xc2\xa7 271(f)\n(1) Whoever without authority supplies or causes to be supplied in or from the\nUnited States all or a substantial portion of the components of a patented\ninvention, where such components are uncombined in whole or in part, in\nsuch manner as to actively induce the combination of such components\noutside of the United States in a manner that would infringe the patent if\nsuch combination occurred within the United States, shall be liable as an\ninfringer.\n(2) Whoever without authority supplies or causes to be supplied in or from the\nUnited States any component of a patented invention that is especially\nmade or especially adapted for use in the invention and not a staple article\nor commodity of commerce suitable for substantial noninfringing use,\nwhere such component is uncombined in whole or in part, knowing that\nsuch component is so made or adapted and intending that such component\nwill be combined outside of the United States in a manner that would\ninfringe the patent if such combination occurred within the United States,\nshall be liable as an infringer.\nNote the parallels between \xc2\xa7 271(f)(1) and \xc2\xa7 271(b) and between \xc2\xa7 271(f)(2) and \xc2\xa7 271(c): this\nnew statute creates liability for exporting products that induce or contribute to foreign\nconduct that would have been direct infringement under \xc2\xa7 271(a) had it occurred in the\nUnited States. As the Supreme Court stated in Limelight v. Akamai, 572 U.S. 915, 922 (2014),\n\n\x0c366\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n\xe2\x80\x9cwhen Congress wishes to impose liability for inducing activity that does not itself constitute\ndirect infringement, it knows precisely how to do so.\xe2\x80\x9d\nOne limitation on \xc2\xa7 271(f) is that it doesn\xe2\x80\x99t apply to method claims under the Federal\nCircuit\xe2\x80\x99s en banc decision in Cardiac Pacemakers v. St. Jude Medical, 576 F.3d 1348 (Fed.\nCir. 2009). The court noted that \xe2\x80\x9ca component of a tangible product, device, or apparatus is a\ntangible part of the product, device, or apparatus, whereas a component of a method or\nprocess is a step in that method or process,\xe2\x80\x9d and that the component of a method cannot be\n\xe2\x80\x9csupplied\xe2\x80\x9d as required by the statutory language. Id. at 1362\xe2\x80\x9364.\nIn 1988, Congress closed another perceived loophole in the patent infringement\nstatute related to products made abroad by processes patented in the United States. Here,\nthe perceived problem was that parties would use a patented process overseas to make a\nproduct and then import that product into the United States. If only the process, and not the\nproduct, were patented, this would allow the importer to evade the U.S. patent while still\nreaping the full benefits of infringement. Congress\xe2\x80\x99s response was to pass \xc2\xa7 271(g):\n\n35 U.S.C. \xc2\xa7 271(g)\nWhoever without authority imports into the United States or offers to sell,\nsells, or uses within the United States a product which is made by a process\npatented in the United States shall be liable as an infringer, if the importation,\noffer to sell, sale, or use of the product occurs during the term of such process\npatent. In an action for infringement of a process patent, no remedy may be\ngranted for infringement on account of the noncommercial use or retail sale of\na product unless there is no adequate remedy under this title for infringement\non account of the importation or other use, offer to sell, or sale of that product.\nA product which is made by a patented process will, for purposes of this title,\nnot be considered to be so made after\xe2\x80\x94 (1) it is materially changed by\nsubsequent processes; or (2) it becomes a trivial and nonessential component\nof another product.\nThe presumption against extraterritoriality still applies when interpreting these\nstatutes, as the Supreme Court made clear in Microsoft v. AT&T, 550 U.S. 437 (2007). In that\ncase, AT&T sued Microsoft for infringement under \xc2\xa7 271(f), alleging that Microsoft\xe2\x80\x99s Windows\nsoftware was a \xe2\x80\x9ccomponent\xe2\x80\x9d that, when installed on computers abroad, rendered them\ncapable of infringing AT&T\xe2\x80\x99s patent for digitally compressing recorded speech. Importing\nthose computers into the United States would be infringement under \xc2\xa7 271(a), but AT&T\nwanted Microsoft held liable solely for its export of the Windows software for installation on\ncomputers made and sold abroad. The Supreme Court held that software can be a\n\xe2\x80\x9ccomponent,\xe2\x80\x9d but only if it is a particular copy of Windows (such as a copy on a CD-ROM).\nWhat Microsoft actually exported was a master disk from which further copies were made,\nwhich the Court analogized to a blueprint or a single component to be replicated.\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n367\n\nAny doubt that Microsoft\xe2\x80\x99s conduct falls outside \xc2\xa7 271(f)\xe2\x80\x99s compass\nwould be resolved by the presumption against extraterritoriality. The\npresumption that United States law governs domestically but does not rule the\nworld applies with particular force in patent law.\nAs a principle of general application, moreover, we have stated that\ncourts should \xe2\x80\x9cassume that legislators take account of the legitimate sovereign\ninterests of other nations when they write American laws.\xe2\x80\x9d F. Hoffmann\xe2\x80\x93La\nRoche Ltd. v. Empagran S.A., 542 U.S. 155 (2004). Thus, the United States\naccurately conveyed in this case: \xe2\x80\x9cForeign conduct is generally the domain of\nforeign law,\xe2\x80\x9d and in the area here involved, in particular, foreign law \xe2\x80\x9cmay\nembody different policy judgments about the relative rights of inventors,\ncompetitors, and the public in patented inventions.\xe2\x80\x9d Brief for United States as\nAmicus Curiae 28. Applied to this case, the presumption tugs strongly against\nconstruction of \xc2\xa7 271(f) to encompass as a \xe2\x80\x9ccomponent\xe2\x80\x9d not only a physical copy\nof software, but also software\xe2\x80\x99s intangible code, and to render \xe2\x80\x9csupplie[d] . . .\nfrom the United States\xe2\x80\x9d not only exported copies of software, but also\nduplicates made abroad.\nAT&T argues that the presumption is inapplicable because Congress\nenacted \xc2\xa7 271(f) specifically to extend the reach of United States patent law to\ncover certain activity abroad. But as this Court has explained, \xe2\x80\x9cthe\npresumption is not defeated just because a statute specifically addresses an\nissue of extraterritorial application,\xe2\x80\x9d Smith v. United States, 507 U.S. 197\n(1993); it remains instructive in determining the extent of the statutory\nexception, see Empagran, 542 U.S. at 161\xe2\x80\x93165.\nAT&T alternately contends that the presumption holds no sway here\ngiven that \xc2\xa7 271(f), by its terms, applies only to domestic conduct, i.e., to the\nsupply of a patented invention\xe2\x80\x99s components \xe2\x80\x9cfrom the United States.\xe2\x80\x9d\n\xc2\xa7 271(f)(1). AT&T\xe2\x80\x99s reading, however, \xe2\x80\x9cconverts a single act of supply from the\nUnited States into a springboard for liability each time a copy of the software\nis subsequently made abroad and combined with computer hardware abroad\nfor sale abroad.\xe2\x80\x9d Brief for United States as Amicus Curiae 29. In short, foreign\nlaw alone, not United States law, currently governs the manufacture and sale\nof components of patented inventions in foreign countries. If AT&T desires to\nprevent copying in foreign countries, its remedy today lies in obtaining and\nenforcing foreign patents.\nMicrosoft, 550 U.S. at 454\xe2\x80\x9356. AT&T also argued that denying liability would create a\n\xe2\x80\x9cloophole\xe2\x80\x9d for software makers, but the Court concluded that any such loophole \xe2\x80\x9cis properly\nleft for Congress to consider, and to close if it finds such action warranted.\xe2\x80\x9d Id. at 457. Do you\nagree with the Court\xe2\x80\x99s reasoning?\nIn contrast, the Federal Circuit interpreted \xc2\xa7 271(g) broadly in Syngenta Crop\nProtection v. Willowood, 944 F.3d 1344 (Fed. Cir. 2019). In that case, it held that infringement\n\n\x0c368\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nunder \xc2\xa7 271(g) does not require a single entity to perform all the claim steps, unlike for\n\xc2\xa7 271(a)-(c) as interpreted by the Akamai decisions. The court stated that \xe2\x80\x9cour conclusion\nthat a single entity need not perform every step of a patented process abroad under \xc2\xa7 271(g)\ndoes not extend patent protection to cover extraterritorial conduct that would not otherwise\ntrigger liability within the United States.\xe2\x80\x9d Do you agree?\nThe Supreme Court adopted a narrow reading of \xc2\xa7 271(f) in Life Technologies Corp. v.\nPromega Corp., 137 S. Ct. 734 (2017). In that case, the infringement claim was based on the\nexport of an enzyme known as Taq polymerase\xe2\x80\x94one out of five components of a patented\ntoolkit for genetic testing. The enzyme has other uses, so the suit could not be based on\n\xc2\xa7 271(f)(2) for export of a component \xe2\x80\x9cespecially made or especially adapted for use in the\ninvention and not a staple article or commodity of commerce suitable for substantial\nnoninfringing use.\xe2\x80\x9d Rather, the claim was for inducement under \xc2\xa7 271(f)(1), which requires\nexport of \xe2\x80\x9call or a substantial portion of the components of a patented invention . . . in such\nmanner as to actively induce the[ir] combination.\xe2\x80\x9d The Court held that one component cannot\nbe \xe2\x80\x9call or a substantial portion of the components.\xe2\x80\x9d Liability under \xc2\xa7 271(f)(1) is thus\nnarrower than its domestic counterpart, \xc2\xa7 271(b), which does not require the infringer to sell\nanything.\nIn yet another \xc2\xa7 102(f) case, WesternGeco LLC v. ION Geophysical Corp., 138 S. Ct.\n2129 (2018), the Supreme Court reaffirmed the presumption against extraterritoriality but\nheld that the presumption had been overcome. WesternGeco owned patents related to a\nsystem for surveying the ocean floor, and it proved at trial that it had lost ten survey contracts\ndue to ION Geophysical\xe2\x80\x99s infringement under \xc2\xa7 271(f)(2) and was awarded nearly $100\nmillion in damages for its lost profits. The infringer argued that awarding damages for lost\nforeign sales violated the presumption against extraterritoriality, but the Court upheld the\naward because \xe2\x80\x9c[t]he conduct that \xc2\xa7 271(f)(2) regulates . . . is the domestic act of \xe2\x80\x98suppl[ying]\nin or from the United States.\xe2\x80\x99\xe2\x80\x9d We will discuss lost profits damages in detail in Chapter 14.\n\nC. Government Infringement\nInfringement suits against governments raise special legal issues because of sovereign\nimmunity, which generally prevents sovereigns from being sued without consent. As one of\nus wrote:\nThis doctrine might strike nonlawyers as bizarre, and is controversial among\nlawyers and legal academics. Defenders of sovereign immunity argue that the\nprinciple preserves each sovereign\xe2\x80\x99s dignity and protects public finance by\nstopping lawsuits seeking damages. Numerous sovereigns enjoy immunity\nunder U.S. law: the federal government, the 50 states (including their state\nuniversities) and the U.S. territories, foreign nations, and the [574] federally\nrecognized Indian tribes.\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n369\n\nGregory Ablavsky & Lisa Larrimore Ouellette, Selling Patents to Indian Tribes to Delay the\nMarket Entry of Generic Drugs, 178 JAMA Internal Med. 179 (2018).\nInfringement of U.S. patents by foreign governments generally doesn\xe2\x80\x99t arise because\npatents are territorial, but the federal government, U.S. states, and Native nations have all\nbeen defendants in patent lawsuits. In this section, we briefly review how the rules of patent\ninfringement change in each of these contexts.\n\n1. Federal Government\nCongress has enacted a limited waiver of federal sovereign immunity in 28 U.S.C.\n\xc2\xa7 1498, which states that when a patented invention \xe2\x80\x9cis used or manufactured by or for the\nUnited States without license of the owner thereof or lawful right to use or manufacture the\nsame, the owner\xe2\x80\x99s remedy shall be by action against the United States in the United States\nCourt of Federal Claims for the recovery of his reasonable and entire compensation for such\nuse and manufacture.\xe2\x80\x9d In other words, if a patent owner believes that the federal government\nhas infringed its patent, it can bring suit for damages in the Court of Federal Claims. The\nCourt of Federal Claims is an Article I court in D.C. that hears monetary claims against the\nU.S. government, with appeals to the Court of Appeals for the Federal Circuit. This statute\nis the only option for patent infringement suits against the federal government. The federal\ngovernment thus may not be sued for an injunction.\nAlthough \xc2\xa7 1498 effectively grants the federal government a compulsory license to use\npatented inventions, with the license fee determined by the Court of Federal Claims, the\ngovernment has not made aggressive use of this provision. There is thus relatively little\ncaselaw on how \xe2\x80\x9creasonable and entire compensation\xe2\x80\x9d should be determined. As we will\ndiscuss in Chapters 14 and 15, normal patent damages allow recovery of \xe2\x80\x9cdamages adequate\nto compensate for the infringement, but in no event less than a reasonable royalty.\xe2\x80\x9d 35 U.S.C.\n\xc2\xa7 284. Patent damages are thus based on calculation of a \xe2\x80\x9creasonable royalty\xe2\x80\x9d unless the\npatentee can prove other damages such as lost profits. Similarly, in the \xc2\xa7 1498 context, the\nFederal Circuit has stated that \xe2\x80\x9c[g]enerally, the preferred manner of reasonably and entirely\ncompensating the patent owner is to require the government to pay a reasonable royalty for\nits license as well as damages for its delay in paying the royalty.\xe2\x80\x9d Hughes Aircraft Co. v.\nUnited States, 86 F.3d 1566, 1572 (Fed. Cir. 1996), vacated on other grounds, 520 U.S. 1183\n(1997). But lost profits are also available, if proven: \xe2\x80\x9cSince both section 284 and section 1498\nspeak of \xe2\x80\x98compensation,\xe2\x80\x99 albeit \xe2\x80\x98adequate\xe2\x80\x99 compensation in the former and \xe2\x80\x98reasonable and\nentire\xe2\x80\x99 in the latter, lost profits should be recoverable in at least some infringement actions\nagainst the government.\xe2\x80\x9d Gargoyles, Inc. v. United States, 113 F.3d 1572, 1576 (Fed. Cir.\n1997).\nSection 1498 has been in the spotlight recently as a potential tool for promoting\nbroader access to medicines:\n\n\x0c370\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nWe propose that the federal government invoke its power under [\xc2\xa7 1498] to\nreduce excessive prices for important patent-protected medicines. Using this\nlaw would permit the government to procure generic versions of patented drugs\nand in exchange pay the patent-holding companies reasonable royalties to\ncompensate them for research and development. This would allow patients in\nfederal programs, and perhaps beyond, to be treated with inexpensive generic\nmedicines according to clinical need\xe2\x80\x94meaning that many more patients could\nbe reached for no more, and perhaps far less, money than is currently spent.\nAnother benefit would be a reduction in the opportunity for companies to\nextract monopoly profits that far exceed their risk-adjusted costs of research\nand development.\n\nAmy Kapczynski & Aaron S. Kesselheim, \xe2\x80\x98Government Patent Use\xe2\x80\x99: A Legal Approach to\nReducing Drug Spending, 35 Health Aff. 791 (2016); see also Hannah Brennan, Amy\nKapczynski, Christine H. Monahan & Zain Rizvi, A Prescription for Excessive Drug Pricing:\nLeveraging Government Patent Use for Health, 18 Yale J.L. & Tech. 275 (2016); Editorial\nBoard, How the Government Can Lower Drug Prices, N.Y. Times (June 20, 2018),\nhttps://www.nytimes.com/2018/06/20/opinion/prescription-drug-costs-naloxone-opioids.html.\nWhat are the advantages and disadvantages of this proposal? Do you think a patent\nowner\xe2\x80\x99s \xe2\x80\x9creasonable and entire compensation\xe2\x80\x9d should be based on recovery of risk-adjusted\nR&D costs? If this rule were widely applied, pharmaceutical innovators would have the same\nincentive, in risk-adjusted terms, to work on any project, regardless of social value. Are there\nways to promote access to medicines while giving firms incentives to focus on projects with\nthe highest probability of saving lives and generating the greatest health improvements? See\nDaniel J. Hemel & Lisa Larrimore Ouellette, Valuing Medical Innovation (unpublished\nmanuscript).\n\n2. State Governments\nFor suits against state governments, Congress unsuccessfully attempted to abrogate\nstate sovereign immunity with the 1992 Patent and Plant Variety Protection Remedy\nClarification Act (Patent Remedy Act). This Act added \xc2\xa7 271(h) to the patent infringement\nstatute to specify that \xe2\x80\x9cany State, any instrumentality of a State, and any officer or employee\nof a State or instrumentality of a State acting in his official capacity\xe2\x80\x9d may be liable as an\ninfringer and \xe2\x80\x9cshall be subject to the provisions of this title in the same manner and to the\nsame extent as any nongovernmental entity.\xe2\x80\x9d Congress also addressed state sovereign\nimmunity even more directly by adding 35 U.S.C. \xc2\xa7 296, which provides that states and state\nofficials \xe2\x80\x9cshall not be immune, under the eleventh amendment of the Constitution of the\nUnited States or under any other doctrine of sovereign immunity, from suit in Federal court\nby any person, including any governmental or nongovernmental entity, for infringement of a\npatent under section 271, or for any other violation under this title.\xe2\x80\x9d\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n371\n\nThe Supreme Court held these provisions unconstitutional in Florida Prepaid\nPostsecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999). The\nCourt held that Congress may abrogate state sovereign immunity where necessary to secure\nprotections of the Fourteenth Amendment, but in enacting the Patent Remedy Act, \xe2\x80\x9cCongress\nidentified no pattern of patent infringement by the States, let alone a pattern of\nconstitutional violations.\xe2\x80\x9d Id. at 640. And even if it had identified such a pattern, \xe2\x80\x9conly where\nthe State provides no remedy, or only inadequate remedies, to injured patent owners for its\ninfringement of their patent could a deprivation of property without due process result.\xe2\x80\x9d Id.\nat 643. The Court noted that Congress \xe2\x80\x9cbarely considered the availability of state remedies\nfor patent infringement,\xe2\x80\x9d and the limited testimony it heard was focused on the point \xe2\x80\x9cnot\nthat state remedies were constitutionally inadequate, but rather that they were less\nconvenient than federal remedies, and might undermine the uniformity of patent law.\xe2\x80\x9d Id. at\n643\xe2\x80\x9344.\nWhat state remedies for patent infringement is the Court referring to? The Federal\nCircuit provided some examples in Pennington Seed v. Produce Exchange, 457 F.3d 1334\n(Fed. Cir. 2006), in which it rejected an argument that the University of Arkansas was subject\nto suit due to a lack of state law remedies. The Court noted that the Arkansas Claims\nCommission may hear claims against the state for damages up to $10,000, that the state\nlegislature may consider monetary awards greater than $10,000, and a judicial claim for\nconversion may be available. Id. at 1340. \xe2\x80\x9cWhile these remedies may be \xe2\x80\x98uncertain\xe2\x80\x99 or \xe2\x80\x98less\nconvenient,\xe2\x80\x99 or may \xe2\x80\x98undermine the uniformity of patent law,\xe2\x80\x99 these attributes are not\nsufficient to show that the patentee\xe2\x80\x99s due process rights have been violated.\xe2\x80\x9d Id. at 1340\xe2\x80\x9341\n(quoting Florida Prepaid, 527 U.S. at 644\xe2\x80\x9345). Do those sound like useful or adequate\nremedies?\nIt is therefore difficult to obtain money damages for patent infringement from state\npatent infringers, but it is possible to sue for an injunction against future infringement.\nUnder the doctrine established by Ex parte Young, 209 U.S. 123 (1908), plaintiffs may obtain\ninjunctions against state officials acting contrary to federal law, even if the state retains\nsovereign immunity. Ex parte Young applies to state patent infringement\xe2\x80\x94\xe2\x80\x9ccontinuing\nprospective violations of a federal patent right by state officials may be enjoined by federal\ncourts under the Ex parte Young doctrine\xe2\x80\x9d\xe2\x80\x94although there must be a causal connection\nbetween the state officials and the unlawful action in question. Pennington Seed, 457 F.3d at\n1341. Thus, state patent infringement may be enjoined by federal courts but not remedied by\nnormal money damages, whereas federal patent infringement may not be enjoined but does\nallow suits for money damages in the Court of Federal Claims. Does this distinction make\nsense?\nStates may use sovereign immunity as a shield when patents are asserted against\nthem, but not as a sword when asserting their own patents. The Federal Circuit has rejected\nthe argument that sovereign immunity protects state patent plaintiffs from transfers for\nimproper venue: \xe2\x80\x9cWhen a State sues in federal court, it waives sovereign immunity with\nrespect to its asserted claims, subjecting itself to the jurisdiction of the federal courts, and\nmust accept the federal statutory provisions that govern the allocation of cases among the\n\n\x0c372\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ncourts.\xe2\x80\x9d Board of Regents of the University of Texas System v. Boston Scientific Corp., 936\nF.3d 1365 (Fed. Cir. 2019).\nSimilarly, sovereign immunity cannot protect states from challenges to the validity of\ntheir patents. As we will discuss in more detail in Chapter 17, the 2011 America Invents Act\ncreated new administrative procedures for the USPTO to review the validity of patents it had\npreviously granted, including inter partes review (IPR). State universities argued that they\nenjoyed immunity from having their patents challenged in IPR proceedings, but the Federal\nCircuit rejected this argument in Regents of the University of Minnesota v. LSI Corp., 926\nF.3d 1327 (Fed. Cir. 2019)\xe2\x80\x94relying on a recent case on tribal sovereign immunity that will\nbe discussed in the following section, Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals\nInc., 896 F.3d 1322 (Fed. Cir. 2018).\n\n3. Native Nations\nAs of this writing, there are 574 federally recognized Native nations within the United\nStates with their own sovereign immunity. Caselaw on tribal sovereign immunity is complex;\nfor instance, Greg Ablavsky argues that \xe2\x80\x9cthe status of Native nations within federal law has\nalmost always been defined with reference to other sovereigns . . . ignoring the differences\nbetween the situation of tribes and other sovereigns\xe2\x80\x9d to serve \xe2\x80\x9ca particular purpose: either to\ncabin the scope of tribal authority or to aggrandize federal power.\xe2\x80\x9d Gregory Ablavsky,\nSovereign Metaphors in Indian Law, 80 Mont. L. Rev. 11, 12 (2019).\nLike state governments, tribal governments are immune from suits for patent\ninfringement, although there is limited caselaw on the subject. See Specialty House of\nCreation, Inc. v. Quapaw Tribe, 2011 WL 308903 (N.D. Okla. Jan. 27, 2011); Home Bingo\nNetwork v. Multimedia Games, Inc., No. 1:05-CV-0608, 2005 WL 2098056 (N.D.N.Y. Aug. 30,\n2005). Unlike state governments, however, many tribal governments have not instituted\nseparate procedures that would allow patent owners to collect in cases of infringement. If\nNative nations began to engage in frequent and intentional patent infringement, how do you\nthink Congress and the federal courts would respond?\nAlso like state governments, tribal governments cannot use sovereign immunity to\nblock most challenges to patent validity. Tribes are different from states in that filing suit is\nnot considered a waiver of sovereign immunity, so tribes can still invoke sovereign immunity\nagainst counterclaims. See Oklahoma Tax Comm\xe2\x80\x99n v. Citizen Band Potawatomi Indian Tribe\nof Oklahoma, 498 U.S. 505 (1991). But a defendant sued by a patent-owning tribe can still\nraise invalidity as an affirmative defense,2 and a declaratory judgment of invalidity may also\nbe available under Ex parte Young.\nPatent infringement defendants typically plead invalidity as both an affirmative defense and\na counterclaim. The counterclaim provides greater strategic leverage in that it survives termination\nof the plaintiff\xe2\x80\x99s claim. Thus, it can be upheld on appeal even if the court also upholds a finding of\nnoninfringement. See Cardinal Chem. Co. v. Morton Int\xe2\x80\x99l, 508 U.S. 83 (1993).\n2\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n373\n\nPatents owned by a tribe can also be challenged in IPR. Tribal sovereign immunity\ncame to a prominent intersection with federal patent law in September 2017, when the global\npharmaceutical company Allergan transferred six patents for its blockbuster dry eye drug\nRestasis to the Saint Regis Mohawk Tribe, a federally recognized tribe of about 15,000\nmembers in upstate New York with a $50 million annual budget. Under the deal, the Tribe\nreceived $13.75 million up front and the possibility of $15 million in annual royalties\xe2\x80\x94a\nfraction of Restasis\xe2\x80\x99s $1.5 billion in annual revenues. The deal also enabled the Tribe to assert\nsovereign immunity in an IPR proceeding in which a generic manufacturer was challenging\nthe patents.\nIn Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., 896 F.3d 1322, 1327\n(Fed. Cir. 2018), the Federal Circuit held that tribal sovereign immunity cannot be asserted\nin IPR because IPR \xe2\x80\x9cis more like an agency enforcement action\xe2\x80\x9d in which immunity does not\napply \xe2\x80\x9cthan a civil suit brought by a private party\xe2\x80\x9d in which it does. And as noted in the prior\nsection, the Federal Circuit then relied on Saint Regis Mohawk Tribe to reach the same result\nwith respect to state sovereign immunity.\nIt is easy to understand deals such as this one from the tribe\xe2\x80\x99s perspective because of\nthe limitations on tribes\xe2\x80\x99 economic options. As one of us has explained:\nFor tribes, economic development and sovereignty are closely linked, especially\nbecause federal law substantially limits tribes\xe2\x80\x99 powers to tax. American\nIndians and Alaska Natives have the highest poverty rate of any racial group\nin the United States. A small fraction of tribes enjoy large gaming revenues,\nbut most must struggle for funds to supplement chronically underfunded\nfederal programs to provide services for their citizens. . . . Responding to the\nAllergan deal requires more than a stopgap narrowly focused on the use of\ntribal sovereign immunity in IPR proceedings challenging drug patents.\nGregory Ablavsky & Lisa Larrimore Ouellette, Selling Patents to Indian Tribes to Delay the\nMarket Entry of Generic Drugs, 178 JAMA Internal Med. 179 (2018). Are there better ways\nto address the underlying challenges that led the Saint Regis Mohawk Tribe to pursue its\ndeal with Allergan?\n\nD. Pharmaceutical Infringement and the FDA\nPatent scholars often distinguish the role of patents in the pharmaceutical industry\nfrom their role in other sectors. For example, in their 2009 book The Patent Crisis and How\nthe Courts Can Solve It, Dan Burk and Mark Lemley write: \xe2\x80\x9cIt is the IT industries that are\nthe poster child for the claims of a patent crisis . . . while for most of the companies in the\nbiomedical industry the patent system is working just fine.\xe2\x80\x9d Patent skeptics James Bessen\nand Michael Meurer similarly single out pharmaceuticals, concluding that \xe2\x80\x9cby the late 1990s\nlitigation costs clearly exceeded the profits from patents outside the chemical and\npharmaceutical industries.\xe2\x80\x9d Patent Failure: How Judges, Bureaucrats, and Lawyers Put\n\n\x0c374\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nInnovators at Risk (2008). As we discussed in Chapter 1, pharmaceutical executives drop\ndrugs without strong patent protection from development pipelines, and drugs with shorter\neffective patent terms (due to long clinical trials) receive less private R&D investment. See\nBenjamin N. Roin, Unpatentable Drugs and the Standards of Patentability, 87 Tex. L. Rev.\n503, 545 (2009); Eric Budish, Benjamin N. Roin & Heidi Williams, Do Firms Underinvest in\nLong-Term Research? Evidence from Cancer Clinical Trials, 105 Am. Econ. Rev. 2044 (2015).\nIt should thus be unsurprising that some of the most important patent litigation\ndisputes involve pharmaceuticals. Pharmaceutical patent infringement follows the same\nbasic rules as patent infringement in other industries: an accused drug infringes only if it\nhas every element of a patent claim, or its equivalent. And as you saw from Chapter 10, the\nmental state for indirect infringement is the same. You have encountered many other\npharmaceutical patent infringement cases in earlier chapters, including Schering v. Geneva,\n339 F.3d 1373 (Fed. Cir. 2003) (the inherent anticipation case in Chapter 2), In re \xe2\x80\x99318 Patent\nInfringement Litigation, 583 F.3d 1317 (Fed. Cir. 2009) (the utility case in Chapter 4), and\nIdenix v. Gilead, 941 F.3d 1149 (Fed. Cir. 2019) (the enablement and written description case\nin Chapter 4). But we discuss pharmaceutical patent infringement separately here because\nCongress has created special statutory frameworks to resolve patent disputes in this\nindustry, and some familiarity with these statutes is important in patent litigation practice.\nUnlike in most industries, the pharmaceutical market is strictly regulated by an\nadministrative agency: the Food and Drug Administration (FDA). Before a new drug is\nallowed on the market, the FDA requires the drug\xe2\x80\x99s sponsor to run costly clinical trials to\nshow that the drug is safe and effective. A second company that wants to sell an equivalent\ndrug could receive FDA approval by running its own clinical trials, but duplicating the first\ncompany\xe2\x80\x99s trials would be both wasteful and ethically problematic (because it would require\ndenying patients in the control group a drug that has already been shown to be effective).\nThe second company can thus seek approval through an abbreviated process based on the\ndata generated by the first company\xe2\x80\x99s trials.\nThe details of this abbreviated process depend on whether the drug is classified as a\nsmall-molecule drug or a biologic. Small-molecule drugs are ones with simple chemical\nstructures, often around 20 to 100 atoms. They are relatively easy to reproduce through\nchemical synthesis. Biologics, in contrast, range in size from around 200 to 50,000 atoms, and\ntheir precise structures are often unknown and not easily characterized. Biologics regulated\nby the FDA include a wide range of products, including vaccines, therapeutic proteins, and\ngene therapy. The figure below illustrates models of the small-molecule drug aspirin\ncompared with a subclass of the biologic antibody IgG. (An antibody is a type of protein used\nby the immune system to identify foreign objects.)\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n375\n\nThe other major class of medical technologies regulated by the FDA is medical devices,\na broad category that includes a wide array of products: bandages, wheelchairs, MRI\nmachines, diagnostic tests, pacemakers, surgical devices, etc. Medical devices do not have a\nspecial statutory framework for resolving patent issues the way small-molecule drugs and\nbiologics do, although there is an unusual exception from patent liability for medical\npractitioners performing certain medical procedures in 35 U.S.C. \xc2\xa7 287(c). This does not\nimmunize the manufacturers of medical devices used for those procedures from indirect\nliability.\nBoth small-molecule drugs and biologics are typically protected by numerous patents.\nFor small-molecule drugs, in addition to \xe2\x80\x9cprimary\xe2\x80\x9d patents claiming the new active\ningredient, chemical compounds are protected by various \xe2\x80\x9csecondary\xe2\x80\x9d patents, including\nformulation claims that claim a specific pharmaceutical preparation such as a tablet or\nsustained-release form, method of use claims that claim a method of treating a specific\ndisease with the compound, and claims to minor chemical modifications such as polymorphs,\nisomers, prodrugs, esters, and salts. Secondary patents are most frequently used to extend\nthe patent life of the most lucrative drugs, a process known as \xe2\x80\x9cevergreening.\xe2\x80\x9d See Amy\nKapczynski, Chan Park & Bhaven Sampat, Polymorphs and Prodrugs and Salts (Oh My!):\nAn Empirical Analysis of \xe2\x80\x9cSecondary\xe2\x80\x9d Pharmaceutical Patents, 7 PLoS One e49470 (2012).\nThey are also much less likely to be upheld in patent litigation. C. Scott Hemphill & Bhaven\nSampat, Drug Patents at the Supreme Court, 339 Science 1386 (2013). What examples of\nevergreening have you encountered in previous chapters?\nFor biologics, their greater scientific complexity is reflected in a more complex patent\nlandscape, and this landscape has also been more obscure due to the lack of any patent listing\nrequirement before December 2020 and the small number of cases challenging these patents.\nAs a rough comparison, best-selling small-molecule drugs from 2002 to 2004 had an average\nof just over five patents per drug, while the best-selling biologics in 2018 were estimated to\nhave over seventy patents per drug.\n\n\x0c376\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nFor small-molecule drugs, the governing statute for promoting generic entry and\nresolving disputes over these patents is the Drug Price Competition and Patent Term\nRestoration Act of 1984, which is generally known as the Hatch-Waxman Act. The HatchWaxman Act was quite successful at increasing entry of generic drugs. Based on this success,\nCongress enacted a similar framework for biologics as part of the 2010 Affordable Care Act:\nthe Biologics Price Competition and Innovation Act (BPCIA). The goal of the BPCIA was to\nspur entry of generic versions of biologics, which are known as biosimilars.\nIn exchange for granting an abbreviated approval process to generic and biosimilar\nentrants, the Hatch-Waxman Act and the BPCIA both gave a new benefit to firms that bring\nnew drugs to market: a non-patent form of intellectual property protection known as\nregulatory exclusivity. There are two key types of regulatory exclusivity: data exclusivity,\nwhich prevents a generic or biosimilar firm from relying on the original firm\xe2\x80\x99s clinical trial\ndata for a certain period, and market exclusivity, which prevents any new approval for an\nequivalent drug, even if the new entrant has conducted its own clinical trials. As a practical\nmatter, both effectively prevent generic or biosimilar entry in most cases due to the cost and\nethical concerns with conducting new trials.\nFor small-molecule drugs, a firm hoping to bring a new drug to market files a New\nDrug Application (NDA) with the FDA. After approval, the sponsor receives five years of data\nexclusivity if the drug has a new active ingredient and three years of data exclusivity for old\ndrugs that required new clinical trials (such as to receive approval for a new indication). For\nbiologics, the process starts with a Biologics License Application (BLA). After approval, the\nsponsor receives twelve years of data exclusivity, including four years before the first\nbiosimilar application may even be filed.\nApproval of an NDA or BLA also comes with a patent term extension. Under 35 U.S.C.\n\xc2\xa7 156, the sponsor may extend one patent on the drug for half the time spent in clinical trials,\nup to a maximum of five years, and with total life not to exceed 14 years after FDA approval.\nAdditionally, the sponsor may request \xe2\x80\x9corphan\xe2\x80\x9d designation for the drug under 21 U.S.C.\n\xc2\xa7 360bb(a)(2) if it treats a disease that either (A) \xe2\x80\x9caffects less than 200,000 persons in the\nUnited States\xe2\x80\x9d at the time of the request or (B) \xe2\x80\x9cfor which there is no reasonable expectation\nthat the cost of developing and making available in the United States a drug for such disease\nor condition will be recovered from sales in the United States of such drug.\xe2\x80\x9d Orphan\ndesignation grants the sponsor a tax credit for 25% of its clinical trial expenses and a sevenyear market exclusivity period. Finally, under 21 U.S.C. \xc2\xa7 355a, if the FDA sends the sponsor\na written request for pediatric clinical studies and the sponsor complies, the drug receives a\nsix-month \xe2\x80\x9cpediatric exclusivity\xe2\x80\x9d attached to the end of all other regulatory exclusivity and\npatent periods.\nTo help potential generic and biosimilar manufacturers determine when they will be\nable to enter the market, the FDA publishes information about approved drugs and their\nexclusivity periods. For small-molecule drugs, the relevant database is the Orange Book. The\nOrange Book has included patent information for each drug since it was first published in\n1985 and may be searched on the FDA\xe2\x80\x99s website by brand name, active ingredient, or NDA\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n377\n\nnumber. For biologics, the equivalent database is known as the Purple Book. Biologic\nmanufacturers were not originally required to list patent information in the Purple Book,\nmaking it more difficult for potential biosimilar manufacturers to understand the patent\nlandscape for each drug. But in the COVID-19 relief bill passed in December 2020, Congress\namended 42 U.S.C. \xc2\xa7 262(k) to require the FDA to include patent information.\nA potential generic or biosimilar manufacturer begins the abbreviated approval\nprocess by filing an abbreviated New Drug Application (ANDA) or an abbreviated Biologics\nLicense Application (aBLA). (We don\xe2\x80\x99t know why \xe2\x80\x9cabbreviated\xe2\x80\x9d is capitalized differently; it\njust is.) The scientific standard for demonstrating that the product is sufficiently similar to\nrely on the original drug\xe2\x80\x99s clinical trial data differs between the two contexts due to the\ngreater complexity of biologics. For small-molecule drugs, the ANDA must provide evidence\nof \xe2\x80\x9cbioequivalence,\xe2\x80\x9d meaning that there is no \xe2\x80\x9csignificant difference in the rate and extent to\nwhich the active ingredient . . . becomes available at the site of drug action.\xe2\x80\x9d 21 C.F.R.\n\xc2\xa7 314.3. For biologics, the aBLA must demonstrate \xe2\x80\x9cbiosimilarity,\xe2\x80\x9d including evidence that\nthe product is \xe2\x80\x9chighly similar\xe2\x80\x9d to the reference product (based on characterizing structure\nand function to the extent possible) and \xe2\x80\x9chas no clinically meaningful differences\xe2\x80\x9d from the\nreference product, as demonstrated through clinical response studies (which are less\nburdensome than randomized controlled trials). There is also a higher standard for biologic\n\xe2\x80\x9cinterchangeability,\xe2\x80\x9d meaning the biosimilar may be substituted for the original biologic\nwithout intervention of the prescribing healthcare provider.\nMore relevantly for patent practitioners, filing an ANDA or aBLA can initiate patent\nlitigation. Under the Hatch-Waxman Act, an ANDA must include certifications for each\nOrange Book patent, which are referred to by the paragraphs of 21 U.S.C. \xc2\xa7 355(j)(2)(A)(vii):\nthe applicant can certify under paragraph I or II that the patent information has not been\nfiled or has expired, under paragraph III that the applicant will wait for the patent to expire,\nor\xe2\x80\x94most importantly for us\xe2\x80\x94under paragraph IV that the patent is invalid or not infringed.\nTo provide an incentive to challenge patents, the first generic firm to file an ANDA with a\nparagraph IV certification receives 180 days of generic market exclusivity once their ANDA\nis approved, meaning that the FDA will not approve a second ANDA for the same drug.\nWithin 20 days of FDA receipt of the ANDA, the filer must notify the original NDA\nsponsor. Under 35 U.S.C. \xc2\xa7 271(e)(2)(A), filing an ANDA constitutes an artificial act of patent\ninfringement\xe2\x80\x94in that the product is not yet on the market\xe2\x80\x94and if the NDA sponsor files\nsuit within 45 days, ANDA approval is stayed for 30 months to provide time to resolve the\npatent issues. If the NDA sponsor doesn\xe2\x80\x99t file suit within 45 days, the FDA may approve the\nANDA, but many generic companies would prefer not to launch at risk of substantial patent\ndamages. Hatch-Waxman addressed this concern by allowing the generic to sue for a\ndeclaratory judgment of invalidity or noninfringement under \xc2\xa7 271(e)(5)).\nUnder the BPCIA, filing an aBLA can also initiate patent litigation, but the BLA\nsponsor cannot sue right away: it must wait and see whether the applicant initiates a complex\nback-and-forth under 42 U.S.C. \xc2\xa7 262 known as the \xe2\x80\x9cpatent dance.\xe2\x80\x9d If the biosimilar applicant\nchooses to dance, it must send its aBLA to the original BLA sponsor within 20 days after the\n\n\x0c378\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nFDA accepts it. Then the BLA sponsor has 60 days to provide a list of patents that could be\nasserted, the biosimilar applicant has 60 days to respond with invalidity and\nnoninfringement contentions, the BLA sponsor has 60 days to reply with validity and\ninfringement contentions, and then the parties jointly negotiate a list of key patents to be\nadjudicated in the first litigation phase\xe2\x80\x94with the goal of increasing efficiency by leaving\nsome patents for a second, later phase.\nIf the biosimilar applicant chooses to dance, the BLA sponsor may file a patent\ninfringement suit on the negotiated patents under 35 U.S.C. \xc2\xa7 271(e)(2)(C)(i), and neither\nparty may file a declaratory judgment action on patents not selected for the first wave of\nlitigation. But the Supreme Court has held that the biosimilar applicant cannot be forced to\ndance under federal law, Sandoz v. Amgen, 137 S. Ct. 1664 (2017), and the Federal Circuit\nhas held that the dance also cannot be forced under state law, Amgen v. Sandoz, 877 F.3d\n1315, 1327 (Fed. Cir. 2017). If the biosimilar applicant elects not to dance, then the BLA\nsponsor may sue under 35 U.S.C. \xc2\xa7 271(e)(2)(C)(ii) based on any patent it could have asserted\nthrough the dance.\nThe second wave of litigation contemplated by the BPCIA can commence after the\nFDA approves the product and the biosimilar applicant provides notice to the original BLA\nsponsor, the latter of which must occur 180 days before it intends to market the drug. (The\nSupreme Court has held that this 180-day notice period may begin before FDA approval.\nSandoz v. Amgen, 137 S. Ct. at 1677.) During the second wave, the BLA sponsor can assert\npatents not included in the first wave and can seek a preliminary injunction to prevent\nmarketing. Both parties may file declaratory judgment actions during this phase.\nLike the Hatch-Waxman Act, the BPCIA incentivizes market entry by providing a\nmarket exclusivity period to the first \xe2\x80\x9cinterchangeable\xe2\x80\x9d biosimilar applicant before\nsubsequent biosimilars will be determined to be interchangeable. Unlike the 180-day generic\nexclusivity period under Hatch-Waxman, the biosimilar exclusivity varies in time, expiring\non the earliest of: 1 year after marketing, 18 months after resolution of patent litigation, 42\nmonths after approval if patent litigation is ongoing at that point, or 18 months after approval\nif the applicant has not been sued. 42 U.S.C. \xc2\xa7 262(k)(6).\nThe complex BPCIA statutory scheme has led to numerous thorny questions of\nstatutory interpretation, including the issues that reached the Supreme Court in Sandoz v.\nAmgen. In Sandoz, the Federal Circuit famously borrowed from Winston Churchill to call the\nBPCIA \xe2\x80\x9ca riddle wrapped in a mystery inside an enigma.\xe2\x80\x9d Amgen Inc. v. Sandoz Inc., 794\nF.3d 1347, 1351 n.1 (Fed. Cir. 2015), rev\xe2\x80\x99d in part, 137 S. Ct. 1664 (2017). We will not attempt\nto canvass all the remaining open questions here; we simply note that this is a wonderful\narea of practice for students interested in detailed statutory interpretation, and that the legal\nissues require little understanding of the science behind biologic medicines.\nHas the BPCIA accomplished its goal of promoting biosimilar entrance? Yes, but\nslowly. Through the end of 2017\xe2\x80\x94six years after the BPCIA\xe2\x80\x99s enactment\xe2\x80\x94only three\nbiosimilars launched in the United States. At that point, the European Union had thirtythree biosimilars on the market, largely due to an earlier regulatory framework. Biosimilar\n\n\x0cOTHER INFRINGEMENT ISSUES\n\n379\n\nlaunches have picked up speed since then, with three in 2018, seven in 2019, and five in 2020,\nbut these numbers are still tiny compared with the number of generic small-molecule drugs.\nThe following table summarizes the key differences between the legal frameworks for\nallowing new entrants based on small-molecule drugs and biologics.\nSmall-Molecule Drugs\n\nBiologics\n\nGoverning\nstatute\n\nHatch-Waxman Act of 1984\n(amending Food, Drug and\nCosmetic Act, 21 U.S.C. \xc2\xa7 355,\nand the Patent Act, 35 U.S.C.)\n\nBiologics Price Competition and\nInnovation Act (BPCIA) (2010)\n(amending Public Health Service\nAct, 42 U.S.C. \xc2\xa7 262, and the\nPatent Act, 35 U.S.C.)\n\nInitial FDA\napplication\n\nNew Drug Application (NDA)\n\nBiologics License Application\n(BLA)\n\nData exclusivity\n\n5 years for new active\ningredient; 3 years for other\ndrugs requiring clinical trials\n\n12 years (including 4 years\nbefore the first biosimilar\napplication may be filed)\n\nPatent term\nextension\n\nup to 5 years for 1 patent under\n35 U.S.C. \xc2\xa7 156\n\nsame\n\nOrphan drug\nbenefits\n\n7 years market exclusivity and\n25% tax credit for clinical trial\nexpenses\n\nsame\n\nPediatric\nexclusivity\n\n6 months added to all\nexclusivities (including patents)\nfor pediatric studies\n\nsame\n\nPatent listing\n\nOrange Book\n\nPurple Book (new patent listing\nrequirement as of Dec. 2020)\n\nGeneric/\nbiosimilar FDA\napplication\n\nAbbreviated New Drug\nApplication (ANDA) showing\nbioequivalence; \xc2\xb6 IV certification\nof invalidity or noninfringement\nfor each listed patent\n\nAbbreviated Biologics License\nApplication (aBLA)\n\nStatute making\nabbreviated\napplication an\nact of patent\ninfringement\n\n35 U.S.C. \xc2\xa7 271(e)(2)(A) (if suit\nisn\xe2\x80\x99t filed within 45 days, courts\nhave declaratory jurisdiction\nunder \xc2\xa7 271(e)(5))\n\n35 U.S.C. \xc2\xa7 271(e)(2)(C) (plus\nmore complex declaratory\njurisdiction rules)\n\nIncentive for\npatent challenge\n\n180-day market exclusivity for\nfirst generic to file \xc2\xb6 IV\ncertification and then get\napproved\n\n12 to 42 months for first\ninterchangeable biosimilar\n\n\x0c380\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nInfringement Review Exercise\nThe following exercise reviews a number of concepts covered in this chapter.\nAlizon is a magical wizard who works in the United States as a scientist. In 2010, she\ndiscovered a cure for the potentially fatal dragon pox disease. She named her cure banefire\npotion, and she made it by heating equal parts of the common ingredients blackthorn and\nsnake bone in a caldron while stirring counterclockwise until they react.\nShe immediately filed a patent application at the USPTO (where there is a special\ndivision to deal with magical patents). Her patent specification described her recipe and also\nnoted that banefire potion unfortunately dissolves human teeth, but that it can be\nadministered to a patient by inserting it into a capsule that dissolves in the stomach after it\nis swallowed. She also described her successful treatment of dragon pox patients with her\nnew potion. Her patent issued in 2014 with two claims:\n1. Banefire potion, produced by heating approximately equal weights of\nblackthorn and snake bone and stirring counterclockwise.\n2. A method for treating dragon pox comprising: producing banefire potion; and\nadministering said potion to a dragon pox patient using a means for preventing\nsaid potion from contacting said patient\xe2\x80\x99s teeth.\nHer treatment was a huge commercial success, selling for $50,000 a capsule.\nMerlin runs a U.S. business exporting potions ingredients. After Alizon\xe2\x80\x99s discovery,\nMerlin\xe2\x80\x99s firm experienced a spike in demand for exports of blackthorn and snake bone.\nMagical doctors in other countries combined these ingredients purchased from Merlin to\nproduce banefire potion. Jealous of Alizon\xe2\x80\x99s commercial success, Merlin began experimenting\nwith his ingredients and discovered that he could produce a potion identical to banefire potion\nby combining two quite different ingredients\xe2\x80\x94ash and goldenseal\xe2\x80\x94in a chilled container for\n24 hours. He kept his process secret and began selling his potion to U.S. doctors for $30,000\nper dose, along with instructions stating that doctors could use it to cure dragon pox by\nmagically having it vanish and reappear in the patient\xe2\x80\x99s stomach. Most magical doctors find\nthis method of administration easier, although a few who have difficulty with spells prefer\nputting the potion in dissolvable capsules. Merlin quickly overtakes Alizon in sales volume.\nAlizon sues Merlin and the foreign doctors for patent infringement. What result, and\nwhy? (Don\xe2\x80\x99t stop your analysis just because you\xe2\x80\x99ve found one argument that seems\ndispositive.)\n\n\x0cDEFENSES\n\n381\n\n12. Defenses\nIn this chapter, we consider the defenses to patent infringement. Patent rights have\nfewer limitations than other intellectual property rights. For example, there is no patent\nequivalent of copyright fair use\xe2\x80\x94although some scholars have argued that there should be.\nSee Maureen A. O\xe2\x80\x99Rourke, Toward a Doctrine of Fair Use in Patent Law, 100 Colum. L. Rev.\n1177 (2000); Katherine J. Strandburg, Patent Fair Use 2.0, 1 UC Irvine L. Rev. 265 (2011).\nBut there are still many important defenses that patent defendants can assert.\nIn Chapter 11, we encountered two specialized defenses: the sovereign immunity of\nthe defendant and the exemption from direct liability for medical practitioners performing\nsurgical procedures under 35 U.S.C. \xc2\xa7 287(c). This chapter focuses on general defenses under\nsubstantive patent law. Defendants often also raise procedural defects such as improper\nvenue or lack of standing, which we will discuss in Chapter 17.\n\nA. Invalidity and Noninfringement\nWe have already discussed the most important and common defenses to a claim of\npatent infringement: noninfringement or invalidity of the asserted claims. See 35 U.S.C.\n\xc2\xa7 282(b). The leading patent treatise, Chisum on Patents \xc2\xa7 19.01, quibbles that\n\xe2\x80\x9c\xe2\x80\x98noninfringement\xe2\x80\x99 is, precisely speaking, not a defense but, rather, a negation of the patent\nowner\xe2\x80\x99s case.\xe2\x80\x9d But \xc2\xa7 282(b)(1) names noninfringement as a patent \xe2\x80\x9cdefense,\xe2\x80\x9d and we think it\nis usefully considered in the list of arguments a patent infringement defendant should\nconsider, even though the plaintiff bears the burden of proof on infringement.\nPatent defendants often raise arguments of both invalidity and noninfringement, but\nthere are practical tradeoffs between these defenses that lead many defendants to focus on\none or the other. As Roger Ford summarizes, these include:\n1. Claim construction strategy . . . In many patent cases\xe2\x80\x94perhaps most patent\ncases\xe2\x80\x94the defendant must choose between arguing for broad claim\nconstructions that support its invalidity arguments and arguing for narrow\nclaim constructions that support its noninfringement arguments.\n2. Trial Narratives . . . [A] patent holder can always present a simple, plausible\nnarrative: \xe2\x80\x9cWe invented this great new widget, and the defendant used (or\nstole) our idea.\xe2\x80\x9d A defendant can counter with its own simple narrative of\ninvalidity (\xe2\x80\x9cThe plaintiff didn\xe2\x80\x99t invent anything\xe2\x80\x9d) or noninfringement (\xe2\x80\x9cOur\nproduct is fundamentally different\xe2\x80\x9d)\xe2\x80\x94but only if it focuses on one defense.\nOtherwise, the response is a story that pulls in multiple directions: \xe2\x80\x9cOur\nproduct is fundamentally different from this thing the plaintiff invented\xe2\x80\x94\n\n\x0c382\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nwhich, by the way, wasn\xe2\x80\x99t actually new but had been invented before by this\nother inventor, or would have been obvious to any idiot in the field.\xe2\x80\x9d\n3. Resource Constraints . . . Besides attorneys\xe2\x80\x99 fees, parties can spend heavily\non expert fees, expenses from investigating the accused product or process, and\nsearching for prior art. Very few of these expenses apply to both invalidity and\nnoninfringement arguments, so the marginal cost of pursuing both defenses\ncan be substantial.\n\nRoger Allan Ford, Patent Invalidity Versus Noninfringement, 99 Cornell L. Rev. 71, 94 (2013).\nFord also notes three asymmetries that tend to push the choice toward noninfringement:\n(1) invalidity has a higher standard of proof because of the presumption of patent validity;\n(2) defendants often have a comparative informational advantage on noninfringement\n(because they know about their own products) and a disadvantage on invalidity (because they\nmay have less experience with the patents at issue); and (3) defendants do not internalize all\nthe benefits of success on invalidity (such as the ability of their competitors to freely enter\nthe market).\nDo you think underinvestment in invalidity defenses is a problem? If so, do you have\nsuggestions of how to address it? Suggestions proposed by commentators include the\nfollowing, which have met with varying degrees of success:\n1. Reduce the Costs of Challenging Validity. In Chapter 17, we will discuss post-grant\nproceedings at the USPTO that were created by the 2011 America Invents Act to promote\ninvalidity challenges in a less costly forum than the courts.\n2. Reduce the Presumption of Validity. Some commentators have argued that the\nstandard for invalidating patents should be lowered, at least where the USPTO hasn\xe2\x80\x99t\nconsidered the relevant argument or prior art. The Supreme Court rejected this argument in\nthe litigation context in Microsoft v. i4i, 564 U.S. 91 (2001), but stated that a jury may be\ninstructed that \xe2\x80\x9cit has heard evidence that the PTO had no opportunity to evaluate before\ngranting the patent\xe2\x80\x9d and may \xe2\x80\x9cconsider that fact when determining whether an invalidity\ndefense has been proved by clear and convincing evidence.\xe2\x80\x9d Empirical work with mock jurors\nsuggests that this instruction has the same effect as explicitly lowering the standard to a\npreponderance of the evidence standard. David L. Schwartz & Christopher B. Seaman,\nStandards of Proof in Civil Litigation: An Experiment from Patent Law, 26 Harv. J.L. & Tech.\n429 (2013). In post-grant proceedings, the presumption of validity does not apply, so\ninvalidity may be established by a preponderance of the evidence.\n3. Allow More Parties to Challenge Validity. The Supreme Court has broadened the\nrange of parties who may challenge a patent\xe2\x80\x99s validity in litigation. In Lear, Inc. v. Adkins,\n395 U.S. 653 (1969), the Court held that patentees may not contractually prevent licensees\nfrom challenging patent validity. And in Minerva Surgical Inc. v. Hologic Inc. (2021), the\nCourt limited the doctrine of assignor estoppel, which previously barred invalidity challenges\nfrom parties in privity with the assignors of the patent. In Hologic, the Court held that\nassignor estoppel only applies if the assignor made explicit or implicit representations that\n\n\x0cDEFENSES\n\n383\n\nthe patent was valid when assigning it. Post-grant proceedings have gone further by allowing\nany party challenge a patent. We discuss these doctrines further in Chapters 17\xe2\x80\x9318.\n4. Increase the Rewards of Challenging Validity. Some commentators have proposed\nbounties for patent invalidation. See Anup Malani & Jonathan S. Masur, Raising the Stakes\nin Patent Cases, 101 Geo. L.J. 637 (2013); Joseph Scott Miller, Building a Better Bounty:\nLitigation-Stage Rewards for Defeating Patents, 19 Berkeley Tech. L.J. 667 (2004). Successful\ninvalidators could also recoup litigation costs from other firms in the industry that benefit\nfrom the effort. See Gideon Parchomovsky & Alex Stein, Intellectual Property Defenses, 113\nColum. L. Rev. 1483 (2013).\n\nB. Licenses and Exhaustion\nAnother common defense to infringement is to have a license: recall that direct\ninfringement under \xc2\xa7 271(a), (f), or (g) requires the infringing conduct to be conducted\n\xe2\x80\x9cwithout authority,\xe2\x80\x9d meaning without an express or implied license. Of course, in some cases\na patent owner will explicitly grant a license by contract. But even where there is no explicit\nlicense, courts have sometimes been willing to imply the existence of a license from the patent\nowner\xe2\x80\x99s behavior. As the Federal Circuit has explained, implied licenses can be inferred from\na variety of circumstances:\nIn patent law, an implied license merely signifies a patentee\xe2\x80\x99s waiver of\nthe statutory right to exclude others from making, using, or selling the\npatented invention. In the words of the Supreme Court, \xe2\x80\x9cNo formal granting of\na license is necessary in order to give it effect. Any language used by the owner\nof the patent, or any conduct on his part exhibited to another from which that\nother may properly infer that the owner consents to his use of the patent in\nmaking or using it, or selling it, upon which the other acts, constitutes a license\nand a defense to an action for a tort.\xe2\x80\x9d De Forest Radio Tel. Co. v. United States,\n273 U.S. 236, 241 (1927).\nSince De Forest, this court and others have attempted to identify and\nisolate various avenues to an implied license. As a result, courts and\ncommentators relate that implied licenses arise by acquiescence, by conduct,\nby equitable estoppel, or by legal estoppel. These labels describe not different\nkinds of licenses, but rather different categories of conduct which lead to the\nsame conclusion: an implied license.\nWang Laboratories v. Mitsubishi Electronics Am., 103 F.3d 1571, 1580 (Fed. Cir. 1997).\nEquitable estoppel occurs when an infringer relies on misleading conduct of the patent owner\nthat suggests they will not be sued. Legal estoppel refers to the doctrine of assignor estoppel,\nwhich as noted above, was limited by the Supreme Court in Minerva Surgical Inc. v. Hologic\nInc. (2021).\n\n\x0c384\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nUnder the doctrine of patent exhaustion, also known as the \xe2\x80\x9cfirst sale\xe2\x80\x9d doctrine, the\nfirst unrestricted and authorized sale of a patented product\xe2\x80\x94or a product that embodies a\npatented method\xe2\x80\x94exhausts the patent owner\xe2\x80\x99s rights over that product. Thus, further use,\nsale, and repair of the product is not \xe2\x80\x9cwithout authority\xe2\x80\x9d under \xc2\xa7 271. The first sale of a\npatented product effectively creates an implied license by operation of law. This is why Apple\ncan\xe2\x80\x99t sue you for patent infringement when you sell your old iPhone\xe2\x80\x94though another patent\nowner could sue you if your phone embodies patents of theirs that Apple failed to license.\nBefore 2017, patent owners could contract around the default exhaustion rule, and\nsales in foreign countries did not exhaust U.S. rights. In the following case, the Supreme\nCourt reconsidered these rules.\n\nImpression Products v. Lexmark International, 137 S. Ct. 1523 (2017)\nChief Justice Roberts delivered the opinion of the Court.\nA United States patent entitles the patent holder, for a period of 20 years, to \xe2\x80\x9cexclude\nothers from making, using, offering for sale, or selling [its] invention throughout the United\nStates or importing the invention into the United States.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 154(a). Whoever\nengages in one of these acts \xe2\x80\x9cwithout authority\xe2\x80\x9d from the patentee may face liability for\npatent infringement. \xc2\xa7 271(a).\nWhen a patentee sells one of its products, however, the patentee can no longer control\nthat item through the patent laws\xe2\x80\x94its patent rights are said to \xe2\x80\x9cexhaust.\xe2\x80\x9d The purchaser\nand all subsequent owners are free to use or resell the product just like any other item of\npersonal property, without fear of an infringement lawsuit.\nThis case presents two questions about the scope of the patent exhaustion doctrine:\nFirst, whether a patentee that sells an item under an express restriction on the purchaser\xe2\x80\x99s\nright to reuse or resell the product may enforce that restriction through an infringement\nlawsuit. And second, whether a patentee exhausts its patent rights by selling its product\noutside the United States, where American patent laws do not apply. We conclude that a\npatentee\xe2\x80\x99s decision to sell a product exhausts all of its patent rights in that item, regardless\nof any restrictions the patentee purports to impose or the location of the sale.\nI\nThe underlying dispute in this case is about laser printers\xe2\x80\x94or, more specifically, the\ncartridges that contain the powdery substance, known as toner, that laser printers use to\nmake an image appear on paper. Respondent Lexmark International, Inc. designs,\nmanufactures, and sells toner cartridges to consumers in the United States and around the\nglobe. It owns a number of patents that cover components of those cartridges and the manner\nin which they are used.\nWhen toner cartridges run out of toner they can be refilled and used again. This\ncreates an opportunity for other companies\xe2\x80\x94known as remanufacturers\xe2\x80\x94to acquire empty\n\n\x0cDEFENSES\n\n385\n\nLexmark cartridges from purchasers in the United States and abroad, refill them with toner,\nand then resell them at a lower price than the new ones Lexmark puts on the shelves.\nNot blind to this business problem, Lexmark structures its sales in a way that\nencourages customers to return spent cartridges. It gives purchasers two options: One is to\nbuy a toner cartridge at full price, with no strings attached. The other is to buy a cartridge\nat roughly 20\xe2\x80\x93percent off through Lexmark\xe2\x80\x99s \xe2\x80\x9cReturn Program.\xe2\x80\x9d A customer who buys\nthrough the Return Program still owns the cartridge but, in exchange for the lower price,\nsigns a contract agreeing to use it only once and to refrain from transferring the empty\ncartridge to anyone but Lexmark.\nIn 2010, Lexmark sued a number of remanufacturers for patent infringement with\nrespect to two groups of cartridges. One group consists of Return Program cartridges that\nLexmark sold within the United States. Lexmark argued that, because it expressly prohibited\nreuse and resale of these cartridges, the remanufacturers infringed the Lexmark patents\nwhen they refurbished and resold them. The other group consists of all toner cartridges that\nLexmark sold abroad and that remanufacturers imported into the country. Lexmark claimed\nthat it never gave anyone authority to import these cartridges, so the remanufacturers ran\nafoul of its patent rights by doing just that.\nEventually, the lawsuit was whittled down to one defendant, Impression Products,\nand one defense: that Lexmark\xe2\x80\x99s sales, both in the United States and abroad, exhausted its\npatent rights in the cartridges, so Impression Products was free to refurbish and resell them,\nand to import them if acquired abroad. Impression Products filed separate motions to dismiss\nwith respect to both groups of cartridges. The District Court granted the motion as to the\ndomestic Return Program cartridges, but denied the motion as to the cartridges Lexmark\nsold abroad. Both parties appealed.\nThe Federal Circuit considered the appeals en banc and ruled for Lexmark with\nrespect to both groups of cartridges. We granted certiorari to consider the Federal Circuit\xe2\x80\x99s\ndecisions with respect to both domestic and international exhaustion, and now reverse.\nII\nA\nFirst up are the Return Program cartridges that Lexmark sold in the United States.\nWe conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold\nthem. The single-use/no-resale restrictions in Lexmark\xe2\x80\x99s contracts with customers may have\nbeen clear and enforceable under contract law, but they do not entitle Lexmark to retain\npatent rights in an item that it has elected to sell.\nThe Patent Act grants patentees the \xe2\x80\x9cright to exclude others from making, using,\noffering for sale, or selling [their] invention[s].\xe2\x80\x9d 35 U.S.C. \xc2\xa7 154(a). For over 160 years, the\ndoctrine of patent exhaustion has imposed a limit on that right to exclude. See Bloomer v.\nMcQuewan, 14 How. 539 (1853). The limit functions automatically: When a patentee chooses\nto sell an item, that product \xe2\x80\x9cis no longer within the limits of the monopoly\xe2\x80\x9d and instead\n\n\x0c386\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nbecomes the \xe2\x80\x9cprivate, individual property\xe2\x80\x9d of the purchaser, with the rights and benefits that\ncome along with ownership. Id. at 549\xe2\x80\x9350.\nThis well-established exhaustion rule marks the point where patent rights yield to\nthe common law principle against restraints on alienation. The Patent Act \xe2\x80\x9cpromote[s] the\nprogress of science and the useful arts by granting to [inventors] a limited monopoly\xe2\x80\x9d that\nallows them to \xe2\x80\x9csecure the financial rewards\xe2\x80\x9d for their inventions. United States v. Univis,\n316 U.S. 241, 250 (1942). But once a patentee sells an item, it has \xe2\x80\x9cenjoyed all the rights\nsecured\xe2\x80\x9d by that limited monopoly. Keeler v. Standard Folding Bed Co., 157 U.S. 659, 661\n(1895). Because \xe2\x80\x9cthe purpose of the patent law is fulfilled . . . when the patentee has received\nhis reward for the use of his invention,\xe2\x80\x9d that law furnishes \xe2\x80\x9cno basis for restraining the use\nand enjoyment of the thing sold.\xe2\x80\x9d Univis, 316 U.S. at 251.\nCongress enacted and has repeatedly revised the Patent Act against the backdrop of\nthe hostility toward restraints on alienation. That enmity is reflected in the exhaustion\ndoctrine. The patent laws do not include the right to \xe2\x80\x9crestrain [ ] . . . further alienation\xe2\x80\x9d after\nan initial sale. Straus v. Victor Talking Machine Co., 243 U.S. 490, 501 (1917). \xe2\x80\x9cThe\ninconvenience and annoyance to the public that an opposite conclusion would occasion are\ntoo obvious to require illustration.\xe2\x80\x9d Keeler, 157 U.S. at 667.\nBut an illustration never hurts. Take a shop that restores and sells used cars. The\nbusiness works because the shop can rest assured that, so long as those bringing in the cars\nown them, the shop is free to repair and resell those vehicles. That smooth flow of commerce\nwould sputter if companies that make the thousands of parts that go into a vehicle could keep\ntheir patent rights after the first sale. Those companies might, for instance, restrict resale\nrights and sue the shop owner for patent infringement. And even if they refrained from\nimposing such restrictions, the very threat of patent liability would force the shop to invest\nin efforts to protect itself from hidden lawsuits. Either way, extending the patent rights\nbeyond the first sale would clog the channels of commerce, with little benefit from the extra\ncontrol that the patentees retain. And advances in technology, along with increasingly\ncomplex supply chains, magnify the problem.\nTurning to the case at hand, we conclude that this well-settled line of precedent allows\nfor only one answer: Lexmark cannot bring a patent infringement suit against Impression\nProducts to enforce the single-use/no-resale provision accompanying its Return Program\ncartridges. Once sold, the Return Program cartridges passed outside of the patent monopoly,\nand whatever rights Lexmark retained are a matter of the contracts with its purchasers, not\nthe patent law.\nB\nThe Federal Circuit reached a different result largely because it got off on the wrong\nfoot. Exhaustion reflects a default rule that a patentee\xe2\x80\x99s decision to sell an item\n\xe2\x80\x9cpresumptively grant[s] \xe2\x80\x98authority\xe2\x80\x99 to the purchaser to use it and resell it.\xe2\x80\x9d 816 F.3d at 742.\nBut, the Federal Circuit explained, the patentee does not have to hand over the full \xe2\x80\x9cbundle\nof rights\xe2\x80\x9d every time. Id. at 741. If the patentee expressly withholds a stick from the bundle\xe2\x80\x94\n\n\x0cDEFENSES\n\n387\n\nperhaps by restricting the purchaser\xe2\x80\x99s resale rights\xe2\x80\x94the buyer never acquires that withheld\nauthority, and the patentee may continue to enforce its right to exclude that practice under\nthe patent laws.\nThe misstep in this logic is that the exhaustion doctrine is not a presumption about\nthe authority that comes along with a sale; it is instead a limit on \xe2\x80\x9cthe scope of the patentee\xe2\x80\x99s\nrights.\xe2\x80\x9d United States v. General Elec. Co., 272 U.S. 476, 489 (1926). The right to use, sell, or\nimport an item exists independently of the Patent Act. What a patent adds is a limited right\nto prevent others from engaging in those practices. Exhaustion extinguishes that\nexclusionary power.\nThe Federal Circuit also expressed concern that preventing patentees from reserving\npatent rights when they sell goods would create an artificial distinction between such sales\nand sales by licensees. Patentees, the court explained, often license others to make and sell\ntheir products, and may place restrictions on those licenses. A computer developer could, for\ninstance, license a manufacturer to make its patented devices and sell them only for noncommercial use by individuals. If a licensee breaches the license by selling a computer for\ncommercial use, the patentee can sue the licensee for infringement. And, in the Federal\nCircuit\xe2\x80\x99s view, our decision in General Talking Pictures Corp. v. Western Elec. Co., 304 U.S.\n175, aff\xe2\x80\x99d on reh\xe2\x80\x99g, 305 U.S. 124 (1938), established that\xe2\x80\x94when a patentee grants a license\n\xe2\x80\x9cunder clearly stated restrictions on post-sale activities\xe2\x80\x9d of those who purchase products from\nthe licensee\xe2\x80\x94the patentee can also sue for infringement those purchasers who knowingly\nviolate the restrictions. If patentees can employ licenses to impose post-sale restrictions on\npurchasers that are enforceable through infringement suits, the court concluded, it would\nmake little sense to prevent patentees from doing so when they sell directly to consumers.\nThe Federal Circuit\xe2\x80\x99s concern is misplaced. A patentee can impose restrictions on\nlicensees because a license does not implicate the same concerns about restraints on\nalienation as a sale. Patent exhaustion reflects the principle that, when an item passes into\ncommerce, it should not be shaded by a legal cloud on title as it moves through the\nmarketplace. But a license is not about passing title to a product, it is about changing the\ncontours of the patentee\xe2\x80\x99s monopoly: The patentee agrees not to exclude a licensee from\nmaking or selling the patented invention, expanding the club of authorized producers and\nsellers. Because the patentee is exchanging rights, not goods, it is free to relinquish only a\nportion of its bundle of patent protections.\nA patentee\xe2\x80\x99s authority to limit licensees does not, as the Federal Circuit thought, mean\nthat patentees can use licenses to impose post-sale restrictions on purchasers that are\nenforceable through the patent laws. So long as a licensee complies with the license when\nselling an item, the patentee has, in effect, authorized the sale. That licensee\xe2\x80\x99s sale is treated,\nfor purposes of patent exhaustion, as if the patentee made the sale itself. The result: The sale\nexhausts the patentee\xe2\x80\x99s rights in that item. A license may require the licensee to impose a\nrestriction on purchasers, like the license limiting the computer manufacturer to selling for\nnon-commercial use by individuals. But if the licensee does so\xe2\x80\x94by, perhaps, having each\ncustomer sign a contract promising not to use the computers in business\xe2\x80\x94the sale\n\n\x0c388\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nnonetheless exhausts all patent rights in the item sold. The purchasers might not comply\nwith the restriction, but the only recourse for the licensee is through contract law, just as if\nthe patentee itself sold the item with a restriction.\nGeneral Talking Pictures involved a fundamentally different situation: There, a\nlicensee \xe2\x80\x9cknowingly ma[de] . . . sales . . . outside the scope of its license.\xe2\x80\x9d 304 U.S. at 181\xe2\x80\x9382.\nWe treated the sale \xe2\x80\x9cas if no license whatsoever had been granted\xe2\x80\x9d by the patentee, which\nmeant that the patentee could sue both the licensee and the purchaser\xe2\x80\x94who knew about the\nbreach\xe2\x80\x94for infringement. General Talking Pictures Corp. v. Western Elec. Co., 305 U.S. 124,\n127 (1938). This does not mean that patentees can use licenses to impose post-sale restraints\non purchasers. Quite the contrary: The licensee infringed the patentee\xe2\x80\x99s rights because it did\nnot comply with the terms of its license, and the patentee could bring a patent suit against\nthe purchaser only because the purchaser participated in the licensee\xe2\x80\x99s infringement. General\nTalking Pictures, then, stands for the modest principle that, if a patentee has not given\nauthority for a licensee to make a sale, that sale cannot exhaust the patentee\xe2\x80\x99s rights.\nIn sum, patent exhaustion is uniform and automatic. Once a patentee decides to sell\xe2\x80\x94\nwhether on its own or through a licensee\xe2\x80\x94that sale exhausts its patent rights, regardless of\nany post-sale restrictions the patentee purports to impose, either directly or through a\nlicense.\nIII\nOur conclusion that Lexmark exhausted its patent rights when it sold the domestic\nReturn Program cartridges goes only halfway to resolving this case. Lexmark also sold toner\ncartridges abroad and sued Impression Products for patent infringement for \xe2\x80\x9cimporting\n[Lexmark\xe2\x80\x99s] invention into the United States.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 154(a). Lexmark contends that it\nmay sue for infringement with respect to all of the imported cartridges\xe2\x80\x94not just those in the\nReturn Program\xe2\x80\x94because a foreign sale does not trigger patent exhaustion unless the\npatentee \xe2\x80\x9cexpressly or implicitly transfer[s] or license[s]\xe2\x80\x9d its rights. The Federal Circuit\nagreed, but we do not. An authorized sale outside the United States, just as one within the\nUnited States, exhausts all rights under the Patent Act.\nThis question about international exhaustion of intellectual property rights has also\narisen in the context of copyright law. Under the \xe2\x80\x9cfirst sale doctrine,\xe2\x80\x9d which is codified at 17\nU.S.C. \xc2\xa7 109(a), when a copyright owner sells a lawfully made copy of its work, it loses the\npower to restrict the purchaser\xe2\x80\x99s freedom \xe2\x80\x9cto sell or otherwise dispose of . . . that copy.\xe2\x80\x9d In\nKirtsaeng v. John Wiley & Sons, Inc., we held that this \xe2\x80\x9c \xe2\x80\x98first sale\xe2\x80\x99 [rule] applies to copies of\na copyrighted work lawfully made [and sold] abroad.\xe2\x80\x9d 568 U.S. at 525. What helped tip the\nscales for global exhaustion was the fact that the first sale doctrine originated in \xe2\x80\x9cthe common\nlaw\xe2\x80\x99s refusal to permit restraints on the alienation of chattels.\xe2\x80\x9d Id. at 538. That \xe2\x80\x9ccommon-law\ndoctrine makes no geographical distinctions.\xe2\x80\x9d Id. at 539.\nApplying patent exhaustion to foreign sales is just as straightforward. Patent\nexhaustion, too, has its roots in the antipathy toward restraints on alienation, and nothing\nin the text or history of the Patent Act shows that Congress intended to confine that\n\n\x0cDEFENSES\n\n389\n\nborderless common law principle to domestic sales. And differentiating the patent exhaustion\nand copyright first sale doctrines would make little theoretical or practical sense: The two\nshare a strong similarity and identity of purpose, and many everyday products\xe2\x80\x94\n\xe2\x80\x9cautomobiles, microwaves, calculators, mobile phones, tablets, and personal computers\xe2\x80\x9d\xe2\x80\x94are\nsubject to both patent and copyright protections. The bond between the two leaves no room\nfor a rift on the question of international exhaustion.\nLexmark sees the matter differently. The Patent Act, it points out, limits the\npatentee\xe2\x80\x99s \xe2\x80\x9cright to exclude others\xe2\x80\x9d from making, using, selling, or importing its products to\nacts that occur in the United States. 35 U.S.C. \xc2\xa7 154(a). A domestic sale, it argues, triggers\nexhaustion because the sale compensates the patentee for surrendering those U.S. rights. A\nforeign sale is different: The Patent Act does not give patentees exclusionary powers abroad.\nWithout those powers, a patentee selling in a foreign market may not be able to sell its\nproduct for the same price that it could in the United States, and therefore is not sure to\nreceive the reward guaranteed by U.S. patent law. Absent that reward, says Lexmark, there\nshould be no exhaustion. In short, there is no patent exhaustion from sales abroad because\nthere are no patent rights abroad to exhaust.\nThe territorial limit on patent rights is, however, no basis for distinguishing copyright\nprotections; those protections do not have any extraterritorial operation either. Nor does the\nterritorial limit support the premise of Lexmark\xe2\x80\x99s argument. Exhaustion is a separate limit\non the patent grant, and does not depend on the patentee receiving some undefined premium\nfor selling the right to access the American market. The patentee may not be able to command\nthe same amount for its products abroad as it does in the United States. But the Patent Act\ndoes not guarantee a particular price, much less the price from selling to American\nconsumers.\nThis Court has addressed international patent exhaustion in only one case, Boesch v.\nGraff, 133 U.S. 697 (1890), decided over 125 years ago. All that case illustrates is that a sale\nabroad does not exhaust a patentee\xe2\x80\x99s rights when the patentee had nothing to do with the\ntransaction. Our decision did not, as Lexmark contends, exempt all foreign sales from patent\nexhaustion. Rather, it reaffirmed the basic premise that only the patentee can decide whether\nto make a sale that exhausts its patent rights in an item.\nFinally, the United States, as an amicus, advocates what it views as a middle-ground\nposition: that \xe2\x80\x9ca foreign sale authorized by the U.S. patentee exhausts U.S. patent rights\nunless those rights are expressly reserved.\xe2\x80\x9d Its position is largely based on policy rather than\nprinciple. The Government thinks that an overseas \xe2\x80\x9cbuyer\xe2\x80\x99s legitimate expectation\xe2\x80\x9d is that a\n\xe2\x80\x9csale conveys all of the seller\xe2\x80\x99s interest in the patented article,\xe2\x80\x9d so the presumption should be\nthat a foreign sale triggers exhaustion. But, at the same time, \xe2\x80\x9clower courts long ago\ncoalesced around\xe2\x80\x9d the rule that \xe2\x80\x9ca patentee\xe2\x80\x99s express reservation of U.S. patent rights at the\ntime of a foreign sale will be given effect,\xe2\x80\x9d so that option should remain open to the patentee.\nThe theory behind the Government\xe2\x80\x99s express-reservation rule wrongly focuses on the\nlikely expectations of the patentee and purchaser during a sale. Exhaustion does not arise\nbecause of the parties\xe2\x80\x99 expectations about how sales transfer patent rights. More is at stake\n\n\x0c390\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nwhen it comes to patents than simply the dealings between the parties, which can be\naddressed through contract law. Instead, exhaustion occurs because, in a sale, the patentee\nelects to give up title to an item in exchange for payment. Allowing patent rights to stick\nremora-like to that item as it flows through the market would violate the principle against\nrestraints on alienation. Exhaustion does not depend on whether the patentee receives a\npremium for selling in the United States, or the type of rights that buyers expect to receive.\nAs a result, restrictions and location are irrelevant; what matters is the patentee\xe2\x80\x99s decision\nto make a sale.\n[Justice Ginsburg dissented from the Court\xe2\x80\x99s holding on international exhaustion,\nnoting that she dissented in Kirtsaeng, but even if she \xe2\x80\x9csubscribed to Kirtsaeng\xe2\x80\x99s reasoning\nwith respect to copyright, that decision should bear little weight in the patent context,\xe2\x80\x9d\nincluding because \xe2\x80\x9c[t]he Patent Act contains no analogue to 17 U.S.C. \xc2\xa7 109(a),\xe2\x80\x9d and copyright\nlaw involves greater harmonization across countries.]\n\nDiscussion Questions: Exhaustion\n1. Patents Versus Contracts and Sales Versus Licenses. To understand what was at\nstake in Impression, it is useful to consider Lexmark\xe2\x80\x99s alternatives. Lexmark could certainly\nhave prohibited its customers from reselling the toner cartridges as a matter of contract law;\nthese contracts could have been an automatic condition of the sale. That would have\npermitted Lexmark to sue anyone who resold the cartridge for breach of contract. But\nLexmark doesn\xe2\x80\x99t want to sue the people who resell the cartridges\xe2\x80\x94Lexmark\xe2\x80\x99s own\ncustomers\xe2\x80\x94for the same reason that Aro didn\xe2\x80\x99t want to sue the individuals who repaired\ntheir fabric convertible tops in Aro and Sanofi didn\xe2\x80\x99t want to sue the patients who took the\ngeneric version of its drug in Sanofi (both in Chapter 10). These individuals are dispersed\nand hard to find, and suing them individually might well cost more than it is worth. Plus, it\xe2\x80\x99s\nnot a great business practice to sue your customers or potential customers.\nInstead, Lexmark wants to sue Impression. But the problem for Lexmark is that it\ndoesn\xe2\x80\x99t have a contract with Impression, only with Lexmark\xe2\x80\x99s customers. Lexmark could try\nto sue Impression for tortious inducement of contract breach (inducing Lexmark\xe2\x80\x99s customers\nto breach their contracts with Lexmark) or some such thing, but those are difficult suits to\nwin, particularly across international lines. In addition, it is easier to obtain treble damages\n(which we will discuss in Chapter 16) and other enhanced remedies via patent law than via\ncontract law. Much better, from Lexmark\xe2\x80\x99s perspective, if it could sue Impression for patent\ninfringement.\nRather than relying on contract remedies, could patent owners circumvent Impression\nthrough creative contract drafting? Exhaustion applies to authorized sales, not licenses.\nCould Lexmark avoid exhaustion by licensing cartridges rather than selling them? Or would\na court reject this tactic as a \xe2\x80\x9cdisguised sale\xe2\x80\x9d? See Daniel Hemel & Lisa Larrimore Ouellette,\nLicensing in the Shadow of Impression Products, Written Description (May 31, 2017),\nhttps://writtendescription.blogspot.com/2017/05/licensing-in-shadow-of-impression.html.\n\n\x0cDEFENSES\n\n391\n\n2. Patent Exhaustion Winners and Losers. The parties advocating for the broad\nexhaustion rules adopted by the Supreme Court in Impression v. Lexmark argued that\nexhaustion increases economic efficiency by decreasing information costs: parties will no\nlonger need to spend as much time verifying whether aspects of imported or resold goods are\nprotected by U.S. patents. Opponents argued that exhaustion reduces economic efficiency by\nincreasing the ability of patent owners to price discriminate, such as by charging lower prices\nin low-income countries. What are the distributive effects of the Supreme Court\xe2\x80\x99s ruling? Do\nyou find it surprising that groups focused on global access to medicines advocated in favor of\na U.S. rule of international patent exhaustion? See Daniel J. Hemel & Lisa Larrimore\nOuellette, Trade and Tradeoffs: The Case of International Patent Exhaustion, 116 Colum. L.\nRev. Sidebar 17 (2016) (arguing that \xe2\x80\x9cwhile the net winners and losers from a U.S.\ninternational exhaustion rule are somewhat ambiguous, it seems clear that consumers in\nlow-income countries do not come out ahead\xe2\x80\x9d).\n3. Repair Versus Reconstruction. We have already encountered one important\nlimitation on exhaustion: it permits authorized purchasers only to use, resell, or repair their\npatented product, not to entirely reconstruct the product. In the Supreme Court\xe2\x80\x99s Aro II\ndecision we read in Chapter 10, the Court discussed its holding in Aro I: the authorized sale\nby GM of cars with a patented convertible top allowed purchasers to replace the fabric in the\ntops because this was \xe2\x80\x9crepair\xe2\x80\x9d rather than \xe2\x80\x9creconstruction.\xe2\x80\x9d Is repair vs. reconstruction a\nuseful dichotomy for courts to manage the underlying policy concerns?\n4. Self-Replicating Technologies. Another limitation on exhaustion involves products\nthat generate new copies of themselves. In Bowman v. Monsanto, 569 U.S. 278 (2013), the\nSupreme Court held that exhaustion did not allow a farmer to reproduce Monsanto\xe2\x80\x99s patented\n\xe2\x80\x9cRoundup Ready\xe2\x80\x9d seeds that were genetically engineered to be herbicide resistant.\n\xe2\x80\x9c[E]xhaustion applies only to the particular item sold, and not to reproductions.\xe2\x80\x9d Id. at 287.\nHow do you think this ruling has affected the farming industry?\n\nC. Inequitable Conduct\nRecall from Chapter 1 that patent applicants are under no affirmative obligation to\nsearch for prior art relevant to their applications. Finding prior art is the USPTO examiner\xe2\x80\x99s\nresponsibility. However, applicants must identify to the USPTO any relevant prior art of\nwhich they are aware. Failure to comply with this requirement can get applicants into serious\ntrouble.\nInequitable conduct is an equitable defense to infringement rendering a patent\n\xe2\x80\x9cunenforceable\xe2\x80\x9d if the patentee deceived the USPTO, such as by failing to disclose devastating\nprior art. \xe2\x80\x9cUnenforceability\xe2\x80\x9d is listed as a defense to patent infringement in 35 U.S.C.\n\xc2\xa7 282(b)(1), and it is even more valuable for defendants than invalidity because the entire\npatent is unenforceable, not just the specific claim at issue. The unenforceability penalty has\nthus been called the \xe2\x80\x9catomic bomb\xe2\x80\x9d of patent law.\n\n\x0c392\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIn response to concerns about a perceived \xe2\x80\x9cplague\xe2\x80\x9d of inequitable conduct\ncounterclaims, the Federal Circuit cut back on this defense in Therasense, Inc. v. Becton,\nDickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). The en banc court held that the\nparty asserting the defense must establish, by clear and convincing evidence, two elements:\n1. But-for materiality. The applicant failed to disclose material information or materially\nfalse information, and the USPTO would not have allowed the claim if it had been\naware of the information.\n2. Specific intent to deceive. The applicant knew of the information, knew it was material,\nand made a deliberate decision to withhold it. Intent may be inferred from\ncircumstantial evidence, but not solely from materiality.\nSuccessful inequitable conduct defenses have become less frequent since Therasense,\nbut the defense remains viable. For example, in Regeneron Pharmaceuticals v. Merus, 864\nF.3d 1343 (Fed. Cir. 2017), the Federal Circuit affirmed an inequitable conduct finding in\nwhich the district court drew an adverse inference of specific intent to deceive the USPTO\nbased on similar deceptive misconduct during litigation. And in GS CleanTech v. Adkins\nEnergy, 951 F.3d 1310 (Fed. Cir. 2020), inequitable conduct was upheld where the patentee\nwithheld information about an earlier sale, made false statements about when the invention\nwas reduced to practice, and threatened a client with legal action if it did not corroborate the\npatentee\xe2\x80\x99s story.\nConsider the incentives this doctrine provides to patent applicants considering\nwhether to disclose material information. Inequitable conduct will only harm an applicant if\nthe buried information is eventually found. If that information is certain to invalidate all\nclaims of the patent, does the defense provide any deterrence? In other words, is there any\nincentive to turn over information to the USPTO that would make the entire patent invalid?\nOn the other hand, what if the applicant makes only a very small misstatement? Does it\nmake sense to render the entire patent unenforceable based on an act of deception that\nconcerns only one or a few claims? Is this the optimal relationship between deterrence and\nculpability? See Tun-Jen Chiang, The Upside-Down Inequitable Conduct Defense, 107 Nw. U.\nL. Rev. 1243 (2013) (arguing that \xe2\x80\x9cthe unenforceability penalty creates too much deterrence\nagainst minor errors, but it also produces inadequate deterrence against the most serious\npatentee frauds\xe2\x80\x9d).\nA patentee\xe2\x80\x99s duty of candor arises not only from the inequitable conduct doctrine, but\nalso from 37 C.F.R. \xc2\xa7 1.56, which states that patent inventors, prosecutors, and anyone else\n\xe2\x80\x9csubstantively involved in the preparation or prosecution of the application\xe2\x80\x9d has \xe2\x80\x9ca duty of\ncandor and good faith in dealing with the [USPTO], which includes a duty to disclose to the\nOffice all information known to that individual to be material to patentability as defined in\nthis section.\xe2\x80\x9d The remedy for violations of this rule is dismissal of the patent application (and,\nless commonly, discipline of the patent prosecutor).\nOf course, as we have said, none of these rules impose any search obligation on\npatentees. Should patentees be encouraged to search for and disclose information to\n\n\x0cDEFENSES\n\n393\n\nexaminers? Would it affect your answer if it turned out that examiners rarely use applicantsubmitted prior art, as one paper has argued? See Christopher A. Cotropia, Mark A. Lemley\n& Bhaven Sampat, Do Applicant Patent Citations Matter?, 42 Res. Pol\xe2\x80\x99y 844 (2013). As\ndiscussed in Chapter 1, patent examiners do not have enough time to conduct a thorough\nprior art search for every patent application on their docket, and empirical evidence suggests\nthat these time constraints cause examiners to erroneously grant many invalid patents. Are\nthere other ways to reduce the informational challenges faced by patent examiners?\n\nD. Patent Misuse and Antitrust Violations\nUnder the judge-made doctrine of patent misuse, a patent is unenforceable when the\npatentee has leveraged it to obtain market power beyond the scope of the patent right. But\nthis is a relatively limited rule. As explained in Chapter 1, providing market power\xe2\x80\x94even\nmonopoly power\xe2\x80\x94is the goal of patent law. The idea is that the prospect of being able to\ncharge prices above marginal cost will induce patent owners to create more new products in\nthe first place. In addition, \xe2\x80\x9ca patent does not necessarily confer market power upon the\npatentee.\xe2\x80\x9d Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28, 45 (2006). That is,\nthe mere fact that a party owns a patent will not be treated as sufficient evidence that the\nparty has market power, much less that it has misused the patent to obtain market power.\nTo emphasize the broad nature of patent rights, Congress has imposed statutory\nlimits on patent misuse by specifying in \xc2\xa7 271(d) of the Patent Act that certain activities such\nas refusal to license do not constitute misuse.\n\n35 U.S.C. \xc2\xa7 271(d)\nNo patent owner otherwise entitled to relief for infringement or contributory\ninfringement of a patent shall be denied relief or deemed guilty of misuse or\nillegal extension of the patent right by reason of his having done one or more\nof the following:\n(1) derived revenue from acts which if performed by another without his\nconsent would constitute contributory infringement of the patent;\n(2) licensed or authorized another to perform acts which if performed without\nhis consent would constitute contributory infringement of the patent;\n(3) sought to enforce his patent rights against infringement or contributory\ninfringement;\n(4) refused to license or use any rights to the patent; or\n(5) conditioned the license of any rights to the patent or the sale of the patented\nproduct on the acquisition of a license to rights in another patent or purchase\n\n\x0c394\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nof a separate product, unless, in view of the circumstances, the patent owner\nhas market power in the relevant market for the patent or patented product\non which the license or sale is conditioned.\n\nThe Federal Circuit has also emphasized \xe2\x80\x9cthe narrow scope of the doctrine\xe2\x80\x9d and that\n\xe2\x80\x9cthe defense of patent misuse is not available to a presumptive infringer simply because a\npatentee engages in some kind of wrongful commercial conduct, even conduct that may have\nanticompetitive effects.\xe2\x80\x9d Princo Corp. v. International Trade Commission, 616 F.3d 1318,\n1329 (Fed. Cir. 2010) (en banc); see also id. at 1342 (Dyk, J., dissenting) (arguing that the\ncourt has \xe2\x80\x9cemasculate[d] the doctrine so that it will not provide a meaningful obstacle to\npatent enforcement\xe2\x80\x9d).\nSo what kind of behavior might constitute patent misuse? Acts that could trigger\nmisuse include tying the sale of patented product to unpatented staple articles of commerce,\ntying patent licenses to the license of other patents, and conditioning licenses on agreements\nnot to sell noninfringing alternatives.\nOne clear example of misuse is that under Brulotte v. Thys Co., 379 U.S. 29 (1964), a\npatentee cannot charge royalties for sales that occur after the patent term expires. This rule\nhas been criticized because it doesn\xe2\x80\x99t actually extend the patent monopoly beyond the patent\nterm: after expiration, others may use the patent for free, and there\xe2\x80\x99s no good reason for\npreventing a licensee from entering a contract that requires it to pay lower royalties for\nlonger. Nonetheless, in Kimble v. Marvel Entertainment, 576 U.S. 446 (2015), the Supreme\nCourt declined to overrule Brulotte on stare decisis grounds, largely due to the lack of\nevidence of a problem. Parties can circumvent Brulotte by contract, such as by (1) deferring\npayments for pre-expiration use to the post-expiration period, (2) specifying that some\nroyalties are for non-patent rights such as related know-how and trade secrets, or (3)\nlicensing the IP to a separate company that produces the product and giving the licensor\nsome stake in that company. What kind of patentees might be disadvantaged by the Brulotte\nrule?\nAnother consequence of the rule reaffirmed in Kimble is that if a patent is declared\ninvalid, any ongoing stream of royalty payments based on that patent can no longer be\ncollected. For instance, imagine that a firm licenses its patented touchscreen technology to\nApple in exchange for 0.00000001% of Apple\xe2\x80\x99s revenues from iPhone sales over a ten-year\nperiod. If the patent is declared invalid halfway through the ten-year period, Apple no longer\nhas to make the remaining payments. How do you think this rule affects the type of licensing\nagreements that firms will negotiate? Is there any harm from firms structuring their\nagreements to avoid this type of potential problem?\nBehavior that does not fall within the narrow scope of patent misuse may still be an\nantitrust violation, and patent litigation sometimes involves antitrust counterclaims. The\nSupreme Court\xe2\x80\x99s most recent discussion of the intersection of patent and antitrust was FTC\nv. Actavis, 570 U.S. 136 (2013). Actavis concerned the common practice of \xe2\x80\x9creverse-payment\nsettlements\xe2\x80\x9d in pharmaceutical patent infringement cases, in which the patent owner pays a\nprospective generic manufacturer to settle the case and stay off the market. Because of a\n\n\x0cDEFENSES\n\n395\n\nconcern that such agreements may be used to shield invalid patents from review, the Court\nheld that reverse-payment settlements may be anticompetitive and should be scrutinized\nunder antitrust law\xe2\x80\x99s \xe2\x80\x9crule of reason.\xe2\x80\x9d Id. at 156. For a thorough exploration of the patentantitrust intersection, see Herbert Hovenkamp et al., IP and Antitrust: An Analysis of\nAntitrust Principles Applied to Intellectual Property Law (3d ed. 2016).\n\nE. Prior User Rights\nAs discussed in Chapter 9, direct patent infringement is strict liability. This means\nthat in general, there is no independent invention defense: someone who has no knowledge\nof a patent and independently develops the invention is still liable. A number of scholars have\nquestioned this policy choice. See, e.g., Stephen M. Maurer & Suzanne Scotchmer, The\nIndependent Invention Defence in Intellectual Property, 69 Economica 535 (2002) (\xe2\x80\x9cWe argue\nthat the patent rule is inferior in any industry where the cost of independently inventing a\nproduct is not too much less than the inventor\xe2\x80\x99s cost.\xe2\x80\x9d); Samson Vermont, Independent\nInvention as a Defense to Patent Infringement, 105 Mich. L. Rev. 475 (2006).\nAlthough U.S. patent law lacks a broad independent invention defense, 35 U.S.C.\n\xc2\xa7 273 provides a defense to infringement based on prior commercial use in the United States.\nThis statutory defense for prior commercial use was first created in 1999 for business method\npatents, and it was then extended to all patents by the 2011 America Invents Act.\n\n35 U.S.C. \xc2\xa7 273(a)\nA person shall be entitled to a defense [to patent infringement] if\xe2\x80\x94\n(1) such person, acting in good faith, commercially used the subject matter in\nthe United States, either in connection with an internal commercial use or an\nactual arm\xe2\x80\x99s length sale or other arm\xe2\x80\x99s length commercial transfer of a useful\nend result of such commercial use; and\n(2) such commercial use occurred at least 1 year before the earlier of either\xe2\x80\x94\n(A) the effective filing date of the claimed invention; or\n(B) the date on which the claimed invention was disclosed to the public\nin a manner that qualified for the exception from prior art under section\n102(b).\nThis defense is subject to a number of limitations. For example, it is a personal defense\nthat applies only to \xe2\x80\x9cthe person who performed or directed the performance of the commercial\nuse\xe2\x80\x9d and may not be licensed or transferred to another party or expanded to other worksites.\n\xc2\xa7 273(e)(1). The defense \xe2\x80\x9cis not a general license under all claims of the patent\xe2\x80\x9d; it only allows\n\n\x0c396\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ncontinuation of the existing commercial use. \xc2\xa7 273(e)(3). Thanks to effective university\nlobbyists, the defense also does not apply to academic patents. \xc2\xa7 273(e)(5).\nThere are no reported cases in which the 1999 prior user rights defense was raised,\nand a 2015 study found only three reported cases in which the expanded defense was\nasserted, none of which were successful. Why do you think the defense hasn\xe2\x80\x99t been more\npopular? For example, if a defendant was engaged in prior commercial use, are there any\nother defenses she could assert that aren\xe2\x80\x99t subject to the limitations described above?\nThe statutory defense for prior commercial use is related to a common-law \xe2\x80\x9cshop\nrights\xe2\x80\x9d defense that gives an employer the right to use patented technologies developed by\nan employee in the employer\xe2\x80\x99s \xe2\x80\x9cshop.\xe2\x80\x9d Like prior user rights, shop rights are rarely asserted,\nand they also seem to be subject to important limitations:\nThe \xe2\x80\x9cshop rights\xe2\x80\x9d doctrine is a judicially created defense to patent infringement\n(sometimes described as an implied license). It applies when an employer is\nsued for patent infringement by an employee who created the patented\ninvention with the employer\xe2\x80\x99s resources while under its employment, even\nthough the employer otherwise has no legal rights to the resultant invention.\nThe doctrine has its limits, however; for example, it seems an employer can\nonly use the invention internally in its own business. And the law regarding\nthe doctrine\xe2\x80\x99s scope is far from clear. It is, at least, likely (if not certain) that\nthe doctrine does not extend to an employer\xe2\x80\x99s sale of the patented invention to\nan unrelated third-party for the latter\xe2\x80\x99s unfettered use, since the \xe2\x80\x9cshop right\xe2\x80\x9d\nbelongs only to the employer.\nBeriont v. GTE Labs., Inc., 535 F. App\xe2\x80\x99x 919, 923 (Fed. Cir. 2013).\n\nF. Experimental Use\nIn 1813, Justice Story developed a defense from patent liability for experimental use,\nwriting that \xe2\x80\x9cit could never have been the intention of the legislature to punish a man, who\nconstructed such a [patented] machine merely for philosophical experiments, or for the\npurpose of ascertaining the sufficiency of the machine to produce its described effects.\xe2\x80\x9d\nWhittemore v. Cutter, 29 F. Cas. 1120, 1121 (C.C.D. Mass. 1813). But the Federal Circuit has\ninterpreted this doctrine narrowly, limiting it to activities \xe2\x80\x9cfor amusement, to satisfy idle\ncuriosity, or for strictly philosophical inquiry.\xe2\x80\x9d Madey v. Duke Univ., 307 F.3d 1351, 1362\n(Fed. Cir. 2002). The doctrine does not exempt university research because even when the\nresearch has \xe2\x80\x9cno commercial application . . . these projects unmistakably further the\ninstitution\xe2\x80\x99s legitimate business objectives, including educating and enlightening students\nand faculty . . . increas[ing] the status of the institution, and lur[ing] lucrative research\ngrants, students and faculty.\xe2\x80\x9d Id.\n\n\x0cDEFENSES\n\n397\n\nMany countries have a broad defense from patent liability for research activities, and\nsome scholars have advocated for a similar rule in the United States. See, e.g., Katherine J.\nStrandburg, What Does the Public Get? Experimental Use and the Patent Bargain, 2004 Wis.\nL. Rev. 81. Do you think expanding the experimental use defense is a good idea? If so, what\nadditional conduct would you exempt? What is the best argument against an experimental\nuse exemption? In Madey v. Duke, the Federal Circuit noted that Duke University, \xe2\x80\x9clike other\nmajor research institutions of higher learning, is not shy in pursuing an aggressive patent\nlicensing program from which it derives a not insubstantial revenue stream.\xe2\x80\x9d 307 F.3d at\n1362-63 n.7. Should patenting activity affect whether an institution qualifies for the defense?\nEven though the United States does not have a broad experimental use defense, there\nis a specific statutory defense for uses related to submitting information for regulatory\npurposes, which is distinct from the common law experimental use exemption and is refered\nto by names including the \xe2\x80\x9cstatutory experimental use defense,\xe2\x80\x9d the \xe2\x80\x9csafe harbor\xe2\x80\x9d and the\n\xe2\x80\x9cBolar exemption\xe2\x80\x9d (named after the case Roche v. Bolar, 733 F.2d 858 (Fed. Cir. 1984), which\ninspired Congress to enact this provision).\n\n35 U.S.C. \xc2\xa7 271(e)(1)\nIt shall not be an act of infringement to make, use, offer to sell, or sell within\nthe United States or import into the United States a patented invention (other\nthan [new animal drugs involving gene manipulation]) solely for uses\nreasonably related to the development and submission of information under a\nFederal law which regulates the manufacture, use, or sale of drugs or\nveterinary biological products.\nUnder this provision, a generic pharmaceutical manufacturer that wishes to apply for FDA\napproval may perform the tests required by the FDA without fear of liability. But this safe\nharbor does not protect \xe2\x80\x9c[b]asic scientific research on a particular compound, performed\nwithout the intent to develop a particular drug.\xe2\x80\x9d Merck KGaA v. Integra Lifesciences I, Ltd.,\n545 U.S. 193, 205 (2005).\nCaution: Both of these experimental use defenses are distinct from \xe2\x80\x9cexperimental use\xe2\x80\x9d\nin the \xc2\xa7 102 context. As discussed in Chapter 2, a public use sometimes does not count as\nprior art if it is experimental and the inventor does not yet know that it will work for its\nintended purpose. In the \xc2\xa7 102 context, the issue is whether the experiment should count as\nprior art that bars the inventor from filing a patent more than a year later. In the\ninfringement context, the issue is whether the experiment should subject the researcher to\nliability under someone else\xe2\x80\x99s patent.\n\n\x0c398\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nG. Laches\nLaches is an equitable defense based on delay caused by the plaintiff. Two types of\nlaches have been recognized under U.S. patent law: (1) laches in suing for infringement and\n(2) prosecution laches due to patentee-caused delay during examination. Both require\nunreasonable delay by the patentee and prejudice to the defendant. But neither type of laches\nis likely to continue to be important.\nPatent law already has a six-year statutory limitations period for damages: 35 U.S.C.\n\xc2\xa7 286 states that \xe2\x80\x9cno recovery shall be had for any infringement committed more than six\nyears prior to the filing of the complaint or counterclaim for infringement in the action.\xe2\x80\x9d And\nin SCA Hygiene Products Aktiebolag v. First Quality Baby Products, 137 S. Ct. 954 (2017),\nthe Supreme Court held that laches in suing for infringement can no longer be asserted as a\ndefense against damages that occurred within this six-year period. The six-year statutory\nlimitations period governs, full stop. (Laches can still be an effective defense to a permanent\ninjunction under the eBay framework described in Chapter 13.)\nProsecution laches can render a patent unenforceable if there is an unreasonable and\nunexplained delay in prosecution. This doctrine was reaffirmed as a defense to patent\ninfringement in Symbol Technologies v. Lemelson Medical, 277 F.3d 1361, 1364 (Fed. Cir.\n2002). Prosecution laches could be important for targeting \xe2\x80\x9csubmarine patents\xe2\x80\x9d that were\nintentionally delayed at the patent office until the relevant technology matured, but\nintentional delay became a much less effective strategy after the 1995 shift in patent term\nfrom 17 years from issue to 20 years from filing. Now, an applicant who has already filed has\nnothing to gain (and much to lose) from delaying the issuance of the patent.\n\n\x0cDEFENSES\n\n399\n\nPractice Problems: Defenses\nYou are the general counsel for a small U.S. solar panel manufacturer, SolarCo, and\nyou just received a letter from PatentCo stating that you are infringing one of their patents.\nConsider each of the following sets of facts. Do they suggest particular defenses that are likely\n(or unlikely) to be successful?\n1. PatentCo failed to search for relevant prior art when applying for the patent.\n2. PatentCo searched for prior art when applying for the patent and decided to not\ndisclose one publication because it seemed related to one of the claims, although it\ndoes not invalidate the claim.\n3. PatentCo has purchased many solar panel patents, and your primary competitors\nhave agreed to license PatentCo\xe2\x80\x99s portfolio for what strikes you as an excessive\nroyalty. You request a license agreement on these terms and the firm refuses.\n4. PatentCo became aware of SolarCo\xe2\x80\x99s infringement five years ago, but because SolarCo\nwas not making any profits then, PatentCo decided to wait for SolarCo\xe2\x80\x99s sales to\nincrease before seeking licensing revenue.\n5. The asserted patent claims a solar panel design that SolarCo began using 2 years\nbefore the patent\xe2\x80\x99s effective filing date. Two months ago, SolarCo switched to a\ndifferent panel design that is also within the scope of PatentCo\xe2\x80\x99s asserted patent.\n6. The asserted patent claims a manufacturing process that SolarCo is using only for\nresearch purposes, with no commercial application.\n7. The asserted patent claims an electronic component that you purchased from another\nU.S. firm, which has a license to the patent with a field-of-use restriction stating that\nthe license only applies to use in personal computers.\n8. The asserted patent claims an electronic component that you purchased from a\nJapanese manufacturer, which has licensed PatentCo\xe2\x80\x99s Japanese patent portfolio but\nnot its U.S. patent portfolio.\n\n\x0c400\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIV. Remedies\nThe following four chapters examine the remedies for patent infringement:\nRemedy\n\nOverview\n\n13. Injunctions\n(\xc2\xa7 283)\n\nPatentees may receive injunctions under \xc2\xa7 283 if they\nsatisfy the four-part eBay framework. Injunctions are more\nlikely if the parties are in a competitive relationship, if the\npatentee can show lost sales or loss of goodwill, or if the\npatentee consistently refuses to license to others. They are\nless likely if the patented invention is a small component\nof a complex product.\n\n14. Lost Profits Damages\n(\xc2\xa7 284)\n\nLost profits are available under \xc2\xa7 284 if the patentee\nsatisfies the four-part Panduit test, including by showing\nthe absence of acceptable noninfringing alternatives. The\ngoal of patent damages is to put the patentee in the\nposition they would have occupied but for the\ninfringement.\n\n15. Reasonable Royalties\n(\xc2\xa7 284)\n\nIf a patentee cannot prove lost profits, \xc2\xa7 284 states that\ndamages shall be \xe2\x80\x9cin no event less than a reasonable\nroyalty,\xe2\x80\x9d which is calculated based on a hypothetical armslength negotiation before infringement began.\n\n16. Enhanced Damages\nand Attorneys\xe2\x80\x99 Fees\n(\xc2\xa7\xc2\xa7 284\xe2\x80\x9385)\n\n\xc2\xa7 284 also allows the court to \xe2\x80\x9cincrease the damages up to\nthree times,\xe2\x80\x9d and \xc2\xa7 285 permits the award of attorneys\xe2\x80\x99\nfees \xe2\x80\x9cin exceptional cases.\xe2\x80\x9d The Supreme Court recently\nrejected the Federal Circuit\xe2\x80\x99s rigid tests for limiting these\nawards.\n\nAs one measure of the relative frequency of different types of damages rewards: The\nlegal analytics site Lex Machina has recorded 440 federal district court patent cases that led\nto a damages award during the decade from 2011 through 2020. Of these, 30% included an\naward of lost profits, 76% included a reasonable royalty, and 28% included enhanced\ndamages. (These numbers exceed 100% because all three types of damages can be awarded\nin a single case.)\nFor a valuable overview of all of these remedies\xe2\x80\x94including a comparison to patent\nremedies in other countries\xe2\x80\x94see Thomas F. Cotter, Comparative Patent Remedies (2013).\n\n\x0cINJUNCTIONS\n\n401\n\n13. Injunctions\nAs we noted at the beginning of the book, patents are best understood as a type of\nproperty. And as you may recall from your 1L Property class, property can be thought of as a\n\xe2\x80\x9cbundle of rights.\xe2\x80\x9d That is, to own property is to possess some set of rights, with the type of\nrights depending on the particular form of property. Patent law conveys only a limited set of\nrights from this bundle. For instance, recall that patents do not include the right to make or\nuse the subject matter of the patented invention. Even if you own a patent over a particular\ntype of invention, your patent will not protect you from being sued by another patent holder\nwhose rights you might be infringing.\nThe principal right contained within the patent bundle is the right to exclude. Patents\nexist to prevent other parties from making, using, or selling the patented invention without\nthe permission of the patent holder. Accordingly, injunctions\xe2\x80\x94the legal mechanism by which\nexclusion occurs\xe2\x80\x94have long been available to patent holders who prove infringement. Patent\ninjunctions are governed by 35 U.S.C. \xc2\xa7 283:\n\n35 U.S.C. \xc2\xa7 283\nThe several courts having jurisdiction of cases under this title may grant\ninjunctions in accordance with the principles of equity to prevent the violation\nof any right secured by patent, on such terms as the court deems reasonable.\nDespite the \xe2\x80\x9cmay\xe2\x80\x9d in this statute, injunctions were almost always granted as a matter\nof course to prevailing plaintiffs before 2006. Under the Federal Circuit\xe2\x80\x99s rules, if a patentee\nproved infringement at trial, a permanent injunction was essentially guaranteed. The\nstatute\xe2\x80\x99s \xe2\x80\x9cmay\xe2\x80\x9d was effectively treated as a bright-line \xe2\x80\x9cwill.\xe2\x80\x9d And then, as we have seen in\nso many areas of patent law, the Supreme Court stepped in to reject the Federal Circuit\xe2\x80\x99s\nformalist, bright-line rules in favor of more flexible standards.\n\neBay v. MercExchange, 547 U.S. 388 (2006)\nJustice Thomas delivered the opinion of the Court.\nOrdinarily, a federal court considering whether to award permanent injunctive relief\nto a prevailing plaintiff applies the four-factor test historically employed by courts of equity.\nPetitioner eBay Inc. argues that this traditional test applies to disputes arising under the\nPatent Act. We agree and, accordingly, vacate the judgment of the Court of Appeals.\n\n\x0c402\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nI\n\nPetitioner eBay operates a popular Internet Web site that allows private sellers to list\ngoods they wish to sell, either through an auction or at a fixed price. Respondent\nMercExchange, L.L.C., holds a number of patents, including a business method patent for an\nelectronic market designed to facilitate the sale of goods between private individuals by\nestablishing a central authority to promote trust among participants. See U.S. Patent No.\n5,845,265. MercExchange sought to license its patent to eBay, as it had previously done with\nother companies, but the parties failed to reach an agreement. MercExchange subsequently\nfiled a patent infringement suit. A jury found that MercExchange\xe2\x80\x99s patent was valid, that\neBay had infringed that patent, and that an award of damages was appropriate.\nFollowing the jury verdict, the District Court denied MercExchange\xe2\x80\x99s motion for\npermanent injunctive relief. The Court of Appeals for the Federal Circuit reversed, applying\nits \xe2\x80\x9cgeneral rule that courts will issue permanent injunctions against patent infringement\nabsent exceptional circumstances.\xe2\x80\x9d We granted certiorari to determine the appropriateness\nof this general rule.\nII\nAccording to well-established principles of equity, a plaintiff seeking a permanent\ninjunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must\ndemonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law,\nsuch as monetary damages, are inadequate to compensate for that injury; (3) that,\nconsidering the balance of hardships between the plaintiff and defendant, a remedy in equity\nis warranted; and (4) that the public interest would not be disserved by a permanent\ninjunction. See, e.g., Weinberger v. Romero\xe2\x80\x93Barcelo, 456 U.S. 305, 311\xe2\x80\x9313 (1982); Amoco\nProduction Co. v. Gambell, 480 U.S. 531, 542 (1987). The decision to grant or deny permanent\ninjunctive relief is an act of equitable discretion by the district court, reviewable on appeal\nfor abuse of discretion. See, e.g., Romero\xe2\x80\x93Barcelo, 456 U.S. at 320.\nThese familiar principles apply with equal force to disputes arising under the Patent\nAct. As this Court has long recognized, \xe2\x80\x9ca major departure from the long tradition of equity\npractice should not be lightly implied.\xe2\x80\x9d Id. Nothing in the Patent Act indicates that Congress\nintended such a departure. To the contrary, the Patent Act expressly provides that\ninjunctions \xe2\x80\x9cmay\xe2\x80\x9d issue \xe2\x80\x9cin accordance with the principles of equity.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 283.\nTo be sure, the Patent Act also declares that \xe2\x80\x9cpatents shall have the attributes of\npersonal property,\xe2\x80\x9d \xc2\xa7 261, including \xe2\x80\x9cthe right to exclude others from making, using, offering\nfor sale, or selling the invention,\xe2\x80\x9d \xc2\xa7 154(a)(1). According to the Court of Appeals, this\nstatutory right to exclude alone justifies its general rule in favor of permanent injunctive\nrelief. But the creation of a right is distinct from the provision of remedies for violations of\nthat right. Indeed, the Patent Act itself indicates that patents shall have the attributes of\npersonal property \xe2\x80\x9c[s]ubject to the provisions of this title,\xe2\x80\x9d 35 U.S.C. \xc2\xa7 261, including,\npresumably, the provision that injunctive relief \xe2\x80\x9cmay\xe2\x80\x9d issue only \xe2\x80\x9cin accordance with the\nprinciples of equity,\xe2\x80\x9d \xc2\xa7 283.\n\n\x0cINJUNCTIONS\n\n403\n\nThis approach is consistent with our treatment of injunctions under the Copyright\nAct. Like a patent owner, a copyright holder possesses \xe2\x80\x9cthe right to exclude others from using\nhis property.\xe2\x80\x9d Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932); see also id. at 127\xe2\x80\x9328 (\xe2\x80\x9cA\ncopyright, like a patent, is at once the equivalent given by the public for benefits bestowed\nby the genius and meditations and skill of individuals and the incentive to further efforts for\nthe same important objects\xe2\x80\x9d). Like the Patent Act, the Copyright Act provides that courts\n\xe2\x80\x9cmay\xe2\x80\x9d grant injunctive relief \xe2\x80\x9con such terms as it may deem reasonable to prevent or restrain\ninfringement of a copyright.\xe2\x80\x9d 17 U.S.C. \xc2\xa7 502(a). And as in our decision today, this Court has\nconsistently rejected invitations to replace traditional equitable considerations with a rule\nthat an injunction automatically follows a determination that a copyright has been infringed.\nSee, e.g., New York Times Co. v. Tasini, 533 U.S. 483, 505 (2001); Dun v. Lumbermen\xe2\x80\x99s Credit\nAssn., 209 U.S. 20, 23\xe2\x80\x9324 (1908).\nNeither the District Court nor the Court of Appeals below fairly applied these\ntraditional equitable principles in deciding respondent\xe2\x80\x99s motion for a permanent injunction.\nAlthough the District Court recited the traditional four-factor test, it appeared to adopt\ncertain expansive principles suggesting that injunctive relief could not issue in a broad swath\nof cases. Most notably, it concluded that a \xe2\x80\x9cplaintiff\xe2\x80\x99s willingness to license its patents\xe2\x80\x9d and\n\xe2\x80\x9cits lack of commercial activity in practicing the patents\xe2\x80\x9d would be sufficient to establish that\nthe patent holder would not suffer irreparable harm if an injunction did not issue. But\ntraditional equitable principles do not permit such broad classifications. For example, some\npatent holders, such as university researchers or self-made inventors, might reasonably\nprefer to license their patents, rather than undertake efforts to secure the financing\nnecessary to bring their works to market themselves. Such patent holders may be able to\nsatisfy the traditional four-factor test, and we see no basis for categorically denying them the\nopportunity to do so. To the extent that the District Court adopted such a categorical rule,\nthen, its analysis cannot be squared with the principles of equity adopted by Congress. The\ncourt\xe2\x80\x99s categorical rule is also in tension with Continental Paper Bag Co. v. Eastern Paper\nBag Co., 210 U.S. 405, 422\xe2\x80\x9330 (1908), which rejected the contention that a court of equity\nhas no jurisdiction to grant injunctive relief to a patent holder who has unreasonably declined\nto use the patent.\nIn reversing the District Court, the Court of Appeals departed in the opposite direction\nfrom the four-factor test. The court articulated a \xe2\x80\x9cgeneral rule,\xe2\x80\x9d unique to patent disputes,\n\xe2\x80\x9cthat a permanent injunction will issue once infringement and validity have been adjudged.\xe2\x80\x9d\nThe court further indicated that injunctions should be denied only in the \xe2\x80\x9cunusual\xe2\x80\x9d case,\nunder \xe2\x80\x9cexceptional circumstances\xe2\x80\x9d and \xe2\x80\x9cin rare instances . . . to protect the public interest.\xe2\x80\x9d\nJust as the District Court erred in its categorical denial of injunctive relief, the Court of\nAppeals erred in its categorical grant of such relief.\nBecause we conclude that neither court below correctly applied the traditional fourfactor framework that governs the award of injunctive relief, we vacate the judgment of the\nCourt of Appeals, so that the District Court may apply that framework in the first instance.\nIn doing so, we take no position on whether permanent injunctive relief should or should not\nissue in this particular case, or indeed in any number of other disputes arising under the\n\n\x0c404\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPatent Act. We hold only that the decision whether to grant or deny injunctive relief rests\nwithin the equitable discretion of the district courts, and that such discretion must be\nexercised consistent with traditional principles of equity, in patent disputes no less than in\nother cases governed by such standards.\nAccordingly, we vacate the judgment of the Court of Appeals and remand the case for\nfurther proceedings consistent with this opinion.\nChief Justice Roberts, with whom Justice Scalia and Justice Ginsburg join, concurring.\nI agree with the Court\xe2\x80\x99s holding that \xe2\x80\x9cthe decision whether to grant or deny injunctive\nrelief rests within the equitable discretion of the district courts, and that such discretion must\nbe exercised consistent with traditional principles of equity, in patent disputes no less than\nin other cases governed by such standards,\xe2\x80\x9d and I join the opinion of the Court. That opinion\nrightly rests on the proposition that \xe2\x80\x9ca major departure from the long tradition of equity\npractice should not be lightly implied.\xe2\x80\x9d\nFrom at least the early 19th century, courts have granted injunctive relief upon a\nfinding of infringement in the vast majority of patent cases. This \xe2\x80\x9clong tradition of equity\npractice\xe2\x80\x9d is not surprising, given the difficulty of protecting a right to exclude through\nmonetary remedies that allow an infringer to use an invention against the patentee\xe2\x80\x99s\nwishes\xe2\x80\x94a difficulty that often implicates the first two factors of the traditional four-factor\ntest. This historical practice, as the Court holds, does not entitle a patentee to a permanent\ninjunction or justify a general rule that such injunctions should issue. The Federal Circuit\nitself so recognized in Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858, 865\xe2\x80\x93\n67 (1984). At the same time, there is a difference between exercising equitable discretion\npursuant to the established four-factor test and writing on an entirely clean slate. \xe2\x80\x9cDiscretion\nis not whim, and limiting discretion according to legal standards helps promote the basic\nprinciple of justice that like cases should be decided alike.\xe2\x80\x9d Martin v. Franklin Capital Corp.,\n546 U.S. 132, 139 (2005). When it comes to discerning and applying those standards, in this\narea as others, \xe2\x80\x9ca page of history is worth a volume of logic.\xe2\x80\x9d New York Trust Co. v. Eisner,\n256 U.S. 345, 349 (1921) (opinion for the Court by Holmes, J.).\nJustice Kennedy, with whom Justice Stevens, Justice Souter, and Justice Breyer join,\nconcurring.\nThe Court is correct, in my view, to hold that courts should apply the well-established,\nfour-factor test\xe2\x80\x94without resort to categorical rules\xe2\x80\x94in deciding whether to grant injunctive\nrelief in patent cases. The Chief Justice is also correct that history may be instructive in\napplying this test. (concurring opinion). The traditional practice of issuing injunctions\nagainst patent infringers, however, does not seem to rest on \xe2\x80\x9cthe difficulty of protecting a\nright to exclude through monetary remedies that allow an infringer to use an invention\nagainst the patentee\xe2\x80\x99s wishes.\xe2\x80\x9d (Roberts, C.J., concurring). Both the terms of the Patent Act\nand the traditional view of injunctive relief accept that the existence of a right to exclude\ndoes not dictate the remedy for a violation of that right. To the extent earlier cases establish\na pattern of granting an injunction against patent infringers almost as a matter of course,\n\n\x0cINJUNCTIONS\n\n405\n\nthis pattern simply illustrates the result of the four-factor test in the contexts then prevalent.\nThe lesson of the historical practice, therefore, is most helpful and instructive when the\ncircumstances of a case bear substantial parallels to litigation the courts have confronted\nbefore.\nIn cases now arising trial courts should bear in mind that in many instances the\nnature of the patent being enforced and the economic function of the patent holder present\nconsiderations quite unlike earlier cases. An industry has developed in which firms use\npatents not as a basis for producing and selling goods but, instead, primarily for obtaining\nlicensing fees. See FTC, To Promote Innovation: The Proper Balance of Competition and\nPatent Law and Policy, ch. 3, pp. 38\xe2\x80\x9339 (Oct. 2003). For these firms, an injunction, and the\npotentially serious sanctions arising from its violation, can be employed as a bargaining tool\nto charge exorbitant fees to companies that seek to buy licenses to practice the patent. When\nthe patented invention is but a small component of the product the companies seek to produce\nand the threat of an injunction is employed simply for undue leverage in negotiations, legal\ndamages may well be sufficient to compensate for the infringement and an injunction may\nnot serve the public interest. In addition injunctive relief may have different consequences\nfor the burgeoning number of patents over business methods, which were not of much\neconomic and legal significance in earlier times. The potential vagueness and suspect validity\nof some of these patents may affect the calculus under the four-factor test.\nThe equitable discretion over injunctions, granted by the Patent Act, is well suited to\nallow courts to adapt to the rapid technological and legal developments in the patent system.\nFor these reasons it should be recognized that district courts must determine whether past\npractice fits the circumstances of the cases before them. With these observations, I join the\nopinion of the Court.\n\nDiscussion Questions: Injunctions\n1. When Are Property Rules More Efficient? In other law school classes, you have likely\nencountered the distinction between protecting legal entitlements with property rules\n(injunctions) versus liability rules (damages), perhaps with reference to the classic article on\nthis point: Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and\nInalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089 (1972). You have also likely\nencountered the \xe2\x80\x9cCoase theorem\xe2\x80\x9d: that if transaction costs are sufficiently low, bargaining\nwill lead to the efficient outcome regardless of the initial entitlement. R. H. Coase, The\nProblem of Social Cost, 3 J.L. & Econ. 1 (1960). How do these ideas apply to patent law? If\nthe patentee\xe2\x80\x99s entitlement is treated as a property rule with an injunction, does that mean\nthat the infringer necessarily must cease his activities? (Why not?) When is it more efficient\nto choose an injunction over damages?\nTo answer this question, you might consider: How efficiently can the parties bargain?\nAs transaction costs rise, liability rules become more appealing. What determines how large\nor small the transaction costs are? For instance, imagine two types of products: a chemical\n\n\x0c406\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ncovered by a single patent, and a smartphone covered by thousands of patents (or more).\nWhich product\xe2\x80\x99s manufacturer will face higher transaction costs in bargaining with all of the\npotential patent owners? As noted in Chapter 1, the problem of needing to clear many\nuncertain and overlapping patent rights is referred to as the problem of \xe2\x80\x9cpatent thickets.\xe2\x80\x9d\nOn the other side, how difficult is it for courts to assess damages? Is clearing rights\nthrough court-enforced damages easier than through private licenses? If judicial damages\nawards are particularly error-prone or administratively costly, property rules may be the\nbetter choice. You should keep this question in mind as you learn the doctrines governing\nmonetary damages in the following chapters.\nOver four decades after authoring his famous article with Guido Calabresi, Doug\nMelamed drew on this framework in the context of patent remedies in an article with IP\nlegend Bill Lee (who also happens to be the first Asian-American to lead a major U.S. law\nfirm). See William F. Lee & A. Douglas Melamed, Breaking the Vicious Cycle of Patent\nDamages, 101 Cornell L. Rev. 385 (2016). They argue that existing patent remedies were\ndeveloped in an era \xe2\x80\x9cin which technology users are presumed to be able to discover relevant\npatents in advance and either design around them or negotiate patent licenses before using\nthe patented technology\xe2\x80\x9d\xe2\x80\x94which is quite different from the reality of many high-tech fields\ntoday. How should patent law adapt to the changing nature of technology?\n2. Factors 1 and 2: Irreparable Injury and Inadequate Remedies at Law. The first two\nfactors of the eBay test are redundant: if monetary damages are adequate to repair the\npatentee\xe2\x80\x99s injury, then the injury is not irreparable. The Federal Circuit has been more likely\nto hold an injury to be irreparable with money damages if the parties are in a competitive\nrelationship, if the patentee can show lost sales or loss of goodwill, or if the patentee\nconsistently refuses to license to other parties. To establish irreparable harm, the Federal\nCircuit has held that \xe2\x80\x9ca patentee must establish that a sufficiently strong causal nexus\nrelates the alleged harm to the alleged infringement,\xe2\x80\x9d which requires a showing that \xe2\x80\x9cthe\ninfringing feature drives consumer demand for the accused product\xe2\x80\x94in other words, that\nconsumers bought the accused product because it was equipped with [the claimed invention].\xe2\x80\x9d\nTEK Global., S.R.L. v. Sealant Sys. Int\xe2\x80\x99l, 920 F.3d 777, 792 (Fed. Cir. 2019).\nWhat are the circumstances under which we should expect that monetary damages\nwill not be adequate? Patent infringement cases do not typically involve issues of human\ndignity, liberty, or other such values where money can be an inadequate substitute. They are\nprimarily about money. Suppose that a firm will lose goodwill from infringement. What\nprevents that from being valued as part of the monetary damages calculation as well?\nPerhaps the best way to think of factors 1 and 2 is as directed not to the question of when\nmonetary damages will be inadequate, but instead to when monetary damages will be hard\nto calculate accurately. Cf. Apple v. Samsung Elecs., 809 F.3d 633, 645 (Fed. Cir. 2015)\n(holding that factor 2 \xe2\x80\x9cstrongly weighs in favor\xe2\x80\x9d of the patentee because the monetary losses\n\xe2\x80\x9care very difficult to quantify\xe2\x80\x9d). In that vein, consider the discussion of property rules and\nliability rules in Note 1. Does that type of analysis provide a better basis for analyzing factors\n1 and 2?\n\n\x0cINJUNCTIONS\n\n407\n\n3. Factor 3: Balance of Hardships. The third factor of the eBay test balances the\nplaintiff\xe2\x80\x99s irreparable harm against the harm to the defendant. The harm to the defendant is\nsmaller if the activity is a small part of the defendant\xe2\x80\x99s business or if the defendant could\neasily switch to a noninfringing alternative. But courts do not consider the inevitable costs\nto the defendant of stopping infringement and losing revenue\xe2\x80\x94this is a risk the infringer\ntakes. Why should the harm to the defendant from being forced to cease infringement matter?\nSuppose that the infringing product is the defendant\xe2\x80\x99s entire business, and ceasing\ninfringement will devastate the defendant\xe2\x80\x99s bottom line. Why should this affect whether the\ncourt awards an injunction? After all, this is to say that the defendant\xe2\x80\x99s business is built\nentirely on infringing behavior. Would it matter if, when the defendant designed its product\nto include the patented technology, the technology was claimed only by a non-public pending\npatent application? In some cases, injunctions have allowed continued use for short periods\nusing \xe2\x80\x9csunset provisions\xe2\x80\x9d that provide time to design around the patent where an immediate\ninjunction would be likely to put the infringer out of business.\n4. Factor 4: Public Interest. What sorts of issues should the court take into account\nunder the heading of the \xe2\x80\x9cpublic interest?\xe2\x80\x9d Courts don\xe2\x80\x99t consider the public interest in\ncompetition and lower prices; remember that patents are designed to allow the patentee to\nexclude competitors and charge supracompetitive prices. But the public interest may be\ndisserved by an injunction if it would completely deprive the public of access to an essential\nproduct; for example, injunctions on medical technologies without acceptable substitutes\nwould disrupt patient care. What other issues should the court consider? Suppose that the\nallegedly infringing technology involves the national defense. Should a court consider\nwhether issuing an injunction will affect national security? Should it account for the potential\nharm to the employees or other stakeholders in the infringing firm?\n5. Combining the Factors. The Supreme Court is not entirely clear on whether the four\neBay factors should be weighed in a balancing test or whether they are mandatory elements\nthat must be established, and different Circuits have approached this question differently.\nThe Federal Circuit has at times described them as mandatory elements. See Nichia v.\nEverlight Americas, 855 F.3d 1328, 1344 (Fed. Cir. 2017) (\xe2\x80\x9cBecause [the patentee] failed to\nestablish one of the four equitable factors, the court did not abuse its discretion in denying\n[the patentee\xe2\x80\x99s] request for an injunction.\xe2\x80\x9d). How do you think the factors should be\ncombined? More generally, do these seem like the key considerations for determining whether\nan injunction should be granted? Are there other factors you would consider?\n6. Chief Justice Roberts Versus Justice Kennedy. Every Supreme Court justice joined\nthe majority and agreed that \xe2\x80\x9c[n]either the District Court nor the [Federal Circuit] fairly\napplied these traditional equitable principles.\xe2\x80\x9d But the two concurrences raised very different\nvisions of how the new eBay test should be applied in practice. Justice Roberts wrote that\n\xe2\x80\x9cthere is a difference between exercising equitable discretion pursuant to the established\nfour-factor test and writing on an entirely clean slate.\xe2\x80\x9d Justice Kennedy, by contrast, wrote\nthat \xe2\x80\x9cit should be recognized that district courts must determine whether past practice fits\nthe circumstances of the cases before them.\xe2\x80\x9d What exactly do the Justices mean by those\n\n\x0c408\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nphrases, and what do they disagree on? Which view do you find more compelling? Which\nconcurrence do you think Lee and Melamed would side with?\n7. The Kennedy Concurrence and the Problem of Holdup. Justice Kennedy refers to an\nindustry \xe2\x80\x9cin which firms use patents not as a basis for producing and selling goods but,\ninstead, primarily for obtaining licensing fees\xe2\x80\x9d and warns that in some cases \xe2\x80\x9cthe threat of\nan injunction is employed simply for undue leverage in negotiations.\xe2\x80\x9d At first blush, this\nconcern may be difficult to understand. What does it mean to have \xe2\x80\x9cundue\xe2\x80\x9d leverage in\nnegotiations? A patent holder has whatever leverage the patent provides. If the patented\ntechnology is essential, the patent holder might have a great deal of leverage, but this would\nseem appropriate. If the patent is easily engineered around, it provides much less leverage.\nPart of the answer to this question lies with the fact that Justice Kennedy is referring\nspecifically to non-practicing entities (NPEs) that do not make or sell a product, sometimes\npejoratively termed \xe2\x80\x9cpatent trolls.\xe2\x80\x9d One particular concern with non-practicing entities is\nthat (by definition) they do not make a substitute product for the one being accused of\ninfringement. That means that if the infringing product is forced off the market due to an\ninjunction, the public loses access to it. This was potentially at issue in eBay, because eBay\nis a practicing entity and MercExchange was not. Why would the non-practicing entity want\nto force the practicing entity out of the market? If it did so, no one would earn any money.\nThe patent would become worthless. Can you envision how a service like eBay might end up\nbeing shut down by an injunction even though that would be in neither party\xe2\x80\x99s interest?\nAnother part of the explanation is the threat of patent holdup. Holdup occurs when a\nparty has already made technology-specific investments that would become worthless (or\nmuch less valuable) if an injunction prevents the party from producing the technology. To\nunderstand the problem, consider the following stylized example:\nSuppose that A invents a new type of widget. A estimates that building a specialized\nfactory to produce widgets will cost $50, and actually producing a number of widgets will cost\nan additional $50. But A will then be able to sell these widgets for $110, thus earning a profit\nof $10. After A has spent $50 to build the factory, but before A has constructed any widgets,\nA learns that B owns a patent that covers the same technology. B sues A for patent\ninfringement and obtains an injunction. If A were perfectly rational, how much would A be\nwilling to pay B to lift the injunction? Hint: the answer is not $9.99, which would leave A\nwith the minimal profit of $0.01.\nThe correct answer is $59.99. The reason is that after having already invested $50 in\nbuilding the factory (a sunk cost), A stands to gain $60 if it is able to manufacture and sell\nthe widgets: $110 in sales minus $50 in production cost. A should thus be willing to pay up\nto $59.99 to lift the injunction, which would leave it with a gain of $0.01 (compared with the\ncurrent status quo). But if A pays B $59.99, that would leave A with total expenses of $159.99\nand total revenues of $110, for a loss of $49.99\xe2\x80\x94less than the net loss of $50 if the injunction\nis not lifted, but not a business plan A would have embarked on at the outset. Even if A only\npays B $30, half of what it stands to gain from lifting the injunction, it will lose $20 (costs of\n$130, revenues of $110) on the whole transaction. If A could repurpose its factory for other\n\n\x0cINJUNCTIONS\n\n409\n\nends without paying to lift the injunction, thus preserving its value, A would not be in such\na pickle. But if the factory can only be used to produce widgets, B has A over a barrel and can\nhold up A for an exorbitant licensing fee. This problem is not limited to NPEs\xe2\x80\x94B could hold\nup A even if B were a productive firm\xe2\x80\x94but it has been particularly salient in that context.\nA legal policymaker focused on efficiency should not necessarily care whether A has\nto pay B a lot or a little. That is just a transfer from A to B and does not represent social loss\nor waste. The problem is what hold-up does to A\xe2\x80\x99s ex ante incentives. If A thinks that it might\nlater be held up, it may shy away from developing the widget technology in the first place.\nAnd A may be unable to assess its risk of hold-up if it cannot locate B\xe2\x80\x99s patent, or if B\xe2\x80\x99s patent\nis still being examined. If A refrains from inventing and producing the widget for fear of later\nbeing held up, that would create social loss.\nOne solution to the hold-up problem is simply to award monetary damages. This can\nbe thought of as another reason to favor monetary damages over injunctions, though again\nthere is the question of whether the court will be able to assess damages accurately. If you\nwere a court evaluating the hypothetical situation above, what amount of damages would\nyou award to B? Is there an amount that would reward the contributions of both A and B\nwithout greatly diminishing either\xe2\x80\x99s incentives?\n8. Anticommons and Royalty Stacking. Imagine a product, like a smartphone, that is\ncovered by a large number of patents, each of which involves a technology that is essential to\nthe creation of the smartphone. This is known as an \xe2\x80\x9canticommons\xe2\x80\x9d: many different parties\n(the patent owners) each have the ability to block the overall invention from being assembled.\nOne feature of an anticommons is that it can create substantial transaction costs for the party\nattempting to assemble all of the individual pieces of property. This is the problem of \xe2\x80\x9cpatent\nthickets\xe2\x80\x9d we discussed in Note 1, above. Another feature is that it can create opportunities\nfor one or more parties to hold up the product\xe2\x80\x99s manufacturer; this is the problem we\ndiscussed in Note 7, above. Yet another feature is that it can give rise to \xe2\x80\x9choldout\xe2\x80\x9d problems\n(not to be confused with \xe2\x80\x9choldup\xe2\x80\x9d problems), in which each individual patent holder wants to\n\xe2\x80\x9chold out\xe2\x80\x9d and be the last to strike a deal with the product\xe2\x80\x99s manufacturer. There is value to\nbeing last because it creates greater opportunities for holdup or, more generally, to extract a\nhigh licensing fee. When the manufacturer is negotiating with the first parties to license their\npatents, the amount it is willing to pay is necessarily moderated by its knowledge that it will\nhave to pay many others in the future and the probability that striking deals with all of them\nwill turn out to be impossible. For the last mover, these problems dissipate, and the\nmanufacturer\xe2\x80\x99s willingness to pay increases. But if everyone is trying to be last, it may be\ndifficult or impossible for the manufacturer to ever strike deals with all of the patent holders.\nIn addition to these concerns, there is another problem with anticommons situations:\nroyalty stacking. Each individual patent owner will look to license its patent at whatever\nquasi-monopoly price will maximize its own returns. Stacking one profit-maximizing price on\ntop of another will raise the overall price of the good beyond even the monopoly price that a\nsingle firm would charge if it controlled all of the relevant patents. See Mark A. Lemley &\nCarl Shapiro, Patent Holdup and Royalty Stacking, 85 Tex. L. Rev. 1991 (2007). The\n\n\x0c410\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nmathematics behind this phenomenon is complicated, but the intuition is simply that more\nthan one firm will be looking to maximize its profits, and paying all of them is more expensive\nthan just paying one.1 And as the price rises, fewer people will be able to afford the invention.\nOf course, this issue, like many of the others described above, looms largest when a\npatented product is covered by many patents, and not just one or two. There are some\nindustries, such as electronics, where most products are likely to incorporate large numbers\nof patents, and some industries, such as small-molecule pharmaceutical drugs, where most\nproducts involve a much smaller number of patents. Does this suggest that courts should be\nmore inclined to grant injunctions in some industries than others? For an argument that\npatent law is actually quite industry-specific and should remain so, despite its nominal facial\nneutrality, see Dan L. Burk & Mark A. Lemley, Policy Levers in Patent Law, 89 Va. L. Rev.\n1575, 1577 (2003).\n\nPractice Problems: Injunctions\nFor each of the following examples, do you think the court should grant an injunction\nto the victorious patent owner? If so, should the injunction begin to run immediately, or\nshould the court delay the injunction for a period of time, such as to allow the infringer time\nto design around the patent? If the patents do not cover the entire product, should the court\nenjoin the infringer from making or selling the entire product or just the infringing features?\n1. The patent owner is a manufacturer of emergency repair kits for fixing punctured\nvehicle tires. The infringer did not infringe a patent covering the entire repair kit, but it\ninfringed patents covering features that drive consumer demand for the kit. The patent\nowner introduced evidence at trial that it had lost customers to the infringer in the years\nleading up to its successful lawsuit. The repair kit is the plaintiff\xe2\x80\x99s only product, and the\nplaintiff risks being driven out of business if an infringer is permitted to continue selling the\nproduct, even if it is paid royalties. A number of customers have already placed orders for the\ninfringer\xe2\x80\x99s (infringing) product, which they expect to be filled within the next nine months. If\nthe infringer is prohibited from producing any additional products, those customers may not\nbe able to obtain the products they have ordered.\nSee TEK Global v. Sealant Sys. Int\xe2\x80\x99l, 920 F.3d 777 (Fed. Cir. 2019).\n2. The patent owner and infringer are competitors in the market for a controlledrelease painkiller covered by the patent. At trial, the court found that the patent owner had\nlost market share to the infringer as a result of the infringement. This loss had forced the\npatent owner to cut its sales force, reduce its promotional expenses, and change its research\nand development strategies. The court also found that the patent owner was at risk of harm\nto its reputation as a result of having had to lay off much of its sales force, which could in\n\nDepending on the structure of the industry in which it arises, this phenomenon is sometimes\nreferred to as the \xe2\x80\x9cdouble marginalization\xe2\x80\x9d effect and sometimes as the \xe2\x80\x9cCournot complements\xe2\x80\x9d effect.\n1\n\n\x0cINJUNCTIONS\n\n411\n\nturn make the company a less attractive place to work in the future or reduce the value of its\nbrand name with potential consumers.\nSee Endo Pharm. Inc. v. Teva Pharm. USA, Inc., 731 F. App\xe2\x80\x99x 962 (Fed. Cir. 2018).\n3. The patent owner (Apple) and infringer (Samsung) are competitors in the market\nfor smartphones. The patents cover a variety of smartphone features, including the \xe2\x80\x9cslide-tounlock\xe2\x80\x9d mechanism and software that detects phone numbers and hyperlinks within\nsmartphone applications. The patent owner demonstrated that competition from the\ninfringer had caused it to lose sales and market share. The infringing features were not the\nsole driver of demand for the product, but the patent owner was able to demonstrate that at\nleast some small fraction of the demand for its product was created by the infringing features.\nThis included evidence that the infringer had directly copied the infringing features, along\nwith emails from engineers working for the infringer who disparaged alternative features\nthey had considered. It also included survey evidence that consumers valued these features\nand were willing to pay more for a smartphone that included them.\nThe monetary harm to the patent owner is hard to quantify because the patent owner\nsells a variety of other products and services related to its smartphone. A decrease in\nsmartphone sales will reduce sales of these related products and services, but it is difficult to\ndetermine in what amount. If the injunction is granted, some of the infringer\xe2\x80\x99s products\nwould have to be removed from store shelves, where they are currently available for sale.\nSome of the infringer\xe2\x80\x99s customers would also be in violation of the injunction if they continued\nto use their smartphones.\nSee Apple v. Samsung, 809 F.3d 633 (Fed. Cir. 2015).\n\n\x0c412\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n14. Lost Profits Damages\nPatent plaintiffs often seek monetary damages to remedy infringing conduct. As\nillustrated in the figure below, even if a preliminary or permanent injunction is granted,\ndamages may be awarded to compensate for infringement that occurred before the injunction.\nDamages are awarded unless an injunction was granted before infringement began. And the\ndecreased availability of injunctions after eBay has placed greater importance on damages\ncalculations, including as a remedy for ongoing infringement after the lawsuit has concluded.\n\nPatent damages are covered by section 284 of the Patent Act:\n\n35 U.S.C. \xc2\xa7 284\nUpon finding for the claimant the court shall award the claimant\ndamages adequate to compensate for the infringement, but in no event less\nthan a reasonable royalty for the use made of the invention by the infringer,\ntogether with interest and costs as fixed by the court.\nWhen the damages are not found by a jury, the court shall assess them.\nIn either event the court may increase the damages up to three times the\namount found or assessed. Increased damages under this paragraph shall not\napply to provisional rights under section 154(d) [providing in certain cases \xe2\x80\x9cthe\nright to obtain a reasonable royalty\xe2\x80\x9d for the period between when a patent\napplication is published and when it is granted].\nThe court may receive expert testimony as an aid to the determination\nof damages or of what royalty would be reasonable under the circumstances.\n\n\x0cLOST PROFITS\n\n413\n\nAs indicated by the first paragraph of this statute, ordinary patent damages are\nintended \xe2\x80\x9cto compensate for the infringement,\xe2\x80\x9d meaning to put the plaintiff in the position\nshe would have occupied but for the infringement. This compensatory goal is different from\nother potential remedial goals, including restitution (taking away the defendant\xe2\x80\x99s benefit\neven if it is larger than the plaintiff\xe2\x80\x99s loss) and punitive damages (deterring and punishing\nthe defendant\xe2\x80\x99s wrongful conduct). These other goals are sometimes served by the second\nparagraph of \xc2\xa7 284, which allows the court to \xe2\x80\x9cincrease the damages up to three times.\xe2\x80\x9d We\nwill discuss these \xe2\x80\x9cenhanced\xe2\x80\x9d damages in Chapter 16.\nPutting the plaintiff in the position she would have occupied but for the infringement\nis challenging because it requires the court to construct the counterfactual. What would have\nhappened in the hypothetical world in which the infringement had not occurred? Consider\nsome of the possibilities:\n\xe2\x97\x8f\n\nThe patentee might have made all or some of the infringer\xe2\x80\x99s sales\xe2\x80\x94that is, the\ninfringement may have caused the patentee to have lost profits.\n\n\xe2\x97\x8f\n\nThe infringer might have made all or some of the same sales by switching to a\nsimilarly priced noninfringing substitute.\n\n\xe2\x97\x8f\n\nThe infringer\xe2\x80\x99s sales might not have occurred at all; the market might have simply\nbeen smaller.\n\n\xe2\x97\x8f\n\nThe patentee might have granted the infringer a license to the patent in exchange for\na reasonable royalty on the infringer\xe2\x80\x99s sales.\n\nCan you imagine other possibilities? Patent law divides damages into two categories: lost\nprofits and reasonable royalties. If the patentee can prove that she has lost profits, these tend\nto be the largest damages. If the patentee cannot prove lost profits\xe2\x80\x94including because of\nnoninfringement substitutes or the patentee\xe2\x80\x99s inability to exploit the demand\xe2\x80\x94\xc2\xa7 284\nguarantees that she will receive \xe2\x80\x9cin no event less than a reasonable royalty.\xe2\x80\x9d\nThis chapter focuses on lost profits, and Chapter 15 explains how reasonable royalties\nare calculated. We begin this chapter with a brief overview of the economics of monopoly\npricing before turning to the caselaw. But as we discuss the complex economic and doctrinal\nframework for each form of damages, do not lose sight of the overall goal: determining what\nwould actually have happened in the market but for the infringement. Damages\ndeterminations often involve expert testimony and economic models, but you should not allow\nthese models to get in the way of common sense. Just as patent litigation does not require a\ntechnical degree, it does not require an economics degree, and patent litigators need to be\nable to explain the underlying principles at an intuitive level to lay judges and jurors. This\nis an area with few hard-and-fast rules, so it is useful to be able to think of different\ncounterfactual scenarios, and what kind of evidence might support them.\n\n\x0c414\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nMonopoly Pricing 101\nAt first glance, one might think that calculating lost profits damages is easy, in that\ncourts could just attribute the infringer\xe2\x80\x99s sales and profits to the patentee. If the patentee\nwould have had a monopoly but for the infringement, and the infringer made profits of $100\nmillion, then the patentee lost profits of $100 million, right? Unfortunately, no. This kind of\nanalysis has logical flaws in both directions: it can undercompensate and overcompensate the\npatentee.\nTo understand these flaws, we\nprovide a crash course on monopoly pricing.\nAs noted in Chapter 1, few patents truly\nconfer monopoly power, but a simple\nmonopoly market illustrates conceptual\nprinciples that apply in many patent\ndamages calculations. For students who\nhave taken a course in economics or who\nfind graphs helpful to illustrate economic\nprinciples, the simplified figures at right\nmay be useful, but understanding the\ngraphs isn\xe2\x80\x99t essential for understanding the\nunderlying economic logic.\nFor most products, a small number of\npeople would be willing to pay very high\nprices, and many more people would be\nwilling to pay more modest amounts. For\nexample, if pencils cost $1000 each, some\npencils would be purchased by wealthy\nconsumers who value the ability to erase,\nbut if pencils are priced at $1 each, demand\nwould be much higher. This principle is\nrepresented by downward-sloping demand\ncurves.\nIn a competitive market, if one\nsupplier prices pencils at $1000 each,\nanother would be able to steal the entire\nmarket by offering $900 pencils. Firms\nwould have incentives to keep entering at\nlower prices until the market price equals\nthe price of supplying another pencil (known\nas the marginal cost); based on current\npencil prices, this appears to be under $0.10.\nThis market benefits consumers who value\n\n\x0cLOST PROFITS\n\n415\n\npencils at more than $0.10 (a benefit known as consumer surplus) and producers who are\nable to supply pencils at less than $0.10 (producer surplus).\nConsider what happens if we give one producer a monopoly on pencils. What price\nwould they choose? They wouldn\xe2\x80\x99t raise prices as high as possible, as this would result in\nvery few sales and few profits. But they also wouldn\xe2\x80\x99t sell at the competitive price. Rather,\nthey would raise prices to the point that maximizes their profits\xe2\x80\x94the blue area in the\nmonopoly pricing graph. (In economic terms, the producer chooses the price at which their\nmarginal revenue equals their marginal cost.)\nNow suppose an infringer enters the market, so it becomes a duopoly rather than a\nmonopoly. The infringer has an incentive to set a price lower than the monopoly price to steal\nmarket share from the patentee, and the patentee has an incentive to respond by lowering\nits own prices, an effect known as price erosion. If the patentee had chosen the profitmaximizing price, price erosion leads to a reduction in overall profits from the market. The\nsize of the reduction is difficult to model. The two firms could compete the price down to the\ncompetitive price, but in practice, duopoly prices often fall between the competitive and\nmonopoly prices (such as due to tacit collusion between the firms).\nIt should now be apparent why simply attributing the infringer\xe2\x80\x99s profits to the\npatentee can lead to undercompensation: if the infringer\xe2\x80\x99s market entrance created price\nerosion, then the duopoly profits will be less than the monopoly profits the patentee would\nhave made but for the infringement. We have illustrated this point in a monopoly market for\nsimplicity, but the price erosion that can be caused by the market entrance of an infringer\ngeneralizes to more common situations in which the patentee has market power that allows\nit to charge prices above marginal cost but not so much market power that it can charge the\nmonopoly price. Of course, the extent of erosion depends on the details of the market,\nincluding how sensitive consumption is to price\xe2\x80\x94an economic factor known as elasticity of\ndemand\xe2\x80\x94and the extent to which the infringer actually competed the price down.\nFurthermore, \xe2\x80\x9cin a credible economic analysis, the patentee cannot show entitlement to a\nhigher price divorced from the effect of that higher price on demand for the product . . . the\npatentee must also present evidence of the (presumably reduced) amount of product the\npatentee would have sold at the higher price.\xe2\x80\x9d Crystal Semiconductor v. TriTech\nMicroelectronics Int\xe2\x80\x99l, 246 F.3d 1336, 1357 (Fed. Cir. 2001). These are the kinds of details\neach party\xe2\x80\x99s damages expert will debate.\nWhy might attributing the infringer\xe2\x80\x99s profits to the patentee lead to\novercompensation? So far, we have treated the products sold in this market as fungible, such\nthat consumers are indifferent between products sold by the patentee and the infringer. Can\nyou think of any market in which all consumers are truly indifferent to the producer? Even\nfor pencils, there are elementary school teachers who insist on Ticonderoga brand pencils for\ntheir classrooms. If the infringer hadn\xe2\x80\x99t entered the market, the infringer\xe2\x80\x99s customers might\nnot have purchased from the patentee. Perhaps some would not have purchased anything.\nPerhaps some would have bought an alternative product that isn\xe2\x80\x99t infringing. Perhaps the\npatent holder wouldn\xe2\x80\x99t have had the manufacturing and marketing capacity to meet the\n\n\x0c416\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nadditional demand created by the entry of the infringer. Consider how the Federal Circuit\naddresses these concerns in the following two cases.\n\nRite-Hite v. Kelley Co., 56 F.3d 1538 (Fed.Cir.1995) (en banc)\nAlan Lourie, Circuit Judge.\nKelley Company appeals from a decision of the United States District Court for the\nEastern District of Wisconsin, awarding damages for the infringement of U.S.\nPatent 4,373,847, owned by Rite-Hite Corporation. The district court determined, inter alia,\nthat Rite-Hite was entitled to lost profits for lost sales of its devices that were in direct\ncompetition with the infringing devices, but which themselves were not covered by the patent\nin suit. The appeal has been taken in banc to determine whether such damages are legally\ncompensable under 35 U.S.C. \xc2\xa7 284. We affirm in part, vacate in part, and remand.\nBackground\n[Rite-Hite sued Kelley for infringement of the \xe2\x80\x99847 patent, which is directed to a device\nfor securing a vehicle to a loading dock. The patent was held to be not invalid and infringed\nby Kelley\xe2\x80\x99s \xe2\x80\x9cTruk Stop\xe2\x80\x9d vehicle restraint.]\nRite-Hite sought damages calculated as lost profits for two types of vehicle restraints\nthat it made and sold: the \xe2\x80\x9cManual Dok\xe2\x80\x93Lok\xe2\x80\x9d model 55 (MDL\xe2\x80\x9355), which incorporated the\ninvention covered by the \xe2\x80\x99847 patent, and the \xe2\x80\x9cAutomatic Dok\xe2\x80\x93Lok\xe2\x80\x9d model 100 (ADL\xe2\x80\x93100),\nwhich was not covered by the patent in suit. The ADL\xe2\x80\x93100 was the first vehicle restraint\nRite-Hite put on the market and it was covered by one or more patents other than the patent\nin suit. The Kelley Truk Stop restraint was designed to compete primarily with Rite-Hite\xe2\x80\x99s\nADL\xe2\x80\x93100. Both employed an electric motor and functioned automatically, and each sold for\n$1,000\xe2\x80\x93$1,500 at the wholesale level, in contrast to the MDL\xe2\x80\x9355, which sold for one-third to\none-half the price of the motorized devices. Rite-Hite does not assert that Kelley\xe2\x80\x99s Truk Stop\nrestraint infringed the patents covering the ADL\xe2\x80\x93100.\nOf the 3,825 infringing Truk Stop devices sold by Kelley, the district court found that,\n\xe2\x80\x9cbut for\xe2\x80\x9d Kelley\xe2\x80\x99s infringement, Rite-Hite would have made 80 more sales of its MDL\xe2\x80\x9355;\n3,243 more sales of its ADL\xe2\x80\x93100; and 1,692 more sales of dock levelers, a bridging platform\nsold with the restraints and used to bridge the edges of a vehicle and dock. The court awarded\nRite-Hite as a manufacturer the wholesale profits that it lost on lost sales of the ADL\xe2\x80\x93100\nrestraints, MDL\xe2\x80\x9355 restraints, and restraint-leveler packages. [It also awarded a reasonable\nroyalty on other sales.]\nOn appeal, Kelley contends that the district court erred as a matter of law in its\ndetermination of damages. Kelley does not contest the award of damages for lost sales of the\nMDL\xe2\x80\x9355 restraints; however, Kelley argues (1) that the patent statute does not provide for\ndamages based on Rite-Hite\xe2\x80\x99s lost profits on ADL\xe2\x80\x93100 restraints because the ADL\xe2\x80\x93100s are\nnot covered by the patent in suit; and (2) lost profits on unpatented dock levelers are not\n\n\x0cLOST PROFITS\n\n417\n\nattributable to demand for the \xe2\x80\x99847 invention and, therefore, are not recoverable losses.\n[Other issues on appeal are omitted.]\nDiscussion\nI. Lost Profits on the ADL\xe2\x80\x93100 Restraints\nThe district court\xe2\x80\x99s decision to award lost profits damages pursuant to 35 U.S.C. \xc2\xa7 284\nturned primarily upon the quality of Rite-Hite\xe2\x80\x99s proof of actual lost profits. The court found\nthat, \xe2\x80\x9cbut for\xe2\x80\x9d Kelley\xe2\x80\x99s infringing Truk Stop competition, Rite-Hite would have sold 3,243\nadditional ADL\xe2\x80\x93100 restraints and 80 additional MDL\xe2\x80\x9355 restraints.\nKelley maintains that Rite-Hite\xe2\x80\x99s lost sales of the ADL\xe2\x80\x93100 restraints do not\nconstitute an injury that is legally compensable by means of lost profits. It has uniformly\nbeen the law, Kelley argues, that to recover damages in the form of lost profits a patentee\nmust prove that, \xe2\x80\x9cbut for\xe2\x80\x9d the infringement, it would have sold a product covered by the\npatent in suit to the customers who bought from the infringer. Under the circumstances of\nthis case, in Kelley\xe2\x80\x99s view, the patent statute provides only for damages calculated as a\nreasonable royalty. Rite-Hite, on the other hand, argues that the only restriction on an award\nof actual lost profits damages for patent infringement is proof of causation-in-fact. A patentee,\nin its view, is entitled to all the profits it would have made on any of its products \xe2\x80\x9cbut for\xe2\x80\x9d the\ninfringement. Each party argues that a judgment in favor of the other would frustrate the\npurposes of the patent statute.\nOur analysis of this question necessarily begins with the patent statute. The statute\n[\xc2\xa7 284] mandates that a claimant receive damages \xe2\x80\x9cadequate\xe2\x80\x9d to compensate for\ninfringement. Section 284 further instructs that a damage award shall be \xe2\x80\x9cin no event less\nthan a reasonable royalty\xe2\x80\x9d; the purpose of this alternative is not to direct the form of\ncompensation, but to set a floor below which damage awards may not fall. Thus, the language\nof the statute is expansive rather than limiting. It affirmatively states that damages must be\nadequate, while providing only a lower limit and no other limitation.\nThe Supreme Court spoke to the question of patent damages in General Motors,\nstating that, in enacting \xc2\xa7 284, Congress sought to \xe2\x80\x9censure that the patent owner would in\nfact receive full compensation for \xe2\x80\x98any damages\xe2\x80\x99 [the patentee] suffered as a result of the\ninfringement.\xe2\x80\x9d General Motors v. Devex, 461 U.S. 648, 654 (1983). Thus, while the statutory\ntext states tersely that the patentee receive \xe2\x80\x9cadequate\xe2\x80\x9d damages, the Supreme Court has\ninterpreted this to mean that \xe2\x80\x9cadequate\xe2\x80\x9d damages should approximate those damages that\nwill fully compensate the patentee for infringement.\nIn Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964), the Court\ndiscussed the statutory standard for measuring patent infringement damages, explaining:\nThe question to be asked in determining damages is \xe2\x80\x9chow much had the Patent\nHolder and Licensee suffered by the infringement. And that question [is]\nprimarily: had the Infringer not infringed, what would the Patentee Holder\xe2\x80\x93\nLicensee have made?\xe2\x80\x9d\n\n\x0c418\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n377 U.S. at 507 (plurality opinion). This surely states a \xe2\x80\x9cbut for\xe2\x80\x9d test. In accordance with the\nCourt\xe2\x80\x99s guidance, we have held that the general rule for determining actual damages to a\npatentee that is itself producing the patented item is to determine the sales and profits lost\nto the patentee because of the infringement.\nPanduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978),\narticulated a four-factor test that has since been accepted as a useful, but non-exclusive, way\nfor a patentee to prove entitlement to lost profits damages. The Panduit test requires that a\npatentee establish: (1) demand for the patented product; (2) absence of acceptable noninfringing substitutes; (3) manufacturing and marketing capability to exploit the demand;\nand (4) the amount of the profit it would have made. A showing under Panduit permits a\ncourt to reasonably infer that the lost profits claimed were in fact caused by the infringing\nsales, thus establishing a patentee\xe2\x80\x99s prima facie case with respect to \xe2\x80\x9cbut for\xe2\x80\x9d causation. A\npatentee need not negate every possibility that the purchaser might not have purchased a\nproduct other than its own, absent the infringement. The patentee need only show that there\nwas a reasonable probability that the sales would have been made \xe2\x80\x9cbut for\xe2\x80\x9d the infringement.\nWhen the patentee establishes the reasonableness of this inference, e.g., by satisfying the\nPanduit test, it has sustained the burden of proving entitlement to lost profits due to the\ninfringing sales. The burden then shifts to the infringer to show that the inference is\nunreasonable for some or all of the lost sales.\nApplying Panduit, the district court found that Rite-Hite had established \xe2\x80\x9cbut for\xe2\x80\x9d\ncausation. In the court\xe2\x80\x99s view, this was sufficient to prove entitlement to lost profits damages\non the ADL\xe2\x80\x93100. Kelley does not challenge that Rite-Hite meets the Panduit test and\ntherefore has proven \xe2\x80\x9cbut for\xe2\x80\x9d causation; rather, Kelley argues that damages for the ADL\xe2\x80\x93\n100, even if in fact caused by the infringement, are not legally compensable because the ADL\xe2\x80\x93\n100 is not covered by the patent in suit.\nPreliminarily, we wish to affirm that the \xe2\x80\x9ctest\xe2\x80\x9d for compensability of damages under\n\xc2\xa7 284 is not solely a \xe2\x80\x9cbut for\xe2\x80\x9d test in the sense that an infringer must compensate a patentee\nfor any and all damages that proceed from the act of patent infringement. Notwithstanding\nthe broad language of \xc2\xa7 284, judicial relief cannot redress every conceivable harm that can\nbe traced to an alleged wrongdoing. For example, remote consequences, such as a heart attack\nof the inventor or loss in value of shares of common stock of a patentee corporation caused\nindirectly by infringement are not compensable. Thus, along with establishing that a\nparticular injury suffered by a patentee is a \xe2\x80\x9cbut for\xe2\x80\x9d consequence of infringement, there may\nalso be a background question whether the asserted injury is of the type for which the\npatentee may be compensated.\nJudicial limitations on damages, either for certain classes of plaintiffs or for certain\ntypes of injuries have been imposed in terms of \xe2\x80\x9cproximate cause\xe2\x80\x9d or \xe2\x80\x9cforeseeability.\xe2\x80\x9d Such\nlabels have been judicial tools used to limit legal responsibility for the consequences of one\xe2\x80\x99s\nconduct that are too remote to justify compensation.\nWe believe that under \xc2\xa7 284 of the patent statute, the balance between full\ncompensation, which is the meaning that the Supreme Court has attributed to the statute,\n\n\x0cLOST PROFITS\n\n419\n\nand the reasonable limits of liability encompassed by general principles of law can best be\nviewed in terms of reasonable, objective foreseeability. If a particular injury was or should\nhave been reasonably foreseeable by an infringing competitor in the relevant market, broadly\ndefined, that injury is generally compensable absent a persuasive reason to the contrary.\nHere, the court determined that Rite-Hite\xe2\x80\x99s lost sales of the ADL\xe2\x80\x93100, a product that directly\ncompeted with the infringing product, were reasonably foreseeable. We agree with that\nconclusion. Being responsible for lost sales of a competitive product is surely foreseeable; such\nlosses constitute the full compensation set forth by Congress, as interpreted by the Supreme\nCourt, while staying well within the traditional meaning of proximate cause. Such lost sales\nshould therefore clearly be compensable.\nRecovery for lost sales of a device not covered by the patent in suit is not of course\nexpressly provided for by the patent statute. Express language is not required, however.\nStatutes speak in general terms rather than specifically expressing every detail. Under the\npatent statute, damages should be awarded \xe2\x80\x9cwhere necessary to afford the plaintiff full\ncompensation for the infringement.\xe2\x80\x9d General Motors, 461 U.S. at 654. Thus, to refuse to\naward reasonably foreseeable damages necessary to make Rite-Hite whole would be\ninconsistent with the meaning of \xc2\xa7 284.\nKelley asserts that to allow recovery for the ADL\xe2\x80\x93100 would contravene the policy\nreason for which patents are granted: \xe2\x80\x9c[T]o promote the progress of . . . the useful arts.\xe2\x80\x9d U.S.\nConst., art. I, \xc2\xa7 8, cl. 8. Because an inventor is only entitled to exclusivity to the extent he or\nshe has invented and disclosed a novel, nonobvious, and useful device, Kelley argues, a patent\nmay never be used to restrict competition in the sale of products not covered by the patent in\nsuit. In support, Kelley cites antitrust case law condemning the use of a patent as a means\nto obtain a \xe2\x80\x9cmonopoly\xe2\x80\x9d on unpatented material.\nThe present case does not involve expanding the limits of the patent grant in violation\nof the antitrust laws; it simply asks, once infringement of a valid patent is found, what\ncompensable injuries result from that infringement, i.e., how may the patentee be made\nwhole. Rite-Hite is not attempting to exclude its competitors from making, using, or selling\na product not within the scope of its patent. The Truk Stop restraint was found to infringe\nthe \xe2\x80\x99847 patent, and Rite-Hite is simply seeking adequate compensation for that\ninfringement; this is not an antitrust issue. Allowing compensation for such damage will\n\xe2\x80\x9cpromote the Progress of . . . the useful Arts\xe2\x80\x9d by providing a stimulus to the development of\nnew products and industries.\nKelley further asserts that, as a policy matter, inventors should be encouraged by the\nlaw to practice their inventions. This is not a meaningful or persuasive argument, at least in\nthis context. A patent is granted in exchange for a patentee\xe2\x80\x99s disclosure of an invention, not\nfor the patentee\xe2\x80\x99s use of the invention. There is no requirement in this country that a patentee\nmake, use, or sell its patented invention. If a patentee\xe2\x80\x99s failure to practice a patented\ninvention frustrates an important public need for the invention, a court need not enjoin\ninfringement of the patent. Whether a patentee sells its patented invention is not crucial in\ndetermining lost profits damages. Normally, if the patentee is not selling a product, by\n\n\x0c420\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ndefinition there can be no lost profits. However, in this case, Rite-Hite did sell its own\npatented products, the MDL\xe2\x80\x9355 and the ADL\xe2\x80\x93100 restraints.\n[T]he only Panduit factor that arguably was not met in the present fact situation is\nthe second one, absence of acceptable non-infringing substitutes. Here, the only substitute\nfor the patented device was the ADL\xe2\x80\x93100, another of the patentee\xe2\x80\x99s devices. Such a substitute\nwas not an \xe2\x80\x9cacceptable, non-infringing substitute\xe2\x80\x9d within the meaning of Panduit because,\nbeing patented by Rite-Hite, it was not available to customers except from Rite-Hite. RiteHite therefore would not have lost the sales to a third party. The second Panduit factor thus\nhas been met. If, on the other hand, the ADL\xe2\x80\x93100 had not been patented and was found to\nbe an acceptable substitute, that would have been a different story, and Rite-Hite would have\nhad to prove that its customers would not have obtained the ADL\xe2\x80\x93100 from a third party in\norder to prove the second factor of Panduit.\nKelley\xe2\x80\x99s conclusion that the lost sales must be of the patented invention thus is not\nsupported. Kelley\xe2\x80\x99s concern that lost profits must relate to the \xe2\x80\x9cintrinsic value of the patent\xe2\x80\x9d\nis subsumed in the \xe2\x80\x9cbut for\xe2\x80\x9d analysis; if the patent infringement had nothing to do with the\nlost sales, \xe2\x80\x9cbut for\xe2\x80\x9d causation would not have been proven. However, \xe2\x80\x9cbut for\xe2\x80\x9d causation is\nconceded here. The motive, or motivation, for the infringement is irrelevant if it is proved\nthat the infringement in fact caused the loss. We see no basis for Kelley\xe2\x80\x99s conclusion that the\nlost sales must be of products covered by the infringed patent.\nII. Damages on the Dock Levelers\nThe district court awarded lost profits on 1,692 dock levelers that it found Rite-Hite\nwould have sold with the ADL\xe2\x80\x93100 and MDL\xe2\x80\x9355 restraints. Kelley argues that this award\nmust be set aside. We agree.\nWhen a patentee seeks damages on unpatented components sold with a patented\napparatus, courts have applied a formulation known as the \xe2\x80\x9centire market value rule\xe2\x80\x9d to\ndetermine whether such components should be included in the damage computation, whether\nfor reasonable royalty purposes or for lost profits purposes. We have held that the entire\nmarket value rule permits recovery of damages based on the value of a patentee\xe2\x80\x99s entire\napparatus containing several features when the patent-related feature is the \xe2\x80\x9cbasis for\ncustomer demand.\xe2\x80\x9d\nThe entire market value rule has typically been applied to include in the compensation\nbase unpatented components of a device when the unpatented and patented components are\nphysically part of the same machine. The rule has been extended to allow inclusion of\nphysically separate unpatented components normally sold with the patented components.\nHowever, in such cases, the unpatented and patented components together were considered\nto be components of a single assembly or parts of a complete machine, or they together\nconstituted a functional unit.\nThus, the facts of past cases clearly imply a limitation on damages, when recovery is\nsought on sales of unpatented components sold with patented components, to the effect that\n\n\x0cLOST PROFITS\n\n421\n\nthe unpatented components must function together with the patented component in some\nmanner so as to produce a desired end product or result. All the components together must\nbe analogous to components of a single assembly or be parts of a complete machine, or they\nmust constitute a functional unit. Our precedent has not extended liability to include items\nthat have essentially no functional relationship to the patented invention and that may have\nbeen sold with an infringing device only as a matter of convenience or business advantage.\nWe are not persuaded that we should extend that liability. Damages on such items would\nconstitute more than what is \xe2\x80\x9cadequate to compensate for the infringement.\xe2\x80\x9d\nThe facts of this case do not meet this requirement. The dock levelers operated to\nbridge the gap between a loading dock and a truck. The patented vehicle restraint operated\nto secure the rear of the truck to the loading dock. Although the two devices may have been\nused together, they did not function together to achieve one result and each could effectively\nhave been used independently of each other. The parties had established positions in\nmarketing dock levelers long prior to developing the vehicle restraints. Rite-Hite and Kelley\nwere pioneers in that industry and for many years were primary competitors. Although\nfollowing Rite-Hite\xe2\x80\x99s introduction of its restraints onto the market, customers frequently\nsolicited package bids for the simultaneous installation of restraints and dock levelers, they\ndid so because such bids facilitated contracting and construction scheduling, and because\nboth Rite-Hite and Kelley encouraged this linkage by offering combination discounts. The\ndock levelers were thus sold by Kelley with the restraints only for marketing reasons, not\nbecause they essentially functioned together.\nWe distinguish our conclusion to permit damages based on lost sales of the unpatented\n(not covered by the patent in suit) ADL\xe2\x80\x93100 devices, but not on lost sales of the unpatented\ndock levelers, by emphasizing that the Kelley Truk Stops were devices competitive with the\nADL\xe2\x80\x93100s, whereas the dock levelers were merely items sold together with the restraints for\nconvenience and business advantage. It is a clear purpose of the patent law to redress\ncompetitive damages resulting from infringement of the patent, but there is no basis for\nextending that recovery to include damages for items that are neither competitive with nor\nfunction with the patented invention. These facts do not establish the functional relationship\nnecessary to justify recovery under the entire market value rule. Therefore, the district court\nerred as a matter of law in including them within the compensation base. Accordingly, we\nvacate the court\xe2\x80\x99s award of damages based on the dock leveler sales.\n[The remainder of the majority\xe2\x80\x99s opinion addresses separate issues and is omitted.]\nHelen Nies, Circuit Judge, with whom Glenn Archer, Chief Judge, Edward Smith, Senior\nCircuit Judge, and Haldane Mayer, Circuit Judge join, dissenting-in-part.\nThe majority uses the provision in 35 U.S.C. \xc2\xa7 284 for \xe2\x80\x9cdamages\xe2\x80\x9d as a tool to expand\nthe property rights granted by a patent. I dissent.\nNo one disputes that Rite-Hite is entitled to \xe2\x80\x9cfull compensation for any damages\nsuffered as a result of the infringement.\xe2\x80\x9d General Motors Corp. v. Devex Corp., 461 U.S. 648,\n653\xe2\x80\x9354 (1983). \xe2\x80\x9cDamages,\xe2\x80\x9d however, is a word of art. Damages in a legal sense means the\n\n\x0c422\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ncompensation which the law will award for an injury done. Thus, the question is, \xe2\x80\x9cWhat are\nthe injuries for which full compensation must be paid?\xe2\x80\x9d\nThe majority divorces \xe2\x80\x9cactual damages\xe2\x80\x9d from injury to patent rights. The majority\nholds that a patentee is entitled to recover its lost profits caused by the infringer\xe2\x80\x99s competition\nwith the patentee\xe2\x80\x99s business in ADL restraints, products not incorporating the invention of\nthe patent in suit but assertedly protected by other unlitigated patents. Indeed, the majority\nstates a broader rule for the award of lost profits on any goods of the patentee with which the\ninfringing device competes, even products in the public domain.\nI would hold that the diversion of ADL\xe2\x80\x93100 sales is not an injury to patentee\xe2\x80\x99s\nproperty rights granted by the \xe2\x80\x99847 patent. To constitute legal injury for which lost profits\nmay be awarded, the infringer must interfere with the patentee\xe2\x80\x99s property right to an\nexclusive market in goods embodying the invention of the patent in suit. The patentee\xe2\x80\x99s\nproperty rights do not extend to its market in other goods unprotected by the litigated patent.\nRite-Hite was compensated for the lost profits for 80 sales associated with the MDL\xe2\x80\x9355, the\nonly product it sells embodying the \xe2\x80\x99847 invention. That is the totality of any possible\nentitlement to lost profits. Under 35 U.S.C. \xc2\xa7 284, therefore, Rite-Hite is entitled to\n\xe2\x80\x9cdamages\xe2\x80\x9d calculated as a reasonable royalty on the remainder of Kelley\xe2\x80\x99s infringing\nrestraints.\nAn examination of pre\xe2\x80\x931946 Supreme Court precedent discloses that the legal scope\nof actual damages for patent infringement was limited to the extent of the defendant\xe2\x80\x99s\ninterference with the patentee\xe2\x80\x99s market in goods embodying the invention of the patent in\nsuit. This limitation reflects the underlying public policy of the patent statute to promote\ncommerce in new products for the public\xe2\x80\x99s benefit. More importantly, it protects the only\nproperty rights of a patentee which are protectable, namely those granted by the patent.\nAn inventor is entitled to a patent by meeting the statutory requirements respecting\ndisclosure of the invention. Prior commercialization of the invention has never been a\nrequirement in our law to obtain a patent. An inventor is merely required to teach others his\ninvention in his patent application. Thus, when faced with the question of whether a patentee\nwas entitled to enjoin an infringer despite the patentee\xe2\x80\x99s failure to use its invention, the\nSupreme Court held for the patentee. Continental Paper Bag, 210 U.S. 405, 424\xe2\x80\x93430 (1908).\nThese clearly established principles, however, do not lead to the conclusion that the\npatentee\xe2\x80\x99s failure to commercialize plays no role in determining damages. That the quid pro\nquo for obtaining a patent is disclosure of the invention does not dictate the answer to the\nquestion of the legal scope of damages. The patent system was not designed merely to build\nup a library of information by disclosure, valuable though that is, but to get new products\ninto the marketplace during the period of exclusivity so that the public receives full benefits\nfrom the grant.\nThus, a patentee may withhold from the public the benefit of use of its invention\nduring the patent term, and the public has no way to withdraw the grant for nonuse. Like\nthe owner of a farm, a patentee may let his property lay fallow. In doing so, \xe2\x80\x9che has but\n\n\x0cLOST PROFITS\n\n423\n\nsuppressed his own.\xe2\x80\x9d E. Bement & Sons v. National Harrow, 186 U.S. 70, 90 (1902). But it is\nanomalous to hold that Congress, by providing an incentive for the patentee to enter the\nmarket, intended the patentee to be rewarded the same for letting his property lay fallow\nduring the term of the patent as for making the investment necessary to commercializing a\nnew product or licensing others to do so, in order that the public benefits from the invention.\nIn the majority\xe2\x80\x99s view, the consideration of patent rights ends upon a finding of\ninfringement. The separate question of damages under its test does not depend on patent\nrights but only on foreseeable competitive injury. This position cannot be squared with the\npremise that compensation is due only for injury to patent rights. Thus, the majority\xe2\x80\x99s\nforeseeability standard contains a false premise, namely, that the \xe2\x80\x9crelevant market\xe2\x80\x9d can be\n\xe2\x80\x9cbroadly defined\xe2\x80\x9d to include all competitive truck restraints made by the patentee. The\nrelevant market for determining damages is confined to the market for the invention in which\nthe patentee holds exclusive property rights. The injury, thus, must be to the protected\nmarket in goods made in accordance with the patent, not unprotected truck restraints. In\nsum, patent rights determine not only infringement but also damages.\nNothing in the statute supports the majority\xe2\x80\x99s \xe2\x80\x9cforeseeability\xe2\x80\x9d rule as the sole basis\nfor patent damages. To the contrary, no-fault liability is imposed on \xe2\x80\x9cinnocent\xe2\x80\x9d infringers,\nthose who have no knowledge of the existence of a patent until suit is filed. While unknowing\ninfringers cannot \xe2\x80\x9cforesee\xe2\x80\x9d any injury to the patentee, they are subject to liability for\ndamages, including lost profits, for competition with the patentee\xe2\x80\x99s patented goods. Now they\nwill be liable for diverting sales of the patentee\xe2\x80\x99s unprotected competitive products as well.\nIf damages are awardable based on lost sales of a patentee\xe2\x80\x99s business in established\nproducts not protected by the patent in suit, the patentee not only has an easier case as a\nmatter of proof, but also would receive greater benefits in the form of lost profits on its\nestablished products than if the patentee had made the investment necessary to launch a\nnew product. This result is not in accordance with the purpose of the patent statute. Actual\ndamages are meant to compensate a patentee for losing the reward of the marketplace which\nthe patentee\xe2\x80\x99s use of the invention would otherwise reap. Without such loss, Congress has\nmandated compensation in the form of a reasonable royalty.\nIt cannot be disputed that Congress intended that the patent grant provide an\nincentive to make investments in patented products during the patent term. If a patentee is\nrewarded with lost profits on its established products, the incentive is dulled if not destroyed.\nWhy make the investment to produce and market a new drug if the patent on the new\ndiscovery not only protects the status quo in the market but also provides lost profits for the\nold?\nFor the foregoing reasons, I would hold that an injury to the patentee\xe2\x80\x99s marketing of\nproducts protected only by other patents\xe2\x80\x94if at all\xe2\x80\x94does not fall within the grant of rights\nprotected by the \xe2\x80\x99847 patent in suit and is not compensable. Thus, I would vacate the award\nof lost profits on 3,283 sales based on Rite-Hite\xe2\x80\x99s loss of business in ADL\xe2\x80\x93100 restraints and\nremand for damages to be assessed on the basis of a reasonable royalty for those\ninfringements.\n\n\x0c424\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nPauline Newman, Circuit Judge, with whom Circuit Judge Rader joines, concurring-in-part\nand dissenting-in-part.\nThe court today takes an important step toward preserving damages as an effective\nremedy for patent infringement. Patent infringement is a commercial tort, and the remedy\nshould compensate for the actual financial injury that was caused by the tort. Thus I concur\nin the majority\xe2\x80\x99s result with respect to entitlement to damages for lost sales of the ADL\xe2\x80\x93100.\nYet the court draws a new bright line, adverse to patentees and the businesses built\non patents, declining to make the injured claimants whole. The majority now restricts en\nbanc the patentee\xe2\x80\x99s previously existing, already limited right to prove damages for lost sales\nof collateral items\xe2\x80\x94the so-called \xe2\x80\x9cconvoyed\xe2\x80\x9d sales. Such remedy is now eliminated entirely\nunless the convoyed item is \xe2\x80\x9cfunctionally\xe2\x80\x9d inseparable from the patented item. The court thus\npropounds a legally ambivalent and economically unsound policy, authorizing damages for\nthe lost sales of the ADL\xe2\x80\x93100 but not those dock levelers that were required to be bid and\nsold as a package with the MDL\xe2\x80\x9355 and the ADL\xe2\x80\x93100.\nI know of no law or policy served by eliminating recovery of actual damages when\npatents are involved. In holding that those injured by the infringement shall not be made\nwhole, the value of the patent property is diminished. The majority\xe2\x80\x99s half-a-loaf award,\nwherein the patentee and the other plaintiffs are denied recovery of a significant portion or\nall of their proven damages, is an important policy decision.\nThe basic principle of damages law is that the injured party shall be made whole. On\nthe facts on which the district court awarded damages for certain lost sales of dock levelers,\nthe relationships were direct, causation was proved, the scope of recovery was narrow, and\nthe circumstances were unusual. Reversing the district court, the majority holds that if the\npatented and convoyed items also have a separate market, there can never be recovery for\nthe lost sales of the convoyed items.\nThe record shows that Kelley foresaw the potential loss of dock leveler sales, and that\nthis contributed to Kelley\xe2\x80\x99s infringement of Rite-Hite\xe2\x80\x99s truck restraint patent. The record\nshows Kelley and Rite-Hite both bidding on the same restraint/leveler packages. The\nevidence established that Rite-Hite\xe2\x80\x99s loss of 1,692 dock leveler sales was the direct,\nforeseeable, and indeed intended result of Kelley\xe2\x80\x99s infringement.\nKelley bore the risk that if it was found to infringe Rite-Hite\xe2\x80\x99s restraint patent, it\nwould be liable for compensatory damages on the restraint/leveler packages. By eliminating\nrecovery for this proven loss, this court makes a policy decision contrary to the principles of\ncompensatory damages. Heretofore Federal Circuit precedent treated lost convoyed sales as\na matter of fact and proof. I discern no clear error or discretionary abuse in the district court\xe2\x80\x99s\naward of actual damages for these specific lost sales of restraint/leveler packages.\n\n\x0cLOST PROFITS\n\n425\n\nGrain Processing v. American Maize-Products, 185 F.3d 1341 (Fed. Cir. 1999)\nRandall Rader, Circuit Judge.\nThe United States District Court for the Northern District of Indiana denied Grain\nProcessing Corporation lost profits for American Maize\xe2\x80\x93Products\xe2\x80\x99 infringement of U.S.\nPatent No. 3,849,194 (the \xe2\x80\x99194 patent). The district court instead awarded Grain Processing\na 3% royalty on American Maize\xe2\x80\x99s infringing sales.\nThe district court found that American Maize proved that a noninfringing substitute\nwas available, though not on the market or for sale, during the period of infringement. The\ncourt found further that this substitute was acceptable to all purchasers of the infringing\nproduct and concluded that American Maize rebutted the inference of \xe2\x80\x9cbut for\xe2\x80\x9d causation for\nGrain Processing\xe2\x80\x99s alleged lost sales. Upholding the district court\xe2\x80\x99s findings and conclusions,\nthis court affirms.\nI.\n[Claim 12 of the \xe2\x80\x99194 patent, the only claim at issue, claims: \xe2\x80\x9cA waxy starch\nhydrolysate having a dextrose equivalent value between about 5 and about 25 . . .\xe2\x80\x9d and other\nelements. Starch hydrolysates are a category of chemical products used as food additives, and\ndextrose equivalence (D.E.) is a measure of sugar content, where higher D.E. values indicate\ngreater sweetness and different functional properties. Maltodextrins are starch hydrolysates\nthat have a D.E. of less than 20.]\nGrain Processing [the assignee of the \xe2\x80\x99194 patent] has manufactured and sold a line\nof maltodextrins under the \xe2\x80\x9cMaltrin\xe2\x80\x9d brand name since 1969. The Maltrin line includes\n\xe2\x80\x9cMaltrin M100,\xe2\x80\x9d a 10 D.E. maltodextrin. None of the Maltrin products, including M100, fall\nwithin claim 12 because they are all made from a non-waxy starch.\nAmerican Maize began selling maltodextrins in 1974. It made and sold several types\nof maltodextrins, including \xe2\x80\x9cLo\xe2\x80\x93Dex 10,\xe2\x80\x9d a 10 D.E. waxy starch maltodextrin. American\nMaize sold Lo\xe2\x80\x93Dex 10 (called Fro\xe2\x80\x93Dex 10 before 1982) during the entire time Grain\nProcessing owned the \xe2\x80\x99194 patent rights, from 1979 until the patent expired in 1991. During\nthis time, however, American Maize used four different processes for producing Lo\xe2\x80\x93Dex 10.\n[After being sued by Grain Processing for infringement in 1981, American Maize\nattempted to avoid infringement by switching from Process I to Process II and then Process\nIII, but the Federal Circuit eventually ruled in 1991 that American Maize hadn\xe2\x80\x99t used the\ncorrect test to measure D.E., so these processes were infringing.]\nAmerican Maize then adopted a fourth process (Process IV) for producing Lo\xe2\x80\x93Dex 10.\nIn Process IV, American Maize added a second enzyme, glucoamylase, to the reaction. From\nthe time American Maize began experimenting with the glucoamylase-alpha amylase\ncombination, or the \xe2\x80\x9cdual enzyme method,\xe2\x80\x9d it took only two weeks to perfect the reaction and\nbegin mass producing Lo\xe2\x80\x93Dex 10 using Process IV. According to the finding of the district\ncourt, this two-week development and production time is \xe2\x80\x9cpractically instantaneous\xe2\x80\x9d for\n\n\x0c426\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nlarge-scale production. American Maize did not change any equipment, source starches, or\nother ingredients from Process III. Glucoamylase has been commercially available and its\neffect in starch hydrolysis widely known since the early 1970\xe2\x80\x99s, before the \xe2\x80\x99194 patent issued.\nAmerican Maize had not used Process IV to produce Lo\xe2\x80\x93Dex earlier because the high cost of\nglucoamylase makes Process IV more expensive than the other processes.\nThe parties agree that Process IV yielded only noninfringing Lo\xe2\x80\x93Dex 10 and that\nconsumers discerned no difference between Process IV Lo\xe2\x80\x93Dex 10 and Lo\xe2\x80\x93Dex 10 made by\nProcesses I\xe2\x80\x93III. American Maize used Process IV exclusively to produce Lo\xe2\x80\x93Dex 10 from April\n1991 until the \xe2\x80\x99194 patent expired in November 1991, and then switched back to the cheaper\nProcess III.\nGrain Processing claimed lost profits in the form of lost sales of Maltrin M100, price\nerosion, and American Maize\xe2\x80\x99s accelerated market entry after the patent expired. Grain\nProcessing further claimed that, for any of American Maize\xe2\x80\x99s infringing sales not covered by\na lost profits award, Grain Processing should receive a 28% royalty. After a three day bench\ntrial, the district court denied lost profits and determined that a 3% reasonable royalty was\nadequate to compensate Grain Processing.\nThe trial court determined that Grain Processing could not establish causation for lost\nprofits, because American Maize \xe2\x80\x9ccould have produced\xe2\x80\x9d a noninfringing substitute 10 D.E.\nmaltodextrin using Process IV. The district court also found that American Maize\xe2\x80\x99s\nproduction cost difference between infringing and noninfringing Lo\xe2\x80\x93Dex 10 effectively capped\nthe reasonable royalty award. American Maize showed that it cost only 2.3% more to make\nnoninfringing Process IV products than it did to make infringing Process I\xe2\x80\x93III products. The\ndistrict court also found that \xe2\x80\x9cbuyers viewed as equivalent\xe2\x80\x9d the Process I\xe2\x80\x93III and Process IV\noutput. The district court concluded that under these facts, American Maize, when faced with\na hypothetical offer to license the \xe2\x80\x99194 patent, would not have paid more than a 3% royalty\nrate. The court concluded that if Grain Processing had insisted on a rate greater than 3% in\nthe hypothetical negotiations, American Maize instead would have chosen to invest in\nproducing noninfringing Lo\xe2\x80\x93Dex 10 with Process IV.\nGrain Processing appealed the district court\xe2\x80\x99s denial of lost profits, alleging that\nAmerican Maize cannot escape liability for lost profits on the basis of a noninfringing\nsubstitute that did not exist during, and was not developed until after, the period of\ninfringement. This court reversed and remanded. This court noted that a product or process\nmust be \xe2\x80\x9cavailable or on the market at the time of infringement\xe2\x80\x9d to qualify as an acceptable\nnon-infringing substitute. Grain Processing VII, 1997 WL 71726 (Fed. Cir. 1997).\nOn remand, the district court again denied Grain Processing lost profits. The district\ncourt found that Process IV was \xe2\x80\x9cavailable\xe2\x80\x9d throughout the period of infringement. Grain\nProcessing VIII, 979 F. Supp. at 1235.1\n[Eds: The district court\xe2\x80\x94Judge Frank Easterbrook of the Seventh Circuit, sitting by\ndesignation\xe2\x80\x94seemed frustrated with the Federal Circuit for not understanding the point the first\ntime: \xe2\x80\x9cI do not wish to be presumptuous, but it seems to me that my opinion did what the court of\n1\n\n\x0cLOST PROFITS\n\n427\n\nII.\nUpon proof of infringement, Title 35, Section 284 provides that \xe2\x80\x9cthe court shall award\n[the patent owner] damages adequate to compensate for the infringement but in no event less\nthan a reasonable royalty for the use made of the invention by the infringer.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 284.\nThe phrase \xe2\x80\x9cdamages adequate to compensate\xe2\x80\x9d means \xe2\x80\x9cfull compensation for \xe2\x80\x98any damages\xe2\x80\x99\n[the patent owner] suffered as a result of the infringement.\xe2\x80\x9d General Motors Corp. v. Devex\nCorp., 461 U.S. 648, 654 (1983). Full compensation includes any foreseeable lost profits the\npatent owner can prove. See Rite-Hite v. Kelley, 56 F.3d 1538, 1545\xe2\x80\x9347 (Fed. Cir. 1995).\nTo recover lost profits, the patent owner must show \xe2\x80\x9ccausation in fact,\xe2\x80\x9d establishing\nthat \xe2\x80\x9cbut for\xe2\x80\x9d the infringement, he would have made additional profits. When basing the\nalleged lost profits on lost sales, the patent owner has an initial burden to show a reasonable\nprobability that he would have made the asserted sales \xe2\x80\x9cbut for\xe2\x80\x9d the infringement. Once the\npatent owner establishes a reasonable probability of \xe2\x80\x9cbut for\xe2\x80\x9d causation, \xe2\x80\x9cthe burden then\nshifts to the accused infringer to show that [the patent owner\xe2\x80\x99s \xe2\x80\x98but for\xe2\x80\x99 causation claim] is\nunreasonable for some or all of the lost sales.\xe2\x80\x9d Rite Hite, 56 F.3d at 1544.\nAt trial, American Maize proved that Grain Processing\xe2\x80\x99s lost sales assertions were\nunreasonable. The district court adopted Grain Processing\xe2\x80\x99s initial premise that, because\nGrain Processing and American Maize competed head-to-head as the only significant\nsuppliers of 10 D.E. maltodextrins, consumers logically would purchase Maltrin 100 if Lo\xe2\x80\x93\nDex 10 were not available. However, the district court found that American Maize proved\nthat Process IV was available and that Process IV Lo\xe2\x80\x93Dex 10 was an acceptable substitute\nfor the claimed invention. In the face of this noninfringing substitute, Grain Processing could\nnot prove lost profits.\nAmerican Maize concedes that it did not make or sell Lo\xe2\x80\x93Dex 10 from Process IV until\n1991, after the period of infringement. However, an alleged substitute not \xe2\x80\x9con the market\xe2\x80\x9d or\n\xe2\x80\x9cfor sale\xe2\x80\x9d during the infringement can figure prominently in determining whether a patentee\nwould have made additional profits \xe2\x80\x9cbut for\xe2\x80\x9d the infringement. As this court stated in Grain\nProcessing VII, \xe2\x80\x9cto be an acceptable non-infringing substitute, the product or process must\nhave been available or on the market at the time of infringement.\xe2\x80\x9d 1997 WL 71726, at *2.\nThis statement is an apt summary of this court\xe2\x80\x99s precedent, which permits available\nalternatives\xe2\x80\x94including but not limited to products on the market\xe2\x80\x94to preclude lost profits\ndamages.\n\nappeals believes ought to have been done. That is, I found as a matter of fact that a \xe2\x80\x98noninfringing\nproduct\xe2\x80\x99 was available \xe2\x80\x98no later than October 1979.\xe2\x80\x99 The Federal Circuit did not conclude that this\nfinding was clearly erroneous; instead it believed that there had been a legal blunder. Yet, as the court\nof appeals wrote, \xe2\x80\x98to be an acceptable noninfringing substitute, the product or process must have been\navailable or on the market at the time of infringement\xe2\x80\x99 (emphasis added). I found and reiterate (a) that\nnoninfringing substitutes for the patented product were on the market at the time of infringement,\nand (b) that American Maize had \xe2\x80\x98available\xe2\x80\x99 at the critical time a process that would have ensured that\nits own product did not infringe the patent.\xe2\x80\x9d The second time around, the Federal Circuit got it.]\n\n\x0c428\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIn Aro Manufacturing, the Supreme Court stated that the statutory measure of\n\xe2\x80\x9cdamages\xe2\x80\x9d is \xe2\x80\x9cthe difference between [the patent owner\xe2\x80\x99s] pecuniary condition after the\ninfringement, and what his condition would have been if the infringement had not occurred.\xe2\x80\x9d\nAro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 507 (1964) (plurality opinion).\nThe determinative question, the Supreme Court stated, is: \xe2\x80\x9chad the Infringer not infringed,\nwhat would the Patent Holder\xe2\x80\x93Licensee have made?\xe2\x80\x9d Id. at 507. The \xe2\x80\x9cbut for\xe2\x80\x9d inquiry\ntherefore requires a reconstruction of the market, as it would have developed absent the\ninfringing product, to determine what the patentee \xe2\x80\x9cwould . . . have made.\xe2\x80\x9d See Grain\nProcessing VIII, 979 F. Supp. at 1236.\nReconstructing the market, by definition a hypothetical enterprise, requires the\npatentee to project economic results that did not occur. To prevent the hypothetical from\nlapsing into pure speculation, this court requires sound economic proof of the nature of the\nmarket and likely outcomes with infringement factored out of the economic picture. Within\nthis framework, trial courts, with this court\xe2\x80\x99s approval, consistently permit patentees to\npresent market reconstruction theories showing all of the ways in which they would have\nbeen better off in the \xe2\x80\x9cbut for world,\xe2\x80\x9d and accordingly to recover lost profits in a wide variety\nof forms. See, e.g., King Instruments v. Perego, 65 F.3d 941, 953 (Fed. Cir. 1995) (upholding\naward for lost sales of patentee\xe2\x80\x99s unpatented goods that compete with the infringing goods);\nRite-Hite, 56 F.3d at 1550 (holding that a patentee may recover lost profits on components\nthat have a functional relationship with the patented invention); Brooktree v. Advanced\nMicro Devices, 977 F.2d 1555, 1580 (Fed. Cir. 1992) (upholding award for price erosion due\nto infringer\xe2\x80\x99s marketing activities); Minnesota Mining & Mfg. v. Johnson & Johnson\nOrthopaedics, 976 F.2d 1559, 1579 (Fed. Cir. 1992) (upholding award for price erosion due to\ninfringing sales); State Indus. v. Mor-Flo, 883 F.2d 1573, 1580 (Fed. Cir. 1989) (upholding\naward of lost profits in proportion to patentee\xe2\x80\x99s market share of the relevant market including\nacceptable noninfringing substitutes); Paper Converting Mach. v. Magna\xe2\x80\x93Graphics, 745 F.2d\n11, 22 (Fed. Cir. 1984) (upholding award compensating the patentee for its decreasing\nmarginal cost of producing the good, i.e., its increasing marginal profit, as its volume of\nproduction would have increased); Lam v. Johns-Manville, 718 F.2d 1056, 1065 (Fed. Cir.\n1983) (upholding lost profits award for future lost sales, and for the patentee\xe2\x80\x99s increased\npromotional expenses); BIC Leisure Products v. Windsurfing Int\xe2\x80\x99l, 687 F. Supp. 134, 137\xe2\x80\x9338\n(S.D.N.Y. 1988), rev\xe2\x80\x99d in part on other grounds, 1 F.3d 1214 (Fed. Cir. 1993) (permitting\nrecovery for future depressed prices, i.e., \xe2\x80\x9cprojected price erosion,\xe2\x80\x9d and for accelerated market\nreentry by the infringer). In sum, courts have given patentees significant latitude to prove\nand recover lost profits for a wide variety of foreseeable economic effects of the infringement.\nBy the same token, a fair and accurate reconstruction of the \xe2\x80\x9cbut for\xe2\x80\x9d market also\nmust take into account, where relevant, alternative actions the infringer foreseeably would\nhave undertaken had he not infringed. Without the infringing product, a rational would-be\ninfringer is likely to offer an acceptable noninfringing alternative, if available, to compete\nwith the patent owner rather than leave the market altogether. The competitor in the \xe2\x80\x9cbut\nfor\xe2\x80\x9d marketplace is hardly likely to surrender its complete market share when faced with a\npatent, if it can compete in some other lawful manner. Moreover, only by comparing the\npatented invention to its next-best available alternative(s)\xe2\x80\x94regardless of whether the\n\n\x0cLOST PROFITS\n\n429\n\nalternative(s) were actually produced and sold during the infringement\xe2\x80\x94can the court\ndiscern the market value of the patent owner\xe2\x80\x99s exclusive right, and therefore his expected\nprofit or reward, had the infringer\xe2\x80\x99s activities not prevented him from taking full economic\nadvantage of this right. Thus, an accurate reconstruction of the hypothetical \xe2\x80\x9cbut for\xe2\x80\x9d market\ntakes into account any alternatives available to the infringer.\nAccordingly, this court in Slimfold Manufacturing Co. v. Kinkead Industries, Inc. held\nthat an available technology not on the market during the infringement can constitute a\nnoninfringing alternative. 932 F.2d 1453 (Fed. Cir. 1991). In Slimfold, the patent owner\n(Slimfold) claimed lost profits on its bi-fold doors with a patented pivot and guide rod\nassembly. This court noted, however, that Slimfold did not show \xe2\x80\x9cthat the alleged infringer\n[Kinkead] would not have made a substantial portion or the same number of sales had it\ncontinued with its old hardware or with the hardware utilized by any of the other companies.\xe2\x80\x9d\nId. at 1458. On the basis of this noninfringing substitute, which was not on the market at the\ntime of infringement, this court affirmed the district court\xe2\x80\x99s denial of lost profits. This court\ndetermined that the record supported the district court\xe2\x80\x99s finding that this noninfringing \xe2\x80\x9cold\nhardware\xe2\x80\x9d was available to Kinkead at the time of the infringement. Furthermore,\nconsumers considered Kinkead\xe2\x80\x99s noninfringing alternative an acceptable substitute for the\ninfringing doors. Therefore, this court upheld the district court\xe2\x80\x99s award of a \xe2\x80\x9csmall\xe2\x80\x9d royalty,\nrather than lost profits.\n[The court clarifies some (misguided) dicta from an earlier case, Zygo v. Wyko, 79 F.3d\n1356 (Fed. Cir. 1996), which had stated that \xe2\x80\x9cit is axiomatic that if a device is not available\nfor purchase, a defendant cannot argue that the device is an acceptable noninfringing\nalternative.\xe2\x80\x9d This is inconsistent with earlier cases like Slimfold and \xe2\x80\x9cat most reflects a\nfinding [limited to] the record in Zygo.\xe2\x80\x9d]\nGrain Processing asserts that permitting the infringer to show substitute availability\nwithout market sales, thereby avoiding lost profits, undercompensates for infringement.\nSection 284, however, sets the floor for \xe2\x80\x9cdamages adequate to compensate for the\ninfringement\xe2\x80\x9d as \xe2\x80\x9ca reasonable royalty.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 284. Thus, the statute specifically\nenvisions a reasonable royalty as a form of adequate compensation. While \xe2\x80\x9cdamages adequate\nto compensate\xe2\x80\x9d means \xe2\x80\x9cfull compensation,\xe2\x80\x9d General Motors, 461 U.S. at 654, \xe2\x80\x9cfull\ncompensation\xe2\x80\x9d does not entitle Grain Processing to lost profits in the absence of \xe2\x80\x9cbut for\xe2\x80\x9d\ncausation. Rite-Hite, 56 F.3d at 1545. Moreover, although Grain Processing stresses that\nAmerican Maize should not reap the benefit of its \xe2\x80\x9cchoice\xe2\x80\x9d to infringe rather than use the\nmore expensive Process IV, Grain Processing does not allege willful infringement and the\nrecord shows none. To the extent that Grain Processing feels undercompensated,2 it must\n\n[n.4 in opinion] The district court\xe2\x80\x99s 3% royalty rate yielded damages of approximately $2.4\nmillion; Grain Processing sought lost profits of $35 million, which with applicable interest presently\nimplies an award approaching $100 million.\n2\n\n\x0c430\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\npoint out a reversible error in the district court\xe2\x80\x99s fact-finding, reasoning, or legal basis for\ndenying lost profits or in its reasonable royalty determination.3\nIII.\nThis court next turns to the district court\xe2\x80\x99s findings that Process IV was in fact\n\xe2\x80\x9cavailable\xe2\x80\x9d to American Maize for producing Lo\xe2\x80\x93Dex 10 no later than October, 1979, and that\nconsumers would consider Process IV Lo\xe2\x80\x93Dex 10 an acceptable substitute. This court reviews\nthese factual findings for clear error. See Gargoyles v. United States, 113 F.3d 1572, 1573\n(Fed. Cir. 1997); Slimfold, 932 F.2d at 1458.\nThe critical time period for determining availability of an alternative is the period of\ninfringement for which the patent owner claims damages, i.e., the \xe2\x80\x9caccounting period.\xe2\x80\x9d\nSwitching to a noninfringing substitute after the accounting period does not alone show\navailability of the noninfringing substitute during this critical time. When an alleged\nalternative is not on the market during the accounting period, a trial court may reasonably\ninfer that it was not available as a noninfringing substitute at that time. The accused\ninfringer then has the burden to overcome this inference by showing that the substitute was\navailable during the accounting period. Mere speculation or conclusory assertions will not\nsuffice to overcome the inference. After all, the infringer chose to produce the infringing,\nrather than noninfringing, product. Thus, the trial court must proceed with caution in\nassessing proof of the availability of substitutes not actually sold during the period of\ninfringement. Acceptable substitutes that the infringer proves were available during the\naccounting period can preclude or limit lost profits; substitutes only theoretically possible\nwill not.\nIn this case, the district court did not base its finding that Process IV was available\nno later than October 1979 on speculation or possibilities, but rather on several specific,\nconcrete factual findings, none of which Grain Processing challenges on appeal. The district\ncourt found that American Maize could readily obtain all of the materials needed for Process\nIV, including the glucoamylase enzyme, before 1979. The court also found that the effects of\nthe enzymes in starch hydrolysis were well known in the field at that time. Furthermore, the\ncourt found that American Maize had all of the necessary equipment, know-how, and\nexperience to use Process IV to make Lo\xe2\x80\x93Dex 10, whenever it chose to do so during the time\nit was instead using Processes I, II or III. American Maize \xe2\x80\x9cdid not have to \xe2\x80\x98invent around\xe2\x80\x99\n\n[n.5 in opinion] The district court appears to have conducted a thorough royalty analysis,\nchallenged by neither party on appeal. The court candidly stated that the 3% rate is its \xe2\x80\x9cbest estimate,\xe2\x80\x9d\nan honest observation that would apply to most reasonable royalty analyses, given the difficulty of\ndetermining a hypothetical agreement between parties which did not actually agree on anything at\nall. The determination is perhaps more difficult when the patentee is not selling the patented product,\nas is the case here. Nevertheless, the district court supported its royalty amount with sound economic\ndata and with actual, observed behavior in the market. Though both parties maintained at trial that\nthey would not have agreed to a license including 3% royalties at the time of infringement, the\nappropriateness of the rate is perhaps reflected in the decision of the parties to forego an appeal on\nthis issue.\n3\n\n\x0cLOST PROFITS\n\n431\n\nthe patent,\xe2\x80\x9d the district court observed; \xe2\x80\x9call it had to do was use a glucoamaylase enzyme in\nits production process.\xe2\x80\x9d\nThe trial court also explained that \xe2\x80\x9cthe sole reason [American Maize did not use\nProcess IV prior to 1991] was economic: glucoamylase is more expensive than the alpha\namylase enzyme American Maize had been using,\xe2\x80\x9d and American Maize reasonably believed\nit had a noninfringing product. While the high cost of a necessary material can conceivably\nrender a substitute \xe2\x80\x9cunavailable,\xe2\x80\x9d the facts of this case show that glucoamylase was not\nprohibitively expensive to American Maize. The district court found that American Maize\xe2\x80\x99s\n\xe2\x80\x9csubstantial profit margins\xe2\x80\x9d on Lo\xe2\x80\x93Dex 10 were sufficient for it to absorb the 2.3% cost\nincrease using glucoamylase.\nMoreover, the district court\xe2\x80\x99s unchallenged finding that there is no \xe2\x80\x9ceconomically\nsignificant demand for a product having all of the [claimed] attributes\xe2\x80\x9d supports its\nconclusion of availability. Consumers demand \xe2\x80\x9clow-dextrose maltodextrins of which the\npatented product is just one exemplar.\xe2\x80\x9d Because consumers find the \xe2\x80\x9cwaxy\xe2\x80\x9d and \xe2\x80\x9cdescriptive\nratio\xe2\x80\x9d elements of claim 12 \xe2\x80\x9cirrelevant,\xe2\x80\x9d the prospect of an available, acceptable noninfringing\nsubstitute expands because a competitor may be able to drop or replace the \xe2\x80\x9cirrelevant\xe2\x80\x9d\nelements from its product. Compare Rite-Hite, 56 F.3d 1538 (upholding lost profits award for\npatentee\xe2\x80\x99s vehicle restraint\xe2\x80\x94not covered by the patent in suit\xe2\x80\x94because the patentee could\nexclude alleged substitute products with another patent) with King Instruments, 65 F.3d 941\n(upholding only a partial award of lost profits for patentee\xe2\x80\x99s tape rewinder\xe2\x80\x94not covered by\nany patent\xe2\x80\x94due to the availability of alternatives acceptable to some consumers); see also\nPanduit, 575 F.2d at 1156, 1160\xe2\x80\x9361 (holding that consumer demand for the \xe2\x80\x9cunique\nadvantages\xe2\x80\x9d of the patented invention, as opposed to substitutes lacking some elements, and\nthe infringer\xe2\x80\x99s \xe2\x80\x9cinability to avoid infringement even if it had wanted to,\xe2\x80\x9d established the lack\nof available, acceptable noninfringing alternatives). Grain Processing cannot exclude Process\nIV Lo\xe2\x80\x93Dex 10 because it does not have a patent on 10 D.E. maltodextrins, \xe2\x80\x9cthe economically\nsignificant product\xe2\x80\x9d as the district court stated, but rather on a particular variety of 10 D.E.\nmaltodextrins.\nThis court therefore does not detect, and the parties do not suggest, clear error in the\ndistrict court\xe2\x80\x99s factual findings on the availability of Process IV. These factual findings\nsupport the district court\xe2\x80\x99s conclusion that Process IV was available to American Maize for\nmaking noninfringing Lo\xe2\x80\x93Dex 10, no later than October 1991. American Maize had the\nnecessary chemical materials, the equipment, the know-how and experience, and the\neconomic incentive to produce Lo\xe2\x80\x93Dex 10 by Process IV throughout the entire accounting\nperiod. Whether and to what extent American Maize\xe2\x80\x99s alleged alternative prevents Grain\nProcessing from showing lost sales of Maltrin 100 depends not only on whether and when the\nalternative was available, but also on whether and to what extent it was acceptable as a\nsubstitute in the relevant market. Consumer demand defines the relevant market and\nrelative substitutability among products therein. Important factors shaping demand may\ninclude consumers\xe2\x80\x99 intended use for the patentee\xe2\x80\x99s product, similarity of physical and\nfunctional attributes of the patentee\xe2\x80\x99s product to alleged competing products, and price.\nWhere the alleged substitute differs from the patentee\xe2\x80\x99s product in one or more of these\n\n\x0c432\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nrespects, the patentee often must adduce economic data supporting its theory of the relevant\nmarket in order to show \xe2\x80\x9cbut for\xe2\x80\x9d causation.\nIn this case, the parties vigorously dispute the precise scope of the relevant market.\nThe district court\xe2\x80\x99s uncontroverted factual findings, however, render this dispute moot. In\nthe eyes of consumers, according to the district court, Process IV Lo\xe2\x80\x93Dex 10 was the same\nproduct, for the same price, from the same supplier as Lo\xe2\x80\x93Dex 10 made by other processes.\nProcess IV Lo\xe2\x80\x93Dex 10 was a perfect substitute for previous versions, and therefore Grain\nProcessing\xe2\x80\x99s efforts to show a distinct 10 D.E. maltodextrin market do not assist its lost\nprofits case.\nMarket evidence in the record supports the district court\xe2\x80\x99s uncontroverted findings\nand conclusions on acceptability. First, for example, American Maize\xe2\x80\x99s high profit margin on\nLo\xe2\x80\x93Dex 10 and the consumers\xe2\x80\x99 sensitivity to price changes support the conclusion that\nAmerican Maize would not have raised the price of Process IV Lo\xe2\x80\x93Dex 10 to offset the cost of\nglucoamylase. Further, American Maize\xe2\x80\x99s sales records showed no significant changes when\nit introduced Process IV Lo\xe2\x80\x93Dex 10 at the same price as previous versions, indicating that\nconsumers considered its important properties to be effectively identical to previous versions.\nWitness testimony supported this market data. Thus, this court discerns no clear error in the\ndistrict court\xe2\x80\x99s finding that Process IV Lo\xe2\x80\x93Dex 10 was an acceptable substitute in the\nmarketplace.\nIt follows from the district court\xe2\x80\x99s findings on availability and acceptability that Grain\nProcessing\xe2\x80\x99s theory of \xe2\x80\x9cbut for\xe2\x80\x9d causation fails. As the district court correctly noted, \xe2\x80\x9c[a]n\n[American Maize] using the dual-enzyme method between 1979 and 1991 . . . would have sold\nthe same product, for the same price, as the actual [American Maize] did . . .\xe2\x80\x9d and\nconsequently would have retained its Lo\xe2\x80\x93Dex 10 sales. Grain Processing did not present any\nother evidence of lost profits, such as individual lost transactions as in Rite-Hite Corp. v.\nKelley Co., 774 F. Supp. 1514, 1525\xe2\x80\x9326, 1528\xe2\x80\x9329 (E.D. Wis. 1991), aff\xe2\x80\x99d in part and vacated\non other grounds, 56 F.3d 1538. Thus, the district court properly determined that, absent\ninfringing Lo\xe2\x80\x93Dex 10, Grain Processing would have sold no more and no less Maltrin 100\nthan it actually did.\nIV.\nIn summary, this court requires reliable economic proof of the market that establishes\nan accurate context to project the likely results \xe2\x80\x9cbut for\xe2\x80\x9d the infringement. The availability\nof substitutes invariably will influence the market forces defining this \xe2\x80\x9cbut for\xe2\x80\x9d marketplace,\nas it did in this case. Moreover, a substitute need not be openly on sale to exert this influence.\nThus, with proper economic proof of availability, as American Maize provided the district\ncourt in this case, an acceptable substitute not on the market during the infringement may\nnonetheless become part of the lost profits calculus and therefore limit or preclude those\ndamages.\nThis court concludes that the district court did not err in considering an alternative\nnot on the market during the period of infringement, nor did it clearly err in determining\n\n\x0cLOST PROFITS\n\n433\n\nthat the alternative was available, acceptable, and precluded any lost profits. Accordingly,\nthe district court did not abuse its discretion in denying lost profits. This court affirms the\ndistrict court\xe2\x80\x99s decision.\n\nDiscussion Questions: Lost Profits Damages\n1. Panduit Factors. Under the four-part Panduit test presented in Rite-Hite, one way\nfor a patentee to prove entitlement to lost profits damages is to show (1) demand for the\npatented product; (2) the absence of acceptable noninfringing substitutes; (3) its own\nmanufacturing and marketing capability to exploit the demand; and (4) the amount of the\nprofit it would have made. The fourth element of the Panduit test is really the ultimate\nquestion rather than an independent factor. Why do the other elements make sense as a\nmatter of economic logic? Which do you think are most likely to be contested? How does Grain\nProcessing allow infringers to demonstrate acceptable noninfringing substitutes?\n2. Defining the Market. A key issue in most lost profits cases is how to define the\nrelevant market. The patentee wants the market defined broadly enough to include whatever\nshe is selling, but not so broadly that it includes noninfringing substitutes. What\xe2\x80\x99s wrong\nwith just defining the market as \xe2\x80\x9cproducts covered by the patent\xe2\x80\x9d? For a discussion of\ndifferent approaches to defining markets in IP and antitrust law, see Mark A. Lemley & Mark\nP. McKenna, Is Pepsi Really a Substitute for Coke? Market Definition in Antitrust and IP, 100\nGeo. L.J. 2055 (2012).\nIn Rite-Hite, the majority held that the patentee could recover lost profits because it\nwas selling a product in the same market as the infringing product, even though the\npatentee\xe2\x80\x99s product was not covered by the patent in suit. What do Judge Nies and the judges\nwho join her dissent think is wrong with this rule? Which view do you find more compelling?\nWhat if Rite-Hite were not selling any products covered by the patent-in-suit? Which rule\ncreates a stronger incentive for industry consolidation?\nHow do the courts define the relevant market in each case? If you were representing\nthe losing party in each appeal\xe2\x80\x94the infringer in Rite-Hite or the patentee in Grain\nProcessing\xe2\x80\x94how would you try to define the market to obtain a different result?\nWhat happens if the patentee is not the only firm in the market other than the\ninfringer? In State Industries v. Mor\xe2\x80\x93Flo Industries, 883 F.2d 1573 (Fed. Cir. 1989), the court\nallowed recovery under a \xe2\x80\x9cmarket-share rule,\xe2\x80\x9d under which the patent holder can recover for\nlost sales proportional to its market share. In Mor\xe2\x80\x93Flo, the patent owner had a 40% share of\nthe relevant market (the national market for foam water heaters), and the Federal Circuit\naffirmed an award of lost profits on 40% of the infringing sales and a reasonable royalty on\nthe other 60%. What economic assumptions is the market-share rule premised on? Given the\nassumption that the patentee would not have made the other 60% of sales, why should it\nreceive a reasonable royalty on those sales?\n\n\x0c434\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAntitrust economists have developed more sophisticated tools than Mor\xe2\x80\x93Flo\xe2\x80\x99s crude\napproach for assessing lost market share when products are differentiated (as is the case for\nmost products). See, e.g., Carl Shapiro, The 2010 Horizontal Merger Guidelines: From\nHedgehog to Fox in Forty Years, 77 Antitrust L.J. 49 (2010). Why do you think these tools\naren\xe2\x80\x99t reflected in Federal Circuit doctrine on patent damages?\n3. Convoyed Sales. In Rite-Hite, the court states that lost profits for unpatented\ncomponents sold with patented components are available only when all the components are\n\xe2\x80\x9canalogous to components of a single assembly or be parts of a complete machine, or they\nmust constitute a functional unit.\xe2\x80\x9d 56 F.3d at 1550. Sale of the functionally related\nunpatented components is known as a \xe2\x80\x9cconvoyed sale.\xe2\x80\x9d Lost profits aren\xe2\x80\x99t available if the\ncomponents don\xe2\x80\x99t have a functional relationship and are sold together merely because of\ncustomer demand, business convenience, or a marketing advantage. See, e.g., American\nSeating Co. v. USSC Group, Inc., 514 F.3d 1262 (Fed. Cir. 2008) (no functional relationship\nbetween patented wheelchair tie-down restraint system for buses and bus passenger seats\nfrom same supplier); Warsaw Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365 (Fed. Cir.\n2015) (no functional relationship between patented spinal implants and medical kits with\nunpatented screws and rods for holding the implants in place). If a patentee can prove that\nbut for the infringement, she would have sold more of the unpatented components, why\nshould the functional relationship matter? See Thomas F. Cotter, Comparative Patent\nRemedies 117\xe2\x80\x9318 (2013) (\xe2\x80\x9cThis rule is somewhat difficult to square with the overall thrust of\nthe Rite-Hite opinion, with its emphasis on restoring the patentee to the position it would\nhave occupied but for the infringement.\xe2\x80\x9d).\n4. Apportionment. In Mentor Graphics v. EVE-USA, 851 F.3d 1275 (Fed. Cir. 2017),\nthe Federal Circuit held that where the Panduit test is satisfied, the patent holder is entitled\nto lost profits for the entire product, even if the patent covers only one component of a\nmulticomponent product. Many commentators argued that this decision contravened the\nprinciple that damages should be based on the value of the patented invention, not the value\nof the product incorporating the invention, and that damages must be \xe2\x80\x9capportioned\xe2\x80\x9d between\nthose attributable to infringing versus noninfringing features. Do you think this is an\nimportant concern? For an argument that these concerns are alleviated by limiting Mentor\nGraphics to its unusual facts\xe2\x80\x94only two market competitors, only one of which holds a patent\non an essential feature\xe2\x80\x94see Jason Reinecke, Note, Lost Profits Damages for Multicomponent\nProducts: Clarifying the Debate, 71 Stan. L. Rev. 1621 (2019).\n5. Lost Profits for Foreign Sales. As discussed in Chapter 11, in WesternGeco LLC v.\nION Geophysical Corp., 138 S. Ct. 2129 (2018), the Supreme Court held that lost profits are\navailable for foreign sales in cases of infringement under 35 U.S.C. \xc2\xa7 271(f). The patent\nrelated to a system for surveying the ocean floor, and the patentee demonstrated at trial that\nit had lost ten specific contracts due to infringement by a firm that manufactured components\nfor a competing system and then shipped them to companies abroad. After WesternGeco, what\nkind of evidence would you look for if you represented an infringer arguing against lost profits\nfor foreign sales?\n\n\x0cLOST PROFITS\n\n435\n\nPractice Problems: Lost Profits Damages\nJuting exclusively licensed all substantial rights in her widget patent to Mateo. In\n2019, Lizy sold 100 infringing widgets for $2 each. Mateo sued. In 2019, Mateo had the\ncapacity to sell 1000 widgets. Each widget cost him $1 to manufacture, and he ended up\nselling 500 widgets at $2 each, for a total profit of $500. Lizy\xe2\x80\x99s manufacturing cost was $1.50\nper widget, so her profits were $50. There are no noninfringing substitutes, and from the\nperspective of consumers, Mateo\xe2\x80\x99s and Lizy\xe2\x80\x99s widgets are identical.\n1. Based solely on these facts, what damages should Mateo receive?\n2. What if Mateo sold only 100 widgets rather than 500?\n3. What if Mateo only had capacity to sell 500 widgets?\n4. What if Lizy\xe2\x80\x99s manufacturing cost was only $0.50 per widget?\n5. Mateo asserts that without Lizy\xe2\x80\x99s competition, he would have been able to charge $3\nper widget. If Mateo can prove this, what would the damages be? How should Lizy\nrespond to this argument?\n6. What if Mateo proves that he would have been able to charge $3 per widget, and Lizy\nshows that at the $3 price, Mateo would have made only 500 sales?\n7. What if Mateo shows that if he had made Lizy\xe2\x80\x99s 100 additional sales, his\nmanufacturing cost for those additional widgets would have been $0.50 per widget\ndue to economies of scale?\n8. What if Mateo shows that Lizy\xe2\x80\x99s competition required him to spend $100 on\nadvertising to maintain his market share?\n9. What if Lizy shows that she could have easily switched to selling a noninfringing\nwidget that is still identical to consumers, and which would have cost her $1.75 per\nwidget to manufacture?\n10. What if widget sales in 2019 comprised (a) 500 sales by Mateo under the patent, (b)\n100 infringing sales by Lizy, and (c) 500 sales by Kevin of a version that is identical\nto consumers, with all sales being made at $2 per widget?\n11. What if the widget market is growing, and Mateo argues that the year of infringement\ndamaged his brand and hurt his sales by 10% indefinitely going forward?\n12. What if Mateo shows that Lizy\xe2\x80\x99s widget sales also caused him to lose sales of doodads\nneeded to make a widget usable to customers, but he does not have a patent on\ndoodads?\n13. What if widgets cost Mateo $1 to manufacture regardless of the quantity, and the\ndemand curve is as follows (and widgets can only be made in 100-unit increments)?\n\n\x0c436\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nHint: If no one else enters the market, what quantity of widgets would Mateo choose\nto make?\n\n\x0cREASONABLE ROYALTIES\n\n437\n\n15. Reasonable Royalties\nLost profits damages might be thought of as the most straightforward means of\ncompensating the patent owner for the infringement. But in some cases, a patent owner will\nbe unable to prove lost profits damages. The patent owner might be a non-practicing entity\n(including, possibly, a research university) that does not manufacture or sell a product. It\nmight instead be in the business of licensing its patents to firms that want to use the\ntechnology. Or it might simply have difficulty (or be uninterested) in trying to prove lost\nprofits. As Chapter 14 should make clear, the lost profits calculation can be complex and\nchallenging, given that it requires constructing a counterfactual world in which the\ninfringement did not occur.\nTo address these circumstances, 35 U.S.C. \xc2\xa7 284 allows successful patent plaintiffs to\ncollect damages equal to a \xe2\x80\x9creasonable royalty\xe2\x80\x9d for the patent(s) at issue. Just as lost profits\ndamages are meant to compensate the patent holder by awarding it whatever profits it would\nhave made if infringement had not occurred, reasonable royalty damages are meant to\ncompensate the patent holder by awarding it whatever licensing fee it would have negotiated\nwith the infringer had the infringer negotiated rather than infringing. However, just as lost\nprofits can be difficult to calculate because they require constructing a counterfactual\nmarketplace that never existed, so too reasonable royalty damages can be difficult to\ncalculate because they involve constructing a hypothetical negotiation that never took place.\nThe following case explores these issues.\n\nLaserDynamics v. Quanta Computer, 694 F.3d 51 (Fed. Cir. 2012)\nJimmie Reyna, Circuit Judge.\nThese appeals come before us after two trials in the district court\xe2\x80\x94a first trial\nresolving the claims of patent infringement and damages, and a second trial ordered by the\ndistrict court to retry the damages issues.\nI. Background\nThe Patented Technology and the Optical Disc Drive Industry\nLaserDynamics, Inc. is the owner of U.S. Patent No. 5,587,981, which was issued in\n1996. The patent is directed to a method of optical disc discrimination that essentially enables\nan optical disc drive (ODD) to automatically identify the type of optical disc\xe2\x80\x94e.g., a compact\ndisc (CD) versus a digital video disc (DVD)\xe2\x80\x94that is inserted into the ODD. Claim 3, which\nwas asserted at trial, is representative:\n\n\x0c438\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n3. An optical disk reading method comprising the steps of:\nprocessing an optical signal reflected from encoded pits on an optical\ndisk until total number of data layers and pit configuration standard of\nthe optical disk is identified;\ncollating the processed optical signal with an optical disk standard data\nwhich is stored in a memory; and\nsettling modulation of servomechanism means dependent upon the\noptical disk standard data which corresponds with the processed optical\nsignal;\n(c) [sic] the servomechanism means including:\na focusing lens servo to modulate position of a focusing lens; and\na tracking servo to modulate movement of a pickup.\n\nThis automated process saves the user from having to manually identify the kind of\ndisc being inserted before the ODD can begin to read the data on the disc. The patented\ntechnology is alleged to be particularly useful in laptop computers where portability,\nconvenience, and efficiency are essential. At least as early as 2006, a laptop computer was\nnot commercially viable unless it included an ODD that could automatically discriminate\nbetween optical discs. [Eds: As with many technologies, this success was short-lived; Apple\nstarted eliminating ODDs from laptops in 2012, and other firms have followed suit.]\nYasuo Kamatani is the sole inventor of the \xe2\x80\x99981 Patent. In 1998, viewing DVD\ntechnology as the next major data and video format, Mr. Kamatani founded LaserDynamics\nand assigned the \xe2\x80\x99981 Patent to the company. Mr. Kamatani is the sole employee of\nLaserDynamics, which is exclusively in the business of licensing Mr. Kamatani\xe2\x80\x99s patents to\nODD and consumer electronics manufacturers.\nWhen LaserDynamics was founded, the DVD market had reached few mainstream\nconsumers, and there was some skepticism as to the likely success of this technology\ncompared with the established VHS format. By 2000, however, DVD sales and the ODD\nmarket were sharply rising. By 2003, most homes had DVD players and nearly every\ncomputer had an ODD. An ODD having automatic disc discrimination capability quickly\nbecame the industry standard for DVD players and computers.\nLaserDynamics\xe2\x80\x99 Licensing History of the \xe2\x80\x99981 Patent\nAccording to LaserDynamics, it was initially difficult to generate interest in licensing\nthe \xe2\x80\x99981 Patent, due to the novelty of the technology and LaserDynamics\xe2\x80\x99 limited operating\ncapital and bargaining power. Nevertheless, LaserDynamics entered into sixteen licensing\nagreements from 1998 to 2001. These licenses were granted to well known electronics and\nODD manufacturers such as Sony, Philips, NEC, LG, Toshiba, Hitachi, Yamaha, Sanyo,\nSharp, Onkyo, and Pioneer. All of the licenses were nonexclusive licenses granted in\n\n\x0cREASONABLE ROYALTIES\n\n439\n\nexchange for one time lump sum payments ranging from $57,000 to $266,000. These sixteen\nlicenses were admitted into evidence in the first trial, as explained below.\nSeveral other lump sum licenses were granted by LaserDynamics between 1998 and\n2003 to other ODD and electronics manufacturers via more aggressive licensing efforts\ninvolving actual or threatened litigation by LaserDynamics.\nOn February 15, 2006, LaserDynamics entered into a license agreement with BenQ\nCorporation to settle a two-year long litigation for a lump sum of $6 million. This settlement\nagreement was executed within two weeks of the anticipated trial against BenQ. By the time\nof the settlement, BenQ had been repeatedly sanctioned by the district court for discovery\nmisconduct and misrepresentation.\nFinally, in 2009 and 2010, LaserDynamics entered into license agreements with\nASUSTeK Computer and Orion Electric Co., Ltd., respectively, for lump sum payments of $1\nmillion or less.\nIn total, twenty-nine licenses were entered into evidence in the second damages trial.\nWith the exception of the $6 million BenQ license, all twenty-nine licenses were for lump sum\namounts of $1 million or less.\nQuanta Computer Inc. and Quanta Storage Inc.\nQuanta Storage, Inc. (QSI) is a manufacturer of ODDs that was incorporated in 1999.\nQSI is headquartered in Taiwan and is a partially-owned subsidiary of Quanta Computer,\nInc. (QCI), with which it shares some common officers, directors, and facilities. QCI\xe2\x80\x99s\ncorporate headquarters are also located in Taiwan, and its factories are located in China. QCI\nholds a minority share in QSI and does not control QSI\xe2\x80\x99s operations.\nQCI assembles laptop computers for its various customers, which include name brand\ncomputer companies such as Dell, Hewlett Packard (HP), Apple, and Gateway. QCI does not\nmanufacture ODDs, but will install ODDs into computers as instructed by its customers. QSI\nfirst sold its ODDs for integration into laptop computers in the United States in 2001. In\n2002, LaserDynamics offered QSI a license under the \xe2\x80\x99981 Patent, but QSI disputed whether\nits ODDs were within the scope of the \xe2\x80\x99981 Patent and declined the offer. QCI sold its first\ncomputer in the United States using an ODD from QSI in 2003. It was not until August 2006\nthat LaserDynamics offered a license to QCI concurrently with the filing of this lawsuit. To\ndate, neither QSI nor QCI has entered into a licensing agreement with LaserDynamics\nrelating to the \xe2\x80\x99981 Patent.\nII. Procedural History\nBased on [pretrial] rulings [on exhaustion and implied licenses], LaserDynamics\ndropped its claims against QSI and opted to pursue its active inducement of infringement\nclaims against QCI only at trial. QCI was first on notice of the \xe2\x80\x99981 Patent in August 2006\nwhen the complaint was filed. Between August 2006 and the conclusion of the first trial in\nJune 2009, QCI sold approximately $2.53 billion of accused laptops into the United States.\n\n\x0c440\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nLaserDynamics sought reasonable royalty damages under 35 U.S.C. \xc2\xa7 284. Pursuant to the\nanalytical framework for assessing a reasonable royalty set forth in Georgia-Pacific Corp. v.\nUnited States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), the date of the \xe2\x80\x9chypothetical\nnegotiation\xe2\x80\x9d between the parties was deemed by the district court to be August 2006\xe2\x80\x94the\ndate that QCI first became aware of the \xe2\x80\x99981 Patent and was therefore first potentially liable\nfor active inducement of infringement.\nThe First Trial\nThe damages theory advanced by LaserDynamics in the first trial was presented\nchiefly through LaserDynamics\xe2\x80\x99 expert, Mr. Emmett Murtha. Mr. Murtha opined that a\nrunning royalty of 2% of the total sales of laptop computers by QCI is what the parties would\nhave agreed to as a reasonable royalty had they engaged in a hypothetical negotiation in\nAugust 2006.\nTo arrive at his 2% per laptop computer royalty rate, Mr. Murtha began by finding\nthat 6% would be a reasonable royalty rate to pay with respect to an ODD alone. Mr. Murtha\nreached his conclusion of a 6% per ODD royalty by relying on \xe2\x80\x9ccomparable rates in two\nseparate licensing programs involving DVDs where the rates were 3.5 in one case and 4\npercent in another case.\xe2\x80\x9d He also relied on \xe2\x80\x9ca very comprehensive royalty survey that was\ndone by the Licensing Executive Society in 1997,\xe2\x80\x9d which he viewed as \xe2\x80\x9ca standard textbook\nfor people who are seeking to set reasonable royalty rates.\xe2\x80\x9d The licensing survey \xe2\x80\x9cwas across\nwhatever technologies were being licensed by the people who responded,\xe2\x80\x9d and suggested that\nin general, across all of those unrelated technologies, \xe2\x80\x9cfor a minor improvement, we would\ncharge 2 to 5 percent. For a major improvement, we would charge 4 to 8 percent. And for a\nmajor breakthrough, 6 to 15 percent . . . .\xe2\x80\x9d\nBased on his discussions with LaserDynamics\xe2\x80\x99 other experts, Mr. Murtha concluded\nthat the patented technology in the ODD is responsible for one-third of the value of a laptop\ncomputer containing such an ODD. Thus, he arrived at his 2% per laptop computer rate\nsimply by taking one-third of the 6% rate for the ODD. When Mr. Murtha\xe2\x80\x99s proffered 2%\nrunning royalty rate was applied to QCI\xe2\x80\x99s total revenues from sales of laptop computers in\nthe United States\xe2\x80\x94$2.53 billion\xe2\x80\x94the resulting figure presented to the jury was $52.1\nmillion.\nBy contrast, QCI\xe2\x80\x99s theory of damages was that a lump sum of $500,000 would be a\nreasonable royalty. QCI\xe2\x80\x99s expert found the 16 licenses in evidence\xe2\x80\x94all lump sums ranging\nbetween $50,000 and $266,000\xe2\x80\x94to be highly indicative of the value of the patented\ntechnology according to LaserDynamics, and of what a reasonable accused infringer would\nagree to pay for a license.\nThe First Jury Verdict and Post\xe2\x80\x93Trial Proceedings\nThe jury ultimately returned a verdict finding QCI liable for active inducement of\ninfringement, and awarded $52 million in damages to LaserDynamics, almost the exact\namount proffered by Mr. Murtha. After the verdict, QCI filed a motion for a remittitur or new\n\n\x0cREASONABLE ROYALTIES\n\n441\n\ntrial pursuant to Federal Rule of Civil Procedure 59(a). In this motion, QCI argued that the\nverdict was grossly excessive and against the great weight of the evidence, and for the first\ntime argued that Mr. Murtha\xe2\x80\x99s testimony should have been excluded due to his unreliable\nmethodology in applying the \xe2\x80\x9centire market value rule\xe2\x80\x9d\xe2\x80\x94i.e., using the revenues from sales\nof the entire laptop computers as the royalty base\xe2\x80\x94without having established that the\npatented feature drives the demand for the entire laptop computer. The district court granted\nQCI\xe2\x80\x99s motion, finding that LaserDynamics had indeed improperly invoked the entire market\nvalue rule.\nThe Second Trial\n[Before and during the second trial on damages, QCI made various objections that are\ndiscussed in detail below.] LaserDynamics offered testimony that damages should be $10.5\nmillion based on a running royalty of 6% of the average price of a standalone ODD. QCI\xe2\x80\x99s\nexpert testified that the appropriate damages amount was a lump sum payment of $1.2\nmillion, based in large part on the fact that none of the now twenty-nine licenses in evidence\n(excluding the BenQ settlement) exceeded lump sum amounts of $1 million. Based on\nevidence that QCI could have switched from QSI drives to other licensed ODD suppliers to\navoid infringement at a cost of $600,000, QCI\xe2\x80\x99s expert also opined that QCI would have paid\ntwice that amount to have the freedom to use ODDs from any supplier. The jury ultimately\nawarded a lump sum amount of $8.5 million in damages.\n[Both parties appealed on multiple grounds.]\nIII. Discussion\nFor reasons explained in detail below, we hold: [1] that the district court properly\ngranted a new trial on damages following the first jury verdict; . . . [2] that the district court\nerred by setting the hypothetical negotiation date as August 2006; [3] that the district court\nerred in admitting the BenQ settlement agreement into evidence; and [4] that the district\ncourt erred in permitting Mr. Murtha to offer his opinion concerning a 6% per ODD running\nroyalty rate based on ODD average price as a proper measure of reasonable royalty damages\nin the second trial. We address each of these issues in turn.\nThe District Court Properly Granted a New Trial on Damages\nBy statute, reasonable royalty damages are deemed the minimum amount of\ninfringement damages \xe2\x80\x9cadequate to compensate for the infringement.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 284.\nWhere small elements of multi-component products are accused of infringement, calculating\na royalty on the entire product carries a considerable risk that the patentee will be improperly\ncompensated for non-infringing components of that product. Thus, it is generally required\nthat royalties be based not on the entire product, but instead on the \xe2\x80\x9csmallest salable patentpracticing unit.\xe2\x80\x9d\nThe entire market value rule is a narrow exception to this general rule. If it can be\nshown that the patented feature drives the demand for an entire multi-component product,\na patentee may be awarded damages as a percentage of revenues or profits attributable to\n\n\x0c442\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthe entire product. Rite-Hite v. Kelley Co., 56 F.3d 1538, 1549, 1551 (Fed. Cir. 1995) (en banc).\nIn other words, \xe2\x80\x9c[t]he entire market value rule allows for the recovery of damages based on\nthe value of an entire apparatus containing several features, when the feature patented\nconstitutes the basis for customer demand.\xe2\x80\x9d Lucent Techs. v. Gateway, 580 F.3d 1301, 1336\n(Fed. Cir. 2009).\nImportantly, the requirement to prove that the patented feature drives demand for\nthe entire product may not be avoided by the use of a very small royalty rate. We recently\nrejected such a contention and clarified that \xe2\x80\x9c[t]he Supreme Court and this court\xe2\x80\x99s precedents\ndo not allow consideration of the entire market value of accused products for minor patent\nimprovements simply by asserting a low enough royalty rate.\xe2\x80\x9d Uniloc USA v. Microsoft, 632\nF.3d 1292, 1319\xe2\x80\x9320 (Fed. Cir. 2011). We reaffirm that in any case involving multi-component\nproducts, patentees may not calculate damages based on sales of the entire product, as\nopposed to the smallest salable patent-practicing unit, without showing that the demand for\nthe entire product is attributable to the patented feature.\nRegardless of the chosen royalty rate, one way in which the error of an improperly\nadmitted entire market value rule theory manifests itself is in the disclosure of the revenues\nearned by the accused infringer associated with a complete product rather than the patented\ncomponent only. In Uniloc, we observed that such disclosure to the jury of the overall product\nrevenues \xe2\x80\x9ccannot help but skew the damages horizon for the jury, regardless of the\ncontribution of the patented component to this revenue.\xe2\x80\x9d Id. at 1320 (noting that \xe2\x80\x9cthe $19\nbillion cat was never put back into the bag,\xe2\x80\x9d and that neither cross-examination nor a\ncurative jury instruction could have offset the resulting unfair prejudice). Admission of such\noverall revenues, which have no demonstrated correlation to the value of the patented feature\nalone, only serve to make a patentee\xe2\x80\x99s proffered damages amount appear modest by\ncomparison, and to artificially inflate the jury\xe2\x80\x99s damages calculation beyond that which is\n\xe2\x80\x9cadequate to compensate for the infringement.\xe2\x80\x9d Id.; see 35 U.S.C. \xc2\xa7 284.\nTurning to the facts of this case, LaserDynamics and Mr. Murtha unquestionably\nadvanced an entire market value rule theory in the first trial. Mr. Murtha opined that a 2%\nrunning royalty applied to QCI\xe2\x80\x99s total revenues from sales of laptop computers in the United\nStates\xe2\x80\x94$2.53 billion\xe2\x80\x94was an appropriate and reasonable royalty. The resulting figure\npresented to the jury was $52.1 million, and the jury awarded damages in nearly that exact\namount.\nLaserDynamics\xe2\x80\x99 use of the entire market value rule was impermissible, however,\nbecause LaserDynamics failed to present evidence showing that the patented disc\ndiscrimination method drove demand for the laptop computers. It is not enough to merely\nshow that the disc discrimination method is viewed as valuable, important, or even essential\nto the use of the laptop computer. Nor is it enough to show that a laptop computer without\nan ODD practicing the disc discrimination method would be commercially unviable. Were\nthis sufficient, a plethora of features of a laptop computer could be deemed to drive demand\nfor the entire product. To name a few, a high resolution screen, responsive keyboard, fast\nwireless network receiver, and extended-life battery are all in a sense important or essential\n\n\x0cREASONABLE ROYALTIES\n\n443\n\nfeatures to a laptop computer; take away one of these features and consumers are unlikely\nto select such a laptop computer in the marketplace. But proof that consumers would not\nwant a laptop computer without such features is not tantamount to proof that any one of\nthose features alone drives the market for laptop computers. Put another way, if given a\nchoice between two otherwise equivalent laptop computers, only one of which practices\noptical disc discrimination, proof that consumers would choose the laptop computer having\nthe disc discrimination functionality says nothing as to whether the presence of that\nfunctionality is what motivates consumers to buy a laptop computer in the first place. It is\nthis latter and higher degree of proof that must exist to support an entire market value rule\ntheory.\nOur decision in Lucent is illustrative. There, the patent at issue involved a helpful and\nconvenient \xe2\x80\x9cdate picker\xe2\x80\x9d feature that was being used within the grand scheme of Microsoft\xe2\x80\x99s\nOutlook email software. We held that because the patented feature was \xe2\x80\x9cbut a tiny feature\nof one part of a much larger software program,\xe2\x80\x9d a royalty could not be properly calculated\nbased on the value of the entire Outlook program because \xe2\x80\x9cthere was no evidence that\nanybody anywhere at any time ever bought Outlook . . . because it had [the patented] date\npicker.\xe2\x80\x9d Lucent, 580 F.3d at 1332\xe2\x80\x9333.\nIn this case, Mr. Murtha never conducted any market studies or consumer surveys to\nascertain whether the demand for a laptop computer is driven by the patented technology.\nOn the record before us, the patented method is best understood as a useful commodity-type\nfeature that consumers expect will be present in all laptop computers.\nFurthermore, Mr. Murtha\xe2\x80\x99s one-third apportionment to bring his royalty rate down\nfrom 6% per ODD to 2% per laptop computer appears to have been plucked out of thin air\nbased on vague qualitative notions of the relative importance of the ODD technology. The\ndistrict court correctly concluded that \xe2\x80\x9c[a]lthough [LaserDynamics] argues that the many\nactivities that may be performed on a computer using a disk drive, such as playing movies,\nmusic and games, transferring documents, backing up files, and installing software comprise\na third of the value of a computer, [Mr. Murtha] offers no credible economic analysis to\nsupport that conclusion.\xe2\x80\x9d This complete lack of economic analysis to quantitatively support\nthe one-third apportionment echoes the kind of arbitrariness of the \xe2\x80\x9c25% Rule\xe2\x80\x9d [as a starting\npoint for royalty calculations] that we recently and emphatically rejected from damages\nexperts, and would alone justify excluding Mr. Murtha\xe2\x80\x99s opinions in the first trial.\nFinally, we reject the contention that practical and economic necessity compelled\nLaserDynamics to base its royalty on the price of an entire laptop computer. LaserDynamics\nemphasizes that QCI is in the business of assembling and selling complete laptop computers,\nnot independent ODDs, and that QCI does not track the prices, revenues, or profits associated\nwith individual components. Likewise, LaserDynamics points out that QCI purchases ODDs\nfor a \xe2\x80\x9cmask price,\xe2\x80\x9d which the district court described as \xe2\x80\x9cnominal\xe2\x80\x9d and essentially \xe2\x80\x9can\naccounting fiction\xe2\x80\x9d that offers \xe2\x80\x9clittle evidence of the drives\xe2\x80\x99 actual value.\xe2\x80\x9d\nLaserDynamics overlooks that a per-unit running royalty is not the only form of a\nreasonable royalty that the parties might have agreed to in a hypothetical negotiation. An\n\n\x0c444\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nalternate form is evidenced by the many license agreements to the \xe2\x80\x99981 Patent in the record\nfor lump sum royalties that are not calculated as a percentage of any component or product,\nwhich immediately belies the argument that using a laptop computer as the royalty base is\n\xe2\x80\x9cnecessary.\xe2\x80\x9d LaserDynamics\xe2\x80\x99 necessity argument also fails to address the fundamental\nconcern of the entire market value rule. If difficulty in precisely identifying the value of the\nODDs is what justifies using complete laptop computers as the royalty base, when it comes\ntime to then apportion a royalty rate that accounts for the ODD contribution only, the\nexceedingly difficult and error-prone task of discerning the ODD\xe2\x80\x99s value relative to all other\ncomponents in the laptop remains.\nThe District Court Erred by Setting the Hypothetical Negotiation Date as August 31, 2006\nDuring both trials, QCI was bound by the district court\xe2\x80\x99s ruling that the hypothetical\nnegotiation date for purposes of the Georgia-Pacific reasonable royalty analysis was August\n2006\xe2\x80\x94i.e., when the lawsuit was filed. The district court reasoned that since QCI was being\naccused of active inducement of infringement, which requires knowledge of the patent, and\nsince QCI was not notified of the patent until August 2006, this date was when QCI first\nbecame liable to LaserDynamics. Based in large part on this late date, LaserDynamics\xe2\x80\x99 expert\nMr. Murtha testified that he disregarded almost all of LaserDynamics\xe2\x80\x99 twenty-nine licenses\nin evidence that were executed earlier, reasoning that the economic landscape had since\nchanged.\nWe have explained that \xe2\x80\x9c[t]he correct determination of [the hypothetical negotiation]\ndate is essential for properly assessing damages.\xe2\x80\x9d Integra Lifesciences I, Ltd. v. Merck KGaA,\n331 F.3d 860, 870 (Fed. Cir. 2003). In general, the date of the hypothetical negotiation is the\ndate that the infringement began.\nWe have also been careful to distinguish the hypothetical negotiation date from other\ndates that trigger infringement liability. For example, the six-year limitation on recovery of\npast damages under 35 U.S.C. \xc2\xa7 286 does not preclude the hypothetical negotiation date from\ntaking place on the date infringement began, even if damages cannot be collected until some\ntime later. Similarly, the failure to mark a patented product or prove actual notice of the\npatent pursuant to 35 U.S.C. \xc2\xa7 287 precludes the recovery of damages prior to the marking\nor notice date, but the hypothetical negotiation date may nevertheless be properly set before\nmarking or notice occurs. In sum, \xe2\x80\x9c[a] reasonable royalty determination for purposes of\nmaking a damages evaluation must relate to the time infringement occurred, and not be an\nafter-the-fact assessment.\xe2\x80\x9d Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1313 (Fed.\nCir. 2002).\nHere, there is no dispute that while QCI first became liable for active inducement of\ninfringement in August 2006, QCI\xe2\x80\x99s sales of accused laptop computers into the United States\nbegan causing the underlying direct infringement by end users in 2003. From the premise\nthat the hypothetical negotiation must focus on the date when the infringement began, we\nnote that active inducement of infringement is, by definition, conduct that causes and\nencourages infringement. Thus, we hold that in the context of active inducement of\n\n\x0cREASONABLE ROYALTIES\n\n445\n\ninfringement, a hypothetical negotiation is deemed to take place on the date of the first direct\ninfringement traceable to QCI\xe2\x80\x99s first instance of inducement conduct\xe2\x80\x94in this case, 2003.\nOur holding is consistent with the purpose of the hypothetical negotiation framework,\nwhich seeks to discern the value of the patented technology to the parties in the marketplace\nwhen infringement began. In considering the fifteen Georgia-Pacific factors, it is presumed\nthat the parties had full knowledge of the facts and circumstances surrounding the\ninfringement at that time. Indeed, the basic question posed in a hypothetical negotiation is:\nif, on the eve of infringement, a willing licensor and licensee had entered into an agreement\ninstead of allowing infringement of the patent to take place, what would that agreement be?\nThis question cannot be meaningfully answered unless we also presume knowledge of the\npatent and of the infringement at the time the accused inducement conduct began. Were we\nto permit a later notice date to serve as the hypothetical negotiation date, the damages\nanalysis would be skewed because, as a legal construct, we seek to pin down how the\nprospective infringement might have been avoided via an out-of-court business solution.\nThe District Court Erred in Admitting the BenQ Settlement Agreement\nBefore the second trial, QCI filed a motion in limine seeking to exclude the 2006\nLaserDynamics\xe2\x80\x93BenQ settlement agreement from evidence pursuant to Federal Rule of\nEvidence 403. QCI\xe2\x80\x99s motion emphasized the unique circumstances of the BenQ settlement,\nwhich was entered into on the eve of trial after BenQ had been repeatedly sanctioned by the\ndistrict court. We conclude that the district court abused its discretion in denying QCI\xe2\x80\x99s\nmotion and allowing the agreement into evidence.\nRule 403 provides for the exclusion of otherwise relevant evidence when the probative\nvalue of that evidence is substantially outweighed by the danger of unfair prejudice,\nconfusing the issues, or misleading the jury. Along these lines, Federal Rule of Evidence 408\nspecifically prohibits the admission of settlement offers and negotiations offered to prove the\namount of damages owed on a claim. The notion that license fees that are tainted by the\ncoercive environment of patent litigation are unsuitable to prove a reasonable royalty is a\nlogical extension of Georgia-Pacific, the premise of which assumes a voluntary agreement\nwill be reached between a willing licensor and a willing licensee, with validity and\ninfringement of the patent not being disputed. See 318 F. Supp. at 1120.\nDespite the longstanding disapproval of relying on settlement agreements to establish\nreasonable royalty damages, we recently permitted such reliance under certain limited\ncircumstances. See ResQNet.com v. Lansa, 594 F.3d 860, 870\xe2\x80\x9372 (Fed. Cir. 2010) (explaining\nthat a settlement license to the patents-in-suit in a running royalty form was \xe2\x80\x9cthe most\nreliable license in [the] record\xe2\x80\x9d when compared with other licenses that did not \xe2\x80\x9ceven mention\nthe patents-in-suit or show any other discernible link to the claimed technology\xe2\x80\x9d). We\npermitted consideration of the settlement license on remand, but we cautioned the district\ncourt to consider the license in its proper context within the hypothetical negotiation\nframework to ensure that the reasonable royalty rate reflects \xe2\x80\x9cthe economic demand for the\nclaimed technology.\xe2\x80\x9d Id. at 872.\n\n\x0c446\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nUnlike the license in ResQNet, the BenQ settlement agreement is far from being the\n\xe2\x80\x9cmost reliable license in [the] record.\xe2\x80\x9d 594 F.3d at 872. Indeed, the BenQ settlement\nagreement appears to be the least reliable license by a wide margin. The BenQ settlement\nagreement was executed shortly before a trial\xe2\x80\x94a trial in which BenQ would have been at a\nsevere legal and procedural disadvantage given the numerous harsh sanctions imposed on it\nby the district court. The $6 million lump sum license fee is six times larger than the next\nhighest amount paid for a license to the patent-in-suit, and ostensibly reflects not the value\nof the claimed invention but the strong desire to avoid further litigation under the\ncircumstances. LaserDynamics executed twenty-nine licenses for the patent-in-suit in total,\nthe vast majority of which are not settlements of active litigation and do not involve the\nunique coercive circumstances of the BenQ settlement agreement, and which are therefore\nfar more reliable indicators of what willing parties would agree to in a hypothetical\nnegotiation. Additionally, in light of the changing technological and financial landscape in\nthe market for ODDs, the BenQ settlement, entered into a full three years after the\nhypothetical negotiation date, is in many ways not relevant to the hypothetical negotiation\nanalysis. This record stands in stark contrast to that in ResQNet, where a lone settlement\nagreement stood apart from all other licenses in the record as being uniquely relevant and\nreliable. This case is therefore well outside the limited scope of circumstances under which\nwe deemed the settlement agreement in ResQNet admissible and probative. The probative\nvalue of the BenQ settlement agreement is dubious in that it has very little relation to\ndemonstrated economic demand for the patented technology, and its probative value is\ngreatly outweighed by the risk of unfair prejudice, confusion of the issues, and misleading\nthe jury. Fed. R. Evid. 403. Accordingly, we conclude that the district court abused its\ndiscretion by admitting the BenQ settlement agreement into evidence, and must exclude the\nagreement from the proceedings on remand.\nThe District Court Erred in Admitting Mr. Murtha\xe2\x80\x99s Opinions Concerning a 6% Royalty\nRate Per $41 ODD\nBecause we are remanding to the district court for a new trial on damages under the\nproper 2003 hypothetical negotiation date, we do not reach QCI\xe2\x80\x99s argument that the second\njury verdict of an $8.5 million lump sum lacks evidentiary support, so as to entitle QCI to a\n$1.2 million judgment on damages as a matter of law. However, for the purposes of remand,\nwe do reach QCI\xe2\x80\x99s Daubert challenge1 to Mr. Murtha\xe2\x80\x99s methodology in the second trial and\nfind that the district court erred in allowing the jury to hear his testimony concerning a 6%\nroyalty rate derived from the Sony-made $41 ODDs.\n1. Mr. Murtha\xe2\x80\x99s Use of the Sony\xe2\x80\x93Made $41 ODDs\nQCI argues that Mr. Murtha\xe2\x80\x99s testimony in the second trial was unreliable for using\na $41 per ODD value that was calculated based on a relatively small sample of about 9,000\nnon-infringing drives made by Sony, not by QSI. We disagree.\n\n[Eds: Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), trial judges\nserve as gatekeepers for expert evidence, excluding testimony that is not reliable and relevant.]\n1\n\n\x0cREASONABLE ROYALTIES\n\n447\n\nLaserDynamics contends that the $41 price of the Sony ODDs was more appropriate\nthan the $28 mask price used in the first trial with respect to QSI-made ODDs. According to\nLaserDynamics, since QCI does not track prices and revenues of the ODDs that it buys to\nincorporate into laptop computers, and does not generally sell stand alone ODDs, the $41\nSony-made drives that QCI sells as replacement parts better reflect the market value for\nODDs independent of the completed laptop computers. QCI counters that the $41 price was\nunreliable because it was based on a small sample size of licensed and therefore noninfringing drives, which is irrelevant to the price of the accused drives, and because the record\nshows that the $28 mask price of the accused QSI-made drives is always higher than the\nprice to the consumer.\nAs the district court explained, \xe2\x80\x9c[Mr. Murtha\xe2\x80\x99s] approach appears to be a reasonable\nattempt to value [QCI\xe2\x80\x99s] drives based on arms-length transactions. Although the jury may\nultimately determine that [Mr. Murtha\xe2\x80\x99s] approach is unreasonable, the approach is not\nsubject to a Daubert challenge.\xe2\x80\x9d We conclude that the district court did not abuse its\ndiscretion in declining to exclude Mr. Murtha\xe2\x80\x99s use of the $41 Sony-made ODDs on Daubert\ngrounds.\n2. Mr. Murtha\xe2\x80\x99s 6% Royalty Rate Per ODD\nQCI contends that Mr. Murtha\xe2\x80\x99s opinion that a reasonable royalty in this case would\nbe 6% of each ODD sold within a laptop computer by QCI was unreliable under Federal Rule\nof Evidence 702 and should have been excluded. We agree.\nThe first of the fifteen factors in Georgia-Pacific is \xe2\x80\x9cthe royalties received by the\npatentee for the licensing of the patent in suit, proving or tending to prove an established\nroyalty.\xe2\x80\x9d 318 F. Supp. at 1120. Actual licenses to the patented technology are highly probative\nas to what constitutes a reasonable royalty for those patent rights because such actual\nlicenses most clearly reflect the economic value of the patented technology in the\nmarketplace.\nWhen relying on licenses to prove a reasonable royalty, alleging a loose or vague\ncomparability between different technologies or licenses does not suffice. For example, in\nLucent, where the patentee had relied on various licenses in the same general computer field\nwithout proving a relationship to the patented technology or the accused infringing products,\nwe insisted that the \xe2\x80\x9clicenses relied upon by the patentee in proving damages [be] sufficiently\ncomparable to the hypothetical license at issue in suit,\xe2\x80\x9d and noted that the patentee\xe2\x80\x99s failure\nto prove comparability \xe2\x80\x9cweighs strongly against the jury\xe2\x80\x99s award\xe2\x80\x9d relying on the noncomparable licenses. 580 F.3d at 1325, 1332.\nLikewise, in ResQNet, the patentee\xe2\x80\x99s expert \xe2\x80\x9cused licenses with no relationship to the\nclaimed invention to drive the royalty rate up to unjustified double-digit levels,\xe2\x80\x9d and which\nhad no \xe2\x80\x9cother discernible link to the claimed technology.\xe2\x80\x9d 594 F.3d at 870. We rejected this\ntestimony, holding that the district court \xe2\x80\x9cmust consider licenses that are commensurate with\nwhat the defendant has appropriated. If not, a prevailing plaintiff would be free to inflate the\n\n\x0c448\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nreasonable royalty analysis with conveniently selected licenses without an economic or other\nlink to the technology in question.\xe2\x80\x9d Id. at 872.\nActual licenses to the patents-in-suit are probative not only of the proper amount of a\nreasonable royalty, but also of the proper form of the royalty structure. In Wordtech Systems\nv. Integrated Network Solutions, the patentee relied on thirteen patent licenses that it\npreviously granted to third parties. 609 F.3d 1308, 1319 (Fed. Cir. 2010). We rejected the\npatentee\xe2\x80\x99s reliance on eleven of the thirteen licenses for being in the form of a running royalty\n(whereas the patentee had sought a lump sum payment) and for including royalty rates far\nlower than the jury returned. Id. at 1320\xe2\x80\x9321. The remaining two licenses, although in the\nform of lump sums, were also rejected for not describing how the lump sums were calculated\nor the type and volume of products intended to be covered by the licenses. Id. at 1320. We\nultimately reversed the $250,000 verdict and remanded for a new trial on damages because\n\xe2\x80\x9cthe verdict was clearly not supported by the evidence and based only on speculation or\nguesswork.\xe2\x80\x9d Id. at 1319\xe2\x80\x9322.\nIn this case, the district court denied QCI\xe2\x80\x99s Daubert motion and permitted Mr. Murtha\nto testify concerning his opinion of a 6% running royalty rate. However, the district court\ninsisted that LaserDynamics prove that two DVD-related patent licensing programs and the\n1997 Licensing Executives Survey relied on by Mr. Murtha (to the exclusion of the many past\nlicenses for the \xe2\x80\x99981 patent) were sufficiently comparable to the hypothetically negotiated\nlicense Mr. Murtha proffered.\nThe DVD-related patent licensing programs did not involve the \xe2\x80\x99981 Patent, and no\nevidence shows that it even involves a disc discrimination method. The 1997 licensing survey\nwas even further removed from the patented technology, since it was not even limited to any\nparticular industry, but \xe2\x80\x9cwas across whatever technologies were being licensed by the people\nwho responded.\xe2\x80\x9d Like the licenses we rejected in ResQNet, this licensing evidence relied upon\nby Mr. Murtha \xe2\x80\x9csimply [has] no place in this case.\xe2\x80\x9d 594 F.3d at 871. Relying on this irrelevant\nevidence to the exclusion of the many licenses expressly for the \xe2\x80\x99981 Patent served no purpose\nother than to \xe2\x80\x9cto increase the reasonable royalty rate above rates more clearly linked to the\neconomic demand for the claimed technology.\xe2\x80\x9d Id. at 872\xe2\x80\x9373.\nAside from the BenQ settlement agreement discussed above, the licenses to the\npatents-in-suit were all for lump sum amounts not exceeding $1 million. Mr. Murtha\xe2\x80\x99s 6%\nrunning royalty theory cannot be reconciled with the actual licensing evidence, which is\nhighly probative of the patented invention\xe2\x80\x99s economic value in the marketplace, and of the\nform that a hypothetical license agreement would likely have taken. Although Mr. Murtha\nconceded that QCI would be aware of LaserDynamics\xe2\x80\x99 prior licenses in the hypothetical\nnegotiation, he dismissed the probative value of the licenses because they were entered into\nbetween 1998 and 2003, before the August 2006 hypothetical negotiation date. Mr. Murtha\nreasoned that, by 2006, the DVD market was larger and more established such that the value\nof the patented technology was better appreciated and LaserDynamics had more bargaining\npower to insist on a running royalty. Thus, in his view, LaserDynamics\xe2\x80\x99 past licenses could\nnot reflect an appropriate royalty for QCI in 2006.\n\n\x0cREASONABLE ROYALTIES\n\n449\n\nThis reasoning is not supported by the record, however, which undisputedly shows\nthat by around 2000, the DVDs and ODD markets were already experiencing tremendous\ngrowth such that by 2003 those markets were highly saturated. Most of the early lump sum\nlicenses that were summarily rejected by Mr. Murtha were thus entered into when the value\nof the patented technology was readily apparent and demand was already projected to greatly\nincrease. The resetting of the hypothetical negotiation date to 2003, the date of first direct\ninfringement induced by QCI\xe2\x80\x99s conduct, further undercuts Mr. Murtha\xe2\x80\x99s reasoning that the\nlicenses to the \xe2\x80\x99981 patent from the 1997 to 2001 time frame were too early to be probative.\nThat the Licensing Executives Survey relied upon by Mr. Murtha\xe2\x80\x94which has no meaningful\nties to the patented technology\xe2\x80\x94was created in 1997 highlights the inconsistency in Mr.\nMurtha\xe2\x80\x99s selective reasoning. Such strained reasoning is unreliable and cannot be used to\nignore LaserDynamics\xe2\x80\x99 long history of licensing the \xe2\x80\x99981 Patent.\nIn sum, the 6% royalty rate was untethered from the patented technology at issue and\nthe many licenses thereto and, as such, was arbitrary and speculative. A new trial is required\nbecause the jury\xe2\x80\x99s verdict was based on an expert opinion that finds no support in the facts\nin the record. On remand, LaserDynamics may not again present its 6% running royalty\ndamages theory.\nAs a final matter, we do not hold that LaserDynamics\xe2\x80\x99 past licenses create an absolute\nceiling on the amount of damages to which it may be entitled, see 35 U.S.C. \xc2\xa7 284, or that its\nhistory of lump sum licenses precludes LaserDynamics from obtaining damages in the form\nof a running royalty. Full consideration of all the Georgia-Pacific factors might well justify a\ndeparture from the amount or even the form of LaserDynamics\xe2\x80\x99 past licensing practices, given\nthe appropriate evidence and reasoning.\n\nReasonable Royalties: Discussion Questions\n1. The Entire Market Value Rule. The court spends a fair amount of time discussing\nthe entire market value rule, which prohibits basing damages on the entire market value of\nthe product being sold unless the patented invention is \xe2\x80\x9cdriving demand\xe2\x80\x9d for the full product.\nFirst of all, why would it be inappropriate to use the entire market value in this case? In\n2006, it would have been very unlikely that a consumer would have wanted to purchase a\ncomputer that could not tell the difference between DVDs and CDs.\nSecond, more generally, why is the entire market value rule necessary? It is easy to\nsee the attraction of the entire market value rule. A court can easily determine the price of a\nQuanta computer, the final product being sold; as the case explains, it is much more difficult\nto determine the true price of some internal component. So, suppose the court allows the\nreasonable royalty calculation to be based on the entire market value of the product being\nsold. It can just reduce the royalty rate correspondingly. If the appropriate royalty rate were\n5% of some component, it could simply assign a royalty rate of less than 5% to the entire\nmarket value of the product. What would be the problem with this approach?\n\n\x0c450\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n2. The Date of the Hypothetical Negotiation. Reasonable royalty damages are based on\nimagining a hypothetical negotiation that takes place between the patent owner and the\ninfringer \xe2\x80\x9con the eve of infringement.\xe2\x80\x9d The goal for the court is to reconstruct what would\nhave happened if, instead of infringing, the infringer had negotiated a royalty with the patent\nholder. Whatever royalty the two parties would have negotiated at that moment is by\ndefinition a reasonable royalty. As an initial matter, why does the date of the negotiation\nmatter, particularly in a case such as this one? Why are the parties fighting over a few years?\nNote that Quanta is not a direct infringer. The direct infringers are the users who\nemploy the optical disc drive technology. Quanta is liable indirectly for inducing that\ninfringing behavior. Quanta thus did not become liable on the date that direct infringement\nbegan (2003). Rather, it only became liable somewhat later, when it acquired the necessary\nknowledge (2006). Given that fact, why does the court pick the earlier date (2003) as the date\nof the hypothetical negotiation? Should it have chosen that date, or should it have chosen the\ndate when Quanta\xe2\x80\x99s liability began?\nWhat about the questions of hold-up and technology-specific sunk costs we discussed\nin Chapter 13? Suppose that before a firm begins infringement, it spends $100 million to\nconstruct a factory that can only be used to manufacture the infringing technology. Should\nthe court set the date of the hypothetical negotiation after the construction of this factory and\non the eve of when infringement begins? Should it take the possibility of hold-up into\nconsideration when determining a reasonable royalty, and increase the royalty paid to the\npatent owner accordingly? For an argument that reasonable royalties systematically\novercompensate due to a failure to account for lock-in costs, see William F. Lee & A. Douglas\nMelamed, Breaking the Vicious Cycle of Patent Damages, 101 Cornell L. Rev. 385 (2016).\n3. Assumptions Built into the Hypothetical Negotiation. What other types of\nassumptions should be built into the court\xe2\x80\x99s construction of the hypothetical negotiation? The\ncourt says that when constructing the hypothetical negotiation, it will \xe2\x80\x9cpresume knowledge\nof the patent and of the infringement.\xe2\x80\x9d This means that the court will imagine that\nLaserDynamics and Quanta agreed that the patent was infringed at the time they were\nengaged in the hypothetical negotiation. What about presuming validity of the patent?\nShould the court similarly presume that LaserDynamics and Quanta agreed that the patent\nwas valid when it constructs the hypothetical negotiation?\nSuppose that LaserDynamics and Quanta had in fact negotiated a license in 2003. Do\nyou think both parties would have agreed that the patent was valid and infringed? If the\ncourt\xe2\x80\x99s goal is to award LaserDynamics the same amount of money that it would have\nreceived in an actual negotiation, is it appropriate to assume that the patent is valid and\ninfringed?\nOn the other hand, can you think of a reason why the court might want to assume\nthat the patent is valid and infringed for purposes of constructing the reasonable royalty,\neven if the parties would not have assumed this if they had negotiated? That is, is there a\nreason to award LaserDynamics greater damages than it would have received in an actual\nnegotiation in 2003? Suppose that Quanta would have paid LaserDynamics a $1 million\n\n\x0cREASONABLE ROYALTIES\n\n451\n\nlicensing fee in 2003, and then the court in 2012 awarded LaserDynamics the same $1 million\nin reasonable royalty damages. What sorts of incentives does this create for Quanta?\n4. The Georgia-Pacific Factors and the Determination of a Royalty Rate. In order to\ncalculate the appropriate royalty rate, courts look to what are known as the \xe2\x80\x9cGeorgia-Pacific\nfactors,\xe2\x80\x9d from Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1119\xe2\x80\x93\n20 (S.D.N.Y. 1970). Those factors are:\n(1)\n\nRoyalties patentee receives for licensing the patent in suit\n\n(2)\n\nRates licensee pays for use of comparable patents\n\n(3)\n\nNature and scope of license in terms of exclusivity and territory / customer\nrestrictions\n\n(4)\n\nLicensor\xe2\x80\x99s established policy of not licensing the invention\n\n(5)\n\nCommercial relationship between licensor and licensee, such as whether they\nare competitors or inventor and promoter\n\n(6)\n\nEffect of selling the patented invention on sales of other items not covered by\npatents by the licensee and licensor\n\n(7)\n\nDuration of patent and term of license\n\n(8)\n\nEstablished profitability of products made under the patent\n\n(9)\n\nUtility and advantages of patent over old modes and devices\n\n(10) Nature of the patented invention; the character of the commercial embodiment\nof it as owned and produced by the licensor; and the benefit of those who have\nused the invention\n(11) Extent to which the infringer has made use of the invention and the value of\nsuch use\n(12) Portion of profit or selling price customarily allowed for the use of the invention\n(13) Portion of realizable profit attributable to the invention as distinguished from\nnonpatented elements\n(14) Opinion testimony of qualified experts\n(15) Outcome of hypothetical arm\xe2\x80\x99s length negotiation at the time the infringement\nbegan\nEven within an area of law that enjoys multi-factor tests (remember the eight Wands\nfactors?), this is a doozy. At the same time, there is nothing magical about any or all of these\nfactors. Not all of them are always relevant, and they\xe2\x80\x99re also not exclusive. Other factors that\nhave affected royalty rates include the cost savings to the infringer of adopting the patented\ntechnology, the availability of noninfringing alternatives, and the infringer\xe2\x80\x99s ability to design\naround the patent. The best way to think of the Georgia-Pacific factors is as ideas to guide a\ncourt\xe2\x80\x99s consideration of the royalty rate. They have also been subject to plenty of criticism. A\nrecitation of all fifteen factors will not generally be useful to a litigant (or to a student writing\na patent law exam response).\n\n\x0c452\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nHere, the LaserDynamics court spends the most time talking about factor 1: other\nlicenses issued for the patent-in-suit. Does that seem like the right approach? Are there\nreasons a patentee might offer different rates to different licensees? Are there other factors\nto which the court should have paid greater attention? The court did not scrutinize any other\nlicenses granted by Quanta for other patents, which is factor 2. Assuming that such licenses\nexisted, should it have?\n5. Relying on Prior Licenses. In light of the previous two notes, consider the licenses\nthe court actually relied upon in LaserDynamics. As its guide to the proper award in this\ncase, the court focused on the twenty-eight licenses that LaserDynamics had issued in the\npast. (Recall that it excluded the infamous BenQ license.) But keep in mind (from Note 3)\nthat, when constructing the hypothetical negotiation, the court is supposed to presume that\nthe parties to the negotiation agree the patent is infringed. When LaserDynamics negotiated\nthese licenses, do you think its counter-parties believed that the patent was infringed (or\nvalid)? Is there any way to know? If the counter-parties had agreed that the LaserDynamics\npatent was valid and infringed, do you think that the licensing prices they would have been\nwilling to pay would have been lower, higher, or the same as the prices they did pay?\nThe problem with the court\xe2\x80\x99s approach is that the counterparties with whom\nLaserDynamics negotiated licenses almost certainly had some degree of skepticism toward\nwhether the patent was valid and infringed, and that skepticism was almost certainly\nreflected in a reduced price. So these licenses might not be accurate measures of what the\ncourt claims to be seeking, namely the result of a hypothetical negotiation in which both\nparties presume that the patent is valid and infringed.\nMoreover, the problem could become recursive. Suppose that the district court\neventually awards LaserDynamics reasonable royalty damages of $500,000 based on these\npre-existing licenses. Now, imagine that LaserDynamics sues another firm (say, Apple) for\ninfringing its patent. Apple can observe the damages verdict in LaserDynamics v. Quanta,\nand it will understand that if it loses to LaserDynamics at trial, it will likely be forced to pay\n$500,000. If Apple believes that a court is only 50% likely to find that it is infringing the\npatent, then its expected damages from proceeding to trial are $500,000 \xc3\x97 50%, or $250,000.\nIt will only be willing to pay LaserDynamics that much for a license. And then the next time\nLaserDynamics goes to trial, the court will be able to observe the Apple license for $250,000.\nThis might cause the court to award LaserDynamics less than $500,000 the next time around,\nreducing the value of its patent even further. The result is a potential downward spiral,\ndriven by the court treating licenses negotiated under conditions of uncertainty as if they had\nbeen negotiated with both parties presuming the patent valid and infringed. See Jonathan S.\nMasur, The Use and Misuse of Patent Licenses, 110 Nw. U. L. Rev. 115 (2015).\nWhat should the court have done differently? How can it try to address this problem,\ngiven that it cannot know exactly what the parties believed about the validity or infringement\nof the patent when LaserDynamics negotiated its licenses? Is there a license the court could\nhave relied upon that would have provided a more accurate picture of the price a defendant\n\n\x0cREASONABLE ROYALTIES\n\n453\n\nwould have been willing to pay if it knew that the patent was valid and infringed\xe2\x80\x94that is, if\nit knew it would lose at trial?\n6. Overcompensation. Relying on prior licenses can lead to undercompensation for the\nreasons described in Note 5, but it can also lead to overcompensation. For one thing, patent\nowners who know that their early licenses will be used to set later royalty awards in court\nhave an incentive not to enter agreements with any low-value licensees, skewing the evidence\navailable to courts. See Erik Hovenkamp & Jonathan Masur, How Patent Damages Skew\nLicensing Markets, 36 Rev. Litig. 379 (2017). For another, licenses are negotiated in the\nshadow of litigation, and if judicial damages awards are inflated due to a failure to account\nfor lock-in costs as described in Note 2, then infringers will have to pay more to avoid\nlitigation\xe2\x80\x94and those inflated licenses could then feed back into future judicial calculations.\nSee Lee & Melamed, supra, at 438.\n7. But in No Event Less Than a Reasonable Royalty. Recall that \xc2\xa7 284 states that the\npatent owner is entitled to \xe2\x80\x9cdamages adequate to compensate for the infringement, but in no\nevent less than a reasonable royalty.\xe2\x80\x9d This sets reasonable royalty damages as a floor, but a\npatent holder can always seek lost profit damages if it thinks they will be greater than\nreasonable royalty damages. In essence, a patent owner who has lost profits has a one-way\noption: it can choose between pursuing lost profit and reasonable royalty damages, depending\non which it believes will be greater. Do you think this option could distort the amount of\ndamages patent plaintiffs receive? See Omri Ben-Shahar, Damages for Unlicensed Use, 78 U.\nChi. L. Rev. 7 (2011). But see Thomas F. Cotter, Comparative Patent Remedies 71-72 (2013).\nWhen is it reasonable for the royalty to be zero? In Apple v. Motorola, Judge Richard\nPosner (sitting as a district court judge by designation) awarded zero damages on summary\njudgment after excluding the majority of damages expert testimony. On appeal, the Federal\nCircuit reversed, holding that \xe2\x80\x9ca fact finder may award no damages only when the record\nsupports a zero royalty award.\xe2\x80\x9d 757 F.3d 1286, 1328 (Fed. Cir. 2014). What incentives does\nthis create for patentees? See Tun-Jen Chiang, The Information Forcing Dilemma in\nDamages Law, 59 Wm. & Mary L. Rev. 81 (2017). The Federal Circuit has affirmed a district\ncourt\xe2\x80\x99s reduction of a jury\xe2\x80\x99s damages award to zero where the patentee presented no damages\nevidence. TecSec v. Adobe, 978 F.3d 1278 (Fed. Cir. 2020).\n\n\x0c454\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n16. Enhanced Damages and Attorneys\xe2\x80\x99 Fees\nThe damages described in Chapters 14 & 15\xe2\x80\x94lost profits and reasonable royalties\xe2\x80\x94\nare compensatory damages, designed to place the patent owner in the position it would have\nbeen in had infringement never occurred. But the Patent Act also permits victorious patent\nowners in particular cases to collect both enhanced damages\xe2\x80\x94up to triple the amount of\ncompensatory damages awarded\xe2\x80\x94and attorneys\xe2\x80\x99 fees. These can be enormously powerful\nremedies. The patent defendant that finds itself paying treble damages is likely to end up far\nworse off than if it had never infringed in the first place. And given the high cost of patent\nlitigation, which can often run into the millions of dollars, attorneys\xe2\x80\x99 fees can carry a hefty\nprice tag and often represent a sizable proportion of the total patent award. For that matter,\nthe Patent Act also permits victorious defendants to collect attorneys\xe2\x80\x99 fees from plaintiffs who\nbring frivolous cases. This chapter discusses why these enhanced rewards have been made\navailable and the standards for determining when they should be awarded.\n\nA. Enhanced Damages\nThe previous two chapters centered on 35 U.S.C. \xc2\xa7 284, the provision of the Patent\nAct that requires a court to award damages for infringement. We have largely focused on the\nfirst paragraph, which discusses lost profit and reasonable royalty damages. But there is also\na second paragraph to the statutory section, which reads (in relevant part): \xe2\x80\x9cthe court may\nincrease the damages up to three times the amount found or assessed.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 284. When\nwe say \xe2\x80\x9crelevant part,\xe2\x80\x9d we really do mean that this is the only relevant part. The statute\nnowhere says when damages should be awarded or what standard the courts should use. In\nAro II (a case that keeps coming up), the Supreme Court held that enhanced damages should\nbe applied only in cases of \xe2\x80\x9cwillful or bad-faith infringement.\xe2\x80\x9d But even that standard largely\nbegged the question as to what \xe2\x80\x9cwillful\xe2\x80\x9d meant in the context of patent infringement.\nTo fill this void, the Federal Circuit formulated an evolving series of doctrines to lend\ncontent to the notion of willfulness. The most recent stemmed from In re Seagate Technology,\nLLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), which the Supreme Court discusses at the\nbeginning of the following opinion. However, over the course of a decade, critics exposed flaws\nin the Seagate test and eventually persuaded the Supreme Court to again take up the issue.\n\nHalo Electronics v. Pulse Electronics, 136 S. Ct. 1923 (2016)\nChief Justice John Roberts delivered the opinion of the Court.\nSection 284 of the Patent Act provides that, in a case of infringement, courts \xe2\x80\x9cmay\nincrease the damages up to three times the amount found or assessed.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 284. In\n\n\x0cENHANCED DAMAGES & ATTORNEYS\xe2\x80\x99 FEES\n\n455\n\nIn re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), the United States\nCourt of Appeals for the Federal Circuit adopted a two-part test for determining when a\ndistrict court may increase damages pursuant to \xc2\xa7 284. Under Seagate, a patent owner must\nfirst \xe2\x80\x9cshow by clear and convincing evidence that the infringer acted despite an objectively\nhigh likelihood that its actions constituted infringement of a valid patent.\xe2\x80\x9d Id. at 1371.\nSecond, the patentee must demonstrate, again by clear and convincing evidence, that the risk\nof infringement \xe2\x80\x9cwas either known or so obvious that it should have been known to the\naccused infringer.\xe2\x80\x9d Id. The question before us is whether this test is consistent with \xc2\xa7 284.\nWe hold that it is not.\nI\nA\nEnhanced damages are as old as U.S. patent law. The Patent Act of 1793 mandated\ntreble damages in any successful infringement suit. In the Patent Act of 1836, however,\nCongress changed course and made enhanced damages discretionary, specifying that \xe2\x80\x9cit shall\nbe in the power of the court to render judgment for any sum above the amount found by [the]\nverdict . . . not exceeding three times the amount thereof, according to the circumstances of\nthe case.\xe2\x80\x9d Patent Act of 1836, \xc2\xa7 14, 5 Stat. 123. In construing that new provision, this Court\nexplained that the change was prompted by the \xe2\x80\x9cinjustice\xe2\x80\x9d of subjecting a \xe2\x80\x9cdefendant who\nacted in ignorance or good faith\xe2\x80\x9d to the same treatment as the \xe2\x80\x9cwanton and malicious pirate.\xe2\x80\x9d\nSeymour v. McCormick, 57 U.S. (16 How.) 480, 488 (1854). There \xe2\x80\x9cis no good reason,\xe2\x80\x9d we\nobserved, \xe2\x80\x9cwhy taking a man\xe2\x80\x99s property in an invention should be trebly punished, while the\nmeasure of damages as to other property is single and actual damages.\xe2\x80\x9d Id. at 488\xe2\x80\x9389. But\n\xe2\x80\x9cwhere the injury is wanton or malicious, a jury may inflict vindictive or exemplary damages,\nnot to recompense the plaintiff, but to punish the defendant.\xe2\x80\x9d Id. at 489.\nSome early decisions did suggest that enhanced damages might serve to compensate\npatentees as well as to punish infringers. See, e.g., Clark v. Wooster, 119 U.S. 322, 326 (1886).\nSuch statements, however, were not for the ages, in part because the merger of law and equity\nremoved certain procedural obstacles to full compensation absent enhancement. In the main,\nmoreover, the references to compensation concerned costs attendant to litigation. See Clark,\n119 U.S. at 326 (identifying enhanced damages as compensation for \xe2\x80\x9cthe expense and trouble\nthe plaintiff has been put to\xe2\x80\x9d). That concern dissipated with the enactment in 1952 of 35\nU.S.C. \xc2\xa7 285, which authorized district courts to award reasonable attorney\xe2\x80\x99s fees to\nprevailing parties in \xe2\x80\x9cexceptional cases\xe2\x80\x9d under the Patent Act. See Octane Fitness, LLC v.\nICON Health & Fitness Inc., 572 U.S. 545, 553 (2014).\nIt is against this backdrop that Congress, in the 1952 codification of the Patent Act,\nenacted \xc2\xa7 284. \xe2\x80\x9cThe stated purpose\xe2\x80\x9d of the 1952 revision \xe2\x80\x9cwas merely reorganization in\nlanguage to clarify the statement of the statutes.\xe2\x80\x9d Aro Mfg. Co. v. Convertible Top\nReplacement Co., 377 U.S. 476, 505, n.20 (1964). This Court accordingly described \xc2\xa7 284\xe2\x80\x94\nconsistent with the history of enhanced damages under the Patent Act\xe2\x80\x94as providing that\n\xe2\x80\x9cpunitive or \xe2\x80\x98increased\xe2\x80\x99 damages\xe2\x80\x9d could be recovered \xe2\x80\x9cin a case of willful or bad-faith\ninfringement.\xe2\x80\x9d Id. at 508.\n\n\x0c456\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nB\n\nIn 2007, the Federal Circuit decided Seagate and fashioned the test for enhanced\ndamages now before us. Under Seagate, a plaintiff seeking enhanced damages must show\nthat the infringement of his patent was \xe2\x80\x9cwillful.\xe2\x80\x9d 497 F.3d at 1368. The Federal Circuit\nannounced a two-part test to establish such willfulness: First, \xe2\x80\x9ca patentee must show by clear\nand convincing evidence that the infringer acted despite an objectively high likelihood that\nits actions constituted infringement of a valid patent,\xe2\x80\x9d without regard to \xe2\x80\x9c[t]he state of mind\nof the accused infringer.\xe2\x80\x9d Id. at 1371. This objectively defined risk is to be \xe2\x80\x9cdetermined by the\nrecord developed in the infringement proceedings.\xe2\x80\x9d Id. \xe2\x80\x9cObjective recklessness will not be\nfound\xe2\x80\x9d at this first step if the accused infringer, during the infringement proceedings,\n\xe2\x80\x9craise[s] a \xe2\x80\x98substantial question\xe2\x80\x99 as to the validity or noninfringement of the patent.\xe2\x80\x9d Bard\nPeripheral Vascular, Inc. v. W.L. Gore & Assoc., Inc., 776 F.3d 837, 844 (Fed. Cir. 2015). That\ncategorical bar applies even if the defendant was unaware of the arguable defense when he\nacted.\nSecond, after establishing objective recklessness, a patentee must show\xe2\x80\x94again by\nclear and convincing evidence\xe2\x80\x94that the risk of infringement \xe2\x80\x9cwas either known or so obvious\nthat it should have been known to the accused infringer.\xe2\x80\x9d Seagate, 497 F.3d at 1371. Only\nwhen both steps have been satisfied can the district court proceed to consider whether to\nexercise its discretion to award enhanced damages. Id.\nUnder Federal Circuit precedent, an award of enhanced damages is subject to\ntrifurcated appellate review. The first step of Seagate\xe2\x80\x94objective recklessness\xe2\x80\x94is reviewed\nde novo; the second\xe2\x80\x94subjective knowledge\xe2\x80\x94for substantial evidence; and the ultimate\ndecision\xe2\x80\x94whether to award enhanced damages\xe2\x80\x94for abuse of discretion.\nC\n[The Supreme Court granted certiorari in two cases addressing the Seagate test: Halo\nv. Pulse and Stryker v. Zimmer. In Halo, Pulse continued to sell allegedly infringing products\neven after Halo sent Pulse two letters offering to license the patents because a Pulse engineer\nconcluded that Halo\xe2\x80\x99s patents were invalid. The district court declined to award enhanced\ndamages because Pulse presented a defense that \xe2\x80\x9cwas not objectively baseless, or a \xe2\x80\x98sham,\xe2\x80\x99\xe2\x80\x9d\nand the Federal Circuit affirmed. In Stryker, the district court awarded treble damages\xe2\x80\x94for\na total award over $288 million\xe2\x80\x94based on \xe2\x80\x9cthe one-sidedness of the case and the flagrancy\nand scope of Zimmer\xe2\x80\x99s infringement,\xe2\x80\x9d such as testimony that Zimmer had \xe2\x80\x9call-but instructed\nits design team to copy Stryker\xe2\x80\x99s products\xe2\x80\x9d and \xe2\x80\x9cto worry about the potential legal\nconsequences later.\xe2\x80\x9d The Federal Circuit vacated the treble damages award because the\ndefendant had asserted \xe2\x80\x9creasonable defenses\xe2\x80\x9d at trial.]\nII\nA\nThe pertinent text of \xc2\xa7 284 provides simply that \xe2\x80\x9cthe court may increase the damages\nup to three times the amount found or assessed.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 284. That language contains no\n\n\x0cENHANCED DAMAGES & ATTORNEYS\xe2\x80\x99 FEES\n\n457\n\nexplicit limit or condition, and we have emphasized that the \xe2\x80\x9cword \xe2\x80\x98may\xe2\x80\x99 clearly connotes\ndiscretion.\xe2\x80\x9d Martin v. Franklin Capital Corp., 546 U.S. 132, 136 (2005).\nAt the same time, \xe2\x80\x9c[d]iscretion is not whim.\xe2\x80\x9d Martin, 546 U.S. at 139. In a system of\nlaws discretion is rarely without limits, even when the statute does not specify any limits\nupon the district courts\xe2\x80\x99 discretion. \xe2\x80\x9c[A] motion to a court\xe2\x80\x99s discretion is a motion, not to its\ninclination, but to its judgment; and its judgment is to be guided by sound legal principles.\xe2\x80\x9d\nMartin, 546 U.S. at 139. Thus, although there is \xe2\x80\x9cno precise rule or formula\xe2\x80\x9d for awarding\ndamages under \xc2\xa7 284, a district court\xe2\x80\x99s \xe2\x80\x9cdiscretion should be exercised in light of the\nconsiderations\xe2\x80\x9d underlying the grant of that discretion. Octane Fitness, 572 U.S. at 554.\nAwards of enhanced damages under the Patent Act over the past 180 years establish\nthat they are not to be meted out in a typical infringement case, but are instead designed as\na \xe2\x80\x9cpunitive\xe2\x80\x9d or \xe2\x80\x9cvindictive\xe2\x80\x9d sanction for egregious infringement behavior. The sort of conduct\nwarranting enhanced damages has been variously described in our cases as willful, wanton,\nmalicious, bad-faith, deliberate, consciously wrongful, flagrant, or\xe2\x80\x94indeed\xe2\x80\x94characteristic of\na pirate. District courts enjoy discretion in deciding whether to award enhanced damages,\nand in what amount. But through nearly two centuries of discretionary awards and review\nby appellate tribunals, \xe2\x80\x9cthe channel of discretion ha[s] narrowed,\xe2\x80\x9d Friendly, Indiscretion\nAbout Discretion, 31 Emory L.J. 747, 772 (1982), so that such damages are generally reserved\nfor egregious cases of culpable behavior.\nB\nThe Seagate test reflects, in many respects, a sound recognition that enhanced\ndamages are generally appropriate under \xc2\xa7 284 only in egregious cases. That test, however,\n\xe2\x80\x9cis unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district\ncourts.\xe2\x80\x9d Octane Fitness, 572 U.S. at 553 (construing \xc2\xa7 285 of the Patent Act). In particular, it\ncan have the effect of insulating some of the worst patent infringers from any liability for\nenhanced damages.\n1\nThe principal problem with Seagate\xe2\x80\x99s two-part test is that it requires a finding of\nobjective recklessness in every case before district courts may award enhanced damages.\nSuch a threshold requirement excludes from discretionary punishment many of the most\nculpable offenders, such as the \xe2\x80\x9cwanton and malicious pirate\xe2\x80\x9d who intentionally infringes\nanother\xe2\x80\x99s patent\xe2\x80\x94with no doubts about its validity or any notion of a defense\xe2\x80\x94for no purpose\nother than to steal the patentee\xe2\x80\x99s business. Seymour, 16 How. at 488. Under Seagate, a\ndistrict court may not even consider enhanced damages for such a pirate, unless the court\nfirst determines that his infringement was \xe2\x80\x9cobjectively\xe2\x80\x9d reckless. In the context of such\ndeliberate wrongdoing, however, it is not clear why an independent showing of objective\nrecklessness\xe2\x80\x94by clear and convincing evidence, no less\xe2\x80\x94should be a prerequisite to\nenhanced damages.\n\n\x0c458\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nOur recent decision in Octane Fitness arose in a different context but points in the\nsame direction. In that case we considered \xc2\xa7 285 of the Patent Act, which allows district\ncourts to award attorney\xe2\x80\x99s fees to prevailing parties in \xe2\x80\x9cexceptional\xe2\x80\x9d cases. 35 U.S.C. \xc2\xa7 285.\nThe Federal Circuit had adopted a two-part test for determining when a case qualified as\nexceptional, requiring that the claim asserted be both objectively baseless and brought in\nsubjective bad faith. We rejected that test on the ground that a case presenting \xe2\x80\x9csubjective\nbad faith\xe2\x80\x9d alone could \xe2\x80\x9csufficiently set itself apart from mine-run cases to warrant a fee\naward.\xe2\x80\x9d 572 U.S. at 555. So too here. The subjective willfulness of a patent infringer,\nintentional or knowing, may warrant enhanced damages, without regard to whether his\ninfringement was objectively reckless.\nThe Seagate test aggravates the problem by making dispositive the ability of the\ninfringer to muster a reasonable (even though unsuccessful) defense at the infringement\ntrial. The existence of such a defense insulates the infringer from enhanced damages, even if\nhe did not act on the basis of the defense or was even aware of it. Under that standard,\nsomeone who plunders a patent\xe2\x80\x94infringing it without any reason to suppose his conduct is\narguably defensible\xe2\x80\x94can nevertheless escape any comeuppance under \xc2\xa7 284 solely on the\nstrength of his attorney\xe2\x80\x99s ingenuity.\nBut culpability is generally measured against the knowledge of the actor at the time\nof the challenged conduct. In Safeco Ins. Co. of America v. Burr, 551 U.S. 47 (2007), we stated\nthat a person is reckless if he acts \xe2\x80\x9cknowing or having reason to know of facts which would\nlead a reasonable man to realize\xe2\x80\x9d his actions are unreasonably risky. The Court found that\nthe defendant had not recklessly violated the Fair Credit Reporting Act because the\ndefendant\xe2\x80\x99s interpretation had \xe2\x80\x9ca foundation in the statutory text\xe2\x80\x9d and the defendant lacked\n\xe2\x80\x9cthe benefit of guidance from the courts of appeals or the Federal Trade Commission\xe2\x80\x9d that\n\xe2\x80\x9cmight have warned it away from the view it took.\xe2\x80\x9d Id. at 69\xe2\x80\x9370. Nothing in Safeco suggests\nthat we should look to facts that the defendant neither knew nor had reason to know at the\ntime he acted.\nSection 284 allows district courts to punish the full range of culpable behavior. Yet\nnone of this is to say that enhanced damages must follow a finding of egregious misconduct.\nAs with any exercise of discretion, courts should continue to take into account the particular\ncircumstances of each case in deciding whether to award damages, and in what amount.\nSection 284 permits district courts to exercise their discretion in a manner free from the\ninelastic constraints of the Seagate test. Consistent with nearly two centuries of enhanced\ndamages under patent law, however, such punishment should generally be reserved for\negregious cases typified by willful misconduct.\n2\nThe Seagate test is also inconsistent with \xc2\xa7 284 because it requires clear and\nconvincing evidence to prove recklessness. On this point Octane Fitness is again instructive.\nThere too the Federal Circuit had adopted a clear and convincing standard of proof, for\nawards of attorney\xe2\x80\x99s fees under \xc2\xa7 285 of the Patent Act. Because that provision supplied no\nbasis for imposing such a heightened standard of proof, we rejected it. We do so here as well.\n\n\x0cENHANCED DAMAGES & ATTORNEYS\xe2\x80\x99 FEES\n\n459\n\nLike \xc2\xa7 285, \xc2\xa7 284 \xe2\x80\x9cimposes no specific evidentiary burden, much less such a high one.\xe2\x80\x9d 572\nU.S. at 557. And the fact that Congress expressly erected a higher standard of proof\nelsewhere in the Patent Act, see 35 U.S.C. \xc2\xa7 273(b), but not in \xc2\xa7 284, is telling. Furthermore,\nnothing in historical practice supports a heightened standard. As we explained in Octane\nFitness, \xe2\x80\x9cpatent-infringement litigation has always been governed by a preponderance of the\nevidence standard.\xe2\x80\x9d 572 U.S. at 557. Enhanced damages are no exception.\n3\nFinally, because we eschew any rigid formula for awarding enhanced damages under\n\xc2\xa7 284, we likewise reject the Federal Circuit\xe2\x80\x99s tripartite framework for appellate review. In\nHighmark Inc. v. Allcare Health Management System, Inc., 572 U.S. 559 (2014), we built on\nour Octane Fitness holding to reject a similar multipart standard of review. Because Octane\nFitness confirmed district court discretion to award attorney fees, we concluded that such\ndecisions should be reviewed for abuse of discretion. Highmark, 572 U.S. at 561.\nThe same conclusion follows naturally from our holding here. Section 284 gives\ndistrict courts discretion in meting out enhanced damages. It \xe2\x80\x9ccommits the determination\xe2\x80\x9d\nwhether enhanced damages are appropriate \xe2\x80\x9cto the discretion of the district court\xe2\x80\x9d and \xe2\x80\x9cthat\ndecision is to be reviewed on appeal for abuse of discretion.\xe2\x80\x9d Id. at 563.\nThat standard allows for review of district court decisions informed by \xe2\x80\x9cthe\nconsiderations we have identified.\xe2\x80\x9d Octane Fitness, 572 U.S. at 554. The appellate review\nframework adopted by the Federal Circuit reflects a concern that district courts may award\nenhanced damages too readily, and distort the balance between the protection of patent\nrights and the interest in technological innovation. Nearly two centuries of exercising\ndiscretion in awarding enhanced damages in patent cases, however, has given substance to\nthe notion that there are limits to that discretion. The Federal Circuit should review such\nexercises of discretion in light of the longstanding considerations we have identified as having\nguided both Congress and the courts.\nIII\nAt the end of the day, respondents\xe2\x80\x99 main argument for retaining the Seagate test\ncomes down to a matter of policy. Respondents and their amici are concerned that allowing\ndistrict courts unlimited discretion to award up to treble damages in infringement cases will\nimpede innovation as companies steer well clear of any possible interference with patent\nrights. They also worry that the ready availability of such damages will embolden \xe2\x80\x9ctrolls.\xe2\x80\x9d\nTrolls, in the patois of the patent community, are entities that hold patents for the primary\npurpose of enforcing them against alleged infringers, often exacting outsized licensing fees\non threat of litigation.\nRespondents are correct that patent law reflects \xe2\x80\x9ca careful balance between the need\nto promote innovation\xe2\x80\x9d through patent protection, and the importance of facilitating the\n\xe2\x80\x9cimitation and refinement through imitation\xe2\x80\x9d that are \xe2\x80\x9cnecessary to invention itself and the\nvery lifeblood of a competitive economy.\xe2\x80\x9d Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489\n\n\x0c460\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nU.S. 141, 146 (1989). That balance can indeed be disrupted if enhanced damages are awarded\nin garden-variety cases. As we have explained, however, they should not be. The seriousness\nof respondents\xe2\x80\x99 policy concerns cannot justify imposing an artificial construct such as the\nSeagate test on the discretion conferred under \xc2\xa7 284.\nJustice Breyer, with whom Justice Kennedy and Justice Alito join, concurring.\nI agree with the Court that In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir.\n2007) (en banc), takes too mechanical an approach to the award of enhanced damages. But,\nas the Court notes, the relevant statutory provision, 35 U.S.C. \xc2\xa7 284, nonetheless imposes\nlimits that help produce uniformity in its application and maintain its consistency with the\nbasic objectives of patent law. I write separately to express my own understanding of several\nof those limits.\nFirst, the Court\xe2\x80\x99s references to \xe2\x80\x9cwillful misconduct\xe2\x80\x9d do not mean that a court may\naward enhanced damages simply because the evidence shows that the infringer knew about\nthe patent and nothing more. Here, the Court\xe2\x80\x99s opinion, read as a whole and in context,\nexplains that \xe2\x80\x9cenhanced damages are generally appropriate . . . only in egregious cases.\xe2\x80\x9d They\namount to a \xe2\x80\x9cpunitive\xe2\x80\x9d sanction for engaging in conduct that is either \xe2\x80\x9cdeliberate\xe2\x80\x9d or\n\xe2\x80\x9cwanton.\xe2\x80\x9d And while the Court explains that \xe2\x80\x9cintentional or knowing\xe2\x80\x9d infringement \xe2\x80\x9cmay\xe2\x80\x9d\nwarrant a punitive sanction, the word it uses is may, not must. It is \xe2\x80\x9ccircumstanc[e]\xe2\x80\x9d that\ntransforms simple knowledge into such egregious behavior.\nSecond, the Court writes against a statutory background specifying that the \xe2\x80\x9cfailure\nof an infringer to obtain the advice of counsel . . . may not be used to prove that the accused\ninfringer willfully infringed.\xe2\x80\x9d \xc2\xa7 298. The Court does not weaken this rule through its\ninterpretation of \xc2\xa7 284. Nor should it. It may well be expensive to obtain an opinion of counsel.\nAn owner of a small firm, or a scientist working there, might, without being \xe2\x80\x9cwanton\xe2\x80\x9d or\n\xe2\x80\x9creckless,\xe2\x80\x9d reasonably determine that its product does not infringe a particular patent, or\nthat that patent is probably invalid. Congress has thus left it to the potential infringer to\ndecide whether to consult counsel\xe2\x80\x94without the threat of treble damages influencing that\ndecision. That is, Congress has determined that where both \xe2\x80\x9cadvice of counsel\xe2\x80\x9d and \xe2\x80\x9cincreased\ndamages\xe2\x80\x9d are at issue, insisting upon the legal game is not worth the candle. Compare \xc2\xa7 298\nwith \xc2\xa7 284.\nThird, as the Court explains, enhanced damages may not \xe2\x80\x9cserve to compensate\npatentees\xe2\x80\x9d for infringement-related costs or litigation expenses. That is because \xc2\xa7 284\nprovides for the former prior to any enhancement. And a different statutory provision, \xc2\xa7 285,\nprovides for the latter.\nPatent infringement, of course, is a highly undesirable and unlawful activity. But\nstopping infringement is a means to patent law\xe2\x80\x99s ends. Through a complex system of\nincentive-based laws, patent law helps to encourage the development of, disseminate\nknowledge about, and permit others to benefit from useful inventions. Enhanced damages\nhave a role to play in achieving those objectives, but, as described above, that role is limited.\n\n\x0cENHANCED DAMAGES & ATTORNEYS\xe2\x80\x99 FEES\n\n461\n\nConsider that the U.S. Patent and Trademark Office estimates that more than\n2,500,000 patents are currently in force. Moreover, Members of the Court have noted that\nsome \xe2\x80\x9cfirms use patents . . . primarily to obtain licensing fees.\xe2\x80\x9d eBay Inc. v. MercExchange,\nL.L.C., 547 U.S. 388, 396 (2006) (Kennedy, J., concurring). Amici explain that some of those\nfirms generate revenue by sending letters to \xe2\x80\x9ctens of thousands of people asking for a license\nor settlement\xe2\x80\x9d on a patent \xe2\x80\x9cthat may in fact not be warranted.\xe2\x80\x9d How is a growing business to\nreact to the arrival of such a letter, particularly if that letter carries with it a serious risk of\ntreble damages? Does the letter put the company \xe2\x80\x9con notice\xe2\x80\x9d of the patent? Will a jury find\nthat the company behaved \xe2\x80\x9crecklessly,\xe2\x80\x9d simply for failing to spend considerable time, effort,\nand money obtaining expert views about whether some or all of the patents described in the\nletter apply to its activities (and whether those patents are even valid)? These investigative\nactivities can be costly. Hence, the risk of treble damages can encourage the company to\nsettle, or even abandon any challenged activity.\nTo say this is to point to a risk: The more that businesses, laboratories, hospitals, and\nindividuals adopt this approach, the more often a patent will reach beyond its lawful scope\nto discourage lawful activity, and the more often patent-related demands will frustrate,\nrather than \xe2\x80\x9cpromote,\xe2\x80\x9d the \xe2\x80\x9cProgress of Science and useful Arts.\xe2\x80\x9d U.S. Const., Art. I, \xc2\xa7 8, cl. 8;\nsee, e.g., Eon\xe2\x80\x93Net LP v. Flagstar Bancorp, 653 F.3d 1314, 1327 (Fed. Cir. 2011) (patent holder\n\xe2\x80\x9cacted in bad faith by exploiting the high cost to defend [patent] litigation to extract a\nnuisance value settlement\xe2\x80\x9d); In re MPHJ Technology Invs., LLC, 159 F.T.C. 1004, 1007\xe2\x80\x9312\n(2015) (patent owner sent more than 16,000 letters demanding settlement for using \xe2\x80\x9ccommon\noffice equipment\xe2\x80\x9d under a patent it never intended to litigate). Thus, in the context of\nenhanced damages, there are patent-related risks on both sides of the equation. That fact\nargues, not for abandonment of enhanced damages, but for their careful application, to\nensure that they only target cases of egregious misconduct.\n\nDiscussion Questions: Enhanced Damages\n1. The Flaws with Seagate. What was it about the Seagate test that the Supreme\nCourt did not like? What was the conduct that the Seagate test would not have reached\xe2\x80\x94\nthat is, would not have classified as willful\xe2\x80\x94that the Supreme Court believed should be\nunderstood as willful? Do you agree with the Court that treble damages should extend to that\ntype of conduct?\nNote that the Supreme Court describes the Seagate test as \xe2\x80\x9cunduly rigid.\xe2\x80\x9d What other\nrules that we have studied has the Supreme Court described as \xe2\x80\x9cunduly rigid?\xe2\x80\x9d Why do you\nthink the Federal Circuit continues to devise rules that the Supreme Court views as unduly\nrigid, and why do you think the Supreme Court continues to reject those rules? Does it have\nsomething to do with the respective roles of those courts and their positions in the judicial\nhierarchy?\nThis case involves yet another unanimous reversal of the Federal Circuit. The list of\nother unanimous reversals of the Federal Circuit in this book includes (but is not limited to)\n\n\x0c462\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAlice, Nautilus, Akamai, Myriad, Mayo, KSR, eBay, and Festo, all of which were decided in a\n12-year period. That\xe2\x80\x99s a lot for one court. There are certainly aspects of the Seagate test that\nmade it a target for revision. As the Supreme Court notes, it was subject to trifurcated review:\nthe objective risk of infringement was reviewed de novo, the subjective question of whether\nthe infringer knew of the risk was reviewed for substantial evidence, and the overall\nconclusion of willfulness was reviewed for abuse of discretion. Yet that alone was not the\nreason the Supreme Court took this case and undid Federal Circuit law. Is there something\nabout the Federal Circuit that creates more opportunities for unanimous reversals? Should\nthis be seen as a feature of patent law, a feature of that court, or just a statistical anomaly?\n2. The Mens Rea of Willful Infringement. The Court does not explicitly say what sort\nof mens rea is required to make a party liable for willful infringement, but it appears from\nthe opinion that willfulness should be judged on the basis of what the infringer knew or\nbelieved at the time of infringement. This is a subjective standard: the infringer\xe2\x80\x99s subjective\nknowledge is at issue.\nThis means, in turn, that an infringer who is completely unaware of the fact of\ninfringement (or unaware of the existence of the patent being infringed) cannot be liable for\nwillfulness damages. This type of subjective standard should remind you of the standard for\ncontributory infringement and inducement. Accordingly, willfulness liability is often\ntriggered the same way that contributory infringement and inducement liability is triggered:\nwith a letter informing the putative infringer of the existence of the patent and the possibility\nof infringement. Are there circumstances under which a failure to search for relevant patents\ncould (or should) trigger willfulness liability? On remand, the Federal Circuit said the jury\nshould consider \xe2\x80\x9cwhat Pulse knew or had reason to know at the time of the infringement\xe2\x80\x9d;\nhow might an infringer have \xe2\x80\x9creason to know\xe2\x80\x9d of the infringement without actual knowledge?\nWhat are the likely policy implications of the fact that enhanced damages (and\nindirect infringement liability) are only available when a party is aware of the patent it might\nbe infringing? Suppose you were the general counsel of a technology firm. What advice would\nyou give to the engineers and scientists in your firm to try and minimize your firm\xe2\x80\x99s legal\nrisk from patent infringement? By shifting the relevant willfulness inquiry away from the\nobjective risk of infringement and toward the subjective perspective of the infringer, has Halo\nmade this problem better or worse?\nIt is worth noting that despite these rules, engineers and scientists appear to continue\nto read and learn from patents, though it is difficult to know whether they would do so more\nor less under different legal rules. See Lisa Larrimore Ouellette, Do Patents Disclose Useful\nInformation?, 25 Harv. J.L. & Tech. 545 (2012); Lisa Larrimore Ouellette, Who Reads\nPatents?, 35 Nature Biotechnology 421 (2017) (reporting that fewer than 10% of surveyed\nscientists said they had been instructed to not read patents because of possible adverse legal\nconsequences).\n3. Opinion Letters and the Breyer Concurrence. In his concurring opinion, Justice\nBreyer raises the issue of opinion letters and the role they play in willfulness analysis. As\nwith indirect infringement, the subjective state of mind necessary for willfulness damages\n\n\x0cENHANCED DAMAGES & ATTORNEYS\xe2\x80\x99 FEES\n\n463\n\nmakes opinion letters from counsel an important mechanism by which infringers can defend\nthemselves. Suppose that a firm is informed of the existence of a patent and seeks an opinion\nfrom counsel before deciding what course of action to take. A reputable law firm produces a\nsound, reasonable letter concluding that the patent is infringed but invalid, and thus the firm\nwill not be held liable. At trial, however, the court holds that the patent is in fact valid and\ninfringed, and the defendant is liable as an infringer. Will this letter that concluded that the\npatent was invalid protect the defendant from willfulness damages? Recall the holding of\nCommil v. Cisco from Chapter 10: with respect to indirect infringement, only belief of\nnoninfringement\xe2\x80\x94and not belief of invalidity\xe2\x80\x94will protect a defendant from indirect\ninfringement liability.\nJustice Breyer suggests that obtaining an opinion letter may be financially impossible\nor impractical for a small firm. He emphasizes that the failure to obtain an opinion letter\nshould not in and of itself be grounds for finding the small firm liable for willful infringement.\nIn such circumstances, how should we judge the state of mind of the firm? Whose views\nmatter, and what inferences should be drawn from those views?\n4. The Problem of Patent Trolls. In Part III of its opinion, the Court discusses the\nconcern that non-practicing entities will too easily be able to extract treble damages from\npatent defendants. Here, the Court even goes so far as to call them \xe2\x80\x9ctrolls\xe2\x80\x9d for the first time.\nThe Court\xe2\x80\x99s answer to this concern is that treble damages will only be available in exceptional\ncases, not in run-of-the-mill cases. Do you think that is right? What are the barriers to patent\ntrolls extracting treble damages after Halo?\n5. Policy and Purpose? Why do enhanced damages exist, or why should they exist? It\nseems clear that courts view willful infringers as particularly bad actors. But this is patent\nlaw, not criminal law\xe2\x80\x94this type of morality doesn\xe2\x80\x99t usually play much of a role in the\ndoctrine. One way to think about treble damages is that they are akin to punitive damages\nin tort. Classic economic theory suggests that punitive damages should be assessed when it\nis difficult to detect or punish wrongdoing. For instance, if there is only a 25% chance that A\nwill be caught or found liable if A harms B, then in the event that A is found liable for harming\nB, the damages assessed against A should be quadrupled in order to adequately deter A\xe2\x80\x99s bad\nactions. How well does this translate to patent law? In a case like Halo v. Pulse, or in another\ntypical patent case, how likely do you think it is that infringement will go undetected or\nuncompensated? Are there particular factors that will make it easier or harder to detect\ninfringers? Is being a willful infringer a good proxy for engaging in infringement that is\nunlikely to be detected?\nWhat other values or policy might the availability of treble damages be serving?\n6. How Much Should a Court Enhance Damages? Note that 35 U.S.C. \xc2\xa7 284 allows a\ncourt to increase damages by \xe2\x80\x9cup to three times.\xe2\x80\x9d It does not necessarily have to treble them.\nHow should a court decide by how much to increase damages? Before Halo, courts looked to\nthe nine factors in Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992), to determine\nwhether infringement had been willful and, if so, how much to increase damages. Those\nfactors are:\n\n\x0c464\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n(1) whether the infringer deliberately copied the ideas of another;\n(2) whether the infringer, when he knew of the other\xe2\x80\x99s patent protection,\ninvestigated the scope of the patent and formed a good-faith belief that it was\ninvalid or that it was not infringed;\n(3) the infringer\xe2\x80\x99s behavior as a party to the litigation;\n(4) the defendant\xe2\x80\x99s size and financial condition;\n(5) the closeness of the case;\n(6) the duration of the defendant\xe2\x80\x99s misconduct;\n(7) remedial action by the defendant;\n(8) the defendant\xe2\x80\x99s motivation for harm; and\n(9) whether the defendant attempted to conceal its misconduct.\n\nAs originally envisioned by the Federal Circuit in Portec, the first three factors speak\nmore to whether infringement was willful in the first place, and the last six to how much\ndamages should be increased. In theory, then, the first three factors would have been largely\nsuperseded by Halo. Nonetheless, since Halo the Federal Circuit and lower courts have\ncontinued to rely upon all nine factors, even though the Federal Circuit has acknowledged\nthat they are not mandatory. See, e.g., Polara Engr. Inc v. Campbell Co., 894 F.3d 1339 (Fed.\nCir. 2018); Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229 (Fed. Cir. 2017).\nConsider the defendants in Halo v. Pulse and Stryker v. Zimmer: Pulse continued\ninfringing after being offered a license because its engineer (incorrectly) determined the\npatents were invalid, and Zimmer instructed its design team to copy Stryker\xe2\x80\x99s products. How\nwould you apply the Portec factors in either case? How much would you increase the damages\nassessed against either defendant?\n\nPractice Problems: Enhanced Damages\nFor all of the following problems, assume you are the CEO of a small tech startup with\napproximately 20 employees. Assume that the following events occur, your firm is eventually\nsued for patent infringement, and found liable as an infringer. Do you think you will be held\nliable for treble damages as a willful infringer?\n1. You receive a letter informing you that your firm is infringing. You consult your patent\nattorney, and she says there is \xe2\x80\x9cprobably about a 50% chance that the patent is valid\nand you\xe2\x80\x99re infringing it.\xe2\x80\x9d\n\n\x0cENHANCED DAMAGES & ATTORNEYS\xe2\x80\x99 FEES\n\n465\n\n2. You receive a letter informing you that your firm is infringing. You consult your\ngeneral counsel, and she says: \xe2\x80\x9cI\xe2\x80\x99m no patent expert, but I don\xe2\x80\x99t think this is a\nproblem.\xe2\x80\x9d\n3. The same situation as #2, but this time you just consult your lead engineer (who says\nthe same thing).\n4. The same situation as #2, except this time you consult a reputable outside law firm,\nwhich says your firm is definitely infringing. Accordingly, you don\xe2\x80\x99t hire this firm to\nwrite an opinion letter. Then you consult a slightly shadier firm, which is quite happy\nto write an opinion letter stating that your firm is not infringing.\n\xe2\x80\xa2\n\nIf your answer to this question was that your firm will be on the hook for treble\ndamages, please explain the mechanism by which the court will learn that you\nconsulted the first firm.\n\n5. The same situation as #1, except this time your patent attorney says that there is no\nway on earth that the patent is valid and infringed. At trial, however, the district\ncourt concludes that the patent is valid and infringed and that this is not even a close\ncase. The court says that the letter you received from your patent attorney could not\nhave been more off-base.\n6. The same situation as #2, except this time in response to the letter you take no action\nwhatsoever. You consult no lawyer; you just continue your activities. When you\xe2\x80\x99re\neventually sued and get to court, you lose, but the district court judge concludes that\nit was a very close case and you had an excellent defense (that just wasn\xe2\x80\x99t quite\nexcellent enough).\n\xe2\x80\xa2\n\nIf your answer to this question is that the conduct was willful, please specify\nwhat the firm has done that is wrong in this case. What is the argument for\npunishing the firm described here more than the firm described in #5?\n\nB. Attorneys\xe2\x80\x99 Fees\nThe so-called \xe2\x80\x9cAmerican rule\xe2\x80\x9d in civil litigation is that the parties bear their own costs:\neach side must pay for its own attorneys, experts, and so forth. Indeed, as the name would\nsuggest, that is the rule that prevails in the mine run of American civil litigation. However,\nthere are exceptions, including in patent law. 35 U.S.C. \xc2\xa7 285 states: \xe2\x80\x9cThe court in exceptional\ncases may award reasonable attorney fees to the prevailing party.\xe2\x80\x9d (That is the entirety of\nthe statute; it gives no hint as to the standard for an \xe2\x80\x9cexceptional case.\xe2\x80\x9d)\nThe evolution of the law on attorneys\xe2\x80\x99 fees may sound familiar\xe2\x80\x94stop us if you\xe2\x80\x99ve heard\nthis one before. Over a period of decades, the Federal Circuit cycled through a series of\ndoctrines, finally settling on a rule that attorneys\xe2\x80\x99 fees were only available if the suit was\nboth \xe2\x80\x9cobjectively baseless\xe2\x80\x9d and \xe2\x80\x9cbrought in subjective bad faith.\xe2\x80\x9d Brooks Furniture Mfg., Inc.\n\n\x0c466\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nv. Dutailier Int\xe2\x80\x99l, Inc., 393 F.3d 1378 (Fed. Cir. 2005). This standard was itself the subject of\ncriticism for nearly a decade before the Supreme Court was persuaded to take up the issue\nin Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014). There, the Court\nstated that the Federal Circuit\xe2\x80\x99s framework was \xe2\x80\x9cunduly rigid\xe2\x80\x9d and that district courts should\ndetermine whether a case is \xe2\x80\x9cexceptional\xe2\x80\x9d as a \xe2\x80\x9ccase-by-case exercise of their discretion,\nconsidering the totality of the circumstances.\xe2\x80\x9d\nOctane Fitness was decided two years before Halo, and it was the Court\xe2\x80\x99s decision in\nOctane Fitness that put the patent community on notice that the Supreme Court was likely\nto change the legal standard for willfulness damages as well. However, we have elected to\npresent the cases out of order in this book (and to provide a substantial portion of Halo, and\nnot of Octane Fitness) because of the greater importance of willfulness damages. Even though\nattorneys\xe2\x80\x99 fees in patent cases can be substantial, treble damages can add up to quite a bit\nmore.\nThe standard the Court settled on in Octane Fitness is not identical to the one it\npropounded in Halo. The Court held that an \xe2\x80\x9cexceptional\xe2\x80\x9d case is \xe2\x80\x9cone that stands out from\nothers with respect to the substantive strength of a party\xe2\x80\x99s litigating position (considering\nboth the governing law and the facts of the case) or the unreasonable manner in which the\ncase was litigated.\xe2\x80\x9d 572 U.S. at 554. Accordingly, \xe2\x80\x9ca case presenting either subjective bad\nfaith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases\nto warrant a fee award.\xe2\x80\x9d Id. at 555. Like the law of willfulness damages, bad faith in litigation\ncan give rise to attorneys\xe2\x80\x99 fees. This includes misconduct during the litigation itself, such as\ndiscovery-related abuses or presenting arguments that the party knows to be meritless. But\nin addition, the Court made clear that a very weak case, even if brought in good faith, could\nsimilarly give rise to an award of attorneys\xe2\x80\x99 fees.\nFinally, under prior Federal Circuit law, prevailing parties had to prove that they\nwere entitled to attorneys\xe2\x80\x99 fees by clear and convincing evidence. The Court in Octane Fitness\nreduced that burden to preponderance of the evidence. Id. at 557\xe2\x80\x9358. All told, these two\nchanges in the law made it much easier for prevailing parties to obtain attorneys\xe2\x80\x99 fees.\nOne important feature of 35 U.S.C. \xc2\xa7 285 is that it is two-sided: a court can assess\nattorneys\xe2\x80\x99 fees against either the plaintiff or the defendant for \xe2\x80\x9cexceptional\xe2\x80\x9d behavior. This\nprovides both parties with an incentive to conform their conduct to the requirements of\nOctane Fitness. What are the likely policy implications of this two-sided threat? You might\nconsider more generally what it would mean for the patent system if the United States\ndeparted from the American rule and adopted a \xe2\x80\x9closer pays\xe2\x80\x9d rule for civil litigation, which is\ncommon in many other countries. For an argument that attorneys\xe2\x80\x99 fees are only a start, and\ncourts should assess even higher penalties against both sides for bringing losing claims, see\nAnup Malani & Jonathan S. Masur, Raising the Stakes in Patent Cases, 101 Geo. L.J. 637\n(2013).\n\n\x0cENHANCED DAMAGES & ATTORNEYS\xe2\x80\x99 FEES\n\n467\n\nPractice Problems: Attorneys\xe2\x80\x99 Fees\nConsider the following situations. Which cases should be viewed as \xe2\x80\x9cexceptional,\xe2\x80\x9d thus\nwarranting an award of attorneys\xe2\x80\x99 fees? If you view a case as exceptional, would you award\nthe prevailing party its full costs and fees, or only partial costs and fees?\n1. The plaintiff to a lawsuit improperly paid its fact witnesses for their testimony, in\nviolation of ethical rules of conduct, and failed to prevent document spoliation over a\nnumber of years. The plaintiff itself did not destroy any documents, but it did not\nprevent the party from whom it was acquiring patents from destroying documents\nrelated to those patents, even when it anticipated forthcoming litigation related to\nthose patents. In addition, the plaintiff asserted two patents that it should have\nknown were unenforceable because their owner had failed to pay the necessary\nUSPTO fees on time. See In re Rembrandt Techs. LP Pat. Litig., 899 F.3d 1254 (Fed.\nCir. 2018).\n2. In the course of a deposition related to litigation, the patent\xe2\x80\x99s inventor testified about\nthe patent\xe2\x80\x99s alleged innovation: \xe2\x80\x9cI realize there is nothing novel about it.\xe2\x80\x9d The patent\nwas later declared invalid by the USPTO in an IPR. Nonetheless, the plaintiff did not\ndrop the lawsuit until the claims were cancelled by the USPTO. See Stone Basket\nInnovations, LLC v. Cook Med. LLC, 892 F.3d 1175 (Fed. Cir. 2018).\n3. The University of Utah filed suit for correction of ownership, claiming that one of its\nfaculty members should have been listed as a joint owner of a valuable patent. During\nher deposition, however, that faculty member made several admissions undermining\nthe university\xe2\x80\x99s claims. When asked if she ever did \xe2\x80\x9cany of the experiments or\ngenerate[d] any of the data that is included in the [relevant] patents,\xe2\x80\x9d she responded:\n\xe2\x80\x9cNot that I know of.\xe2\x80\x9d She also stated that her lab does not study the particular\nscientific process at issue in the patents. After these admissions, the University of\nUtah declined to withdraw its claims of joint inventorship, and those claims were\neventually rejected at trial. U. of Utah v. Max-Planck-Gesellschaft zur Foerderung der\nWissenschaften e.V., 851 F.3d 1317 (Fed. Cir. 2017).\n\n\x0c468\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nV. U.S. and International Patent Systems\n17. U.S. Patent Litigation Procedure\nThis chapter provides an overview of some of the rules of U.S. patent litigation\nprocedure: (A) the law of jurisdiction, standing, and venue as applied in patent cases; (B) the\nspecialized patent local rules adopted by many federal districts to govern patent cases; (C) the\nprocedures for post-issuance review of granted patents at the USPTO; and (D) the law\ngoverning patent litigation at the alternative forum of the International Trade Commission.\nOur brief overview only scratches the surface of the complexity of patent litigation.\nPatent lawsuits are often lengthy and expensive\xe2\x80\x94a recent survey of patent practitioners\nestimated the average cost of litigation through appeal at $725,000 when less than $1 million\nis at stake and $5 million when at least $25 million is at stake. American Intellectual\nProperty Law Association, Report of the Economic Survey (2019). And patent lawsuits involve\nnumerous specialized rules of procedure not covered here\xe2\x80\x94the rules for joinder of multiple\ndefendants, procedures for bifurcation of liability and damages, the use of neutral experts to\nprovide technology tutorials, etc. A useful additional free resource is the Federal Judicial\nCenter\xe2\x80\x99s\nPatent\nCase\nManagement\nJudicial\nGuide\n(3d\ned.\n2016),\nhttps://www.fjc.gov/sites/default/files/2017/PCMJG3d_2016_final.pdf.\n\nA. Jurisdiction, Standing, and Venue\nAll of the basic rules you encountered in 1L Civil Procedure also apply in patent cases.\nFor example, like other civil cases, a patent lawsuit commences with an adequate complaint.\nIn 2015, a rule that allowed patent complaints to state general allegations (former Fed. R.\nCiv. P. 84) was withdrawn, so patent complaints must now satisfy the general pleading\nstandards set by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),\nand Ashcroft v. Iqbal, 556 U.S. 662 (2009). In this section, we briefly review how the\nfoundational concepts of (1) jurisdiction, (2) venue, and (3) standing apply to patent litigation.\n1. Jurisdiction. Courts have power to decide cases only when they have jurisdiction,\nincluding both subject matter jurisdiction over the cause of action and personal jurisdiction\nover the defendant.\nAs noted in Chapter 1, patent law is unusual in that the federal courts have exclusive\nsubject matter jurisdiction under 28 U.S.C. \xc2\xa7 1338(a). If a suit contains any claims under the\nPatent Act, it thus must be brought in federal court, even if the patent claims are a minor\npart of the lawsuit. Cases must also be removed to federal court if the defendant successfully\n\n\x0cU.S. PATENT LITIGATION PROCEDURE\n\n469\n\nasserts a patent counterclaim. Patent law may still be involved in state court lawsuits that\ndo not arise under the Patent Act, and the Supreme Court has held that \xe2\x80\x9cstate legal\nmalpractice claims based on underlying patent matters will rarely, if ever, arise under federal\npatent law for purposes of \xc2\xa7 1338(a).\xe2\x80\x9d Gunn v. Minton, 568 U.S. 251, 258 (2013); see also\nIntellisoft v. Acer America, 955 F.3d 927 (Fed. Cir. 2020) (trade secret claim did not require\nresolution of substantial issue of federal patent law).\nA case may also be dismissed for lack of personal jurisdiction over the defendant,\nwhich can be general (such as based on the state where the defendant resides) or specific to\nthe asserted cause of action (including activities purposefully directed at residents of the\nforum state). The requirement of personal jurisdiction, unlike subject matter jurisdiction, can\nbe waived. To determine whether specific jurisdiction exists, the Federal Circuit applies a\nthree-part test: \xe2\x80\x9c(1) whether the defendant purposefully directed activities at residents of the\nforum; (2) whether the claim arises out of or relates to those activities; and (3) whether\nassertion of personal jurisdiction is reasonable and fair.\xe2\x80\x9d Nuance Communications v. Abbyy\nSoftware House, 626 F.3d 1222, 1231 (Fed. Cir. 2010). For example, California courts were\nheld to have specific jurisdiction over foreign defendants who have imported allegedly\ninfringing goods to the state. Id. And in a declaratory judgment action, California courts were\nheld to have specific jurisdiction over a foreign non-practicing patent holder that had sent\ncease-and-desist letters to the plaintiff and traveled to the state to discuss potential licensing\narrangements. Xilinx v. Papst Licensing, 848 F.3d 1346 (Fed. Cir. 2017).\n2. Standing. A patent suit can also be dismissed if the plaintiff lacks standing, either\nbecause it fails to meet the constitutional requirements of the Case and Controversy Clause\nof Article III or because it fails to accord with various prudential requirements that the Court\nhas developed to define the domain of the judiciary. There are three categories of plaintiffs\nfor standing issues. First, the owner of a patent, or of \xe2\x80\x9call substantial rights\xe2\x80\x9d in the patent\n(as assessed based on the totality of the agreement), meets both constitutional and prudential\nstanding requirements. Second, exclusive licensees who don\xe2\x80\x99t hold \xe2\x80\x9call substantial rights\xe2\x80\x9d\nhave standing as a constitutional matter, but joinder of the patent owner (typically under\nFed. R. Civ. P. 19) is required to satisfy prudential standing concerns. (University patent\nowners are often joined to lawsuits asserted by their licensees for this reason.) Third, parties\nwithout exclusionary rights lack constitutional standing, and this defect cannot be cured by\njoining the patent owner. See Morrow v. Microsoft, 499 F.3d 1332, 1339 (Fed. Cir. 2007); Lone\nStar Silicon Innovations v. Nanya Technology, 925 F.3d 1225 (Fed. Cir. 2019).\nPatent lawsuits may also be commenced as declaratory judgment actions, in which a\npotential infringer seeks a declaratory judgment that a patent is invalid or not infringed. As\nsummarized by the Federal Circuit:\nA party has standing to bring an action under the Declaratory\nJudgment Act if an \xe2\x80\x9cactual controversy\xe2\x80\x9d exists, 28 U.S.C. \xc2\xa7 2201(a), which is\nthe same as an Article III case or controversy.\nIn MedImmune, Inc. v. Genentech, Inc., the Supreme Court rejected our\nprior, more stringent standard for declaratory judgment standing insofar as it\n\n\x0c470\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nrequired a \xe2\x80\x9creasonable apprehension of imminent suit.\xe2\x80\x9d 549 U.S. 118 (2007).\nUnder the Court\xe2\x80\x99s new standard, an Article III case or controversy exists when\n\xe2\x80\x9cthe facts alleged, under all the circumstances, show that there is a substantial\ncontroversy, between parties having adverse legal interests, of sufficient\nimmediacy and reality to warrant the issuance of a declaratory judgment.\xe2\x80\x9d Id.\nat 127.\nAn \xe2\x80\x9cadverse legal interest\xe2\x80\x9d requires a dispute as to a legal right\xe2\x80\x94for\nexample, an underlying legal cause of action that the declaratory defendant\ncould have brought or threatened to bring. In the absence of a controversy as\nto a legal right, a mere adverse economic interest is insufficient to create\ndeclaratory judgment jurisdiction.\n\nArris Group v. British Telecommunications, 639 F.3d 1368, 1373\xe2\x80\x9374 (Fed. Cir. 2011).\nIn Chapters 10 and 16, we discussed the letters that patent owners send to putative\ninfringers to create the knowledge necessary to trigger liability for indirect infringement and\ntreble damages. These letters can also have the effect of triggering declaratory judgment\njurisdiction if they threaten legal action. In turn, this could allow the putative defendant to\nfile a declaratory judgment action against the putative plaintiff before the plaintiff sues for\ninfringement. Importantly, this allows the putative defendant to choose the judicial district\nwhere the case will be litigated. If you are the CEO of Intel, and you are facing litigation\nagainst Texas Instruments, you would much rather litigate in the Northern District of\nCalifornia, where your company headquarters is located, than in the Northern District of\nTexas, where Texas Instruments\xe2\x80\x99 corporate headquarters is located.\nAs a result, these notice letters are often worded quite strangely in an effort to avoid\ncreating declaratory judgment jurisdiction. Instead of notifying a potential defendant that a\npatent exists and the owner is considering suing, the letter might simply observe that \xe2\x80\x9cthere\nare some patents you might want to be aware of,\xe2\x80\x9d and \xe2\x80\x9cperhaps the two firms should discuss\ntheir mutual economic interests.\xe2\x80\x9d To the untrained eye, these letters might seem to be\nfriendly suggestions that the two firms consider a joint venture; to the trained eye, they are\nthe opening salvo in a patent war.\n3. Venue. Patent lawsuits must also be filed in an appropriate venue. Patent law is\nunusual in having its own venue statute:\n\n28 U.S.C. \xc2\xa7 1400(b)\nAny civil action for patent infringement may be brought in the judicial district\nwhere the defendant resides, or where the defendant has committed acts of\ninfringement and has a regular and established place of business.\nBefore 2017, the Federal Circuit interpreted this statute such that corporate\ndefendants are deemed to \xe2\x80\x9creside\xe2\x80\x9d in any district where the defendant is subject to the court\xe2\x80\x99s\n\n\x0cU.S. PATENT LITIGATION PROCEDURE\n\n471\n\npersonal jurisdiction, rendering the second portion of the statute superfluous. This broad\nvenue rule led many patent plaintiffs to shop for favorable locations in which to file suit, and\neven led some locations to market themselves as friendly venues for patent plaintiffs. See\nDaniel Klerman & Greg Reilly, Forum Selling, 89 S. Cal. L. Rev. 241 (2016). The most\negregious example was the Eastern District of Texas, where the largest city is Plano, and\nwhich successfully earned a reputation as a highly favorable venue for patent plaintiffs.\n(Because the plaintiff picks the venue, a venue that wants to attract business only has to be\nfavorable to plaintiffs.) The Eastern District of Texas heard so many patent cases that\nbeleaguered repeat defendants started to invest in the community in an effort to curry favor\nwith potential jurors. Samsung (in)famously sponsored an ice rink in the town square in\nMarshall, Texas (where most of the cases were tried), directly across from the federal\ncourthouse.\nAlmost needless to say, this is not how things are supposed to work. In TC Heartland\nv. Kraft Foods, 137 S. Ct. 1514 (2017), the Supreme Court narrowed this rule and held that\nfor purposes of the patent venue statute, a corporation only \xe2\x80\x9cresides\xe2\x80\x9d in its state of\nincorporation. Since TC Heartland, the Federal Circuit has provided additional guidance as\nto the second portion of the venue statute: \xe2\x80\x9cwhere the defendant has committed acts of\ninfringement and has a regular and established place of business.\xe2\x80\x9d For example, this test is\nnot satisfied by an executive working out of his home in the district, In re Cray Inc., 871 F.3d\n1355 (Fed. Cir. 2017), or by the mere presence of computer servers, In re Google LLC, 949\nF.3d 1338 (Fed. Cir. 2020). This, in turn, has led some potential patent defendants to\neliminate their physical presences in plaintiff-friendly districts in order to defeat venue there.\nFor instance, you will search in vain for an Apple Store in the Eastern District of Texas\xe2\x80\x94\nApple closed all of its locations there after TC Heartland.\nTC Heartland did not address venue for foreign corporations. The Federal Circuit has\nsince held that venue for foreign firms is governed by the general venue statute, which states\nthat \xe2\x80\x9ca defendant not resident in the United States may be sued in any judicial district.\xe2\x80\x9d 28\nU.S.C. \xc2\xa7 1391(c)(3). See In re HTC Corp., 889 F.3d 1349 (Fed. Cir. 2018).\nAs illustrated in the following table, TC Heartland has led to a substantial shift in\npatent filings away from the Eastern District of Texas, which is often no longer an\nappropriate venue. The District of Delaware (where many companies are incorporated) and\nthe Western District of Texas (which includes Austin and San Antonio, where many\ndefendants have operations) have seen the largest gains in share of patent cases; the\nNorthern and Central Districts of California have also seen upticks. In the first three months\nof 2021, the Western District of Texas continued its upward trajectory with 25% of new\nfilings. That upward trajectory is being driven in particular by the lone judge in the Waco\ndivision (Judge Alan Albright), not by increased filings by firms with operations in Austin\nand San Antonio. This is raising concerns about the Western District of Texas becoming the\nnew Eastern District of Texas.\n\n\x0c472\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nMost Popular Districts for Patent Case Filings (from Lex Machina)\n2014\xe2\x80\x932016\n\n2018\xe2\x80\x932020\n\nE.D. Tex.\n\n37%\n\n11%\n\nD. Del.\n\n13%\n\n23%\n\nC.D. Cal.\n\n6%\n\n8%\n\nD.N.J.\n\n5%\n\n4%\n\nN.D. Cal.\n\n4%\n\n8%\n\nN.D. Ill.\n\n4%\n\n4%\n\nS.D.N.Y.\n\n3%\n\n3%\n\nW.D. Tex.\n\n1% (15th most popular)\n\n11%\n\nIf venue is proper in more than one district, then a defendant can file a motion to\ntransfer venue under 28 U.S.C. \xc2\xa7 1404(a), which allows a district court to transfer a case\n\xe2\x80\x9c[f]or the convenience of parties and witnesses [and] in the interest of justice.\xe2\x80\x9d For example,\nafter patent-assertion entity Uniloc sued Apple for patent infringement in the Western\nDistrict of Texas, Apple moved to transfer the case to the Northern District of California on\nthe basis that it would be more convenient to litigate where the accused products were\ndesigned, developed, and tested. The district court denied the motion, but Apple successfully\npetitioned the Federal Circuit for a writ of mandamus directing the district court to transfer\nthe case. In re Apple Inc., 979 F.3d 1332 (Fed. Cir. 2020).\n\nB. Patent Local Rules\nMany federal district courts have \xe2\x80\x9clocal rules,\xe2\x80\x9d which are procedural guidelines that\nsupplement the Federal Rules of Civil Procedure. Local rules often establish timing and style\nguidelines for filing motions, holding status conferences, mediating disputes, and other\nprocedural details. In 2000, the Northern District of California became the first federal\ndistrict to adopt specialized local rules for patent infringement cases in particular. Since then,\nover thirty districts have promulgated their own patent local rules. See Jean Dassie, District\nCourt Local Rules for Patent Infringement Cases, Federal Circuit Damages (Dec. 27, 2019),\nhttp://www.fedcirdamages.com/district-court-local-rules-for-patent-infringement-cases. Of\nthe jurisdictions that hear the most patent cases, only the District of Delaware and the\nWestern District of Texas do not have district-wide patent local rules, although some\nindividual judges in these districts have adopted standard procedures for patent cases. As an\n\n\x0cU.S. PATENT LITIGATION PROCEDURE\n\n473\n\nexample, here is a rough overview of the schedule provided under the Northern District of\nCalifornia Patent Local Rules, which was used as a model by many other districts:\n\xe2\x97\x8f\n\nInitial Case Management Conference. During this conferral, the parties can discuss\nany modifications to Patent Local Rules.\n\n\xe2\x97\x8f\n\nDisclosure of Asserted Claims and Infringement Contentions (14 days later). The\nplaintiff\xe2\x80\x99s initial disclosure requirements include infringement claim charts showing\nhow each \xe2\x80\x9cAccused Instrumentality\xe2\x80\x9d infringes each asserted claim, as well as\ndocuments related to issues such as patent ownership.\n\n\xe2\x97\x8f\n\nInvalidity Contentions and Defendant\xe2\x80\x99s Document Production (45 days later). The\ndefendant must provide any asserted grounds of invalidity, with \xc2\xa7\xc2\xa7 102 & 103\narguments supported by invalidity claim charts showing how each asserted claim\nelement can be found in each alleged item of prior art. Later amendments to invalidity\nor infringement contentions require good cause. The defendant\xe2\x80\x99s required document\nproduction can also be quite burdensome, including \xe2\x80\x9c[s]ource code, specifications,\nschematics, flow charts, artwork, formulas, or other documentation sufficient to show\nthe operation of any aspects or elements of an Accused Instrumentality identified by\nthe patent claimant.\xe2\x80\x9d\n\n\xe2\x97\x8f\n\nClaim Construction:\n\n\xe2\x97\x8f\n\n\xe2\x97\x8b\n\nExchange of Proposed Terms for Construction (14 days after Invalidity\nContentions). The parties exchange lists of terms they would like construed\nand then \xe2\x80\x9cjointly identify the 10 terms likely to be most significant to resolving\nthe parties\xe2\x80\x99 dispute.\xe2\x80\x9d\n\n\xe2\x97\x8b\n\nExchange of Preliminary Claim Constructions and Extrinsic Evidence (21 days\nlater). The parties exchange proposed constructions and references to\nsupporting evidence, including proposed testimony of experts.\n\n\xe2\x97\x8b\n\nJoint Claim Construction and Prehearing Statement (60 days later). The\nparties file a joint statement with their respective constructions.\n\n\xe2\x97\x8b\n\nCompletion of Claim Construction Discovery (30 days later). The parties finish\ndiscovery related to claim construction, including depositions.\n\n\xe2\x97\x8b\n\nClaim Construction Briefs (45 days later). The plaintiff files an opening claim\nconstruction brief. The defendant then has 14 days to respond, and the plaintiff\nhas 7 days to reply.\n\n\xe2\x97\x8b\n\nClaim Construction Hearing (2 weeks after reply brief, subject to the court\xe2\x80\x99s\nconvenience). If necessary, the court holds a hearing, including testimony of\nany expert witnesses.\n\nDamages Contentions (50 days after Invalidity Contentions). The plaintiff must\nexplain the categories of damages it is seeking and its theories of recovery. (The\ndefendant has 30 days to explain why it disagrees.)\n\n\x0c474\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nThe predictability provided by this timeline can be particularly helpful for clients, who\noften want to know the expected timeline on which litigation costs will be incurred. These\npatent local rules also highlight the detailed information that will be needed early in a case\nfor infringement and invalidity contentions. Patent plaintiffs will generally want to prepare\ninfringement claim charts before filing suit if possible, and defendants will need to begin\nsearching for invalidating prior art as early as possible.\nDoes it make sense to have specialized procedural rules for patent cases? If so, should\nthere be specialized procedures for other types of civil cases? Should patent local rules be\nstandardized across jurisdictions? What rules might parties want to change in the initial case\nmanagement conference?\n\nC. Post-Issuance Review at the USPTO\nIn addition to challenging the validity of patents in court, potential infringers and\nother parties can also bring challenges at the USPTO. This section summarizes the three\nUSPTO administrative procedures for invalidating granted patents: ex parte reexamination,\npost grant review (PGR), and inter partes review (IPR). Ex parte reexamination (sometimes\nshortened to \xe2\x80\x9cex parte reexam\xe2\x80\x9d) was introduced in 1981; PGR and IPR were created by the\n2011 America Invents Act (AIA).1\nEx parte reexamination allows any person\xe2\x80\x94including the patent owner2\xe2\x80\x94to request\nthat the USPTO reexamine any patent, but only based on novelty and nonobviousness\narguments involving paper prior art (patents and printed publications). As its name suggests,\nthis procedure is largely ex parte: If the USPTO determines that the petition raises \xe2\x80\x9ca\nsubstantial new question of patentability,\xe2\x80\x9d the patent owner may respond to the petition, and\nthe third-party requester \xe2\x80\x9cmay file and have considered in the reexamination a reply to any\nstatement filed by the patent owner.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 304. Otherwise, third parties have no\ninvolvement in the proceeding. Reexamination is similar to the initial examination except\nthat it is conducted by a panel of three examiners in the USPTO\xe2\x80\x99s \xe2\x80\x9ccentral reexamination\nunit,\xe2\x80\x9d and the patentee cannot amend the patent after the initial response to the petition. As\nwith initial examination, the patentee may appeal a negative decision to the PTAB, and from\nthere to the Federal Circuit.\nIn contrast to ex parte reexamination, the AIA\xe2\x80\x99s PGR and IPR proceedings allow\nactive participation by a third-party challenger in a trial-like proceeding before the PTAB.\nThe AIA also created a post-grant proceeding known as covered business method (CBM)\nreview, which applied to non-technological financial product or service patents, but CBM review sunset\nin September 2020. PGR and IPR replaced another type of post-grant proceeding, inter partes\nreexamination, which had been created in 1999.\n1\n\nWhy would anyone challenge their own patent? The most common use is to test and\nstrengthen the validity of a patent in light of a newly discovered piece of prior art before asserting the\npatent in a costly infringement suit.\n2\n\n\x0cU.S. PATENT LITIGATION PROCEDURE\n\n475\n\nThe AIA trials are adversarial proceedings that afford the parties some discovery and an oral\nhearing, although both are more limited than in district court, and the timeline is much\nshorter. After a petition is filed, the patent owner has three months to file a preliminary\nresponse, and then the USPTO has three months to decide whether to \xe2\x80\x9cinstitute\xe2\x80\x9d the\nproceeding and begin the trial phase. By statute, the trial phase is supposed to be concluded\nwithin twelve months, with a six-month extension for good cause.\nPGR and IPR petitions differ in what kinds of arguments may be raised and when\nthey may be filed. For the first nine months after an AIA patent is issued, it is eligible for\nPGR, which allows validity to be challenged by any third party who has not filed a civil action\nchallenging the patent\xe2\x80\x99s validity. All validity issues that are defenses to infringement may\nbe asserted in a PGR petition, including issues under \xc2\xa7\xc2\xa7 101, 102, 103, and 112 as well as\ndouble patenting, but not \xc2\xa7 112\xe2\x80\x99s best mode requirement. The USPTO will institute a PGR\nproceeding if the petition shows \xe2\x80\x9cthat it is more likely than not that at least 1 of the claims\nchallenged in the petition is unpatentable\xe2\x80\x9d or of it \xe2\x80\x9craises a novel or unsettled legal question.\xe2\x80\x9d\n35 U.S.C. \xc2\xa7 324.\nAll patents that are not eligible for or currently subject to PGR are eligible for the\nthird type of proceeding, IPR, which allows validity to be challenged by any third party who\nhas not filed a civil action challenging validity or been sued for infringement of the patent\nmore than one year earlier. The petitioner may only raise novelty and nonobviousness\narguments involving paper prior art (as with ex parte reexam). The USPTO will institute an\nIPR proceeding if \xe2\x80\x9cthere is a reasonable likelihood that the petitioner would prevail with\nrespect to at least 1 of the claims challenged in the petition.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 314. Only about half\nof IPR petitions are instituted; the others are denied for failure to meet this standard or are\ndismissed due to settlement between the challenger and the patent owner.\nOf the three post-grant proceedings, IPRs are by far the most popular. In 2020, the\nUSPTO received about 200 petitions for ex parte reexam, 60 for PGR, and over 1400 for IPR.\nThe growth in IPR proceedings has also reshaped the Federal Circuit docket: in 2011, the\ncourt heard fewer than 150 appeals from the USPTO and over 400 appeals from patent\ninfringement lawsuits in district courts; in 2020, there were well over 500 USPTO appeals\nand fewer than 300 appeals from patent infringement suits. Over this same time, patent law\nhas grown from 42% to 59% of the court\xe2\x80\x99s caseload.3 What are the advantages of challenging\nvalidity through post-grant proceedings at the USPTO rather than in federal district court,\nand how do parties choose among these options?\nOne important factor is cost. The typical 2020 USPTO filing fees are $12,600 for ex\nparte reexam, $19,000 for IPR (plus another $22,500 if instituted), and $20,000 for PGR (plus\n$27,500 if instituted). In addition, according to a 2018 survey of practitioners, the average\nlegal cost for ex parte reexamination is about $17,000. For IPR and PGR, the average cost of\nThis shift has exacerbated concerns about the negative effects of judicial specialization. See\ngenerally Paul R. Gugliuzza, Rethinking Federal Circuit Jurisdiction, 100 GEO. L.J. 1437 (2012); Laura\nG. Pedraza-Fari\xc3\xb1a, Understanding the Federal Circuit: An Expert Community Approach, 30 Berkeley\nTech.L.J. 89 (2015).\n3\n\n\x0c476\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nattorneys\xe2\x80\x99 fees to file a petition is just over $100,000, and the average total attorneys\xe2\x80\x99 fees\nthrough appeal is around $450,000. (The average cost of filing an IPR petition and defending\na patent in an IPR proceeding are roughly the same.) These costs can be significant for some\nfirms, but all of these proceedings are less expensive than the millions of dollars it might cost\nto litigate in court, as noted at the beginning of this chapter. See American Intellectual\nProperty Law Association, Report of the Economic Survey (2019).\nAnother advantage of these USPTO proceedings for those challenging validity is that\nthe presumption of validity does not apply. That is, invalidity is established by a\npreponderance of the evidence rather than the higher standard of clear and convincing\nevidence. The agency also used to use the \xe2\x80\x9cbroadest reasonable interpretation\xe2\x80\x9d claim\nconstruction standard from the examination context rather than the \xe2\x80\x9cordinary meaning\xe2\x80\x9d\nPhillips standard used in the courts, and the Supreme Court granted Chevron deference to\nthis choice in Cuozzo Speed Technologies v. Lee, 136 S. Ct. 2131 (2016). (Chevron deference\nmeans that the statute is ambiguous and that the agency has discretion to choose from among\nreasonable interpretations.) The USPTO then decided in 2018 that it would use the Phillips\nstandard for AIA trial proceedings (PGR and IPR); the \xe2\x80\x9cbroadest reasonable interpretation\xe2\x80\x9d\nstandard still applies in ex parte reexamination.\nChallengers should also consider the effect of USPTO proceedings on other\nproceedings, including pending or future district court litigation. Ex parte reexam petitions\ncan be filed anonymously and have no estoppel effect. IPR and PGR proceedings bar\nchallengers from later raising invalidity questions that were \xe2\x80\x9craised or reasonably could have\nbeen raised\xe2\x80\x9d in the IPR or PGR proceeding. 35 U.S.C. \xc2\xa7\xc2\xa7 315(e), 325(e). Most IPR petitions\nare filed after a patent has been asserted in district court litigation, and district courts\ntypically stay litigation pending the USPTO proceeding. That is to say, many patent\ndefendants prefer to litigate the validity of the patent in an IPR proceeding rather than in\nthe course of the district court litigation, largely for the reasons described above. When\nlitigation is not stayed, non-final judgments\xe2\x80\x94including large damages awards\xe2\x80\x94have\nsometimes been vacated in light of invalidations in parallel USPTO proceedings. See\nFresenius USA v. Baxter International, 721 F.3d 1330 (Fed. Cir. 2013); Paul R. Gugliuzza,\n(In)valid Patents, 92 Notre Dame L. Rev. 271 (2016). Patent defendants generally praise IPR\nproceedings as a more cost-effective way to challenge patents, whereas patent owners have\nargued that IPRs have undermined confidence in the U.S. patent system.\nIPR critics have launched a number of legal challenges to the IPR process and the\nPTAB. The Supreme Court has already heard five cases involving the PTAB: the 2016 Cuozzo\ncase mentioned above on claim construction standards; SAS Institute v. Iancu, 138 S. Ct.\n1348 (2018) (rejecting the USPTO\xe2\x80\x99s \xe2\x80\x9cpartial institution\xe2\x80\x9d practice of sometimes granting an\nIPR petition on only some of the challenged claims); Oil States Energy v. Greene\xe2\x80\x99s Energy\nGroup, 138 S. Ct. 1365 (2018) (rejecting constitutional challenges to IPRs); Thryv v. ClickTo-Call Technologies, 140 S. Ct. 1367 (2020) (holding that certain challenges to PTAB\ndecisions are nonappealable); and United States v. Arthrex (pending) (on whether PTAB\njudges should have been appointed and confirmed by the Senate).\n\n\x0cU.S. PATENT LITIGATION PROCEDURE\n\n477\n\nHow should policymakers evaluate these different proceedings for invalidating\npatents? Should they be expanded, such as by allowing IPR petitions to raise invalidity issues\nbeyond \xc2\xa7\xc2\xa7 102 and 103 challenges based on paper prior art?\nThe following table summarizes the key differences between ex parte reexamination,\nPGR, and IPR.\nEx Parte\nReexamination\n\nPost Grant Review\n(PGR)\n\nInter Partes Review\n(IPR)\n\nStatute\n\n35 U.S.C. \xc2\xa7\xc2\xa7 301\xe2\x80\x9307\n\n35 U.S.C. \xc2\xa7\xc2\xa7 321\xe2\x80\x9329\n\n35 U.S.C. \xc2\xa7\xc2\xa7 311\xe2\x80\x9319\n\nPetitioner\n\nanyone (including the\npatent owner); can be\nanonymous; no\nestoppel\n\nanyone who is not the\npatent owner and has\nnot filed a civil action\nchallenging validity\n\nanyone who is not the\npatent owner, has not\nfiled a civil action\nchallenging validity,\nand has not been sued\nover the patent more\nthan one year prior\n\nEligible\nPatents\n\nall patents in force\n\nonly AIA patents in\nfirst nine months after\nissuance\n\nall patents in force,\nunless eligible for or\ncurrently subject to\nPGR\n\nBasis for\nChallenge\n\nonly \xc2\xa7\xc2\xa7 102 and 103\nbased on paper prior\nart (patents and\nprinted publications)\n\nall validity issues that\nare defenses to\ninfringement\n\nonly \xc2\xa7\xc2\xa7 102 and 103\nbased on paper prior\nart (patents and\nprinted publications)\n\nTotal Cost\nEstimate\n\naround $30,000\n\naround $500,000\n\naround $500,000\n\nLegal\nStandards\n\nno presumption of\nvalidity; claims get\nbroadest reasonable\ninterpretation\n\n\xe2\x80\x9creasonable likelihood\xe2\x80\x9d\ninstitution standard;\nno presumption of\nvalidity; Phillips claim\nconstruction\n\n\xe2\x80\x9cmore likely than not\xe2\x80\x9d\ninstitution standard;\nno presumption of\nvalidity; Phillips claim\nconstruction\n\nEstoppel\n\nnone\n\nissues that were raised\nor reasonably could\nhave been raised\n\nissues that were raised\nor reasonably could\nhave been raised\n\n\x0c478\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nD. Litigation at the International Trade Commission\nThe federal courts and the USPTO are not the only institutions that resolve U.S.\npatent law issues: the International Trade Commission (ITC) also has authority to resolve\ncertain patent infringement claims. The ITC is an independent agency in DC with\njurisdiction over various trade disputes. The ITC shouldn\xe2\x80\x99t be confused with the Court of\nInternational Trade (or \xe2\x80\x9cTrade Court\xe2\x80\x9d), an Article III court in New York that hears some\nappeals from the ITC and other trade disputes, and which is also under the jurisdiction of\nthe Federal Circuit. The ITC\xe2\x80\x99s patent decisions don\xe2\x80\x99t go through the Trade Court; they are\nappealed directly to the Federal Circuit. Private parties may bring an action in the ITC under\nSection 337 of the Tariff Act of 1930, 19 U.S.C. \xc2\xa7 1337, and about 90% of Section 337 cases\nare patent cases.\nThere are two important prerequisites for ITC jurisdiction over patent disputes:\nFirst, the infringing goods must be imported. The ITC may investigate claims of \xe2\x80\x9c[t]he\nimportation into the United States, the sale for importation, or the sale within the United\nStates after importation by the owner, importer, or consignee, of articles that . . . infringe a\nvalid and enforceable United States patent . . . or are made, produced, processed, or mined\nunder, or by means of, a process covered by the claims of a valid and enforceable United\nStates patent.\xe2\x80\x9d 19 U.S.C. \xc2\xa7 1337(a)(1)(B). This statute also covers \xe2\x80\x9cimportation of goods that,\nafter importation, are used by the importer to directly infringe at the inducement of the goods\xe2\x80\x99\nseller.\xe2\x80\x9d Suprema v. Int\xe2\x80\x99l Trade Comm\xe2\x80\x99n, 796 F.3d 1338 (Fed. Cir. 2015) (en banc). Because\nITC cases are in rem proceedings, with jurisdiction over the accused imported articles, issues\nregarding personal jurisdiction over foreign entities are simplified.\nSecond, the patentee (referred to as the \xe2\x80\x9ccomplainant\xe2\x80\x9d) must have a domestic industry\nrelated to the patent. The ITC has jurisdiction \xe2\x80\x9conly if an industry in the United States,\nrelating to the articles protected by the patent . . . exists or is in the process of being\nestablished.\xe2\x80\x9d \xc2\xa7 1337(a)(2). A domestic industry exists \xe2\x80\x9cif there is in the United States, with\nrespect to the articles protected by the patent . . . (A) significant investment in plant and\nequipment; (B) significant employment of labor or capital; or (C) substantial investment in\nits exploitation, including engineering, research and development, or licensing.\xe2\x80\x9d \xc2\xa7 1337(a)(3).\nNote that it is the investments, not the patent owner, that must be \xe2\x80\x9cin the United States.\xe2\x80\x9d A\ndomestic patent owner that invests in foreign plants, labor, or licensing does not satisfy the\ndomestic industry requirement. And a foreign patent owner can satisfy the requirement if it\nhas made one of these investments in exploiting the invention in the United States (simply\nimporting the finished product into the United States is not enough). The patent owner\ndoesn\xe2\x80\x99t need to manufacture the patented goods itself, but expenses asserting the patent in\nlitigation are not enough to establish a domestic industry. See John Mezzalingua Assocs. v.\nInt\xe2\x80\x99l Trade Comm\xe2\x80\x99n, 660 F.3d 1322 (Fed. Cir. 2011); InterDigital Commc\xe2\x80\x99ns v. Int\xe2\x80\x99l Trade\nComm\xe2\x80\x99n, 707 F.3d 1295 (Fed. Cir. 2013).\nIf the ITC finds a Section 337 violation, the only remedy is prospective injunctive relief\nthrough exclusion orders and cease-and-desist orders, both of which are subject to presidential\n\n\x0cU.S. PATENT LITIGATION PROCEDURE\n\n479\n\nreview. An exclusion order prohibits further entry of infringing goods, enforced by Customs\nand Border Protection at the border, and can be limited to specific infringing products or\ngeneral orders covering products from importers who were not parties to the investigation.\nCease-and-desist orders are enforced by the ITC (using civil and criminal penalties) and\nprohibit continued distribution of products that were already imported. The ITC may not\naward money damages. But because of the availability of injunctions, the ITC grew in\npopularity as a patent litigation forum post-eBay, with about 50\xe2\x80\x9370 complaints per year.\nPatent owners may file in both the ITC for an exclusion order and in district court for\ndamages, although the district court action must be stayed pending the outcome of the ITC\ndispute. See 28 U.S.C. \xc2\xa7 1659; In re Princo, 478 F.3d 1345 (Fed. Cir. 2007). About 70% of\nSection 337 cases have a district court counterpart. But note that ITC cases do not have\npreclusive effect on district court cases. If one party wins before the ITC, the district court\ncase can continue (and that court can reach a different result).\nProcedurally, litigating in the ITC is different from litigating in district court. Cases\nmove more quickly, with the entire dispute typically resolved within 10\xe2\x80\x9315 months. There\nare also fewer limits on discovery than in district court, which can be particularly\nburdensome for the accused infringer (referred to as the \xe2\x80\x9crespondent\xe2\x80\x9d). Most cases go to trial,\nand trials are in front of one of six Administrative Law Judges (ALJs) rather than a jury. The\ncosts of ITC litigation are thus extremely high and rapidly incurred, typically favoring\ncomplainants who can prepare for these costs and use them to exert settlement pressure.\nThere is also a third party to each dispute: the Commission Investigative Attorney (or \xe2\x80\x9cStaff\xe2\x80\x9d)\nrepresents the public interest and has the same rights as the complainant and respondent to\ngather and present evidence. Convincing the staff of the merits and policy arguments in favor\nof your position can bring an important strategic advantage.\nWhat are the public benefits of patent litigation at the ITC? Should anything be done\nto address the litigation advantages to wealthy plaintiffs that this forum creates?\n\nE. Alternative Dispute Resolution\nAlthough this casebook is focused on patent litigation, the vast majority of uses of\npatented technology do not involve the courts. Rather, parties often reach an agreement such\nas a patent license without formal legal proceedings through processes known as alternative\ndispute resolution (ADR). We provide a brief overview of the law of patent licensing and\npatent transactions in Chapter 18.\nThe most informal ADR method is negotiation, or unstructured discussions between\nthe parties to determine whether they can reach a mutually beneficial outcome. Patent\nmediation involves a neutral third party to facilitate non-binding negotiations in a more\nstructured way. Mediation is often used to encourage settlement after a lawsuit is filed, and\n\n\x0c480\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nthe Federal Judicial Center has produced a comprehensive patent mediation guide.4 Finally,\narbitration can provide a binding dispute resolution process that is often cheaper and faster\nthan litigation.\nThe United States is an outlier in allowing arbitration of patent validity claims. The\nPatent Act expressly recognizes that agreements \xe2\x80\x9crequiring arbitration of any dispute\nrelating to patent validity or infringement . . . shall be valid, irrevocable, and enforceable,\nexcept for any grounds that exist at law or in equity for revocation of a contract.\xe2\x80\x9d 35 U.S.C.\n\xc2\xa7 294(a). The American Arbitration Association and the International Institute for Conflict\nPrevention and Resolution each maintain specialized exemplaroy rules for arbitration of\npatent disputes, which are similar to the patent local rules discussed above in setting out a\nstructure for exchanging infringement contentions, invalidity contentions, discovery, and\nclaim construction.\nAlthough arbitration is private, making it easier to maintain confidentiality, \xc2\xa7 294(d)\nrequires notice of the arbitration and of the resulting award to be provided to the USPTO.\nParties may thus choose to limit the award to decide infringement and damages online to\navoid any record of an invalidity finding that third parties might rely on in the future.\n\n4\n\nhttps://www.fjc.gov/sites/default/files/materials/05/Patent_Mediation_Guide.pdf\n\n\x0cU.S. PATENT LITIGATION PROCEDURE\n\n481\n\nPractice Problems: Patent Litigation Procedure\n1. Amandeep is the general counsel for a German consumer electronics firm, ALO.\nTwo years ago, ALO exclusively licensed U.S. patent rights for a new invention called a\nthingamajigger, which ALO has developed for commercial production and begun exporting to\nthe United States. Amandeep just learned that a Japanese firm, Wonoly, is also exporting\nthingamajiggers to the United States. ALO\xe2\x80\x99s CEO has asked Amandeep what their options\nare for stopping Wonoly\xe2\x80\x99s sales in the United States. What should she recommend?\n2. Although Amandeep\xe2\x80\x99s legal department coordinated a patent search on the\nthingamajigger before ALO began thingamajigger production, she recently came across a\nU.S. patent issued to a Delaware corporation six months ago which the new thingamajigger\nmight infringe. Amandeep\xe2\x80\x99s team has studied the claims and does not think the patent is\nobvious in light of the earlier patent ALO licensed, but they do think the patent is likely\ninvalid for indefiniteness. What course of action should Amandeep recommend for ALO?\n3. Amandeep has recently become aware that an American electronics firm, xJigger,\nis selling a facsimile of the thingamajigger to American consumers. xJigger is incorporated\nin the state of South Dakota, where it also has its main production facilities. xJigger sells\nthingamajiggers nationwide via its website, with roughly 55% of its business flowing to the\nWestern District of Washington, where ALO has its American headquarters. There is also a\ntrade show (\xe2\x80\x9cJiggerCon\xe2\x80\x9d) held every year in the Western District of Washington. xJigger\nalways sends a representative, and a large proportion of its sales are generated at this trade\nshow. In addition, xJigger operates a facility in Rhode Island where it produces components\nfor the thingamajigger, to be assembled at the plant in South Dakota. In which of these three\njudicial districts\xe2\x80\x94the District of South Dakota, the Western District of Washington, and the\nDistrict of Rhode Island\xe2\x80\x94would venue be proper if ALO were to sue xJigger? Which district\nor districts should ALO prefer to sue in, and which district or districts should it try to avoid?\n\n\x0c482\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n18. Patent Licensing and Transactions\nMuch of this book has focused on the legal rules governing obtaining and litigating\npatents. But most uses of patented technology do not involve litigation: instead, a potential\ninfringer can license the patent. That is, the putative infringer could reach an agreement\nwith the patent owner that permits the infringer to use the patented technology in exchange\nfor some amount of money (or something else of value). Licensing is important both to patent\nowners and the potential users of patented technology. For owners, licensing can be a\nsignificant source of revenue\xe2\x80\x94sometimes the only source of revenue, if the owner is a nonpracticing entity. For potential users, licensing creates freedom to operate: the firm can\nemploy the patented technology without having to be concerned about being sued for\ninfringement. Potential licenses can also be valuable bargaining chips: if one firm is\nthreatened with suit by a competitor in the same industry, it can sometimes defend itself by\nthreatening to counter-sue its competitor. The eventual solution may be a cross-license, in\nwhich each firm grants the other the right to use its patented technology.\nFor the most part, licenses are simply contracts and evaluated under standard\ncontract principles. That is, the question of which patented technology a licensee is permitted\nto use, what activities a license covers, or how much the patent owner is to be paid in\nexchange for granting the license are all questions of contract interpretation. The same is\ntrue for mergers & acquisitions, assignments, and other transactions in which patent rights\nare bought and sold. They are creatures of contract, and the transfer of patent rights is\nevaluated under the same contract principles that are used to evaluate the merger or\nacquisition itself.\nHowever, patents can also give rise to particular issues or complexities when they are\nlicensed or transferred. In some cases, these issues concern the uneasy interaction between\npatent law and antitrust law. As explained in Chapter 1, patents create an incentive for\ninnovation by offering the possibility of a quasi-monopoly for the patent owner, allowing it to\ncharge supra-competitive prices. But under certain circumstances, particularly when patents\nare aggregated, that power can become excessive and lead to antitrust concerns. In other\ncases, patent law has developed a series of specialized rules to govern issues that arise in\nlicensing and other transactions. This chapter briefly canvasses some of these specialized\nconcerns that stem from patent transactions and the rules that have evolved to address those\nconcerns.\nFor those looking for more details on the law of IP transactions and licensing, Jorge\nContreras has written an excellent free casebook, which is available at iptransactions.org.\n\n\x0cPATENT LICENSING & TRANSACTIONS\n\n483\n\nA. Standards-Essential Patents, FRAND Licensing, Patent\nPools, and Monopoly\nA great deal of modern technology, particularly consumer electronics, runs on\ntechnical \xe2\x80\x9cstandards.\xe2\x80\x9d A standard is a set of technical specifications that establishes how the\ntechnology will work, how it can be operated, and how it interacts with other types of\ntechnology. DVDs, Bluetooth, Wi-Fi, 4G and 5G cellular networks\xe2\x80\x94these are all technical\nstandards. The value of a technical standard is that it allows a panoply of different companies\nto create a wide variety of products that will all operate and interact seamlessly. You can\nconnect a Samsung phone, an Apple tablet, an Amazon Fire Stick, and even a GE oven to a\nWi-Fi router made by Netgear, and they\xe2\x80\x99ll all function properly. In the modern era it is easy\nto take this type of technical interoperability for granted, but there is nothing inevitable\nabout it. It\xe2\x80\x99s easy to imagine an alternative universe in which Apple tablets only worked with\nApple wireless routers and Samsung phones only worked with Samsung wireless routers,\njust as only some versions of software will run on the iOS operating system that powers Apple\ndevices. Standards are what make this type of interoperability possible.\nThe problem with standards is that, when coupled with patents, they create the\npotential for severe monopoly power and anticommons problems. Imagine that Cisco owned\na patent on some essential aspect of Wi-Fi, without which a Wi-Fi network would not be\noperable. (This is in fact the case.) This is known as a \xe2\x80\x9cstandards-essential patent\xe2\x80\x9d or \xe2\x80\x9cSEP,\xe2\x80\x9d\nin that it is impossible to construct a device that uses the standard without infringing the\npatent. In a world without standards, a competing company that did not want to license\nCisco\xe2\x80\x99s patent could simply create and sell its own wireless network\xe2\x80\x94imagine Wi-Apple\xe2\x80\x94to\navoid infringing the patent. But if Wi-Fi has been adopted as the industry standard by every\nother firm in the market, Wi-Apple becomes nearly worthless. Who would buy or install a\nwireless network that will only connect with Apple products, rather than a Wi-Fi network\nthat works with everything else? Once Wi-Fi has been selected as the industry standard,\nevery firm in the market has little choice but to use Wi-Fi and make their devices\ninteroperable with Wi-Fi. This bestows tremendous market power on Cisco and any other\ncompany whose patented technology is essential to the standard. Cisco can charge every\nmarket participant an exorbitant price for licensing its technology, and so can any other party\nthat owns an essential patent. There is no alternative and no way to design around Cisco\xe2\x80\x99s\npatent. A firm must either pay or leave the industry.\nThe industries that employ standards have tried to avoid this problem through\ngovernance systems. Technical standards are typically established by international nongovernmental organizations known as \xe2\x80\x9cstandard-setting organizations.\xe2\x80\x9d The Institute of\nElectrical and Electronics Engineers, known as IEEE, is one of the most famous of these\nstandard-setting organizations, responsible for many widely used standards. Generally, the\norganization that selects a standard will require every party that owns a standard-essential\npatent to agree ahead of time to license that patent to any manufacturer of a standardized\nproduct either for free, or on \xe2\x80\x9cfair, reasonable, and non-discriminatory\xe2\x80\x9d (\xe2\x80\x9cFRAND\xe2\x80\x9d) terms. In\n\n\x0c484\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nmany instances, this means in practice that before a standard such as Wi-Fi is adopted by\nthe relevant standard-setting organization, the owner of each relevant patent must sign a\ncontract or otherwise promise that it will license the patent on FRAND terms. The patent\nowner is then bound to this agreement, and failure to license on those terms in the future\ncan subject the patent owner to contractual or antitrust liability.\nWhat are FRAND terms? The \xe2\x80\x9cnon-discriminatory\xe2\x80\x9d part of FRAND means that the\npatent owner must license the patent on the same terms to similarly situated licensees. That\nmeans it cannot grant more favorable licensing terms to a corporate partner than to a\ncompetitor. As for the requirements that the licensing terms be \xe2\x80\x9cfair\xe2\x80\x9d and \xe2\x80\x9creasonable,\xe2\x80\x9d they\nhave been the subject of substantial litigation and much scholarly discussion, with no\ndefinitive resolution. The general consensus seems to be that the patent owner must license\nat a price that allows it to recoup value but does not eliminate the licensee\xe2\x80\x99s profits and does\nnot exploit its powerful bargaining position. But as one might imagine when it comes to terms\nlike \xe2\x80\x9cfair\xe2\x80\x9d and \xe2\x80\x9creasonable,\xe2\x80\x9d there is still quite a bit of debate as to whether the licensors of\nstandards-essential patents are fulfilling their FRAND obligations in any given case.\nOf course, even with FRAND terms, negotiating a license with every firm that owns a\nstandards-essential patent can involve significant transaction costs. There are often\nhundreds or thousands (or more) of such patents that are essential to a given technological\nstandard, and striking a deal with every such firm can be time-consuming and costly.\nUsefully, however, standards-essential patents also open up the possibility of \xe2\x80\x9cpatent pools.\xe2\x80\x9d\nA patent pool is a collection of patents that all concern a particular technology, such as\nBluetooth or Wi-Fi. The advantage of a patent pool is that a potential licensee can license all\npatents in the pool in one fell swoop, often for a flat price, rather than having to negotiate\nseparately with all of their owners.\nPatent pools are voluntary associations. A group of firms that own the relevant\npatents can agree to form a patent pool, aggregating their patents and making them\ncollectively available. However, patent pools are generally prohibited under antitrust law\nwhen the patents involved are substitutes for one another, rather than complements. The\nreason is that patent pool that involves substitute patents can constitute classic horizontal\nagreements in restraint of trade. They force a potential licensee who wants access to one\npatent to purchase access to all the patents. To understand the problem, imagine that there\nare three methods for manufacturing an automobile engine, each protected by a patent. In\ntheory, this is a semi-competitive marketplace: an automobile manufacturer could negotiate\nseparately with all three patent-holders and elect to license whichever technology is being\noffered at the best value. But now imagine that the three patent owners reached an\nagreement: anyone who wanted to license the technology from one of them would have to\nlicense the technology from all of them. This would create a full-fledged monopoly and\ndramatically raise the price that licensees would be forced to pay. And this monopoly would\nbe the result of a contract between the patent owners\xe2\x80\x94an agreement in restraint of trade\xe2\x80\x94\nrather than merely the result of the patents alone. This is patent pools that include substitute\npatents are generally prohibited.\n\n\x0cPATENT LICENSING & TRANSACTIONS\n\n485\n\nOn the other hand, patent pools are typically permitted when the patents involved are\ncomplements\xe2\x80\x94that is, when a firm that licenses one of the patents would benefit from\nlicensing the others as well. In such cases, there is no horizontal agreement because the firm\nis not being deprived of a choice between options. Instead, the firm is licensing a package of\npatents that are more valuable together than separately. Standards-essential patents are\ncomplementary in exactly this regard. By definition, a patentee must license all the relevant\npatents to construct a device that operates according to the standard. (That\xe2\x80\x99s what it means\nfor patents to be \xe2\x80\x9cstandards-essential.\xe2\x80\x9d) A patent pool thus does not restrain trade or create\nan artificial monopoly; the potential licensee never had any option other than to license all\nthe patents. Accordingly, antitrust regulators have generally permitted patent pools\ninvolving standards-essential patents. This has redounded to the benefit of both patent\nowners and patent licensees, who no longer need negotiate separately with each patent\nowner.\n\nB. Kimble v. Marvel and the Structure of Licenses\nAs we detailed in Chapter 15 (and as LaserDynamics v. Quanta makes clear), there\nare multiple ways to structure a patent license. The two most common forms are lump sum\nlicenses and running royalty licenses. When a license is structured as a lump sum, the\nlicensee pays one fixed amount of money for the license. When a license is structured as a\nrunning royalty, the licensee pays some percentage of its revenues (or profits, or sales) as a\nroyalty, extending into the future.\nIn some cases, licensees or licensors might prefer a lump sum royalty. For the licensee,\nit allows them to pay one amount of money, once, and never worry about the patent owner\nagain, no matter how successful the licensee\xe2\x80\x99s product or how much money they make in the\nfuture. For the licensor, it shifts the risk that the product will fail to the licensee. In other\ncases, licensees or licensors might prefer to negotiate running royalties. A running royalty\nshifts some of the risk of the product underperforming to the licensor; and at the same time,\nit gives the licensee some stake in the ongoing success of the product, which can be lucrative\nif the product performs well. More generally, if the parties do not know how much the\ntechnology will eventually be worth, or how successful the licensee\xe2\x80\x99s product will eventually\nbe, a running royalty offers a compromise solution that allows the two sides to reach\nagreement under conditions of uncertainty. The licensee will pay much more if the technology\nturns out to be more valuable, and much less if it turns out to be less valuable.\nHowever, there are other considerations at play as well. As we explained in Chapter\n12, in Kimble v. Marvel Entertainment, 576 U.S. 446 (2015), the Supreme Court upheld the\nlongstanding Brulotte rule, which prohibits patent owners from continuing to collect royalties\non a patent after that patent has been declared invalid by a court or the USPTO. Suppose\nthat Firm A agrees to license a patent to Firm B for ten years in exchange for 1% of Firm B\xe2\x80\x99s\nsales revenue in each of those ten years. In year five of this arrangement, Firm C files an IPR\nagainst Firm A and the USPTO declares the patent invalid. Firm A can no longer enforce its\n\n\x0c486\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nagreement against Firm B\xe2\x80\x94it can no longer collect revenues under the license. This is the\ncase even if the contract between Firm A and Firm B explicitly states: \xe2\x80\x9cFirm B is obligated\nto pay Firm A 1% of its sales revenue each year even if Firm A\xe2\x80\x99s patent is declared invalid.\xe2\x80\x9d\nThat is, this is a hard and fast rule of patent licensing, not a default rule of contract\ninterpretation. It is also an extra-textual rule, created by the courts without obvious warrant\nin the Patent Act.\nThis might seem at first blush like a sensible rule\xe2\x80\x94why should a patent owner be\nallowed to collect royalties on an invalid patent? The problem is that the parties may have\nexplicitly wanted to allocate the risk of the patent being invalidated to the licensee, as in the\nexample above. There might be any number of reasons why the parties would want to\nstructure their license this way, including the possibility that the licensee is best positioned\nto bear the risks of an uncertain future. (For instance, the patentee might be a large company,\nand the patent owner a small entity or solo inventor.) The Brulotte rule may thus skew\ndecision-making by firms negotiating licenses. Licensors may lean more toward lump sums\nthan they otherwise would, because a lump sum insulates them against the risk of the patent\nbeing invalidated. Licensees might lean more than they otherwise would toward running\nroyalties for the opposite reason. The result may be that more firms will end up compromising\non the economic suitability of licenses in order to avoid the legal risk created by the Brulotte\nrule. In any event, this is an important rule for IP attorneys to keep in mind when negotiating\nlicensing arrangements.\n\nC. Patents in Mergers, Acquisitions, and Other Deals\nIn the modern technology economy, the physical assets owned by businesses\xe2\x80\x94\nfactories, machines, land\xe2\x80\x94have diminished in importance, and the intangible assets owned\nby businesses\xe2\x80\x94patents, trade secrets, technical know-how, and other intellectual property\xe2\x80\x94\nhave grown in importance. As a result, patents are often an important component of corporate\nmergers and acquisitions. This means that transactional attorneys who work on deals will\noften need to be well-versed in patent law or able to call upon attorneys who are.\nThe issues surrounding patents that can arise during merger and acquisition deals\nare a microcosm of the issues that those deals involve more generally. A target firm (the firm\nbeing acquired) will often be involved in patent law as both a \xe2\x80\x9cseller\xe2\x80\x9d and \xe2\x80\x9cbuyer.\xe2\x80\x9d That is,\nthe target will frequently have a portfolio of patents that it licenses, enforces, or simply uses\nas a potential deterrent against competitors. The target will also frequently be a licensee of\nothers\xe2\x80\x99 patents, or it will depend on being able to navigate the thicket of patent rights in a\nmanner that leaves it with ample freedom to operate its business.\nThis means that transactional attorneys must be careful to assess both the quality of\nthe patents held by a target firm and that firm\xe2\x80\x99s potential susceptibility to patent suits by\ncompetitors when structuring or advising on a deal (for find another attorney who can do it\nfor them). The strength of a firm\xe2\x80\x99s patent portfolio, or that firm\xe2\x80\x99s vulnerability to suit by other\npatent-holding firms, can affect the firm\xe2\x80\x99s value quite substantially.\n\n\x0cPATENT LICENSING & TRANSACTIONS\n\n487\n\nThe situation becomes even more complex when one firm is acquiring a piece, but not\nthe entirety, of another firm. Imagine, for instance, that Firm A is acquiring the personal\ncomputer division of Firm B but not its mainframe server division, which primarily sells to\nlarge web business. Firm A would presumably like to acquire all of the patents involved in\nFirm B\xe2\x80\x99s personal computer division. However, these patents may overlap to some degree\nwith Firm B\xe2\x80\x99s server division, which could cause problems for Firm B if the patents were sold.\nIn addition, ownership of the patents is not strictly necessary to the personal computer\ndivision\xe2\x80\x99s operations. After all, patents do not provide a right to manufacture anything; they\noffer (only) a right to exclude others. The personal computer division merely needs a license\nto continue using the patented technology. Thus, an acquisition of all assets necessary to\noperate the personal computer division will not necessarily include that division\xe2\x80\x99s intellectual\nproperty, which might be one of its most valuable assets.\nIn some cases, corporate deals of this sort can also raise antitrust concerns. For\ninstance, it is not uncommon for large, entrenched firms to deal with new entrants by simply\nacquiring them, thereby eliminating the threat of competition. In a world without patents,\nhowever, one acquisition may not be enough to make competition disappear. For instance,\nimagine that Facebook is concerned about competition from Small Startup A. It acquires\nSmall Startup A and folds its business into Facebook\xe2\x80\x99s own operations\xe2\x80\x94or shuts it down\ncompletely. Even then, there is nothing to stop another entrepreneur (or even the same\nentrepreneur) from opening Small Startup B and pursuing precisely the same line of business\nas Small Startup A. The threat of serial challenges of this nature will often deter large firms\nfrom pursuing these \xe2\x80\x9ckiller acquisitions\xe2\x80\x9d as a strategy in the first instance.\nThe calculus changes, however, when Small Startup A owns critical patents. In that\ncase, acquiring Small Startup A allows Facebook not only to swallow that potential\ncompetitor, but then to force other competitors out of the market as well. Facebook would of\ncourse argue that it is only using its patents as they were intended. But this type of action\nhas echoes of the sort of horizontal agreement in restraint of trade that justifies prohibiting\npatent pools and other horizontal arrangements in most circumstances. For this reason,\nacquisitions of this type often draw antitrust scrutiny, though they are rarely invalidated.\nNonetheless, it is useful to think of patents as \xe2\x80\x9cforce multipliers\xe2\x80\x9d\xe2\x80\x94they make killer\nacquisitions and other types of deals much more profitable for incumbent firms and\npotentially much more deleterious to competition. For an empirical study suggesting that\nincumbent pharmaceutical firms acquire startups for the purpose of discontinuing research\nprojects that would compete with the incumbent\xe2\x80\x99s existing products, see Colleen\nCunningham, Florian Ederer & Song Ma, Killer Acquisitions, 129 J. Pol. Econ. 649 (2021).\nEven simple licensing arrangements can raise significant antitrust concerns. For\ninstance, imagine two competitors, A and B, that each produce a particular product such as\na large piece of machinery. Imagine that A and B each own a series of overlapping patents,\nsuch that A may be infringing B\xe2\x80\x99s patents and B may be infringing A\xe2\x80\x99s patents. Suppose that\nA sues B and B counter-sues A. The two parties then settle their lawsuit, with A granting B\na license covering any sales made east of the Mississippi River and B granting A a license\ncovering any sales made west of the Mississippi River.\n\n\x0c488\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nAt first glance, this looks like a standard patent litigation settlement via cross-license:\nthe two parties have reached an agreement that will allow both to operate without infringing.\nBut in fact what they have done is divided the country geographically in such a way as to\neliminate competition. Customers east of the Mississippi have only one option, and customers\nwest of the Mississippi have only one option. Of course, it is possible that a customer could\npurchase a machine in Illinois and transport it to California, thus creating some level of\ncompetition. But this may be challenging and costly, particularly for larger products. What\nwas once a duopoly has become a monopoly. That would be unlawful in the absence of patents,\nand the fact that it occurs as the result of patent litigation does not shield it from antitrust\nliability.\n\nD. Assignor Estoppel\nA distant cousin to the rule prohibiting royalties after a patent has been invalidated\nis the doctrine of \xe2\x80\x9cassignor estoppel.\xe2\x80\x9d Perhaps the most common context in which this\ndoctrine arises involves serial entrepreneurs who sell one business and then begin another.\nImagine that Juanita starts a high-tech firm and successfully applies for several patents.\nJuanita then sells her firm\xe2\x80\x94including her patents\xe2\x80\x94to Motorola and begins another startup\nventure involving a similar type of technology. If Juanita\xe2\x80\x99s new venture involves technology\nthat is too similar to the work she did previously, she might find herself as the target of a\npatent infringement suit, filed by Motorola, asserting her own patents. Juanita might then\ntry to defend herself by arguing that the patents she is being accused of infringing\xe2\x80\x94the\npatents she sold to Motorola\xe2\x80\x94are invalid.\nFor decades, the Federal Circuit has prohibited any party who assigns (sells or gives)\na patent to any other party from thereafter challenging the validity of that patent. Diamond\nScientific Co. v. Ambico, Inc., 848 F.2d 1220 (Fed. Cir. 1988). The court based this rule on\nequitable considerations: having sold a patent, it did not seem fair for the assignor to turn\naround and argue that the patent it sold was invalid, and thus a nullity. In the same vein, it\nseemed to be violating the principle that patent owners should not be receiving payment for\npatents that are invalid.\nAt the same time, there are evident downsides to such a rule. In some cases, the\nassignor might be the party best positioned to challenge a patent\xe2\x80\x99s validity. Prohibiting the\nassignor from bringing such a challenge, ostensibly in the name of fairness, could have the\neffect of forcing other parties to pay for licenses to the (invalid) patent and thus create\nunfairness for them. In addition, this is another rule without textual warrant in the Patent\nAct, created out of whole cloth by the Federal Circuit. More than 50 years ago, the Supreme\nCourt abolished the related doctrine of licensee estoppel, which barred the licensee to a\npatent from challenging that patent\xe2\x80\x99s validity. Lear, Inc. v. Adkins, 395 U.S. 653 (1969). Yet\nthe doctrine of assignor estoppel has persisted.\nLitigants continue to test and probe the contours and limits of this doctrine. In Arista\nNetworks v. Cisco Systems, 908 F.3d 792 (Fed. Cir. 2018) and Hologic v. Minerva Surgical,\n\n\x0cPATENT LICENSING & TRANSACTIONS\n\n489\n\n957 F.3d 1256 (Fed. Cir. 2020), the Federal Circuit refused to extend the doctrine of assignor\nestoppel to IPR proceedings. It held first in Arista that the doctrine of assignor estoppel did\nnot prevent an assignor from filing for IPR of a patent it had previously assigned. Then, in\nHologic, it held that an assignor who prevailed in the IPR could use the patent\xe2\x80\x99s invalidation\nas a defense in litigation, even though it could not separately have asserted in litigation that\nthe patent was invalid. The Supreme Court granted certiorari in Hologic and carved back on\nthe doctrine even further in 2021. The Court held that assignor estoppel only applies if the\nassignor made explicit or implicit representations regarding the validity of the patent when\nassigning it.\nThese decisions are a rather formalist gloss on what was, at least in theory, an\nequitable doctrine based in fairness. If it is unfair for an assignor to argue that a patent it\nhas sold is invalid during district court litigation, it does not seem any less unfair for the\nsame assignor to argue that the same patent is invalid in an IPR, particularly if that IPR will\n(if successful) end the litigation in favor of the assignor. The compromise position struck by\nthe Federal Circuit and Supreme Court may thus prove to be unstable. It would not be\nsurprising to see either court further limit the doctrine of assignor estoppel in the coming\nyears.\n\n\x0c490\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n19. Other U.S. Intellectual Property Rights\nThis casebook has focused on U.S. utility patents, but patents are only one of a number\ntypes of legal entitlements over knowledge goods, which are grouped under the umbrella of\n\xe2\x80\x9cintellectual property.\xe2\x80\x9d U.S. patent lawyers should be familiar with other forms of IP, both\nbecause legal arguments from one IP field are often imported to another and because a given\nproduct can often be protected with numerous IP rights.\nConsider a wrist-worn fitness tracker, like a Fitbit. By now, you should recognize that\nthis product can be covered by thousands of utility patents, such as on the microprocessor,\nbattery, heartrate monitor, motion sensing, GPS tracking, wireless connectivity (e.g., Wi-Fi\nor Bluetooth standards), novel materials in the wristband, waterproofing technology, and\nmore. But the tracker can also be protected with other forms of IP in the United States:\n\xe2\x80\xa2\n\nTrade secret law protects any confidential information related to the tracker, such\nas manufacturing techniques that are not disclosed in a patent, the source code for\nthe tracker\xe2\x80\x99s software, business plans, and lists of suppliers and customers.\n\n\xe2\x80\xa2\n\nCopyright law protects original creative expression, including not just artistic\nexpression such as graphics on the display screen and perhaps the overall design of\nthe tracker, but also the software source code.\n\n\xe2\x80\xa2\n\nTrademark law protects symbols or product designs that tell consumers about the\nsource of the tracker, which can include not just the product name and logo but also\naspects of the product design like the color or shape.\n\n\xe2\x80\xa2\n\nRegulatory exclusivity attaches to some kinds of information submitted to\nregulatory agencies like the FDA; for example, certain medical devices (including\nsome fitness trackers) receive six years of data exclusivity.\n\n\xe2\x80\xa2\n\nDesign patents protect new designs, which can include not just the overall product\ndesign but also individual features like the shape of the graphics display, aspects of\nthe wristband design, and icons displayed on the screen.\n\nWe have already described the key forms of regulatory exclusivity associated with\nFDA approval in Chapter 11(D). This chapter provides a brief overview of the most prominent\nother forms of non-patent IP (trade secrets, copyright, and trademark), as well as the two\nother kinds of U.S. patents (design patents and plant patents). For those interested in\nlearning about these areas in more depth, links to other free or low-cost IP casebooks have\nbeen collected by James Grimmelmann at https://james.grimmelmann.net/files/casebooks.\n\n\x0cOTHER U.S. INTELLECTUAL PROPERTY RIGHTS\n\n491\n\nA. Non-Patent IP\n1. Trade Secrets\nU.S. trade secret law evolved as a matter of state common law, but every state except\nNew York has now enacted a trade secrets statute based on the Uniform Trade Secrets Act\n(UTSA), although the specific language and interpretation vary by state.1 The 2016 Defend\nTrade Secrets Act (DTSA) also provides a federal civil cause of action modeled on the UTSA,\nwhich doesn\xe2\x80\x99t preempt state law. In addition, trade secret misappropriation of commercial\ninformation may be criminally punished under the federal Economic Espionage Act of 1996.\nSome of the underlying justifications for trade secret law are similar to those for utility\npatents: trade secret protection can encourage investment in information, limit the secrecy\narms race, and encourage efficient disclosure and licensing. But trade secret law is also\ninfluenced by tort-based deterrence theories grounded in industry norms and good faith.\nThe definition of a \xe2\x80\x9ctrade secret\xe2\x80\x9d is provided by UTSA \xc2\xa7 1(4) and by the DTSA at 18\nU.S.C. \xc2\xa7 1839(3). Under both, establishing a trade secret involves three elements:\n1. The information must be secret, meaning \xe2\x80\x9cnot . . . generally known to, and not . . .\nreadily ascertainable\xe2\x80\x9d by other persons. (Some states, such as California, do not have\nthe \xe2\x80\x9cnot readily ascertainable\xe2\x80\x9d language.)\n2. The information must have \xe2\x80\x9cindependent economic value\xe2\x80\x9d due to its secrecy. This is\nusually easily established; why would the information have been misappropriated if\nit wasn\xe2\x80\x99t valuable?\n3. The owner must have taken \xe2\x80\x9creasonable\xe2\x80\x9d efforts to maintain its secrecy. This may be\nassessed through an economic cost-benefit analysis, comparing the cost of precautions\nto the value of the secret.\nTrade secrecy protection can last forever, but it is lost once the information is disclosed,\nincluding by third parties who have independently invented or reverse engineered the secret.\nThus, the choice of whether to patent an invention or protect it as a trade secret may be\ninformed by comparing the patent term with the expected lifespan of the secret. In practice,\ninventors can often patent one aspect of an invention while maintaining trade secrecy\nprotection over any aspects that are not disclosed in the patent application.\nTrade secrecy \xe2\x80\x9cmisappropriation\xe2\x80\x9d is defined by UTSA \xc2\xa7 1(1)\xe2\x80\x93(2) and by the DTSA at\n18 U.S.C. \xc2\xa7 1839(5)\xe2\x80\x93(6). It includes acquisition, disclosure, or use of a trade secret by\n\xe2\x80\x9cimproper means,\xe2\x80\x9d which \xe2\x80\x9cincludes theft, bribery, misrepresentation, breach or inducement\nThe UTSA is at https://www.uniformlaws.org/viewdocument/final-act-with-comments-89.\nNorth Carolina is the only state whose statute is not explicitly based on the UTSA, but it is very\nsimilar. New York\xe2\x80\x99s trade secret law remains heavily influenced by the 1939 Restatement of Torts.\n1\n\n\x0c492\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nof a breach of a duty to maintain secrecy, or espionage through electronic or other means.\xe2\x80\x9d A\ncomment to the UTSA also specifies: \xe2\x80\x9cImproper means could include otherwise lawful conduct\nwhich is improper under the circumstances; e.g., an airplane overflight used as aerial\nreconnaissance to determine the competitor\xe2\x80\x99s plant layout during construction of the plant.\nE. I. du Pont de Nemours & Co., Inc. v. Christopher, 431 F.2d 1012 (5th Cir. 1970).\xe2\x80\x9d The\nmajority of trade secret misappropriation cases involve violation of an express or implied\nconfidential relationship, such as disclosure of trade secrets by a former employee.\nTrade secret law can be a rewarding practice area because it is geographically flexible,\nit often involves substantial client counseling and corporate work in addition to litigation,\nand there are many major open questions that still need to be resolved by the courts. There\nis also substantial overlap with patent practice because many lawsuits involve both patent\ninfringement and trade secret misappropriation claims.\n\n2. Copyright\nCopyright law protects a wide variety of creative expression, including not only works\nthat might be the subjects of literature, art, and film classes, but also product designs and\ncomputer programs. Like patent law, copyright law is grounded in the IP Clause: \xe2\x80\x9cTo promote\nthe progress of science and useful arts, by securing for limited times to authors and inventors\nthe exclusive right to their respective writings and discoveries.\xe2\x80\x9d But the \xe2\x80\x9climited times\xe2\x80\x9d for\ncopyrights are far longer than for patents: 70 years after the death of the author, or for\ncorporate works, 120 years after creation or 95 years after publication, whichever is shorter.\nThe primary source of U.S. copyright law is the federal Copyright Act at Title 17 of\nthe U.S. Code, although there are also limited state law protections. You don\xe2\x80\x99t need a formal\nregistration or a \xc2\xa9 notice to have a valid copyright, although registering a work with the U.S.\nCopyright Office at copyright.gov provides important benefits. For example, copyright\nregistration is required before filing most infringement suits, can serve as prima facie\nevidence of validity, and is a prerequisite for statutory damages and attorneys\xe2\x80\x99 fees.\nUnder 17 U.S.C. \xc2\xa7 102, copyright protects \xe2\x80\x9coriginal works of authorship,\xe2\x80\x9d which courts\nhave interpreted to require both a modicum of creativity\xe2\x80\x94a much lower bar than patent law\xe2\x80\x99s\nnonobviousness requirement\xe2\x80\x94and independent creation. Thus, unlike in patent law, an\nindependent creator can receive their own copyright protection. If you take a photograph that\nhappens to look strikingly similar to someone else\xe2\x80\x99s, you can copyright your photograph\n(because of the minimal creativity involved in arranging the photo composition) and your\nphoto doesn\xe2\x80\x99t infringe the earlier photographer\xe2\x80\x99s copyright. A copyrighted work must also be\n\xe2\x80\x9cfixed in any tangible medium of expression,\xe2\x80\x9d meaning that some embodiment \xe2\x80\x9cis sufficiently\npermanent or stable to permit it to be perceived, reproduced, or otherwise communicated for\na period of more than transitory duration.\xe2\x80\x9d \xc2\xa7\xc2\xa7 101\xe2\x80\x93102. This broad language is intended to\ncover future technological development: works can be fixed using canvas, paper, sculpture,\nrecords, DVDs, MP3s, and a variety of other digital or nondigital formats.\n\n\x0cOTHER U.S. INTELLECTUAL PROPERTY RIGHTS\n\n493\n\nCopyright law doesn\xe2\x80\x99t protect ideas\xe2\x80\x94only expressions of ideas. Copyright thus cannot\ncover useful methods (that\xe2\x80\x99s for utility patent law), whether a method of accounting, a cooking\nrecipe, or a functional computer algorithm. But it can protect a particular creative expression\nof any of these ideas, such as the text of a book describing how to use the accounting method,\na cookbook author\xe2\x80\x99s asides about the memories a recipe evokes, or software in which a\nprogrammer has made one of many choices in how to express an algorithm in code. Of course,\nthe dividing line between idea and expression can be murky. See Google v. Oracle, 141 S. Ct.\n1183 (2021) (sidestepping the issue of whether the code at issue was copyrightable).\nCopyright also doesn\xe2\x80\x99t protect facts, such as a factual database. (Other countries offer\nsui generis IP protection for databases.) If after painstaking archival research you develop a\nnew theory about how a statute should be interpreted and you write a seminar paper\ndescribing your ideas about the facts you have uncovered, copyright law would not prevent\nanother student from copying your ideas and facts without attribution if they do not copy the\ncreative expression you used. (However, they will have committed plagiarism and may be\nsanctioned for academic misconduct!) Although facts are not themselves copyrightable, you\ncan receive copyright protection for a compilation of facts (or other works, as in a cookbook\nor poetry anthology) based on minimal creativity in the selection and arrangement.\nYou also generally cannot copyright a \xe2\x80\x9cuseful article\xe2\x80\x9d\xe2\x80\x94one with \xe2\x80\x9can intrinsic\nutilitarian function that is not merely to portray the appearance of the article or to convey\ninformation\xe2\x80\x9d\xe2\x80\x94unless the \xe2\x80\x9cdesign incorporates pictorial, graphic, or sculptural features that\ncan be identified separately from, and are capable of existing independently of, the utilitarian\naspects of the article.\xe2\x80\x9d 17 U.S.C. \xc2\xa7 101. For example, you cannot use copyright law to protect\nthe design of a simple utilitarian shovel or T-shirt\xe2\x80\x94this is the domain of utility patent law.\nBut you can copyright a shovel with elaborate handle carvings or a T-shirt with a creative\ngraphic design. As with the idea/expression dichotomy, the dividing line has been\ncontentious, and recent Supreme Court intervention has done little to resolve the issue. In a\nrecent case that upheld the copyrightability of cheerleader uniforms, the Court held that the\ndesign of a useful article is copyrightable if the feature \xe2\x80\x9c(1) can be perceived as a two- or\nthree-dimensional work of art separate from the useful article and (2) would qualify as a\nprotectable pictorial, graphic, or sculptural work\xe2\x80\x94either on its own or fixed in some other\ntangible medium of expression\xe2\x80\x94if it were imagined separately from the useful article into\nwhich it is incorporated.\xe2\x80\x9d Star Athletica v. Varsity Brands, 137 S. Ct. 1002 (2017).\nA valid copyright provides protection against reproduction, adaptation into a\n\xe2\x80\x9cderivative work\xe2\x80\x9d (like a translation, movie version, or sequel), distribution, performance, or\ndisplay. This protection extends not only to exact copies, but also to substantially similar\nvariations, such as borrowing part of a song\xe2\x80\x99s melody for another song. Establishing an\ninfringement claim requires showing (1) that the infringing work was actually copied from\nthe original rather than independently created, and (2) that the works have \xe2\x80\x9csubstantial\nsimilarity\xe2\x80\x9d from the perspective of an ordinary consumer. Before the works are compared for\nsimilarity, it is important to \xe2\x80\x9cfilter out\xe2\x80\x9d any unprotected elements, such as abstract ideas,\nfacts, and public domain materials.\n\n\x0c494\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nCopyright protection has many statutory limitations and compulsory licensing\nregimes, but the most prominent limitation is the doctrine of fair use under 17 U.S.C. \xc2\xa7 107.\nUse of a copyrighted work is more likely to be fair use when the use is noncommercial or for\ncritique or research, when the copyrighted work is factual, when only a small portion of the\nwork is used, and when the use doesn\xe2\x80\x99t supplant potential markets for the copyrighted work.\nUnder the Supreme Court\xe2\x80\x99s interpretation of the fair use statute, the most important factor\nhas become whether the use is \xe2\x80\x9ctransformative\xe2\x80\x9d: whether it \xe2\x80\x9cadds something new, with a\nfurther purpose or different character, altering the first with new expression, meaning, or\nmessage.\xe2\x80\x9d Most recently, the Supreme Court relied on this transformativeness inquiry in\nholding Google\xe2\x80\x99s repurposing of certain computer software owned by Oracle to be fair use.\nGoogle v. Oracle, 141 S. Ct. 1183 (2021).\nFinally, note that just because the author of a copyrighted work has made it available\nfor free download online doesn\xe2\x80\x99t mean you are free to copy, edit, or distribute it yourself. So\nbefore you copy an image from Google search into your PowerPoint presentation, check\nwhether the author has placed the image under an open license such as those available from\nCreative Commons. For example, this casebook is under a CC BY-NC-ND license, allowing\nyou to download the casebook and share it with others in the original form (including\nattribution to us), but not to edit the casebook or use it commercially. But as noted at the\nstart of the book, we are likely willing to authorize many derivative uses!\n\n3. Trademark\nUnlike patent, trade secret, and copyright law, trademark law is not designed to\nprovide incentives for innovation. Rather, trademark law is meant to improve the quality of\ninformation about the source of goods and services, which can have benefits such as reducing\nsearch costs for consumers and providing incentives for firms to invest in consistent quality.\nNonetheless\xe2\x80\x94for better or worse\xe2\x80\x94trademark law often allows producers to charge\nsupracompetitive prices without using patent law. Consider, for example, the higher price\ncharged for Tylenol than for store-brand acetaminophen, even though the products are\nchemically identical.\nThe sources of U.S. trademark law include the federal Lanham Act at 15 U.S.C. \xc2\xa7 1051\net seq. and state common law. Like for copyright law, registration is not required for federal\ntrademark protection; trademark rights are established through use in commerce. But\nregistering a trademark with the USPTO provides benefits such as making it harder to argue\nthat the mark is invalid and serving as a prerequisite for treble damages and attorneys\xe2\x80\x99 fees.\nTrademark law can protect \xe2\x80\x9cany word, name, symbol, or device\xe2\x80\x9d used \xe2\x80\x9cto identify and\ndistinguish\xe2\x80\x9d the source of goods or services. 15 U.S.C. \xc2\xa7 1127. Courts have interpreted this\ncoverage expansively to include aspects of product design, including color, shape, sound, and\neven fragrance (collectively referred to as \xe2\x80\x9ctrade dress\xe2\x80\x9d). If consumers would immediately\nview a mark as signifying source, such as for coined terms like \xe2\x80\x9cZappos\xe2\x80\x9d shoes, it is deemed\n\xe2\x80\x9cinherently distinctive\xe2\x80\x9d and is immediately protectable. Other marks are only protectable\n\n\x0cOTHER U.S. INTELLECTUAL PROPERTY RIGHTS\n\n495\n\nonce they have \xe2\x80\x9cacquired distinctiveness,\xe2\x80\x9d meaning that consumers\nhave learned to view it as identifying source. For example, \xe2\x80\x9cAmerican\xe2\x80\x9d\nairlines could initially be viewed as signifying a generic U.S. air\ncarrier, but over time it has acquired distinctiveness and come to be\nviewed as signifying the brand American Airlines. Product design\nfeatures can also gain acquired distinctiveness, as in the three chimes\nthat signify NBC, the red shoe soles that signify Louboutin (at least\namong those who purchase $700 shoes), the purple color of Nexium\nacid reflux pills, and product shapes of everything from Lego minifigs\nto Pepperidge Farm Milano cookies.\nLike copyright law, trademark law attempts to channel IP\nprotection for useful product features to utility patent law by denying\nprotection to \xe2\x80\x9cfunctional\xe2\x80\x9d features. The Supreme Court has defined a\nfunctional feature as one that \xe2\x80\x9cis essential to the use or purpose of the article\xe2\x80\x9d or that \xe2\x80\x9caffects\nthe cost or quality of the article.\xe2\x80\x9d TrafFix Devices v. Marketing Displays, 532 U.S. 23, 32\n(2001). \xe2\x80\x9cA utility patent is strong evidence that the features therein claimed are functional.\xe2\x80\x9d\nId. at 29. Product features can also have \xe2\x80\x9caesthetic\xe2\x80\x9d functionality\xe2\x80\x94where a design is valued\nfor the way it looks rather than for the source it signifies\xe2\x80\x94which is unprotectable if it puts\ncompetitors at \xe2\x80\x9ca significant non-reputation-related disadvantage.\xe2\x80\x9d Id. at 33. As with\ncopyright\xe2\x80\x99s useful article doctrine, the dividing line between functional and non-functional\ntrade dress has proven difficult to police.\nA valid trademark provides protection against \xe2\x80\x9clikelihood of confusion\xe2\x80\x9d by others\xe2\x80\x99 use,\nwhich is evaluated by multi-factor tests that vary by federal appellate circuit. Confusion is\nmore likely when the mark is strong, when the defendant\xe2\x80\x99s use is more similar to the mark,\nand when the defendant\xe2\x80\x99s goods or services are more proximate to the plaintiff\xe2\x80\x99s. If the mark\nis \xe2\x80\x9cfamous\xe2\x80\x9d (think Coca-Cola or Louis Vuitton), trademark also protects against \xe2\x80\x9cdilution,\xe2\x80\x9d or\nuse of similar marks on dissimilar goods or services.\nTrademark law has its own fair use doctrines, although they operate differently from\ncopyright fair use. Descriptive fair use allows a third party to use a descriptive mark in good\nfaith to describe their own goods\xe2\x80\x94so even though American Airlines is a strong mark, a\ndifferent airline may describe themselves as \xe2\x80\x9can American air carrier.\xe2\x80\x9d Nominative fair use,\nalso known as non-trademark use, allows a third party to use a mark to refer to the mark\nowner\xe2\x80\x99s product for purposes like comparative advertising, parody, or artistic expression. The\nuse of Mattel\xe2\x80\x99s \xe2\x80\x9cBarbie\xe2\x80\x9d trademark in the title and lyrics of Aqua\xe2\x80\x99s \xe2\x80\x9cBarbie Girl\xe2\x80\x9d song is a\nwell-known example of permissible nominative use.\n\n\x0c496\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nB. Design Patents\nAs noted in Chapter 1, in 2020, the USPTO granted 34,877 design patents in addition\nto 352,049 utility patents. Under 35 U.S.C. \xc2\xa7 171, design patents are available for \xe2\x80\x9cany new,\noriginal and ornamental design for an article of manufacture.\xe2\x80\x9d This broad language applies\nto designs of products ranging from app icons to cement mixers, and design patents can cover\neither surface ornamentation (like the pattern of a rug) or three-dimensional product\nconfiguration (like the shape of a chair). Many of these design features can also be protected\nusing copyright and trademark law. What are the costs and benefits of IP protection for\ndesigns? Does it make sense to allow protection through overlapping IP regimes? See\nChristopher Buccafusco, Mark A. Lemley & Jonathan S. Masur, Intelligent Design, 68 Duke\nL.J. 75 (2018).\nLike utility patents, design patents are examined for compliance with 35 U.S.C.\n\xc2\xa7\xc2\xa7 102, 103, and 112, although these requirements are implemented differently and\nexamination is far less stringent. Design patents also must be \xe2\x80\x9cornamental\xe2\x80\x9d rather than\nfunctional. The lifespan of a design patent is 15 years from the date of grant (14 years for\ndesign patents filed before May 13, 2015). 35 U.S.C. \xc2\xa7 173.\nThis section briefly reviews how the legal requirements for a design patent differ from\nthose for a utility patent; for more in-depth coverage, see the design patent chapter of the\nfree casebook by Sarah Burstein, Sarah Wasserman Rajec, and Andres Sawicki available at\nhttps://ssrn.com/abstract_id=3866658.\n\n1. Claiming and Disclosing Design Patents\nThe disclosure requirements of 35 U.S.C. \xc2\xa7 112(a) and the definiteness requirement\nof \xc2\xa7 112(b) also apply to design patents, but unlike for utility patents, both disclosure and\ndefiniteness requirements are satisfied through drawings of the design at issue, along with\na statement of the type of article of manufacture to which the design is applied. Each design\npatent has a single claim. Design patent drawings use solid lines to define the scope of the\nclaim and dashed lines to provide context. Below are drawings from three different vacuum\ndesign patents owned by Dyson, where the first claims the whole vacuum design, the second\nfocuses on the vacuum head, and the third focuses on the sphere at the bottom. Each claim\nconsists of the statement \xe2\x80\x9cWe claim the ornamental design for a vacuum cleaner, as shown\nand described\xe2\x80\x9d along with seven drawings showing the vacuum from different angles.\n\n\x0cOTHER U.S. INTELLECTUAL PROPERTY RIGHTS\n\n497\n\nAs long as the configuration of the design for which protection is sought is clear (e.g.,\nthere aren\xe2\x80\x99t inconsistencies between drawings) and an ordinary designer could make an\narticle having that design, the \xc2\xa7 112 requirements are satisfied.\n\n2. Novelty and Nonobviousness\nLike utility patents, design patents must be novel and nonobvious relative to the prior\nart under \xc2\xa7\xc2\xa7 102 and 103, but small modifications are often enough to clear these bars. The\nprior art is defined using \xc2\xa7 102 with the same broad definitions of categories like \xe2\x80\x9cprinted\npublication\xe2\x80\x9d and \xe2\x80\x9cpublic use\xe2\x80\x9d as in the utility patent context.\nThe test for whether a prior art reference anticipates a design patent is whether an\n\xe2\x80\x9cordinary observer,\xe2\x80\x9d considering the designs as a whole, would think that the two designs are\n\xe2\x80\x9csubstantially the same.\xe2\x80\x9d International Seaway Trading Corp. v. Walgreens Corp., 589 F.3d\n1233, 1239\xe2\x80\x9340 (Fed. Cir. 2009).\nThe doctrinal framework for evaluating obviousness is more complicated. The test is\nfrom the perspective of \xe2\x80\x9ca designer of ordinary skill who designs articles of the type involved\xe2\x80\x9d\nrather than an \xe2\x80\x9cordinary observer,\xe2\x80\x9d and the obviousness assessment must start by identifying\na \xe2\x80\x9cprimary reference\xe2\x80\x9d that creates \xe2\x80\x9cbasically the same visual impression\xe2\x80\x9d as the patented\ndesign as a whole. Campbell Soup Co. v. Gamon Plus, Inc., 939 F.3d 1335, 1339\xe2\x80\x9340 (Fed. Cir.\n2019) (summarizing earlier caselaw). In most cases, no single reference meets the high\nstandard of \xe2\x80\x9cbasically the same,\xe2\x80\x9d so the claimed design is nonobvious. If there is a primary\nreference, then the question is whether modifying that reference with related secondary\nreferences to arrive at the claimed design would have been obvious to the designer of ordinary\nskill. See id.\n\n\x0c498\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n3. Ornamentality\nDesign patents have an additional validity requirement that is in some ways the\nopposite of the requirement that utility patents be \xe2\x80\x9cuseful\xe2\x80\x9d: under 35 U.S.C. \xc2\xa7 171, the\nclaimed design must be \xe2\x80\x9cornamental,\xe2\x80\x9d as opposed to useful or functional. As summarized by\nthe Federal Circuit:\nA design patent cannot claim a purely functional design\xe2\x80\x94a design patent is\ninvalid if its overall appearance is \xe2\x80\x9cdictated by\xe2\x80\x9d its function. But as long as the\ndesign is not primarily functional, the design claim is not invalid, even if\ncertain elements have functional purposes. That is because a design patent\xe2\x80\x99s\nclaim protects an article of manufacture, which necessarily serves a utilitarian\npurpose. So a design may contain both functional and ornamental elements,\neven though the scope of a design patent claim must be limited to the\nornamental aspects of the design. Where a design contains both functional and\nnon-functional elements, the scope of the claim must be construed in order to\nidentify the non-functional aspects of the design as shown in the patent.\nSport Dimension, Inc. v. Coleman Co., 820 F.3d 1316, 1320 (Fed. Cir. 2016). Factors for\ndetermining whether a design is \xe2\x80\x9cdictated by\xe2\x80\x9d function include the availability of alternative\ndesigns, whether the protected design is \xe2\x80\x9cthe best design,\xe2\x80\x9d and the existence of utility patents.\nSee id. at 1322.\nLike the useful article doctrine in copyright law and the functionality doctrine in\ntrademark law, the ornamentality doctrine attempts to channel protection for new functional\nfeatures to utility patent law. But each area of IP law defines functionality differently. For a\ncomparison of these different channeling doctrines, see Christopher Buccafusco & Mark A.\nLemley, Functionality Screens, 103 Va. L. Rev. 1293 (2017).\n\n4. Design Patent Infringement\nThe infringement rules of 35 U.S.C. \xc2\xa7 271 discussed in Chapters 9\xe2\x80\x9311 also apply to\ndesign patents, but the test for evaluating infringement differs. Claim construction is a more\nflexible process that recognizes that design patents are claimed using drawings, so that in\nsome cases, verbal descriptions are unnecessary.\nAs for utility patents, design patents have infringement-anticipation symmetry: any\nproduct that would infringe if it postdates the patent should anticipate if it predates the\npatent. The test for infringement thus mirrors the anticipation test described above: whether\nan \xe2\x80\x9cordinary observer,\xe2\x80\x9d considering the designs as a whole, would think that the two designs\nas \xe2\x80\x9csubstantially the same.\xe2\x80\x9d See Seaway, 589 F.3d at 1239\xe2\x80\x9340 (quoting Egyptian Goddess v.\nSwisa, 543 F.3d 665, 676 (Fed. Cir. 2008) (en banc)). In making this comparison, the ordinary\nobserver is \xe2\x80\x9cdeemed to view the differences between the patented design and the accused\nproduct in the context of the prior art\xe2\x80\x9d because \xe2\x80\x9cwhen the claimed design is close to the prior\n\n\x0cOTHER U.S. INTELLECTUAL PROPERTY RIGHTS\n\n499\n\nart designs, small differences between the accused design and the claimed design are likely\nto be important to the eye of the hypothetical ordinary observer.\xe2\x80\x9d Id. (quoting Egyptian\nGoddess). This is the only test for infringement; there is no doctrine of equivalents.\n\n5. Design Patent Damages\nIn addition to all the patent remedies covered in Chapters 13\xe2\x80\x9316, design patent\nowners who succeed in proving infringement are also entitled to disgorgement of an\ninfringer\xe2\x80\x99s profits. Under 35 U.S.C. \xc2\xa7 289, someone who makes or sells an infringing article\nof manufacture \xe2\x80\x9cshall be liable to the [design patent] owner to the extent of his total profit,\nbut not less than $250,\xe2\x80\x9d although the owner \xe2\x80\x9cshall not twice recover the profit made from the\ninfringement.\xe2\x80\x9d\nThis provision could lead to enormous profits when the patented design is a small\ncomponent of a product, although the Supreme Court limited the potential scope of this\nremedy in Samsung v. Apple, 137 S. Ct. 429 (2016). In that case\xe2\x80\x94a separate piece of the\nmultinational patent war that also led to the obviousness decision you read in Chapter 3\xe2\x80\x94\nApple sued Samsung for infringement of numerous design patents, including on the iPhone\xe2\x80\x99s\nrounded rectangular shape and on the grid of app icons on the home screen.\n\nA jury found that some of Samsung\xe2\x80\x99s smartphones infringed Apple\xe2\x80\x99s design patents,\nand Apple was awarded $399 million in design patent damages\xe2\x80\x94the entire profit Samsung\nmade from sales of those phones. But the Supreme Court held that the \xe2\x80\x9carticle of\nmanufacture\xe2\x80\x9d for which \xc2\xa7 289 allows total profits to be awarded can be merely a component\nof an article sold to consumers. Yet the Court declined to decide what the relevant \xe2\x80\x9carticle of\nmanufacture\xe2\x80\x9d was for Samsung\xe2\x80\x99s infringing phones. On remand, the jury was instructed to\n\n\x0c500\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nconsider this issue and ended up awarding even more than the first jury: $533 million in\ndesign patent damages. The parties then settled before appealing this verdict.\n\nPractice Problems: Designs\nConsider the following design patent claims and products, which are drawn from the\nlisted cases. If the product comes later in time, do you think it infringes? If it came earlier,\ndo you think it anticipates the claim or renders it obvious? Should the design patent claim be\ninvalidated for lack of ornamentality (i.e., functionality)? How would your answers differ if\nyou were evaluating the designs for copyright or trade dress infringement?\n1. Sport Dimension, Inc. v. Coleman Co., 820 F.3d 1316, 1320 (Fed. Cir. 2016):\n\n\x0cOTHER U.S. INTELLECTUAL PROPERTY RIGHTS\n2. Richardson v. Stanley Works Inc., 597 F.3d 1288 (Fed. Cir. 2010):\n\n3. Spigen Korea Co. v. Ultraproof, Inc., 955 F.3d 1379 (Fed. Cir. 2020):\n\n501\n\n\x0c502\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nC. Plant Protection\nIn J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., 534 U.S. 124 (2001),\nthe Supreme Court held that utility patents may be issued for new plants such as hybrid\nvarieties as long as they satisfy the patentability requirements discussed earlier in this\ncasebook. Sometimes a biological deposit is necessary to satisfy the enablement requirement,\nas discussed in Chapter 4. Utility patents may also be obtained for plant-related inventions\nsuch as methods of breeding plants, chemicals made by plants, and plant seeds. New plant\nvarieties are also often protected as trade secrets, and new variety names can be protected\nwith trademarks.\nBut these are not the only forms of IP protection for plants. Plant inventors may also\nseek plant patents or plant variety protection certificates, and these are not mutually\nexclusive with utility patents. This section briefly reviews these plant-specific forms of IP; for\nmore in-depth coverage, see Daniel J. Knauss, Erich E. Veitenheimer, and Marcelo\nPomeranz, Protecting Plant Inventions, 11 Landslide, July\xe2\x80\x93Aug. 2019.\n\n1. Plant Patents\nUnder 35 U.S.C. \xc2\xa7 161, a plant patent is available to \xe2\x80\x9c[w]hoever invents or discovers\nand asexually reproduces any distinct and new variety of plant, including cultivated sports,\nmutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant\nfound in an uncultivated state.\xe2\x80\x9d As noted in Chapter 1, the USPTO granted 1,398 plant\npatents in 2020\xe2\x80\x940.4% of the number of utility patent grants. Plant patents have a term of\n20 years from the date of filing.\nLike design patents, plant patents contain only a single claim. The utility patent\nrequirements of \xc2\xa7\xc2\xa7 102, 103, and 112 generally apply, although \xc2\xa7 112 is less stringent and no\nbiological deposit is required; \xc2\xa7 162 specifies that \xe2\x80\x9c[n]o plant patent shall be declared invalid\nfor noncompliance with section 112 if the description is as complete as is reasonably possible.\xe2\x80\x9d\nDrawings or photographs \xe2\x80\x9cmust disclose all the distinctive characteristics of the plant\ncapable of visual representation\xe2\x80\x9d and \xe2\x80\x9cmust be in color if color is a distinguishing\ncharacteristic of the new variety.\xe2\x80\x9d 37 C.F.R. \xc2\xa7\xc2\xa7 1.165.\nA granted plant patent \xe2\x80\x9cshall include the right to exclude others from asexually\nreproducing the plant, and from using, offering for sale, or selling the plant so reproduced, or\nany of its parts, throughout the United States, or from importing the plant so reproduced, or\nany parts thereof, into the United States.\xe2\x80\x9d 35 U.S.C. \xc2\xa7 163. Thus, infringement is limited to\nplants asexually reproduced from the patent owner\xe2\x80\x99s plant. An independently reproduced\nplant with similar characteristics does not infringe.\n\n\x0cOTHER U.S. INTELLECTUAL PROPERTY RIGHTS\n\n503\n\n2. Plant Variety Protection Certificates\nPlant variety protection certificates are available under the Plant Variety Protection\nAct, 7 U.S.C. \xc2\xa7\xc2\xa7 2321\xe2\x80\x932583. Unlike plant patents, which are limited to asexually reproduced\nplants and exclude protection for tubers, plant variety protection certificates can be obtained\nby \xe2\x80\x9c[t]he breeder of any sexually reproduced, tuber propagated, or asexually reproduced plant\nvariety (other than fungi or bacteria) who has so reproduced the variety.\xe2\x80\x9d 7 U.S.C. \xc2\xa7 2402.\nPlant variety protection certificates have a term of 20 years from the date of issuance, or 25\nyears for trees or vines.\nIn addition to a written description of the new variety, applications for plant variety\nprotection certificates must include \xe2\x80\x9c[a] declaration that a viable sample of basic seed\n(including any propagating material) necessary for propagation of the variety will be\ndeposited and replenished periodically in a public repository in accordance with regulations\nto be established hereunder.\xe2\x80\x9d 7 U.S.C. \xc2\xa7 2422.\nA plant variety protection certificate is infringed by activities including sale, import,\nexport, or reproduction of the protected variety, with exceptions for \xe2\x80\x9cplant breeding or other\nbona fide research.\xe2\x80\x9d 7 U.S.C. \xc2\xa7\xc2\xa7 2541, 2544.\n\n\x0c504\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\n20. International and Comparative Patent Law\nIn Chapter 11(B), we discussed territoriality, the international law principle that a\ncountry\xe2\x80\x99s laws only have force within its boundaries. Congress has extended the reach of U.S.\npatent law through 35 U.S.C. \xc2\xa7 271(f)-(g), but the presumption against extraterritoriality still\napplies. Recall Microsoft v. AT&T, 550 U.S. 437 (2007), in which the Supreme Court held\nthat \xc2\xa7 271(f) could not reach copies of Windows software made abroad, and that \xe2\x80\x9cif AT&T\ndesires to prevent copying in foreign countries, its remedy today lies in obtaining and\nenforcing foreign patents.\xe2\x80\x9d Understanding the basics of obtaining and enforcing foreign\npatents has only become more important for U.S. patent lawyers as patentable goods and\nservices increasingly cross national borders.\nIn this chapter, we provide an overview of the following issues: (A) the key treaties\nand international institutions that constrain domestic patent laws; (B) the procedures for\nacquiring multinational patent rights; (C) a comparison of how different countries define\npatent validity requirements within international constraints (\xe2\x80\x9cpre-grant flexibilities\xe2\x80\x9d); (D) a\ncomparison of how countries define the rights and remedies available for patent infringement\n(\xe2\x80\x9cpost-grant flexibilities\xe2\x80\x9d); and (E) the main legal and strategic factors businesses consider\nwhen coordinating multinational patent litigation. Each of these topics could occupy a full\ntextbook on its own, but we hope to provide an accessible overview, as well as the vocabulary\nand framework for conducting further research.\nAlthough this chapter focuses on international equivalents of utility patents, many\nother countries have equivalents of design patents (typically called industrial designs) and\nplant patents (sometimes as sui generis systems for plant variety protection). Some countries\nalso have a patent-like form of IP not available in the United States: the utility model or petty\npatent (not to be confused with the utility patent), which provides cheaper and narrower\nprotection for minor inventions for terms that typically run 6\xe2\x80\x9315 years.1 The legal doctrines\ngoverning a utility model are similar to those for a patent except that the nonobviousness\nrequirement is usually lower or absent. Utility models are typically registered rather than\nexamined, allowing them to be obtained quickly. Countries offering utility models include\nAustria, China, France, Germany, Japan, Russia, Spain, and Taiwan, and many patent\noffices allow utility patent applications to be converted to utility model applications. U.S.\npatent lawyers advising clients about possibilities for IP protection abroad should keep this\noption in mind.\n\n1\n\nFor more information, see https://www.wipo.int/patents/en/topics/utility_models.html.\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n505\n\nA. International Patent Institutions and Treaties\n1. WIPO, WTO, and Other Fora\nThe first major international agreement on intellectual property was the 1883 Paris\nConvention for the Protection of Industrial Property, which created a framework to allow\ninventors from one signatory to the Convention to obtain utility patents in other members of\nthe Paris Union (among other things). In 1970, the governance structure for the Paris\nConvention (along with two non-patent IP treaties) was replaced with the new Geneva-based\nWorld Intellectual Property Organization (WIPO), which then became a specialized agency\nof the United Nations in 1974. WIPO also administers the Patent Cooperation Treaty\n(PCT)\xe2\x80\x94signed in 1970 and effective as of 1978\xe2\x80\x94which facilitates patent filings in multiple\ncountries and is discussed in more detail in section (B) below. WIPO treaties may be joined \xc3\xa0\nla carte. As of June 2021, there were 193 members of the WIPO Convention (the agreement\nestablishing WIPO), 175 members of the Paris Union, and 153 members of the PCT.\nIf a member fails to comply with its WIPO treaty obligations, there is no effective\ndispute resolution process, but WIPO treaties are still important for harmonizing procedures,\nsetting norms, and creating the possibility that agreements will be imported into other\ntreaties or into domestic law. For example, the U.S. Supreme Court still applies the\nCharming Betsy canon that domestic statutes should be construed so as not to conflict with\ninternational law. See, e.g., F. Hoffmann-La Roche v. Empagran, 542 U.S. 155, 164 (2004)\n(citing Murray v. Schooner Charming Betsy, 6 U.S. 64 (1804)).\nWIPO receives most of its income from PCT filing fees, giving it an institutional\ninterest in encouraging more global patent filings. It provides training, advice, and technical\ninfrastructure to support domestic patent systems. But the agency is no longer the forum of\nchoice for negotiating new treaties focused on strengthening or harmonizing patent law;\nrather, its current treaty-making activities are largely driven by developing countries. For\nexample, in 2013, WIPO concluded negotiations on a treaty to facilitate access to published\nworks for persons with visual impairments, and it is currently working on treaties related to\nprotecting traditional knowledge and genetic resources.\nThe other key institution for international patent governance is the World Trade\nOrganization (WTO), which was created in 1995 to regulate international trade. The\nnegotiations that led to the WTO also created a comprehensive IP treaty, the Agreement on\nTrade-Related Aspects of Intellectual Property Rights (TRIPS). Unlike the Paris Convention,\nthe TRIPS Agreement set a minimum patent term (20 years from filing), which is why the\nU.S. patent term shifted from 17 years from issuance to 20 years from filing for patents filed\non or after June 8, 1995. TRIPS also states that patents must be available in \xe2\x80\x9call fields of\ntechnology\xe2\x80\x9d based on criteria similar to the U.S. novelty, obviousness, utility, and enablement\nrequirements, which was an important change in countries that had limited patents on\n\n\x0c506\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\ninventions such as pharmaceuticals. (Least-developed countries need not offer\npharmaceutical patents until 2033.) We discuss these requirements further in section (C).\nTRIPS was an important change from Paris not only because it set minimum\nsubstantive standards, but also because it has teeth. WTO members may not pick and choose\nwhich WTO treaties to comply with, so TRIPS binds all WTO members\xe2\x80\x94which includes\nalmost every country.2 And the WTO has an effective enforcement mechanism: trade\nsanctions. Under the WTO Dispute Settlement Understanding (DSU), disputes are heard by\npanels of three or five experts appointed on an ad hoc basis, with review by an Appellate Body\ncomprised of seven experts serving four-year terms. From 1995 to 2020, WTO members\ninitiated 598 disputes, 42 of which involved TRIPS.3 If a member found to be in violation of\nTRIPS does not bring its law into conformity, the complaining member may then withdraw\ntrade concessions. This enforcement mechanism has been effective\xe2\x80\x94except against the\nUnited States.4 However, the future of WTO dispute resolution is unclear: the Trump\nAdministration blocked appointment of new Appellate Body members, leaving the Body\nwithout a quorum and with a growing backlog of pending appeals since December 2019. As\nof this writing, the Biden Administration has continued this policy.\nBoth high- and low-income countries have become dissatisfied with WTO\xe2\x80\x99s consensusbased decisionmaking process. Instead, countries have looked to new fora that might serve\ntheir interests for further international negotiations, similar to \xe2\x80\x9cforum shopping\xe2\x80\x9d for a\nfavorable court. Laurence Helfer calls this process \xe2\x80\x9cregime shifting\xe2\x80\x9d:\nWith negotiations in the WTO effectively stalled, both proponents and\nopponents of stronger intellectual property rules sought out greener pastures\nin other international regimes. Developing countries decamped to the World\nHealth Organization (WHO), Food and Agriculture Organization (FAO), and\nConvention on Biological Diversity (CBD). These organizations and\nnegotiating venues offered these states advantages that they did not possess\nin the WTO and in WIPO. First, the goals of these institutions\xe2\x80\x94to promote\npublic health, plant genetic sources, and biodiversity\xe2\x80\x94predisposed them to\nview challenges to expansive intellectual property rights sympathetically.\nSecond, industrialized nations were either absent from these venues (the\nUnited States has never ratified the CBD, for example) or were represented by\ngovernment ministries whose negotiating objectives were more sympathetic to\ndeveloping country concerns. Third and finally, the WHO, FAO, and CBD,\nunlike the WTO, were relatively open to civil society, including NGOs that\n\n2 Only a few countries are neither members nor observers negotiating accession, such as North\nKorea, Monaco, and Palau. See https://www.wto.org/english/thewto_e/countries_e/org6_map_e.htm.\n3\n\nFor more details, see https://www.wto.org/english/tratop_e/dispu_e/dispustats_e.htm.\n\nThe United States did not change domestic laws after losing two non-patent WTO disputes:\none involving a law prohibiting registration and enforcement of Cuban trademarks (in particular,\n\xe2\x80\x9cHavana Club\xe2\x80\x9d rum), and one for blocking Antigua and Barbuda\xe2\x80\x99s online gambling industry.\n4\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n507\n\nwere highly critical of TRIPS and that worked with developing states to fashion\nstrategies for challenging the treaty.\nThe United States and the European Communities, by contrast, shifted\ntheir efforts from the WTO and WIPO to bilateral and regional trade and\ninvestment treaties, incorporating IP protection rules into these agreements.\nIndustrialized states could more easily leverage their economic and political\nclout in these intimate negotiating forums. In exchange for enhanced access to\ntheir markets, these states demanded that developing countries ratify the new\nWIPO treaties or adhere to intellectual property protection standards that\nexceeded those found in TRIPS. Opponents derisively labeled these bilateral\nand regional agreements as \xe2\x80\x9cTRIPS plus\xe2\x80\x9d treaties.\nAs compared to a single-venue regime, the existence of overlapping and\nparallel regimes modifies implementation politics in two distinct and opposing\nways. First, the multiplicity of legal rules generated in nested, overlapping,\nand parallel institutions can make it more difficult to claim that states have\nimplemented those rules in ways that violate their treaty obligations. Decision\n486 of the Andean Community provides an apt illustration. Adopted by the\nbiodiversity-rich nations of this South America sub-region in 2000, Decision\n486 attempts to reconcile the intellectual property protection rules of TRIPS\nwith the biodiversity preservation measures of the CBD. It does so by imposing\nvarious restrictions on patents derived from biological materials found in\nAndean Community member states. Whether these restrictions are in fact\ncompatible with TRIPS\xe2\x80\x99 patent protection rules is open to debate. Yet no state\nhas filed a WTO dispute settlement complaint challenging Decision 486 as a\nviolation of TRIPS. To the contrary, Andean Countries have promoted the\nlegislation as a good faith attempt to harmonize the two multilateral treaties,\nalbeit an attempt that furthers their own interests in safeguarding the region\xe2\x80\x99s\nbiological heritage.\nSecond, international regime complexity provides opportunities for\npowerful states to narrow the options available to weaker countries to\nimplement intellectual property rules into their national legal systems. For\nexample, TRIPS requires WTO members to protect new plant varieties. But it\nallows them to do so \xe2\x80\x9ceither by patents or by an effective sui generis system or\nby any combination thereof.\xe2\x80\x9d Developing countries interpreted this provision\nas permitting them to tailor plant variety protection laws to their domestic\nagricultural needs. Yet the United States and the European Union have used\n\xe2\x80\x9cTRIPS plus\xe2\x80\x9d treaties to restrict this discretion, pressuring several of these\ncountries to enact legislation that favors the interests of foreign commercial\nplant breeders.\nLaurence R. Helfer, Regime Shifting in the International Intellectual Property System, 7\nPersp. Pol. 39, 41 (2009). For a discussion of how the World Health Organization (WHO) has\n\n\x0c508\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nregained influence in international IP law since TRIPS, see Laura G. Pedraza-Fari\xc3\xb1a, The\nIntellectual Property Turn in Global Health: From a Property to a Human Rights View of\nHealth, 36 Osiris (2021).\nAs Helfer suggests, the United States has recently focused on bilateral and regional\ntrade agreements, which are negotiated through the Office of the U.S. Trade Representative\n(USTR). The 1994 NAFTA agreement with Canada and Mexico was the first trade treaty to\nprotect IP rights, and the USTR has negotiated many more agreements since then.5 For an\nargument that USTR has exported a captured version of U.S. IP law, see Margot E.\nKaminski, The Capture of International Intellectual Property Law Through the U.S. Trade\nRegime, 87 S. Cal. L. Rev. 977 (2014). For example, some agreements have banned rules of\ninternational exhaustion, required attorneys\xe2\x80\x99 fees in patent cases \xe2\x80\x9cat least in exceptional\ncases,\xe2\x80\x9d or automatically blocked generic pharmaceutical entry even if the patent owner does\nnot initiate litigation. Id. at 1021\xe2\x80\x9326. One controversial expansion in the rights of patent\nowners has been to allow certain private parties to challenge countries\xe2\x80\x99 compliance with\ninternational obligations\xe2\x80\x94although these rights have had limited impact on patent law so\nfar. Most prominently, in 2012 Eli Lilly challenged Canada\xe2\x80\x99s interpretation of the utility\ndoctrine (which had led to the revocation of its patents on two drugs) under NAFTA, but in\n2017, the tribunal found against Eli Lilly and ordered them to pay most of the costs of the\ndispute. Three months later, the Canadian Supreme Court adopted a more forgiving utility\nstandard.\nThe USTR also exerts unilateral pressure on countries whose IP systems are viewed\nas non-compliant. Section 301 of the Trade Act of 1974 requires the USTR to \xe2\x80\x9cidentify those\nforeign countries that deny adequate and effective protection of intellectual property rights,\xe2\x80\x9d\nwhich it does in its annual \xe2\x80\x9cSpecial 301\xe2\x80\x9d Report. The \xe2\x80\x9cPriority Foreign Countries\xe2\x80\x9d with\ninadequate IP laws may be subject to sanctions, and countries with concerning IP practices\nare placed on the \xe2\x80\x9cWatch List\xe2\x80\x9d or \xe2\x80\x9cPriority Watch List.\xe2\x80\x9d Many countries were placed on these\nlists at the request of industry groups like the Pharmaceutical Research and Manufacturers\nof America (PhRMA).\n\n2. Paris Convention and TRIPS: Basic Principles\nBecause of the prominence of the TRIPS Agreement in shaping domestic patent laws,\nand its explicit incorporation of most of the Paris Convention in Article 2.1, it is worth\nunderstanding the basic principles contained in these agreements. Their full texts are freely\navailable online.6 For a comprehensive guide on interpreting TRIPS, see Daniel Gervais, The\nTRIPS Agreement: Drafting History and Analysis (5th ed. 2021).\n\n5\n\nFor agreement texts, see https://ustr.gov/trade-agreements.\n\nTRIPS is at https://www.wto.org/english/docs_e/legal_e/trips_e.htm and the Paris Convention\nis at https://wipolex.wipo.int/en/text/288514.\n6\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n509\n\nThe principle of national treatment requires member countries to treat foreigners no\nless favorably than locals. In particular, Article 2.1 of the Paris Convention states that\nnationals of any Paris member state \xe2\x80\x9cshall, as regards the protection of industrial property,\nenjoy in all the other countries of the Union the advantages that their respective laws now\ngrant, or may hereafter grant, to nationals.\xe2\x80\x9d Articles 2.2 and 3 specify that national treatment\napplies to nationals of Paris members domiciled in non-Paris members and to nationals of\nnon-Paris members who are domiciled in Paris members. The TRIPS Agreement incorporates\nthis requirement (Article 2.1 incorporates Paris Articles 1\xe2\x80\x9312 and 19) and has its own\nsubstantively equivalent national treatment rule at Article 3.1:\nEach Member shall accord to the nationals of other Members treatment no less\nfavourable than that it accords to its own nationals with regard to the\nprotection7 of intellectual property, subject to the exceptions already provided\nin, respectively, the Paris Convention [and other treaties].\nParis Article 2.3 provides a limited exception to national treatment for laws \xe2\x80\x9crelating to\njudicial and administrative procedure,\xe2\x80\x9d and TRIPS Article 3.2 states that such exceptions\nmay be used only where not inconsistent with TRIPS or \xe2\x80\x9ca disguised restriction on trade.\xe2\x80\x9d\nTRIPS Article 4 sets forth the most-favored-nation principle, which requires that\nmember countries give the same advantages to foreigners from different countries:\nWith regard to the protection of intellectual property, any advantage, favour,\nprivilege or immunity granted by a Member to the nationals of any other\ncountry shall be accorded immediately and unconditionally to the nationals of\nall other Members.\nThere is an exception for advantages \xe2\x80\x9cderiving from international agreements related to the\nprotection of intellectual property which entered into force prior to the entry into force of the\nWTO Agreement,\xe2\x80\x9d which includes an agreement among European Union members for\ncommon IP rules that did not necessarily benefit non-EU persons.\nPartis Article 4 (incorporated by TRIPS 2.1) provides for a right of priority: once an\ninventor has filed for a patent in one Paris member, a twelve month period starts \xe2\x80\x9cfrom the\ndate of filing of the first application\xe2\x80\x9d under which \xe2\x80\x9cany subsequent filing in any of the other\ncountries of the Union before the expiration of [twelve months] shall not be invalidated by\nreason of any acts accomplished in the interval, in particular, another filing [or] the\npublication or exploitation of the invention . . . and such acts cannot give rise to any thirdparty right or any right of personal possession.\xe2\x80\x9d\nFinally, Paris Article 4bis (incorporated by TRIPS 2.1) provides for independence of\npatents: patents applied for in one country \xe2\x80\x9cshall be independent of patents obtained for the\n[n.3 in original] For the purposes of Articles 3 and 4, \xe2\x80\x9cprotection\xe2\x80\x9d shall include matters\naffecting the availability, acquisition, scope, maintenance and enforcement of intellectual property\nrights as well as those matters affecting the use of intellectual property rights specifically addressed\nin this Agreement.\n7\n\n\x0c510\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nsame invention in other countries.\xe2\x80\x9d8 In other words, one country\xe2\x80\x99s decision to grant or refuse\na patent does not oblige any other country to do the same. In addition, Article 4bis discusses\npatent term: \xe2\x80\x9cPatents obtained with the benefit of priority shall, in the various countries of\nthe Union, have a duration equal to that which they would have, had they been applied for\nor granted without the benefit of priority.\xe2\x80\x9d\n\nPractice Problems: Basic Principles of Paris and TRIPS\n1. Under the national-treatment and most-favored-nation obligations, can China:\na. Give Japanese nationals 20 years of patent protection, and Chinese nationals\n30 years?\nb. Give Japanese nationals 30 years of patent protection, and Chinese nationals\n20 years?\nc. Give Japanese nationals 30 years of patent protection, and U.S. nationals 20\nyears?\nd. Require foreigners but not domestic parties to make a security deposit for\nlitigation costs?\n2. Nitisha, a U.S. citizen, files a patent application in China on her computer-related\ninvention, which is not patentable in the United States but is patentable in China.\na. Do national treatment rules require the Chinese patent office (CNIPA) to grant\nher patent?\nb. If CNIPA grants Nitisha\xe2\x80\x99s application after six months, and two months later\nshe files an application in Japan claiming priority to her Chinese application,\nis Japan\xe2\x80\x99s patent office (JPO) obligated to grant the patent?\nc. May JPO reject Nitisha\xe2\x80\x99s application because Zach filed a Japanese patent\napplication for the same invention four months before Nitisha did?\nd. If the JPO grants Nitisha\xe2\x80\x99s application, when does it expire (assuming no\npatent term adjustment)?\ne. If Nitisha files a patent application in Germany ten months after her JPO\napplication, may she claim priority to the Japanese filing?\n3. Article 3.2 of the DSU says WTO agreements will be clarified \xe2\x80\x9cin accordance with\ncustomary rules of interpretation of public international law.\xe2\x80\x9d This includes Article\nParis also has Articles 4ter and 4quater, with the suffixes \xe2\x80\x9cbis,\xe2\x80\x9d \xe2\x80\x9cter,\xe2\x80\x9d and \xe2\x80\x9cquater\xe2\x80\x9d derived\nfrom Latin for \xe2\x80\x9ctwice,\xe2\x80\x9d \xe2\x80\x9cthree times,\xe2\x80\x9d and \xe2\x80\x9cfour times\xe2\x80\x9d and indicating that these articles were inserted\nbetween Articles 4 and 5 during negotiations.\n8\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n511\n\n31 of the Vienna Convention on the Law of Treaties: a treaty shall be interpreted\nbased on the \xe2\x80\x9cordinary meaning\xe2\x80\x9d of its terms \xe2\x80\x9cin their context and in light of its object\nand purpose.\xe2\x80\x9d That context includes the preamble, subsequent agreements, and\nsubsequent practices. Look at the preamble and Part I of TRIPS on the WTO website.\nIf you were representing a developing country that was concerned about strong IP\nprotection interfering with its technological development goals, what parts would you\npoint to?9\n\n3. Justifying International Patent Coordination\nMany commentators have been skeptical of the necessity of global coordination on IP\nlaw and view TRIPS as benefiting the United States and other wealthy nations at the expense\nof low-income countries. For example, Susan Sell describes the role of U.S. multinationals in\nbringing TRIPS into being, concluding: \xe2\x80\x9cIn effect, twelve corporations made public law for\nthe world.\xe2\x80\x9d Susan K. Sell, Private Power, Public Law: The Globalization of Intellectual\nProperty Rights 96 (2003). Amy Kapczynski similarly concludes that TRIPS reflected \xe2\x80\x9ca new\nmode of conquest and imperium\xe2\x80\x9d and was \xe2\x80\x9can exceptionally audacious attempt to extract\nvalue from and exert control over informational domains in virtually all of the countries of\nthe world.\xe2\x80\x9d Amy Kapczynski, Access to Knowledge: A Conceptual Genealogy, in Access to\nKnowledge in the Age of Intellectual Property 26 (2010). For the perspective of negotiators\nfrom India, Brazil, Argentina, Malaysia, and Hong Kong, including the countervailing\nbenefits they saw in terms of favorable trade terms from the broader WTO negotiations, see\nThe Making of the TRIPS Agreement: Personal Insights from the Uruguay Round\nNegotiations 209\xe2\x80\x9393 (Jayashree Watal & Antony Taubman eds., 2015).\nHemel and Ouellette offer the following qualified defense of international coordination\non patent law and other forms of IP:\nAll members of the WTO are bound by the 1994 TRIPS Agreement,\nwhich requires all but the least-developed nations to protect the IP rights of all\nTRIPS members at or above a basic level. For example, TRIPS members must\noffer twenty-year patents in \xe2\x80\x9call fields of technology\xe2\x80\x9d to inventors in any\nmember country, including for novel pharmaceuticals and food products that\nsome countries had previously excluded from patentability. TRIPS is a\nsignificant step in the longer trend of IP standards gradually being revised\nupwards to require greater and different protection through international\nagreements.\nBut this international framework and domestic IP policy are largely\nseparable. Even the strongest international IP regime does not lead ineluctably\nto the use of IP-based innovation incentives or allocation mechanisms at the\nFor an Appellate Body decision using these sources, see India \xe2\x80\x93 Patent Protection for\nPharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, 19 December 1997.\n9\n\n\x0c512\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\ndomestic level. On the incentives side, countries can still comply with TRIPS\nwhile using non-IP tools to encourage domestic innovation. For example, a\ncountry could provide incentives only though grants and prizes conditioned on\nrelinquishing IP rights, while the national government itself retains revenues\nfrom licensing the knowledge good in other countries. Or\xe2\x80\x94as is more\ncommon\xe2\x80\x94countries can both subsidize the domestic production of knowledge\ngoods through grants and tax credits and purchase domestic patent rights from\nthe producer, while still allowing the producer to collect overseas profits (with\nthe state potentially collecting some of those profits through a tax on the\ndomestic producer).\nOn the allocation side, countries can (and often do) choose nonprice\nmechanisms\xe2\x80\x94closer to open access than to proprietary pricing\xe2\x80\x94to distribute\nknowledge goods at the domestic level. For instance, a country that wants to\nmake a patented pharmaceutical available to its own citizens at zero or\nmarginal cost can purchase a license from the patentee and pay for the license\nusing funds raised through broad-based taxation. Countries with single-payer\nhealth care systems generally follow a version of this model, respecting the\npatentee\xe2\x80\x99s IP rights while avoiding domestic deadweight loss from proprietary\npricing. Even countries without single-payer health care, such as the United\nStates, often allocate access to patented pharmaceutical products through\nnonmarket mechanisms (e.g., the Medicaid program).\nWe have argued that rather than dictating domestic policy, the role of\ninternational IP law is to provide a serviceable (if imperfect) framework for\ncost sharing among countries that produce and consume knowledge goods.\nWithout such a framework, certain goods for which demand transcends\nnational boundaries would be underproduced. Absent an international costsharing mechanism, rational and self-interested countries will finance\nknowledge goods only up to the point that the marginal cost equals the\nmarginal benefit to their own citizens, rather than the marginal benefit to all\npeople everywhere. International IP law addresses this underinvestment\nproblem by ensuring that when Country A produces a knowledge good that\nbenefits consumers in Country B, Country B will provide at least some\ncompensation to Country A. As a general matter, TRIPS prohibits Country B\nfrom using the Country-A-produced knowledge good without first reaching\nsome sort of cost-sharing agreement with Country A (such as a license from\nthe private producer in Country A, who may be separately subsidized or taxed\nby Country A\xe2\x80\x99s government). In this respect, TRIPS functions as an \xe2\x80\x9cagreement\nto agree\xe2\x80\x9d: signatory states commit to reaching an arrangement under which\nknowledge-good consumers share costs with knowledge-good producers. The\nagreement to agree operates against the background rule that absent a further\narrangement, the consumer state cannot use the knowledge good for which the\nproducer state (or one of its citizens or firms) holds a patent.\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n513\n\nWhile cost-sharing through TRIPS can address the global\nunderinvestment problem, international IP law is not the only possible costsharing framework. We can imagine a global prize fund or a global R&D\norganization, financed by mandatory national contributions, that would also\nprovide for cost sharing among producer and consumer states. Yet\ninternational IP law has the advantage of establishing a link between the\nbenefits to the consumer country and the size of the transfer from the consumer\ncountry to the producer country. Under international IP law, no country ever\nneeds to pay for knowledge goods it doesn\xe2\x80\x99t use. No such assurance would exist\nwith respect to a global prize fund or global R&D organization. Such an\ninstitution might channel more of its funding to \xe2\x80\x9cfirst-world problems\xe2\x80\x9d than to\nproblems facing less-developed nations. (Indeed, if wealthier nations control\nthe institutional levers of power, then this prediction seems not just plausible\nbut likely.)\nImportantly, the argument for using international IP law as a crossborder cost-sharing mechanism does not depend on whether individual\ncountries use IP to incentivize innovation or allocate access to knowledge goods\nat the domestic level. International and domestic innovation policy choices are\nseparable.\nDaniel J. Hemel & Lisa Larrimore Ouellette, Innovation Policy Pluralism, 128 Yale L.J. 544,\n588\xe2\x80\x9392 (2019). For a detailed discussion of qualifications to this account, including examples\nof knowledge goods that are not global public goods and alternative accounts of state action,\nsee Daniel J. Hemel & Lisa Larrimore Ouellette, Knowledge Goods and Nation-States, 101\nMinn. L. Rev. 167 (2016).\n\nDiscussion Questions: Justifying International Patent Coordination\n1. Should India Weaken Pharmaceutical Patents? Before TRIPS, India did not grant\npatents on pharmaceutical products, and it developed a robust generic drug manufacturing\nindustry. After a transition period for developing countries, India began allowing these\npatents in 2005. But countries can still weaken their patent systems within the TRIPS\nframework, as illustrated by the many limitations on U.S. patent rights in recent decades\n(e.g., the increased ease of invalidating patents for lack of patentable subject matter and the\ndecreased availability of injunctions). Sections (C) and (D) of this chapter will discuss\nadditional \xe2\x80\x9cflexibilities\xe2\x80\x9d countries have in implementing TRIPS. Should India take advantage\nof these flexibilities to limit pharmaceutical patents as much as possible? See generally Amy\nKapczynski, Harmonization and Its Discontents: A Case Study of TRIPS Implementation in\nIndia\xe2\x80\x99s Pharmaceutical Sector, 97 Cal. L. Rev. 1571 (2009).\nHow does this issue differ from the analysis of the U.S. patent system discussed in\nChapter 1? Does your answer differ if you focus on Indian patients or Indian pharmaceutical\ncompanies rather than total Indian social welfare? Does it matter whether the patents are\n\n\x0c514\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\non treatments for hypertension (a global concern) or dengue fever (which is endemic in India\nbut not in high-income countries)? Does it affect your analysis to know that in practice, after\nIndia\xe2\x80\x99s TRIPS implementation, the average price increase for patented medicines was just\n3\xe2\x80\x936%, and that there was little impact on quantities sold or on the number of domestic\npharmaceutical firms? See Mark Duggan, Craig Garthwaite & Aparajita Goyal, The Market\nImpacts of Pharmaceutical Product Patents in Developing Countries: Evidence from India,\n106 Am. Econ. Rev. 99 (2016).\n2. Changing Patent Importers and Exporters. Each year since 2008, the USPTO has\ngranted more utility patents of foreign origin than domestic origin, and the gap continues to\ngrow. China now has the world\xe2\x80\x99s largest patent office, the China National Intellectual\nProperty Administration (CNIPA). How do these changes affect the winners and losers from\nTRIPS and other agreements setting minimum patent standards?\n\nB. Acquiring Multinational Patent Rights with the PCT\nAs discussed above, Article 4 of the Paris Convention, which was incorporated by\nTRIPS, established the right of priority: filing a patent application in one national or regional\noffice starts a one-year period during which applicants can file in other offices, claiming\npriority to the first application. If the applicant runs out this clock, they generally can\xe2\x80\x99t get a\npatent in that country later. This is a relatively short time period for applicants to decide\nwhich offices to file in, to find local patent agents to prosecute their applications, and to pay\nthe costs for application translation, filing, and prosecution. Translation and filing costs can\nexceed ten thousand dollars for each patent office added, and each round of prosecution could\nadd another ten thousand dollars per patent office. When deciding whether to file in a given\noffice, applicants must balance these costs against the value that patent protection in that\njurisdiction might add. For example, is it a large market? An important part of a competitor\xe2\x80\x99s\nsupply chain? A forum in which the applicant would want to litigate or negotiate licensing\nfees? For inventions whose future value is uncertain, answering these questions early in the\ndevelopment process may be challenging.\nThe Patent Cooperation Treaty (PCT) provides a simpler process for obtaining patent\nprotection in a large number of jurisdictions.10 As illustrated on the timelines below, rather\nthan directly filing separate patent applications in every patent office of interest within 12\nmonths of an initial filing, applicants may initiate the PCT process by filing a single\n\xe2\x80\x9cinternational\xe2\x80\x9d application with a \xe2\x80\x9creceiving office\xe2\x80\x9d (including the USPTO or WIPO) within\nthat 12-month period. The PCT application doesn\xe2\x80\x99t directly provide any patent rights; rather,\nit initiates a streamlined procedure for pursuing applications with individual national or\nregional patent offices. Perhaps most valuably, it allows applicants to delay the choice of\nThe PCT is available at https://www.wipo.int/pct/en/texts/articles/atoc.html, and the\nimplementing regulations are at https://www.wipo.int/pct/en/texts/rules/rtoc1.html. The description\nhere provides the most common time limits, but they may be different if, for example, applicants file\nthe international application closer to the priority date.\n10\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n515\n\nwhere to pursue patent protection\xe2\x80\x94and the associated costs of local patent agents,\ntranslators, and filing fees\xe2\x80\x94for up to 30 months from the initial filing date (31 in some\njurisdictions).\nThe PCT receiving office transmits the application to a patent office that serves as an\nInternational Searching Authority (ISA)\xe2\x80\x94which includes the USPTO\xe2\x80\x94by 13 months from\nthe priority date. The ISA then has 3 months to produce an international search report listing\nrelevant prior art along with a written opinion as to \xe2\x80\x9cwhether the claimed invention appears\nto be novel, to involve an inventive step (to be non-obvious), and to be industrially applicable\n[i.e., useful].\xe2\x80\x9d PCT Rule 43bis. The application, international search report, and written\nopinion are published 18 months from the priority date. Within 22 months of the priority\ndate, the applicant has the option of requesting international preliminary examination,\nwhich is the only chance to actively participate in the \xe2\x80\x9cinternational phase\xe2\x80\x9d of the PCT\nprocess. International preliminary examination, which must be completed by 28 months,\nprovides an evaluation of patentability by a second ISA and gives applicants a chance to\nsubmit amendments and arguments and to interview the examiner. Finally, by 30 months\nfrom the initial priority date, applicants enter the \xe2\x80\x9cnational phase\xe2\x80\x9d by directly pursuing\napplications with the national or regional patent offices of interest.\nThe national phase looks something like the patent prosecution process at the USPTO\ndescribed in Chapter 1\xe2\x80\x94multiplied by the number of patent offices the applicant is trying to\nobtain a patent from\xe2\x80\x94although the procedures for each national or regional patent office\ndiffer. During the national phase it is generally necessary to translate the application into\nthe local language and to work with a local patent attorney. Because patent laws differ by\ncountry, applicants often obtain somewhat different claims in different countries. It is also\nimportant to coordinate across offices so the applicant doesn\xe2\x80\x99t make inconsistent arguments.\nFailing to disclose something that came up in one country to an examiner at the USPTO can\nconstitute inequitable conduct.\n\n\x0c516\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nIf an applicant begins with a non-provisional U.S. application, followed by a PCT\napplication one year later, then the U.S. patent will expire 20 years from the U.S.\napplication\xe2\x80\x94one year earlier than the national or regional patents resulting from the PCT\napplication (assuming no patent term adjustment). Applicants can avoid this disadvantage\nby starting with a provisional U.S. patent application and then filing a PCT application one\nyear later; as noted in Chapter 1, U.S. patents expire 20 years from the filing date of the\nearliest non-provisional application.\nThe non-U.S. patent office in where U.S. applicants most commonly file\xe2\x80\x94either\nthrough the PCT or direct filing\xe2\x80\x94is the European Patent Office (EPO), a regional office\ncreated in 1977 by the European Patent Convention (EPC).11 The EPC is separate from the\nEuropean Union; for example, Switzerland, Iceland, Norway, and now the United Kingdom\nare members of the EPC but not the EU. The EPC created a unified process for prosecuting\npatent applications at the EPO in one of three official languages (English, French, and\nGerman), which results in a \xe2\x80\x9cEuropean patent\xe2\x80\x9d that is effectively a bundle of individual\nnational patents. Once a European patent is granted, it must be \xe2\x80\x9cvalidated\xe2\x80\x9d in designated\ncountries for additional fees and any necessary translation costs. Under Article 2 of the EPC,\na European patent \xe2\x80\x9cshall, in each of the Contracting States for which it is granted, have the\neffect of and be subject to the same conditions as a national patent granted by that State.\xe2\x80\x9d\nFor the first nine months after a European patent is granted, a third party may file an\nopposition proceeding (similar to a post-grant review proceeding at the USPTO). After that,\nthe validity and infringement of the patent are assessed independently by national courts in\ndesignated countries, although there are ongoing efforts for a Unified Patent Court that could\nhear infringement and revocation cases for European patents.12\nThe other regional patent offices are the African Intellectual Property Organization\n(OAPI) (which includes mostly French-speaking African countries), the African Regional\nIntellectual Property Organization (ARIPO) (English-speaking African countries), the\nEurasian Patent Organization (EAPO) (members of the former Soviet Union), and the Patent\nOffice of the Cooperation Council for the Arab States of the Gulf (GCC Patent Office).\nNational offices used frequently by U.S. applicants include the other members of the five\nlargest patent offices\xe2\x80\x94known as the \xe2\x80\x9cIP5\xe2\x80\x9d\xe2\x80\x94besides the USPTO and EPO: the China\nNational Intellectual Property Administration (CNIPA), Japan Patent Office (JPO), and\nKorean Intellectual Property Office (KIPO). U.S. applicants also file frequently in other highincome, English-speaking countries: the Canadian Intellectual Property Office (CIPO) and\nIP Australia.\n\n11\n\nThe EPC text is at https://www.epo.org/law-practice/legal-texts/html/epc/2016/e/ma1.html.\n\nA treaty to establish a Unified Patent Court was signed in 2013, but entry into force has\nbeen repeatedly delayed, most recently due to Brexit and constitutional challenges in Germany.\n12\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n517\n\nDiscussion Questions: Acquiring Multinational Patent Rights\n1. How Does Filing Strategy Vary by Industry? Throughout this casebook, we have\nemphasized differences in how patents are used in different industries. How would your\nmultinational patent acquisition strategy differ if you represented a biotechnology\ncorporation versus a developer of microprocessors? For instance, how many different\ncountries would you seek patent rights in?\n2. A Global Patent? The PCT streamlines multinational patent acquisition, but\napplicants still face the substantial costs of hiring local patent agents and translators so that\n\xe2\x80\x9capplying for patents all over the world is an option feasible only to the wealthiest and most\nsophisticated of inventors.\xe2\x80\x9d Marketa Trimble, Global Patents: Limits of Transnational\nEnforcement (2012). And many local patent offices still duplicate some efforts by conducting\ntheir own searches and examinations after receiving the ISA\xe2\x80\x99s search report and written\nopinion. Are there ways to improve the system? Trimble argues for a more global approach,\nsuch as a global version of the EPC that allows global enforcement and makes widespread\npatent protection feasible for individual inventors and small businesses. What are the\nbenefits and costs of this approach? How would it affect patent search costs?\n3. Ending Government Patent Office Monopolies? Michael Abramowicz and John Duffy\nhave argued that the rise in multinational filing provides an opportunity to rethink the idea\nthat each country\xe2\x80\x99s patent office should have a monopoly on deciding whether patent rights\nare available. The creation of the EPO caused national patent offices in Europe to become\nentrepreneurial; for example, the UK can deliver a low-cost examination report in four\nmonths that can help evaluate whether investing more is worthwhile, and Denmark offers\nopinions on patentability of either new ideas or existing patents in ten working days for an\nhourly charge. And with the rise of work-sharing programs among patent offices like the\nPatent-Prosecution Highway,13 \xe2\x80\x9capplicants might have significant incentives to forum shop\nfor better examination\xe2\x80\x9d such that \xe2\x80\x9c[a] small country like Denmark or Singapore could become\nthe \xe2\x80\x98Delaware\xe2\x80\x99 of patent offices.\xe2\x80\x9d Michael Abramowicz & John F. Duffy, Ending the Patenting\nMonopoly, 157 U. Pa. L. Rev. 1541, 1572 (2009). But see Jonathan S. Masur, The PTO\xe2\x80\x99s\nFuture: Reform or Abolition?, 158 U. Pa. L. Rev. PENNumbra 1 (2009) (casting doubt on\nwhether the Abramowicz and Duffy proposal will make much of a difference). Do you think\nprivate patent offices with appropriate incentives (e.g., fines for mistakes found in random\naudits) could improve global examination quality?\n\nC. Pre-Grant Flexibilities: Comparative Patent Validity\nAt a high level, the basic requirements of patentability are largely harmonized across\nthe globe. The TRIPS Agreement requires every WTO member to have equivalents of the\nThe Patent-Prosecution Highway allows applicants to fast-track applications that have been\nallowed in participating offices. See https://www.wipo.int/pct/en/filing/pct_pph.html.\n13\n\n\x0c518\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nU.S. requirements of novelty, nonobviousness, utility, and enablement, as specified in\nArticles 27 and 29:\n\nTRIPS Article 27: Patentable Subject Matter\n1. Subject to the provisions of paragraphs 2 and 3, patents shall be available\nfor any inventions, whether products or processes, in all fields of\ntechnology, provided that they are new, involve an inventive step and are\ncapable of industrial application.14 Subject to [exceptions related to the\nTRIPS transition] and paragraph 3 of this Article, patents shall be\navailable and patent rights enjoyable without discrimination as to the place\nof invention, the field of technology and whether products are imported or\nlocally produced.\n2. Members may exclude from patentability inventions, the prevention within\ntheir territory of the commercial exploitation of which is necessary to\nprotect ordre public or morality, including to protect human, animal or\nplant life or health or to avoid serious prejudice to the environment,\nprovided that such exclusion is not made merely because the exploitation\nis prohibited by their law.\n3. Members may also exclude from patentability:\n(a) diagnostic, therapeutic and surgical methods for the treatment of\nhumans or animals;\n(b) plants and animals other than micro-organisms, and essentially\nbiological processes for the production of plants or animals other\nthan non-biological and microbiological processes. However,\nMembers shall provide for the protection of plant varieties either by\npatents or by an effective sui generis system or by any combination\nthereof. The provisions of this subparagraph shall be reviewed four\nyears after the date of entry into force of the WTO Agreement.\n\nTRIPS Article 29: Conditions on Patent Applicants\n1. Members shall require that an applicant for a patent shall disclose the\ninvention in a manner sufficiently clear and complete for the invention to\nbe carried out by a person skilled in the art and may require the applicant\nto indicate the best mode for carrying out the invention known to the\n[n.5 in original] For the purposes of this Article, the terms \xe2\x80\x9cinventive step\xe2\x80\x9d and \xe2\x80\x9ccapable of\nindustrial application\xe2\x80\x9d may be deemed by a Member to be synonymous with the terms \xe2\x80\x9cnon-obvious\xe2\x80\x9d\nand \xe2\x80\x9cuseful\xe2\x80\x9d respectively.\n14\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n519\n\ninventor at the filing date or, where priority is claimed, at the priority date\nof the application.\n2. Members may require an applicant for a patent to provide information\nconcerning the applicant\xe2\x80\x99s corresponding foreign applications and grants.\nRequiring patents in \xe2\x80\x9call fields of technology\xe2\x80\x9d and \xe2\x80\x9cwithout discrimination as to . . .\nthe field of technology\xe2\x80\x9d was an important change from prior international law. The exceptions\nare relatively limited. Article 27.2 allows exclusions to protect morality or \xe2\x80\x9cordre public\xe2\x80\x9d\xe2\x80\x94a\nFrench legal term covering important public policy exceptions. Importantly, these exceptions\napply only where a country wants to prevent exploitation of the invention, not to increase\nexploitation by eliminating patent rights. Thus, this exception could be used to ban patents\non stem cells if a country wants to avoid any stem cell research or products within its borders,\nbut it couldn\xe2\x80\x99t be used to ban patents on AIDS medicines \xe2\x80\x9cto protect human . . . life or health\xe2\x80\x9d\nby increasing access through generic production.\nDespite the harmonization provided by international patent treaties, countries still\nretain substantial \xe2\x80\x9cflexibilities,\xe2\x80\x9d or discretion in how they implement their domestic patent\nlaws. See generally Graeme Dinwoodie & Rochelle Dreyfuss, A Neofederalist Vision of TRIPS:\nThe Resilience of the International Intellectual Property Regime (2012). For example, many\nother countries have a more limited (or nonexistent) grace period for whether pre-filing\ndisclosures constitute prior art and do not have a separate written description requirement.\nIndia specifies that secondary pharmaceutical inventions such as new formulations are not\ninventions within the meaning of the India Patent Act unless the inventor demonstrates\nimproved therapeutic efficacy. See Bhaven N. Sampat & Kenneth C. Shadlen, Indian\nPharmaceutical Patent Prosecution: The Changing Role of Section 3(d), 13 PloS ONE\ne0194714 (2018). WIPO maintains tables of information about national and regional patent\nlaws.15 Thomas Cotter\xe2\x80\x99s Comparative Patent Remedies (2013) provides a useful overview of\nthe law of patentability in key jurisdictions, as well as the relevant legal institutions.\nAs one illustration, consider how the EPO approach to assessing patentable subject\nmatter for software differs from that in the United States. For software, Article 52 of the EPC\nexcludes patents from \xe2\x80\x9cnon-technical\xe2\x80\x9d categories including \xe2\x80\x9cmathematical methods\xe2\x80\x9d and\n\xe2\x80\x9cprograms for computers,\xe2\x80\x9d but \xe2\x80\x9conly to the extent to which [the patent] relates to such subjectmatter or activities as such.\xe2\x80\x9d In the 2010 decision G 3/08 (Programs for computers), the EPO\nEnlarged Board of Appeal16 summarized current case law as indicating that \xe2\x80\x9ca claim in the\narea of computer programs can avoid [this exclusion] merely by explicitly mentioning the use\nof a computer or a computer-readable storage medium.\xe2\x80\x9d But the Enlarged Board also found\nit \xe2\x80\x9cquite clear\xe2\x80\x9d that a \xe2\x80\x9ca claim which specifies no more than \xe2\x80\x98Program X on a computer15\n\nSee https://www.wipo.int/patents/en/topics/laws.html.\n\nThe EPO Boards of Appeal are similar to USPTO PTAB panels, and an Enlarged Board is\nsimilar to taking a decision en banc and may involve amicus briefing from interested firms and\nacademics. Decisions are available at https://www.epo.org/law-practice/case-law-appeals.html, and\nG 3/08 is at https://www.epo.org/law-practice/case-law-appeals/recent/g080003ex1.html.\n16\n\n\x0c520\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nreadable storage medium,\xe2\x80\x99 or \xe2\x80\x98A method of operating a computer according to program X,\xe2\x80\x99 will\nalways still fail to be patentable for lack of an inventive step [i.e., obviousness].\xe2\x80\x9d In other\nwords, adding \xe2\x80\x9cgeneric computer implementation\xe2\x80\x9d to a U.S. patent is insufficient to transform\nan abstract idea into patentable subject matter under Alice v. CLS Bank, 573 U.S. 208 (2014),\nbut in the EPO, it does make the invention eligible\xe2\x80\x94it just requires evaluation under their\nequivalent of the nonobviousness requirement.\nSimilarly, in the diagnostics context, Article 53(c) of the EPC states that European\npatents shall not be granted for \xe2\x80\x9cdiagnostic methods practised on the human or animal body.\xe2\x80\x9d\nIn the 2005 opinion 1/04 (Diagnostic methods), the EPO Enlarged Board of Appeal specified\nthat \xe2\x80\x9cdiagnostic methods\xe2\x80\x9d must include each of four steps: (i) \xe2\x80\x9ccollection of data\xe2\x80\x9d (including\n\xe2\x80\x9cinteraction with\xe2\x80\x9d a human or animal body), (ii) \xe2\x80\x9ccomparison of these data with standard\nvalues,\xe2\x80\x9d (iii) \xe2\x80\x9cthe finding of any significant deviation, i.e. a symptom, during the comparison,\xe2\x80\x9d\nand (iv) \xe2\x80\x9cattribution of the deviation to a particular clinical picture,\xe2\x80\x9d i.e., \xe2\x80\x9cdiagnosis for\ncurative purposes.\xe2\x80\x9d17 A method that does not claim one of these steps is patent eligible,\nincluding in vitro diagnostics and methods that include data acquisition without diagnosis,\nunless the omitted step is essential. Furthermore, Article 53(c) states that the exclusion\n\xe2\x80\x9cshall not apply to products, in particular substances or compositions, for use in any of these\nmethods.\xe2\x80\x9d Patentees can thus avoid the exclusion by claiming pharmaceutical products,\nmedical devices, or computer systems related to the diagnostic method.\nDo you think all of these rules are consistent with TRIPS\xe2\x80\x99s requirement that patents\nbe available \xe2\x80\x9cwithout discrimination as to . . . the field of technology,\xe2\x80\x9d aside from the\nexceptions in Article 27?\n\nPractice Problem: Patentable Subject Matter in the USPTO and EPO\nResearchers at ThermCo invented forehead infrared thermometers, which can\ndetermine a person\xe2\x80\x99s temperature by measuring the thermal radiation emitted from their\nforehead. The idea that body temperature could be determined from skin temperature was\nnovel and defied conventional wisdom: scientists previously thought that skin temperature\ncouldn\xe2\x80\x99t be independently correlated with internal body temperature. The recent iterations\nof ThermCo\xe2\x80\x99s invention exploded in popularity during the COVID-19 pandemic.\nThermCo sought a number of patents on this invention at patent offices worldwide.\nOne claim, which was successfully prosecuted through both the USPTO and the EPO, reads\nas follows:\nA method of detecting human body temperature comprising:\n(a) measuring radiation as target skin surface of the forehead is viewed, and\n\n17\n\nG 1/04 is at https://www.epo.org/law-practice/case-law-appeals/recent/g040001ex1.html.\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n521\n\n(b) processing the measured radiation to provide a body temperature\napproximation based on heat flow from an internal body temperature to\nambient temperature.\nA number of companies have sought to imitate ThermCo\xe2\x80\x99s successful product. In\nresponse to legal threats by ThermCo, the most successful competitor, GeneriCo, has filed\npost-grant opposition proceedings to challenge the validity of both the U.S. and European\npatents on patentable-subject matter grounds. What are the best arguments on behalf of each\ncompany in each jurisdiction?\n\nD. Post-Grant Flexibilities: Rights, Exceptions, and\nRemedies\nCountries have substantial flexibilities not only in deciding which kinds of inventions\nreceive patents in the first place, but also in setting the exclusive rights protected by a patent,\nexceptions to those rights such as experimental use or compulsory licensing, and the remedies\navailable for infringement. We refer to these as \xe2\x80\x9cpost-grant flexibilities.\xe2\x80\x9d\n\n1. Rights\nTRIPS Article 28 defines the exclusive rights protected by a patent: \xe2\x80\x9cmaking, using,\noffering for sale, selling, or importing,\xe2\x80\x9d including for \xe2\x80\x9cthe product obtained directly by [a\npatented] process.\xe2\x80\x9d TRIPS does not require countries to provide rights against indirect\ninfringement, but most major economies have. In Europe, infringement statutes have largely\nbeen harmonized based on the 1989 Agreement Relating to Community Patents (even though\nnot enough countries ratified the agreement to cause it to enter into force):\nArticle 25 \xe2\x80\x93 Right to prevent \xe2\x80\x9cdirect use\xe2\x80\x9d: (a) \xe2\x80\x9cmaking, offering, putting on the\nmarket or using a [patented] product . . . or importing or stocking the product\nfor these purposes\xe2\x80\x9d; (b) \xe2\x80\x9cusing a [patented] process\xe2\x80\x9d or \xe2\x80\x9coffering the process for\nuse within . . . the Contracting States\xe2\x80\x9d; (c) \xe2\x80\x9coffering, putting on the market,\nusing, or importing or stocking for these purposes the product obtained directly\nby a [patented] process.\xe2\x80\x9d\nArticle 26 \xe2\x80\x93 Right to prevent \xe2\x80\x9cindirect use\xe2\x80\x9d: (1) \xe2\x80\x9csupplying or offering to supply\nwithin the territories of the Contracting States a person, other than a party\nentitled to exploit the patented invention, with means, relating to an essential\nelement of that invention, for putting it into effect therein, when the third\nparty knows, or it is obvious in the circumstances, that these means are\nsuitable and intended for putting that invention into effect\xe2\x80\x9d except (2) \xe2\x80\x9cwhen\nthe means are staple commercial products, except when the third party induces\nthe person supplied to [infringe].\xe2\x80\x9d\n\n\x0c522\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nFor example, these provisions are codified by Sections 9 and 10 of the German Patent Act,\nand by Articles 53 and 73 of the Dutch Patent Act. The resulting scope of liability is similar\nto that created by 35 U.S.C. \xc2\xa7 271(a)-(c). The current Chinese Patent Law does not have\nexpress provisions for indirect infringement, but indirect liability can be available under tort\nlaw principles.\nCountries also vary in how infringement is evaluated, such as the rules for claim\nconstruction or infringement under the doctrine of equivalents, although different formal\nrules can lead to similar results. For example, the UK uses \xe2\x80\x9cpurposive\xe2\x80\x9d construction, while\nGerman courts \xe2\x80\x9cfocus on the objective meaning of claims\xe2\x80\x9d in a way that some view as distinct\nfrom the UK approach, but \xe2\x80\x9cin substance both U.K. and German courts today adhere to\nsomething of a middle ground.\xe2\x80\x9d Thomas F. Cotter, Comparative Patent Remedies 226 (2013).\n\n2. Exceptions\nTRIPS Articles 30 and 31 allow explicit exceptions to the rights that must generally\nbe conferred on patent owners.\n\nTRIPS Article 30: Exceptions to Rights Conferred\nMembers may provide limited exceptions to the exclusive rights conferred by a\npatent, provided that such exceptions do not unreasonably conflict with a\nnormal exploitation of the patent and do not unreasonably prejudice the\nlegitimate interests of the patent owner, taking account of the legitimate\ninterests of third parties.\nA WTO panel decision from 2000 provides the clearest guidance on the meaning of\nterms like \xe2\x80\x9climited exceptions.\xe2\x80\x9d The panel evaluated two exceptions from liability under\nCanada\xe2\x80\x99s Patent Act: one for activities related to regulatory review (e.g., allowing generic\nfirms to produce patented pharmaceuticals for submission to the Canadian equivalent of the\nFDA), and one allowing generic firms to manufacture drugs for six months prior to patent\nexpiration so they have a stockpile ready when the patent expires. The panel held that the\nstockpiling provision was not a \xe2\x80\x9climited exception[],\xe2\x80\x9d including because \xe2\x80\x9cthere were no limits\nat all on the volume of production allowed, or the market destination of such production.\xe2\x80\x9d In\ncontrast, the regulatory review provision was \xe2\x80\x9climited\xe2\x80\x9d because it was limited to regulatory\npurposes, it didn\xe2\x80\x99t conflict with \xe2\x80\x9cnormal exploitation\xe2\x80\x9d because most patent holders don\xe2\x80\x99t get\nthe benefit of exclusivity due to regulatory review, and the interest was \xe2\x80\x9cneither so\ncompelling nor so widely recognized that it could be regarded as a \xe2\x80\x98legitimate interest\xe2\x80\x99 within\nthe meaning of Article 30.\xe2\x80\x9d Canada \xe2\x80\x93 Patent Protection of Pharmaceutical Products (\xe2\x80\x9cCanada\nGenerics\xe2\x80\x9d), WT/DS114/R, 17 March 2000.\nAs discussed in Chapter 12, the United States also has an exception for activities\nrelated to regulatory review at 35 U.S.C. \xc2\xa7 271(e)(1), but lacks a broad experimental use\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n523\n\ndefense for other research. See Madey v. Duke, 307 F.3d 1351 (Fed. Cir. 2002). Many other\ncountries do have a general experimental use exception, which is generally accepted as\nTRIPS compliant. Indeed, the Canada Generics panel took \xe2\x80\x9cas an illustration one of the most\nwidely adopted Article 30-type exceptions in national patent laws\xe2\x80\x94the exception under\nwhich use of the patented product for scientific experimentation, during the term of the\npatent and without consent, is not an infringement.\xe2\x80\x9d\nArticle 30 is not helpful to a country that wants to issue a compulsory license for\npatents on a particular pharmaceutical to promote generic manufacturing. Instead, that\ncountry would have to turn to Article 31, \xe2\x80\x9cOther Use Without Authorization of the Right\nHolder.\xe2\x80\x9d Article 31 sets out numerous conditions, including that \xe2\x80\x9cthe proposed user has made\nefforts to obtain authorization from the right holder on reasonable commercial terms\xe2\x80\x9d (except\nin cases of \xe2\x80\x9cextreme urgency\xe2\x80\x9d or \xe2\x80\x9cpublic non-commercial use\xe2\x80\x9d), the use must be limited in\n\xe2\x80\x9cscope and duration,\xe2\x80\x9d and the use must be terminated when no longer necessary. If a\ncompulsory license is issued, \xe2\x80\x9cthe right holder shall be paid adequate remuneration in the\ncircumstances of each case, taking into account the economic value of the authorization.\xe2\x80\x9d\nOriginally, Article 31 was limited to use \xe2\x80\x9cpredominately for the supply of the domestic market\nof the Member authorizing such use,\xe2\x80\x9d raising concerns about its infeasibility for countries\nwithout domestic manufacturing capacity. The 2001 Doha Declaration on TRIPS and Public\nHealth proposed amendments to permit compulsory licenses for export, which are now\nincorporated in Article 31bis.\nThe Doha Declaration and the ratification of Article 31bis were hailed as important\nsuccesses by advocates for global access to medicines, but in practice, they have had little\nimpact. The only actual use of the system was in 2007, when Rwanda notified for an\nHIV/AIDS drug (Apo-TriAvir), and Canada filed a generic export notification and sent two\nshipments, one in 2008 and one in 2009. There have been a number of compulsory licenses\nissued under Article 31, mostly between 2003 and 2005 over HIV/AIDS drugs, although\n\xe2\x80\x9cactivity has diminished markedly since 2006.\xe2\x80\x9d Reed Beall & Randall Kuhn, Trends in\nCompulsory Licensing of Pharmaceuticals Since the Doha Declaration: A Database Analysis,\n9 PLoS Med e1001154 (2012).\n\n3. Remedies\nPart III of TRIPS covers enforcement of intellectual property rights, including\nremedies. These rules allow substantial flexibility in how a country implements its domestic\nIP enforcement system. For an excellent overview of patent remedies in jurisdictions with\nthe most patent cases, see Thomas F. Cotter, Comparative Patent Remedies (2013), and the\ncorresponding blog at https://comparativepatentremedies.blogspot.com.\nFor injunctions, TRIPS Article 44 specifies that judges \xe2\x80\x9cshall have the authority to\norder a party to desist from an infringement\xe2\x80\x9d but doesn\xe2\x80\x99t suggest that injunctions are\nmandatory or must be available in all cases. Additionally, Article 44 specifies that injunctions\nneed not be available for \xe2\x80\x9cprotected subject matter acquired or ordered by a person prior to\n\n\x0c524\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nknowing or having reasonable grounds to know that dealing in such subject matter would\nentail the infringement of an intellectual property right.\xe2\x80\x9d In other words, countries may limit\ninjunctions to knowing infringement rather than adopting a strict liability approach.\nInjunctions are more routinely granted to successful patent litigants in most other\njurisdictions than they have been in the United States after eBay, and they are particularly\nlikely in Germany. See Cotter, supra. Preliminary injunctions are more variable. \xe2\x80\x9cPatent\nowners often view the Netherlands as a desirable forum in which to seek preliminary\ninjunctions, given the availability there of a type of speedy pretrial hearing (known as the\nkort geding) and the importance of the Netherlands as a center for the distribution of products\nthroughout Europe.\xe2\x80\x9d Id. at 5. The Netherlands is also attractive for its willingness to issue\ncross-border preliminary injunctions throughout Europe.\nTRIPS Article 45 permits similar flexibility in how countries award damages,\nincluding the ability to limit damages to cases of knowing infringement:\n\nTRIPS Article 45: Damages\n1. The judicial authorities shall have the authority to order the infringer to\npay the right holder damages adequate to compensate for the injury the\nright holder has suffered because of an infringement of that person\xe2\x80\x99s\nintellectual property right by an infringer who knowingly, or with\nreasonable grounds to know, engaged in infringing activity.\n2. The judicial authorities shall also have the authority to order the infringer\nto pay the right holder expenses, which may include appropriate attorney\xe2\x80\x99s\nfees. In appropriate cases, Members may authorize the judicial authorities\nto order recovery of profits and/or payment of pre-established damages even\nwhere the infringer did not knowingly, or with reasonable grounds to know,\nengage in infringing activity.\nAverage U.S. damage awards are higher than in any other jurisdiction. In other\ncountries, damages \xe2\x80\x9coften can be calculated on the basis of the defendant\xe2\x80\x99s profits (a type of\nmonetary award abolished in utility patent actions in the United States in 1946), or published\nreports of typical industry-wide royalties (as in Germany), or as in China as a fixed sum of\nso-called statutory damages.\xe2\x80\x9d Cotter, supra at 7\xe2\x80\x938.\n\nDiscussion Questions: Post-Grant Flexibilities\n1. Local Working Requirements. Can patentees lose any rights through failure to\npractice their patents? Requirements that patentees \xe2\x80\x9cwork\xe2\x80\x9d their inventions locally (beyond\nsimply importing them) are pervasive; in 1968, every industrialized country except the\nUnited States and the Soviet Union had local working requirements, and many countries still\nhave them today, such as in Section 84 of India\xe2\x80\x99s Patents Act (which has resulted in India\xe2\x80\x99s\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n525\n\nlisting in the USTR\xe2\x80\x99s Special 301 Report). Why would countries have such requirements?\nUnder what theories do you think they are (or aren\xe2\x80\x99t) justified? See Jorge L. Contreras, Rohini\nLakshan\xc3\xa9 & Paxton M. Lewis, Patent Working Requirements and Complex Products, 7 NYU\nJ. Intell. Prop. & Ent. L. 1 (2017) (empirically studying the high degree of non-compliance\nwith working requirements in India).\nIn 2001, after Brazil threatened to issue compulsory licenses for patented AIDS drugs\nbased on failure to manufacture locally, the United States filed a WTO complaint based on\nTRIPS Article 27.1, which proscribes \xe2\x80\x9cdiscrimination as to . . . whether products are imported\nor locally produced.\xe2\x80\x9d For bargaining leverage, Brazil countered with its own request for a\nWTO panel, arguing that the Bayh-Dole Act, 35 U.S.C. \xc2\xa7 204, violates TRIPS by requiring\ngovernment-funded inventions that are exclusively licensed to be manufactured\n\xe2\x80\x9csubstantially in the United States.\xe2\x80\x9d The dispute settled. How do you read 27.1 in light of the\ncompulsory licensing provisions of Articles 30 and 31, and Article 5A of the Paris Convention\n(incorporated by TRIPS Article 2.1), which provides that countries \xe2\x80\x9cshall have the right to\ntake legislative measures providing for the grant of compulsory licenses to prevent abuses\n[such as] failure to work\xe2\x80\x9d? Were Brazil or the United States in violation? See Paul Champ &\nAmir Attaran, Patent Rights and Local Working Under the WTO TRIPS Agreement: An\nAnalysis of the U.S.\xe2\x80\x93Brazil Patent Dispute, 27 Yale J. Int\xe2\x80\x99l L. 365 (2002).\n2. Exhaustion. Another post-grant flexibility is the right of each country to determine\nits rules for patent exhaustion; TRIPS Article 6 specifies that \xe2\x80\x9cnothing in this Agreement\nshall be used to address the issue of the exhaustion of intellectual property rights.\xe2\x80\x9d As\ndiscussed in Chapter 12, the U.S. Supreme Court changed the U.S. exhaustion rule such that\nsales in foreign countries now exhaust U.S. patent rights, and exhaustion cannot be\ncontracted around. What countries would benefit from adopting similar exhaustion rules?\n3. COVID-19 IP Waiver. In October 2020, India and South Africa asked the WTO to\nwaive enforcement of TRIPS for all intellectual property related to the prevention,\ncontainment, and treatment of COVID-19, arguing that \xe2\x80\x9c[a] particular concern for countries\nwith insufficient or no manufacturing capacity are the requirements of Article 31bis and\nconsequently the cumbersome and lengthy process for the import and export of\npharmaceutical products.\xe2\x80\x9d The proposal was supported by many countries but opposed by\nothers, including governments from the United States, EU, UK, Switzerland, Japan, Brazil,\nCanada, and Australia. In May 2021, amid a devastating wave of infections in India, the\nBiden Administration shifted its position to support IP waiver as applied to COVID-19\nvaccines. What effect do you think removal of the TRIPS requirements would have in the\nvaccine context? Are there other tools for expanding global vaccine distribution?\n\nE. Coordinating Multinational Patent Litigation\nDeveloping a legal and business strategy for multinational patent litigation draws\ntogether many of the topics from this chapter. Although U.S. lawyers will not themselves be\nlitigating overseas, they often help U.S. clients determine their global litigation strategy and\n\n\x0c526\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nhelp coordinate with local counsel. This chapter begins with practical questions to ask when\nchoosing among potential forums before presenting two exercises: one advising a hypothetical\nclient, and one focused on Apple\xe2\x80\x99s and Samsung\xe2\x80\x99s strategies in their global patent litigation\nwar.\n\n1. Choosing Among Forums\nWhere Can You File?\nThe first question to ask when determining where to file a patent lawsuit is: where\ncan you file? Your options may be limited by many of the topics covered in 1L civil procedure:\n\xe2\x80\xa2\n\nWhere can you get personal jurisdiction over the defendant? It usually exists in in any\nstate where the defendant resides or takes substantial acts to further infringement;\nmere ownership of IP, nationality, or physical service are typically insufficient.\n\n\xe2\x80\xa2\n\nWhere do courts have subject matter jurisdiction? This depends on where your client\nhas relevant patents because courts are reluctant to adjudicate infringement of\nforeign patents.\n\n\xe2\x80\xa2\n\nAre there forum selection clauses in any contracts between the parties? Selection\nclauses are usually enforced unless they are against public policy.\n\n\xe2\x80\xa2\n\nWere there any earlier disputes that create collateral estoppel or res judicata issues?\n\n\xe2\x80\xa2\n\no\n\nCourts in the United States have adopted factual findings from foreign\nproceedings as long as the issue was identical and actually litigated and the\nproceedings were fundamentally fair, but they have refused to adopt\nconclusions as to the validity of corresponding parallel patents.\n\no\n\nEuropean courts will attach some weight to decisions in other European\ncountries on parallel patents.\n\nIf your client is the accused infringer, you often have the option of filing an action for\na declaratory judgment of noninfringement or a patent invalidation request, but the\nrules for establishing declaratory judgment jurisdiction vary.\n\nWhere Should You File?\nJust because your client can file a patent lawsuit somewhere doesn\xe2\x80\x99t mean it is a wise\nbusiness move. Here are some additional questions that may inform the choice:\n\xe2\x80\xa2\n\nWhat are your client\xe2\x80\x99s business goals? Money, market dominance, or something else?\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n527\n\no\n\nDo the available remedies in the forum serve those goals? In some cases,\npreliminary and permanent injunctions and border measures may be crucial;\nin others, clients may be interested in large damage awards. Germany is a top\njurisdiction for patent plaintiffs because of the speed with which an injunction\ncan be obtained, with parallels to the ITC in the United States. China is also\nincreasingly popular because of the availability of injunctions against\nmanufacturing, export, and in-country sales, but damages are very low.\n\no\n\nHow important is the forum for serving those goals in terms of its market share\nand role in supply chains? Some countries with small markets may still be key\nmanufacturing hubs; for example, India and Israel attract patent lawsuits\nbecause they are important generic pharmaceutical manufacturers.\n\n\xe2\x80\xa2\n\nHow expensive is it to litigate in the forum, and can your client afford it? Is straining\nyour adversary\xe2\x80\x99s resources a goal in itself? The United States is generally the most\nexpensive place to litigate due to expansive discovery and high legal fees. Continental\nEurope has lower costs, and the United Kingdom is expensive by European but not\nU.S. standards.18 Japan can be moderately expensive due to many rounds of briefing\nwithout page limits. China has lower costs than any of these forums. In many other\ncountries, attorneys\xe2\x80\x99 fees are routinely awarded to the prevailing party, although they\nare not always fully compensatory.\n\n\xe2\x80\xa2\n\nIs key evidence available only in one venue, and how can that evidence be made\navailable? The availability of discovery closely tracks litigation costs: discovery is\nbroadly available in the United States, more difficult in Europe, and very limited in\nChina. Note that evidence in the United States doesn\xe2\x80\x99t mean you need to litigate in\nthe United States; under 28 U.S.C. \xc2\xa7 1782, a party may ask a U.S. district court to\ncompel production of evidence needed for a proceeding in a foreign tribunal.\n\n\xe2\x80\xa2\n\nHow important is timing to your client? Jurisdictions vary in how quickly litigation\nwill proceed and whether the case will be stayed for a validity challenge; for example,\ntrials in Germany or the Netherlands can begin less than a year after filing, but in\nFrance it might take two years to reach trial. China is also known for often resolving\ndisputes within a year. Where slowing down litigation is a goal, it can be useful to file\nin a slow EU jurisdiction because other countries often grant stays for related actions.\nFor example, actions for a declaratory judgment of noninfringement in Italy against\na patentee not domiciled in Italy were known as \xe2\x80\x9cItalian torpedoes,\xe2\x80\x9d although both\nItalian and other European courts have cabined use of this strategy. More recently,\nsome courts have been willing to issue an \xe2\x80\x9canti-suit injunction\xe2\x80\x9d to prevent a party\nfrom pursuing litigation in another jurisdictions\xe2\x80\x94and others have responded with\nanti-anti-suit injunctions and anti-anti-anti-suit injunctions\xe2\x80\x94making timing critical.\nSee Jorge L. Contreras, It\xe2\x80\x99s Anti-Suit Injunctions All the Way Down \xe2\x80\x93 The Strange\n\nThe average cost of patent litigation has been estimated at 50,000\xe2\x80\x93200,000 \xe2\x82\xac in Germany,\nFrance, and the Netherlands, and 2,000,000\xe2\x80\x934,000,000 \xe2\x82\xac in the UK. Katrin Cremers et al., Patent\nLitigation in Europe, 44 Eur. J.L. & Econ. 1 (2017).\n18\n\n\x0c528\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nNew Realities of International Litigation Over Standards-Essential Patents, 26 IP\nLitigator (2020).\n\n\xe2\x80\xa2\n\nHow logistically difficult is it to litigate in the forum? What language are proceedings\nconducted in? Can you find local counsel you trust?\n\n\xe2\x80\xa2\n\nFinally, how likely to win is your client, and how predictable is the outcome? The\nlikelihood of success may be affected by many factors beyond substantive law:\no\n\nIs there a forum where one party will have home field advantage, or where\nnational attitudes toward the parties or patents may favor one party?\n\no\n\nAre the judges specialists or generalists? Many non-U.S. jurisdictions have\nspecialized IP trial courts (or specialized IP chambers within a court of general\njurisdiction), including the UK, Germany, France, China, and Japan.\nSpecialists are sometimes viewed as more pro-patent, but they may also focus\nmore on the specific requirements of patent law and less on secondary\nconsiderations like a party\xe2\x80\x99s reputation and commercial success.\n\no\n\nAre there forum choices within a jurisdiction? For example, the forum shopping\nopportunities in Germany are similar to those that have favored E.D. Tex. and\nW.D. Tex. in the United States. In China, parties may litigate infringement at\nthe patent office (which is inexpensive, but which may not award preliminary\ninjunctions or damages), or in court, or both. Some countries offer ITC-like\nproceedings against imports.\n\no\n\nAre validity and infringement assessed in separate (\xe2\x80\x9cbifurcated\xe2\x80\x9d) proceedings?\nIn some countries, such as Germany and China, challenges to validity must be\nbrought in separate proceedings. Bifurcation can give rise to an \xe2\x80\x9cinjunction\ngap\xe2\x80\x9d where infringement is found and an injunction issued before validity\nreview is complete. A recent amendment to Germany\xe2\x80\x99s Patent Act is intended\nto reduce but may not eliminate this gap.\n\nIs Alternative Dispute Resolution a Better Option?\nAlthough this casebook is focused on formal legal proceedings, as we noted in Chapter\n17, patent disputes may also be resolved through alternative dispute resolution (ADR),\nincluding arbitration, mediation, and negotiation. As one option, WIPO runs an Arbitration\nand Mediation Center, which it advertises as flexible, confidential, and capable of efficiently\nresolving multinational disputes in a single proceeding without the complexity of multijurisdictional litigation or the risk of inconsistent results.19 Most countries do not allow\narbitration of patent validity claims, but arbitration or mediation may be an attractive option\nfor disputes involving patent ownership, license interpretation, or infringement.\n\n19\n\nMore information is available at https://www.wipo.int/amc/en/.\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n529\n\n2. Advising a Hypothetical Client\nYour client, Drivera Inc., is an LA-based electric car startup. Drivera has developed\nan improved electric car battery with a faster charging time and has used the PCT to acquire\nnumerous patent rights. The plug-in electric vehicle market is rapidly growing; in terms of\nvehicles sold, it is largest in China, Europe, and the United States. Drivera is currently\nfocused only on the U.S. market, where it exceeded expectations with sales last year. Its cars\nare entirely manufactured in the United States have received great acclaim from reviewers,\nlargely due to the improved battery. Drivera hopes to build on this momentum by focusing\non marketing its cars to consumers who prioritize very rapid charging, but it currently has\ncash-flow difficulties and was recently sued for failure to pay a contractor for work on its\nheadquarters.\nDrivera\xe2\x80\x99s innovative battery design has been independently developed by Shenzhenbased XFA, another innovative electric car startup with its own global patent portfolio\n(though not on the battery design). XFA has deep cash reserves. Last year, XFA\xe2\x80\x99s global sales\nof cars with the new battery design were ten times as high as Drivera\xe2\x80\x99s, with most sales in\nChina but a growing number throughout Europe. It has shipped a few cars to the United\nStates to generate press, and it has signaled its intention to enter the U.S. market in 2019.\nIt manufactures the key component of the battery, the flux capacitor, in China. (The flux\ncapacitor has no current known use besides this battery.) XFA ships the flux capacitor to a\nfactory in Germany that manufactures the battery and assembles the cars. The cars are\nshipped globally via Rotterdam, Netherlands (the largest port in Europe). Drivera\xe2\x80\x99s GC has\ntold you that the firm views XFA as an existential threat, and that it is imperative that XFA\nbe kept out of the U.S. market for as low a budget as possible.\nYou have determined that Drivera has used the PCT to acquire the following global\npatent rights:\n\xe2\x80\xa2\n\nUnited States: Drivera has a U.S. patent on the flux capacitor, which it features in\nall its promotional materials. But in-house counsel located devastating prior art from\nan obscure prior use by Dr. Brown, so you think there is a 90% chance of invalidation\nif the patent is challenged. Drivera has a stronger U.S. patent on the process of\nassembling the battery components (including the flux capacitor) into a battery. You\npredict a 5% chance of invalidation if it is challenged in district court or the ITC and\na 10% chance of invalidation in an inter partes review proceeding before the USPTO.\n\n\xe2\x80\xa2\n\nEurope: Drivera\xe2\x80\x99s EPO patents (designating Germany, France, the Netherlands, and\nthe UK) have passed the nine-month EPO opposition period. As in the United States,\nDrivera has a well-publicized patent on the flux capacitor. But in light of the prior use\nby Dr. Brown, there is a 60\xe2\x80\x9380% chance of invalidation if the patent is challenged\n(with variation by country). Drivera also has a stronger EPO patent on the process of\nassembling the battery components (including the flux capacitor). You estimate a less\nthan 5% chance of the process patent being invalidated in any given country.\n\n\x0c530\n\xe2\x80\xa2\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\nChina: Drivera also has a Chinese patent on the flux capacitor, and under China\xe2\x80\x99s\npatent law, you think there is only a 10% chance that the patent would be invalidated\nif challenged. And Drivera has a Chinese patent on the process of assembling the\nbattery components (including the flux capacitor), which you predict to have a 5%\nchance of invalidation. Drivera\xe2\x80\x99s GC has expressed uncertainty and concern about\nlitigating in China, particularly against a Chinese firm. But you have seen studies\nsuggesting that foreign firms have been more successful in China in recent years.20\n\nWhat course of action do you recommend? Are there additional issues you would want\nto research, either about the facts or the law in different jurisdictions?\n\n3. Case Study: Apple v. Samsung Global Smartphone Patent Wars\nIn Chapter 3, you read the Apple v. Samsung decision on the use of secondary\nconsiderations in nonobviousness, and Chapter 19 described their trip to the Supreme Court\nin a separate case involving design patents. But these two cases were only part of the global\nIP war between these companies.\nWhen the iPhone was launched in 2007 after a top-secret three-year research project,\nSteve Jobs noted: \xe2\x80\x9cToday, Apple is going to reinvent the phone . . . . And boy, have we\npatented it.\xe2\x80\x9d21 Apple obtained utility patents in many jurisdictions on easy-to-understand\nelements of the iPhone and iPad, including touch gestures like \xe2\x80\x9cpinch to zoom\xe2\x80\x9d and the\n\xe2\x80\x9crubber-banding\xe2\x80\x9d feature in which the screen bounces back up when you pull down past the\nbottom. It also obtained many design patents for features including the icons, uncluttered\nfront face, edge-to-edge glass, and rounded corners. The press lauded the phone as\n\xe2\x80\x9crevolutionary,\xe2\x80\x9d and demand soared. By 2010, Apple had 16% of the smartphone market.\nThen, in spring 2010, Samsung launched a new smartphone called the Galaxy S, with\nan overall appearance and touch gestures that appeared to be directly copied from the iPhone.\nBy the end of the first quarter of 2011, Samsung had over 300% growth in smartphone sales\nand had risen in market share from 5% to 13%. When Apple\xe2\x80\x99s lawyers accused Samsung of\ncopying, Samsung\xe2\x80\x99s vice president denied the allegation and noted that Samsung had been\ndeveloping mobile phones since 1991, including with $435 billion in R&D between 2005 and\n2010 and numerous parts that it supplies to Apple for the iPhone (including memory and\nprocessors). According to Samsung, it was already developing products with the allegedly\ncopied elements before the iPhone was announced. Like Apple, Samsung holds many patents\n\nOne study reviewed all 1663 publicly available patent infringement decisions in 2014 and\nfound that plaintiffs won in 80% of cases and received permanent injunctions in 90% of those cases,\nand that foreign patent holders received better results than domestic ones. The injunction rate may\nbe misleadingly low, as the primary reasons injunctions were not granted were failure to ask and\nexpired patents. Renjun Bian, Patent Litigation in China: Challenging Conventional Wisdom, 33\nBerkeley Tech. L.J. 413 (2018).\n20\n\n21\n\nYou can hear the applause he drew at https://www.youtube.com/watch?v=8JZBLjxPBUU.\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\n\n531\n\nacross the globe, including standard-essential patents on 3G technology that had been\nlicensed by virtually every major mobile firm\xe2\x80\x94except Apple, which argued that Samsung\nhadn\xe2\x80\x99t followed FRAND procedures.\nApple and Samsung attempted to negotiate a resolution, but in March 2011, Samsung\nintroduced a tablet that appeared very similar to the iPad. Before looking at the timeline\nbelow, imagine you are outside counsel for either Apple or Samsung. Apple wants to leverage\nits multinational patent portfolio to wipe Samsung\xe2\x80\x99s products from the global market;\nSamsung wants to keep selling its very successful products and to avoid substantial damages\nor attorney fees. The most important markets are the United States, the European Union\n(including Germany, France, the UK, Italy, and the Netherlands), Australia, Japan, and\nSouth Korea. Assume that Apple and Samsung have patents similar to those described above\nin all these jurisdictions, but you needn\xe2\x80\x99t delve into the details of whether these patents are\nvalid or infringed. Rather, focus on the differences in litigation procedures and remedies in\ndifferent jurisdictions. Where should Apple file suit, and why? Should Samsung file suits\nproactively based on its standard-essential patents, or simply focus on playing defense? What\nadditional information do you want to know?\nAfter you have considered these questions, compare the actual strategies the two\ncompanies followed based on the timeline below. Why do you think they made the choices\nthey did? Did anyone \xe2\x80\x9cwin\xe2\x80\x9d the patent war?\n\nSimplified Timeline of Apple v. Samsung Global Smartphone Patent War\nApple\n\nSamsung\n\nsues in US (N.D. Cal.) alleging\ninfringement of design patents and\ntrade dress\ncountersues in Germany & South Korea,\nsues in the Netherlands\n\nsues in South Korea, Japan, Germany;\ncountersues in US\n\nsues in Australia and the US ITC\nwins injunctions in Australia, EU (scaled\nback to just Germany) & the\nNetherlands (where Samsung designs\naround)\nsues in German Federal Patent Court to\ninvalidate Samsung\xe2\x80\x99s EU patents\n\nsues in France\n\nNovember\n\nloses Australian injunction on appeal\n\nconvinces Australian Court to force\nApple to reveal iPhone 4S source code\n\nDecember\n\nloses US preliminary injunction request\n\n2012\nJanuary\n\nnew patent suit in Germany; EU begins\nantitrust investigation v. Samsung\nbased on Apple\xe2\x80\x99s claim of not getting\nFRAND offer for Samsung\xe2\x80\x99s patents\n\n2011\nApril\nJune\nJuly\nAugust\n\nsues in UK, Italy, and the US (the ITC\nand D. Del.)\n\n\x0c532\n\nMASUR & OUELLETTE \xe2\x8b\x85 PATENT LAW\n\nFebruary\n\nfiles 2nd US suit in N.D. Cal. on \xe2\x80\x9cslide to\nunlock\xe2\x80\x9d etc.\n\nMarch\nJune\nJuly\n\nAugust\n\nloses request for injunction in\nNetherlands\nwins damages in the Netherlands\n\nwins injunctions on some products in US\nstay of US injunction by Fed. Cir. (and\nthen reversal in October)\nwins EU ban on some but not all\nproducts\nAustralian patent hearings begin (and continue until June 2013, though no\nsubstantive rulings before Aug. 2014 settlement)\nwins $1B jury verdict in US\nloses case in Japan\nsplit decision in South Korea: both companies got small damages award and\ntemporary injunction, but only against old models\n\nSeptember\nOctober\n\nDecember\n\nloses in Germany on touch-screen tech\nloses UK design appeal, ordered to run\npublic notice that Samsung didn\xe2\x80\x99t\ninfringe (then reprimanded for\nmisleading notice & ordered to pay\nSamsung\xe2\x80\x99s legal fees)\nbased on Apple complaints, US DOJ\ninvestigates Samsung over FRAND\nabuse\nloses US permanent injunction request\n\n2013\nJune\n\nwins ITC exclusion order\nafter reexam (likely requested by\nSamsung), USPTO confirms\npatentability of Apple rubber-band\npatent\nGerman Federal Patent Court\ninvalidates Apple\xe2\x80\x99s slide-to-unlock\npatent (affirmed Aug. 2015 by Federal\nCourt of Justice)\n\nApril\n\nAugust\n\nwithdraws EU standards-based\ninjunction requests in (unsuccessful)\neffort to prevent preliminary EC\nantitrust ruling; will just seek damages\n\nwins ITC exclusion order against older\nSamsung products\n\nOctober\nNovember\n\nGerman court stays Samsung suit\npending Federal Patent Court decision\non validity\n\n2014\nMay\n\nwins $120M jury verdict in 2nd US case\n(had asked for $2B)\n\nloses ITC ban on iPhone 4 and iPads\nwhen USTR vetoes it\nUSPTO confirms patentability of\ntouchscreen patent on reexam\n\nwins $158K jury verdict in 2nd US case\n(had asked for $6M)\n\n\x0cINTERNATIONAL & COMPARATIVE PATENT LAW\nAugust\n\nDecember\n2015\nMay\nSeptember\n\n2016\nFebruary\n\nOctober\n\nDecember\n2018\nMay\nJune\n\n533\n\nall non-US patent suits dropped (including ongoing litigation in Germany, UK,\nFrance, Italy, Netherlands, South Korea, Australia, Japan)\nUSPTO non-final action invalidates\nApple design patents on reexam\nUSPTO affirms rejection of Apple pinchto-zoom patent on reexam\nFed. Cir. reduces $1B US jury verdict\nfrom 1st case (reversing trade dress\nportion)\nFed. Cir. vacates denial of injunction in\n2nd US case (over dissent), modifies\nopinion slightly in December\nN.D. Cal. enters partial final judgment\nin 1st case of $548M\nFed. Cir. panel finds slide-to-unlock and\nautocorrection patents obvious and\ndata-detection patent not infringed,\nreversing Apple\xe2\x80\x99s win in 2nd case\nen banc Fed. Cir. sua sponte vacates Feb.\npanel decision, reinstates N.D. Cal.\njudgment for 2nd case\nSupreme reverses & remands on design\npatent damages in 1st case\nN.D. Cal. jury awards $539M to Apple\nsettlement of all claims on undisclosed terms\n\n\x0c"