The Year in Patents: Ten Developments We’ll Remember From 2020

As we end 2020— a year most of us probably wish to forget— it appears that after much litigation it is finally safe to call Joe Biden the President-Elect of the United States. While some may still wish for the improbable, with the Supreme Court not scheduled to hold a hearing on any election issue until after inauguration day, it is impossible to envision anyone other than Biden being sworn in on January 20–although, with everything that has happened so far this year nothing is truly unimaginable anymore.

Operating on what seems to be the safe assumption that Joe Biden will become the 46^th President of the United States, what is already shaping up to be the biggest story of 2021 is the change in IP policy everyone expects under the new President. It is no understatement to point out that concrete details on IP policy are lacking in Joe Biden’s presidential platform. Perhaps the best indication of Biden’s own views on IP are found on his “Made in America” platform page, which contains the most references to “innovation” on joebiden.com and discusses the creation of “millions of new manufacturing and innovation jobs throughout all of America” during a Biden presidency.

Patent owners who rely on certainty in their intellectual property rights have a right to worry about the future given the lack of any policy position and given that Biden’s only advisor on IP issues seems to be Colleen Chien, whose views are in line with those of Michelle Lee, which is unsurprising given that she was herself a senior White House Advisor to President Obama. So, while Senators Chris Coons (D-DE) and Thom Tillis (R-NC), both strong IP proponents, won re-election this year, many expect changes at the United States Patent and Trademark Office (USPTO), including the undoing of many pro-patent reform initiatives during the Iancu Administration. But for now, as interesting as this may be and while it is the early front runner for story of the year for 2021, it is still all speculation,

Notwithstanding the uncertainty the future holds, we take this time to look back on the year that was 2020, remembering the biggest patent news stories of the year (in reverse chronological order).

1. USPTO Seeks Comment on Discretionary Denials (October)

On October 20, the USPTO published a “Request for Comments on Discretion To Institute Trials Before the Patent Trial and Appeal Board” in the Federal Register in consideration of the codification or modification of its current policies and practices with respect to instituting trials before the Office under the Leahy-Smith America Invents Act (AIA). In particular, the USPTO sought comments on considerations for instituting America Invents Act (AIA) trials related to serial and parallel AIA petitions, as well as proceedings in other tribunals. For example, with respect to serial and parallel AIA petition, the USPTO specifically requested input on whether the Patent Trial and Appeals Board (PTAB) should “(a) altogether disregard whether the claims have previously been challenged in another petition, or (b) altogether decline to institute if the claims have previously been challenged in another petition.”

Submissions in response to the Request were received through the deadline of December 3, 2020. A total of 843 comments were received from individuals and organizations, including Senator Thom Tillis, Robert Stoll, Conservatives for Property Rights, US Inventor’s Randy Landreneau and the Small Business Technology Council. Additional comments were received from Josh Malone, the Alliance of U.S. Startups and Inventors for Jobs (USIJ), U.S. Senators Christopher Coons and Mazie Hirono and the Institute of Electrical and Electronics Engineers, Inc. (IEEE-USA). Many comments supported the USPTO in codifying the rules that it currently applies through precedential opinions. The Small Business Technology Council (SBTC) noted that clarification of rules is necessary to “ensure that IPRs are conducted in a more predictable manner, and also to ensure that innovative small businesses are not burdened with duplicative and unwieldy proceedings that serve no purpose other than providing patent challengers a second bite at the apple.” A need for predictability was also expressed by many commenters. For example, Randy Landreneau, President of US Inventor, urged the USPTO to adopt regulations to govern the discretion to institute PTAB trials consistent with principles outlined in its comments, but noted that any adopted regulations must provide predictability to allows stakeholders to know in advance whether a petition will be permitted or denied for policy reasons.

2. Certiorari Granted in Arthrex (October)

On October 13, the Supreme Court granted certiorari in three cases involving Arthrex, Inc. focusing on the question of whether the administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) were constitutionally appointed. The Court consolidated the cases and limited its review to two questions in the United States government’s memorandum of July 22 in both Smith & Nephew, Inc., et. al. v. Arthrex, Inc. et. al. and Arthrex, Inc. v. Smith & Nephew, Inc., et. al.

The questions were:

1. Whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office are principal officers who must be appointed by the President with the Senate’s advice and consent, or “inferior Officers” whose appointment Congress has permissibly vested in a department head; and
2. Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges.

There were four petitions filed with the Supreme Court relating to the October 2019 Federal Circuit decision in Arthrex, Inc. v. Smith & Nephew, Inc, wherein the CAFC ruled that the current statutory scheme for appointing APJs to the PTAB violates the Appointments Clause of the U.S. Constitution as it makes APJs principal officers.

3. Facebook v. Windy City (September and March)

On March 18, the CAFC issued an opinion in Facebook v. Windy City Innovations, ruling that the Patent Trial and Appeal Board (PTAB) erred both in allowing Facebook to join itself to a proceeding in which it was already a party, and in allowing Facebook to add new claims to the inter partes reviews (IPRs) at issue through that joinder. In particular, the CAFC concluded that “the Board’s joinder decisions, which allowed Facebook to join itself to a proceeding in which it was already a party, and to add otherwise time-barred issues to the IPRs, were improper under § 315(c).”

Then, on September 4, the CAFC modified and reissued its March 18, 2020 opinion following Facebook’s combined petition for panel rehearing and rehearing en banc. In the revised opinion, the CAFC explained that the Supreme Court recently decided Thryv, Inc. v. Click-to-Call Technologies, LP, wherein the Court “held that the PTO’s Application of § 315(b)’s time bar is ‘closely related to its decision whether to institute inter partes review and is therefore rendered nonappealable by § 314(d).’” Citing Thryv, the CAFC stated that two decisions must be made when determining whether to join a party in an IPR: (1) “whether the joinder applicant’s petition for IPR ‘warrants’ institution under § 314,” which is not reviewable by the CAFC; and (2) “§ 315(c) requires the Director to exercise his discretion to decide whether to ‘join as a party’ the joinder applicant, which is “a separate and subsequent decision to the institution decision.” The CAFC said that there is nothing in Section 314(d), or elsewhere, to overcome the “strong presumption that [the CAFC has] jurisdiction to review [the] joinder decision.”

4. FTC v. Qualcomm Ruling Vacated (August)

On August 11, the U.S. Court of Appeals for the Ninth Circuit vacated a decision of the U.S. District Court for the Northern District of California finding that Qualcomm had engaged in unlawful licensing practices, and reversed a permanent, worldwide injunction against several of Qualcomm’s core business practices.  In particular, the district court’s May 2019 order found that Qualcomm had engaged in unlawful licensing practices and ordered in part that Qualcomm “must make exhaustive SEP licenses available to modem-chip suppliers on fair, reasonable, and non-discriminatory (“FRAND”) terms and to submit, as necessary, to arbitral or judicial dispute resolution to determine such terms…[and] submit to compliance and monitoring procedures for a period of seven (7) years.” The Ninth Circuit examined the district court’s conclusion that Qualcomm was under an obligation to license its standard-essential patents (SEPs) to its direct competitors in the chip market as outlined in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., but held that “none of the required elements for the Aspen Skiing exception were present, and the district court erred in holding that Qualcomm was under an antitrust duty to license rival chip manufacturers.”

In response to the FTC’s argument that Qualcomm engaged in anticompetitive conduct in violation of Section 2 of the Sherman Act, the Ninth Circuit panel concluded that to the extent Qualcomm breached any of its FRAND commitments, the remedy for such a breach was in contract or tort law. Finally, as to the district court’s contention that Qualcomm’s “no license, no chips” policy amounted to an “anticompetitive surcharge” on its rivals, the Ninth Circuit disagreed, and found that Qualcomm’s practices were “chip-supplier neutral.”

5. SEPs in Europe: Sisvel v. Haier and Unwired Planet v. Huawei (August and July)

In July, the German Federal Court of Justice published the reasoning behind its May decision to allow injunctive relief in patent litigation brought by a standard essential patent (SEP) owner despite the obligation to license an SEP portfolio on fair, reasonable and non-discriminatory (FRAND) rates. The German Court in Sisvel v. Haier agreed with what had become a growing body of law in lower courts across Europe, namely in the Netherlands in Philips v. Asus and in the United Kingdom in Unwired Planet v. Huawei, that there is no prohibition against an injunction simply because a patent in question is standard essential. Furthermore, the Sisvel court held that an SEP holder can offer different rates to different licensees and also explained that the SEP holder is only required to make a FRAND offer if the SEP holder has received an adequate declaration of a willingness to license.

Subsequently, at the end of August, the much-anticipated decision of the Supreme Court of the United Kingdom in Unwired Planet v. Huawei held that it is appropriate for UK courts to set worldwide FRAND rates. Furthermore, the UK Supreme Court, in agreement with lower tribunals and the German Federal Court of Justice in Sisvel, similarly ruled that SEP holders are allowed to offer different FRAND rates to different licensees. The Unwired Planet court also explained that an SEP hold does not abuse power as long as there is a showing of a willingness to license.

6. EU and USPTO Deny AI Inventor Applications (May and January)

The USPTO, European Patent Office (EPO) and UK Intellectual Property Office (UKIPO) all refused to allow artificial intelligence (AI) to be named as an inventor on patent applications. In May, the USPTO issued a decision refusing to vacate a Notice of Missing Parts in U.S. Patent Application No.: 16/524,350 (the ‘350 Application), titled “Devices and Methods for Attracting Enhanced Attention”, for failure to “identify each inventor by his or her legal name” on the Application Data Sheet (ADS). The ADS listed a single inventor with the given name DABUS and the family name as “Invention generated by artificial intelligence.” DABUS stands for “Device for the Autonomous Bootstrapping of Unified Sentience”. However, the USPTO declined to make any determinations regarding who actually “created” the invention.

In January 2020, the EPO and the UKIPO each rejected patent applications that designated DABUS as the inventor. The UKIPO published a decision noting that the application must be withdrawn because DABUS is not a person as envisioned by Patent Act and cannot be considered an inventor. The EPO’s opinion explained that the name of a machine does not meet the requirements of Rule 19(1) EPC, which requires a family name, given names, and a full address of the inventor. The EPO further explained that legislation would be required to create a legal personality for AI systems or machines because “legislative history shows that the legislators of the EPC were in agreement that the term ‘inventor’ refers to a natural person only.” The EPO also pointed out that requiring an inventor to be a natural person appears to be an “internationally applicable standard” followed by the majority of the EPC contracting states, as well as China, Japan, Korea, and the USA. Further, the EPO stated that “No national law has been determined which would [recognize] a thing, in particular an Al system or a machine, as an inventor.”

7. Thryv, Inc. v. Click-to-Call (April)

On April 20, the Supreme Court issued an opinion Thryv, Inc. v. Click-to-Call Technologies, ruling that Section 314 (d) of the U.S. Patent Act, which bars judicial review of Patent Trial and Appeal Board (PTAB) decisions to institute inter partes review (IPR), should preclude appeals of PTAB institution decisions, even where the appeal is based on Section 315(b)’s one-year time-bar for institution. The Court vacated the CAFC’s decision, wherein the CAFC dismissed Click-to-Call’s appeal of a PTAB’s institution decision in accordance with Section 314(d)’s prohibition against appealing institution decisions. Despite Click-to-Call’s argument that the bar on appeals under Section 314(d) is limited to the agency’s threshold determination under §314(a) of the question whether the petitioner has a reasonable likelihood of prevailing, the Court explained that Cuozzo Speed Technologies, LLC v. Lee was “fatal to that interpretation.”

Justice Gorsuch dissented, joined in part by Justice, wherein Gorsuch expressed that the majority’s opinion “takes a flawed premise—that the Constitution permits a politically guided agency to revoke an inventor’s property right in an issued patent—and bends it further, allowing the agency’s decision to stand immune from judicial review.”  The decision generated buzz among the patent community with many commenters pointing to Justice Gorsuch’s dissent as being particularly poignant.

8. Trading Technologies International, Inc. v. IBG LLC, Interactive Brokers LLC and Chargepoint SCOTUS denials (January)

On January 27, the U.S. Supreme Court denied petitions for certiorari filed by Trading Technologies and ChargePoint, Inc. asking the Court to review their cases related to the patent eligibility.

Trading Technologies International, Inc.’s (TT) petition for certiorari asked the Supreme Court to clarify U.S. patent eligibility law, including whether the Court should overrule its “abstract idea” precedents. The petition related to the Federal Circuit’s April 2019 decision siding with the Patent Trial and Appeal Board (PTAB) that certain claims of TT’s patents for graphical user interfaces (GUI) for electronic trading were eligible for covered business method (CBM) review and also patent ineligible. In its petition, TT further argued that “while one line of Federal Circuit decisions holds computer-implemented inventions to be ineligible if they do not make hardware-like improvements to computers’ basic functions, another line holds the opposite. Several decisions have even upheld patent protection for interactive graphical interfaces, in plain and open conflict with the decision below.”

ChargePoint, Inc.’s petition asked the Court to address:  1. whether a patent claim to a new and useful improvement to a machine or process may be patent eligible even when it “involves” or incorporates an abstract idea; and 2. whether the Court should reevaluate the atextual exception to 35 U.S.C. §101. ChargePoint argued in its petition that certiorari was warranted because the CAFC’s decision in its case conflicted with Diamond v. Diehr, wherein the patentee claimed a rubber curing process with one of the steps including an abstract mathematical algorithm, and the Supreme Court nonetheless found the claims patent eligible because the claims were not aimed at patenting the mathematical formula itself. ChargePoint further argued that the Court must reconsider the implicit non-statutory exception to Section 101 to curb the federal courts’ invalidation of patents “at break-neck speed,” outside of the scope of Congressional intent.

9. Supreme Court Denies Cert in Athena (January)

On January 13, 2020, the Supreme Court this morning released an orders list, wherein it denied a petitions for certiorari in Athena Diagnostics v. Mayo Collaborative Services. Through its denials, the Court made it fully clear that it did not plan to wade back into the Section 101 debate, leaving it up to Congress to clarify the law. Athena’s petition for a writ of certiorari, which asked the Supreme Court to clarify its patent-eligibility doctrine under the Alice/Mayo framework on the subject of medical diagnostic patent claims, was backed by  several amicus filings.  On the same day, the Court denied petitions in several other cases concerning patent eligibility, including Hikma Pharmaceuticals v. Vanda Pharmaceuticals and  HP Inc. v. Berkheimer.  Not surprisingly, the denial of Athena immediately began to draw sharp criticism.

10. Bayh-Dole 40 Anniversary (All Year)

This year marked the 40th anniversary of the passage of University and Small Business Patent Procedures Act of 1980, better known as the Bayh-Dole Act. Several events and celebrations took place throughout the year, including the launch of Bayh-Dole 40, a coalition of industry, academic, policy organizations, venture capital and others formed to help celebrate and protect the Bayh-Dole Act, and a virtual briefing by the Eagle Forum Education & Legal Defense Fund, titled: “The Bayh-Dole Act at 40 Years: How the ‘Most Inspired Piece of Legislation’ of a Half-Century Has Turned American Basic Research Discoveries into Products, Startups and Economic Growth.” The Bayh-Dole Act was enacted by Senator Birch Bayh (D-Ind.) and Senator Bob Dole (R-Kan.) with an intent was to facilitate the commercialization of inventions made from federally funded research.

Throughout the year there has been a great deal of praise for the Bayh-Dole Act. For example, in the virtual briefing, several speakers emphasized that the Act provides universities and private licensees “certainty” and commercial returns from reliable patent rights. Speakers also explained that, while the Act allows the government to require universities to license the technology to others if there is not a good faith effort to commercialize the technology, if a company cannot meet the needs of a national emergency, or if a company has falsified a pledge to make the product in the United States, that “march-in” right has never had to be exercised. Joseph Allen, IPWatchdog contributor and the Executive Director of Bayh-Dole 40th Coalition and Former Senate Judiciary Aide to Sen. Birch Bayh, noted that the Act “decentralized technology management from Washington D.C. to the universities and small businesses that make inventions with government support, so they had the incentive and the ability to own and license” their inventions.