Posts in USPTO

In Knauf Insulation, Inc. v. Rockwool International, the U.S. Court of Appeals for the Federal Circuit vacated and remanded the Patent Trial and Appeal Board’s determination in an inter partes reexamination that certain patent claims for two of Knauf’s patents covering fibrous products and related methods and binder and fiber glass products were obvious. The Court also found that certain other claims of the two patents were not unpatentable as obvious, and Rockwool International cross-appealed that determination, but the Court held that Rockwool did not have standing to cross-appeal and thus dismissed it. The decision was not precedential, but some have commented that the Court’s holding with respect to Rockwool’s lack of standing for a cross-appeal could have significant implications.

On Tuesday, I attended a panel discussion on the National Security Implications of Patents along with my siblings, Madeline and Gideon Malone, and we were informed that inventors like the Wright brothers pose a threat to innovation. We were joined by approximately 50 attendees at the Capitol event moderated by Charles Duan from R Street Institute, along with panelists Abby Rives from Engine, Daniel Takash from Niskanen Center, and Ian Wallace from New America. They argued that patents harm innovation, and government subsidies are a better alternative to incentivize innovation. In order for R Street (a free-market think tank) to justify these blatantly anti-free-market claims, they focused on the problems with “bad patents” and how patent monopolies prevent competition. To top it all off, their example of a “bad patent” was the one granted to the Wright brothers, which the panelists felt unreasonably excluded their competitors from making improved versions of their airplane.

Facebook is being sued by online banking company, Finco Services, Inc., which operates as Current, for trademark infringement, unfair competition, and false designation of origin relating to Facebook’s controversial subsidiary, Calibra, which plans to launch the digital currency Libra by 2020. Current’s complaint, filed in the U.S. District Court for the Southern District of New York on October 10, says that the company hired Character, a branding and design agency, in 2016 to develop a logo and branding strategy for Current’s banking services and mobile app. The resulting logo, and iterations thereof, have been used by the company since at least as early as 2016.

On October 9, the Patent Trial and Appeal Board issued a final written decision in a covered business method (CBM) review which invalidated all 38 claims of Nasdaq’s U.S. Patent No. 7747506, Recipient Status Indicator System and Method, challenged by Miami International Holdings (MIAX), on Section 101 grounds for being directed to unpatentable subject matter. The decision is the latest in a series of CBM reviews at the PTAB which stem from a district court patent infringement proceeding targeting fintech technologies employed by MIAX’s technological securities trading platform.

This past week in Other Barks & Bites: the Federal Circuit issued precedential decisions affirming the invalidation of patent claims covering osteoarthritis treatments and a costs award to Facebook, but reversed the PTAB on a reasonable expectation of success finding; the U.S. Supreme Court issued orders denying certiorari to several intellectual property cases; North Korea acceded to the Geneva Act of WIPO’s Lisbon Agreement; the Dollywood theme park was hit with a copyright suit over use of the Peanuts’ “Christmas Time is Here”; Nokia announced 2,000 patent families declared as 5G SEPs; former CAFC Chief Judge Rader has called on China to move forward with promised pharmaceutical patent reforms; 2019’s third quarter showed growth in the global PC market; and the USPTO announced that it has met its patent application pendency goals as well as a new senior-level position for an AI expert.

Experts agree that public health issues in the United States are not being solved despite an abundance of highly trained personnel, remarkable facilities, and access to the newest drugs and technologies. Instead, health care costs keep rising as the technology advances. A significant part of the problem is that governments are more likely to grant patents to drugs, devices, and treatments over nutrition innovations, making treatments more financially rewarding than prevention and increasing the disease burden and health care costs. Though there is no restriction against nutritional inventions in most patent laws, in practice the patent system favors drugs, devices, and treatments over nutritional solutions.  Further, when nutritional patents are granted, they are severely restricted, such as to a narrow formulation or to fortification of foods with certain nutrients for certain use.

Last week, Professor Andrew Michaels published an article with IPWatchdog commenting on Facebook v. Windy City and the U.S. Patent and Trademark Office’s claim for Chevron deference for precedential decisions of the Patent Trial and Appeal Board (PTAB). While I agree with his ultimate conclusion, “the PTAB cannot speak with the force of law through adjudication even on issues where it has the authority to do so through regulation,” I disagree with the path he took to get there. I’ve written extensively on the topic (see the bibliography is at the bottom of this article). Of my articles, the most relevant is The PTAB Is Not an Article III Court, Part 3: Precedential and Informative Opinions. More recently, I filed an amicus brief in Facebook. In my view, PTAB precedential decisions can be eligible for Chevron deference in only the rarest of circumstances:  the PTAB is the wrong entity in the USPTO to engage in rulemaking, the PTAB doesn’t follow the procedures required by statute and executive order for rulemaking, and the PTAB doesn’t have access to the personnel within the USPTO that are necessary for rulemaking.

On Monday, the U.S. Supreme Court denied a petition for certiorari filed by Imperium IP Holdings (Cayman) Ltd., thus letting stand a U.S. Court of Appeals for the Federal Circuit decision that reversed a more than $22 million enhanced damages award against Samsung. Imperium Holdings petitioned the Supreme Court in July seeking to overturn the January 2019 Federal Circuit ruling that agreed with Samsung’s argument “that the only reasonable finding on this record is that the ’884 patent claims at issue here are invalid for anticipation,” largely due to the Court’s interpretation of the expert witness testimony during the jury trial. “Juries have wide leeway to assess evidence and credibility,” said the Court, “but under the requirement of substantial evidence, a jury’s rejection of expert testimony must have some reasonable basis.”

Recently, IPWatchdog published an excellent article by Wen Xie outlining the legal inconsistencies of the Chamberlain v. Techtronic Industries opinion, penned by Judge Chen. Unfortunately, describing the latest inconsistencies in the garbage pile of contradictions that is the Federal Circuit’s Alice/Mayo doctrine provides no surprise to anyone. The Alice/Mayo decisions issued by the CAFC are self-contradictory and cannot be reconciled with the Constitution, 35 U.S.C. §§ 102, 103, and 112, and at least a dozen Supreme Court cases. Indeed, the only surprises from the Federal Circuit these days come in the form of the odd holding for patent eligibility. However, Wen Xie’s article did cause me to realize that I’d overlooked Judge Chen’s distortions of fact. “Distortions,” however, is too mild a term for the outrageous misrepresentations made in Chamberlain.

Justices Breyer, Kavanaugh, Ginsburg and Gorsuch and Chief Justice Roberts were among the most active questioners of Malcolm Stewart, representing the government of the United States, and Morgan Chu of Irell & Manella, representing NantKwest, during yesterday’s oral argument in Peter v. NantKwest at the Supreme Court. The question presented in the case is “Whether the phrase ‘[a]ll the expenses of the proceedings’ in 35 U.S.C. 145 encompasses the personnel expenses the USPTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation.” The government’s argument at yesterday’s hearing seemed shaky at best. Stewart himself admitted repeatedly that there was “no good explanation” for the fact that the U.S. Patent and Trademark Office (USPTO) had, as noted in NantKwest’s reply brief “until now…never even sought, much less been awarded, attorneys’ fees under § 145 in the nearly two centuries since its passage.”

On September 26, the U.S. Patent and Trademark Office filed a motion to dismiss a class action complaint  filed by two inventors alleging violations of the Privacy Act created by the agency’s handling of its Sensitive Application Warning System (SAWS). The USPTO is seeking a Rule 12(b)(6) dismissal for failure to state a claim, arguing that application flags under the SAWS program don’t concern individual patent applicants and that omission of those flags from patent application files isn’t the proximate cause of adverse determinations such as increased scrutiny holding up patent grants. The case was first filed this June in the U.S. District Court for the District of Columbia by Paul Morinville and Gil Hyatt, two inventors who allege that they have filed patent applications on inventions that have been flagged by the SAWS program. Morinville is an inventor on nine patents who has had 26 patent applications pending at the USPTO since February 2000. Hyatt is listed as an inventor on 70 patent applications and has had patent applications pending at the agency since 1990. Hyatt was first informed that he had patent applications flagged by the SAWS system in June 2017, more than two years after the USPTO officially retired the SAWS program.

This past week in Other Barks & Bites: the USPTO delays the effective date for mandating electronic trademark application submissions and issues a proposed rulemaking on Patent Term Adjustments in light of Supernus; UKIPO report shows that women inventors represent only 12.7 percent of inventors worldwide; trademark dispute leads street artist Banksy to open a retail store; the Federal Circuit upholds the invalidation of method of manufacture claims as being directed to a natural law over a dissent from Judge Moore; the screenwriter of The Terminator files a copyright termination notice; Tesla stock drops after missing analyst expectations on car sales; Seinfeld beats copyright case over Comedians in Cars Getting Coffee; and the Department of Justice tells the Supreme Court not to review Google’s appeal over the ability to copyright Java code.

As expected, Athena Diagnostics last night filed its petition for certiorari to the U.S. Supreme Court, asking it to fix the United States’ patent eligibility law problem. Adam Gahtan and Eric Majchrzak of Fenwick & West and Seth Waxman, Thomas Saunders, Joshua Koppel and Claire Chung of WilmerHale filed the petition for Athena. The specific question Athena is presenting is: “Whether a new and specific method of diagnosing a medical condition is patent-eligible subject matter, where the method detects a molecule never previously linked to the condition using novel man-made molecules and a series of specific chemical steps never previously performed.” Athena urged the Court to take the case considering the Federal Circuit’s eight separate opinions in which the court divided 7-5 on denying en banc review—evidence of “much-needed guidance on the proper application of the judicially-created exceptions to Section 101 of the Patent Act.”

Next week, the Supreme Court will hear the first of six IP cases granted cert last term. On Monday, the Court will hear Peter v. NantKwest, in which the question presented is “Whether the phrase ‘[a]ll the expenses of the proceedings’ in 35 U.S.C. 145 encompasses the personnel expenses the USPTO incurs when its employees, including attorneys, defend the agency in Section 145 litigation.” The Court will heard other IP cases in November and December, while Google v. Oracle, Berkheimer v. HP, and Hikma v. Vanda await a decision on cert, and petitions in Straight Path IP Group, LLC v. Apple Inc., et al. and Athena Diagnostics v. Mayo Collaborative Services have the patent world holding its collective breath.

In May, the USPTO held the first of three hearings prompted by the Study of Underrepresented Classes Chasing Engineering and Science (SUCCESS) Act, which requires the USPTO Director to provide Congress with a report on publicly available patent data on women, minorities, and veterans, and to provide recommendations on how to promote their participation in the patent system. The hearing featured emotional testimony from five inventors, one of whom said she had joined Debtors Anonymous as a result of her patent being invalidated in the Southern District of New York.Responses to the USPTO’s request for written comment on 11 questions the Office had posed have now been published. Eleven organizations and 58 individuals submitted comments, underscoring a range of concerns. While many organizations focused on the need to collect demographic information and increase exposure to STEM education at the K-12 level, a number of other organizations and individuals emphasized the broader issue that was addressed during the hearing in May—that the current patent system is stacked against the individual inventor across demographics.