Posts in Litigation

Recently, the United States Court of Appeals for the Federal Circuit (“the Federal Circuit”) issued its opinion in Solutran, Inc. v. Elavon, Inc., 2019-1345, 2019-1460 (Fed. Cir., July 30, 2019) in which the Court held claims 1-5 of Solutran’s U.S. Patent No. 8,311,945 invalid under 35 U.S.C. § 101 for failing to recite patent eligible subject matter. In reversing the District Court, the Federal Circuit found that the claims of the patent recited an abstract idea (electronically processing paper checks) and that the claims failed to transform that abstract idea into patent-eligible subject matter. More importantly, the Federal Circuit dismissed Solutran’s argument that the claims were patent eligible simply because they were novel and non-obvious, noting that: “We have previously explained that merely reciting an abstract idea by itself in a claim—even if the idea is novel and non-obvious—is not enough to save it from ineligibility.” The Solutran decision is not the first time the Federal Circuit has held that novelty/non-obviousness does not bear on the question of patent eligibility.

This week in Other Barks & Bites: the Federal Circuit issued a precedential decision reversing the PTAB regarding proper primary reference and CBM review findings; USPTO Director Iancu told IPO Annual Meeting attendees that subject matter eligibility guidelines are working; an EPO-EUIPO report shows IP-intensive industries contribute nearly half of EU GDP; the producers of the Broadway musical Hamilton have filed a motion to dismiss copyright claims filed in connection with a museum exhibit; eBay CEO Devin Wenig stepped down; the Ninth Circuit heard oral arguments in the en banc rehearing of the “Stairway to Heaven” copyright case; the U.S. Copyright Office is seeking public comments regarding the blanket licensing structure under the Music Modernization Act; and Sandoz has moved forward with a PTAB challenge on patent claims covering AbbVie’s Imbruvica.

On September 12, a jury verdict form  entered in an Eastern District of Texas patent infringement case found in favor of defendant Jack Henry & Associates on its defenses of noninfringement and invalidity regarding patent claims asserted by plaintiff PPS Data. According to information provided to IPWatchdog, the verdict marks the first time that a jury has invalidated a patent under Section 101 since the February 2018 decision of the U.S. Court of Appeals for the Federal Circuit in Berkheimer v. HP Inc., where the appellate court held that factual questions underlie the Section 101 inquiry.

Something has happened at the United States Court of Appeals for the Federal Circuit over the past six months. After inching forward in a positive direction on patent eligibility, the entire court, including those judges who had been on the pro-patent eligibility wing of the court, have fallen, slipped, or just given up. The precisely correct characterization remains elusive given the traditional, characteristic and appropriate secrecy that surrounds judicial tribunals. As constitutional officers charged with independently deciding cases, judges take few speaking engagements. Even when they do, they generally speak off the record, and never speak about specific issues or cases that may at some point come before them. In this industry, that means little discussion is had between the bench and bar relating to matters of patent eligibility outside the record, which is itself unfortunate. If the judges of the Federal Circuit would sit through a conference exploring patent eligibility as it applies to the software and biotechnology industries, they would learn much about the uncertainty their decisions are causing. Still, something undeniably has changed.

The Federal Circuit issued a precedential decision on Wednesday reversing-in-part, vacating and remanding a decision of the Patent Trial and Appeal Board that had found certain claims of U.S. Patent No. 8,908,842 (the ’842 patent) subject to covered business method review, patent ineligible and unpatentable for obviousness. SIPCO LLC v. Emerson Electric (Fed. Cir., Sept. 25, 2019). Judge Reyna dissented in part. In a footnote, the Court distinguished its reasoning from its finding in the garage door-opener case, Chamberlain Group, Inc. v. Techtronic Industries Co., in which the Court found claims reciting wireless communication of status information about a movable barrier operator to be directed to an abstract idea. “Unlike in Chamberlain, SIPCO’s claimed invention does not simply use “well understood,” off-the-shelf wireless technology for its intended purpose of communicating information,” said the Court.

The spectacular failure of blood-testing firm Theranos is the subject of a riveting book, Bad Blood by investigative reporter John Carreyrou, and an engaging documentary, “The Inventor” on HBO, focusing on Elizabeth Holmes, the once-celebrated wunderkind who dropped out of Stanford at age 19 to “change the world” with a device that would perform hundreds of diagnostic tests with a few drops of blood from a finger stick. It’s a story made for Hollywood (Jennifer Lawrence will play Holmes in the forthcoming movie), filled with lies, deception, threats and sex, set in a Silicon Valley startup. But even the Theranos story doesn’t mean that trade secret law is inherently dangerous. Consider Apple, one of the world’s most secretive companies. (Holmes famously modeled her clothing and business habits after Steve Jobs.) Apple has consistently used NDAs and secrecy management to protect products under development, to great effect when they are ultimately unveiled, all without touting non-existent technology. And it’s easy to imagine how Theranos might never have happened if investors and business partners had been less credulous and more insistent to understand the technology.

The Supreme Court has requested that Apple and Cisco file responses to Straight Path IP Group, LLC’s (SPIP’s) petition for certiorari in Straight Path IP Group, LLC v. Apple Inc., et al. The petition presents the following question: “Whether Rule 36(e) of the Federal Circuit’s Rules of Procedure violates the Fifth Amendment by authorizing panels of the Federal Circuit to affirm, with no explanation whatever, a District Court judgment resolving only issues of law.” SPIP filed its petition on August 23 and Apple and Cisco filed waivers of their right to respond on September 4 and 5, respectively. But on September 18, the Court requested that both companies file their responses by October 18.

The U.S. District Court for the Eastern District of Michigan, Southern Division, on September 9 granted Motions to Dismiss in favor of all defendants in a federal trademark infringement action brought by R&B band Ready for the World, Inc. (Ready for the World) against Melvin Riley, John Eaton, Daniel Dillman, Renee Atkins, and Jan Mark Land. Ready for the World brought us classic 1980s hits including “Oh, Sheila!” and “Love You Down”. Riley and Eaton are original band members, while Dillman works for a nonprofit that promoted a concert performed by Riley and Atkins and Land were alleged to be employed by Riley. In their Motions to Dismiss, Eaton and Riley argued lack of subject matter jurisdiction because Ready for the World did not plead a claim arising under the Lanham Act. Citing Derminer v. Kramer, they argued that they are co-owners of the Ready for the World trademark and thus cannot infringe upon the mark. The court agreed, and also granted the motions of Dillman, Atkins and Land.

It is time to recognize the elephant in the room. The Patent Trial and Appeal Board (PTAB) is broken. And, if we want to be perfectly fair and reasonable in our assessment of the reasons that the PTAB is failing, the blame must trace all the way back to Congress. The creation of three new ways to invalidate patent rights was at best ill-conceived. The manner in which it was done clearly put the finger of infringers on the scale of justice. The creation of an open-ended second window for patents to endlessly be challenged without title ever quieting and ownership ever settling is making a mockery of patent ownership.

The present U.S. eligibility jurisprudence, and especially that of the Federal Circuit, not only creates serious issues of U.S. domestic law but also arguably places the U.S. in violation of its obligations under the TRIPS treaty with respect to inventions at both ends of the subject-matter spectrum. Acts of Congress, including Section 101, where fairly possible, ought to be construed so as not to conflict with international law or with an international agreement with the United States, particularly where, as with TRIPS, the United States was the moving spirit behind the treaty. See Murray v. The Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804). Although there may have been room for doubt prior to the en banc refusal in Athena and the Australian decision in Ariosa, it is submitted following Judge Moore’s dissent that the situation has become a virtual certainty.

Standards-declared patents have been challenged in ex parte and post-grant review for years as part of enforcement efforts and other strategies, though the volume of patents declared essential and their largely unlitigated status has limited the appeal of post-grant challenges against them.  One such standard, High-Efficiency Video Coding (HEVC), promises to be the successor to the current H.264 standard used by most streaming visual media.  As all parties seek to clear risk and license as they implement, developing patent pools have been utilizing new strategies for licensing standard-declared patents. Recently, Unified Patents launched an HEVC zone aimed at encouraging adoption and shedding light on the standard-essential patent (SEP) landscape, and has conducted damages studies, landscape models, and analysis of the patent landscape around the HEVC standard. As part of those efforts, Unified has been challenging patents related to the standard. To date, only a handful of litigations have been filed related to HEVC patents. 

The Intellectual Property Owners Association and four other associations have filed amicus briefs with the Supreme Court in the case of Romag Fasteners v. Fossil, Inc., Fossil Stores, I. Inc., Macy’s Inc, and Macy’s Retail Holdings, Inc. The case will examine whether lower courts have discretion under the Lanham Act with respect to how to award damages in trademark infringement cases, or whether courts are required to establish that the infringement was willful before awarding profits. While the American Bar Association (ABA), the International Trademark Association (INTA), the American Intellectual Property Law Association (AIPLA) and the Intellectual Property Law Association of Chicago (IPLAC) support adopting a more flexible approach that would not make willfulness a prerequisite to recover profits, IPO argues that the plain language of the statute necessitates such a requirement.

USPTO Director Andrei Iancu said “something has to be done about” Section 101, as it has been thrown into flux following various U.S. Supreme Court cases, in comments made at the AIPPI Congress in London, United Kingdom last week. Iancu took part in an hour-long discussion with AIPPI Reporter General John Osha, and also took questions from the audience last Monday. He addressed topics including AI, anti-IP sentiment, litigation costs, bad faith trademark filings and gender parity. But it was issues of patent eligibility that were chief on his mind. Iancu said the Administration “has tried to bring consistency and predictability” to Section 101 with its January 2019 guidance, but added: “Courts are independent. They don’t have to follow our guidance. And so far, I have seen no evidence that they want to.”

This week in Other Barks & Bites: the Federal Circuit issued a pair of precedential opinions affirming the USPTO’s determinations on patent term adjustment; Chuck Yeager filed a trademark lawsuit against Airbus; Facebook CEO Mark Zuckerberg met with Capitol Hill lawmakers and President Trump; the Office of Technology Assessment Improvement and Enhancement Act was introduced into both houses of Congress; the Sixth Circuit affirmed the dismissal of a copyright case lodged against musician Steve Winwood; the U.S. Department of Justice announced criminal charges over the theft of pediatric medicine trade secrets; and the NMPA doubled the damages sought against Peloton after finding more unlicensed songs used by the streaming exercise companies.

Yesterday, the Federal Circuit once again breached a fundamental boundary of our American system of law. This particular transgression has occurred only a handful of times, but each is more ominous than the last. If this is allowed to stand, we can no longer be considered a democratic republic, but will have become a banana republic. What is rapidly becoming routine to the patent litigation industry will create shockwaves throughout the other 12 circuit courts, upend the rule of law, and damage our nation. In Chrimar Systems, Inc. v. Ale USA, Inc. FKA Alcatel-Lucent Enterprise USA, Inc. (Fed. Circ. Case No. 18-2420), the Federal Circuit allowed the Patent Trial and Appeal Board (PTAB) to overrule an Article III court and jury. That is, the Executive Branch of government directly and unequivocally has overruled the Judicial Branch, including a jury.