Posts in Litigation

Earlier today, the United States Court of Appeals for the Federal Circuit issued a decision in a standard essential patent (SEP) appeal involving Ericsson and TCL Communication Technology—a closely watched case that many hoped would produce some case law relating to what constitutes a FRAND (fair, reasonable and non-discriminatory) offer of a licensing royalty rate relative to SEPs. See TCL Communication Technology Holdings Ltd. V. Telefonaktiebolaget LM Ericsson, No. 2018-1363, 2018-1732 (Fed. Cir. Dec. 5, 2019). Because the Federal Circuit determined that Ericsson was deprived of its constitutional right to a jury trial, the district court decision was reversed, and the case remanded for further proceedings. However, the question of whether Ericsson’s offers to TCL qualified as FRAND offers were not reached by the Federal Circuit.

Senator Thom Tillis (R-NC) yesterday led a hearing of the Senate Committee on the Judiciary’s Subcommittee on Intellectual Property titled “Fraudulent Trademarks: How They Undermine the Trademark System and Harm American Consumers and Businesses.” The hearing included five witnesses from academia, private practice and the business community who testified on ways to declutter the U.S. trademark register, curb fraudulent trademark filings from China, and improve current mechanisms for enforcing trademarks in U.S. courts, among other topics. All agreed that the U.S. Patent and Trademark Office’s (USPTO’s) August rule change requiring that foreign trademark applicants use U.S. counsel has likely only temporarily helped to ebb the flow of fraudulent filings from China, as bad actors are already adjusting their strategies.

Earlier this month, Mallinckrodt succeeded in its inter partes review (IPR) challenge against patent owner Biovie, Inc. (Biovie). The Patent Trial and Appeal Board’s (PTAB’s) final determination held that all claims of Biovie’s U.S. Patent No. 9,655,945 (the ‘945 patent) were unpatentable. The claims of Biovie’s ‘945 patent, directed to administering terlipressin to ascites (abnormal buildup of fluid in the abdomen) patients, were deemed anticipated and/or obvious over the prior art. During the IPR, Biovie attempted to use the recent Federal Circuit decision from OSI Pharmaceuticals v. Apotex (OSI) as a shield to patentability, but the shield was unsuccessful. As such, OSI is unlikely to be a cure-all for pharmaceutical method of treatment claims, in IPR proceedings or otherwise.

On November 13, the United States Patent and Trademark Office (USPTO) requested the U.S. Court of Appeals for the Federal Circuit suspend all consideration of an appeal from the Patent Trial and Appeal Board (PTAB) that would raise the same issues addressed in Arthrex, Inc. v. Smith and Nephew, Inc., because the Office will seek rehearing en banc in Arthrex. See Stuben Foods, Inc. v. Nestle USA, Inc., No. 20-1082, -1083. As a reminder, on October 31, the Federal Circuit issued an important constitutional decision in Arthrex, which found that the hiring of Administrative Patent Judges (APJs) violated the Appointments Clause of the U.S. Constitution. The Federal Circuit did, however, attempt to provide a gift to the Office by rewriting the section of the statute they found to create the problem, which created the PTAB and the appointment of APJs, and by so doing turned APJs into inferior officers. The solution: APJs were judicially decreed to be employees-at-will in order to save the statute. So, why hasn’t Director Iancu cleaned house at the PTAB? It would seem to be because the USPTO believes Arthrex was wrongly decided.  

My company, Chestnut Hill Sound Inc. (ChillSound), has been victimized by a U.S. patent system that for nearly a decade has been in a sorry state. Changes wrought by the America Invents Act (AIA) in 2011 and other recent developments cost my company, its investors and inventors millions of dollars. These changes have allowed a large company to reap great profits at our expense. Even more unfortunately, our story is too typical of many other inventors and small companies. Small businesses are the backbone of our economy and need to be cultivated, as they are the most dynamic source of new jobs and competitive products and technologies. There have always been reports of large corporations stealing inventions from small businesses, but it used to be possible via the courts to vindicate the patent rights of owners and obtain ultimate redress.  The AIA—sold by the “efficient infringers” lobby as a measure to protect big business from the expense and nuisance of so-called “patent trolls”—has turned into a weapon of deep-pocketed big businesses that enables them to steal with impunity inventions from small businesses and independent inventors. The AIA brought with it the Patent Trial and Appeal Board (PTAB) and Inter Partes Review (IPRs), a post-grant adversarial proceeding at the United States Patent and Trademark Office (USPTO). As has been amply discussed here on IPWatchdog, the Court of Appeals for the Federal Circuit (CAFC) recently opined that the so-called Administrative Patent Judges (APJs) were unconstitutionally appointed from the beginning. Yet these unconstitutionally appointed APJs continue to kill patents, especially when the patent owner is a small company that has sued a large company for infringement, as was the case with ChillSound.

It is not unusual for there to be unintended consequences in the law or life. A loved one gives you something you don’t really like, but you do such a good job of feigning happiness that it becomes a regular gift. Who knew you could ever have too many “lovely” ties or too much single malt Scotch? Congress is in the process of giving the patent bar some welcome relief on some important issues, but may be throwing in that unwanted gift along with it. The STRONGER Patents Act intends to address the potential for inconsistent rulings between district court cases and inter partes reviews (IPRs). The Act achieves this by expressing a preference for district court rulings and by requiring IPRs to apply the same standards for validity determinations that are used in the district court. This is already the case by USPTO regulation with respect to claim construction, but the Act would make it statutory for both claim construction and validity, and thus not subject to change by the USPTO. While the use of the same standard for validity in both forums will make the rulings more consistent, the statutory preference for the district court over the IPR may have an unintended consequence.

This week in Other Barks & Bites: the Federal Circuit issues precedential decisions regarding its authority to remand to the PTAB, patent prosecution history estoppel and expert testimony on motivation to combine for obviousness findings; China nominates its choice for WIPO Director while pledging to reach “social satisfaction” on IP protections by 2025; INTA announces Ayala Deutsch as the organization’s new president; the USPTO seeks public comments on information collection related to national security concerns; the TTAB applies Federal Rules of Civil Procedure to discovery requests; Hewlett Packard shares drop after quarterly revenues fall short of analyst expectations; and the PTAB allows additional briefing in a case after the possibility of Administrative Procedure Act violations were raised by a patent owner.

On November 22, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a decision of the District of Nevada granting summary judgment of noninfringement under the doctrine of equivalents. Pharma Tech Solutions, Inc. (Pharma Tech) sued LifeScan, Inc. (LifeScan) for infringement of U.S. Patent Nos. 6,153,069 (the ‘069 patent) and 6,413,411 (the ‘411 patent). The patents are directed toward home use, blood glucose monitoring systems for individuals with diabetes. Previous monitoring systems determined blood glucose concentration from the Cottrell current drawn and measured from a patient’s oxidized blood sample. The specification of the ‘069 and ‘411 patents claims to improve on these systems by “eliminating several of the critical operator dependent variables that adversely affect the accuracy and reliability” of the previous systems. The invention performs multiple Cottrell current measurements (opposed to just the one) and converts these into analyte concentrations. It then compares the results for better accuracy, notifying the user if the results fall outside of an acceptable range of each other to indicate a system error. Ultimately, the CAFC found that because LifeScan’s meter does not convert diffusion limiting current readings to analyte concentration measurements and then compare the measurements to detect errors, and because Pharma Tech is barred in its infringement argument by prosecution history estoppel, LifeScan did not infringe Pharma Tech’s ‘069 or ‘411 patents.

This year has included many twists and turns for IP stakeholders, particularly on the patent side. Most recently, the Federal Circuit’s decision in Arthrex has called into question the constitutionality of Patent Trial and Appeal Board decisions, and perhaps the Board itself. Elsewhere, Congress has been—unsuccessfully—attempting to step in and clarify U.S. patent law since early in the year, while the courts have continued to muddy the waters of patent eligibility law. The Federal Trade Commission’s case against Qualcomm, and Judge Lucy Koh’s decision in the case, have further called into question the United States’ ability to compete on the innovation front going forward. And yet, there have been some wins in other areas this year, including at the U.S. Patent and Trademark Office (USPTO), and there remain many reasons to be hopeful about the year ahead. IPWatchdog asked some IP experts to share what they have to be thankful for on the IP front this Thanksgiving, despite all the uncertainty. Hopefully, as those of you who celebrate the holiday enjoy your Thanksgiving dinners, these sentiments will inspire you to be thankful too.

On November 23, the Court of Appeals for the Federal Circuit (CAFC) reversed the Patent Trial and Appeal Board’s (PTAB) ruling in a pair of inter partes review (IPR), which had invalidated all claims of two related patents, U.S. Patent Nos. 9,014,243 and 8,718,158. TQ Delta, the patent owner, appealed the PTAB’s holding that all claims of the challenged patents would have been obvious when viewed in light of the prior art references, including U.S. Patent Nos. 6,144,696 (Shively) and 6,625,219 (Stopler), asserted by Cisco System Inc. and the other appellees (collectively, “Cisco”). Admissibility of evidence, claim construction, and due process were among several other challenges raised by TQ Delta on appeal. Because the PTAB’s determination of obviousness was not supported by substantial evidence, the CAFC reversed.

In Airbus S.A.S v. Firepass Corporation, Appeal 2019-1803 (November 8, 2019), Airbus appealed the Patent Trial and Appeal Board’s (PTAB’s) reversal of the examiner’s rejection of new claims presented by Firepass in an inter partes reexamination of U.S. Patent No. 6,418,752 (“the ‘752 patent”). In particular, the inter partes reexam returned to the Court from a prior appeal (Airbus SAS v. Firepass Corp., 793 F.3d 1376 [Fed. Cir. 2015]) in which the Court vacated and remanded to the Board to consider Airbus’s challenge to the newly presented claims. Airbus disputes the Board’s finding that an asserted prior art reference, which just so happens to be a patent issued to the same inventor as the ‘752 patent, is nonanalogous art.

In most respects, the widely reported patent complaint recently filed against Gilead is perfectly ordinary. It was filed in the U.S. District Court for the District of Delaware, the most common venue for patent infringement lawsuits, and alleged that a pharmaceutical company’s drug sales infringed the plaintiff’s patents on uses of the sold drug. The defendant’s response has so far been similarly unexceptional:  Gilead has filed petitions for Inter Partes Review (IPR) of each asserted patent (see links below), arguing that those patents are invalid over the prior art, either as obvious or as entirely anticipated. What is remarkable about this lawsuit, however, is that the plaintiff is the government of the United States.

If you innovate and invest more than $10,000 to obtain patent protection on your idea, do you trust a government-issued patent to be a valid one?  And if you believe you have a valid patent, would you trust that government’s judicial system to protect you from sanctions for believing in its validity? These underlying assumptions provide the foundation to any system. If you purchase and obtain title to a car, stock, or real estate, you expect that title to be valid. And you expect not to be penalized for believing in that title’s validity.     For patents, it’s quite the opposite. It has become so commonplace for government-issued patents to be invalidated after issuance, we hardly bat an eye. But with the development of Section 101 law, the patent system has turned down a twisted path—one that sanctions patent holders for believing their patent to be valid. In Finnavations LLC v. Payoneer, Inc., the U.S. District court for the District of Delaware unfortunately advanced our patent system down this path

Mayo Collaborative Services has filed its brief in opposition to Athena Diagnostics’ petition to the Supreme Court in early October asking the justices to weigh in on whether its patent claims for a method of making a medical diagnosis are patent eligible under Section 101. Eleven amici have weighed in on the case, and the patent community is waiting to see if the High Court will grant the petition and help to solve the Section 101 problem, which has been particularly problematic for the field of medical diagnostics. Mayo states its argument quite simply in the opening sentence of its brief, relying on the Court’s 2012 precedent in Mayo v. Prometheus: “Patent claims directed to a natural law that employ only conventional and routine activities to detect that law are not patent eligible. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 73 (2012). That rule disposes of this case, as the district court, appellate panel, and en banc Federal Circuit each concluded.”

About a month ago, Steve Brachmann authored an article concerned with a brief given to Capitol Hill staff by Professors Frakes and Wasserman. The article highlighted fundamental, as well as practical, problems with Professors Frakes’ and Wasserman’s proposal (i.e. doubling the number of patent examiners as a means to reduce the number of invalid patents and thereby prevent societal harms) and how it could be detrimental to the U.S. patent system. The IPWatchdog article points to several issues with Frakes’ and Wasserman’s proposal, but does not discuss other approaches or options, such as using artificial intelligence tools to improve the patent application review process—an option that USPTO Commissioner for Patents Drew Hirshfeld said in a recent Senate IP Subcommittee hearing that the Office is actively pursuing. According to PWC, 72% of executives testify that AI improves internal operations while freeing up workers to perform more creative and meaningful tasks. In fact, while some might fear that “robots” will take human jobs, technological innovation has been proven to generate more jobs than it takes, while automating tasks, like patent search.