Posts in Litigation

Five years ago today, the Supreme Court issued its decision in Octane Fitness LLC v. ICON Health & Fitness, Inc., empowering district courts to award attorneys’ fees in those patent case that “stand out from others.”  Last year, we crunched the numbers and explored several notable trends that have emerged post-Octane Fitness. For that article, we looked at nearly 420 decisions spanning nearly four years. In the last 14 months, district courts have been asked to declare patent cases exceptional another 165 times. Below, this article revisits the statistics and takes a deeper look at the line between zealous advocacy and litigation misconduct that can serve as the basis of an exceptional case determination.

On April 15, U.S. District Judge William Conley of the Western District of Wisconsin issued an opinion and order in Raytheon Company v. Cray, Inc. granting summary judgment of non-infringement to defendant Cray on two supercomputer patents that had been asserted by Raytheon. The order is the likely conclusion to a case that became an important part of the debate on proper venue in patent cases after the U.S. Supreme Court’s decision in TC Heartland, and aspects of how this case played out after venue was transferred point to the importance of that particular decision on U.S. patent litigation.

Earlier this year, the Supreme Court of India set aside an order of the division bench of the Delhi High Court that revoked a patent granted on genetically modified cotton, holding that the single bench of the High Court should assess the patentability of the invention after hearing arguments from both sides. The Indian Patent Office granted Patent No. 214436 to Monsanto Technology LLP on genetically modified cotton. In 2016, Monsanto filed a suit before the single judge bench of the Delhi High Court [Civil Suit (Comm) No. 132 of 2016] alleging infringement by Nuziveedu Seeds Ltd., which responded with a counterclaim for invalidity of the patent, among other claims. The single judge ruled in favor of the petitioner and granted an injunction. On appeal, the division bench of the Delhi High Court vacated the injunction and invalidated the patent. That decision was set aside by the Supreme Court, which held that the matter at hand was the injunction and that patentability issues must be dealt with separately by the High Court. This suggests a changing mindset by the Indian courts regarding patentability of genetically modified living organisms. India may now be set to join the league of various other nations that respect biotechnological inventions.

April 22 was the deadline for filing amicus briefs with the Court of Appeals for the Federal Circuit in Athena Diagnostics’ petition for an en banc rehearing by the court. The petition comes after a 2-1 panel decision in early February affirmed a district court’s ruling that patent claims covering methods of diagnosing myasthenia gravis (MG), an autoimmune disorder that causes weakness in skeletal muscles, were directed toward laws of nature and were thus unpatentable subject matter under 35 U.S.C. § 101. In an invitation to file briefs with the Federal Circuit in this case, Knowles IP Strategies Founder Sherry Knowles and AddyHart Partner Meredith Addy discussed the need for amici to hold the Federal Circuit accountable regarding its duty to apply a strict statutory construction of the literal language of Section 101 to ensure that patent eligibility cases are decided in a way that is consistent with Constitutional statutes. Knowles and Addy filed a brief on behalf of Freenome Holdings and Achillon Pharmaceuticals (discussed below). Theirs and other briefs that have now been filed raise concerns about the inability to patent life-saving diagnostic methods that are found ineligible under Section 101 using the Alice/Mayo framework simply because the invention or discovery involves monitoring natural processes.

On March 21, Personalized Media Communications, LLC (PMC), owner of 98 patents covering networked equipment technologies, filed patent lawsuits in the Eastern District of Texas against major tech firms Netflix, Google, and Akamai. The lawsuits claim that the defendants infringed upon intellectual property that covers a major part of the adaptive streaming capabilities for each of the three businesses. In the lawsuits, PMC is asserting claims from six patents it has earned between 2010 and 2017, each titled Signal Processing Apparatus and Methods.

As was recently reported by IPWatchdog Founder Gene Quinn, it has come to light that information made public by the California State Bar shows that Matthew Robert Clements, formerly an administrative patent judge (APJ) at the Patent Trial and Appeal Board (PTAB) has been hired as an attorney by consumer tech giant Apple Inc. Prior to his work as a PTAB APJ, Clements was a patent attorney at Ropes & Gray and he represented Apple as counsel in patent infringement matters, where Apple was a defendant. While at the PTAB, Clements served on APJ panels in a few dozen cases brought by Apple, a situation that raises questions of ethics and that brought to light other matters, such as a lack of any code of judicial conduct for PTAB APJs despite their importance in adjudicating U.S. property rights, which can be worth billions of dollars. We’ve previously reported on statistics showing the outcome of PTAB trials petitioned by Apple where Clements served as an APJ, noting that the mixture of those ingredients resulted in nothing short of a lethal cocktail for patents and their owners. With Clements’ departure from the PTAB now upon us, we wanted to revisit his career statistics at the PTAB using Lex Machina’s data analytics tools to see how the new Apple hire ruled in cases involving his current employer.

In Trading Technologies International, Inc. v. IBG LLC, Interactive Brokers LLC (2018-1063), the Federal Circuit agreed with the Patent Trial and Appeal Board (PTAB) that the contested claims of Trading Technologies International, Inc’s patents for graphical user interfaces (GUI) for electronic trading, numbers 7,533,056, 7,212,999, and 7,904,374, were eligible for covered business method (CBM) review and also patent ineligible. The claims at issue were claims 1–15 of the ’056 patent, claims 1–35 of the ’999 patent, and claims 1–36 of the ’374 patent. To be eligible for CBM review, a patent must claim “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” In previous Federal Circuit cases, Trading Technologies (TT) patents had been determined not eligible for CBM review as they were technological inventions or were found patent eligible. The court rejected the argument that this weighed in favor of finding similarly in the present case. “We are not bound by non-precedential decisions at all, much less ones to different patents, different specifications, or different claims,” wrote the Court.

On April 10, inventor Gilbert Hyatt and the American Association for Equitable Treatment (AAET) filed a petition for writ of certiorari with the U.S. Supreme Court asking the Court to review a Federal Circuit case that struck down an Administrative Procedures Act (APA) claim brought by the petitioners. If the Supreme Court grants certiorari, they will determine whether a section of the U.S. Patent and Trademark Office’s (USPTO) Manual of Patent Examining Procedure (MPEP) authorizing examiners to reopen patent prosecution and block a patent applicant’s appeal after a second rejection violates that patent applicant’s statutory right of appeal under the Patent Act. The particular section of patent examination procedure at issue in this appeal is MPEP § 1207.04, titled Reopening of Prosecution After Appeal. This section was adopted by the USPTO in August 2005. Prior to this, patent examiners could propose reopening prosecution to patent applicants who had appealed a decision after a second rejection and patent applicants were free to disregard this proposal. In Gil Hyatt’s case, Section 1207.04 was used by patent examiners to force the reopening of prosecution, ending 80 appeals of examiner decisions to the Patent Trial and Appeal Board (PTAB).

In Iancu v. Brunetti (Case No. 18-302), the United States Patent and Trademark Office (USPTO) is appealing to the Supreme Court from a U.S. Court of Appeals for the Federal Circuit decision that held the Lanham Act’s prohibition on “immoral” or “scandalous” marks violates the First Amendment’s free speech clause. The case is the second in two years that the High Court has taken on the subject, and was argued on Monday, April 15. The federal government’s petition specifically asks the Court to consider “whether Section 1052(a) [of the Lanham Act]’s prohibition on the federal registration of ‘immoral’ or ‘scandalous’ marks is facially invalid under the Free Speech Clause of the First Amendment.” At issue is Erik Brunetti’s FUCT trademark for clothing, which was refused in 2011 because it was considered a scandalous term under Section 1052(a) of the Lanham Act.According to the report from Monday’s hearing, the justices’ line of questioning indicated they are likely to follow their own lead in Matal v. Tam, which struck down the disparagement clause of the Lanham Act, by likewise striking down the restriction on federal registration of trademarks that are “immoral or scandalous” on First Amendment grounds. But, according to most observers, they are likely to take a relatively cautious approach in doing so. As is customary, IPWatchdog reached out to industry experts for some additional views on the hearing.

Among the seven amicus curiae briefs filed Monday with the U.S. Supreme Court in InvestPic, LLC, v. SAP America, Inc., Eagle Forum Education & Legal Defense Fund’s brief argues that the case demands a hearing because the Federal Circuit has added yet another extra-statutory test to the already distorted patentability jurisprudence. In a decision of May 15, 2018 authored by Judge Taranto, the Federal Circuit found the patent claims of U.S. Patent No. 6,349,291 invalid because they were directed to an abstract idea and lacked an inventive concept necessary to save the invention under 35 U.S.C. § 101. In the course of its opinion, the Federal Circuit created a “physical realm” test, which is nowhere to be found in 35 U.S. Code Section 101, having been wholly conjured by judges.

Following our visit to the Supreme Court for Monday’s entertaining oral argument in Iancu v. Brunetti, we can report that the Court seems likely to strike down, on First Amendment grounds, the statutory restriction on federal registration of trademarks that are “immoral or scandalous.”  It seems less likely that the case will generate a clear and ringing statement of First Amendment principles. Rather, the justices’ comments at argument seem to presage a limited, cautious opinion. The Court’s main legal concerns appear to be the facial overbreadth of the existing statute and its history of inconsistent application. Congress and the U.S. Patent and Trademark Office (USPTO) may  therefore be left with room to try again, seeking a narrower and more predictable approach to limiting the federal registration of dirty words as trademarks (especially given the Court’s main practical concern of the loss of civility represented by the proliferation of such marks).

In one more example of ways the U.S. patent system can be stacked against the small inventor, we have the story of Lori Cheek, who more than ten years ago had an idea for a unique dating service that she dubbed Cheekd. In 2008, still just prior to the age when people existed via smartphone, the patent she applied for covered a card-based dating system. Cheek decided to leave her steady job as an architect to pursue the idea of a business centered around pre-printed dating cards featuring clever pick-up lines and held a brainstorming session with friends on February 22, 2008. On March 7, 2008, she registered the URL Youvebeencheekd.com (now cheekd.com) with GoDaddy, and officially founded her company, Cheekd, on April 20, 2009. She applied for a patent in 2010 and it was granted on September 24, 2013. A few years later was when the trouble started for Cheek, and today, she is embroiled in her second lawsuit over a patent on a business she is no longer pursuing, both brought by a man, Alfred Pirri, whose first suit was dismissed in pre-trial conference.

On April 8, the Court of Appeals for the Federal Circuit issued a precedential decision in Omega Patents, LLC v. CalAmp Corp. that reversed and vacated a district court’s ruling that CalAmp had directly infringed certain patent claims asserted by Omega. While the Federal Circuit did affirm that CalAmp directly infringed one of the asserted claims, it vacated and remanded on a number of the district court’s other findings. The decision was issued by a panel including Chief Judge Sharon Prost and Circuit Judges Timothy Dyk and Evan Wallach. Omega’s allegations of patent infringement centered on CalAmp’s sale of Location Messaging Unit (LMU) products that assist businesses and government entities by tracking fleets of vehicles and retrieving vehicle information such as battery health and speed for remote monitoring. A jury verdict in the Middle District of Florida held that all asserted claims were not invalid, were infringed, and that CalAmp had committed willful patent infringement. The jury awarded compensatory damages of $2.98 million and the judge trebled that damages award and added attorney’s fees, damages for sales subsequent to the jury verdict and pre-judgment interest, increasing the monetary award to about $15 million with an ongoing royalty rate of $12.76 per sale of infringing unit by CalAmp.

In each of the recent Federal Circuit decisions on medical diagnostics inventions, Athena Diagnostics v. Mayo Collaborative Services, 2017-2508, (Fed. Cir. Feb. 6, 2019) (“Athena”) and Cleveland Clinic Found. v. True Health Diagnostics LLC, 2018-1218 (Fed. Cir. April 1, 2019; non-precedential) (“Cleveland Clinic II”), the court affirmed a district court ruling that found a medical diagnostic or a related patent invalid for being directed to ineligible subject matter. Athena and Cleveland Clinic II follow the hard stance taken by the Federal Circuit against medical diagnostics inventions, first in Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1376 (Fed. Cir. 2015) (“Ariosa”) and next in Cleveland Clinic Found. v. True Health Diagnostics LLC, 859 F.3d 1352, 1361 (Fed. Cir. 2017) (“Cleveland Clinic I”). In Athena, the patent covered a method for diagnosing a disease in a subpopulation of affected individuals based on the discovery of a correlation between the disease and certain autoantibodies found only in that subpopulation. In Cleveland Clinic I, the patent claims were directed to diagnosing the risk of atherosclerotic cardiovascular disease (CVD) based on the correlation between elevated levels of a protein found in the blood and occurrence of atherosclerotic CVD. In Cleveland Clinic II, the claims were directed to methods of identifying elevated levels of the protein but did not include any recitation of the correlation…. The requirement for an improvement to the technology involved in carrying out the claimed method is a steep hurdle for the eligibility of most medical diagnosis inventions, since the essence of such inventions is applying a newly discovered correlation to deliver a practical benefit—not improving the technology used to provide the diagnosis. In this regard, medical diagnostic inventions are unique. This point was highlighted by the Athena dissent through reference to the amici curiae Five Life Sciences Patent Practitioners’ brief, which stated, “[medical] diagnostic methods . . . are so tightly bound to underlying natural laws and phenomen[a], they are especially susceptible to undue expansion of the eligibility standards…” Athena Dissenting opinion at 13.

A company must be strategic in any business decision it makes in order to ensure that it takes the necessary measures to avoid liability for its actions. With respect to patent infringement, and specifically willful patent infringement, the different approaches to determining which measures to take and when to take such measures have been repeatedly challenged in light of a number of court decisions in recent years. To set the scene, the Federal Circuit held in Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (1983) that a potential infringer has an affirmative duty to exercise due care to determine whether or not he or she is infringing. This placed the burden on the potential infringer to seek competent counsel and obtain either a non-infringement opinion or invalidity opinion prior to undertaking the possible infringing activities. This would prevent a finding of willful infringement and treble damages.