Posts in Litigation

As most of us know by now, in Arthrex, Inc. v. Smith & Nephew, Inc., entered on Halloween 2019, a panel of the Federal Circuit held that the administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) were improperly appointed, and remanded the case for a new decision by a properly appointed panel. Almost immediately after, the court entered two orders dismissing motions for remand because the issue had not been timely raised. See Customedia Technologies, LLC v. Dish Network Corp., Nos. 18-2239 & 19-1001 (Fed. Cir., Nov. 1, 2019) (the motions were inferred from letters to the court). The Federal Circuit remanded a case in which the issue had been timely raised. Uniloc 2017 LLC v. Facebook, Inc., No. 18-2251 (Fed. Cir., Oct. 31, 2019). Predictions about the effect on pending cases overlook that the vast majority of PTAB final decisions come in appeals from the patent examining corps. Any of the hundreds of applicants dissatisfied with a recent PTAB appeal decision could appeal to the Federal Circuit and then promptly move for remand to a different panel. A reader could be forgiven for feeling a sense of déjà vu: in In re DBC, the Federal Circuit similarly found that APJs had been improperly appointed, but the issue was quickly resolved and now is remembered as a minor footnote in patent case law. In re DBC, 545 F.3d 1373 (Fed. Cir. 2008). Arthrex holds the potential to be far more significant. Indeed, Arthrex may prove more trick than treat.

The Supreme Court heard oral argument in Allen v. Cooper (Case No. 18-877) on Monday, November 5, 2019. Petitioner Allen claims that the State of North Carolina infringed his copyrights in images and video of the salvage of Blackbeard’s famed pirate ship. Relying on the Copyright Remedies Clarification Act (CRCA), Allen seeks monetary damages against the State. The State argues, and many lower courts have agreed, that the CRCA is unconstitutional and state sovereign immunity precludes Allen from recovering copyright infringement damages against the State.

Jury verdicts are supposed to be sacrosanct. The biggest opposition to the ratification of our Constitution in 1788 was due to its lack of protection for jury trials in civil cases. The omission was corrected by adding the Seventh Amendment as part of the Bill of Rights. So, when a patent holder wins a jury verdict, that should mean more than the paper the verdict is written on. Yet it does not, under recent decisions by the U.S. Court of Appeals for the Federal Circuit. On behalf of Eagle Forum Education & Legal Defense Fund, I filed an amicus brief on November 4 in support of a petition for rehearing en banc by the full Federal Circuit to end the abusive authority of the Patent Trial and Appeal Board (PTAB) to overturn jury verdicts. Many other amicus briefs were subsequently filed in this case, Chrimar Systems, Inc. v. ALE USA, Inc. FKA Alcatel-Lucent Enterprise USA, Inc. (Fed. Circ. Case No. 18-2420), to make similar requests of the Federal Circuit

This week in Other Barks & Bites: the Trump Administration sues Gilead for infringement over HIVE PrEP treatment patents; Senators Inhofe and Wicker ask President Trump to show no leniency on Chinese IP theft; the Supreme Court hears the Allen v. Cooper copyright appeal; the Federal Circuit issues precedential opinions on PTAB evidence admissibility and limitation in patent claim preamble; the Copyright Office says that its digital recordation pilot project is on track for Spring 2020; the PTAB Precedential Opinion Panel (POP) will review the Board’s rejection of substitute patent claims in a motion to amend; “This Is Spinal Tap” creators settle copyright suit; and T-Mobile announces December launch for nationwide 5G network.

While there are a number of falsehoods being spread about the CASE Act by those who philosophically oppose any legislation that will help the creative community, there are a few honest critiques that are based on simple misunderstandings about the bill rather than malice. Take, for instance, an article published earlier this week on this blog which characterizes the CASE Act’s intentions as noble, but argues that there are “three gaping holes” that make for bad policy…. The CASE Act will not bring an end to copyright infringement, nor is it intended to. Subversive parties that intend to infringe and skirt the law are unlikely to be brought to justice under the CASE Act. But the CASE Act is good policy for achieving what it is intended to do: provide an alternative to federal court where consenting parties who presently cannot afford to, might finally get their day in court.

Two days ago, TechCrunch published an article touting an important victory by Cloudflare against an evil patent troll—Blackbird Technologies. In the article there is no mention of any inappropriate tactics used by Blackbird, and there is nothing to suggest that Cloudflare was not infringing the patents they were accused to have infringed. In fact, that article seems to practically admit that Cloudflare was infringing on the patents because the defense tactic used by Cloudflare was not to argue that they were not infringing, but instead to argue that the patent claims asserted were invalid. Indeed, on November 4, Cloudflare published a description of their strategy, which does not mention anything about demonstrating that they were not infringing the patents issued by the United States Patent and Trademark Office (USPTO). Instead, the strategy was to: (1) not settle; (2) make a public cry for help and seek the submission of prior art that might invalidate the patent claims they were facing; and (3) file ethics complaints against the attorneys representing Blackbird. In this case, the Blackbird patent claims were found invalid. Cheering for Cloudflare, who had no reason to know that at the time they recklessly infringed those claims, is beyond the pale and speaks volumes as to why innovators are leaving America and heading to Europe, China and elsewhere around the world.

Everybody in the patent world is talking about the latest atrocity from the Federal Circuit known as the American Axle decision, but few actually appreciate the true level of absurdity. Yes, 35 U.S.C. § 101 swallowed §§ 112(a), 112(f), 102, and 103 in a single decision (a new feat of judicial acrobatics), and Judges Taranto and Dyk displayed their technical ignorance. For example, in citing the Flook decision Judges Dyk and Taranto assert that Flook’s mathematical formula (known to a million-plus engineers as the steepest-descent algorithm) is a “natural law.” American Axle, slip op. at p. 19. Seriously? Are Federal Circuit judges so technically ignorant that the entirety of the country is doomed to believe such an idiotic fantasy that a particular adaptive mathematical algorithm associated with no natural law must be a natural law? 

The Arthrex decision caused considerable confusion and excitement among the patent bar last week, partly because the issue decided by the Federal Circuit was a constitutional, and not a patent one. While we await next steps from the parties and the USPTO, IPWatchdog spoke to several constitutional law experts to get their take on the significance of the decision and the likelihood that the Supreme Court would be interested in the issue if appealed. All agreed that the Federal Circuit’s reasoning was correct, though one thought the Court’s approach to deciding that administrative patent judges (APJs) are inferior officers was slightly “unusual” in its focus strictly on the issue of “supervision” over other factors that the Supreme Court has found to be relevant to the distinction between inferior and principal officers. IPWatchdog posed three questions to the experts based on some of the issues that have been raised since Arthrex.

One day before the now-famous Arthrex decision was issued, the U.S. Court of Appeals for the Federal Circuit (CAFC) decided an appeal by Idenix Pharmaceuticals LLC and Universita Degli Studi Di Cagliari (collectively “Idenix”) against Gilead Sciences, Inc. (Gilead) that reiterates the extent to which the Court is split in its approach to so many issues. The precedential opinion was authored by Chief Judge Prost, with Judge Newman dissenting. In 2013, Idenix sued Gilead for infringement of U.S. Pat. No. 7,608,597 (the ‘597 patent), which claims a drug directed to the treatment of the hepatitis C virus (HCV). In response, Gilead argued that the ‘597 patent was invalid for failure to meet the written description and enablement requirements. At trial, the jury found for Idenix and upheld the validity of the patent. Gilead filed a renewed motion for Judgment as a Matter of Law (JMOL) on the written description and enablement requirements, and the court granted the motion only on enablement grounds, thus holding the patent invalid. The decision overturned the jury’s award to Idenix of $2.5 billion.

Recent multi million-dollar jury verdicts on trade secret misappropriation claims reflect that there can be significant risk to companies when employees leave or joint development relationships dissolve. Coupled with the passage of the federal Defend Trade Secrets Act of 2016, which created a federal civil cause of action for such claims, these verdicts have heightened the need to refine intellectual property protection strategies. But even with greater attention paid to improving protection measures, litigation can be inevitable, and such cases, as demonstrated by a recent survey conducted by the American Intellectual Property Law Association (AIPLA), can be expensive. Companies should consider whether insurance coverage is available to cover litigation costs. In this article we examine a sampling of cases where coverage questions were raised in connection with intellectual property disputes and the differing outcomes which ensued.

November 1 was the deadline for filing amicus briefs to the U.S. Supreme Court, which is considering whether to grant a petition for writ of certiorari to take up Athena Diagnostics v. Mayo Collaborative Services on appeal from the U.S. Court of Appeals for the Federal Circuit. Almost every amicus filing to the Supreme Court in this case supported granting the petition or backed up the position of petitioner Athena, who is asking the Supreme Court to clarify its patent-eligibility doctrine under the Alice/Mayo framework on the subject of medical diagnostic patent claims. The appeal to the Supreme Court follows a hotly contested denial of an en banc rehearing of the Federal Circuit’s original panel decision in Athena, which produced eight opinions, including four dissents, with many judges agreeing that Athena’s invention should be patent eligible even while they disagreed over whether Supreme Court precedent allowed for patent protection of diagnostic methods.

This week in our nation’s capital, the U.S. Senate is the lone house of Congress that will host hearings on tech and innovation topics. On Tuesday, Senate subcommittees will explore national security concerns related to big tech use of user data along with NASA’s efforts to improve the STEM workforce. On Wednesday, a few legislative hearings will commence to look at bills related to government AI, cybersecurity and geothermal innovation, among other tech subjects. Elsewhere in D.C., the Center for International and Strategic Studies explores the future of the electrical grid and China’s efforts towards techno-governance.

On November 1, Meredith Addy of AddyHart P.C. and I submitted an Amici Curiae brief to the U.S. Supreme Court on behalf of Freenome Holdings and New Cures for Cancers in support of the Petition for Certiorari in Athena Diagnostics v. Mayo Collaborative Services. If the Supreme Court does not take this case, it is unlikely to reconsider its decisions on Section 101 of the U.S. patent law. This may be our last gasp judicial effort. The Supreme Court takes cases raising inconsistencies in the law or a circuit split. We knew parties/amici would focus on the Federal Circuit’s “internal circuit split,” so we took a different approach and urged the Court to resolve five critical inconsistencies in the law, summarized below.

On October 22, the U.S. House of Representatives passed, by a vote of 410-6, the Copyright Alternative in Small-Claims Enforcement Act (the “CASE Act”). The Act proposes to set up what is in essence a voluntary administrative procedure conducted in the U.S. Copyright Office whereby artists and other copyright holders can protect their copyrights without the cost, expense and difficulty associated with filing a full-blown copyright infringement litigation in federal court. Based on the vote in the House, the CASE Act appears to enjoy widespread, bipartisan support in Congress—a rarity these days, to be sure. The appeal is simple: give individual artists and small companies an affordable mechanism to enforce their rights in their creative works. But although the political appeal of the CASE Act is obvious, the practical reality of the CASE Act is something entirely different. Indeed, there are three gaping holes in the CASE Act which may cause the small claims process it sets forth to have only very narrow appeal and to be an effective dispute resolution mechanism in only a narrow subset of cases.

The Federal Circuit’s decision in Arthrex, Inc. v. Smith & Nephew, Inc. generated excitement late last week, when many initially speculated that the Patent Trial and Appeal Board (PTAB) would not be able to continue operations as usual in light of the ruling. However, now that the dust has settled, it seems more likely that the effects of Arthrex will be limited to a small subset of cases. While he could not comment on next steps directly as it is a pending matter, USPTO Director Andrei Iancu suggested during a panel at the John Marshall Law School’s 63rd IP Conference in Chicago on Friday that the Office would not be significantly burdened by the decision. USPTO guidance is likely to be issued soon. Of course, the decision has not done much to bolster the already shaky reputation of the PTAB or its Administrative Patent Judges with some, and there are several scenarios in which the Federal Circuit’s quick fix to avoid shutting down the Board entirely might be challenged. Below are some early reactions to the ruling and predictions about how it may play out.