Posts in Patents

As I noted in part one of my talk at the IPWatchdog Patent Masters Symposium, the validity statistics for SEPs do not look very good at first glance. Thus, according to a 2017 PricewaterhouseCoopers study, plaintiffs in U.S. courts (ignoring patent type) have on average a 33% chance of success—only a 27% chance in the case of telecommunications patents. This chance of success is probably overstated for Standard Essential Patents (SEPs), based on the easy availability of prior art. Indeed, according to RPX’s 2014 study, in the United States, SEPs are likely to be less than half as successful as non-SEPs.In my talk, I pointed to the high invalidation rates in Europe to buttress my point that, at first glance, SEPs seem particularly vulnerable to validity challenges. Thus, in Germany, a supposed nirvana for patent assertion, the authors of the study “Patent Paper Tigers” reviewed the case law of the German Federal Patent Court and the German Federal Court of Justice in nullity matters in the period from 2010 to 2013 and found that: The nullification rate of all Senates of the German Federal Patent Court is 79.08% in total; and the nullification rate at the German Federal Patent Court regarding Software and Telecom patents which are (currently) of particular relevance from an economic point of view is 88.11%. Returning to the point made in the first part of my talk, having noted that most SEP nullification comes from obviousness, and not novelty, there should be no public interest exception to my argument that: unprovoked—that is, without first having made a FRAND offer or counteroffer—serial nullification of SEPs is contrary to the duty to negotiate in good faith and should remove a party’s defense against an injunction to SEPs.

Now, there is a flaw in this theory, and that is that, in the past few years, third parties have emerged that will—for their members or other contracted entities—kill patents.

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.

In response to a request for supplemental briefing from the Federal Circuit in Facebook v. Windy City Innovations, the U.S. Patent and Trademark Office (USPTO) recently argued that its precedential panel opinions interpreting the America Invents Act (AIA) are entitled to Chevron deference, under which (essentially) courts must defer to an agency interpretation of a statute so long as the interpretation is reasonable. To the extent that this bid for Chevron deference is limited to procedural administrative Patent Trial and Appeal Board (PTAB) matters such as the one at issue in that case, (an interpretation of 35 U.S.C. § 315(c) which relates to the USPTO Director’s ability to join a party in inter partes review [IPR]), it is arguably defensible. But to the extent that the agency claims (or plans to claim) that its precedential PTAB opinions are owed deference on issues of substantive patent law, it is likely incorrect.

Today, blockchain projects are proceeding in nearly every major industry and occur in more than 140 countries. According to blockchain IP landscape research by Perception Partners, over the past three years, the compound annual growth rate (CAGR) of patent families publishing in the United States, Europe, Patent Cooperation Treaty (PCT), China, Japan and Korea is about 23%. The space has more than 13,000 global competitors of every size with nearly 23,000 inventors or authors disclosing or researching blockchain innovations. Much has been written about Bitcoin and blockchain technology, including a prior article in which we provided an overview on “The Bitcoin Network, Blockchain Technology and Altcoin Futures.”  To keep pace with the evolving nature of blockchain intellectual property and technology, below we provide some sample use cases of how blockchain innovations are already being leveraged in commerce and likely to be exploited in the near future.

The “Support Technology and Research for Our Nation’s Growth and Economic Resilience Patents Act of 2019” or the “STRONGER Patents Act of 2019,” currently under consideration as Senate Bill 2082 and House Resolution 3666, poses questions about the types of decisions that would operate to bar inter partes review (IPR) and post-grant review (PGR) of patent claims. The STRONGER Patents Act is an effort to cure some of the perceived infirmities in the U.S. patent system. While prior versions—introduced in 2015 and 2017—were more wide-ranging, the STRONGER Patents Act of 2019 primarily focuses on the availability of injunctive relief and the susceptibility of patents to IPR and PGR. Among other changes, the bill would effectively overrule the Supreme Court’s eBay v. MercExchange decision, require inter partes and post-grant review petitioners to prove invalidity by clear and convincing evidence, permit only one such review of any given patent claim, and purport to finally end the occasional practice of diverting some the USPTO fees from its operations. While much can (and has) been written about the merits of such reforms, the present comment specifically considers the proposed “Priority of Federal Court Validity Determinations.”

This week in Washington D.C., the Congressional hearings schedule is empty as both the U.S. Senate and the U.S. House of Representatives enter work periods. However, Monday kicks off with a pair of think tank events on global technology issues at the Center for Strategic and International Studies and the Atlantic Council. The Brookings Institution hosts a pair of tech-related events this week—one focused on threats to democracy through digital capitalism and the other exploring how tech policy has altered the U.S.-China relationship. Other events include a look at securing supply chains for information and communication technology at the Carnegie Endowment for International Peace and a look at the future of the Marine Corps at The Heritage Foundation.

The authorization of consumption of Cannabis derivative products in several countries has led to the rapid development of a robust industry around such products. However, Brazilian legislation is still conservative concerning the sale, production, and use of cannabis derivative products, all of which are currently prevented by Brazilian law and defined as both civil and criminal offenses. But despite Brazil’s restrictive position concerning the permission of production and selling of cannabis-related products, the country is now taking baby steps towards the legalization of some aspects of the use and sale of cannabis products, putting the country at the center of discussions around this topic.

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.

In order to obtain exclusive rights on an invention, you must file for and obtain a patent. Many inventors will initially opt to file a provisional patent application to initiate the application process, which is a perfectly reasonable decision to make, and will result in a “patent pending” that can even result in a licensing deal. Ultimately, if a patent is desired, a nonprovisional patent application must be filed, and it is this nonprovisional patent application that will mature into an issued patent. U.S. patent laws require that the patent applicant particularly point out and distinctly claim the subject matter which the inventor regards as his or her invention. Any patent, or patent application, contains a variety of different sections that contain different information. Generally speaking, a patent is divided into a specification, drawings and patent claims. Only the patent claims define the exclusive right granted to the patent applicant; the rest of the patent is there to facilitate understanding of the claimed invention. Therefore, patent claims are in many respects the most important part of the patent application because it is the claims that define the invention for which the Patent Office has granted protection.

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.