Posts in Patents

This week in Other Barks & Bites: the Chinese government announces stricter punitive measures in its IP system; the Federal Circuit says state sovereignty principles do not allow the University of Texas to bring suit in an otherwise improper venue; Congressional leadership asks Google to expand copyright protections under its Content ID tool; Google and Facebook to face antitrust probes from state AGs; George Mason University to create an Innovation Law Clinic; Ariana Grande files a copyright and trademark infringement suit against Forever 21; the Hudson Institute publishes a report on China’s 5G developments; and South Korea’s government has reportedly been collecting copyright payments for use of North Korean TV broadcasts.

An inter partes review (IPR) petitioner appeals the final written decision of the Patent Trial and Appeal Board (PTAB) as to claims upheld but is found to have no standing, as there is no present indication that the challenger would face a patent infringement suit in future. Under these circumstances, would the IPR statutory estoppel provision, 35 U.S.C. § 315(e), prevent the petitioner from asserting the challenges it brought against the upheld claims if the patent owner were to assert those claims against the petitioner in future? Note that under these circumstances, if estopped, the petitioner would have sought judicial review, but the merits of the challenges would not have been reviewed by an Article III court. This was one of the questions before the Federal Circuit in Avx Corporation v. Presidio Components, Inc. 2018-1106 (Fed. Cir. May 13, 2019) (“Avx Corp.”). Although the court declined to answer the question, as there were no adversarial presentations on this question, it clarified that the operation of estoppel was not a foregone conclusion under these facts, which, the court indicated, may fall under one of the exceptions to issue preclusion.

A recent study by Patexia analyzing the win/loss record of 784 law firms representing patent owners in inter partes review (IPR) proceedings at the Patent Trial and Appeal Board (PTAB) found that Carmichael IP had the highest win percentage. The study counted all decisions rendered in the past five years for firms that handled a significant number of IPRs before the Board. Carmichael IP ranked #1 out of the 784 qualifying law firms in the Patexia survey and Carmichael himself ranked third out of 5,000 individual attorneys.

The most effective way to protect an inventive business method is with a patent on a technical invention. Ever since the U.S. Supreme Court’s 2014 Alice decision, the U.S. courts and the U.S. Patent and Trademark Office (USPTO) have consistently held that you can’t patent a business method by itself. The Alice decision overturned several related business method patents as being nothing more than an attempt to patent a fundamental economic process. Lower court decisions have since affirmed that “no matter how groundbreaking, innovative or even brilliant” a business method might be, you still can’t patent it. The only way to use patents, therefore, to protect business method inventions, is to patent the technological inventions required to make the business methods work. These inventions will be patentable since they will “improve the functioning of the computer itself.” See Buysafe, Inc., v. Google, Inc. 765 F.3d 1350 (2014) citing Association for Molecular Pathology v. Myriad Genetics, Inc., ___ U.S. ___, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013).

The Federal Circuit recently vacated and remanded a decision by the Northern District of California granting a motion on the pleadings that claims related to “toolbars” on computers were ineligible under 35 U.S.C. § 101. The Court, holding that the district court failed to address a claim construction dispute, was “hesitant to construe patent claims in the first instance on appeal” and remanded for further proceedings. Judge Lourie authored a dissent, finding the claims to be “clearly abstract, regardless of claim construction,” and opined that he would have affirmed the district court’s holding. See MyMail, Ltd. v. ooVoo, LLC, Nos. 2018-1758, 2018-1759, 2019 U.S. App. LEXIS 24430 (Fed. Cir. Aug. 16, 2019) (Before Lourie, O’Malley, and Reyna, Circuit Judges) (Opinion for the Court, Reyna, Circuit Judge) (Dissenting opinion, Lourie, Circuit Judge).

Theranos was based on the promise that a charismatic 19-year-old Stanford drop-out, Elizabeth Holmes, had developed a revolutionary technology that could perform important diagnostic tests by using a drop or two of blood. Whatever the outcome of a planned three-month trial set to begin next August in San Jose federal court, there may never be a full accounting of the destructive power of a good story well-told. The attitudes that allowed Theranos and Holmes to operate undetected and for investors to be duped out of more than a half-billion dollars do not appear to have changed. “The Inventor: Out for Blood in Silicon Valley,” a documentary released by HBO earlier this year, effectively dramatizes an extraordinary narrative. Gibney’s eye-opening film is important on several levels. However, its suggestion that “faking it ‘til you make it” is what many innovative businesses and professional inventors (like Edison) typically do, is inaccurate and disrespectful.

This week in Other Barks & Bites: the PTAB institutes IPRs despite arguments that the Chinese government was an unnamed real party-in-interest; the Federal Circuit dismisses appeals of PTAB decisions denying institution on three IPRs; USPTO seeks public comments on examination guidance for artificial intelligence inventions, announces a public hearing on proposed trademark fee adjustments, and is facing backlash for seeking proof of citizenship for trademark applications; Tesla avoids a 10% tax on auto sales in China; the Department of Defense gets closer to establishing an IP protection team; former Google engineer Anthony Levandowski is charged with trade secret theft; trademark protection cases in Dubai have risen 63%; the Copyright Royalty Board announces an intent to audit Sirius XM Radio; and Amazon’s Audible faces copyright infringement suit over text captioning feature.

The Federal Circuit recently affirmed in part and reversed in part a district court decision holding that Actavis Laboratories FL, Inc.’s (“Actavis’s”) generic Abbreviated New Drug Application (“ANDA”) product infringed claims of patents owned by Nalpropion Pharmaceuticals (“Nalpropion”) and that the asserted claims were not invalid. The Court found that the district court did not err in finding that Nalpropion’s U.S. Patent No. 8,916,195 (“the ’195 patent”) was not invalid for lack of written description, but that the district court did err in finding that the asserted claims of U.S. Patent Nos. 7,375,111 (“the ’111 patent”) and 7,462,626 (“the ’626 patent”) were not obvious in view of the prior art.

It’s been five years since the Supreme Court remade the law of patent eligibility in Alice Corp Pty Ltd v. CLS Bank Int’l. As we all know, in Alice the Supreme Court dictated that patent-eligible subject matter is determined based on a two-step test. The application of this test under Queen Alice’s reign has drastically altered the patent landscape. Over 1,000 patents have been invalidated by the federal courts and the U.S. Patent and Trademark Office’s (USPTO’s) Patent Trial and Appeal Board (PTAB), while over 60,000 patent applications have been abandoned before the USPTO following rejections for patent ineligible subject matter. Patents and portfolios in many fields – particularly software and biotechnology – have declined in value or simply become unsaleable at any price. Defenders of Queen Alice and her critics go back and forth endlessly, driven by differing permutations of ideology, technology, judicial philosophy and business goals. I have contributed my share to those discussions, no doubt. But today, let’s get down to data and see what has really happened under Queen Alice’s rule.

In the most recent exploration of Section 101 by the Federal Circuit, Chief Judge Sharon Prost authored a non-precedential opinion holding the claims of a patent for a method of administering inhaled nitric oxide (iNO) ineligible for patent protection under the Alice/Mayo framework. The ruling paves the way for industrial gas company Praxair Distribution to move forward with its abbreviated new drug application (ANDA) for a nitric oxide delivery system. Judge Pauline Newman dissented in part, stating that the “method that is described and claimed does not exist in nature” and “was designed by and is administered by humans,” so should be patent eligible.

SPIP Litigation Group, LLC v. Apple, Inc. and Cisco Systems, Inc., No. 19-253., concerns four patents that have been the subject of decisions by the Patent Trial and Appeal Board (PTAB) and the Federal Circuit. More than 25 lawyers have participated in the litigation. The briefs and evidence in the trial court covered more than 2,500 pages. My client, on appeal from an adverse summary judgment, did not contend that the factual record failed to support that result. My client raised only two legal issues when it appealed to the Federal Circuit from the district court’s decision that the patents were not infringed. The appeal briefs covered 202 pages. Three Federal Circuit judges heard oral argument and issued their decision 12 days later. It read: “AFFIRMED. See Fed. Cir. R. 36.” Did the judges understand the technology any better than I do? No one can tell. Did my client deserve some explanation, even if exceedingly concise, from the judges? The petition I have now filed with the Supreme Court claims that the Federal Circuit judges deprived my client of a constitutional right by declaring, “You lose, but we won’t tell you why.”

As the summer winds down, it is time again to focus on how to fix the U.S. patent system. In June, the Senate Judiciary’s IP Subcommittee held unprecedented hearings on patent eligibility. They are now back in closed door sessions with selected stakeholders to further consider language to amend Section 101, having received extensive feedback. My testimony in part addressed the unconstitutionality of the U.S. Supreme Court’s cases on patent eligibility, which have created judicial exceptions that arrogantly ignore the plain wording of Congress’ statute (“invention or discovery” in the disjunctive in Sections 100(a), (f) and (g) and Section 101) and its legislative history, and despite the fact that the U.S. Constitution gives Congress the sole power to create patent law. The doctrine of judicially-created non-statutory obviousness-type double patenting is the flip side of the coin of the patent eligibility issues.  A rejection for “non-statutory obviousness-type” double patenting is based on a “judicially-created doctrine” grounded in public policy and which is primarily intended to prevent prolongation of the patent term by prohibiting claims in a second patent not patentably distinct from claims in a first patent. This is problematic for at least the following reasons.

Judge Douglas Ginsburg of the U.S. Court of Appeals for the D.C. Circuit, Professor Joshua Wright, and attorney Lindsey Edwards of Wilson Sonsini Goodrich & Rosati, have condemned the decision in FTC v. Qualcomm Inc. (N.D. Cal. May 21, 2019) in the George Mason University Law & Economics Research Paper Series. In their paper, “Section 2 Mangled: FTC v. Qualcomm on the Duty to Deal, Price Squeezes, and Exclusive Dealing,” the authors characterize the decision as being a part of “the misguided trend of using antitrust law to intervene in contract disputes between sophisticated parties negotiating over intellectual property rights.”

On August 23, the Patent Trial and Appeal Board’s (PTAB’s) Precedential Opinion Panel (POP) issued a decision granting patent owner 360Heros’ request for rehearing of an earlier PTAB decision to institute an inter partes review (IPR) requested by GoPro and also denied institution of that IPR under the one-year time-bar codified in 35 U.S.C. § 315(b). The PTAB agreed with 360Heros that the one-year time-bar began tolling from the filing date of a counterclaim alleging patent infringement that was dismissed by the district court for lack of standing. The POP panel included U.S. Patent and Trademark Office (USPTO) Director Andrei Iancu, Commissioner for Patents Drew Hirshfeld and PTAB Chief Administrative Patent Judge Scott Boalick. The 360Heros decision may offer inventors an escape route from the PTAB death squad. For the first time since the America Invents Act became law, the shoe could be on the other foot.

On August 15, Trading Technologies International, Inc. (TT) petitioned the Federal Circuit again for panel rehearing and rehearing en banc of its recent decision that found TT’s Ladder Tool invention to be subject to the USPTO’s Covered Business Method (CBM) review process and abstract under Section 101. TT argues that the PTAB did not follow the precedent of the Supreme Court or Court of Appeals for the Federal Circuit (CAFC) when reviewing its patent claims. The latest brief relates to U.S. Patent No. 7,725,382 (the ‘382 patent), while TT’s request for rehearing filed July 31 related to U.S. Patent No. 7,693,768.