Posts in Patents

When a patent or trademark applicant loses in front of the U.S. Patent and Trademark Office (USPTO), they can either appeal to a court of appeals or develop a fuller record by starting a district court action. If the applicant goes to district court, then the applicable statute says that the applicant-appellant pays “[a]ll the expenses of the proceedings,” and everyone at one time agreed that those expenses did not include fees for the government’s attorneys. That changed in 2013, when the USPTO unilaterally started including its attorney and support staff fees amongst the expenses. On the first Monday of October—the first day of arguments in the Supreme Court’s 2019 term—the Court will hear argument in Peter v. NantKwest, No. 18-801. The question in that case is whether the word “expenses” includes the government’s attorneys’ fees. On July 22, we filed an amicus brief on behalf of the American Intellectual Property Law Association (AIPLA) arguing that it does not.

The decision came down to two technologies for detecting and correcting noise in signals transmitted over the air for 5G—one of the most fundamental features for wireless communications. Scientists and engineers in 2016 vigorously debated for months which one was technologically superior and most efficient. China had lined up Chinese companies’ and allies’ votes behind the “polar codes” technology led by Huawei. Ultimately, the technology that had broader technical support would share a role in the 5G standard with Huawei’s preferred polar coding. But the heightened political battle in a traditional technical arena was unprecedented. This incident highlights a growing threat. “China has politicized the standards-making process,” the Center for Strategic and International Studies (CSIS) reports. “Beijing expects Chinese companies to vote for [China-backed technologies] whether or not they are the best.”

On August 7, the U.S. Court of Appeals for the Federal Circuit heard oral arguments in TCL Communication v. Telefonaktiebolaget LM Ericsson, an appeal stemming from an action for declaratory judgment filed by TCL in the Central District of California. Among the various aspects of the district court proceedings being examined on appeal are the fair, reasonable and non-discriminatory (FRAND) rates set by the court for Ericsson’s standard essential patent (SEP) portfolio for cellular technology as well as whether the court abused Ericsson’s Seventh Amendment rights by entering a release payment based on factual issues that weren’t tried by a jury.

The Federal Circuit recently affirmed a Patent Trial and Appeal Board (Board) decision finding that Dr. Stephen Quake and Dr. Christina Fan’s (collectively, “Quake”) asserted claims were unpatentable for lack of written description under 35 U.S.C. § 112. See Quake v. Lo, Nos. 2018-1779, 2018-1780, 2018-1782, 2019 U.S. App. LEXIS 20407 (Fed. Cir. July 10, 2019) (Before Reyna, Chen, and Hughes, Circuit Judges) (Opinion for the Court, Chen, Circuit Judge). The claims were directed to a method for determining the presence of a chromosomal abnormality, called aneuploidy, in fetuses. Aneuploidy occurs when a fetus is born with either an abnormally high or low number of chromosomes. The claimed detection was accomplished using a method called massively parallel sequencing (MPS). Specifically, the claims recited a “random” MPS method, which amplified and sequenced all DNA in a sample rather than specific, targeted sequences of DNA. Quake, based out of Stanford University, and Dr. Dennis Lo (“Lo”) based out of Chinese University of Hong Kong began developing the claimed methods around the same time and requested interferences with respect to a number of applications to determine who invented the method first.

The case of Celgene Corp. v. Peter, Nos. 2018-1167 et al. (Fed. Cir. July 30, 2019) has drawn attention for its decision that inter partes review (IPR) may be applied to invalidate pre-AIA patents without running afoul of the Fifth Amendment’s prohibition of taking property without just compensation. Matthew Rizzolo and Kathryn Thornton, among others, have addressed the constitutional aspects of the decision. I will address the lesser issues decided by the Federal Circuit panel before it could reach those constitutional aspects. In particular, the Federal Circuit panel upheld the Patent Trial and Appeal Board’s (PTAB’s) conclusion that the claims in question were obvious. And, perhaps focusing upon the sparkling constitutional issue, the panel first had to address the mundane issues of obviousness; and in disposing of the obviousness issues, the panel set forth an analysis that is unclear at best and is in its present form arguably inconsistent with precedent and public policy.

This week in Other Barks & Bites: WIPO launches dispute resolution service for Chinese domain names; Morrison Foerster report shows that IP litigation costs are increasing as the number of IP matters being handled are decreasing; the Federal Circuit issues precedential decisions upholding claim construction findings at the ITC and overturning a district court jury verdict finding invalidity for being unsupported by record evidence; the Second Circuit clarifies when profits can be awarded in trademark cases; Uber IP transfer creates $6.1 billion tax break for the company; major football associations call for crackdown on Saudi piracy service; OPPO inks patent agreements with Intel and Ericsson; and Broadcom acquires Symantec’s enterprise security business.

In the latest stage of the nine-year VirnetX/ Apple patent saga, Apple has filed a Motion to Stay the Mandate and a Motion to Vacate in relation to the U.S. Court of Appeals for the Federal Circuit’s August 1 order denying Apple’s petition for rehearing and rehearing en banc. That petition related to the Federal Circuit’s previous Rule 36 judgment upholding a district court decision ordering Apple to pay VirnetX nearly $440 million.

Last week, the Patent Trial and Appeal Board (PTAB) issued 18 institution decisions based on petitions for inter partes review (IPR) proceedings, instituting 10 and denying eight. One of those denials ended a petition from Apple to challenge a touch screen patent owned by Nartron, although the PTAB instituted two other IPRs on the same patent the following Monday, giving rise to questions about whether the U.S. Patent and Trademark Office is effectively dealing with the issue of multiple petitions at the PTAB. Elsewhere, a pair of KOM Software patents asserted in separate district court proceedings against NetApp and Hewlett Packard each had two IPRs instituted against them after the patent infringement defendants teamed up to file petitions.

On June 12, the U.S. Court of Appeals for the Seventh Circuit decided Bodum USA, Inc. v. A Top New Casting Inc., No. 18-3030, 2019 (7th Cir. June 12, 2019). The case was based on Bodum’s allegation that A Top infringed Bodum’s unregistered trade dress in its Chambord® French press coffee maker design and squarely addressed the doctrine of “functionality” of trade dress. The court addressed two important issues related to functionality: (1) what type of evidence is necessary to prove functionality of a particular design and (2) under what circumstances are utility patents relevant to that analysis?

Since the Supreme Court upheld the constitutionality of inter partes review (IPR) a little more than a year ago in Oil States, several patent owners have brought other constitutional challenges to America Invents Act (AIA) trial proceedings. These cases have been slowly percolating at the Patent Trial and Appeal Board (PTAB), the U.S. Court of Federal Claims, and the U.S. Court of Appeals for the Federal Circuit. In many cases, however, the Federal Circuit has declined to address these constitutional claims on the merits, finding them unnecessary to resolve or insufficiently developed by the parties. But early last week, the Federal Circuit for the first time addressed the applicability of the Takings Clause of the Fifth Amendment to IPRs, holding in Celgene Corp. v. Peter, Case No. 18-1167 (Fed. Cir. 2019) “that the retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment.” While the court’s holding may appear on its face to forestall current and future Takings Clause challenges to AIA proceedings, its analysis leaves some questions unanswered, and may even provide a narrow path forward for future takings claims. Furthermore, given the Supreme Court’s predilection for addressing both AIA and Takings Clause issues, the Federal Circuit panel’s decision may not be the last word on this interesting issue.   

On July 31, Trading Technologies, a firm that develops software used for electronically trading derivatives, filed a combined petition for panel rehearing and rehearing en banc at the U.S. Court of Appeals for the Federal Circuit. The appellant is seeking review of the Federal Circuit’s earlier decision this May in Trading Technologies International v. IBG LLC (IBG IV), which confirmed the results of four covered business method (CBM) review proceedings at the Patent Trial and Appeal Board (PTAB) that invalidated patent claims owned by Trading Technologies as unpatentable under Section 101 of the patent law. In doing so, Trading Technologies argues that the Federal Circuit panel failed to follow both U.S. Supreme Court and Federal Circuit precedent, as well as previous Federal Circuit decisions upholding the validity of other Trading Technologies patents that share a specification with one of the invalidated patents.

Let’s face it, intellectual property (IP) litigation is a very expensive and risky endeavor. For the accused infringer, the prospect of going to trial means high legal fees and, even worse, a substantial disruption to the business. Even in cases where an accused infringer has viable defenses, leaving a ruling in the hands of the judge or jury is nothing more than a Las Vegas roll-of-the-dice. Whether through informal settlement discussions, mediation, or court-mandated settlement conference, IP defense litigators must arm their clients with a bevy of effective, business-minded settlement strategies. Settling does not have to mean capitulating and paying the other side an arbitrary sum of money to go away. Instead, think of ways to put your client’s available settlement dollars to work. Here are a few practical concepts to set your client on a viable settlement path.

The United States Court of Appeals for the Federal Circuit last week affirmed-in-part, vacated-in-part, and remanded a decision of the Patent Trial and Appeal Board (PTAB) in the long-running case of VirnetX Inc. v. Apple Inc., Cisco Systems, Inc. The case relates to three inter partes reexaminations maintained by Apple and Cisco. The PTAB found that Apple could proceed with its reexaminations under the America Invents Act (AIA) and held that claims of VirnetX’s patent numbers 7,418,504 (“the ’504 patent”) and 7,921,211 (“the ’211 patent”) were unpatentable as anticipated/obvious. These patents were directed to methods for “establishing a secure communication link between [computers] over a computer network, such as the Internet” and are “built on top of the existing Internet protocol.” Basically, the patents claim a way to create secure communication links via domain name service (DNS) systems.

The Federal Circuit recently vacated and remanded a decision by the Patent Trial and Appeal Board (PTAB), finding that the PTAB applied the wrong legal standard for determining whether a reference was publicly accessible before the critical date of the challenged patent. The Court found that the asserted reference was publicly accessible because a person of ordinary skill in the art could, through the exercise of reasonable diligence, access the reference. The decision, authored by Judge O’Malley, held that a patent challenger does not have to establish that the asserted reference was actually accessed or received or available to a significant portion of those skilled in the art to show that the work was publicly accessible. 

Recently a group out of the University of Surrey provided a new challenge to the definition of inventor, asking “who what may be an inventor on a patent?” The group has created an artificial intelligence (AI) named DABUS. Using a first system of networks to generate new ideas, and second system of networks to determine consequences, DABUS invented a beverage container and a flashing device used for search and rescue that are the subjects of patent applications filed in the United States and Europe.