Posts in Patents

Since the Supreme Court issued its decision in Alice v. CLS Bank five years ago today, patent eligibility jurisprudence and practice have become increasingly chaotic—at least in the opinion of many IP stakeholders and the members of Congress who are spearheading the effort to rectify the situation. Today, to commemorate Alice’s five-year anniversary/ birthday, IPWatchdog posed the following—admittedly somewhat leading—statement to a cross-section of the IP community, and gave them a chance to agree or disagree with it. Many did not respond—including the Electronic Frontier Foundation and Google—perhaps because of the sensitive moment in the history of patent eligibility law in which we find ourselves right now. However, the responses below do reflect a range of views on the impact of the case so far.

Today is Alice’s fifth birthday; some may not be celebrating, but as a birthday gift, John Vandenberg argues the decision was not new law and should not be abrogated. – On the third day of the U.S. Senate Judiciary Committee – IP Subcommittee’s hearings this month on whether to radically revise the standards for patent eligibility, I testified on behalf of our patent system’s under-appreciated second engine of innovation. Below are some of the key arguments I made in my oral and written testimony and my thoughts on why the Alice Corp. v. CLS Bank decision was good law that should not be abrogated. Much of the anti-Alice commentary touts our patent system’s first engine of innovation, which uses the lure of monopoly profits or royalties to incentivize innovation and the public disclosure of those innovations. Today’s Sec. 101 jurisprudence is said to harm that first engine of innovation, particularly in life sciences where it is easier to get a patent in Europe and China than in the U.S., causing investment in personalized therapy and medicine R&D in the U.S. to suffer. While some question those factual premises, the “101 status quo” camp primarily responds that Alice (along with IPRs) has curtailed abusive patent troll litigation, cutting patent litigation costs by 40% or more. But, another important point has received little attention: expanding what can be patented, and how claimed, risks harming our patent system’s second engine of innovation.

Here’s the hypothetical: A patent application has been filed for a new medical device. The device reads various physiological signals from a patient and presents, with previously unheard-of accuracy and reliability, the condition of the patient’s immune system.

Your client, who made a heavy investment in research and development of this device, wants U.S. patent protection, and is willing to pursue remedies in court if necessary.

A patent application has been filed. The subject matter has been claimed as a device and as a method. The claimed method recites actions performed with the physical components of the device.
To your client’s disappointment, a hypothetical examiner has rejected the claims as patent ineligible under section 101. The examiner relied principally upon the case of Electric Power Group, LLC v. Alstom, 830 F.3d 1350 (Fed. Cir. 2018), concluding that the method claims and the device claims “are directed to a patent-ineligible concept, namely, collecting information, analyzing it, and displaying certain results of the collection and analysis.”  If the “directed to” inquiry means that patent eligibility depends upon what the device does, then the examiner has a legitimate point invoking the Electric Power case. Your client’s device does indeed collect information, analyze that information, and display the results of the analysis. Even though the examiner had a legitimate point, that does not mean the examiner is correct; but it does mean that there is a good chance that the examiner will not reverse the stated position on ineligibility. You have, therefore, advised your client of the foreseeability that your quest for patent protection will have to go to the Patent Trial and Appeal Board (PTAB), and may well end up in court. Your client is ready to go the distance. Your immediate job is to respond to the pending rejection. You must argue in favor of patent eligibility under section 101. You must preserve the arguments you expect to make in the foreseeable appeals, even if you have confidence that the examiner’s ruling on patent eligibility will not be reversed by the examiner. You do not want to be in the position where an appellate tribunal points out that you are making arguments for the first time on appeal.

Late last week, the Federal Circuit issued Power Integrations, Inc. v. Semiconductor Components Indus., LLC and Regents of the Univ. of Minnesota v. LSI Corp. These two precedential decisions bring further clarity to who is subject to the time bar for filing petitions for inter partes review (IPR) and whether sovereign immunity protects patents from being subject to IPR challenges. The key takeaways are: (1) Consider the impact of mergers and acquisitions on IPR petitions, including those that have already been filed; and (2) Patents owned by states (including, state universities and research institutions) can be challenged in an IPR.

Coverage of the ongoing patent reform debate in the Senate Judiciary Committee by the popular press has been alarmist and largely incorrect. For example, even just yesterday—five days after the final hearing on patent eligibility reform concluded—the top story in Google’s patent alert results was “Corporations shouldn’t be able to patent your DNA,” which leads with the sentence, “The practice of patenting genes, once banned by the Supreme Court, may come back soon despite a measure of horror the very idea once inspired.” It would seem that those companies and entities that oppose reform to patent eligibility requirements are not going to meaningfully participate in the political process, and instead will wield their considerable PR machines in an effort to confuse, conflate and misdirect the public as part of their ongoing scheme to suppress innovation in America. Indeed, we know that the high-tech industry was invited to testify before the Senate Judiciary Committee, but refused, as Senator Thom Tillis (R-NC) explained at the second hearing. Why would the high-tech industry choose to ignore these Senate hearings, where many dozens of witnesses both for and against reform were invited to share their views?

This week, the U.S. Senate will hold hearings on enhancing drone innovation and addressing cybersecurity concerns; reducing prescription drug prices; and developments in geothermal energy technologies. The House of Representatives will host a hearing on clean energy tech development as well as a markup meeting on a proposed bill to increase participation in STEM careers. Meanwhile, think tanks the American Enterprise Institute and the Information Technology and Innovation Foundation will take a look at the patent reform debate with Representative Steve Stivers (R-OH) and explore the potential effects of proposed drug pricing reforms on innovation in the pharmaceutical sector, respectively.

It’s tough to fight on after losing an Alice appeal, but that’s just what most applicants are doing. An “Alice appeal” is an appeal of a patent rejection under 35 U.S.C. 101 for lack of statutory subject matter. The major field of these patents is business methods (class 705). More than half of business method applicants that are losing Alice appeals are taking action to keep their applications alive. The reasons for renewed hopes include the new 2019 Subject Matter Eligibility Guidance that came out in January, as well as the current movement in Congress to clarify 35 U.S.C. 101. With hope on the horizon, now is not the time to give up. The table below gives some recent examples of how both large and small applicants are continuing to prosecute their patent applications after losing an Alice appeal.

Villena v. Iancu (Supreme Court Dkt. No. 18-1223), which is the 43rd patent eligibility case to be considered for certiorari since the notorious Alice Corp. decision, was denied cert. on June 10. Villena would have been the 45th patent eligibility case to be considered for certiorari, but the Supreme Court kicked the can over to the Solicitor General for both Vanda Pharmaceuticals and Berkheimer, which happen to be Alice/Mayo cases in which the Federal Circuit held the inventions at issue to be patent eligible. That’s no coincidence. The rough probability of waiting through 43 petitions outlining the capricious decisions from the lower courts before the Supreme Court might generate a “yes” to certiorari is well-above one standard deviation and approaching two standard deviations. It is beyond evident that the Supreme Court refuses to clean up its own mess and will continue to do so for the indefinite future.

Google’s U.S. patent application 20190124318—originally assigned to Lytro, an American developer of light-field cameras, before it went defunct in March 2018—was published in April 2019. Google is actively working on concepts constructing Virtual Reality (VR) and Augmented Reality (AR) and has spun out products like Daydream, ARCore, Cardboard, Jump, Tilt Brush and Blocks, all of which benefit from light field technology. CNET reported last year that a number of Lytro employees were heading to Google after Lytro folded, and that Google would likely acquire some Lytro patents as a result. Global market research and management consultation company, Global Market Insights, reports that the light field market will grow to $1.5 billion by 2024, rising from $650 million in 2017. The 2017 figures point to media and entertainment industries like gaming, theaters and amusement parks, making up 25% of the overall industry shares. The adoption of the technology in cameras is predicted to drive this growth.

The Federal Circuit today ruled that The University of Minnesota (UMN)—an arm of the state of Minnesota—is not protected by state sovereign immunity from a number of inter partes review (IPR) petitions filed against UMN patents. Regents of the University of Minnesota v. LSI Corporation and Avago Technologies U.S. Inc (Fed. Circ., 2018-1559). The Court, in an opinion authored by Judge Dyk, relied heavily on its 2018 decision in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., 896 F.3d 1322 (Fed. Cir. 2018), which found that “tribal sovereign immunity cannot be asserted in IPRs.” Despite UMN’s arguments to the contrary, the Federal Circuit answered a question left open in its decision in Saint Regis Mohawk by concluding today that “the differences between tribal and state sovereign immunity do not warrant a departure from the reasoning in Saint Regis.”

This week in Other Barks & Bites: the Supreme Court’s decision in Return Mail prohibits the federal government from petitioning for America Invents Act (AIA) patent validity trials; the TERM Act is introduced into the House of Representatives to reduce patent evergreening; the leadership of the Senate IP Subcommittee calls for a restoration of America’s patent system before wrapping up its third patent eligibility hearing; Huawei asks Verizon to license more than 200 patents; the Ninth Circuit decides to rehear “Stairway to Heaven” copyright case en banc; Princeton University and Facebook are targeted with copyright and trade secret claims for scraping 3D image database; and the U.S. ban on supplying components to Huawei leads to decrease in Broadcom’s revenue.

Last week, the Patent Trial and Appeal Board (PTAB) issued 51 institution decisions, with denials narrowly edging out institutions by a 26-25 margin. In a decision on six Apple petitions, the PTAB terminated the consumer electronics giant’s challenges as time-barred; Apple had sought joinder to an already-terminated proceeding brought by Samsung. Elsewhere, Apple did successfully team up with Samsung and LG Electronics to challenge two patents owned by non-practicing entity Uniloc. Comcast had five petitions challenging a Rovi patent denied, but succeeded on one petition, which included seven obviousness challenges on that same Rovi patent. Expedia and various Internet travel booking websites lost out on a challenge to an IBM patent based on arguments already considered by the PTAB. Peloton Interactive also faces the potential invalidation of claims of three patents after a trio of successful institutions for Flywheel Sports.

IPWatchdog will host its first Annual Meeting and Conference from March 15-18, 2020. The event will take place at the Renaissance Dallas Richardson in Dallas, Texas. Registration will begin on Sunday, March 15, followed by an opening General Session, and then an Opening Reception. We will begin Monday, March 16 and Tuesday, March 17 with breakfast. Each morning will feature two General Sessions, followed by lunch, and then a series of breakout panels in the afternoon. A Networking Cocktail Reception will be held both Monday night and Tuesday night. We hope everyone will stay and celebrate St. Patrick’s Day with us on Tuesday evening, March 17. We will conclude with an ethics breakfast on Wednesday, March 18, which will provide two hours of ethics credit for those attorneys in attendance.

In late May, news reports surfaced regarding allegations of trade secret theft committed by Chinese telecom giant Huawei Technologies that had been made in an Eastern District of Texas case. The claims targeted an executive working for Huawei who is accused of participating in a scheme to misappropriate trade secrets from California-based semiconductor startup CNEX Labs. The recent filings mark a new turn in the case, which was originally filed in 2017 by Huawei when it accused CNEX of committing trade secret theft and poaching employees in an effort led by a former Huawei employee and CNEX co-founder. CNEX Labs might be a startup, but it has been attracting venture capital funding for its cloud software and solid-state drive controller products from major names in the tech industry, including Dell and Microsoft. While Huawei has made its own allegations against CNEX, news reports indicate that Huawei’s attempt to access a closely guarded research project by working through a Chinese university professor isn’t an isolated incident. In fact, such activities may be a major factor behind the company’s rapid rise in recent years.

Most U.S. patent practitioners are keenly aware of the foreign filing license requirement for filing of U.S. patent applications abroad. Since it is common for U.S. based companies to file a U.S. priority patent application and take advantage of the one-year grace period for foreign filing, a foreign filing license is typically issued without much thought to the matter. Given the propensity for international companies and many universities to routinely carry out inventive activities in multiple countries by inventors of varied citizenships, the opportunities to run afoul of foreign filing license requirements is of growing concern, and this concern extends well beyond the walls of the U.S. Patent and Trademark Office (USPTO).