Posts in Patents

Based on the age of many of us in the room, President Reagan was probably the first president many of us remember. And I mention this because we need another President Reagan—another person like that, who sees the power of the patent system. Upon taking Office, President Reagan told the then leaders at the patent office that the backlog of unexamined patent applications was unacceptable and he wanted it brought down to 18 months in his first term. The leaders at the patent office told him that that was simply not possible. That’s how bad the backlog was then. And then President Reagan and his advisors asked whether it would be possible to reduce the backlog to an average pendency of 18 months within two terms, assuming he would be given two terms. And they said, “yes, we think we can do that within two terms.”  And they didn’t quite get it done, but they got really, really close. They got to around 18.2 or 18.3 months average pendency by the end of President Reagan’s second term. And it was because President Reagan invested in the patent office.

Over the course of two weeks, the United States has imposed tariffs on hundreds of billions of dollars of Chinese goods and has blacklisted Huawei, the world’s largest telecommunications company, on national security grounds. Google, Intel, Qualcomm and Micron have announced that they will stop doing business with the company. The United States has even threatened to withhold intelligence from our key allies if they go forward with plans to use Huawei equipment. Although there are many issues driving this newly escalated trade war between the United States and China, chief among them is the concern that China and its companies are engaged in intellectual property theft. Say what? Upend global markets over infringement of private technology rights? This must be pretty serious. Let’s take a closer look.

IPWatchdog’s coverage of the November 2017 Bunch O Balloons district court trial left off with an Eastern District of Texas jury awarding $12.3 million in damages to patent owner Tinnus Enterprises and its partner ZURU against major U.S. telemarketing firms Telebrands and its subsidiaries. The jury found that Telebrands had willfully infringed Tinnus’ patents that protected Tinnus’ Bunch O Balloons invention, and that those patents were not invalid. But even with the November 2017 jury award in place, Tinnus still faced the upcoming specter of patent validity trials for which Telebrands had petitioned the Patent Trial and Appeal Board (PTAB) for the patents-in-suit. Additionally, the Eastern District of Texas had not yet ruled on post-trial motions regarding the jury’s verdict.

To kick off the month in which Alice v. CLS Bank will turn five, the Senate Judiciary Committee’s Subcommittee on Intellectual Property will hold its first two hearings on “The State of Patent Eligibility in America.” The hearings are scheduled for Tuesday, June 4 and Wednesday June 5, both at 2:30 PM in the Dirksen Senate Office Building, and the Subcommittee has now published the rosters for both hearings. As mentioned in a Senate press release last week, there will be three hearings held in total, on June 4, 5 and 11, featuring three panels of five witnesses each, for a total of 45 witnesses over three days. Overall, it is quite balanced between those who will argue for and against reform. This is quite a change in and of itself; congressional hearings on patent legislation over the past decade have largely favored those arguing against pro-patent reforms. IPWatchdog will cover these hearings, and several of the witnesses testifying next week — Chief Judge Paul Michel, Sherry Knowles and Phil Johnson —will be speaking later in the month at our Patent Masters™ Symposium titled Alice Five Years Later. 

When drafting Patent Cooperation Treaty (PCT) applications, or applications intended to be prosecuted abroad, a U.S. drafter inevitably faces the challenge of providing a description in line with the requirements of different jurisdictions. By the time feedback is received from the foreign patent offices, it will be too late to make any adjustments, and important aspects of the invention may inadvertently be lost. The challenge might feel impossible when dealing with the requirements of the European Patent Office (EPO), as the European Patent Convention (EPC) regulations on written description are framed in a way that is fundamentally different from U.S. regulations. For example, the requisites of providing an adequate description and notice of the metes and bounds of the claimed invention are framed in the United States as separate requirements (written description and definiteness respectively) with different legal bases (35 USC 112(a) for written description and 35 USC 112(b) for definiteness respectively).

Senators Coons and Tillis and a group of Representatives recently proposed an admirable piece of legislation to amend the Patent Act to abrogate Supreme Court Section 101 cases on patent eligible subject matter. I like that they propose a fix to Section 101. So far, so good. Alice was an interpretation of Mayo, which was an interpretation of Flook, which was an interpretation of Benson, which was supposed to be an interpretation of what Congress meant by the short and crisp statement of Section 101 of the Patent Act. But just as a photocopy of a photocopy of a photocopy gets more distorted with each generation, so did Supreme Court rulings. The judicially-invented residue left behind not only errs by failing to capture the plain and unambiguous scope of Section 101 and patent-eligible subject matter, but also catastrophically undermines and invalidates important patents that, until then, protected breakthrough inventions. Congress is right to step in. Inventors of breakthroughs need protections to form companies and create new jobs. What the senators propose is not perfect, but at least as far as Section 101 is concerned, will restore fairness to many future outcomes.But there’s an extra bit. To call it alarming would be an understatement. That extra bit would sharply and sweepingly limit the property rights of all technology patents. The proposal (as currently drafted) amends Section 112 to require any patent claim limitation that names any function “without the recital of a structure, material or act in support thereof” to be interpreted as limited to the structural embodiment in the patent specification that practices that function (plus equivalents).

This week, both houses of Congress sit silent during scheduled work periods, although the House Infrastructure Subcommittee will host a hearing on rural broadband Internet access in Minnesota. Back in Washington, D.C., tech and innovation think tanks kick off the week with an event on bridging the STEM education gap hosted by the Consortium for Science, Policy and Outcomes. Later in the week, the American Enterprise Institute explores issues in promoting security in 5G networks, the Information Technology and Innovation Foundation meets at the NIST headquarters in Gaithersburg to discuss standards setting for artificial intelligence tech, and the Brookings Institution focuses on the CIA’s efforts to police online channels to identify threats while balancing those activities with Americans’ civil liberties.

Despite falling average prices, in 2018, the patent market grew fast. We estimate the 2018 market size to be $353 million, up from last year’s estimated $296 million. The 2016 market slump (estimated $165 million market) is, hopefully, a thing of the past. In order to make this estimate, we use the observed sales that occurred in the 2018 market year and used their actual asking prices to determine the market size. As is consistent with the previous two years, if no pricing guidance was provided, the average asking price per asset for the market year of the sale (eg $123,000 for 2018 market year sales), was multiplied by the number of assets to determine the expected asking price. In the 2018 market year, 210 sales were identified, accounting for a total asking price of $527 million. Due to recordation delays, we assume that we have not yet seen 3% of the sales that occurred in the timeframe, so we multiplied this total asking price by 1.03 before applying our standard 35% discount between asking price and expected selling price. Thus, our expected total market size for the 2018 market is $353 million, indicating that the market has increased by 19% since last year and 114% since the 2016 market.

On May 13, patent owner Opticurrent, LLC, filed an emergency motion for leave to file a supplemental motion for judgment  in a patent infringement case being fought out in the Northern District of California against high-performance semiconductor supplier Power Integrations, Inc. The motion, which ultimately asks the district court to render judgment on Power Integrations’ patent invalidity claims, alleges that the defendant has engaged in “gamesmanship” meant “to derail the Article III court system in the event of an adverse outcome on infringement by… manufacturing a race to an administrative outcome intended to circumvent the authority of this Court.” The case goes back to April 2016, when Opticurrent first filed charges against Power Integrations, alleging infringement of U.S. Patent No. 6958623, titled Three Terminal Noninverting Transistor Switch. Power Integrations followed with a counterclaim in which it asserted invalidity of the ‘623 patent, submitted expert discovery, and filed a motion for summary judgment of invalidity based on one of its alleged prior designs, but not based on any other reference contained within its invalidity contentions or expert report.

As a buyer, tracking the behaviors of sellers, both in aggregate and individually, allows you to operationalize your buying activities. This is especially true for repeat sellers, who account for 41% of the transactions for patent packages listed in calendar years 2017 and 2018. Knowing who the regular sellers are, often companies with a large portfolio, allows you to contact sellers to create a private deal. Keeping track of a seller’s listings, package sizes, and asking prices can also help you in negotiations because you know their negotiation parameters at the outset. Similarly, if you are a seller, it is important to get out the word that you are selling. Listing packages on your website, through the IAM Market, or working with brokers attracts buyers to you rather than you having to spend the time and effort to find them. For the analysis of current sellers and buyers we looked at all of the packages that sold between January 1, 2017 and May 31, 2018 (assignments were last checked on August 15, 2018) regardless of their listing date. Sales continue to be made mostly by operating companies, which is not surprising as they file the majority of patents. Operating companies were the sellers in 67% of transactions. This is remarkably consistent, at 66% in the previous two papers.

This week in Other Barks & Bites: Chinese state media pushes back on the United States’ claims of intellectual property theft; a bipartisan coalition from both houses of Congress releases a draft proposal of Section 101 patent law reform; Senator Coons seeks more information on Amazon’s privacy practices for Alexa devices; the city of Baltimore files a lawsuit over a scheme to delay market entry of a generic to the Zytiga prostate cancer treatment; the USITC institutes a patent infringement investigation of Comcast after several complaints from Rovi; USPTO Deputy Director Peters files a petition brief in a Supreme Court case over USPTO personnel expenses incurred during litigation instigated by patent applicants; and Qualcomm plans to appeal adverse ruling in Northern California antitrust case brought by the FTC.

This is the last in a 13-part series of articles authored by Kilpatrick Townsend. The series examined industry-specific patent trends across 12 key patent-intensive industries. In this 13-part series, we introduced our patent trends study (performed in a collaboration between Kilpatrick Townsend and GreyB Services) and provided high-level data across 12 industries. Today’s article pertains to the Building Materials industry and its enabling technology. Innovation in this space is motivated by more than just buildings, but also hydrocarbon production and aerospace applications. For example, deep sea concrete encasements and insulation for space modules are inventions that have far broader applications. California dominated the patent filings in every patent cluster of the study except Building Materials, where Texas has the most filings. This tech cluster is pushing the envelope for cutting-edge applications that will find their way into such things as green or smart building materials over time so that all consumers benefit.

In Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1376 (Fed. Cir. 2015) the Federal Circuit belittled pioneering work at Oxford University, indisputably one of the world’s leading research institutions. In the Athena Diagnostics v. Mayo Collaborative Services decision handed down early in 2019, the Federal Circuit surpassed itself by belittling pioneering work representing the combined efforts of Oxford University and the Max-Plank Gesellschaft, two of the world’s leading research institutions. A petition for en banc review has been filed and is supported by amicus briefs. This article further supports the need for review, emphasizing inadequate attention paid to the positive eligibility provisions of 35 USC 101, conflict with Diamond v Diehr, an inadmissible extension of admissions within the patent description regarding a genus of techniques to cover a previously undisclosed species of techniques within the genus, and the need to give equal treatment to those who make pioneering inventions or discoveries and those whose inventions or discoveries are incremental.

On May 7, the U.S. Patent and Trademark Office (USPTO) designated two recent decisions of the Patent Trial and Appeal Board (PTAB) as precedential, bringing the number of PTAB decisions declared precedential since the beginning of this March to 11. The recently designated decisions, both of which resulted in the denial of institution in inter partes review (IPR) proceedings, appear to be part of a general trend to designate as precedential patent owner-friendly decisions denying the institution of PTAB trials. The first of these recent precedential designations was NHK Spring Co., Ltd. v. Intri-Plex Technologies, Inc., an IPR proceeding that was denied institution last September. NHK Spring had requested an IPR to challenge the validity of four claims of U.S. Patent No. 6183841, titled Optimized Low Profile Swage Mount Base Plate Attachment of Suspension Assembly for Hard Disk Drive. The patent covers a disk head assembly having a low-profile base plate which addressed a need for increased data storage capacity in hard disk drives.

A group of Senators and Representatives has just released the draft text of a bipartisan, bicameral proposal to reform Section 101 of the Patent Act. Senators Thom Tillis (R-NC) and Chris Coons (D-DE), Chair and Ranking Member of the Senate Judiciary Subcommittee on Intellectual Property; Representative Doug Collins (R-GA-9), Ranking Member of the House Judiciary Committee; Hank Johnson (D-GA-4), Chairman of the House Judiciary Subcommittee on Intellectual Property and the Courts; and Steve Stivers (R-OH-15) sent the draft text via press release today. The stated goal of releasing the draft is to solicit feedback—there will be additional stakeholder feedback and Senate hearings, according to the press release.Senate hearings on the topic will be held on June 4, 5 and 11 featuring three panels of five witnesses each, for a total of 45 witnesses over three days. The draft text explicitly states that “the provisions of section 101 shall be construed in favor of eligibility.”