Robert Levy

Since the issuance by the United States Supreme Court of its opinion in Alice Corporation Pty Ltd. v. CLS Bank International, 573 U.S. 208, 134 S. Ct. 2347 (2014), the United States Patent and Trademark Office (USPTO) has increased its focus on patent eligibility. As a consequence, patent applicants now receive more claim rejections under 35 U.S.C. § 101, leading to protracted prosecution. While rejections under 35 U.S.C. § 101 are likely unavoidable, patent attorneys and agents can take steps during application preparation and prosecution to minimize the likelihood of such rejections and to successfully rebut such rejections when they do arise.

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.

Inequitable conduct remains the most powerful defense to patent infringement. In contrast to other defenses to patent infringement that require a claim-by-claim analysis, the defense of inequitable conduct is global. A finding of inequitable conduct renders the entire patent unenforceable. For this reason, the U.S. Court of Appeals for the Federal Circuit has referred to the defense of inequitable conduct as the “atom bomb of patent law” Aventis Pharma S.A. v. Amphastar Pharmaceutical, Inc., 525 F.3d 1334, 1349 (Fed.Cir.2008). Given the tremendous impact of the inequitable conduct defense, the Federal Circuit, in Therasense, Inc. v. Becton, Dickinson and Co., 649 F. 3d 1276 (Fed. Cir., 2011), has significantly increased the burden on patent infringers who assert this defense. Rather than needing to prove materiality in the context of 37 C.F.R. § 1.56 and intent to deceive, Therasense now requires an infringer prove “but for” materiality and a specific intent to deceive—a much higher burden than before. To the disappointment of those who believed that Therasense would spell the demise of inequitable conduct, this defense to patent infringement remains alive and well, although less prevalent than before. See Energy Heating, LLC v. Heat On-The-Fly LLC, 889. F.3d 1291 (Fed. Cir. 2018). Moreover, the Federal Circuit, in Gilead Sciences, Inc. v. Merck & Co. 890 F.3d 1231(Fed. Cir 2018), now seems to recognize an equitable defense (“business misconduct”) separate from inequitable conduct to penalize patentees for unethical behavior committed outside of the confines of patent prosecution before the United States Patent and Trademark Office (USPTO).

All too often, the prospective licensee/purported infringer usually doesn’t begin its efforts to acquire the patent(s) until after making disparaging statements about them during negotiations.  As an example, consider the time line discussed in the case of Gust, Inc. v. Alphacap Ventures, LLC, No. 2017-2414 (Fed. Cir. September 28, 2018) in which Alphacap Ventures, the purported infringer, demanded re-assignment of the patent owner’s patents as part of a settlement offer, but only after arguing for the invalidity of such patents under 35 U.S.C. § 101… While disparaging the patents question might serve a useful purpose in reducing their value, such disparaging statements will likely haunt the new owner during subsequent assertion assuming the new owner conceals such statements because of their potentially harmful nature.