Court Awards $15,000 for Linguine Car Wash Massacre

by Dennis Crouch

Artist Christopher Boffoli is known for his detailed photographs contrasting small people with large food. In 2015, Atemis LLC allegedly posted a couple of images of Boffoli works on Facebook and mis-attributed the works to other artists in the same small-people-large-food genre.  Atemis has a food-ordering app called “Let Eat Go” and the FB posts were in conjunction a FB page for the app.

Two years later – December 2017, Boffoli discovered the use of his images and then sued for copyright infringement in 2018. I’ll note that naming-the-wrong-artist itself is not copyright infringement, but may have triggered Boffoli enough to sue.

Atemis did not show up to court and so the clerk awarded default under FRCP 55(a).

Entering a Default. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.

R.55(a).  After a bit of back-and-forth with the Judge, the court has now also awarded Default Judgment under R. 55(b) for $15,000.

When the complaint asks for a “sum certain,” then the court clerk will simply enter that amount as the default judgment. R. 55(b)(1).  Here, the plaintiff asked for $150,000 as a statutory damages for willful infringement.  However, the district court implicitly ruled that 55(b)(1) doesn’t apply — perhaps since the copyright act expressly puts the calculation of statutory damages in the hands of the judge.

[C]opyright owner may elect … statutory damages … in a sum of not less than $750 or more than $30,000 as the court considers just. . . . In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000.

Here, the court first ruled that the evidence submitted in its motion for default judgment was not sufficient to prove willful infringement.  The court then found that $15,000 was the “just” amount.

Atemis may still escape judgment on personal jurisdiction. It may turn-out that the W.D. Washington court has no personal jurisdiction over the Delaware company. In that case, the default judgment would be void under R. 60(b)(4).

Boffoli has been a frequent copyright litigant — having filed more than a dozen additional infringement suits over the past decade.

Non-Analogous Art — More than Simply Different

Obviousness is the central patentability doctrine.  Obvious innovations are not patentable. Instead, to be patentable, and invention must embody a substantial step beyond what was known in the prior art.  Unlike its more rigid brother-doctrine of anticipation, obviousness is flexible to its core.  This flexibility leaves the doctrine both powerful and subject to many lawyer arguments.

A new petition for writ of certiorari to the Supreme Court asks two seemingly simple questions:

  1. In making rejections under 35 U.S.C. § 103(a), what standard should be applied in determining whether prior art is “analogous?”
  2. If the prior art is demonstrated to be non-analogous, does that render any such obviousness rejection void?

Macor v. USPTO, Sct. Docket No. 18-1072.

Although the questions presented may be interesting in the abstract – the actual underlying arguments are extremely weak:

The invention in this case stems from a problem in the collectables market of certifying authenticity.  The patent application here claims a FLASH-drive that contains an “immutable digital image” of a collectable (such as a coin).  The drive itself will also include “tamper resistant visual markings” that tie it to the particular collectable.

 

The examiner rejected the pending claims as obvious based upon U.S. Patent No.
6,250,549 (DeFabio) both alone and in combination with other references.

DeFabio is also focused collectable authentication — particularly celebrity signatures.  That patent discloses the idea of taking a photograph or video of the celebrity signing the particular collectable item (having a unique identifier) and distributing memorablia kit that includes both the original signed collectable and a storage medium with the image.

The applicant’s non-analogous argument here is simply that DeFabio uses a different method of authentication.  That approach, however, would prove too much, since all obvousness-type art exhibit some differences from the invention at issue.  Macor’s line would effectively exclude all obviousness-type prior art and entirely undermine the doctrine.  In patent law class, I like to discuss the idea of eliminating the obviousness doctrine as a hypothetical what-if scenario.  But, the Supreme Court will certainly not be the body that takes that transformational step.  The Federal Circuit decided this case without opinion and I expect the Supreme Court to follow that approach as well.

Read the Petition.

 

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A Written Description of the Invention (including how it is made?)

by Dennis Crouch

CenTrak v. Sonitor Tech (Fed. Cir. 2019) is a quirky case that basically stands for the (wrongheaded) proposition that the Written Description Requirement does not usually require a description of how to make the invention actually work. Here, largely the court relied on the broad language of Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180, 1191 (Fed. Cir. 2014) (“written description is about whether the skilled reader of the patent disclosure can recognize that what was claimed corresponds to what was described; it is not about whether the patentee has proven to the skilled reader that the invention works, or how to make it work, which is an enablement issue.”).  

The district court dismissed this infringement lawsuit on summary judgment — finding the asserted claims invalid for lack of written description or not infringed (or both).  On appeal the Federal Circuit reversed that determination — finding both issues ripe with “genuine disputes of material fact.”

The patent at issue here claims the use of ultrasound signals to track location of a mobile device (typically a patient in a hospital).  U.S. Patent 8,604,909.  There are several reasons why ultrasound can be a better option than WIFI or infrared (IR) signals for location detection within a small area.  For example, the steeper proximity decay makes it much less likely that a distant base-station would pick-up the signal. Thus, location can be discovered and without needing triangulation or highly precise equipment.  Both the patentee and accused infringer deal in ultrasonic location equipment.

All the claims are directed to the ultrasound approach.  However, it does not appear that the inventor initially cared much about the ultrasound approach. Rather, the original provisional application does not mention ultrasound at all [60881269].  While the subsequent priority non-provisional application also focuses primarily on the use of IR and RF signals, it does does include two-sentences disclosing ultrasound signalling:

Although IR base stations 106 are described, it is contemplated that the base stations 106 may also be configured to transmit a corresponding BS-ID by an ultrasonic signal, such that base stations 106 may represent ultrasonic base stations. Accordingly, portable devices 108 may be configured to include an ultrasonic receiver to receive the BS-ID from an ultrasonic base station.

The original priority filing also included one claim directed to ultrasonic detection.  That claim was the subject of a restriction requirement and withdrawn.  The patent at issue is the resulting divisional application filed with a set of 25 claims all directed to ultrasonic detection.

At trial, the inventor admitted that the invention did not describe an ultrasonic portable device:

Q. But there’s no ultrasonic portable device that is actually described in the ’909 patent; right?

A. This is correct, yeah.

But, the inventor indicated (supported by expert testimony) that a person of skill in the art would have little trouble adapting the disclosure to build the ultrasound system.

[To make the invention]  You have to understand how to drive an ultrasonic transmitter, how to receive an ultrasonic signal, and how to process them. But this is known art to people who are knowing ultrasound.

In its invalidity decision, the district court focused on the testimony of no example device and concluded that the mere mention of ultrasonic techniques was not sufficient to satisfy the written description requirement.  The court explained, for instance, that the claims include timing synchronization elements that were explained for IR, but that timing could be quite different for ultrasound of speed (speed of light vs speed of sound) and reflection differences.

= = =

The written description requirement is a test of for sufficiency of disclosure — The disclosure must “reasonably convey . . . that the inventor had possession of the claimed subject matter as of the filing date.” Ariad.  The basic question is whether the specification as originally filed provides evidence that that the inventor actually invented what is being claimed.

In looking at the evidence on appeal, the Federal Circuit found a “genuine issues of material fact” as to whether “disclosure of the implementation details” is necessary to satisfy the written description requirement.  According to the court, written description does not demand examples, or actual reduction to practice. Rather, the law only requires “identif[ication] of the claimed invention . . . in a definite way” quoting Ariad.

Here, the court concluded, “the specification at least mentions base stations and receivers that use ultrasound,” and in many cases such a mention is sufficient to satisfy WD.  One question that arises from Ariad is the level of detail required. In that case, the court explained that “the level of detail required to satisfy the written description requirement varies depending on the nature and  cope of the claims and on the complexity and predictability of the relevant technology.”  Here, the court concluded that the level of complexity and predictability is a factual issue in dispute and thus that it should go to trial rather than be decided on summary judgment.

In this process, the court noted that on remand, the district court should also consider the separate doctrine enablement that may bear more teeth in this type of situation.

On infringement, the district court also dismissed the case for lack of infringement. The claims require use of wireless computer network, including a backbone, Wi-Fi access points, and server hardware. The accused infringer does not supply this material but instead piggy-backs its systems as an add-on to the already existent network.  The district court found that no single entity had “made” the system and so Sonitor could not be liable as a direct infringer.

On appeal, the Federal Circuit rejected that analysis — finding material evidence that Sonitor was the “final assembler” of the system and thus could be held liable for “making” the invention.   I’ll note here that the hospitals themselves could be held liable, but the patentee would rather extract rents from its direct competitor rather than its potential clients.

 

User Interface Claims are Technological and Thus Not Subject to Business Method Review

by Dennis Crouch

IBG LLC v. Trading Technologies Int’l (Fed. Cir. 2019) (non-precedential)

This appeal stems from Covered Business Method (CBM) Review decisions on four related patents owned by TT.  The PTAB instituted all four CBM reviews. However, by the time of final decision, two of the challenged patents had been already upheld on eligibility by the Federal Circuit.  For those two patents, the PTAB followed the court’s lead and found the patents were directed to eligible subject matter. However, claims of the second set of patents were ruled invalid as ineligible and obvious.

On appeal, the Federal Circuit took a shortcut. Rather than directly addressing the underlying patentability question, the court vacated the PTAB determinations on jurisdiction grounds.  The court held that the inventions at issue are “technological” and therefore not “covered business methods.”

Section 18 of the America Invents Act (AIA) creates the “Transitional Program for Covered Business Method Patents.” The program, which sunsets in 2020 allows broad challenges of business method patents — including challenges on eligibility grounds.  However, the law includes a strict and limited definition of what counts as a “covered business method patent.”

The term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

18(d)(1).

In its prior statement on the TT patents, the Federal Circuit ruled that the user interface patents were “directed to a specific improvement to the way computers operate.”  Here, the court found its prior holding (as adopted by the PTAB) automatically leads to a conclusion that “the patents are also for a ‘technological invention’ under any reasonable meaning of that term.”  The Board’s holding otherwise, according to the court, is “internally inconsistent and therefore arbitrary and capricious.”  The result here is that the PTAB does not have authority to conduct a CBM review of these patents because they are “technological.”

CONFLICT DISCLOSURE: While in practice at the MBHB firm, I represented Trading Technologies and personally filed several infringement complaints asserting some of the patents at issue here.  MBHB is also the primary financial sponsor of Patently-O. – DC

 

Case Dismissed: No Standing When Deal Fell Through

Momenta Pharma v. Bristol-Myers Squibb Co. (Fed. Cir. 2019)

In this recent decision, the Federal Circuit dismissed Momenta’s appeal — finding that the company lacks standing to appeal its loss before the PTAB.  The decision stands on fairly controversial grounds and in some tension with Supreme Court jurisprudence on appellate jurisdiction requirements.  Still, I suspect it will be cabined-in by its facts and not have a large precedential impact.

In 2015, Momenta petitioned for inter partes review of US Patent 8,476,239 owned by BMS. The patent covers a particular immunosuppressive formulation sold as ORENCIA .  At the time, Momenta was exploring an ORENCIA biosimilar as part of a partnership with Mylan.  And, over the years, Momenta has apparently conducted clinical trials on aspects of the product.  According to Momenta, during that time the ‘239 patent has been a clear obstacle to the project’s success.

Back to the administrative action: In the IPR, the PTAB sided with the patentee BMS — finding that the claims were not proven invalid (i.e., confirming the claims). Momenta appealed.

The Patent Act allows for any “person” to file IPR petitions and also indicates that the losing party of an IPR (here the patent challenger) has a right to appeal the decision to the Federal Circuit.  Although the statute provides a right to appeal, the U.S. Constitution has a further standing requirement before the courts are allowed to step in and pass judgment.  In particular, the Case and Controversy clause of Article III requires a genuine material dispute between the parties that can be resolved by the litigation.

By the time the appeal rolled around, Momenta’s clinical trials turned out to be a failure and BMS filed for dismissal — arguing that Momenta was no longer planning to use the invention and thus had no stake in the validity/invalidity of the patent. Momenta first responded that it was still intent on producing an ORENCIA biosimilar, but later the court was updated with information showing that Momenta was exiting its partnership with Mylan and was no longer developing the biosimilar.  Momenta did not provide any further explanation as to whether it had standing — and the Federal Circuit ultimately determined that Momenta no longer had standing. Thus, the appeal was dismissed for absence of standing/jurisdiction and for mootness.

A party filing an appeal must have a “concrete and particularized” interest at stake in order for a court to have Constitutional jurisdiction over the case (“Article III Jurisdiction”).  This interest required during all parts of the litigation.  Here, the court ruled that Momenta may have once had an interest at stake, but that interest “has now been eliminated by Momenta.”

Although momenta still has a potential of receiving royalties on a future biosimilar impacted by the patente, the court agreed with the patentee that interest was “too speculative to support standing.”

= = = =

There are a long line of Supreme Court and DC Circuit cases that involve situations parallel to this that begin with a statutory right to an administrative action.  In those cases, the standing issue arises when the party attempts to appeal a negative administrative decision.  The basic rule in these cases is that a concrete and particularized interest needs to exist before the court will get involved. That said, the courts have allowed for a reduced standing requirement in these appeal cases as compared with what is required for a new district court action.

My concern with this case is the basic notion that Momenta’s standing to challenge the patent completely disappeared based solely on a mid-appeal SEC filing stating that a particular deal had fallen-through.  From that front, this appears to be a rash decision by the Federal Circuit.  On the other hand, I think that the better frame for seeing this case is to recognize that Momenta could have (but did not) update and explain its standing argument based upon its withdrawal from the Mylan-biosimilar project.  In Federal Court each party is expected to affirmatively make its case, and Momenta simply did not make its case.

Perhaps Momenta did not provide any explanation because it no longer cared about the case — providing a precise primary justification for the standing rule in the first place.

Progress and Potential: A profile of women inventors on U.S. patents

The following comes directly from the USPTO: 

On February 11, 2019, the USPTO released “Progress and Potential: A profile of women inventors on U.S. patents,” a report on the trends and characteristics of U.S. women inventors named on U.S. patents granted from 1976 through 2016. The report shows that women still comprise a small minority of patent inventors. Further, it highlights the untapped potential of women to spur U.S. innovation. Women, like other under-represented groups, are among the “lost Einsteins”—people who may contribute valuable inventions had they been exposed to innovation1 and had greater access to the patent system.

line chart showing consistent upward trend of three variables: patents with at least one woman, women inventor rate, and women's share of total patenting. X-axis shows time 1976-2016. Y-axis shows percentage from 0-25 percent.

Download report

Major findings:

  • The share of patents that include at least one woman as an inventor increased from about 7 percent in the 1980s to 21 percent by 2016.
  • Even with this increase in patent counts, women inventors made up only 12 percent of all inventors on patents granted in 2016.
  • Gains in female participation in science and engineering occupations and entrepreneurship are not leading to broad increases in female patent inventors.
  • Technology-intensive U.S. states, and those where women participate more in the overall workforce, show higher women inventor rates.
  • Women inventors are increasingly concentrated in specific technologies and types of patenting organizations, suggesting that women are specializing where female predecessors have patented rather than entering into male-dominated fields or firms.
  • American businesses have the lowest women inventor rates among the various categories of U.S. patent owners.
  • Women are increasingly likely to patent on large, gender-mixed inventor teams, highlighting the growing importance of understanding the relationship between gender and innovative collaboration.

 


1 Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova, John Van Reenen; Who Becomes an Inventor in America? The Importance of Exposure to Innovation, The Quarterly Journal of Economics, forthcoming, https://doi.org/10.1093/qje/qjy028(link is external)

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Words of Ambiguity in Specification Save patent Scope

by Dennis Crouch

Continental Circuits LLC v. Intel Corp (Fed. Cir. 2019)

Claim-construction used to be the bread-and-butter of Federal Circuit decisions.  That standard was of course upset by the onslaught of eligibility decisions from district courts and BRI obviousness cases out of the PTAB.

The patents at issue here all relate to circuit board construction – and dealing with the problem of delamination. The claimed solution is uses “a unique surface structure . . . comprised of teeth that are preferably angled or hooked like fangs or canine teeth to enable one layer to mechanically grip a second layer.” The figure below from the patent provides an example of how the layers might fit together.

The toothy layers can be formed in various ways — etching

Step 6, as discussed subsequently in greater detail, involves the etching cavities, veins, openings, or gaps in the applied dielectric material 8, or more particularly an outermost surface thereof, to accommodate the teeth. One technique for forming the teeth is somewhat similar to what has been known as the swell and etch or desmear process, except that contrary to all known teachings in the prior art, in effect, a “double desmear process” is utilized.

During prosecution, the patentee also explained that the invention uses “two separate swell and etch steps” to form the teeth.  However, the claims themselves do not expressly require the double pass process.

In the first decision in this case, the district court considered the claims, specification, and prosecution history and found that the claims should be interpreted to require a double pass — even though not expressly required by the claims. Because the accused infringers only used a single-pass, non-infringement was then an easy finding.

On appeal,  the Federal Circuit has rejected the narrow claim construction.  As is its process, the court began with the claim language — finding that ” at least based on the plain language, the claims are not limited to a repeated desmear process.”  Moving then to the specification, the court found no “clear and unmistakable disclaimer” of the claim scope covering a single-pass method.  For the court here, the deciding factor appears to be the patent attorney’s care in drafting the specification. Here, the specification calls double desmear “one technique” that the invention “can be carried out” and “for example” rather than calling the approach “the invention.”

This approach here is properly seen as a patent drafting trick rather than an improved disclosure or invention.  We know this because, although the specification called its double-pass approach “one technique” it did not describe any other technique — except for the prior art single-pass technique that the specification bemoaned as inferior. 

Still, the Federal Circuit sided with the patentee and found that the words of ambiguity sufficient to avoid a claim scope narrowing.

Heeding the warning in Phillips to keep in mind that a goal of the specification is to provide a best mode to make and use an invention, phrases such as “one technique,” “can be carried out,” and “a way” indicate that using Probelec XB 7081 is only one method for making the invention and does not automatically lead to finding a clear disavowal of claim scope. We have also “expressly rejected the contention that if a patent describes only a single embodiment, the claims of the patent must be construed as being limited to that embodiment.” Id. . . . Additionally, distinguishing the double desmear process as “contrary to” or “in stark contrast” with the single desmear process, which again appears within the context of disclosures of the preferred embodiment, are not clear and unmistakable limiting statements. We have held that “[m]ere criticism of a particular embodiment . . . is not sufficient to rise to the level of clear disavowal.”

I’ll note that this decision is an example of the rhetorical approach of disassembly.  After the appellee pointed to ten different reasons for limiting claim scope, the court walked through each one individually — and concluding that each offered “mere” subtleties and not a “clear disclaimer.” The court did not consider the impact of the whole.  This is an easy criticism of the court’s decision, but the reality is that the court is now in a tough position.  I would have also criticized the decision if it had gone the other way (which it could have based upon an alternative statement of the case and reading of precedent).  The bigger problem here is that we need to step back and repeatedly ask – how can we build up this system in ways that truly encourage beneficial innovation and do not simply encourage extensive lawyering. This case is also a clear failure of the examiner who was told by the patentee that a particular aspect of the innovation was important, but then allowed the patent to issue without requiring that it be expressed in the claims.

Diagnosis: Ineligible

by Dennis Crouch

Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)

There is a lot to unpack in this decision, and so this is just a small discussion of an important Federal Circuit opinion – DC

Mayo is involved in another diagnostic method patent dispute — and again has come out on-top with a finding that the asserted patent claims are ineligible under 35 U.S.C. 101. That district court finding has now been affirmed on appeal, although subject to a strong dissent from Judge Newman.

The named inventors on Athena’s patent were working on a subset of Myasthenia gravis (MG) patients who did not exhibit the usual acetylcholine receptor antibodies.  The researchers discovered that these patients were instead generating excess antibodies to a muscle-specific tyrosine kinase (MuSK) that the body uses in neuromuscular junctions. So, the key discovery here was the relationship between MuSK autoantibody production and MG.

The patent at issue is not directed a this relationship per se, but rather a method for diagnosing MuSK related disorders by looking for those MuSK autoantibodies.  The particular claims at issue include a basic diagnostic method involving: mixing a person’s “bodily fluid” with a labeled antigen to the MuSK antibodies; immunoprecipitating any MuSK complexes from the fluid; and then looking for the label in the precipitate.  Some claims indicate that the label is a radioactive iodine isotope.

Conventional Techniques: As we get into the eligibility analysis, it makes sense to note here that the claimed method is basically the one that any biochem PhD researcher would have come up with after learning about the importance of the MuSK autoantibody — i.e., it probably would be obvious if the relationship between MuSk and MG were in the prior art. However, the claimed method does involve creating non-naturally-occurring labeled antigens and then causing a chemical reaction that does not naturally-occur.

Under Mayo v. Prometheus, 566 U.S. 66 (2012) a law of nature may not be patented.  In that case, the provided an example of a law of nature — the correlation between the a blood metabolite and the appropriate treatment dosage.  The court explained explain that it is proper to have a claim “directed to” a law of nature, so long as the claim also includes “something more” such as an inventive practical application.  In other words: “Laws of nature are not patentable, but applications of such laws may be patentable.” Athena.

Here, the Federal Circuit agreed with the lower court that the claims at issue are directed to a law of nature: “the correlation between the presence of naturally-occurring MuSK autoantibodies in bodily fluid and MuSK-related neurological diseases like MG.”  This correlation exists in nature, even if only recently discovered by humans, and “there can thus be no dispute that it is an ineligible natural law.”

Here, although the claims include “certain concrete steps,” the court still determined that they were – as a whole – directed to the abstract idea “because the claimed advance was only in the discovery of a natural law, and . . . the additional recited steps only apply conventional techniques to detect that natural law.”  To support this conclusion, the court cited to portions of the specification explaining that “the actual steps [are] known per se in the art” or are “standard techniques in the art.”

Regarding the required creation and use of a man-made molecule.  The court held that “the use of a man-made molecule is not decisive if it amounts to only a routine step in a conventional method for observing a natural law.”  I will note here that the molecule itself would likely be eligible — to the extent they were created by the researchers.

In its analysis, the court also distinguishes its recent decision in Vanda, which found a method of treatment based upon genotype to be eligible.

We consider it important at this point to note the difference between the claims before us here, which recite a natural law and conventional means for detecting it, and applications of natural laws, which are patent-eligible. See Vanda Pharm. Inc. v. West-Ward Pharm. Int’l Ltd., 887 F.3d 1117, 1133–36 (Fed. Cir. 2018) (holding that method of treatment by administering drug at certain dosage ranges based on a patient’s genotype was not directed to a natural law). Claiming a natural cause of an ailment and well-known means of observing it is not eligible for patent because such a claim in effect only encompasses the natural law itself. But claiming a new treatment for an ailment, albeit using a natural law, is not claiming the natural law.

Within step-one of the Mayo/Alice analysis the court basically answered step-two as well — does the claim include “something more.” Here, the court appears to have added the notion that step-one should focus only on the claim as a whole while step-two includes an element-by-element analysis.  Regardless, the court found that the application steps were all simply recitations of steps known in the art.

Because the specification defines the individual immunoprecipitation and iodination steps and the overall radioimmunoassay as conventional techniques, the claims fail to provide an inventive concept. . . .  [A]pplying standard techniques in a standard way to observe a natural law does not provide an inventive concept.

Although conventionality can now be seen as an issue of fact, the court found that it was effectively admitted within the specification.

Judge Lourie penned the majority opinion and was joined by Judge Stoll. Judge Newman wrote in dissent. Judge Newman argued that the claims should be seen at face value:

The claims … preparation of the new radioactive entities and their chemical reactions to detect autoantibodies to the protein muscle-specific tyrosine kinase (MuSK).

This, according to Judge Newman is “not a law of nature.”

Note here Footnote 4 from the majority opinion — agreeing with the dissent that “the public interest is poorly served by adding disincentive to the development of new diagnostic methods” and lamenting their inability to act. “Our precedent leaves no room for a different outcome here.”

State of the Union and IP

President Trump’s State of the Union Speech included only a small focus on intellectual property rights — and only in the international sphere:

We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end. . . .

Our new U.S.-Mexico-Canada Agreement — or USMCA — will replace NAFTA and deliver for American workers: bringing back our manufacturing jobs, expanding American agriculture, protecting intellectual property, and ensuring that more cars are proudly stamped with four beautiful words: made in the USA.

Am I my Server Rack?: Do Edge Nodes Satisfy the Venue Rules?

by Dennis Crouch

In re Google (Fed. Cir. 2019)

This appeal stems from a pending E.D.Tex. infringement lawsuit filed in 2017. SEVEN Networks, LLC v. Google LLC, 2:17-CV-00442 (E.D. Tex. Aug. 22, 2017).  In the case, SEVEN accused Google of infringing ten of its patents:

  • 8,078,158, titled “Provisioning Applications for a Mobile Device”
  • 8,811,952, titled “Mobile Device Power Management in Data Synchronization Over a Mobile Network With or Without a Trigger Notification”
  • 9,247,019, titled “Mobile Application Traffic Optimization”
  • 9,325,600, titled “Offloading Application Traffic to a Shared Communication Channel for Signal Optimization in a Wireless Network for Traffic Utilizing Proprietary and Non-Proprietary Protocols”
  • 9,351,254, titled “Method for Power Saving in Mobile Devices by Optimizing Wakelocks”
  • 9,386,433 titled “System and Method for Providing a Network Service in a Distributed Fashion to a Mobile Device”
  • 9,444,812, titled “Systems and Methods for Authenticating a Service”
  • 9,516,127, titled “Intelligent Alarm Manipulator and Resource Tracker”
  • 9,516,129, titled “Mobile Application Traffic Optimization”
  • 9,553,816, titled “Optimizing Mobile Network Traffic Coordination Across Multiple Applications Running on a Mobile Device,”

Google filed for dismissal under TC Heartland — arguing that it did not reside in E.D. Texas, and had no “regular and established place of business” within the district as required for proper venue under 28 U.S.C. § 1400(b).

However, the district court found venue to be proper.  The crux of the conclusion was based upon the fact that Google owns and uses computer servers within the district — “edge nodes” — that Google operate to quickly deliver content to its users within the district.  Note here that, although Google owns the servers, it rents the rack space within various ISP server hubs.

The Federal Circuit then denied Google’s writ of mandamus in a non-precedential 2018 order — noting in dicta that the district court decision was fact-specific and reasoned:

Google owns and wholly controls the servers, located in the district under specific contracts with ISPs—which may not even tighten a screw without Google’s instruction. The location of the servers in the district serves Google’s business interests—by serving interests of Google’s ISP customers (e.g., in saving transport costs), Google’s end-user customers (e.g., in quick delivery of content), or both—as confirmed by Google’s advertising of its Edge Network and the Edge Nodes for efficient content delivery; and upon installation of the servers, Google places its inventory in (loads its content onto) those servers, and when Google’s end-user customers ask Google for that inventory, Google can and often does fulfill those requests from those local servers. And the server placement contracts provide Google very strong control to
keep the servers at their locations once they are installed.

Rather than ruling on the merits, the appellate panel court denied the writ — holding that mandamus is not warranted in this case.  Rather, the majority approach is to wait until the conclusion of the trial and, if Google loses, it can then appeal the improper venue issue.

The mandamus denial was issued in a per curiam order by Judges Dyk and Taranto. Judge Reyna wrote in dissent — arguing that “Google’s petition presents fundamental issues concerning the application of § 1400(b) that have far reaching implications and on which district courts have disagreed.” Google persisted and filed a petition for en banc rehearing of its mandamus petition.  That request has now also been denied, with the inclusion of another Judge Reyna dissent — this time precedential and joined by Judges Newman and Lourie.

The question poised before the court is whether Google’s servers … which have no physical interaction with Google employees or customers and are installed by third-parties in the facilities of third-party [ISPs] located in the Eastern District of Texas, constitute a regular and established place of business under 35 U.S.C. 1400(b) and this court’s decision in Cray.

In his dissenting opinion, Judge Reyna argues (1) this is an important question that should be addressed on mandamus; and (2) the answer is that servers likely do not count as a “regular and established place of business.”

[E]xclusive ownership and control over the servers may be insufficient under Cray. See Cray, 871 F.3d at 1363 (“Relevant considerations include whether the defendant owns or leases the place, or exercises other attributes of possession or control over the place.” (emphases added)). It is undisputed that no Google employee has ever visited the places where the servers are installed. Nor do those facilities resemble one of the many Google offices in other venues that would satisfy § 1400(b) under a straightforward application of the statute. See id. at 1364 (“A further consideration for this requirement might be the nature and activity of the alleged place of business of the defendant in the district in comparison with that of other places of business of the defendant in other venues.”). … For many [internet focused] companies, the reasoning of the district court’s holding could essentially reestablish nationwide venue, in conflict with TC Heartland, by standing for the proposition that owning and controlling computer hardware involved in some aspect of company business (e.g., transmitting data) alone is sufficient.

Here, Judge Reyna is not deciding the question, but suggesting that the answer is likely that venue is improper.

Back on the ground – the case has been proceeding throughout the entire mandamus process. Trial was set for January 2018.  However, just before trial the parties asked for a stay of the case based upon an “agreement in principle” to settle the case.  A full settlement is now likely within a few days.

Standing on the Shoulders of those Without Standing

by Dennis Crouch

Mylan Pharms. Inc. v. Research Corp. Techs., Inc.  (Fed. Cir. 2019)

This post begins with an obviousness discussion, then moves to IPR standing, and finally talks about SAS. 

Obviousness: In Mylan, the Federal Circuit affirms a PTAB decision siding with the patentee and holding that RCT’s pharmaceutical compound patent claims were not proven unpatentable (i.e., confirming patentability).

The patent at issue is directed toward an enantiomeric isomer (R configuration) of lacosamide. The dependent claims at issue are directed to the use of the drug for anticonvulsant effective (treating epilepsy symptoms).

As with most Inter Partes Review (IPR) decisions, the focus is obviousness.  The listed inventor – Harold Kohn – is also the author of the lead prior art reference.

Harold Kohn et al., Preparation and Anticonvulsant Activity of a Series of Functionalized α-Heteroatom-Substituted Amino Acids, 34 J. Medicinal Chemistry 2444 (1991); J.A. 2404–12.

The article identifies a particular compound as the “most active” as a potential anticonvulsant whose structure is shown below.

Although the Board decided that there was sufficient similarity to institute the IPR, it ultimately ruled that the modification of the 1991 compound to create lacosamide was beyond ordinary skill in the art.

On appeal, the Federal Circuit affirmed — holding that even if the 1991 compound was an appropriate lead compound the challenger “failed to meet their burden to establish a motivation to modify.”  Here, the challenger relied upon an organic chemistry drug design text for the principle that a developer would be motivated to replace an amine in the 1991 compound with a methylene link to form lacosamide.

According to Appellants, a person of skill in the art would then have been motivated to modify compound 3l by replacing the amine of its methoxyamino group with a methylene link to yield a more stable, synthetically accessible, pharmaceutically common and acceptable moiety.

On appeal, however, the Federal Circuit rejected this approach — holding that the PTAB decision was based upon substantial evidence. In particular, the Board looked at contemporaneous evidence that such a modification would have reduced therapeutic activity.

= = = = =

The case includes an important discussion regarding standing to appeal and the one-year bar under 5 U.S.C. § 319.  Here, Argentum filed the IPR petition in November 2015.  Argentum had not ever been sued under the patent and arguably would not have Article III standing to challenge the patent in court.  However, the IPR statute allows anyone to petition.

After institution, Mylan, Brekenridge, and Alembic all filed their own IPR petitions as well as petitions for joinder under 35 U.S.C. § 315(c).

(c) Joinder.— If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.

The joinder petitions were granted.  One quirk here is that the Mylan, Brekenridge, and Alembic IPR petitions would not have been granted on their own since they were all time-barred under 35 U.S.C. § 315(b).  Joinder, however, is a different matter — since the statute expressly indicates that “The time limitation set forth in [§ 315(b)] shall not apply to a request for joinder under subsection (c).”

In the appeal, the original petitioner Argentum dropped-out and did not appeal — and arguably could not have appealed. Only the newcomers, Mylan, Brekenridge, and Alembic, appealed.

On appeal, RCT called foul — on the challengers approach of cobbling together rights.

  • Argentum able to file IPR, but no right to appeal.
  • Mylan, et al., not able to file IPR on its own, but standing to appeal.

In the end though, the Federal Circuit found the approach proper under the statute. Once Mylan was joined as a petitioner, it had a statutory right to appeal.

= = = = =

Final point to discuss here involves SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).  In that case, the Supreme Court held that the PTAB must either institute as to either (1) all challenged claims or (2) no claims.  The Federal Circuit has expanded that holding to now include a requirement of instituting as to either (1) all grounds for challenge or (2) no grounds at all.

Here, the PTAB instituted as to all challenged claims, but only some grounds for challenge.  In oral arguments (rebuttal), Mylan’s counsel requested, in the “alternative,” that the case be remanded for consideration of all grounds.  On appeal, the Federal Circuit held that the right to remand had been waived. In particular, applicant waited more than 6-months until the rebuttal portion of oral arguments to request the remand. “Given the circumstances in this case, we find that Appellants have waived their request for remand.”

2019 Revised Subject Matter Eligibility Guidance

Chad Gilles at BigPatentData reports on the first handful of PTAB decisions considering eligibility under the 2019 Revised Subject Matter Eligibility Guidance. The outcome — 101 Rejection Affirmed in five of six cases.  Gilles writes “If your claim can still be lumped into the very broad ‘certain methods of organizing human activity’ the new guidance may not be of much help.”

LINK

 

Inventors Per Patent III

U.S. patents list the country of residence of the inventors at the time of patent issue — although I imagine that many applicants do not update residence during application pendency.  The chart below looks at the first-listed inventor for recently issued patents and then reports the average number of inventors per patent for each country.  An interesting caveat to this report is that about 8% of U.S. patents involve cross-border inventions. These are multi-inventor patents with at least two of the inventors residing in different countries.

Self-Harm: Company’s own 102(e) prior art Cancels the Patent

by Dennis Crouch

Duncan Parking Techs., Inc. v. IPS Group, Inc. (Fed. Cir. 2019) and
IPS Group, Inc. v. Duncan Solutions Inc. (Fed. Cir. 2019)

This decision involves parallel appeals from (1) a district court siding with the accused infringer on noninfringement grounds; and (2)  a PTAB IPR decision siding with the patentee confirming patentability. On appeal, the accused infringer won on several grounds, but it appears that at least some of the claims will be found both infringed and valid.

In this post, I focus on the PTAB decision and self-harming prior art.

0= 

The two patents in suit are related to single-space, credit-card enabled, solar-powered parking meters. U.S. Patents 8,595,054 and 7,854,310.  Of the two, the ‘054 patent has the earlier effective filing date (December 2006) while the ‘310 patent’s associated application was not filed until 14 months later (February 2008).  The two patents are both owned by IPS and have one overlapping inventor (King). However the patents also have several non-overlapping inventors.  Relevant for this case, Schwarz is a listed inventor of the ‘054 patent but not the ‘310 patent.

Once the ‘054 patent published in 2009, it became prior art under pre-AIA 35 U.S.C. 102(e) with a prior art date of December 2006.  102(e) offers two additional tricks for our situation here: First, a published application or patent only counts as prior art if filed “by another”; and second, 102(e) prior art cannot be used for obviousness purposes if the purported prior art is owned by the same entity as the application/patent being challenged.

By Another: This gets a little bit tricky, but the baseline law is that a prior art application is “by another” if invented by someone not listed in the later application being challenged.  Here, the purported prior art (the ‘054 patent) lists King and Schwarz as inventors — that counts as a different since Schwarz is not listed on the ‘310 patent.  However, the court allows parties to get into the weeds on this point and ask — who actually invented the particular aspects of the disclosure being used.  Here, the patentee argued that King (the overlapping inventor) is the one who created the particular disclosure.  On appeal, the Federal Circuit agreed with the legal analysis, but disagreed on the facts:

If Schwarz is a joint inventor of the anticipating disclosure, then it is “by another” for the purposes of § 102(e). . . . Because the [later] ’310 patent claims clearly include elements previously disclosed in Figure 8 [of the prior ‘054 patent], the question is whether Schwarz conceived those elements as they were disclosed in the ’054 patent. . . .

While IPS argues that Schwarz’s role consisted of “drawing a schematic,” the record shows that creating the block diagram was not a minor task. Schwarz had to coordinate with D+I as they designed a device that could
physically fit within an existing parking meter housing. As a result of Schwarz’s contribution, the ’054 patent discloses a parking meter device with a detailed electrical system, a challenge King described as one of “two big hurdles” to the invention. Thus, Schwarz’s contribution, measured against the dimension
of the full invention, was significant.

Okay, based upon the Federal Circuit’s conclusion that Schwarz is an inventor of that disclosure in the ‘054 patent and not listed on the ‘310 patent, his contribution is “by another” and thus can count as 102(e) prior art.

Same Owner: The same-owner caveat on 102(e) is quite powerful. However, pre-AIA it only applied to limit the obviousness doctrine.  Here, the challenge is anticipation and so the reference counts as prior art.

The result here is that the earlier application counts as prior art — as such, Federal Circuit reversed the PTAB decision and remanded for a finding that the claims should be cancelled.

= = = =

Note here that these details have been substantially changed by the America Invents Act. Under the new law, the same-company exception applies for both obviousness and anticipation. Thus, this case would have a different outcome.

In addition, the “by another” language was removed and replaced with “names another inventor.”  I don’t believe that this second language actually changes the law.

= = = =

The result here is that the ‘310 patent is invalid, but the ‘054 patent remains strong and at least some of its claims appear infringed.

2019 Revised Subject Matter Eligibility Guidance: Advanced Module

On February 26, the USPTO will be holding a 3-hour online training focused on the 2019 Revised Subject Matter Eligibility Guidelines.  [Free – Sign-Up Here] This will basically parallel examiner training on the same subject matter and will be led by USPTO trainers.  The Office has limited space, but has scheduled potential additional training on February 27 and 28.  Sign-up by February 3, 2019.

Read these Eligibility Guidelines from the USPTO

 

 

Teams of Inventors: Trends in Patenting

by Dennis Crouch

I recently posted a chart showing a short time series showing the number of inventors per patent.  The basic conclusion from that post was in the headline: Average Number of Inventors per Patent Continues Steady Rise.  Here, I have updated and added to those charts. The first chart below reaches back to 1976 — showing that the average number of inventors per patent has been steadily increasing over all of the past 40 years.  The trend has been amazingly steady and linear, and should serve as good fodder for economic analysis.  My simple linear model suggests that we’ll top the 3.0 inventors-per-patent threshold by 2021 (both the mean and median).

The second and third charts (below) provides a bit more detail and looks to answer some questions posted by James Daily of WashU regarding the underlying distributions.  The basic conclusion there is that the proportion of one-inventor patents has dropped steadily — and can be linked with a steady rise in patents listing three or more inventors.  During this time, the proportion of two-inventor patents has remained steady at about 25%.  The charts also demonstrate that the growth in 3+ inventor patents is itself skewed: For example, the proportion of patents with 3 inventors doubled during the 43 year span while the proportion of patents with 7+ inventors saw a nine-fold increase.

Although the movement was already fully underway, recognize that the America Invents Act (AIA) helps foster this as well by (1) allowing patents to be filed by the applicant rather than the inventors; and (2) weakening the penalty for errors in listing of inventorship.  That change was by design and part of what Dir. Kappos notion that major inventions these days are quite often major team projects, and that the patent law should foster and encourage those teams projects at least as much as it encourages individual innovation.

Person(s) Skilled in the Art: Should the Now Established Model of Team-Based Inventing Impact the Obviousness Analysis?

THOSITA: Obvious to a Team Having Ordinary Skill in the Art

 

Tappy the Robot vs xDeviceRobot

by Dennis Crouch

The new HUAWEI indictments make include some amount of comedy.  The basic claim centers on an anthropomorphic robot named “Tappy.”   Tappy is owned by T-Mobile, but HUAWEI was allowed to use Tappy to test phones it was making for T-Mobile (subject to a non-disclosure agreement).  HUAWEI then started developing its own robot — with the much less friendly name of xDeviceRobot.   HUAWEI tried to buy Tappy, but was refused and so figured out a way to infuse xDeviceRobot with some of Tappy’s features.  That infusion of ideas is what los federales consider criminal theft of a trade secret in violation of the Federal Economic Espionage Act.

I’ll note here that Tappy the Robot is also a street performer with its (his?) own FaceBook page.  I might suggest a dance-off to settle the dispute.

It turns out that HUAWEI perhaps didn’t take all the steps necessary for criminal trade secret theft.  But, the criminal prosecutors were able to indict the company on conspiracy to steal trade secrets and attempted trade secret theft; as well as wire fraud and obstruction of justice.

IndictmentHuawei.