by Dennis Crouch

I wrote earlier about the Supreme Court petition in Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA Inc. (Supreme Court 2021) that focuses on secondary considerations of non-obviousness such as commercial success and long-felt un-met need.  There has been a small movement over the years to refer to these as “objective indicia of nonobviousness” as opposed to secondary considerations.  That movement did not arise with the Supreme Court.  Rather, the Supreme Court has repeatedly referred to these as “secondary factors” or “secondary considerations” of non-obviousness.  It did so in both Graham (1966) and again in KSR (2007).  In KSR, the court particularly suggested that they have a role in negating obviousness — effectively as rebuttal evidence. “Teleflex has shown no secondary factors to dislodge the determination that claim 4 is obvious.”  In Amarin, the patentee is arguing that commercial success and the other factors should not be relegated to rebuttal evidence but rather be used on-par with the other Graham factors.

I wanted to see what language courts have been using and so pulled up the 2,500+ Federal Court decisions since 1966 that talk about either objective indicia or secondary considerations (or both). [Search strings below].  The results.  Most cases — about 2/3 — follow Graham and speak of “secondary considerations.” Another 13% are what I call “overlapping” and use forms of characterizing the analysis.  Finally, 20% speak in terms of “objective indicia.”  The charts below shows these results along with the time series.

* To find the cases, I used Westlaw and limited the search to only patent-cases.  For “objective indicia” cases, I looked within the opinin (OP) for (“objective indicia” or “objective factors”) /s (obvious! or nonobvious!).  For “secondary considerations” cases, my search string was (“secondary factors” or “secondary conditions”) /s (obvious! or nonobvious!).  Note – there are some problems with attempting longitudinal studies with Westlaw for several reasons, including changes in how cases are recorded and coded within the service.

Mojave Desert Holdings, LLC v. Crocs, Inc., 2020-1167 (Fed. Cir. 2021) [Merits Decision][Substitution Decision]

In this non-precedential opinion, the Federal Circuit has sided with the patentee CROCS — upholding the design patent for its really amazing footwear. D517,789.

The setup here is an inter partes reexamination filed by Dawgs back in 2012 (now Mojave Desert).  During the reexam, the examiner searched the Wayback Engine (Internet Archive) and found images on the crocs website that predate the patent application filing.  The examiner relied upon those pre-filing disclosures (images below) to reject the patent claims as anticipated.  However, the PTAB rejected that analysis and instead upheld the validity of the issued patent.

Here is the problem — the patent includes claim features on the bottom-side of the shoe, and Fig 11 does not show the bottom of the shoe.  On appeal, the Federal Circuit affirmed with only cursory analysis: “Having reviewed the Board’s decision and the record, we discern no reversible error.”

Mojave’s basic argument is that nothing on the bottom of the shoe was really claimed. Mojave’s briefing included the figure below, where it argued that the red lines were the only claimed portion — and those were adequately shown in the Fig 11 prior art. (Sorry color blind friends).

= = = =

An aspect of the case also involved whether Mojave could stand-in for the original IPR petitioner Dawgs.  Dawgs went bankrupt back in 2018 and stopped participating in the IPR.  Mojave bought up various aspects of Dawgs rights.  However, the PTAB refused to allow Mojave to participate in the reexam. On appeal here, the Federal Circuit found that Mojave was an appropriate substitute.

In contrast to Agilent, the sale … clearly transferred all of U.S.A. Dawgs’s assets and claims and did so using broad language. U.S.A. Dawgs did not need to enumerate each of its assets individually to effectuate the broad transfer. U.S.A. Dawgs dissolved and did not continue to participate before the Board. Under the circumstances, the transfer of all assets on its face included the rights in the Board proceeding.

= = = =

The briefing involved substantial discussion about who should count as the “ordinary observer” for both infringement and validity consideration.  In a prior case involving the patent, Crocs had argued that the ordinary observer was an “Impulse Buy Purchaser.”  That low-standard made it easier to argue infringement since – at a quick glance the accused product looked so similar.  In this case, however, the patentee changed its tune and focused on detailed and small differences that would not have been observed at a quick glance.   The court did not reach this issue, which might have applied judicial estoppel.

In re Earley (Fed. Cir. 2021)

In its December 2020 decision, the Federal Circuit sided with the PTO — upholding the PTAB conclusion that Mr. Earley’s claims were obvious based upon Earley’s own prior invention. The court has now also denied Early’s petition for rehearing. Earley represented himself pro se.  His filings at the Federal Circuit were not pretty, and I expect that sealed his loss — even if he had a good underlying argument on the merits.  Still his innovations are pretty interesting.

Earley’s pending application, APN No. 12/925,235, claims priority back to a 2009 filing date. His prior patent, PAT No. 6,949,842 reaches back to a 2001 provisional and issued as a patent in 2005 — so it was 102(b) prior art.

In looking at the history in the case, I suspect that Earley could have won by submitting his factual arguments to the Examiner / PTAB in the form of an affidavit (i.e., as evidence) rather than merely as arguments in the briefing. The PTAB had noted that Earley’s arguments regarding problems with the prior art carried no weight because they were based upon conclusory statements rather than “objective evidence (e.g., declaration evidence) providing detailed specifics.”

by Dennis Crouch

Amgen v. Sanofi and Regeneron (Fed. Cir. 2021)

The decision here provides another anti-functional-limitation decision — this time rendering Amgen’s monoclonal antibody claims invalid.  Although enablement decisions traditionally differed greatly between biotech and computer innovations, the decision here relies heavily on the Federal Circuit’s recent software decision in McRO, Inc. v. Bandai Namco Games Am. Inc., 959 F.3d 1091 (Fed. Cir. 2020).

The first jury sided with Amgen, the patentee, finding that Regeneron had failed to prove that the asserted patents lacked enablement or written description.  On appeal, the Federal Circuit vacated the resulting final judgment and ordered a new trial based upon errors in evidentiary rulings and jury instructions.  On remand, the second jury again sided with Amgen.  The district court though favored the defendant and awarded Judgment as a Matter of Law (JMOL) for lack of enablement. On appeal, the Federal Circuit has affirmed.

[Image of second verdict above]

The patents at issue claim monoclonal antibodies used to help reduce LDL-C levels. US8829165 and US8859741.  Amgen’s product is evolocumab (Repatha) and Regeneron’s product is alirocumab (Praluent).  Both drugs have been shown to be effective and each sell for around $14,000 per year.  In the lawsuit, Regeneron admitted to infringement, but challenged the patent’s enablement — arguing that the claims extend well beyond what was taught in the specification.

Anyone reading the claims will quickly notice that the claims are claimed functionally — the claims are basically directed to all monoclonal antibodies that bind to a particular portion of the protein PCSK9 and consequently block PCSK9 from binding with the LDL-C.

An isolated monoclonal antibody [that] binds to [one of the residues of PCSK9] and … blocks binding of PCSK9 to LDRL

‘165 patent.   Sanofi argued to the jury that the claims encompass millions of potential antibody candidates and that the specifications lack sufficient guidance to allow a person of skill in the art to practice the full scope of the claims without undue experimentation in the form of substantial trial and error. Amgen provided contrary testimony: “The jury heard evidence from which it could conclude that the number of distinct antibodies within the claims was around 400.”  After hearing both sides, the jury found the claims enabled. But, Judge Andrews rejected the jury verdict and sided with the patentee — holding that no reasonable jury could have found otherwise.

Enablement: The patent act requires that the patent specification “enable any person skilled in the [relevant] art . . . to make and use” the claimed invention.  35 U.S.C. 112(b).  Like obviousness, enablement is a question of law based upon a collection of factual findings.  The Federal Circuit generally considers the Wands factors in enablement cases — particularly when asking whether the gaps in disclosure require undue experimentation.  The Wands factors:

1. Quantity of experimentation necessary: When more experimentation is needed, it is more likely undue experimentation;
2. Amount of direction or guidance presented in the specification: When less guidance is provided, it is more likely that practicing the invention requires undue experimentation
3. Presence or absence of working examples: Their absence suggests undue experimentation;
4. Nature of the invention: This one is basically meaningless, but it generally is seen in comparison to the level of prior art;
5. State of the prior art: If the invention is a major step beyond the prior art, then it more likely requires undue experimentation;
6. Relative skill of those in the art: If PHOSITA is relatively low skill then it is more likely that undue experimentation is needed to practice the invention;
7. Predictability or unpredictability of the art: Unpredictable arts are more likely to require undue experimentation in order to practice the invention;
8. Breadth of the claims: Broad claims are more likely to require undue experimentation to practice the full scope of the claims.

In re Wands, 858 F.2d 731 (Fed. Cir. 1988).

The functional claim language and resulting potential for so many compounds fitting within the claim scope focus attention on the final factor — claim breadth. Although Amgen appears to have provided guidance and framework for creating and testing the efficacy of each of its claimed compounds, the problem is that there are many thousands of potential compounds — only some of which will actually work effectively as claimed.

While functional claim limitations are not necessarily precluded in claims that meet the enablement requirement, such limitations pose high hurdles in fulfilling the enablement requirement for claims with broad functional language. . . .

[T]he scope of the claims is broad. While in and of itself this does not close the analysis, the district court properly considered that these claims were indisputably broad. . . . If the genus is analogized to a plot of land, the disclosed species and guidance “only abide in a corner of the genus.” AbbVie (Fed. Cir. 2014). Further, the use of broad functional claim limitations raises the bar for enablement, a bar that the district court found
was not met.

Slip Op.

Although the court identifies the limitations in the claim as “functional” rather than structural. These particular functional limitations are important because they direct researchers in how to go about identifying compounds covered by the claims.  In other words, its not surprising that researchers would say that their invention is compounds that bind to PCSK9 — because that is exactly how they have been screening for the compound.  Amgen suggested a randomization-and-screening roadmap as a pathway for figuring out which antibodies would bind with PCSK9.  On appeal though the Federal Circuit held that that the the amount of experimentation was too much.

The functional limitations here are broad, the disclosed examples and guidance are narrow, and no reasonable jury could conclude under these facts that anything but “substantial time and effort” would be required to reach the full scope of claimed embodiments.

We therefore conclude that, after weighing the Wands factors, the court did not err in concluding that undue experimentation would be required to practice the full scope of these claims.

Slip Op.   Note, the court took care to suggest that it may be possible to enable an entire genus, but only perhaps. “We do not hold that the effort required to exhaust a genus is dispositive. It is appropriate, however, to look at the amount of effort needed to obtain embodiments outside the scope of the disclosed examples and guidance.”

In this case the burdens are important.  The jury found that the defendants had not met their burden of clear-and-convincing evidence of invalidity.  The district and appellate courts considered the same evidence and flipped — holding that the only reasonable outcome that a jury could reach is that the claims were proven invalid with clear and convincing evidence.

Amgen argued that that the potential breadth of the claims was “artificially inflated” by Sanofi; that the “millions” number was contested on the facts; and “A reasonable juror could easily have rejected Sanofi-Regeneron’s argument [as not] clear and convincing.”   On appeal, the Federal Circuit notes that they are “not concerned simply with the number of embodiments but also with their functional breadth,” although the court later appears to side with the defendant in concluding that “the evidence showed that the scope of the claims encompasses millions of candidates.”

This is a big case for enablement and I expect to see a petition for rehearing — likely with substantial focus on the standards for reviewing and rejecting a jury’s factual findings.

= = =

Consider – Greg R. Vetter, Patent Law’s Unpredictability Doctrine and the Software Arts, 76 Mo. L. Rev. 763 (2011) (arguing against the categorical lines on enablement).

by Dennis Crouch

cxLoyalty, Inc. v. Maritz (Fed. Cir. 2021)

Maritz is in the business of designing employee incentive plans and other reward programs.  The company’s U.S. Patent No. 7,134,087 claims a computer system for using “award points” to purchase goods at a regular store by using a “shadow credit card.”  cxLoyalty is a competitor — focusing primarily on customer loyalty. Their creepy motto: “we increase customer lifetime value.”  At least they’re not focused on true zombies.

Maritz sued cxLoyalty for infringement back in 2018.  In response, the defendant filed a petition for covered-business-method review (CBM) and argued that the claims lack patent eligibility. The PTAB offered a split result:

• Claims 1-15 ineligible;
• Substitute claims 16-23 eligible.

On appeal, the Federal Circuit has reversed — finding that none of the claims recite patent eligible subject matter under 35 U.S.C. 101 and Alice.

The claims each occupy 3+ pages of text, but basically spell out the “computerized system” as shown below in Figure 2.  The original claim 1 was written at roughly the same level of generality used in the figure below.  The substituted claim added several limitations: requiring a “program database”; requiring the GUI to use an “internet connection”; and formatting the information from the vendor so that it can be used by the GUI system.  For the PTAB, those changes were sufficient to surpass the eligibility threshold. On appeal, however, the Federal Circuit disagreed. 

In its analysis, the PTAB found all the claims directed to the abstract idea of facilitating a commercial transaction — “a fundamental economic practice long prevalent in commerce.” Quoting Alice.  However, according to the PTAB, the substitute claims included an additional concept under the USPTO’s 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019).

The eligibility guidance is generally seen as Former Dir. Iancu’s attempt to limit ongoing damage to patent applicants based upon expansive readings of Alice & Mayo. However, it was (and is) apparent that the guidance does not closely follow binding Federal Circuit caselaw but rather takes several opportunities to favor a conclusion of patent eligibility.

On appeal, the court first noted that the eligibility guidance “is not, itself, the law” and  “does not carry the force of law.” Further, the court explained that Federal Circuit caselaw controls PTAB judgments on eligibility — not the PTO guidance.

On appeal here, the Federal Circuit concluded that the claims are ineligible — and, in particular, that the claims fail Alice Step Two.

Maritz attempts to distinguish claim 16 at both steps one and two on the basis of its added requirement that the GUI “is able to convert vendor-related information into information formatted for the GUI, which GUI-formatted information may then be provided to the claimed participants.”

Maritz argues that the added limitation constitutes a technological solution to a technological problem. However, Maritz does not contend that the claimed invention improves the use of computers as a tool by reciting a new way for computers to conduct format conversion. Nor do the claims provide any guidance as to how this purported function is achieved. Thus, claim 16 does not claim a patent-eligible technological solution to a technological problem.

At the trial, Maritz presented unrebutted expert testimony that the information conversion was not “well-understood, routine, or conventional.”  On appeal, the Federal Circuit gave no weight to that conclusory testimony and rather found that the testimony did not actually present anything to support the conclusion other than an argument that the invention as a whole was novel.  “But, as explained previously, our cases are clear that a patent claim is not eligible under § 101 merely because it recites novel subject matter.”

Patent Holder Identified in Exhibit 1 vs. Does 1-254 (N.D. Ill. 2021)

I previously wrote briefly about this double-anonymous lawsuit.  The plaintiff filed the lawsuit in secret in order to avoid spooking the defendants.  The complaint was followed up by a request for temporary restraining order.  District Court Judge Matthew Kennelly quickly denied plaintiff’s request to conceal its identity and also issued an order to show cause as to why the case should not be dismissed for improper joinder under 35 U.S.C. § 299.  This ex parte situation provides an instance where it is important that the case was routed to a patent-knowledgeable judge such as Judge Kennelly.

In its opinion, the court begins with a discussion of a common practice in trademark litigation — to file suit naming “dozens or even hundreds of claimed infringers and counterfeiters.”  In those cases, an attachment to the complaint offers some information that partially identifies the defendants.  And, that attachment is filed under seal to avoid tipping-off the defendants before a TRO can be filed to payment processors (such as PayPal) to attach any of the defendants assets in the US. In those cases, however, the plaintiff’s name is ordinarily made public.  In response, the plaintiff has amended its pleadings to now disclose its name under the new caption

NG Imports vs. Does 1-254 (N.D. Ill. 2021)

In his order, Judge Kennelly also raised the improper joinder issue of 35 U.S.C. § 299. That provision was added to patent holders from asserting their patents against a large number of defendants in a single lawsuit and reads “For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit.”  In response, the patentee has alleged that all of the accused products are coming from the same “unknown Chinese manufacturer.”  That same-source linkage would seemingly be enough to allow joinder.

The amended complaint also reveals the patent at issue – US10881159.  A parallel lawsuit was previously filed in California asserting the same patent against a Chinese company. NG Imports v. Zhengzhou Kerui Electronic Commerce Company, Ltd., Docket No. 2:20-cv-09776 (C.D. Cal. Oct 23, 2020).

= = = =

The papers mention a site that I have not explored sellerdefense.cn — a site that “monitors this District’s PACER filings and screens for Plaintiff counsel’s filings as well as all Trademark and Patent filings throughout the District.”   In his opinion, the Judge found that the existence of the website as justification for sealing Plaintiff’s name an “inferential leap—worthy of Bob Beamon in the 1968 Olympics—that if it becomes known that the plaintiff has filed a lawsuit against someone, the defendants will all hide their assets. The Court is unwilling to draw this inference without some supporting evidence and argument.”

by Dennis Crouch

Saso Golf, Inc. v. Nike, Inc. (Fed. Cir. 2021)

I have not played golf in a decade, and I had assumed that the rest of the world was following suit.  Apparently though there is still some money in the game.  When I played, I had a crazy slice.  Back then, I thought it was me.  But, it looks like Saso found a solution with some subtle shifting of the club head weighting. Basically, Saso redesigned the clubs so that more weight was on the heel-side of the club rather than the toe-side.  This means that the toe end of the club is less likely to twist during a swing. The image below shows the result.

During prosecution, the patent examiner rejected broadest claims directed toward shifting the weight because they were clearly anticipated.  At that point, Saso altered the claims to focus on re-shaping of the head of a “metallic wood type” club such as a driver. The annotated figure below shows how the heal-side has a bulge (12) and the toe-side has been shaved-down (11).

13 year of litigation involving 1 golf head patent. Saso sued Nike for patent infringement back in 2008.  It is a simple case and so I don’t have a good understanding of why it is still pending 13 years later, but the N.D. Ill. docket indicates that the case was originally assigned to Judge Blanch Manning who pushed it down to Magistrate Judge Nan Nolan.  In 2010, Judge Manning withdrew Judge Nolan from the case and the case was also transferred to Senior Judge Harry Lienenweber who issued an opinion in 2010 finding the claims “not indefinite.”  In 2011 the case was reassigned to Judge Edmond Chang soon after he joined the bench. In 2013, the case was then reassigned to Judge Andrea Wood soon after she joined the bench. By that point, no depositions had taken place and there was pretrial schedule. The docket shows no substantive entries from 2014 – 2019.  Then in November 2019, Judge Wood entered a decision finding claim 7 “too indefinite to be valid.”  That indefiniteness decision was apparently based upon a motion filed by the defendant back in 2013.

Indefiniteness: The statute requires “one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.” 35 U.S.C. 112(b).  A claim that fails this provision is deemed indefinite and thus invalid.  In Nautilus, the Supreme Court set the standard for indefiniteness as reasonable certainty as to the scope.   Patent claims are indefinite if they “fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898 (2014).  In general, the Federal Circuit sees definiteness as an extension of claim construction — and thus is for the judge to decide.  However, the issue may involve underlying factual questions — such as the understanding of someone skilled in the art.

Here, the claim at issue (Claim 7) divides up the profile of the back-side of the club into two portions.  (1) the toe side extends from “the toe” to the “most rearwardly point of the head;” and (2) the heel extends from “the  heel” to that same “most rearwardly point.”  The claim then requires that the “radius of curvature” of the toe side be “larger than the radius of curvature” of the heel side.  If you look at figure 1 above, you know what they mean — the back portion of the toe side is flatter (larger radius of curvature) and the heel side rounder (smaller radius of curvature).

The problem is that the patent does not expressly define what part is “the toe” and “the heel.” Do we know with reasonable certainty what the claim covers?  The district court said no: “With nothing suggesting where the toe side and heel side end points are located, it is not clear from where on each surface one measures to the most rearwardly point to determine the radii of curvature.”

In its opinion, the district court made the conclusion that a skilled artisan would not inherently know the boundaries of the toe and heel — “it is not clear from where on each surface one measures.” On appeal, the Federal Circuit first determined that this conclusion was a factual-finding by the district court (even though it was not properly labelled as such as required by the rules of procedure).  As a factual finding, it is due deference on appeal, and the appellate panel found no clear error. The court pointed to expert testimony that “‘toe’ and ‘heel’ are general terms” and do not define a particular point on the club. Because those elements lacked precision, the appellate panel agreed that the claim as a whole failed.

Because an artisan would not already know the bounds of the toe and heel of a golf club, and because the patent provides no guidance, we hold that claim 7 is indefinite.

Slip Op.

= = = =

If you wanted to draft a claim regarding the shape of the head disclosed in Figure 1 — using only the disclosure from Figure 1 — could you do it?

= = = =

The patentee also asked for a jury trial on the underlying factual issues leading to an invalidity conclusion. That was rejected based upon  See Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).  Of course, Markman is about claim construction and not indefiniteness.

Normally, the evidentiary requirement for factual findings supporting invalidity must be based upon clear and convincing evidence.  Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91 (2011) (“§282 requires an invalidity defense to be
proved by clear and convincing evidence.”).   Subsequently in Nautilus (2014), the court avoiding the issue as it relates to indefiniteness.  The court wrote:

The parties … dispute whether factual findings subsidiary to the ultimate issue of definiteness trigger the clear-and-convincing-evidence standard and, relatedly, whether deference is due to the PTO’s resolution of disputed issues of fact. We leave these questions for another day.

Nautilus at F.N.10.  In this case, the district court did not indicate the standard that she applied for making the factual finding and neither did the the appellate panel.

Jason Rantanen

In United States v. Arthrex, Inc., the Supreme Court will consider the application of the Appointments Clause to Patent Trial and Appeal Board judges–specifically, whether PTAB judges are principal officers who must be appointed by the President and confirmed by the Senate, and whether the proper remedy is to sever their statutory removal protections.

To address these issues, The Center for Innovation Policy at Duke Law and the Duke Law Program in Public Law will host a Zoom discussion on Friday, February 12, noon to 1:30 p.m. Commentators will include the Honorable Timothy B. Dyk and renowned academics whose scholarship has focused on the key patent, administrative, and constitutional issues.  Below are the details.

February 12, 2021
12:00 noon – 1:30 p.m.
Virtual [Register here]

12:00 noon–12:45 p.m. | Panel I: IP and Innovation Policy
The Honorable Timothy Dyk
Professor John Duffy
Professor Melissa Wasserman
Moderator: Professor Arti Rai

12:45 p.m.–1:30 p.m. | Panel II: Administrative and Constitutional Law
Professor Michael Asimow
Professor Jennifer Mascott
Professor Nina Mendelson
Professor Christopher Walker
Moderator: Professor Stuart Benjamin

Contact Balfour Smith (bsmith@law.duke.edu) or Kelli Raker (kelli.raker@law.duke.edu) for more information.

Chudik v. Hirshfeld (Fed. Cir. 2021)

Chudik filed his patent application back in 2006. After receiving a final rejection back in 2010, Chudik filed a request for continued examination (RCE).  At that point the examiner withdrew the prior rejection, but then rejected the claims on an alternative ground.  Chukik appealed to the PTAB, but the Board did not get a chance to hear the case. Rather, the examiner again withdrew their rejection and re-opened prosecution with a new alternative ground for rejection.  That appeal-withdraw-new-ground process happened again.  Then it happened again.

Now we’re up to 2017.  Chudik had filed four appeals in the same case but the PTAB with the examiner backing-down each time.  Finally, on the fourth go-round, the examiner issued a notice of allowance after withdrawing the rejection. His patent: US 9,968,459.  Good job Chudik. The patent covers a medical device used in shoulder surgery.  This is the type of invention that – if its use becomes widespread – will use-up the whole 20-year patent term.

Patent term — You know that a patentee gets a term of 20-years from the application priority filing date (not counting provisional and foreign priority). BUT, Congress allowed for patent term adjustment in situations involving delays in prosecution.  The statute, 35 U.S.C. § 154(b), is a bit complicated and poorly written.  In general, a patentee gets extra time whenever it takes the USPTO more than three-years to issue the patent. (B-delay).  However, under the statute, the 3-year delay counter is cut-short by an RCE filing.  Thus, Chudik’s RCE filing cuts-off that form of adjustment.  The statute also provides for A-delay bonuses associated with specific deadlines. This includes issuing a first OA within 14 months and responding to most responsive-filings by the applicant within 4 months.  Overall, out of the 11 1/2 years (4246 days) in prosecution, the PTO awarded 5 1/2 years (2066 days) of PTA to the end of the patent term based upon A- and B-delays.

This appeal focuses on what is known as C-delay. 35 U.S.C. § 154(b)(1)(C). This is time added to the patent term due to appellate review by the PTAB (inter alia).  C-delay has an important caveat — it only applies in cases where “the patent was issued under a decision in the review reversing an adverse determination of patentability.” Id.  Here, although Chudik appealed to the Board four times, the examiner withdrew the rejection each time.  The PTO issued regulations regarding the statute that particularly state that an applicant “is not entitled to [C-delay] patent term adjustment for the reopening of prosecution” by the examiner.

Now, the A-Delay already accounts for some of the delay because the examiner has a bit of a deadline to withdraw the rejection.  However, Chudik found that repeated appeals cost him about 2 years (655 days) of additional patent term not accounted-for by the A-Delay provision.

On appeal, Chudik argued that (1) the appellate process should be deemed to begin when he files the notice-of-appeal; and (2) an examiner’s decision to withdraw a rejection should be interpreted under the statute as the Board “reversing an adverse determination of patentability” because it has the same impact. Chudik filed a civil action on the issue and lost.

On appeal here, the Federal Circuit did not determine the particular standard-of-review to apply to the agency action — finding that it didn’t matter because the PTO’s interpretation was also the best interpretation.

In particular, the court held that Chudik’s proposed interpretation “is, if not linguistically impossible, strained.” The provision:

[PTA provided for] (iii) appellate review by the Patent Trial and Appeal Board or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability.

You decide – does this provision allow for an examiner’s withdraw of a rejection?  The court explained that a “review reversing” something requires action by the appellate tribunal (here, the PTAB).  Without a PTAB decision, the C-Delay had no effect.

In conclusion, the appellate panel offered a warning to applicants regarding RCEs:

The [loss of] nearly two years (655 days) of delay in the PTO illustrates what applicants should understand when deciding whether to request a continued examination rather than take an immediate appeal. The potential benefit of immediate re-engagement with the examiner through such continued examination comes with a potential cost.

Affirmed.

In the end, Chudik’s patent, originally filed back in 2006 is set to expire in 2032.

In re Mohapatra (Fed. Cir. 2021)

The security code on your credit card seems pretty weak. Basically, it is a 3-4 digit number on opposite side of the card.  Mr. Sarada Mohapatra’s innovation was to create a more dynamic security code using an internet-based account management approach.

The Examiner rejected the claims as obvious, indefinite, and failing to claim patent eligible subject matter. On appeal, the PTAB reversed the obviousness conclusions, but maintained the rejection on the other grounds.  When Mohapatra raised the case to the Federal Circuit, the Solicitor’s office also dropped the indefiniteness challenge — leaving only the eligibility issue.

Mohapatra began his argument with a tradition-and-justice issue.  He pointed to many patents issued over the past 20 years relating to the same subject matter.  (note, Mohapatra represented himself pro se). The appellate court rejected this argument out-of-hand, concluding that “issuance of other patents in the same field of technology is not a ground for challenging the rejection of a subsequent application.” See In re Wertheim, 541 F.2d 257 (CCPA 1976) (“[I]t is immaterial in ex parte prosecution whether the same or similar claims have been allowed to others.”).

On the merits of Section 101, the court found that the claims are directed to the abstract idea of facilitating “an individual to alter the identification code associated with a financial instrument, such as a credit card, to protect against fraud.”  Mohapatra’s invention is limited in a number of ways and does not preempt all uses of this idea, but the court explained:

The fact that the claims are directed to a specific subset of that abstract idea—in this case, enabling a credit card user to change the security code on the card by using a web application—does not render the idea any less abstract.

Further, abstract-idea innovations may provide societal or personal benefits, but remain unpatentable: “The idea of changeable personal-identification numbers may be beneficial. But it is also abstract and therefore not patentable without more.”

At Alice Step 2, the court found no additional inventive concept beyond standard additions such as doing-it-on-the-web and storing the information on a computer.

[These functions] amount to no more than the implementation of an abstract idea on a computer operating in a conventional manner. That is not enough to convert an abstract idea into patent-eligible subject matter.

Rejection Affirmed.

= = = =

The following claim 18 was seen as representative for the appeal:

18. A method for countering credit card fraud arising from compromised credit card information by utilizing cardholder changeable card security code (CSC; also known as card verification value CVV2 or card verification data CVD or card identification code CID or card verification code CVC2) comprising:

a) A card issuer enabling change of card security code printed on the card, by

allowing cardholder to choose a new security code value as often as cardholder wishes,

facilitating recordation of chosen card security code by the cardholder by providing an internet connected card account management facility,

using most recently recorded card security code to verify subsequent transaction authorization requests without requiring any change in existing credit cards, terminals, equipment, computer software and communication protocols used in transaction authorization, and

denying transactions when card security code provided during authorization does not match card security code on record;

b) Cardholder changing card security code any time s/he deems it necessary to mitigate risk from possible card security code compromise, by

selecting a new security code value to be used as personal secret separate from the card without requiring assistance from any software program running on any device,

ensuring that selected new security code value is different from the printed code on first change and is different from last recorded code on subsequent changes,

recording the new card security code value using issuer provided internet connected card account management facility, and

remembering and providing the new card security code when prompted during subsequent credit card authorizations.

Published Appn. [PDF: CreditCardSecurityPatentApp]

PTAB Decision

= = = =

Question – Can you read through this specification and find anything patent eligible for Mr. Mohapatra that he could use on remand? 

by Dennis Crouch

Deere & Co. v. Gramm (Fed. Cir. 2021).

In 1966, the US Supreme Court decided Graham v. John Deere, and established the framework for adjudging obviousness under the 1952 Patent Act. In the processes Graham’s plow patent was deemed obvious.  In this new case, Deere is looking to invalidate Richard Gramm’s patent. This time though the patentee prevails.

Gramm’s  US Patent No. 6,202,395 covers a sensor and controller for the head-height of a combine harvester.  The case is interesting because of its similarity to the spring-loaded shear in the 1966 case. Here, “a flexible sensor arm that engages the soil and is
dragged across the ground” as the giant tractor rolls along.

The particular novel aspects of the invention here appear to be related to what happens when the Combine is placed in reverse — we don’t want to bob to snap off.  The solution is a spring (“biasing means”) for keeping the arm at an incline but allows for displacement when you reverse.  The spring then uses Hooke’s Law to encourage the sensor arm to return to its original position.

Deere petitioned the USPTO for inter partes review (IPR). Although the Board granted the petition, it eventually sided with the patentee and found that none of the challenged claims had been proven obvious. The case has included some partial institution mix-up following SAS, and the CAFC has previously affirmed the holding with regard to some of the claims, this appeal is related to claims 12-26.

Claimed Biasing Means: That spring discussed above – the claims require a “biasing means for urging said arm to a selected inclined orientation relative to
vertical …”  The parties agree that the claim term is properly interpreted as means-plus-function because “biasing” is a functional limitation rather than structural. Further, the patent document discloses a “coiled spring” that performs the claimed function. Thus – as required by the text of 112p6, the claim limitation is interpreted as requiring a coiled spring “and equivalents thereof” that performs the same function.

In the IPR, this limited view of “biasing means” was helpful to the patentee because it narrowed the scope of prior art that read upon the invention.  On appeal, the Federal Circuit confirmed that the prior art reference (US3611286) did not disclose the biasing means. An image from the prior-art patent is below.  To be clear, the reference does disclose a coiled spring, but it did not operate in the same way — to urge the arm to move toward an “inclined orientation.”

The true key controversy of the appeal was really about whether this issue should be reviewed de novo as a claim construction dispute or instead with substantial deference as a factual finding regarding the scope of the prior art.  As usual, the appellant wanted de novo review, but the Federal Circuit refused:

First and foremost, we reject Deere’s attempt to obtain de novo review of a factual finding by reframing it as though it presents a claim construction issue. . . . .

Here, after construing the biasing means limitation, the Board determined that [the prior art] did not teach the first function of the biasing means. That is a factual finding subject to appellate review for substantial evidence. . . . Deere attempts to contort the Board’s opinion by suggesting that the Board actually misconstrued the claim in such a way so as to not read on the teachings of Cleveland. We are not persuaded by that argument, which seeks to blur the clear delineation in the law between the two steps of the invalidity analysis.

Slip Op. Notably, the court does not actually do a very good job of explaining why this particular dispute is not a claim construction dispute except that the PTAB did not see it as claim construction either.

Judgment Affirmed in Favor of Patentee

by Dennis Crouch

An expansive notion of “property” also allows for expansive criminal prosecution.  As an example, the Federal Wire Fraud statute makes it a crime to use the “wires” to move forward with “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.”  18 U.S.C. § 1343.

Case-in-point is Kelly v. U.S., 140 S. Ct. 1565 (2020).  Kelly case involves George Washington Bridge lane closing scandal known lovingly as “Bridgegate.” In 2013, Chris Christie was Governor of New Jersey seeking reelection (he won).  His deputy Chief of Staff Bridget Kelly (and others) had caused the bridge lanes to be closed (via text messages) “for a political reason—to punish the mayor of Fort Lee for refusing to support [Christie’s] reelection bid.”  Kelly was prosecuted and criminally convicted for property fraud — both wire fraud as well as fraud on a federally funded program.    The Second Circuit affirmed.

 These statutes require the use of fraud for the purpose of obtaining “property.”  The Supreme Court took up the case and reversed the convictions — holding that Kelly’s actions were not designed to obtain money or property and thus do not violate the statutes.  The court recognized the abuse-of-power: “But not every corrupt act by state or local officials is a federal crime.” (Unanimous opinion authored by Justice Kagan).

The evidence the jury heard no doubt shows wrongdoing—deception, corruption, abuse of power. But the federal fraud statutes at issue do not criminalize all such conduct. Under settled precedent, the officials could violate those laws only if an object of their dishonesty was to obtain the Port Authority’s money or property.

The Government pointed to the following property frauds: commandeering of bridge lane access; diverting the “wage labor” of federal employees.  While the bridge itself can be considered Property, the actions here, according to the court, were a “quintessential exercise of regulatory power” rather than a scheme to “appropriate the government’s property.   The court noted that a “public employee’s paid time” is also the property of the government. According to the court, the use of employee time was “incidental to” the lane-closure purpose — the use of that portion of the government’s property was not the “object of the fraud” as required under Cleveland v. U.S., 531 U.S. 12, (2000) (the statute “requires the object of the fraud to be ‘property'”).

= = = = =

The decision here offers an interesting dichotomy regarding property and property rights. On the one hand, the Court offers a broad conception of what counts as property — including a conclusion that an employer “owns” the time employees are spending working (this seems like a pre-civil war conclusion). On the other hand, the Court weakens property rights by reinforcing its prior conclusions that major regulatory actions that shift the owner’s ability to use its property do not count as property rights violations.  This same dichotomy is seen in patent law with the advent of inter partes review; and is a longstanding element of zoning law.

In January 2011, the Supreme Court vacated and remanded (GVR) a parallel case in Blaszczak v. U.S., 20-5649, 2021 WL 78043 (U.S. Jan. 11, 2021) “for further consideration in light of Kelly v. United States, 590 U.S. –––– (2020).”  In that case, the Second Circuit held that “confidential information” about an upcoming regulatory action was a property right whose “embezzlement” could serve as a basis for property fraud under the statute.  In its decision, the Second Circuit did not use the term “trade secret” but rather suggested that the information was property because it was a “thing of value.” quoting U.S. v. Girard, 601 F.2d 69 (2d Cir. 1979). The outcome of Blaszczak will end up giving us a lot more information about the meaning of property in the US.

by Dennis Crouch

The Supreme Court has issued a unanimous decision in the stolen-art case of Federal Republic of Germany v. Philipp.

The claimants in the case are heirs to German Jewish art dealers who purchased a set of medieval Christian relics known as the Guelph Treasure (Welfenschatz) from the Duke of Brunswick in 1929 (although by then the Duke had already abdicated).

As the Nazi government rose to power, the dealers were coerced to sell the collection back to the State (Prussia), allegedly for for 1/3 of their value.  After WWII, the US took possession of the collection but then later handed the collection back to Germany and the art is on display in a Berlin museum.

The heirs perused claims in Germany, but the special German Advisory Commission for the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property found that the sale had not been taken under duress.

Later, the heirs sued Germany in the US, asserting a set of common law replevin, conversion, declaration of ownership, unjust enrichment, fraud, breach of good faith, etc.

Normally a Sovereign Nation such as Germany is granted sovereign immunity in U.S. Federal Court. Although the core of Sovereign Immunity stems from international tradition, US also has a statute on point — the Foreign Sovereign Immunities Act (“FSIA”).  FSIA has a number of express exclusions from the general rule of immunity.  The salient exception here allows US courts to hear lawsuits against foreign states where the claim is for “property taken in violation of international law.”

The D.C. Circuit court found no immunity-holding that the plaintiffs had properly alleged that the coerced sale was “an act of genocide because the confiscation of property was one of the conditions the Third Reich inflicted on the Jewish population to bring about their destruction.”

In its unanimous opinion, the Supreme Court has vacated and remanded — holding that the FSIA exceptions do not extend to protect human rights. And, in particular, the law does not open the door to allowing US courts decide whether a particular country violated the human rights of its own citizens.  Further, when a country unlawfully takes the property of its citizens, that taking is a purely domestic matter that does not implicate international law.

We need not decide whether the sale of the consortium’s property was an act of genocide, because the expropriation exception is best read as referencing the international law of expropriation rather than of human rights. We do not look to the law of genocide to determine if we have jurisdiction over the heirs’ common law property claims. We look to the law of property.

And in 1976 [the year FSIA was passed], the state of that body of law was clear: A “taking of property” could be “wrongful under international law” only where a state deprived “an alien” of property.

Slip Op.  This outcome follows the international norm that gives countries a free-pass under international law for violations of the human rights of its citizens.

As the International Court of Justice recently ruled when considering claims brought by descendants of citizens of Nazi-occupied countries, “a State is not deprived of immunity by reason of the fact that it is accused of serious violations of international human rights law.”

Slip Op. quoting Jurisdictional Immunities of the State (Germany v.
Italy), 2012 I. C. J. 99, 139 (Judgt. of Feb. 3).

On remand, there will likely be more arguments. In particular, the plaintiffs will likely argue that their ancestors were not German nationals at the time of the sale – thus prompting an international taking.  Germany will also respond with a comity argument — even if it lacks sovereign immunity, the court should use its discretion to not hear the case.

Columbia University v. Illumina, Inc. (Fed. Cir. 2021) (nonprecedential opinion)

In this IPR decision, the PTAB cancelled claims from five patents owned by Columbia — finding them obvious. US Patent Nos. 9,718,852 (clm 1); 9,719,139 (clm 1); 9,708,358 (clm 1); 9,725,480 (clm 1); and 9,868,985 (clms 1-2).   The patents are all related to methods of sequencing DNA using “sequencing-by-synthesis.”  Illumina believes that it owns the process. Columbia felt otherwise and sued Illumina for patent infringement in D.Del. That lawsuit has been stayed since July 2018 as the court awaits these IPR decisions. On appeal, the Federal Circuit has affirmed.

Here is a fairly easy to understand video about  how this work:

The likelihood of winning an appeal certainly depends upon the merits of your case.  The second most important factor is the level of deference afforded to the lower-tribunal.   The Federal Circuit gives deference to any factual findings made by the PTAB in its IPR decisions.  In particular, a PTAB finding of fact will be affirmed if it is based upon “substantial evidence.”  The words “substantial evidence” might sound like a lot of evidence, it is actually a quite easy threshold.  A decision is based upon “substantial evidence” if it is supported by “more than an iota” of evidence or if “a reasonable mind might accept the evidence to support the finding.”  On the other hand, questions of law are reviewed without deference — de novo.

Obviousness is a question of law reviewed de novo.  However, the ultimate conclusion of obviousness is always based upon a large number of factual findings, “including the scope and content of the prior art, differences between the prior art and the claims at issue, the level of ordinary skill, and relevant evidence of secondary considerations.”   See my simple tip-of-the-mountain drawing below.

Here, the patentee challenged three factual findings by the Board, and the Federal Circuit found that each finding was supported by enough evidence to pass muster.  The three topics: motivation-to-combine; and two reasonable-expectation-of-success arguments.

The patentee argued someone skilled in the art would not have been motivated to combine an allyl capping group into a sequencing-by-synthesis approach.  Their particular argument, was that a prior art reference indicated some problems with use of the capping group and thus discouraged its use.  As supporting evidence, Columbia pointed to the fact that other researchers ceased related experiments after the reference was published.  On appeal, however, the Federal Circuit noted that this “teaching away” argument requires “clear discouragement” which was not proven. Although the reference did not show the experiment to be a smashing success, it also was not a failure.  Thus, while researchers might have considered better alternatives based upon the reference, it did not actually teach-away.

While it may be true that … scientists ultimately chose to research alternative capping groups, “just because better alternatives exist in the prior art” does not mean that an inferior alternative “is inapt for obviousness purposes.” Quoting In re Mouttet (Fed. Cir. 2012).

Thus, the PTAB’s finding of motivation to combine was supported by substantial evidence.

Obviousness affirmed.