Patently-O Bits and Bytes by Juvan Bonni

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Teaching Online, Copyright, and Queen Anne’s Revenge

Guest post by Kevin L. Smith, Dean of Libraries at the University of Kansas

On March 23, 2020, the Supreme Court announced a decision in one of the three copyright cases before it this term, Allen v. Cooper, a case that involves alleged copyright infringement by the state of North Carolina for using some video shot by a private videographer of the salvage operation for Blackbeard’s notorious pirate ship, the Queen Anne’s Revenge. Predictably, the Justices cannot resist word play about piracy and copyright infringement. The truth is that the case is really about sovereign immunity, so the jokes might have more appropriately focused on Queen Anne. The question presented in the case was whether a state can be sued in federal court for copyright infringement, and, specifically, was the effort to allow such lawsuits through the Copyright Remedies Clarification Act a valid exercise of Congressional authority.

Both these questions received a resounding “no” in the unanimous opinion. The Court found that Congressed did not have authority, either under its Article 1 power to grant patents and copyrights or under section 5 of the 14th Amendment, to abrogate sovereign immunity to create state liability for copyright infringement. Patent practitioners will not be surprised that much of the discussion focused on the Court’s 1999 precedent in Florida Prepaid. Indeed, most of the debate in the case, which feature a majority opinion and two different concurrences, focused on the amount of deference due to established precedent, and it seems pretty clear that much of the background in this discussion are positions being established regarding Roe v. Wade.

To me the big question coming out of this case is how much it changes the landscape for teachers working in public schools or universities. Can we all breathe a sigh of relief and no longer worry about copyright infringement? I want to suggest that this decision doesn’t really change much, and that educators employed by states should pretty much continue to do what they are doing, relying on fair use but not throwing all caution to the wind. Two important points occur to me.

  1. There is still injunctive relief available against a state entity for continuous violations of federal law, under the Ex Parte Young doctrine. The long running lawsuit by three academic publishers against Georgia State University is premised on this doctrine, and, even though the publishers seem to have largely lost on fair use grounds, this case that is now as old as some fine Scotch is still costing GSU time and money. So simply relying on a “go ahead, try to sue me” attitude still seems unwise.
  2. Employees of non-profit educational institutions also have another protection from liability, in section 504(c)2 of the U.S. copyright law. This statutory defense remits all statutory damages – the biggest bite available to most copyright plaintiffs – for such employees who have a good faith belief that their actions were fair use. If this provision is to mean anything, it must mean that the revision applies even (indeed, only) when that belief was mistaken, so that a court has gotten to the issue of damages. In effect, this provision has already widened the scope for fair use decisions made by the very teachers and faculty who might think they could benefit from the ruling in Allen v. Cooper.

So maybe it is only the folks who represent state institutions who need to pay much attention to this case. It is an arrow in their quiver of defenses to raise if they get sued. But teachers and faculty at those institutions should go on as before, making smart fair use decisions, even as they recognize that both Congress and the Court have given them some extra breathing room.

Fair use is crafted for the benefit of educators and researcher. The examples of the kinds of activities that might be fair use makes this clear, since five of the six examples are education related: criticism, comment, teaching, scholarship, and research. These examples are not per se fair use; the factor analysis still must be applied. But they do indicate that Congress intended to give educators a great deal of latitude in making fair use decisions, as well as a reduced risk, based on the 504(c)2 provision discussed above.

As most educational institutions move to online teaching during this period of efforts to contain the outbreak of COVID-19, teachers and faculty should keep this latitude in mind. Our first priority should be providing the best education to students in the online environment, and doing it as expeditiously and efficiently as possible. Many publishers of academic materials are moving to make the resources they publish widely available. In my own copyright law class, I use an open casebook, but also asked my students to obtain and read a monograph from MIT Press, and at our request, the Press gave each student a link to download a no-cost copy of the book, in case they did not have the purchased copy with them when they were told to stay at home. I mention this to illustrate that publisher are thinking about these issues with us, and have tried to be helpful. It is also the case, however, that sometimes we will have to rely on fair use, and that is OK. With or without the Supreme Court’s ruling in Allen v. Cooper, fair use was made for us, and it was made flexible precisely so that we could respond to changing circumstances.

Recently, a group of copyright specialists in academic libraries, many, but not all of whom are lawyers, drafted a statement about fair use in a time of emergency, which can be found online with a list of signers and those who have endorsed it (full disclosure: I am one of the signers). This statement recognizes a long-acknowledged fact about fair use — it is extremely driven by circumstances – and makes an effort to assess how the extraordinary circumstances under which teachers and academics are now trying to deliver their courses might impact a fair use analysis. It really simply serves to remind us that fair use is flexible, adaptable, and designed to support teaching and research. Whether or not our state institutions can be liable for copyright infringement damages (and the Court has now told us that they cannot be), fair use remains our most useful and productive legal tool in this enterprise.

Claiming Super-Augmenting a Persona to Manifest a Pan-Environment Super-Cyborg

Motupalli v. Iancu (Supreme Court 2020)

This pro se petition to the Supreme Court has a number of major problems, but does ask one interesting question:

Whether 35 U.S.C. §112 [the enablement doctrine] is satisfied when the specification of a patent application is enabling to an interdisciplinary team of two or three persons, working in cooperation?

[petition].  The statute is written as directed toward a single person: “enable any person skilled in the art to which it pertains.” But, a project of this size is unlikely to be understandable by any single human (See below).

The case itself is a nonstarter if only based upon the title of the invention at issue:

Necktie-imitating Persona Extender / Environment-Integrator and Method for Super-Augmenting a Persona to Manifest a Pan-Environment Super-Cyborg or Wedded Avatar of Christ with eThrone for Global Governance

See US Pub No. 20120253517.


Motupalli’s full biography can be found on

Oral Arguments at the Federal Circuit (via Telephone)

The Federal Circuit is set to start holding oral arguments again for the week of April 6, 2020. The arguments not be in-person but rather conducted via telephone (audio only).  The currently conceived setup won’t allow non-parties to listen-in on the conversation but the court is recording oral arguments and has indicated that it “will continue to release same-day audio for all arguments.” Additionally, a substantial number of scheduled arguments have been cancelled with a notice that:

The panel of judges that will decide this appeal has determined that oral argument is unnecessary. See Fed. R. App. P. 34(a)(2)(C).

The cited rule of appellate procedure indicates that a party’s request for oral arguments may be denied based upon unanimous agreement from the assigned panel of three judges agree that “oral argument is unnecessary” because:

(A) the appeal is frivolous;

(B) the dispositive issue or issues have been authoritatively decided; or

(C) the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument.

Fed. R. App. Proc. R. 34(a)(2).

The rules of appellate procedure allow for use of “physical exhibits other than documents” during oral arguments. R. 34(g). That’s probably not happening either.

“A single inartful statement in the prosecution history”

Genentech v. Iancu (Fed. Cir. 2020)

Hospira, Samsung Bioepis, Celltrion, and Pfizer each filed one or more inter partes review (IPR) petitions challenging Genentech breast-cancer slow-down patents: US7846441 and US7892549.  The patents recognize that some breast cancer patients make too much ErbB2 protein.  The offered solution is administration of an antiErbB2 antibody and “a taxoid, in the absence of an anthracycline derivative.”  The claims do not require a specific dosing except that it be adequate to do the job without causing major problems:

… in an amount effective to extend the time to disease progression in said human patient, without increase in overall severe adverse events.

‘441 patent, claim 1 (elsewhere claimed “effective amount”). The Board found a number of the claims invalid and Genentech appealed.  None of the petitioners participated in the appeal to defend the Board’s decision as part of a settlement with Genentech, but the USPTO intervened.

The question on appeal is the meaning of the claimed “amount effective to extend the time to disease progression.”  The problem for the patentee is that the specifications do not define the required comparisons. During prosecution the examiner originally rejected “extend the time to disease progression” as indefinite after explaining that the specification “never set[s] forth what the extension of time to disease progress is relative to.”

After receiving the indefiniteness rejection during prosecution, the patent applicant did not amend the claims but rather explained that “clearly” the effectiveness of the claimed combination should be compared with the baseline “relative to an untreated patient.”  Later, during the IPR, the Board used the statement to construe the claim term as stated and find the claim invalid as obvious.

Genentech argues that its claims should not be limited “Based on a single inartful statement in the prosecution history.” In particular, Genentech argues that the claimed improvement in disease progression should be compared to treatment with paclitaxel (the taxoid alone) – not with an untreated patient.  And, that in that framework the improvement in outcomes would have been nonobvious.

On appeal, the Federal Circuit has affirmed the PTAB claim construction and the obviousness determination.  The appellate panel noted that Genentech might have an argument except for the fact that “[t]he specification does not … expressly define the disputed terms.” In its indefininteness rejection, the examiner asked particularly — is the time “relative to untreated patients? Pateients who received antibody or taxoid alone? …”  The patentee then responded “untreated patients” and is now arguing that the correct answer should have been “taxoid alone.”

Genentech expressly rejected this comparator during prosecution and instead clearly stated that it was effectiveness relative to an untreated patient. Genentech provided an unequivocal, direct response to the examiner’s inquiry—that the term “extend the time to disease progression” was compared to an untreated patient.

Slip Op.  The response discussed above was provided in the ‘441 patent prosecution history.  In the appeal, the Federal Circuit also agreed that the same construction should apply in the ‘549 patent “which shares a specification and is in the same patent family.” “We see no error in the Board’s constructions.”


Patent Abandonment

The US is reporting more new jobless claims last week than for the entire prior year — ending a 10-year streak of month-by-month “job growth” that began shortly after Pres. Obama took office and has continued for the past three years under Pres. Trump.

In addition to cutting employees, businesses are likely to cut patents. Russ Krajec offers some preliminary numbers on abandonment of rejected claims — finding that the number for the first half of March 2020 show an abandonment rate of double normal.

Effects of COVID-19 on Patents – Twice The Number of Abandonments


CARES Act Text – PTO Related Deadlines

The following is the text of the CARES Act as it relates to the USPTO deadlines. [Full Text of the Bill].

SEC. 12004. 

(a) IN GENERAL.—During the emergency period described in subsection (e), the Director may toll, waive, adjust, or modify, any timing deadline established by title 35, United States Code, the Trademark Act, 19 section 18 of the Leahy-Smith America Invents Act (35 U.S.C. 321 note), or regulations promulgated thereunder, in effect during such period, if the Director determines that the emergency related to such period—

(1) materially affects the functioning of the Patent and Trademark Office;
(2) prejudices the rights of applicants, registrants, patent owners, or others appearing before the Office; or
(3) prevents applicants, registrants, patent owners, or others appearing before the Office from filing a document or fee with the Office.

(b) PUBLIC NOTICE.—If the Director determines that tolling, waiving, adjusting, or modifying a timing deadline under subsection (a) is appropriate, the Director shall publish publicly a notice to such effect.

(c) STATEMENT REQUIRED.—Not later than 20 days after the Director tolls, waives, adjusts, or modifies a tim13 ing deadline under subsection (a) and such toll, waiver, adjustment, or modification is in effect for a consecutive or cumulative period exceeding 120 days, the Director shall submit to Congress a statement describing the action taken, relevant background, and rationale for the period of tolling, waiver, adjustment, or modification.

(d) OTHER LAWS.—Notwithstanding section 301 of the National Emergencies Act (50 U.S.C. 1631), the au21 thority of the Director under subsection (a) is not contin22 gent on a specification made by the President under such section or any other requirement under that Act (other than the emergency declaration under section 201(a) of such Act (50 U.S.C. 1621(a))). The authority described in this section supersedes the authority of title II of the National Emergencies Act (50 U.S.C. 1621 et seq.).

(e) EMERGENCY PERIOD.—The emergency period described in this subsection includes the duration of the por5 tion of the emergency declared by the President pursuant to the National Emergencies Act on March 13, 2020, as
7 a result of the COVID–19 outbreak (and any renewal thereof) beginning on or after the date of the enactment of this section and the 60 day period following such duration.
(f) RULE OF CONSTRUCTION.—Nothing in this section may be construed as limiting other statutory authorities the Director may have to grant relief regarding filings or deadlines.

(g) SUNSET.—Notwithstanding subsection (a), the authorities provided under this section shall expire upon the expiration of the 2-year period after the date of the enactment of this section.

(h) DEFINITIONS.—In this section:

(1) DIRECTOR.—The term ‘‘Director’’ means the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

(2) TRADEMARK ACT.—The term ‘‘Trademark Act’’ means the Act entitled ‘‘An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes’’, approved July 5, 1946 (15 U.S.C. 1051 et seq.).

(i) EMERGENCY REQUIREMENT.—The amount provided by this section is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.

Coronavirus Aid, Relief, and Economic Security (CARES) Act and the USPTO


Coronavirus Aid, Relief, and Economic Security (CARES) Act and the USPTO

The $2 trillion stimulus and economic rescue bill known as the CARES Act is moving forward in the Senate.  Although not generally a key aspect of the legislation, the current proposal on the table includes temporary authority for the USPTO Director to “toll, waive, adjust, or modify, any timing deadline” established by the patent or trademark laws or by prior PTO regulation.  In order to take action, the director must determine that the COVID-19 National Emergency:

(1) materially affects the functioning of the Patent and Trademark Office;

(2) prejudices the rights of applicants, registrants, patent owners, or others appearing before the Office; or

(3) prevents applicants, registrants, patent owners, or others appearing before the Office from filing a document or fee with the Office.

Here the “emergency” period is defined as the National Emergency declared by President Trump on March 13, 2020, as a result of the COVID–19 outbreak. The Director’s authority would begin with the enactment of the legislation and last until the end of the Emergency (including any renewals) plus 60 more days.  In addition, the whole thing sunsets in 2-years.

Dir. Iancu has privately indicated a need for the legislation, but has not stated publicly what if he would make any immediate actions or whether he would delegate his authority to the PTAB to make these determinations.

My reading of the proposal is that it provides authority to the USPTO Director but does not place any requirement on the Director to act. Thus, a particular party who experiences problems with filing or meeting other deadlines will not have a claim under the statute.

All of the deadlines are easy for the PTO Director to adjust with the one exception being the original filing date. In addition, international obligations may create some problems with adjusting PCT-related dates — although WIPO and the big-five are working through potential arrangements as we sit here today.

Consisting of . . . and optionally . . .

I am writing a separate post on Galderma Labs., L.P. v. Amneal Pharms. LLC (Fed. Cir. March 25, 2020), but wanted to note the claim language found in Gladerma’s U.S. patent No. 8,206,740.  In particular, I was first surprised to see the final element of the claim written as an “optional” limitation:

1. An oral pharmaceutical composition of doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 μg/ml and a maximum of 1.0 μg/ml, the composition consisting of

(i) an immediate release (IR) portion comprising 30 mg doxycycline;

(ii) a delayed release (DR) portion comprising 10 mg doxycycline; and

optionally, (iii) one or more pharmaceutically acceptable excipients.

The MPEP offers some ambiguous thoughts on use of the term “optionally” within claim language — concluding that it may raise indefiniteness concerns where ambiguity arises from a “list of potential alternatives.” MPEP 2173.05(h) Alternative Limitations.   In the usual claim situation, an “optional” limitation creates confusion because it doesn’t appear to do any actual work in the claim because a claim “comprising” a list of features may also include other features as well. In that situation, the ambiguity comes into play because we still want to assign some meaning to the claim element even though it is largely meaningless.

In the claim above, however, the “optionally” language complements a “consisting of” transition.  It does substantial work because of the closed transition — without the optionally limitation a formulation having the “pharmaceutically acceptable excipients” would be found not literally infringing.

Customer Suit Exception and Stays for Judicial Economy

In re Sprouts Farmers Market, Inc. (Fed. Cir. 2020)

Sprouts is a supermarket chain sued by Motion Offense, LLC in W.D.Tex. for infringing its patents, US10013158  & US10021052 (processing and sharing a “data object”).  The basic allegation in the case is that Sprouts’ is infringing the patents by using Dropbox.  After hearing that its customers were being sued, Dropbox itself brought a declaratory judgment action in D.Del. against Motion Offense seeking a non-infringement declaration.

Asserting a “customer-suit exception,” Sprouts motioned for a stay of the W.D.Tex case pending outcome of the D.Del. dispute.  Judge Albright refused to stay the case and Sprouts then petitioned for writ of mandamus.  Meanwhile, the Delaware court ordered the DJ lawsuit transferred to W.D.Tex so the cases could be decided together, but also stayed that action pending outcome of the mandamus.

The Federal Circuit has now denied mandamus without particularly discussing the “customer-suit exception,” the court found that Sprouts had not met the “very demanding standard” of mandamus.

Only exceptional circumstances, amounting to a clear abuse of discretion or judicial usurpation of power, will justify the extraordinary remedy of mandamus. In re Cordis Corp., 769 F.2d 733 (Fed. Cir. 1985).

On remand, the court did not provide any order to the district court but did offer its expectation:

now that both related cases are in the Western District of Texas, we expect the district court to consider whether the most efficient resolution entails staying or consolidating at least some of the underlying proceedings.


More Background: The “customer suit exception” is an exception to the normal first-to-file approach to civil litigation stays.  The first-to-file approach works as follows:

  • When there are multiple similar and overlapping lawsuits filed in parallel, the district court may want to stay some of the lawsuits for judicial economy.
  • The first-to-file “rule” indicates that the court should let the first-filed lawsuit keep running and stay the later filed lawsuits.

I’ll note here that this first-to-file approach is not a RULE rule but rather a rule-of-thumb type of rule — a typical approach within the sound discretion of the district court judges involved in the litigation.

In patent cases, courts have recognized a customer suit exception to the first to file rule in a situation where there are parallel lawsuits involving (1) the prime manufacturer/originator of an infringing product/service and also (2) customers of the prime manufacturer. Even if the customers were sued first, courts have found it proper and appropriate to stay those cases pending outcome of the big one against the prime manufacturer. Other approaches abound — including synchronizing motion practice and partial joinder.  The guiding principles for all of these approaches is “efficiency and judicial economy” Tegic Commc’ns Corp. v. Bd. of Regents of Univ. of Texas Sys., 458 F.3d 1335 (Fed. Cir. 2006).  As stated by Rule 1 of the Federal Rules of Civil Procedure: The rules “should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.”

Fote v. Iancu: R.36 Decisions and the Reasons for Judgment

I previously discussed Fote v. Iancu. Charles Fote has now petitioned the Supreme Court for certiorari — asking the following question:

Whether a court of appeals must provide an opinion explaining its reasoning in an appeal that involves a complex and unsettled area of the law and in which a written opinion would likely provide the appellant with a viable basis for seeking rehearing, rehearing en banc, or certiorari.



Respect for Judgment: Challenging the Federal Circuit’s Unique Finality Rule

by Dennis Crouch

My Civil Procedure class at Mizzou is now “Online Civil Procedure.”  The final topic in the course will be “respect for judgments.”

A basic setup of our  legal system is to offer substantial justice — giving all parties due process including an opportunity to be heard and judged by an impartial tribunal.  Once that process is complete, the result is then seen as final and further challenges regarding the same issues or claims are precluded.

In patent law, the sense of finality and respect for judgment has been substantially complicated with the rise of AIA trials.

A case-in-point is Chrimar Systems v. Ale USA (Supreme Court 2020).  Chrimar is typical of many contemporary cases because it involves parallel district court and PTAB litigation.

Here is a timeline of the district court litigation.

  • Chrimar sued ALE for infringement on four patents.
  • ALE admitted infringement and a jury rejected ALE’s invalidity defenses. The district court entered judgment awarding damages and ongoing royalties.
  • On appeal, the Federal Circuit affirmed except to claim construction of one term in one of the four patents. The appellate court particularly stated that the partial reversal was “immaterial to damages
    because any damages that would result from the alleged
    infringement of the [remanded] ’012 patent also results from
    the infringement of the ’107 and ’760 patents.”
  • Back on remand, Chrimar issued a covenant-not-to-sue on the ‘012 patent and the district court amended its final judgment favoring Chrimar – now  just include the other three patents with the same damage award.

Meanwhile at the PTAB:

  • After the original lawsuit was filed, Chrimar filed for IPR petitions — challenging each of the asserted patents.  The PTAB granted those petitions.
  • After the jury verdict and district court (original) final judgment, the PTAB sided ALE — cancelling the all of the asserted claims.

Finally at the Federal Circuit:

  • September 9, 2019: The Federal Circuit affirmed the PTAB Decisions in a R.36 Judgment Without Opinion
  • September 9, 2019: The Federal Circuit vacated the district court final judgment and “remanded for dismissal.” The court held that its simultaneous affirmance of the IPR decisions gives effect to the PTAB judgments that applies to all still pending cases. Since an appeal was still pending in the district court litigation, that it applies there. “Our affirmance of the Board’s decisions of unpatentability of the patent claims at issue in the present case has ian immediate issue-preclusive effect on any pending or copending actions involving the patent[s].’ XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018).

Now to the Supreme Court:

Chrimar has now petitioned the U.S. Supreme Court in the case with the basic argument that the lawsuit was already finally decided by the district court and an administrative agency (the PTO) does not have the right or power to reopen that final judgment.  The petition explains:

Chrimar brought an action for infringement against ALE under four patents. A jury rejected ALE’s invalidity defenses and awarded past damages. The District Court then awarded post-judgment ongoing royalties. The … Federal Circuit affirmed liability and damages, expressly holding that a partial remand to reconstrue one patent was “immaterial to damages because any damages that would result from the alleged infringement of the [remanded] ’012 patent also results from the infringement of the ’107 and ’760 patents.” App. 48a.

After the District Court’s entry of the eventually-affirmed judgment, the Patent Trial and Appeal Board (“PTAB”) (part of an Executive Branch agency) rendered final decisions finding unpatentable all asserted claims (a decision later affirmed). On this basis, the Federal Circuit ordered that the Article III damages judgment be vacated and remanded for dismissal. The Federal Circuit reasoned that the later Executive Branch administrative outcome required vacating the prior already-affirmed Article III judgment.

The questions presented are:

1. Whether the Federal Circuit may apply a finality standard for patent cases that conflicts with the standard applied by this Court and all other circuit courts in non-patent cases.

2. Whether a final judgment of liability and damages that has been affirmed on appeal may be reversed based on the decision of an administrative agency, merely because an appeal having nothing to do with liability, damages or the proper calculation of the ongoing royalty rate is pending.

The petition here is correct that the Federal Circuit’s preclusion principle here “is the sole invention of the Federal Circuit, having been adopted by no other court.”

This legal rule has earned sharp rebuke from academics and jurists alike. It is legally incorrect and conflicts with the decisions of all other circuits and of this Court. The legal rule incentivizes unfairness against patentees, motivates gamesmanship by accused infringers, leads to wasted judicial effort by trial and appeals courts, and disincentivizes innovation by undermining confidence in the patent system.

Petition at 4. See  Paul R. Gugliuzza, (In)valid Patents, 92 Notre Dame L. Rev. 271 (2016); Peggy P. Ni, Rethinking Finality in the PTAB Age, 31 Berk. Tech. L.J. 557 (2016)

USPTO launches the Expanding Innovation Hub, a new online platform to encourage greater participation in the patent system

The following post is republished from the USPTO Director’s Blog and is authored by USPTO Director Andrei Iancu and Deputy Director Laura Peter. 

Red, yellow, and blue silhouettes of heads look left and right.

“To maintain our technological leadership, the United States must broaden our innovation ecosphere demographically, geographically, and economically.”—USPTO Director Andrei Iancu

Today, as part of Women’s History Month, the USPTO has officially launched the Expanding Innovation Hub (“the Hub”), an online platform available on the USPTO website that provides resources for inventors and practitioners to encourage greater participation in the patent system. The new platform is yet another step the USPTO has taken to broaden the innovation ecosphere, to inspire novel inventions, to accelerate growth, and to drive America’s global competitive edge. It builds on our SUCCESS Act report to Congress of 2019, as well as our Progress and Potential report on women inventors. (more…)

En Banc Denial in Arthrex

by Dennis Crouch

Arthrex, Inc. v. Smith & Nephew, Inc. and U.S. as intervenor (Fed. Cir. 2020) (en banc denial)

None of the parties in this case were happy with the Federal Circuit’s original decision in Arthrex and all filed petitions for en banc rehearing.  Those petitions have now been denied in what appears to be a 8-4 split with Judges Newman, Wallach, Dyk, and Hughes expressly dissenting from the denial.  Judge Moore authored the original opinion in the case and also authored an opinion here defending that original opinion. She was joined on the opinion by her original panel members of Judges Reyna and Chen as well as Judge O’Malley explaining that (1) the original decision was correct and (2) conducting a rehearing would “only create unnecessary uncertainty and disruption.”

The Arthrex panel followed Supreme Court precedent to conclude that the administrative patent judges (APJs) of the USPTO’s Patent Trial and Appeal Board were improperly appointed principal officers. It further followed the Supreme Court’s direction by severing a portion of the statute to solve that constitutional problem while preserving the remainder of the statute and minimizing disruption to the inter partes review system Congress created.

Judge Moore Op. Concurring in the en banc denial.  This quote mentions the the “severing” element of the original panel decision. In particular, the court invalidated the removal restrictions of 5 U.S.C. § 7513 as it applies to APJs — thus making it easier for the USPTO director to remove APJs at will. This move – according to the court – was sufficient to shift APJs from principal Officers to inferior Officers and thus “save” the system.

Judge O’Malley wrote her own concurring opinion that included the following statement:

While I agree with Judge Dyk and Judge Hughes that Title 5’s protections for government employees are both important and long-standing, I do not believe Congress would conclude that those protections outweigh the importance of keeping the remainder of the AIA intact—a statute it debated and refined over a period of more than six years.

The leading dissent by Judge Dyk argues that the severance choice here is an improper, “draconian remedy” that “rewrites the statute contrary to Congressional intent.  Judges Hughes and Wallach each wrote their own dissenting opinions – arguing that APJs were already inferior officers based upon the extensive control and authority exerted by the USPTO director.

= = = = =

The basic issue in the case is the Constitutionality of the appointments process for Administrative Patent Judges (APJs) sitting on the Patent Trial & Appeal Board (PTAB).  The Appointments Clause of the U.S. Constitution indicates that all “Officers of the United States” shall be nominated and appointed by the US President with the Advice and Consent of the Senate.  The provision then goes on to say that Congress has the power to alter this process for “inferior Officers, as they think proper.” In particular, Congress may allow inferior Officers to be appointed by “Heads of Departments.”  U.S. Const. Art. II, Sec. 2, Cl. 2.  An improperly appointed officer isn’t really an officer at all and so should have no power to render judgment to cancel privately held property rights.

APJs used to be hired by the USPTO Director.  However, Prof John Duffy shook that cage in his 2007 article: Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21. In the article, Duffy argued that APJs are likely best classified as inferior Officers and thus could be appointed by a Head of Department — namely the Secretary of Commerce.  Congress quickly acted on Duffy’s submission and altered the law to fix the problem.

The America Invents Act (AIA) greatly increased the power of APJ with the advent of inter partes review (IPR) proceedings and the other AIA trials.  The PTAB has become the most frequented patent court in the country and thousands of patents have been cancelled based upon APJ rulings.

After losing before the PTAB in an inter partes review, Arthrex appealed to the Federal Circuit with the argument that the increased power granted by the AIA ratches APJs up to the status of principal Officers rather than inferior Officers.  The result of that conclusion would be that APJs would need Presidential Appointment with Senate consent.  In Arthrex, the Federal Circuit agreed with the contention, but rather than requiring Presidential Appointment, the court decided instead to invalidate a statute that provides job security to APJs.  Since job security (ability to be easily fired by someone other than the President) is an element of the inferior/principal Officer distinction, the Federal Circuit found that severing that portion of the statute was enough to change the nature of the role.

= = = =

The case offers an interesting constitutional query – but is also being used as a tool for those who are hoping for the IPR system to fail.

SCT: States can Keep Infringing Copyright With Immunity/Impunity

By Dennis Crouch

This case is welcome news to state-employed teachers infringing copyrights like crazy as they post materials online. 

Allen v. Cooper (Supreme Court 2020)

Justice Kagan offered the US Supreme Court’s opinion siding with the State of North Carolina (Cooper) in a Copyright federalism question — holding that US Congress does not have the authority to abrogate State immunity from copyright infringement lawsuits.

The 11th Amendment (1795) provides that:

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

In this case, copyright holder Rick Allen sued the State of North Carolina (Cooper is the Governor) for copyright infringement in Federal Court after the state willfully and deliberately copied his works.   The videos and photos at issue here are ones that Allen captured as part of the recovery and exploration of the Pirate Blackbeard’s downed ship Queen Anne’s Revenge.  The state used his materials for various educational purposes and Allen sued.

At first glance, the text of the 11th Amendment appears to make this an open-and-shut case — US courts have no judicial power over a State in this situation.  Note here though that Allen is actually a citizen of North Carolina and so the law doesn’t directly apply because he is not fit the set of “Citizens of another State.”

The 11th Amendment is the touchstone of state sovereign immunity because it expressly remarks upon the issue. However, in several decisions over the centuries, the Supreme Court has noted that the 11th Amendment is not the limit or the whole. See, Hans v. Louisiana, 134 U.S. 1 (1890) and Alden v. Maine, 527 U.S. 706 (1999) as examples.  In Alden, the Supreme Court explained that nothing in the rest of the U.S. Constitution generally empowers Congress to subject the States to private lawsuits in Federal Court.  Alden though was a 5-4 decision not cited here in Allen v. Cooper.  That fact, along with Justice Kagan as author reflect that the unanimous decision here is a compromise judgment.

The intellectual property clause is also found in the Constitution — giving Congress power “To promote the progress of science and useful arts” by granting “exclusive rights” to authors and inventors.  U.S. Const. Art. I, Sec. 8, Cl. 8 (1789).  It is not clear from the text whether this clause creates an exception to the states-not-being-sued principle.  To make it clear, in 1990 Congress passed the Copyright Remedy Clarification Act (CRCA) that expressly removed States sovereign immunity in copyright infringement cases.   Subsequently, in 1999 the Supreme Court decided a parallel case involving a parallel Remedy Clarification Act for patents. Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999). In Florida Prepaid, a 5-4 majority held that nothing in Article I (including the IP Clause) allowed Congress to abrogate state sovereign immunity.  The Court did explain that the 14th Amendment provides the mechanism for abrogating state sovereign immunity with the statement:

The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

14th Amendment, Section 5 (1868).  The 14th Amendment explains that no State may “deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” 14th Amendment, Section 1.   Here, Allen contends that his Copyright is a Property Right enabled and promoted by the US Constitution and Congress. And, that it is a violation of the 14th amendment to deprive Allen of his property rights without due process.

In reviewing the claim, the Supreme Court extended the patent discussion in Florida Prepaid to cover copyright as well — holding that Article I does not grant Congress power to limit state sovereign immunity.  In the process, the court distinguished Central Va. Community College v. Katz, 546 U. S. 356 (2006), limiting  that case to the “unique history of the Bankruptcy Clause.”  In interpreting the 14th Amendment, the Supreme Court repeated prior holdings that – in most instances – Congress must “identify a pattern of unconstitutional” activity by the states sufficient to require abrogation of sovereign immunity.  Here, the “thin evidence” of widespread state infringement was insufficient to open the door to 14th Amendment protections.

The court offers a bone to Congress — explaining that the Supreme Court’s approach to State sovereign immunity has changed since CRCA passed.  Since the decision the court had not yet explained its test, “Congress likely did not appreciate the importance of linking the scope of its abrogation to the redress or prevention of unconstitutional injuries—and of creating a legislative record to back up that connection.”  The court then notes that in the future Congress can likely create a “tailored statute” to “stop States from behaving as copyright pirates. Even while respecting constitutional limits, it can bring digital Blackbeards to justice.”

In the end, the majority opinion explained

Florida Prepaid all but prewrote our decision today. That precedent made clear that Article I’s Intellectual Property Clause could not provide the basis for an abrogation of sovereign immunity. And it held that Section 5 of the Fourteenth Amendment could not support an abrogation on a legislative record like the one here. For both those reasons, we affirm the judgment below.


The decision includes two additional opinions, both concurring in the judgment — agreeing that sovereign immunity protects the State in this case.

In his concurring opinion, Justice Thomas offers “two disagreements and one question open for resolution in a future case.”

  • Stare decisis: The court does not need “special justification” to overrule precedent.  Rather the Court is obligated to correct prior errors.
  • Opinion on Future Legislation: Justice Thomas argued that the Supreme Court has no role in advising Congress on “how it might exercise its legislative authority, nor give our blessing to hypothetical statutes or legislative records not at issue here.”
  • Are Copyrights Property: Justice Thomas’s big final question is “whether copyrights are property within the meaning of the 14th Amendment’s Due Process Clause.” According to Justice Thomas, that question “remains open.”  In his opinion, Justice Thomas recognized that the court has previously identified copyrights as a form of property – even for Due Process considerations.  But, those statements were effectively dicta or without substantial analysis.

Finally, Justice Breyer – joined by Justice Ginsberg – offered a concurring opinion.  Effectively, the pair would dissent on the merits, but now recognize that their view of limited State sovereignty “has not carried the day.”

Patently-O Bits and Bytes by Juvan Bonni

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Guest Post: Joinder and the One-Year Time Bar in Inter Partes Review

Guest post by Saurabh Vishnubhakat, Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering. Disclosures: Professor Vishnubhakat was formerly an advisor at the USPTO, but his arguments here should not be imputed to the USPTO or to any other organization. Professor Vishnubhakat was an author of amicus briefs by Professors of Patent and Administrative Law in Wi-Fi One v. Broadcom (in support of neither party) and in Thryv v. Click-to-Call Technologies (in support of the respondent), both of which cases are discussed below.

The March 18, 2020 precedential Federal Circuit opinion in Facebook v. Windy City has notable implications for the system of inter partes review proceedings before the USPTO Patent Trial and Appeal Board. The case was about how two important provisions of the IPR statute—the one-year time bar of § 315(b) and the Director’s discretion to permit joinder under § 315(c)—interact with each other. (As those who follow PTAB issues know, the one-year time bar is also currently before the Supreme Court in Thryv v. Click-to-Call Technologies, on whether PTAB determinations about the time bar are subject to judicial review.) The holding in Windy City is fairly straightforward. The broader implications deserve some elaboration.

The Panel Decision

The panel held that § 315(c) does not authorize same-party joinder, i.e., does not allow a petitioner who has filed an inter partes review petition to join its own, earlier inter partes review petition. The panel also held that § 315(c) does not authorize issue joinder, i.e., does not allow joinder that would introduce new issues material to patentability, such as new patent claims or new grounds for cancellation. (As to the merits of the PTAB’s final written decisions on claims from each of Windy City’s four patents, the panel affirmed that the PTAB’s findings of obviousness were supported by substantial evidence—except as to the patent claims that had been improperly joined through Facebook’s later, time-barred petitions.)

The Dispute’s Background and Timeline

The case began with an infringement suit in which Windy City asserted four patents against Facebook. Exactly one year after it had been served with Windy City’s complaint, Facebook timely sought inter partes review of some, but not all, claims across all four of Windy City’s asserted patents. Taken together, the four patents contained 830 claims, though it was not yet clear which claims were in suit. The PTAB instituted review as to nearly all of the patent claims that Facebook challenged in its petitions. By the time Windy City had clarified which particular patent claims it was asserting in its district court suit, the one-year bar of § 315(b) had passed.

Facebook still sought inter partes review on the remaining patent claims asserted against it, along with a motion under § 315(c) to join these IPRs to the earlier IPRs that the PTAB had already instituted. The PTAB instituted both petitions and allowed joinder.

June 2, 2015

Windy City sued Facebook in the Western District of North Carolina.

June 3, 2015

Windy City served its complaint upon Facebook.

June 3, 2016

Facebook timely filed four IPR petitions challenging some, but not all, claims across all four of Windy City’s patents.

December 12–15, 2016

The PTAB instituted review on nearly all of the patent claims that Facebook had challenged in its IPR petitions of June 2016.

October 19, 2016

Windy City identified the patent claims that it believed Facebook had infringed.

January 12–17, 2017

Facebook filed two more IPR petitions challenging the remaining Windy City patent claims that were asserted against it—and sought joinder of these IPRs to its earlier, already-instituted IPRs.

July 31–August 1, 2017

The PTAB instituted review on both of Facebook’s additional IPR petitions and allowed them to be joined to Facebook’s earlier IPRs.

The Court’s Statutory Analysis

On the question of same-party joinder, the panel explained that the Director’s discretion under § 315(c) is only to “join as a party to that inter partes review any person who” meets certain conditions. Slip op. at 14 (emphasis added). This language excludes the joinder of a petitioner who is already a party to the existing IPR, as Facebook was in this case. The court analogized to the Federal Rules of Civil Procedure, under which “joinder of a person as a party is uniformly about adding someone that is not already a party.” Id. at 16 (emphasis in original). It also noted that joinder under § 315(c) pertains to persons, not proceedings, and that combining one IPR proceeding with another, earlier IPR proceeding was best understood in terms of a different statutory provision: consolidation under § 315(d). Id. at 14–15.

Importantly, this reading of § 315(c) does not depend on whether the later-filed petition or petitions were time-barred under § 315(b). The USPTO’s contrary view had been expressed a year ago by Precedential Opinion Panel’s review of Proppant Express Investments v. Oren Technologies. The agency’s conclusion was that same-party joinder is permissible under § 315(c)—indeed, is permissible even if the later-filed petition may otherwise be time-barred under § 315(b).

Similarly on the question of issue joinder, the panel started from the same premise that the Director’s discretion under § 315(c) is only to join a person as a party to an earlier IPR who meets certain conditions. Among these conditions is the limitation that such a joinder must be to “to an already-instituted IPR.” Slip op. at 17 (emphasis in original). This point matters because the already-instituted IPR “is governed by its own
petition and is confined to the claims and grounds challenged in that petition.” Id. at 17–18 (citing SAS Institute v. Iancu, especially that “the petitioner’s petition, not the Director’s discretion, is supposed to guide the life of the litigation”). That confinement, the court concluded, does not allow “the joined party to bring new issues from the newer proceeding into the existing proceeding.” Id. at 18.

As with same-party joinder, the court’s view against issue joinder did not depend on whether the later-raised issues were time-barred under § 315(b). And here, too, the court explained that allowing a new petition with new issues to be combined with an already-instituted petition with its own issues was simply not the purview of party joinder under § 315(c). Rather, it was the stuff of consolidation under § 315(d). Id. at 18–19.

The Court’s Deference Analysis

On both of these statutory questions, the panel concluded that the plain language of § 315(c) is unambiguous. As a result, the USPTO’s contrary view was not entitled to deference under the familiar two-step framework of Chevron v. NRDC. Id. at 23–24. The agency lost at step one.

The entire panel also went further, however, in a separate concurring opinion that offered additional views about what deference, if any, might have been owed to the USPTO as a result of its Precedential Opinion Panel’s conclusion in Proppant. The panel in its concurring opinion concluded that, even if § 315(c) were deemed ambiguous in the contexts at issue here—same-party joinder and issue joinder—the agency’s views as expressed through the Precedential Opinion Panel would still fail at Chevron step two: the most reasonable reading of § 315(c) would remain the one adopted in the majority opinion. Slip op. at 2 (Prost, C.J., conc.).

This position of non-deference and the precedential interpretations of joinder and the one-year bar together represent a major milestone in the PTAB’s adjudicatory power as well as in Federal Circuit oversight of the USPTO. It is these two very practical concerns, which are at the heart of the AIA’s system of administrative patent revocation, where the larger significance of Windy City really lies.

Implications for the PTAB and the USPTO

The District Courts vs. the Agency

That first concern of adjudicatory power is, to be more precise, about the separation of the PTAB’s power from that of the federal courts—indeed, about the AIA’s intended plan that the PTAB should act as a substitute for the courts. The one-year time bar is an especially important safeguard of that substitutionary choice, which the AIA requires petitioners to make. As I have previously discussed on this blog, the boundary-enforcing function of the one-year bar makes § 315(b) a robust statutory limit on the Director’s discretion in institution-related matters.

For purposes of judicial review, § 315(b)’s work as a statutory limit means that the en banc Federal Circuit correctly decided Wi-Fi One v. Broadcom, holding that the nonappealability of institution decisions under § 314(d) does not extend to PTAB determinations about the one-year time bar. It also suggests that the Supreme Court in Thryv v. Click-to-Call, argued last December, should affirm that § 315(b) determinations are judicially reviewable.

The problem of joinder, however, raises further questions both on its own and in combination with the one-year bar. On its own, PTAB joinder offers a mechanism for socially beneficial collective action in challenging patents whose validity may be in question. The problem of resolving patent validity through litigation in the federal courts is not limited to cost, delay, and potential inaccuracy due to the relative technical inexpertise of most judges and juries. That problem also includes the high constitutional barrier of access to federal court—in the form of Article III standing—that allows only certain parties with certain kinds of incentives even to enter the fray. PTAB proceedings under the AIA have no such standing requirement and so reduce this barrier to entry considerably.

Moreover, the Blonder-Tongue doctrine means that an unsuccessful patent validity challenge in federal court estops only the challenger, whereas a successful validity challenge invalidates the patent as against the world. Thus, federal-courts litigants with a concrete enough stake in challenging a patent generally bear all the costs of losing but must share with the world—including their competitors—the benefits of winning, creating a collective action problem. By contrast, the relatively lower costs of entering and conducting PTAB review and the ability to join inter partes review petitions as co-challengers reduce this collective action problem.

Empirical research on the PTAB offers good evidence of this intuition. For example, inter partes review (unlike covered business method review) allows not only defensive petitions by parties sued in district court for infringement but also entirely preemptive petitions by those who have yet to be sued on the patent in question. Thus, when so-called “standard” petitioners who act defensively file IPR petitions, they may subsequently be joined by “nonstandard” petitioners who are interested in striking preemptively. And across most major fields of technology, the share of standard IPR petitions (in which at least one petitioner was previously sued on the same patent) is greater than the share of standard IPR petitioners (who have themselves previously been sued on the same patent). In fact, this disparity is quite high for certainly technology categories, such as Drugs and Medical (48.5% vs. 70.8%) and Mechanical (53.1% vs. 70.2%).

What this disparity reveals is that petitioners who are not prior district-court defendants tend to use § 315(c) to join IPR petitions that have been filed by prior defendants.

Source: Saurabh Vishnubhakat, Arti K. Rai & Jay P. Kesan, Strategic Decision Making in Dual PTAB and District Court Proceedings, 31 Berkeley Tech. L.J. 45 (2016) [SSRN].

Still, though joinder under § 315(c) offers benefits for socially desirable collective action, it is easy to see how it can conflict with the overarching boundary between district courts and the PTAB, the very boundary that the one-year time bar of § 315(b) exists to enforce. If parties can evade the one-year deadline by joining already-instituted petitions, whether their own or those of others, then the substitutionary function of PTAB review is undermined, potentially significantly. But if patent owners can “run out the clock” in district court before identifying their patent claims in suit—as Facebook cautioned in this case, slip op. at 21—then petitioners may not be able to make fully meaningful use of inter partes review.

Given these competing policy choices, the practical question becomes: who should decide the contours of the PTAB-district court boundary, the USPTO or the Federal Circuit? By construing the statute for itself and giving no deference to the USPTO’s interpretation, the Federal Circuit has sent a strong signal about the degree to which the USPTO still does not enjoy full policymaking authority in the patent system.

The Federal Circuit vs. the Agency

That same strong signal from the Federal Circuit also pervades the second major concern, regarding appellate oversight of the USPTO. The panel opinion’s direct holding about § 315(c) sidesteps whether the substance of the Precedential Opinion Panel’s position would merit Chevron deference, as the statute here was deemed unambiguous. The court’s dicta in its separate concurring opinion, however, offers a stark picture of how the agency’s future positions might fare in debates over judicial deference.

In that picture, the role of the Precedential Opinion Panel is of central importance. Created in September 2018 to streamline the process by which PTAB opinions could be designated precedential, the POP marked a departure from the USPTO’s preexisting Standard Operating Procedure, which had required discussion and a majority vote from the entire PTAB membership followed by approval from the Director. That process had proven relatively unwieldy for generating case law that could effectively bind PTAB panels, and the resulting lack of precedential force had hamstrung the USPTO’s desire for deference.

For example, the Federal Circuit had previously “decline[d] to give Chevron deference to these nonprecedential Board decisions, which do not even bind other panels of the Board”—observing further that, “[i]ndeed, this court has not yet opined on whether deference is warranted for precedential Board decisions.” Power Integrations v. Semiconductor Components, 926 F.3d 1306, 1318 (Fed. Cir. 2019). And even in the present case, the Windy City concurrence still noted that “precedential value alone does not add up to Chevron entitlement.” Slip op. at 13 (Prost, C.J., conc.).

What matters more for Precedential Opinion Panel review, the court explained, is whether Congress has delegated to the USPTO the authority to speak with the force of law and whether the USPTO’s relevant statutory interpretation represents an exercise of that authority. Id. at 6 (citing United States v. Mead Corp., 533 U.S. 218, 226–27 (2001)). In the court’s view, the POP process does not rise to that level. It is true that § 316 confers rulemaking authority to govern the conduct of inter partes review proceedings. However, that authority is limited to prescribing regulations and does not include other means for adopting legal standards and procedures. Id. at 7. In this regard, POP review “is not equivalent in form or substance to traditional notice-and-comment rulemaking” and so does not rise to Chevron-worthy agency action. Id. at 12–13.

It is also true that §§ 3(b) and 3(c) delegate adjudicatory authority over inter partes review proceedings and that, according to the Supreme Court in Mead itself, the power to adjudicate is as quintessential a form of lawmaking authority as rulemaking. Id. at 8. However, that authority belongs in this case to the PTAB itself whereas the rulemaking authority of § 316 is delegated to the Director. The court observed that most modern Congressional delegations of authority to administrative agencies vest “a single delegee with both rulemaking and adjudicatory powers”—that delegee being the agency head. Id. at 9–10. The AIA, by contrast, divided the powers of rulemaking and adjudication between the Director and the PTAB. In this sort of “bilateral structure,” the two forms of lawmaking cannot be exercised interchangeably in order to achieve Chevron deference. Id. at 10 (citing Martin v. OSHRC, 499 U.S. 144, 154–55 (1991)).

Notably, the USPTO has been here before. As the Federal Circuit held in its complex and fractured en banc decision in Aqua Products v. Matal (Fed. Cir. 2017), the USPTO was not entitled to Chevron deference for its interpretation of § 316(e), which places “the burden of proving a proposition of unpatentability” upon the petitioner. The USPTO’s view at the time was that, for patent claim amendments offered during inter partes review, the patent owner bears the burden of proving that the amended claims are patentable—not the petitioner to prove that the amended claims are unpatentable. The en banc court concluded by a 7–4 majority that the USPTO’s approach did not merit Chevron deference, but the split in reasoning did much to shape the outcome.

Only five of the eleven judges had concluded that § 316(e) was unambiguous on the relevant question; the other six concluded that the statute was ambiguous. But of those latter six judges, only four concluded that Chevron deference was appropriate for the USPTO’s interpretation of § 316(e). The other two judges held that the agency had not engaged in APA-compliant rulemaking and so was not entitled to deference. Thus, the USPTO’s engagement in APA-compliant rulemaking could potentially have turned a 7–4 defeat into a 6–5 victory on the question of Chevron deference.

Source: Saurabh Vishnubhakat, The Mixed Case for a PTAB Off-Ramp, 18 Chi.-Kent J. Intell. Prop. 101 (2019) [SSRN].


The concurring opinion in Windy City seems to offer much the same lesson. It is not enough simply that the AIA contained delegations of lawmaking authority and that the USPTO has attempted to speak with the force of law. The institutional details of who in the USPTO received which powers—and how specifically those powers were exercised to generate the agency’s views—matters a great deal. Following an initial period of judicial latitude toward broad USPTO assertions of authority and discretion, the Federal Circuit’s more recent jurisprudence has reflected some retrenchment, such as its en banc reversal in Wi-Fi One. The same is true of the Supreme Court, which after a broadly drawn affirmation of agency discretion in Cuozzo v. Lee, took a considerably more skeptical view two years later in SAS Institute v. Iancu. This retrenchment, if it continues, will demand an increasingly formal, increasingly specific exercise of the authority that the USPTO believes it is exercising.

3D Printing, Patent Infringement, and the Coronavirus

Guest post by Prof. Lucas Osborn, Campbell University School of Law.

Never waste an opportunity in a pandemic to incur a PR disaster. That appears to be the mantra – if initial reports are believed – of an Italian company who holds a patent on a valve used in breathing machines that are critical for coronavirus patients. The company could not meet the surging demand for its valves. In response to the shortage, two engineers used 3D printers to make these essential devices locally near Brescia in northern Italy, a region the coronavirus has hit particularly hard. In response, the patent holder allegedly threatened a patent infringement lawsuit against them.

In a remarkable testament to the speed and flexibility of 3D printing technology, on the same day the engineers learned about the shortage of valves, they were able to create a digital version of the valve and 3D print working valves. Within a day they had made over 100. (As an aside, 3D printing is at the core of a rapid move to create an open source ventilator to combat shortages.)

To be fair, the company, and one of the individuals doing the 3D printing, denies a threat was made. Although the company did refuse to share the design file with the individuals, forcing them to create a 3D printable digital file from scratch.

Regardless, this episode represents the first widely publicized instance of 3D printing technology being used to (arguably) infringe a patent on a medical device. Patent infringement and 3D printing involves several interesting patent issues on which I have previously written here (with Professor Tim Holbrook) and here.

The key to appreciating the unique patent infringement issues with 3D printing is to keep in mind the difference between the digital and physical version of the patented device. In just about every case, the patent covers only the tangible object, not the digital version of it. Therefore, merely creating a 3D printable file of the device is not an act of direct infringement.

Direct Infringement

On the other hand, anyone who prints the physical valve commits direct infringement for “making” the patented device. But even the issue of who performs the actual printing will not always be clear. For instance, assume that X makes the digital file, but does not have the appropriate 3D printer. X takes the file to Y, an on-demand 3D print shop, who prints the object on X’s behalf. Did X or Y “make” the invention? In the copyright context, companies like YouTube have avoided liability for direct infringement by arguing they are passive conduits for their users’ actions. Perhaps 3D print shops will be able to make the same argument.

Indirect Infringement

Getting back to the digital file, although the engineers printed lots of valves for local use, they declined to share the file with others out of fear of patent liability. Their fear was not misplaced. A person can be liable for indirect patent infringement for helping or inducing others to commit direct patent infringement. And the person can be potentially liable in any and all countries where the direct infringement occurred or was facilitated (unlike the US, many other countries do not require a specific act of direct infringement as a precursor to indirect liability).

In the US, the relevant indirect liability would be inducement under 35 U.S.C. § 271(b), which states simply that, “Whoever actively induces infringement of a patent shall be liable as an infringer.” Although the statute does not say so, liability for inducement requires that the accused have knowledge of the specific patent and that the induced acts constitute patent infringement. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765-68 (2011). If the engineers in Italy were in fact warned of a specific patent, that would likely be enough to meet the knowledge requirement.

Knowledge can be negated by a good faith belief of noninfringement, but it cannot be negated by a good faith belief in the patent’s invalidity. Commil USA, LLC v. Cisco Sys., Inc., 135 S. Ct. 1920, 1928 (2015). Courts have not had an opportunity to explore what is required for an individual, as opposed to a company, to form a good faith belief of noninfringement. Would a layperson’s study of the patent suffice, or must they incur the huge expense of a formal legal opinion?

In most European countries, indirect liability applies where someone

supplies or offers to supply in [the country] . . . with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the [the country].

See, e.g., UK Patent Act § 60(2). (Most European countries have similar provisions because their statutes are all based on the 1975 Community Patent Convention.) Although the statute requires actual or constructive knowledge, the details of that knowledge requirement are unsettled: must the infringer have knowledge of the specific patent or merely knowledge of the acts that the direct infringer will take. If courts only require knowledge of the induced acts, liability would attach regardless of any specific knowledge of the patent.

In short, creators of 3D printable files, especially those with knowledge of a relevant patent, should be wary of making them available for others on the internet.

Love Your Neighbor, or At Least Your Reputation

Although the coronavirus pandemic inflames passions when needed medical equipment is in short supply, it is important to remember that in emergencies Article 31 of TRIPS, the key international patent treaty, provides flexibilities for governments to use – and authorize others to use – patents without the consent of patent holders.

The above analysis focuses only on the legal issues. Even if the patent holder is more interested in making money than saving lives, it may be wise to consider the reputational and other costs associated with denying live saving equipment to hospitals in need. Others, including patent holders relating to vaccine development, have initially threatened patent infringement suits only to backtrack after a storm of public outrage. So even if the patent holder made a threat to someone in Italy (and it is not at all clear that it did), it would be no surprise that it decided to change tactics.

Jury Verdicts in Design Patent Cases

Hafco Foundry and Machine Co. v. GMS Mine Repair and Maintenance, Inc. (Fed. Cir. 2020).

Hafco’s US Design Patent D681,684 covers an ornamental design for a “Rock Dust Blower.” GMS was Hafco’s distributor. After a breakup GMS started selling its own version.

The jury awarded a verdict of $123k and the district court issued a permanent injunction. However, in a post verdict ruling, the district court remitted the damages award to zero and ordered a new trial on damages.  The court also denied GMS’s motion for judgment as a matter of law (JMOL) on non-infringement and GMS appealed.

The basic question in the appeal is the extent that functional elements of the design can be protected by design patent.  Unlike copyright, design patent law does not have a statutory requirement that ornamental features of a design be separable from the functional elements.  I have never used a “rock dust blower”, but nothing in the design shown above appears purely decorative.  At the same time, I can imagine many ways to make a fully functional and relatively inexpensive “rock dust blower” that use different design features than those drawn by the patentee here.  Unfortunately, during the trial (or pre-trial) GMS never pointed to (or provided evidence on) the particular functional aspects of the design here that should have been excluded. As such, the Federal Circuit found the issue waived

Because GMS never made this non-infringement argument at the district court, nor presented relevant evidence on the functional or prior art aspects of the ‘684 patent to the jury, GMS has not preserved the argument for appeal.

Slip Op.

Jury Instructions – Functionality:  A jury is supposed to be instructed on the law.  Here, GMS asked for a jury instruction that “a design patent protects only the non-functional aspects of the design as shown in the patent drawings, if there are any such nonfunctional aspects.”  The did not use GMS’s proposal and GMS did not subsequently object to the Jury Instructions provided by the court. That lack of second-round objections to jury instructions is required under FRCP 51(d)(1) unless the instructions fall under the “plain error” exception of FRCP 51(d)(2).

(2) Plain Error. A court may consider a plain error in the instructions that has not been preserved as required by Rule 51(d)(1) if the error affects substantial rights.

On appeal, the Federal Circuit found no “plain error” and in fact no error at all.  The court particularly walked through and approved the following jury instructions:

Ordinary Observer:

An ordinary observer is a person who buys and uses the product at issue.

The appellate panel found no error with this instruction.

Differences from the Prior Art:  Under Egyptian Goddess, the infringement test compares the design patent images with with the accused product while keeping the prior art in-mind.  Here, for instance, the 55 gallon drum used in the patent is at least prior art.

The jury was not properly instructed to “familiarize yourself with each of the prior art designs that have been brought to your attention.” Rather, the court simply asked the jury to compare the design patent to the accused product:

You must only compare GMS’ accused rock dust blower to the ’684 design patent when making your decision regarding infringement.

On appeal, the Federal Circuit confirmed that this is a special case since the accused infringer – GMS – did not present any prior art for comparison. “Given that there was no prior art introduced at trial, no attempt by GMS to introduce the prior art, and no proposed jury instruction on this issue, the purported exclusion of this instruction cannot be error.”

Affirmed.  In hindsight, this case looks like a failure of lawyering by the defendant.  However, part of the issue here is that we were talking about only $100,000 and the level of lawyering required for a strong appellate case costs more than that.  In addition we have a situation where it sure looks like the defendant intentionally made a knock-off product.

Crouch’s Advice: If you are going to litigate a design patent, hire someone who has previously litigated a design patent (even though there are not that many folks).  If you already have litigation counsel that you trust, have them bring in an additional design patent litigator (likely from another firm) to add to the team. The difficulty here is that design patent law is different enough to get folks in deep trouble who assume they understand the process.

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Damages: Dissent by Judge Newman concurred with the opinion discussed above but also added her own opinion resolving the question of damages that was apparently not appealed. The jury verdict (image below) shows damages of $123k and were measured by GMS’s infringing sales under a profit disgorgement theory.  The problem though is that Hafco eventually elected to pursue damages based upon its own lost profits rather than profit disgorgement.  Clear error there by the jury and so it looks like it should require a new trial unless remittur works.

Remittur: When the jury verdict size cannot be supported by the evidence presented, the court may order a new trial (as here) under R.59.  In addition, the court can also offer the plaintiff the option to accept a lesser amount of damages – an amount that is supported by the evidence. This option is a remittur.  Here, the judge offered the Hafco a remittur of $0 in damages, which Hafco rejected in favor of a new trial.  In her dissent, Judge Newman suggested that the proper amount for Remittur would be $110,000 which (according to her) was the patentee’s undisputed lost profits.

Hafco suggests that remittitur to Hafco’s lost profits of $110,000 would be a more reasonable action than remittitur to zero, for $110,000 reasonably implements the jury’s verdict and intent. . . .

I would simply correct the district court’s judgment, and remit the damages award to the undisputed amount of $110,000. A new trial, on undisputed facts, is not needed to serve the purposes of the jury verdict.

Dissent.  On remand, the court may take Judge Newman’s arguments to heart and reconsider the new trial with a R.60(b) order.

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I also want to just note for a second that the lids here appear to have major differences in design.