Supreme Court Opens Door for Taxation of Interstate Commerce

by Dennis Crouch

Important non-patent Supreme Court case for businesses operating online:

South Dakota v. Wayfair, Inc (Supreme Court June 21, 2018)

Holding: The “physical presence” rule of Quill Corp. v. North Dakota, 504 U. S. 298 is overruled. While states may not impose undue burdens on interstate commerce, the constitution does not prohibit taxation of activities having “substantial nexus with the taxing State” that are non-discriminatory, fairly apportioned, and related to services provided by the state.


Biting into PTAB decisions

Sirona Dental Systems GMBH v. Institut Strauman AG (Fed. Cir. 2018)

In its Final Written Decision, the PTAB partially invalidated Sirona Dental Systems U.S. Patent No. 6,319,006 (claims 1-8 obvious over two prior art references; claims 9-10 patentable). Following cross-appeals, the Federal Circuit the Federal Circuit found no error in these ultimate conclusions, but did vacate the decision based upon the Board’s refusal to allow the patentee to amend its claims.

The ‘006 patent covers the use of x-rays and optical scans of teeth to determine an “optimal bore hole” location for a tooth implant.

Rather than simply requesting an amendment to the claims, Sirona filed a “contingent motion to amend” — essentially asking for two-simultaneous-trips through the whirly ball known as inter partes review.  The basic request: If the original claims are found invalid, please amend them to this narrower form.  The PTAB does allow these contingent motions, but did not allow it this particular PRE-Aqua decision.   In Aqua, the Federal Circuit held that the PTAB had been improperly requiring patentees to prove the patentability of their proposed claim amendments before allowing them to be amended. Rather, under Aqua, it is the petitioner who “bears the burden of proving that proposed amended claims are unpatentable.”

Here, the court writes:

The final written decision, which issued prior to our en banc decision in Aqua Products, improperly placed the burden on Sirona to demonstrate that the proposed substitute claims were patentable. Thus, we must vacate the Board’s denial of Sirona’s contingent motion to amend and remand for the Board to reconsider in light of Aqua Products.

On remand, the PTAB will reconsider whether to allow the amendment and, if so, whether the amendment is sufficient to overcome the prior art.

New Grounds: The Federal Circuit also suggested that the Board consider “in light of recent precedent including SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), whether it may consider combinations of references not argued by the petitioner in opposing the motion to amend claims, and, if so, what procedures consistent with the
APA are required to do so.”

Side note: The PTAB decision here is the one IPRO where then PTO Director Michelle K. Lee took-up her statutory role as a PTAB Judge.

Registering ZERO: Trademarks mean Nothing to Me

Royal Crown Dr. Pepper, and Seven Up v. Coca Cola (Fed. Cir. 2018)

This case stems from Royal Crown’s opposition of Coca-Cola’s attempt to register various trademarks with the term ZERO. These include, among others, SPRITE ZERO, FANTA ZERO, COKE ZERO, PIBB ZERO, and my favorite COKE ZERO ENERGY.

Coke uses the ZERO mark on zero calorie products — presumably to indicate the same.  Other companies, including Royal Crown have used the mark for the same purposes (See DIET RITE PURE ZERO).  Royal Crown argued that Coca-Cola should be required to disclaim the term ZERO since it a generic term is simply descriptive of the a feature of the goods.  The Federal Circuit has approved of the disclaimer process in the past: “Disclaiming unregistrable components prevents the applicant from asserting exclusive rights in the disclaimed unregistrable terms.” In re La. Fish Fry
Prods., Ltd., 797 F.3d 1332, 1335 (Fed. Cir. 2015).

Coca-Cola argued that no disclaimer was necessary since its use of the ZERO mark was not generic and has acquired distinctiveness under Section 2(f) of the Lanham Act. The TTAB agreed with Coca-Cola and approved the marks for publication without any disclaimer.

On appeal, the Federal Circuit has VACATED and REMANDED — holding that the TTAB applied the wrong standard in determining whether the the marks are generic and did not fully consider the evidence presented.  The court also held that the TTAB had failed to sufficiently explain how the evidence presented meets the “precise burden” of acquired distinctiveness.

The word ZERO has lots of potential meanings that can vary by context.  In trademark law, we look particularly a mark’s use in the particular marketplace at issue (“genus of goods”) and consider how the the relevant public would understand the term with reference to that genus.   If the term is understood “to refer to a key aspect of that genus” then it is generic. In re Cordua Rests., Inc., 823 F.3d 594, 603 (Fed. Cir. 2016).  It was in the “key aspect” or sub-genus focus that the TTAB failed in its analysis:

The Board here failed to consider whether the relevant consuming public would consider the term ZERO to be generic for a subcategory of the claimed genus of beverages—i.e., the subcategory of the claimed beverages encompassing the specialty beverage categories of drinks with few or no calories or few or no carbohydrates.

On remand, the TTAB will reconsider the issue with a focus on whether ZERO is generic for zero-calorie drinks.

Again, the focus of Trademark Law is the perception of relevant consumers.  A word or phrase that is seemingly descriptive of a product can still serve as a protectable mark if those consumers distinctively associate the mark with particular products or services (rather than the genus as a whole).  In cases where a mark is “highly descriptive” then “evidence of acquired distinctiveness must be exacting.”

Here, however, the TTAB “did not make any finding as to the degree of descriptiveness conveyed by the term ZERO” nor did it asses the evidence “through an exacting lens.”

Important decision: Read it here

What is really going on in the case: Coke could register these marks if it disclaimed protection to ZERO alone.  However, it appears that Coke is looking to use these marks as a stepping-stone for prohibiting any other ZERO soft drinks.

Infringement-by-manufacture requires complete — not merely substantial — manufacture

by Dennis Crouch

The United States government is not directly liable for patent infringement under the Patent Act. However, 28 U.S.C. 1498(a) represents a partial waiver of sovereign immunity — allowing patent owners to sue the US Government for its unlicensed use of a U.S. patent.

149a(a) Whenever an invention described in and covered by a [US] patent . . . is used or manufactured by or for the United States without license . . . or lawful right . . . , the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

In FastShip, LLC v. U.S., the question before the Federal Circuit was whether the infringing Littoral Combat Ships (“LCS”) were “manufactured” by the Government before the patent expiration dates.  In particular, the accused LCS-3 ship model was still under construction when the asserted patents expired, but the patentee argued that it should be considered manufactured since it was substantially complete, including the key aspects of the claims at issue that had no non-infringing uses.

Rejecting the patentee’s argument, the court made the seemingly straightforward determination that a product is not “manufactured” until it is made suitable for use. According to the court, the term should be seen as synonymous with the word “make[]” as found in the ordinary infringement provision of the Patent Act.

[W]e interpret “manufactured” in § 1498 in accordance with its plain meaning, such that a product is “manufactured” when it is made to include each limitation of the thing invented and is therefore suitable for use.

The interpretation here does not fill all potential gaps, but serves its purpose in this case.  The claims were interpreted to require a hull — and no hull had been yet built by the patent expiration.

U.S. Patent No. 10,000,000

By Dennis Crouch

Today the USPTO issued U.S. Patent No. 10,000,000 covering a new form of LADAR invented by Joseph Marron and assigned to Raytheon. [patent10million].

The patent is the 10 millionth issued since the current numbering system was established in 1836. Although the count has been going for 182 years, one-half of the patents have been issued over the past 30 years. The chart below shows the number of U.S. utility patents issued per year over the past four decades with an expected-value for 2018.

LADAR (Laser detection and ranging) is similar to RADAR, but uses a light emitting LASER instead of radio waves.  These are well known systems, the improvement appears to be that the system can receive multiple inputs within a single clock cycle.

Patent No. 10 Million is atypical in several ways:

  • The ‘000 patent lists a single inventor.  Most new patents list multiple inventors.
  • The ‘000 patent does not claim priority to or benefit from any prior US or Foreign application.  Most new patents include at least one priority claim.
  • The ‘000 patent lists a U.S. corporate patent owner.  Most new corporate-owned patents are owned by foreign companies.

Compare, for example Patent No. 10,000,001 — an injection molding invention with multiple inventors, claiming priority back to an original Korean patent application and owned by a Korean company.

12:01 Tuesday

by Dennis Crouch

Patent attorney Aaron Feigelson named his occasional blog 12:01 Tuesday.  The inside-reference is directed to the USPTO’s standard practice for the past several decades “like clockwork, every Tuesday after midnight” the USPTO issues a new set of patents.  These are released to the USPTO web servers and rapidly distributed through various other mechanisms — automatically being incorporated into various public and private databases.

Some readers will notice that no patents issued yet today, Tuesday June 19, 2018.  Do not worry though, the PTO has delayed the issuance until 9:00 am EST so that the release of U.S. Patent No. 10,000,000 can be done while the masses are awake.

One question though, for patentees seeking infringement damages going back to the patent’s issuance — will the day’s earnings be prorated?

When are Confidential Sales Prior Art?

by Dennis Crouch

In the pending case of Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., et al., No. 17-1229 (Supreme Court 2018), the petitioner has asked the Supreme Court to offer its statement on whether Congress altered the “on sale bar” to now apply only to non-confidential sales or offers.

Question Presented: Whether, under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.

In its decision, the Federal Circuit held that the on sale bar attaches even if the details of the invention are kept secret.  In this particular case, the sale was partially public – i.e., although the details of the invention were kept secret, the existence of the sale was publicly known.

The Supreme Court held its first conference regarding Helsinn on June 14, 2018 and took no action in the case — likely relisting it for a later conference.  Most petitions for writ of certiorari are denied immediately following the first conference — and so this is an important step toward certiorari in this case.  I expect that the next step in the case would be CVSG — seeking views of the Trump Administration.

The On Sale Bar has its origin in Justice Story’s decision in Pennock v. Dialogue, 27 U.S. 1 (1829). There, Story wrote:

If an inventor should be permitted to hold back from the knowledge of the public the secrets of his invention; if he should for a long period of years retain the monopoly, and make, and sell his invention publicly, and thus gather the whole profits of it * * * and then, and then only, when the danger of competition should force him to secure the exclusive right, he should be allowed to take out a patent * * * it would materially retard the progress of science and the useful arts, and give a premium to those who should be least prompt to communicate their discoveries.

IN 1836, the rule was expressly stated in the revision of the patent laws:

Sec. 6. That any person or persons having discovered or invented any new and useful art, machine, manufacture, or composition of matter . . . not known or used by others before his or their discovery or invention thereof, and not, at the time of his application for a patent, in public use or on sale, with his consent or allowance, as the inventor or discoverer; . . . may make application in writing  . . . and the Commissioner, on due proceedings had, may grant a patent therefor.

Since then, and even before, secret sales were seen as a bar to patenting (except when within the grace period).  In Metallizing Engineering, Judge Learned Hand expanded the doctrine to encompass any commercial exploitation by the inventor:

[H]e shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy, or legal monopoly. It is true that for the limited period of two years he was allowed to do so, possibly in order to give him time to prepare an application; and even that has been recently cut down by half. But if he goes beyond that period of probation, he forfeits his right regardless of how little the public may have learned about the invention; just as he can forfeit it by too long concealment, even without exploiting the invention at all.

Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2d Cir. 1946).

Third Party Sales: In an interesting question – not at issue directly in Helsinn — involves secret sales by third parties. 1985 footnote, the Federal Circuit explained its position that the on sale bar is only directed at activities by the inventor:

The “on sale” provision of 35 U.S.C. § 102(b) is directed at precluding an inventor from commercializing his invention for over a year before he files his application. Sales or offers made by others and disclosing the claimed invention implicate the “public use” provision of 35 U.S.C. § 102(b).

In re Caveney, 761 F.2d 671, 676 (Fed. Cir. 1985); explanation restated in, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010).  On the other hand, other cases have applied the on-sale bar to activities by third parties. See In re Epstein, 32 F.3d 1559 (Fed. Cir. 1994).   Professor Carl Moy aptly explained the situation in his treatise: “The current authorities plainly evidence a difference of opinion about the underlying purpose of the on-sale bar.” 2 Moy’s Walker on Patents § 8:227 (4th ed.).

PGS Geophysical: Partial Institution and Remand

by Dennis Crouch

PGS Geophysical AS v. Iancu, Appeal No. 16-2470 (Fed. Cir. June 7, 2018) (PGS I) (precedential)
PGS Geophysical AS v. Iancu, Appeal No. 17-1582 (Fed. Cir. June 18, 2018) (PGS II) (non-precedential)

Our timeline for theses appeals probably began with WesternGeco’s infringement lawsuit against its Norwegian competitor PGS. In the S.D.Tex. lawsuit, PGS counterclaimed alleging infringement of its U.S. Patent Nos. 6,906,981 and 6,026,059.  WesternGeco then petitioned the PTO to begin Inter Partes Review Proceedings against those patents. Happy to oblige, the PTO partially instituted the IPRs and eventually cancelled a number of claims of each patent.  In the midst of the appeal WesternGeco and PGS settled settled their dispute. On appeal, however, the PTO intervened to defend its decision.  In its decisions, the Federal Circuit has largely affirmed, I raise a few interesting points from the decisions below.

Partial Institution: In SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354 (2018), the Supreme Court held that the statute does not permit the PTO Director to partially institute IPR proceedings.  Nevertheless, the court held in these cases that no remand was necessary reconsider institution since neither party nor the intervenor requested that action.  In PGS I, the court explained:

We have uncovered no legal authority that requires us sua sponte to treat the Board’s incorrect denial of institution as to some claims and grounds either as a basis for disturbing or declining to review the Board’s rulings on the instituted claims and grounds or as a basis for reopening the IPRs to embrace the non-instituted claims and grounds.

In its brief, the PTO further argued that

The failure of the Board’s final written decision to address the non-instituted claims was not ultra vires and if it were, this Court would still have jurisdiction to review the decision. The Board’s final written decision on a subset of the claims challenged in the petition did not exceed the authority given it by Congress and is not
an ultra vires act. If anything, the Board did the opposite; it improperly constrained its own authority by not adjudicating the merits of patentability for all the claims challenged in the petition. This may have been an error, but it was not ultra vires.

In its decisions, the Federal Circuit did not particularly address this contention by the Office.

Neither PGS I or PGS II involved a remand.  Thus, the procedural setup of this case may be contrasted with Medtronic, Inc. v. Barry, 2017-1169, 2018 WL 2769092 (Fed. Cir. June 11, 2018).  That IPR appeal resulted in a remand and a statement by the Federal Circuit that “we understand . . . that [the Board] will consider the previously non-considered grounds on remand.”  In PGS II, the court explained that “Neither party seeks a remand pursuant to which the Board would be required to adjudicate the claims on which the IPR was not instituted.”

No Consolidation of Appeals: The appeals here involved two different patents, but were both related to the same infringement lawsuit and thus would have parallel impact to that litigation.  I find it interesting however, that the Federal Circuit did not consolidate the appeals in any way, and the judical panels were entirely different from one another.

Broadest Reasonable Interpretation: Finally, I’ll note that as the PTO continues to consider whether to continue to apply BRI, the PTAB and courts continue to cancel patent claims based upon the current rule.

Helping Protect US Drug Patents with the Hatch-Waxman Integrity Act

Senator Orrin Hatch has been a central figure in essentially all patent legislation over the past 40 years (he joined the Senate in 1977).  As he nears retirement (Jan 2019), Hatch has proposed one additional change — an amendment to provide pharma with some protection from Inter Partes Review challenges titled the Hatch-Waxman Integrity Act of 2018.

The basics of the amendment is that the results of an IPR/PRG proceeding cannot serve as its Paragraph IV certification that the patent is invalid.  A parallel provision is designed for biologics under the BCPIA.  In addition – as Dan Feigelson explains in the comments – The proposal would also require an ANDA applicant to certify that it will not (and has not) filed an IPR/PRG petition against Orange Book listed patents for the related drug.

In addition, the provision would modify the Securities Exchange Act to make it a manipulative or deceptive trade practice to an IPR petition and short-selling the patent owner’s stock within 90-days (before or after).

More info from the Senator.

Patently Bits and Bytes by Juvan Bonni

Recent Headlines in the IP World:

Source: Healthcare IT News

Commentary and Journal Articles:

Source: Entrepreneur

New Job Postings on Patently-O:



En Banc Denied: Walker Process Claims Stay out of the Federal Circuit

By Dennis Crouch

Xitronix Corp. v. KLA-Tencor Corp. (Fed. Cir. 2018)

When Xitronix sued KLA-Tencor, it raised only one cause of action – “a Walker Process monopolization claim under § 2 of the Sherman Act and §§ 4 and 6 of the Clayton Act based on the alleged fraudulent prosecution of a patent.” See Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965). The basic allegation was that KLA fraudulently obtained its U.S. Patent No. 8,817,260 with claims identical-to or broader than claims of KLA’s previously invalidated U.S. Patent No. 7,362,441.

The district court rejected the case on summary judgment based upon a lack of evidence of fraud – reasoning that the PTO probably has power to override the court. The district observed wrote:

[T]he Court suspects the examiner was in fact aware of the Court’s [invalidity] holding but chose to ignore it. It would not be the first time the PTO, an administrative agency, overrode a final judgment of an Article III court, and it will likely not be the last. (Order).

The Patent Office can now come to a different conclusion than district court[s], the circuit court, [the] Supreme Court, for that matter, and until the Supreme Court or the Congress suggests that, there’s no stability in patent law. . . . It’s an egotistical war between the patent office and the circuit court for sure. But they’re not bound by a jury verdict. They’re not bound by a judge’s judgment. They made that clear, expressly in writing.

On appeal, the Federal Circuit did not address the merits of the holding – but rather ruled that Walker Process monopolization claims do not arise under the U.S. Patent Laws. As a result, the Federal Circuit has no appellate jurisdiction over the case and it was ordered transferred to the 5th Circuit.

Xitronix then requested en banc rehearing on the issue – arguing that the questions here strike to the core of patent law doctrine and procedure. That request has now been denied.

Writing in dissent, Judge Newman explains that the decision here is fundamental “to the judicial structure of patent adjudication, and the future of a nationally consistent United States patent law.”

I write in concern for the conflicts and uncertainties created by this unprecedented change in jurisdiction of the Federal Circuit and of the regional courts of appeal. With the panel’s unsupported ruling that the Supreme Court now places patent appeals within the exclusive jurisdiction of the regional circuits when the pleading alleges that the patent issue may lead to a non-patent law violation, we should consider this change en banc.

In its 2013 decision in Gunn v. Minton, 568 U.S. 251 (2013), the Supreme Court ruled that a state-law attorney malpractice case did not trigger federal court patent jurisdiction. Newman distinguishes that case on several grounds: (1) that case involved a “long dead patent” and so the outcome would not change any other patent litigation cases; (2) Gunn involved a State interest in adjudging the state cause of action – while here there are only federal interests at stake. According to Judge Newman, the underlying dispute is about “the validity and enforceability of the patent” – questions that should be heard by the Federal Circuit.

The case is now pending in the 5th Circuit Court of Appeals with the Following Two Questions:

  1. After an unappealed federal district court judgment declared claims in a parent patent invalid, can a patent-holder maintain a continuation patent before the PTO with claims “word for word” identical to, or broadened over, claims that had been invalidated by a jury verdict and a federal court judgment without committing fraud?
  2. Did the summary judgment record present a factual basis from which a jury could find that KLA-Tencor made affirmative misrepresentations and material omissions in its prosecution of the ’260 patent but for which the ’260 patent would not have issued?

USPTO and the IP5

As high level drama proceeds between our trading partners, the heads of the IP5 (US, China, Japan, EPO, and South Korea) recently met in New Orleans.  Together, these five offices “handle approximately 80 percent of the world’s patent applications.” The focus of the meeting was further harmonization, reducing costs, and reducing the burden on inventors filing in multiple jurisdictions.

More information on the IP5 cooperation can be found at

Can an Intervenor Cause Improper Venue?

by Dennis Crouch

In re Intex Recreation Corp., No. 18-131 (Fed. Cir. June 13, 2018) (denial of mandamus) [IntexMandamus]

Team Worldwide (TWW) sued Wal-Mart in E.D. Texas for infringing its U.S. Pat. Nos. 9,211,018, 7,346,950, and 7,246,394 (air mattress products).  Wal-Mart does not make the accused products but does sell them.  The manufacturers (Intex, Coleman, and Bestway) are all contractually bound to indemnify Wal-Mart and intervened to defend their products. After intervening the manufacturers then demanded that the case be severed and transferred to their chosen districts (Intex to C.D. Cal; Coleman to N.D. Ill, and Bestway to Arizona). The district court refused — holding that the manufacturers had waived any objection to venue by intervening.

The Federal Circuit has now denied the manufacturers’ petition for writ of mandamus:

  1. No Need for Speed: Ordinarily appeals are only filed following a final judgment in a case. Writ of mandamus effectively allows for immediate interlocutory appeals, but requires a petitioner to show a need for immediate decision.  Here, petitioners did not prove why immediacy is necessary.  Rather, the court found that the manufacturers can simply wait and address their improper venue defense after trial is complete.
  2. Clear and Indisputable Right to Relief: Neither the Federal Circuit nor the 5th Circuit have not spoken directly as to whether “a party that voluntarily enters a case through intervention may raise a venue defense.” However, some amount of parallel jurisprudence supports the district court decision.  “Given the substantial amount of authority supporting the district court’s decision, we cannot say that Petitioners’ entitlement to relief is clear and indisputable.”

Petition denied.

Severing: A secondary aspect of the petition decision involves the question of joinder/severing under Section 299 of the Patent Act.  The district court held that Section 299 did not apply here because the manufacturers had not been joined together but rather voluntarily intervened (and the patentee never alleged infringement against the manufacturers).  In its decision here denying mandamus the Federal Circuit noted that even if Section 299 is inapplicable, the rules of civil procedure provide a district court with authority to sever claims in order to better ensure “fundamental fairness” or avoid prejudice. FRCP 21; See  In re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012).  Thus, although denying mandamus, the appellate panel has instructed the district court to “consider whether such concerns warrant severance for the purposes of adjudicating the merits of the case.”


Notice before Attorney Fee Request

By Dennis Crouch

Stone Basket Innovations, LLC v. Cook Med. LLC, 17-2330, 2018 U.S. App. LEXIS 15670 (Fed. Cir. 2018)

Typical initial setup of a patent infringement lawsuit: the patentee (Stone’) sued Cook for infringement; Cook then requested an inter partes of the asserted patent.  What happened next was odd — after Cook refused a $150k settlement, Stone conceded the IPR (all claims then cancelled) as well as the lawsuit (dismissed with prejudice).

Note here that the invention looks pretty cool – an endoscope with a basket-type device for extracting stones from a human body — such as ureteral, kidney, or gall stones. U.S. Patent No. 6,551,327.  The problem apparently is the invention’s lack of novelty. 

The Patent Act provides that a “court in exceptional cases may award
reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285.  In Octane
Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), the Supreme Court defined an “exceptional Case” as one that “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”  That particular determination is made by a district court judge on a case-by-case basis after considering the “totality of the circumstances” and then given deference on appeal.  See Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014).

While the Federal Circuit agreed that Cook had the better litigation position and may have been wronged, the court noted that Cook had “fail[ed] to provide early, focused, and supported notice of its belief that it was being subjected to exceptional litigation behavior further.” Quoting a recent informal opinion from Judge Guilford (C.D.Cal.), the appellate court wrote that a “party cannot simply hide under a rock, quietly documenting all the ways it’s been wronged, so that it can march out its ‘parade of horribles’ after all is said and done.” See Aten Int’l Co. v. Uniclass Tech., No. CV 15-04424-AG (AJWx), slip op. at 5 (C.D. Cal. Mar. 30, 2018) [AJWX Decision].  While neither Judge Guilford nor the Federal Circuit cited any precedent or statutory analysis for this implicit notice requirement, the court concluded that the reasoning of the approach is “both persuasive and applicable to this case.”

Notice Prior to Attorney Fee Request: A key requirement for sanctions under FRCP R. 11 (Rule 11) is to provide advance notice to the offending party.  While Section 285 does not expressly require notice, this line of cases suggests that such interim notice to both the opposing party and the court will serve as important aspects of the exceptional case determination.

I’ll note here that the notice is important for several reasons: (1) notice of bad-behavior or exceptionally weak arguments provides the opposing party with a chance to correct its approach in order to avoid undue expenses and hardships; (2) notice to the court will then give the court the ability to take immediate corrective actions in order (admonish the party) in order to avoid compounding the problem; (3) going through the steps of providing notice provides some modicum of evidence that the noticing party is actually being harmed by the bad behavior.

Defining a Printed Publication as Prior Art

In Medtronic Inc. v. Mark Barry, the PTAB confirmed the patentability of some of Barry’s patented back-straightening claims found in U.S. Patent Nos. 7,670,358 and 7,776,072.  The saving-grace for Barry was a PTAB ruling that a set of Videos and Slides distributed by Medtronic did not count as prior art “printed publications” because they were not sufficiently publicly accessible prior to Barry’s application filing. On appeal, however, the Federal Circuit has vacated the lower tribunal opinion — holding that the Board did not consider all the relevant factors in its determination.

Section 102 of the patent act establishes “printed publications” as a form of prior art.

Printed: Whether a publication is “printed” has been broadly applied to allow widely for fixed expressions – including recorded video and powerpoint slides. MPEP 2128 (R-08.2017).

Publication: At issue in this case is the “publication” requirement — which has been interpreted as a public circulation requirement.  That said, there is no requirement that the document be circulated to the public at large.  Rather, courts have held that circulation at a relevant scientific conference can be sufficient so long as there is no confidentiality requirement. Deep Welding, Inc. v. Sciaky Bros. Inc., 417 F.2d 1227, 1235, 163 USPQ 144 (7th Cir. 1969). In the leading case of In re Hall, the Federal Circuit ruled that ‘a single cataloged thesis in one university library’ was sufficient circulation – even without proof that anyone actually read the work. In re Hall, 781 F.2d 897 (Fed. Cir. 1986). In that instance, accessibility to the work was the key – “whether interested members of the relevant public could obtain the information if they wanted to.” Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1569 (Fed. Cir. 1988).

In this case, a CD containing the video was distributed at three spinal deformity research symposia and printed versions of the slides were distributed at two of the three events.

A number of court decisions have walked through this type of conference distribution applying what the court terms a “case-by-case inquiry into the facts and circumstances surrounding the reference’s disclosure to members of the public.” In re Klopfenstein, 380 F.3d 1345, 1350 (Fed. Cir. 2004).  Still, in all of these inquiries, the primary question is whether the reference has been sufficiently made accessible to interested members of the public.


  • MIT v. AB Fortia, 774 F.2d 1104, 1109 (Fed. Cir. 1985): Paper that was orally presented at a conference was a printed publication even though only about 50 people were told of the paper and document itself was only distributed to six people.
  • Cordis Corp. v. Boston Scientific Corp., 561 F.3d 1319 (Fed. Cir. 2009): Distributed research papers were not printed publications based upon “academic norms” that created an “expectation” of confidentiality. In Cordis, the court expressly ruled that a norm or expectation of confidentiality is sufficient to defeat public accessibility — even if there was no legal requirement of confidentiality.
  • In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004): Printed slide presentation displayed on a poster at a conference and without any stated expectation against copying counted as a printed publication.

In Klopfenstein, the court walked through a set of factors:

The factors relevant to the facts of this case are: the length of time the display was exhibited, the expertise of the target audience, the existence (or lack thereof) of reasonable expectations that the material displayed would not be copied, and the simplicity or ease with which the material displayed could have been copied.

Bringing these cases together, the Federal Circuit here explained in Medtronic that the PTAB should have considered a set of factors regarding the distribution of the video and slides:

As relevant to this case, the size and nature of the meetings and whether they are open to people interested in the subject matter of the material disclosed are important considerations. Another factor is whether there is an expectation of confidentiality [either formal or informal] between the distributor and the recipients of the materials.

On remand, the PTAB will refresh its analysis.

= = = = =

The court also provided the following footnote:

The Supreme Court recently held in SAS Institute Inc. v. Iancu, 584 U.S. __ (2018), that the statute does not permit a partial institution leading to a partial final written decision. Because the final written decisions relating to this appeal do not address every ground raised in the petitions, we understand from the Board’s recent guidance document, Guidance on the impact of SAS on AIA trial proceedings (April 26, 2018), that it will consider the previously non-considered grounds on remand.

The footnote here is not an order, and should be read along with the holding in PGS Geophysical v. Iancu (reopening partially instituted IPR not necessary).

= = = = =

In 2016, a Texas Jury awarded Barry $20 million for the infringement. That case is on appeal with Medtronic arguing prior use, on sale bar, prior invention (102(g)), inequitable conduct, and improper damage calculation.

Rising Per-Patent Inventor Count

By Dennis Crouch

The chart below is a follow-up my prior post involving teams of inventors. The chart shows the average number of inventors per utility patent. For patents issued in first five-months of 2018, about 5% have 7 or more inventors.

U.S. Patent No. 9,971,713 (GlobalFoundaries) is an example of a high-inventor-count patent with 60 listed inventors. The patent is now owned by GlobalFoundaries (CAYMAN ISLANDS) but originated from work by IBM and a Department of Energy grant.

Guest Editorial: Yes, Native Americans and Patents Do Go Together

Guest post by Michael Gulliford.  Mr. Gulliford is an advisor to the Saint Regis Mohawk Tribe and the Founder of Soryn IP Group, a patent advisory and finance firm headquartered in New York City.

Native Americans and patents don’t make headlines. That changed when the Saint Regis Mohawk Tribe, located in upstate New York, conceived a lucrative transaction that saw Allergan transfer patents covering the dry eye drug Restasis® to the Tribe. In return, the Tribe agreed to use its sovereign status to protect the patents from a controversial administrative proceeding coined the patent “death squad”, and to license the patents to Allergan. Allergan paid the Tribe $13.75 million upfront, with continuing royalty payments of $3.75 million per quarter.

Although the story is far from over, so much remains unsaid. As an advisor to the Tribe on patent issues, allow me to explain.

#1 – Tribes Are Vilified For Following The Status Quo

Tribes, like States, are sovereigns and cannot be hauled into federal administrative proceedings that resemble lawsuits without consenting.  Here, the Tribe used its sovereign status to shield the patents from attack in a new administrative proceeding called Inter Partes Review (IPR), held at the Patent Trial & Appeals Board (PTAB). Generic companies remain free to challenge patent validity in district court.

From the hysteria, you’d think the Tribe is the first to invoke sovereign immunity with IPRs. It is not. State universities are, and began successfully doing so before the Allergan deal.

At least five major state universities have asserted their immunity as arms of their sovereign states with respect to IPRs. Some invoked sovereign immunity with corporate partners. Yet, only the Tribe faced Congressional hearings and proposed legislation. And in its recent decision, the PTAB, which hears IPRs, took the remarkable step of concluding that the Tribe’s immunity did not apply to an IPR because it was lesser than the immunity held by States.

In doing so, the Board overlooked the guidance of our nation’s most prominent Constitutional law scholars on the exact issue at hand. But as the leaders of numerous Indian tribes have told me, this treatment is par for the course. Once Native Americans engage in economic activities that were previously considered the status quo, the claws come out.

#2 – No One Gives Native Americans Credit

The most recited narrative of the deal is that Allergan “rented” the Saint Regis Mohawk Tribe’s sovereign immunity. This point of view is based on racism at worse and paternalism at best. Most can’t fathom that an Indian tribe, itself no stranger to devastating property loss, could be sophisticated enough to appreciate how recent changes to the U.S. patent system have failed innovators, or to have done a deal to right such wrongs.

But as I’m sure Allergan quickly appreciated when it visited the Tribe’s reservation, the Saint Regis Mohawk Tribe challenges convention. Its leadership is highly sophisticated and entrepreneurial. With limited powers of taxation, and the enormous burden of providing healthcare, addiction treatment, housing and education to its people, the Saint Regis Mohawk Tribe innovates to create revenue.

The Tribe’s broadband company “Mohawk Networks,” is solving the “last mile” problem in regions of Northern New York by building and expanding its high-speed fiber network. While local auto and aluminum factories have shut down, costing local jobs, the Tribe invested heavily in a new soy bean processing plant located close to the Tribe’s reservation. The plant will support farms that supply the State’s Greek yogurt industry, and create needed jobs.

The Tribe’s Office of Technology, Research and Patents, founded well before the Allergan deal, is pursuing a host of patent and commercialization initiatives. All are examples of the Tribe’s desire to steer away from casino gaming as its sole revenue source. And there is more to come.

#3 – PR Is Obfuscating A Conversation That Needs To Happen

Created in 2011 in response to “patent troll” problems, IPRs were supposed to give companies a cheaper way to challenge the validity of patents they are accused of infringing. But by implementing rules that strongly promote patent invalidity findings, IPRs inflicted significant pain for companies heavily reliant on patents.

It isn’t even controversial that IPRs have clouded the validity of most U.S. patents. The U.S. Chamber of Commerce recently demoted the U.S. patent system to #12 in the world because of IPRs.  Numerous Supreme Court and appellate judges have railed against IPRs. The Wall Street Journal Editorial Board highlighted the harm that IPRs cause to American innovation.

Given these truths, one could make a compelling argument that the Board of any company reliant on patents should do whatever is necessary to avoid IPRs. Why shouldn’t companies fight back and do deals to avoid having their crown jewels invalidated?

The answer is PR and political pressure to not do such deals. Big tech likes IPRs because killing patents increases the bottom line. It is cheaper to invalidate patents than to compensate innovators for the use of their technology. Generic drug companies like IPRs because the lax IPR standards that were set up to make “patent troll” patents easier to kill can be used to more easily wipe out pharma patents. Although Congress carefully sculpted legislation to govern pharmaceutical patent challenges — called the Hatch-Waxman Act — IPRs have undone the delicate balance that Hatch-Waxman strikes.

But conversations about these issues are not happening because huge sums of money have been spent vilifying Allergan and the Tribe.

So let’s start asking new questions. Why are tribal sovereigns being treated so much differently than States? And why is way more attention being paid to the Tribe’s transaction than to fixing the flawed IPR process that forces innovators to need the Tribe’s assistance?

In the end, my bet is that history will thank the Saint Regis Mohawks for enabling changes that bring the United States patent system back to #1 in the world.

Michael Gulliford is the Founder and a Managing Principal of Soryn IP Group, a patent advisory and finance firm headquartered in New York City that closed almost $140 million in patent deals in 2017. In addition, Soryn Capital, manages one of the largest funds in the U.S. dedicated to patent litigation finance. Prior to founding Soryn, Michael was a partner in the Intellectual Property group at Kirkland & Ellis LLP.

Pro Se Loses

by Dennis Crouch

Huang v. Huawei (Fed. Cir. 2018)

This is a fairly ridiculous case. Acting pro se Mr. Huang sued Huawei for infringing three of his patents: U.S. Patent Nos. 6,744,653, 6,999,331, and RE45259 (high speed memory chips).

At the start of discovery, Huang agreed to a protective order, including a designation for “attorney’s eyes only.” Huawei then used that “attorneys eyes only” designation when it disclosed the technical information for its accused chips.  Since he had no attorney, Huang was unable to look at the disclosures.  When Huawei later motioned for summary judgment of non-infringement, Huang responded with a number of previously undisclosed reverse-engineering figures and declarations from undisclosed witnesses. The court granted a motion to strike that purported evidence as well as the summary judgment motion and awarded attorney fees to Huawei (but only $600,000) after finding his litigation behavior “constituted bad faith and an abuse of the judicial process.”

On appeal, the Federal Circuit has affirmed — holding that the district court did not abuse its discretion.

Lessons learned here: