Intellectual Property Cases to Watch in 2017

The New Year brings excitement and anticipation of changes for the best.  Some of the pending patent cases provide us with ample opportunity to expect something new and, if not always very desirable to everybody, at least different.  In this post, we highlight several cases that present interesting issues and that we anticipate may provide for new and important developments in the patent law this year.

Samsung Electronics Co. v. Apple Inc.

2017 IP cases intellectual propertyThis highly-publicized case, now on remand from the Supreme Court, concerns damages for design patent infringement.

Apple sued Samsung in 2011 for infringement of U.S. Patent Nos. D618,677 (claiming an electronic device having black rectangular front face with rounded corners), D593,087 (claiming an electronic device having a rectangular front face with rounded corners and a raised rim) and D604,305 (claiming a grid of 16 colorful icons on a black screen of an electronic device).  As we reported earlier, a jury found that several Samsung smartphones resembling the iPhone infringe those patents and awarded $399 million in damages to Apple, the entirety of Samsung’s profit from sale of the infringing smartphones.

The Federal Circuit upheld the award. The decision centered on 35 U.S.C. § 289, which provides that an accused infringer manufacturing or using a patented “article of manufacture” is liable to the patent owner “to the extent of his total profit.”  The Federal Circuit rejected Samsung’s argument that damages should not be determined based on the entire smartphone but rather should be limited to individual components covered by the patents, such as a front face or a screen.  The smartphone as a whole was deemed to be an “article of manufacture” in the context of Section 289.  The Supreme Court, in an unanimous (but short) decision, however agreed with Samsung and remanded, stating that an “article of manufacture” is “simply a thing made by hand or machine,” and is broad enough to include both a multicomponent product sold to a consumer and individual components of that product, “whether sold separately or not.”  No test however was provided on how to identify an “article of manufacture” relevant to damages.

On remand, the Federal Circuit will determine whether “the relevant article of manufacture for each design patent … is the smartphone or a particular smartphone component.”  A test for determining what exactly constitutes an “article of manufacture” for the purpose of determining damages in design patent cases is highly anticipated.

TC Heartland LLC v. Kraft Foods Group Brands LLC

This case concerns a choice of venue in patent cases, and a decision by the Supreme Court is expected around June, 2017.

Kraft Foods sued TC Heartland in the District of Delaware, alleging that Heartland’s liquid water enhancer products infringed three of Kraft Foods’ patents.  Heartland moved to either dismiss the action or transfer venue to the Southern District of Indiana, where it is headquartered and incorporated.  In support, Heartland stated that it is not registered to do business and has no presence in Delaware.  After the district court denied its motion, Heartland appealed.  The Federal Circuit affirmed and stated that patent suits may be filed in any judicial district in which the defendant sells an allegedly infringing product (Heartland ships accused products to Delaware, which amounts though to only about 2% of its total sales).  The Federal Circuit has consistently applied this interpretation of the patent venue statute since its 1990 decision in VE Holding, which has since allowed patent holders to file suits in favorable courts that are perceived to be more plaintiff-friendly, such as the Eastern District of Texas. Opponents of this doctrine refer to it as a “forum shopping.”

As we reported before, on December 14, 2016, the Supreme Court agreed to review the Federal Circuit’s decision.  A decision in favor of Heartland would fundamentally change where patent cases can be litigated.  In particular, many patent holders may effectively be barred from bringing suits in the Eastern District of Texas.

Lexmark International v. Impression Products

On December 2, 2016, the Supreme Court granted Impression Products’ petition to hear a case concerning whether patent exhaustion arises from foreign sales.

Lexmark, a manufacturer of printers and cartridges for those printers, sold the cartridges covered by Lexmark’s U.S. patents in the U.S. and abroad.  Some of the cartridges were sold at a reduced price and, according to a “Return program,” were subject to a single-use/no-resale restriction set forth in the user agreement.  With the goal of protecting quality and reputation of its products, and for other reasons, Lexmark required that customers who bought Return program cartridges return the empty cartridges only to Lexmark for remanufacturing or recycling.  Impression, among others, acquired and re-purposed (which included modifying the original chip) both the foreign- and domestically-sold cartridges, and sold the modified cartridges in the U.S.  When Lexmark took legal actions and other defendants agreed to settlements, Impression however argued that the first sale of the cartridges, either in the U.S. or abroad, exhausted Lexmark’s U.S. rights to exclude.

The district court partially sided with Impression, ruling that Lexmark’s sale in the U.S. exhausted its patent rights, despite the express single-use/no-resale restrictions under the Return Program, but concluded that foreign sales did not exhaust Lexmark’s patent rights.  As we said earlier, on February 12, 2016, the en banc Federal Circuit agreed with Lexmark and confirmed two important aspects of the patent exhaustion doctrine, namely that (1) a patentee can “sell[] a patented article subject to a single-use/no-resale restriction that is lawful and clearly communicated to the purchaser” without exhausting the patentee’s rights to that item; and (2) because foreign sales do not permit “the buyer to import the article and sell and use it in the United States,” an authorized foreign sale of a product does not exhaust a patentee’s U.S. patent rights to exclude associated with that product.

In re Aqua Products

This is a pending en banc case before the Federal Circuit regarding whether it is the patent owner who bears the burden of proving patentability of its amended claims in inter partes reviews before the Patent Trial and Appeal Board.

Aqua Products, Inc., as a patent owner, faced a claim amendment issue.  In particular, after an inter partes review (IPR) of Aqua’s patent on a robotic swimming pool cleaners was initiated, Aqua moved to substitute several of the challenged claims with limitations from the claims that were not challenged, effectively amending the claims.  The America Invents Act (AIA) permits patent owners to move to amend claims of a patent, and 35 U.S.C. § 316(d) states that “the patent owner may file one motion to amend the patent,” with additional motions to amend allowed in limited circumstances.

Applying its rule making authority, the PTO ruled that Aqua failed to demonstrate that its amendments would make the claims-at-issue patentable over the known prior art.  On August 12, 2016, the Federal Circuit granted Aqua’s motion for an en banc hearing and asked Aqua and the USPTO to brief whether the USPTO may require that a patent owner bear the burden of persuasion regarding patentability of the amended claims, even though the AIA assigns the burden of proving unpatentability of the proposed claim amendments to an IPR petitioner.  See 35 U.S.C. § 316(e)).

Argument was heard on December 9, 2016, and a blog post on the upcoming decision will appear in due course.

Supreme Court Punts Design Patent Damages Back to Federal Circuit

design patent damagesThe Supreme Court issued a rare decision on the issue of damages for design patent infringement in the Apple v. Samsung smartphone case. The result could mean significant changes in the calculation of damages for infringement of design patents.

The decision is one more step in the ongoing battle between Apple and Samsung that originally included claims of patent infringement, design patent infringement and trade dress infringement. Samsung’s phones were found to infringe the ornamental designs in each of the three design patents shown below and Apple was awarded Samsung’s entire profit from the sale of its infringing smartphones, which amounted to nearly $400 million. The only issue on appeal was the basis for the damages award.

Generally, a design patent holder may seek damages under the standard patent damages statute 35 U.S.C. §284 that sets a floor for damages as “a reasonable royalty for the use made of the invention by the infringer.” As an alternative, the patentee can collect damages under the design-patent-damages provision in 35 U.S.C. §289. Section 289 provides for the significant remedy of profit disgorgement based upon a defendant’s use of the patented “article of manufacture.” The infringer “shall be liable to the owner to the extent of his total profit.”

The Federal Circuit affirmed the damages award, rejecting Samsung’s argument that damages should be limited because the relevant articles of manufacture on which damages are based were the front face or screen as opposed to the entire smartphone. The Federal Circuit’s reasoning was that such a limit was not required because the components of Samsung’s smartphones were not distinct articles of manufacture.

The Supreme Court held unanimously that the Federal Circuit incorrectly interpreted §289 in holding that the “article of manufacture” for the purpose of calculating damages must be the entire smartphone and remanded the case back to the Federal Circuit for additional briefing on what constitutes an “article of manufacture” in the context of the design patents at issue.

Although the Supreme Court did not completely resolve the issue, this decision will be significant in future design patent cases when the design patent protection is directed solely to a component or element of a product as compared to the entirety of the product.

©2016 von Briesen & Roper, s.c

U.S Supreme Court Revisits Design Patent Damages

design patent appleOn December 6, 2016, the U.S. Supreme Court, in Samsung Electronics Co. Ltd., v. Apple Inc., 580 U.S. ____ (2016), unanimously ruled that in multicomponent products, the “article of manufacture” subject to an award of damages under 35 U.S.C. §289 is not required to be the end product sold to consumers but may only be a component of the product.

In 2007, when Apple launched the iPhone, it had secured several design patents in connection with the launch. When Samsung released a series of smartphones resembling the iPhone, Apple sued Samsung, alleging that the various Samsung smartphones infringed Apple’s design patents. A jury found that several Samsung smartphones did infringe those patents. Apple was awarded $399 million in damages for Samsung’s design patent infringement, the entire profit Samsung made from its sales of the infringing smartphones. The Federal Circuit affirmed the damages award, rejecting Samsung’s argument that damages should be limited because the relevant articles of manufacture were the front face or screen rather than the entire smartphone.

The Supreme Court reversed and remanded the case back to the Federal Circuit. In its unanimous opinion, the Court reasoned that for purposes of a multicomponent product, the relevant “article of manufacture” for arriving at a damages award (based on 35 U.S.C. §289) need not be the end/finished product sold to the consumer but may be only a component of that product. The Court determined that “The Federal Circuit’s narrower reading of the ‘article of manufacture,'” limiting it to the end product, “cannot be squared with the text of §289.” How to arrive at §289 damages? According to the Supreme Court, “Arriving at a damages award under §289 thus involves two steps. First, identify the ‘article of manufacture’ to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture.”

This decision could have potential impact on future design patent infringement cases, especially when calculating infringement damages. It remains to be seen, what kind of guidance the Federal Circuit will provide in addressing the scope of the “article of manufacture” for multicomponent products.

ARTICLE BY Sudip K. Mitra of Vedder Price

© 2016 Vedder Price

Supreme Court Reinvigorates Effectiveness of Obtaining an Opinion of Counsel to Defend against Potential Enhanced Damages for Willful Infringement in Halo Electronics

Supreme Court Willful Patent InfringementOn June 13, 2016, the U.S. Supreme Court again reversed a decision of the Federal Circuit—the Circuit specially designated to hear all patent appeals—this time, in articulating the test for determining whether to award enhanced damages for willful patent infringement in Halo Electronics, Inc. v. Pulse Electronics, Inc.1  This is the third time in two years that the Court has reversed the Federal Circuit on remedies in high-stakes patent litigation.2  In an opinion that harkens, in part, back to 1980’s patent law, Chief Justice Roberts and a unanimous Supreme Court held that parties who have actual knowledge that their activities may infringe another’s patent must subjectively believe that their actions are legal, and no longer can rely on theories of objective reasonableness first developed at the time of trial to avoid enhanced damages.

I. Opinions of Counsel at The Federal Circuit

The Halo Electronics decision expressly overruled a 2007 Federal Circuit case, In re Seagate Technologies, which had used a two-part test to determine whether the defendant willfully infringed. Under Seagate, courts first had to find that the actions taken by the alleged infringer were objectively reckless.3  Second, the Court had to find that the defendant acted in a subjectively reckless manner: that they actually acted in bad faith to infringe the plaintiff’s patent.4

The Seagate test created a situation where defense counsel could place the weight of their strategy on showing that the defendant’s conduct was objectively reasonable after the fact at trial. Under this test, it was sufficient to show just one scenario where it would have been reasonable to believe that the defendant’s conduct would not have fallen under the plaintiff’s patent, or that the patent would be invalid.5  This emphasis on what the defendant could have thought, rather than what it actually had thought, resulted in the prospect of enhanced damages becoming very difficult to obtain.6

Seagate itself represented a shift away from the Federal Circuit’s earlier test, established by Underwater Devices in 1983, which placed an “affirmative duty” on the defendant to obtain a competent opinion of counsel to avoid the threat of treble damages.7  Such an opinion of counsel represented the documented legal understanding of the defendant as to whether it believed the plaintiff’s patent was valid, and/or covered the defendant’s activities. A defendant relied upon the opinion of counsel to avoid a finding of willfulness if its actions were later deemed infringing.

To be competent, an opinion of counsel had to investigate the file histories of the patents to determine both their validity and their applicability to the defendant’s actions.8  Additionally, whether the opinion came from a licensed patent attorney, and the extent to which the attorney was affiliated with the defendant, also were considered in determining the competency of the opinion.9  The Federal Circuit made it clear that conclusory opinions made by affiliated in-house counsel, lacking in patent training and expertise, would not be deemed competent.10

The Federal Circuit’s shift away from Underwater Devices came with industrywide changes in the field of patent litigation.11  With the rise in lawsuits pursued by non-practicing entities, the Federal Circuit recognized that many defendants lacked the resources to obtain a competent opinion of counsel every time they received a cease-and-desist letter from a patent holder. In this regard, the Halo Supreme Court also agreed with the Federal Circuit that the “affirmative duty” standard of Underwater Devices was inappropriate.

II. What Halo Electronics Means for Patent Defendants

The Supreme Court, in overruling Seagate, held that a showing of subjective recklessness nonetheless would be required for Courts to consider awarding enhanced damages.12  By removing Seagate’s “objectively reasonable standard” prong, Halo Electronics has the effect of shifting the timeline in which the defendant must establish the reasonableness of its actions. Rather than permitting an after-the-fact showing of objective reasonableness through theories devised for trial, Halo Electronics places an onus on defendant to prove that it believed, at the time of its actions, that it did not infringe another’s patent, or that the patent was invalid.

The Court seemed most troubled by the idea that a truly malicious infringer could avoid treble damages under the Seagate test solely as a result of its trial lawyer’s creative trial presentation of what the defendant could have thought.13  Rather than provide defendants with beforehand and after-the-fact defenses, the Halo Electronics decision encourages defendants to be proactive. Although Halo Electronics reduces the number of options available to a defendant, the options that remain include a clear and safe path around the threat of potential enhanced damages by way of an opinion.

III. Halo Electronics Shields Patent Defendants Who Proactively Obtain an Opinion of Counsel

In some ways, Halo Electronics represents a shift back to the Underwater Devices era, with at least one critical difference. Underwater Devices made obtaining a competent opinion of counsel an affirmative duty for defendants in order to avoid enhanced damages. In contrast, the Halo Electronics decision rejected the notion of an “affirmative duty” as in Underwater Devices.

As Justice Breyer noted in his concurrence, Halo Electronics does not create any rigid affirmative duties akin to those in Underwater Devices.14  Instead, it implicitly holds that a competent opinion of counsel, though not necessary to avoid treble damages, nearly always would be sufficient to avoid them. By acting in honest reliance on documented, independent legal advice stating that the patents are either invalid or do not cover the conduct at issue, the defendant cannot act with the bad faith the Court requires. Thus, proactively obtaining a competent opinion of counsel can be a highly effective way to shield potential infringers from the threat of enhanced damages.

On a practical level, the up-front cost of obtaining an opinion of counsel pales in comparison to the cost of protracted litigation to determine the willfulness of the defendant’s actions. Ultimately, by relying on a competent opinion of counsel, a defendant can protect itself against the threat of enhanced damages well before trial at the pleadings or summary judgment stages. Moreover, the removal of enhanced damages also disarms a critical weapon plaintiffs could wield in settlement negotiations.

IV. Opinions of Counsel at Cadwalader

One area of practice of the Intellectual Property Group at Cadwalader specializes in advising clients regarding potential patent infringements and developing defenses once a client becomes aware of a potentially problematic patent. The IP Group has prepared hundreds of opinions of counsel in a diverse array of technologies, from electronics to pharmaceuticals and mechanical devices.


1 Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. ___ (2016).

2 See Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014); Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014); see generally Ronald Mann, Opinion analysis: Where have I read this before? Justices tread familiar path limiting Federal Circuit control over remedies in patent cases, SCOTUSblog (Jun. 16, 2016, 8:04 AM), http://goo.gl/DzNlIC.

3 In re Seagate Tech., LLC, 497 F.3d 1360, 1384 (Fed. Cir. 2007).

4  “[Defendant’s] subjective beliefs may become relevant only if [plaintiff] successfully makes this showing of objective unreasonableness.” Id. Accord Prof’l Real Estate Inv’rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 61 (1993) (describing similar objective, then subjective, two‑part test determining when litigation is a “sham” for antitrust purposes); Octane Fitness, 134 S. Ct. at 1751-52 (refusing to further extend Prof’l Real Estate’s definition of “sham” litigation in context of patent litigation).

5 “Under that standard, someone who plunders a patent—infringing it without any reason to suppose his conduct is arguably defensible—can nevertheless escape any comeuppance under § 284 solely on the strength of his attorney’s ingenuity.”  Halo Elecs., 579 U.S. at ___ (slip op. at 10).

6 Id.

7 Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389 (Fed. Cir. 1983).

8 Id. at 1390.

9 Id.

10 Id.

11 “Seagate, it would seem . . . would reflect the Federal Circuit’s directed response to patent trolls. . . .” Dov Greenbaum, In re Seagate: Did It Really Fix the Waiver Issue? A Short Review and Analysis of Waiver Resulting from the Use of A Counsel’s Opinion Letter As A Defense to Willful Infringement, 12 Marq. Intell. Prop. L. Rev. 155, 183 (2008).

12 Halo Elecs., 579 U.S. at ___ (slip op. at 10).

13 Id. at ___ (slip op. at 9).

14 “[C]onsulting counsel may help draw the line between infringing and noninfringing uses,” but it is not required. Id. at ___ (slip op. at 3) (Breyer, J., concurring).

Supreme Court Defers Certiorari Decision In Amgen Sandoz

Amgen Sandoz Supreme Court Biosimilar PatentOn June 20, 2016, instead of deciding whether to grant certiorari in the biosimilar patent dance dispute between Amgen and Sandoz, the Supreme Court invited the Solicitor General “to file a brief in this case expressing the views of the United States.” While this will delay any Supreme Court review of the Federal Circuit’s first decision interpreting the patent dance provisions of the Biologics Price Competition and Innovation Act (BPCIA), it could give the Court an opportunity to consolidate its consideration of the biosimilar statute with other biosimilar cases making their way through the courts.

These articles discuss some of the issues raised to date in biosimilar patent disputes surrounding Neupogen®, Nuelasta® and Remicade®:

© 2016 Foley & Lardner LLP

Patent Prosecution: “Unclean Hands” Doctrine Erases Merck’s Damage Award

unclean hands doctrine patent prosecutionIn my last post on the district court’s ruling in Gilead v. Merck, I implied that Gilead had convinced the Judge that Merck had employed inequitable conduct (“IC”) in conducting its negotiations with Pharmasset, the company Gilead later purchased to obtain the rights to the HCV drug, sofosuvir or Solvaldi®. However, I was reading and writing at an usually high speed and missed the fact that the judge’s finding was based on the pre-IC, unclean hands defense.

I skipped over the section on Therasense, a 2011 Fed. Cir. decision that redefined the IC doctrine, and missed the Judge’s comments distinguishing the two doctrines. In both opinions, it was noted that the unclean hands defense originated with three early S. Ct. decisions in which the “guilty parties” employed egregious misconduct to obtain their patents. The remedy in each case was to bar the wrongdoers ability to sue for infringement of the patents.

Gilead probably chose this defense because the IC doctrine has been applied in modern decisions to render patents or entire patent families unenforceable for failure of the patentee to submit relevant prior art to the PTO during prosecution. There is a specific intent requirement and a “hard but for” materiality requirement for unsubmitted art that is difficult for defendants to plead and to meet. Here is the district court’s analysis of the doctrines:

“Therasense addressed the separate defense of IC — a defense that Gilead does not assert in this case — but the Fed. Cir.’s discussions of the differences between IC and unclean hands confirmed that unclean hands remains a viable defense to patent infringement. [649 F.3d at 1285-89]. As the Fed. Cir. explained, the doctrine of IC grew from the older doctrine of unclean hands. Id. at 1287. Whereas unclean hands can involve improper conduct before either the Patent Office or the courts, IC relates solely to conduct before the Patent Office. Id. Additionally, where unclean hands can involve improper conduct before either the Patent Office or the courts, IC relates solely to conduct before the Patent Office.”

Well, not exactly. Therasense does not have a lot to say about the unclean hands doctrine, since the facts in Therasense involved a failure to disclose documentary evidence to the Patent Office, but it is clear that the Fed. Cir. did not intend to supplant the unclean hands defense promulgated by the S. Ct. to punish egregious misconduct. In fact, the Fed. Cir. added egregious misconduct to the current IC doctrine, to cover fact situations not involving withholding prior art. How this version of egregious conduct varies from the older unclean hands doctrine is not clear.

The district court judge seems to have erred when she wrote that IC is applicable only to patent prosecution. As set forth in Therasense:

“As the IC doctrine evolved from these unclean hands cases, it came to embrace a broader scope of misconduct, including not only egregious affirmative acts of misconduct intended to deceive both the PTO and the courts but also the mere nondisclosure of information to the PTO. IC also diverged from the doctrine of unclean hands by adopting a different and more potent remedy – unenforceability of the entire patent rather than mere dismissal of the instant suit.”[emphasis added]

As the dissenters wrote in Therasense: “[N]othing in this opinion rejects the application of the doctrine of IC (or “unclean hands”) as applied to other forms of misconduct, in litigation or otherwise.”[emphasis added]

So while Gilead’s “unclean hands” arguments prevailed, it appears that Gilead could have pled either doctrine and prevailed, especially since the Court found a specific intent to deceive.  It is my guess that since the Gilead decision did not involve the PTO, Gilead chose to go with unclean hands, but this decision may foreshadow a revival of this defense, particularly when most of the wrong-doing involves the litigation work and not the prosecution. Stay tuned.

© 2016 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Supreme Court Cert: Laches (in Patent Cases) and Copyrightable Subject Matter to Be Reviewed

U_S_-Supreme-Court1Laches

The Supreme Court of the United States granted certiorari to review a patent case on the law of laches. SCA Hygiene Products v. First Quality Baby Products, Case No. 15-927 (Supr. Ct., May 2, 2016).

In its cert petition, SCA argued that the en banc decision of the US Court of Appeals for the Federal Circuit conflicts with the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer (IP Update, Vol. 17, No. 5) that, under the Copyright Act, laches cannot bar damages claims brought within a statutory limitations period, even though the initial violation may have occurred years earlier. SCA also argued that the Federal Circuit observes a presumption in favor of laches that is inconsistent with Supreme Court precedent.

The question presented is: Can the defense of laches bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period (35 USC § 286), and if so, to what extent?

In SCA, the Federal Circuit granted en banc review to determine if the Supreme Court’s Petrella decision required a change to the law of laches in patent cases (IP Update, Vol. 18, No. 10). In a 6–5 decision, the Federal Circuit held that in terms of patent infringement actions, Petrella did not require a change in the laches rule set out by the court in 1992 in A.C. Aukerman v. R.L. Chaides Constr. Rather, the en banc Court explained that notwithstanding the provisions of § 286, Congress codified the laches defense in § 282 when it included an unenforceability defense in that statute. Thus, the Court found that laches could bar a damages claim even for acts occurring within the six-year period of § 286.

The Federal Circuit also held, however, that Petrella requires a change in the Aukerman rule that only pre-suit damages may be barred by laches. The Court explained that the availability of injunctive relief or ongoing royalties now depends on an analysis of the circumstances of the delay under the Supreme Court’s 2006 decision in eBay, Inc. v. MercExchange (IP Update, Vol. 9, No. 5).

Copyrightable Subject Matter                

The Supreme Court also granted certiorari in a copyright case arising from the US Court of Appeals for the Sixth Circuit and presenting the issue of copyrightability of cheerleader uniforms. Star Athletica, L.L.C. v. Varsity Brands, Inc., Case No. 15-866 (Supr. Ct., May 2, 2016).

The question presented is: What is the appropriate test to determine when a feature of a useful article is protectable under § 101 of the Copyright Act?

In Star, a split panel of the Sixth Circuit held that the arrangement of colors, stripes, chevrons, zigzags and other designs on a cheerleading uniform are copyrightable, separate from utilitarian aspects of the uniform itself (IP Update, Vol. 18, No. 9). The Court rejected the argument that the pictorial, graphic or sculptural features are simply performing a decorative function (which is itself a “utilitarian aspect of an article”) and are therefore not separable from the utilitarian aspects of the cheerleading uniform. The dissent argued that the case turned on how “function” is defined (i.e., in terms of the decorations in issue), which would determine whether the designs were copyrightable.

© 2016 McDermott Will & Emery

Case of First Impression: Federal Circuit Endorses Patent-Agent Privilege

In a case of first impression regarding whether communications between a non-lawyer patent agent and a client are legally privileged, a split panel of the US Court of Appeals for the Federal Circuit held that a patent-agent privilege is warranted on a limited basis where an agent is engaged in the congressionally endorsed, authorized practice of law. In Re Queen’s University at Kingston, PARTEQ Research and Development, Case No. 2015-145 (Fed. Cir., Mar. 7, 2016) (O’Malley, J) (Reyna, J, dissenting).

The opinion followed the plaintiffs’ petition for mandamus. At the district court, the petitioners withheld documents reflecting communications between the plaintiffs’ employees and the non-lawyer patent agents who prosecuted the patents-in-suit based on an alleged patent-agent privilege. The district court overruled objections to the magistrate’s order granting defendants’ motion to compel production over the alleged privilege, but agreed to stay the discovery order pending a writ of mandamus. Applying Federal Circuit law, the Court found that mandamus was warranted to decide the issue of first impression, which had split the lower courts.

The Federal Circuit first recognized that “Rule 501 of the Federal Rules of Evidence authorizes federal courts to define new privileges by interpreting ‘common law principles.’” Finding that the respondents did not argue that a patent-agent privilege was foreclosed by the US Constitution, any federal statute or any rule prescribed by the Supreme Court of the United States, the Court turned to reason and experience, as directed by Rule 501, in order to determine whether recognizing a privilege was now appropriate. The majority concluded that it was, holding that the unique roles of patent agents, the congressional recognition of their authority to act, the Supreme Court’s characterization of their activities as the practice of law, and the current realities of patent litigation warranted an independent patent-agent privilege.

The Federal Circuit relied on the Supreme Court’s prior assertion that the preparation and prosecution of patent applications for others constitutes the practice of law. Further, the majority found that Congress had delegated to the commissioner of patents oversight authority concerning lawyers, agents or other persons representing applicants or other parties before the US Patent and Trademark Office (PTO), and that the commissioner had, in fact, allowed both lawyers and agents to practice before the PTO.

In further support, the majority panel cited both the Supreme Court’s recognition of Congress’s delegation of supervisory authority to the commissioner of patents for lawyers and agents alike, and related legislative history acknowledging the practitioners’ equivalent professional rights before the PTO. The majority found that a client has a reasonable expectation that all communications relating to obtaining legal advice on patentability and legal services in preparing a patent application will be kept privileged, and that denying privilege to agents would frustrate Congress’s intent to provide clients a choice between agent and lawyer. As a result, the majority found that a patent-agent privilege is coextensive with the rights Congress affords to patent agents, and serves the same important public interests as the attorney-client privilege.

The Court also noted that the new privilege’s scope is necessarily limited to communications with non-lawyer patent agents when those agents are acting within their authorized practice of law before the PTO. The Court found that the Code of Federal Regulations (CFR) sets forth the acts permitted by non-lawyer agents and helps to define the scope of communications covered under the privilege. For example, communications are due the privilege if made in furtherance of the performance of tasks specifically set forth in the CFR, or “are reasonably necessary and incident to the preparation and prosecution of patent applications or other proceedings before the [PTO] involving a patent application or patent in which the practitioner is authorized to participate.” The Court stressed that it is the burden of the person asserting the privilege to justify its applicability. The Court also cited examples of non-privileged communications, including those with a patent agent who offers an opinion on the validity of another party’s patent in contemplation of litigation or the sale or purchase of a patent, or on infringement.

In dissent, Judge Reyna argued that the public’s need for open discovery outweighed the need for the privilege. The dissent also argued against the new privilege with the following reasoning:

  • The privilege may adversely affect an agent’s duty of candor.

  • Agent communications are already routinely protected because of lawyer involvement.

  • Patent agents and clients are able to destroy written communications through implementation of document-destruction policies.

  • Determining the scope of the privilege is complicated and uncertain.

  • Congress and the Supreme Court have recognized a difference between agents and lawyers.

  • Evidence suggests that Congress did not intend that agents have a privilege.

  • No state has created an agent-client privilege.

  • The Judicial Conference Advisory Committee has not recommended creating the privilege.

  • Lawyers hold the privilege because of their professional status.

  • The Supreme Court has never held that patent agents practice law; it has merely recognized that the Florida Supreme Court has done so under Florida law.

  • Congress has never believed that patent agents practice law.

The Federal Circuit remanded the issue to the district court to determine whether the patent-agent privilege applied.

Article By John C. Low, PhD
© 2016 McDermott Will & Emery

The Smart Phone Patent Saga Continues: Apple Inc. v. Samsung Electronics Co., Ltd., et al.

In a case involving suits, countersuits and multiple appeals by the two giants of the mobile phone space, the US Court of Appeals for the Federal Circuit reversed a jury’s finding of infringement, voiding the accompanying award to Apple of more than $119 million. Apple Inc. v. Samsung Electronics Co., Ltd., et al., Case Nos. 015-1171, -1195, -1994 (Fed. Cir., Feb. 26, 2016) (Dyk, J).

In this case’s third appeal, the Federal Circuit was asked to deal with “the core infringement and invalidity issues with respect to the asserted patents.” At issue were five patents asserted by Apple against Samsung (four of which a jury found to be infringed) and two patents asserted by Samsung against Apple (one of which the same jury found to be infringed).

After the district court entered judgment on the jury verdict ($120 million to Apple and $160,000 to Samsung), both sides appealed.

The Apple Patents

With regard to the Apple “click structure” patent, the Federal Circuit found that no reasonable jury could have concluded that the accused Samsung devices included the claimed “analyzer server,” and reversed the judgment of infringement. Before trial, neither party sought construction of “analyzer server,” agreeing that it should be given its ordinary meaning. On the last scheduled day of the trial, the Federal Circuit construed this term (in the Motorola case) as “a server routine separate from a client that receives data having structures from the client.” The district court adopted this construction and permitted the parties to recall their expert witnesses to provide testimony under this construction. However, the Federal Circuit concluded that Apple failed to present sufficient testimony that the accused software library programs in the Samsung phones ran separately from the programs they served (i.e., the Browser and Messenger applications), as required by the Federal Circuit’s construction. Accordingly, the Federal Circuit reversed the district court’s denial of judgment as a matter of law (JMOL) of non-infringement.

Apple also asserted its “slide to unlock” patent, whereby a user can slide a moving image across the screen with a finger in order to unlock the phone, and its “auto correct” patent, whereby a phone automatically corrects typing errors. At the district court, Samsung sought JMOL that both of these patents were invalid as obvious. The Federal Circuit agreed.

For the “slide to unlock” patent, Apple did not dispute that the prior art combination disclosed all of the claimed features. Rather, Apple argued that the jury could have reasonably found that one of the references taught away from using the “slider toggle” feature, and that a skilled artisan would not have been motivated to combine these references, since the slide toggle reference describes a wall-mounted touch-screen device, not a mobile phone. The Federal Circuit  disagreed, concluding that “[t]he fact that [the prior art reference] notes that users did not prefer the particular design of the slider toggle is not evidence of teaching away.” The Federal Circuit reasoned that a motivation to use the teachings of a particular prior art reference need not be supported by a finding that the feature is the “preferred, or the most desirable” option.

The Federal Circuit also concluded that no reasonable jury could find that the reference is not analogous art since it concerned user interfaces for touch-screen devices, noting that the asserted patent and the reference both disclose essentially the same structure: a touch-screen device with software that allows the user to slide his or her finger across the screen to change interface states.

The Federal Circuit also dismissed Apple’s secondary considerations argument, noting that although Apple identified the unsolved problem as the lack of an “intuitive” method of unlocking a touch-screen portable device, it provided no evidence showing that the asserted need was recognized in the industry. With respect to industry praise, the Court noted that evidence of approval by Apple fans—who may or may not have been skilled in the art—is not legally sufficient.

With respect to copying, the Federal Circuit noted the only evidence of copying went to an unlock mechanism using a fixed starting and ending point for the slide—a feature disclosed in the prior art. Finally, with respect to commercial success, the Federal Circuit reasoned that Apple’s evidence was not sufficient to show a “nexus” between the patented feature and the commercial success of the iPhone. Accordingly, the evidence of secondary considerations was insufficient as a matter of law to overcome the prima facie obviousness case.

Apple also asserted its “universal search” patent that permits a user to search for results from both the phone and the internet based on a single search term. On appeal, the issue was whether the search feature on the Samsung phones “locates” information on the internet. The district court found that Samsung devices do not search the internet, but rather blend data previously retrieved from a Google server and a local database. Apple argued that the plain meaning of the claim covered search information previously downloaded from the internet, a construction the  district court denied. The Federal Circuit agreed with the district court’s denial.

The Samsung Patents

Samsung asserted a patent directed to capturing, compressing and transmitting videos. In its claim construction order, the district court construed “means for transmission”—a means-plus-function claim limitation—to require software in addition to hardware. Samsung argued that the district court erred in its construction because the specification did not “require any software for transmission, and including such software [in addition to hardware] as necessary structure was error.” The Federal Circuit agreed with the district court that the term “transmission” implies communication from one unit to another, and the specification explains that software is necessary to enable such communication. The Federal Circuit noted that software is necessary because hardware alone does nothing without software instructions telling it what to do, and affirmed the district court’s construction of the term and the judgment of non-infringement.

As for Samsung’s patent directed to a camera system for compressing, decompressing and organizing digital files, the jury found that Apple had infringed, and the district court denied Apple’s post-trial motion for JMOL of non-infringement. Apple argued that no reasonable jury could have found that the Apple products met the “compressor” and “decompressor” limitations of the claim because these limitations require components that compress or decompress both still images and videos, and its products use separate and distinct components to compress and decompress still images and videos. The Federal Circuit rejected this argument, finding that Samsung presented testimony that identified a single Apple design chip with circuitry that performs compressing/decompressing methods for both images and videos.

Practice Note: Assuming this decision resolves the utility patent fight, the only remaining battle shifts to the Supreme Court of the United States, which has now agreed to hear Samsung’s appeal on the issue of damages in connection with design patent infringement. See CertAlert in this issue of IP Update.

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© 2016 McDermott Will & Emery

Superman Breyer v. Batman Lourie Battle in Sequenom Petition for Cert.

This is an amplification of my last post on the Sequenom petition for cert. in Sequenom v. Ariosa. I have been arguing for some years that the patent world will never be at rest where diagnostic claims are concerned until the patent eligibility of a simple “If A, then B” claim is addressed by the Fed. Cir. and/or the Supreme Court.

This is the type of claim criticized by Justices Breyer, Souter and Stevens in the “Metabolite Labs dissent” of 2006, when the Court declined to decide the patent-eligibility of a method of detecting a deficiency of cobalamin or folate by assaying a body fluid for an elevated level of homocysteine and correlating the elevated level with a cobalamin or homocysteine deficiency.” Justice Breyer just called the claim a law of nature with a mental step.

Fast forward to 2012 and the Mayo decision (132 S.Ct. 1289), and the Supreme Court invalidated an awkwardly drafted claim that I will re-write here as a method of medical treatment claim:

A method of treating an immunoregulatory disorder by administering a [known drug] so that the metabolite levels of said drug in the blood are between 1 and 10 um/l. (I made up the concentrations, but they represent, on the low side, minimal acceptable efficacy and, on the high side, unacceptable side effects. This is what the Court viewed as a natural phenomenon or correlation).

The Alice decision led the Court to the “Mayo Rule,” that a claim reciting a natural law, phenomenon or abstract idea had to be inspected to see if, in combination with the additional steps, it contained a further inventive concept that would render the claim patent-eligible under s. 101. Little guidance has been provided by the courts or the PTO as to how this rule should be applied in the case of life science claims, particularly to diagnostic claims. (Dicta in Mayo suggested that the Court did not view the claim as directed to a diagnostic method.)

Enter Arisoa. The Fed. Cir. held that the Mayo Rule rendered all the appealed claims patent-ineligible as directed to a natural phenomenon combined with well-known laboratory techniques. And, in fact, most of the appealed claims are broad. Here is claim 1 of US 6,258,540:

  1. A method for detecting a paternally inherited[cffDNA] …which method comprises amplifying a paternally inherited nucleic acid of fetal origin from a serum or plasma sample [from a pregnant female] and detecting the presence of cffDNA in the sample.

That’s it. In an earlier post, I noted that only claim 21 recites that a diagnostic test is carried out of the amplified cffDNA. The final step of this claim reads: “providing a [prenatal] diagnosis based on the presence and/or quantity and/or sequence of the foetal nucleic acid.”

The Federal Circuit opinion below noted that this claim was on appeal but did not mention it again in its opinion. But, in Sequenom’s petition it is the only claim that is reproduced in full. Sequenom states that “Claim 21 situates [the steps of amplification and detection of cffDNA] within a larger diagnostic method that up-ended conventional practice.”

Sequenon knew both that a claim to cffDNA in maternal blood was unpatentable as a natural phenomenon. The isolated and purified cffDNA obtained after amplification and detection is a patent-ineligible natural product thanks to Myriad. So Sequenom’s decided that its best approach was to argue that the isolation and detection steps where not conventional because they had never previously been used to isolate and detect the target biomarker, cffDNA. So the Question posed to the Supreme Court might have been: “Is a method directed to isolating a biomarker from a patient sample where it had not been known by the art to occur, patent-eligible under s. 101?” But that is not exactly how Sequenom saw it in its petition, when it wrote that the Question Presented is:

“Whether a novel method is patent-eligible where; (1) a researcher is the first to discover a natural phenomenon; (2) that unique knowledge motivates him to apply a new combination of known techniques to that discovery, and (3) he hereby achieves a previously impossible result without preempting other uses of that discovery.”

The “Question” is more difficult to interpret than many claims, and raises more questions than it answers. Why does the method have to be novel to meet the requirements of s. 101? What is the “natural phenomenon”? But these are minor quibbles that Judge Breyer seems to have answered to his own satisfaction. In other words, any diagnostic test will be based on the discovery of a natural phenomenon. In this case it is not the correlation between cffDNA and any pathological state, it is the existence of cffDNA in maternal blood. Remember, only claim 21 recites carrying out a diagnostic assay based on the cffDNA, but the claim does not recite the condition that is detected.

To continue, the “unique knowledge” [of cff DNA in maternal blood] motivates researcher to apply a new combination of known techniques to that discovery. But the only conceivable difference between the known techniques used to amplify and detect cffDNA and the known techniques to measure elevated homocysteine, does not lie in the analytic techniques but in the marker that is being detected or measured. In other words, the known techniques are in “new combination” because of the marker to which they are applied.

The last factor in the Sequenom Question requires the researcher to achieve a previously impossible result without preempting other uses of the discovery. This can be no more than an tautological attempt to save the claims that do not recite carrying out a diagnostic test. But what is the impossibility that has been overcome? The previously impossible result can only be a blood test that can yield information about the state of the fetus. And all practitioners soon learn the danger of labeling the results of an invention as previously impossible.

But doesn’t any new diagnostic test achieve a result that is “impossible” before it was discovered? To come full circle, it was surely “impossible” to predict the likelihood of a man’s developing prostate cancer before the PSA assay was discovered – e.g., before it was discovered that PSA was a fairly reliable biomarker for imminent or present prostate cancer. (And there were other uses for the homocysteine assay as well – at least in 2006, lack of preemption would not have saved that claim from Justice Breyer.)

Until the recognition of the significance of a natural correlation by a researcher is given weight as an “unconventional step” per se, the relentless degradation of patent claims for both diagnostic methods and methods of medical treatment [remember my Mayo claim, above] will continue. That’s why Judges Lourie and Moore are my current superheroes, since, in their Ariosa concurrence, they wrote that “the patent’s claims merely ‘rely on or operate by, but do not recite [claim?] a natural phenomenon…and that barring such inventions under s. 101 would mean that ‘nothing in the physical universe would be patent eligible.’” Sequenom wants the Supreme Court to reverse on the basis that the Fed. Cir. is applying the Mayo Rule too broadly. I don’t think they are wrong. I just don’t like the condition of the horse they rode in on.

© 2016 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.