Category: Intellectual Property

SAS Indirectly Strengthens the Impact of Estoppel

The Supreme Court decision in SAS Institute v. Iancu[i]will likely strengthen a patent owner’s ability to argue in favor of estoppel and keep a petitioner from getting multiple bites at the invalidity apple in parallel PTAB and district court proceedings. At first glance the Supreme Court’s recent decision appears to be another setback to patent owners. Instead of quickly defeating post grant challenges to at least some challenged claims pursuant to a denial of institution, patent owners will now have to fight petitions even if the Board finds merit with only a single ground challenging patentability. Upon closer examination, however, SAS’s implications for estoppel are favorable and may even resolve a split concerning the scope of estoppel.

The Supreme Court Directive in SAS

SAS addressed the PTAB’s “partial institution” policy, under which the PTAB claimed the power to institute an IPR with respect to only some of the claims challenged in a petition. In SAS, the Supreme Court rejected that policy. The Court explained that if the PTAB decides to institute an IPR, 35 U.S.C. § 318(a) provides that PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” Emphasizing the statute’s use of the phrase “any patent claim,” the Court held that PTAB cannot pick and choose which claims to address, but must instead take the petition as it finds it.[ii] The Court found further support for its interpretation in the structure of the inter partes review process “in which it’s the petitioner, not the Director, who gets to define the contours of the proceeding.”[iii]

The Split on Estoppel

The partial institution policy that SAS rejected has created a split in the interpretation of estoppel under 35 U.S.C. § 315(e). Section 315(e)(2) provides that “[t]he petitioner in an inter partes review . . . that results in a final written decision under section 318(a) . . . may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” Congress intended this provision to preclude the same party from re-litigating invalidity in the district court once it had chosen to do so through an IPR. As then-Director of the PTO David Kappos testified, the “estoppel provisions mean that your patent is largely unchallengeable by the same party.”[iv] Similarly, Senator Grassley stated that IPR review “will completely substitute for at least the patents-and-printed-publications portion of the civil litigation.”[v]

Notwithstanding the apparently broad estoppel envisioned by Congress, some courts have interpreted § 315(e) more narrowly. For example, in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., the Federal Circuit explained that where PTAB partially instituted an IPR, the petitioner was not estopped from raising a ground in district court that it had included in its IPR petition but on which PTAB did not institute. The court reasoned that the non-instituted ground was not raised “during th[e] inter partes review.”[vi] Similarly, in HP Inc. v. MPHJ Technology Investment, LLC, the Federal Circuit explained that “noninstituted grounds do not become a part of the IPR,” and “[a]ccordingly, the noninstituted grounds were not raised and, as review was denied, could not be raised in the IPR.” The court therefore held that “the estoppel provisions of § 315(e)(1) do not apply.”[vii] Other courts have followed suit and even extended that holding.[viii]

A broader interpretation of estoppel tracks what many believe to be the statutory intent, however, as a party should not get two bites at the apple and be able to seek review at both the PTAB and in the district court. Adopting this view, the court in Biscotti Inc. v. Microsoft Corp. cabined Shaw and HP to their facts, holding that they “exempt an IPR petitioner from § 315(e)’s estoppel provision only if the PTAB precludes the petitioner from raising a ground during the IPR proceeding for purely procedural reasons.”[ix] Thus, the court held that § 315(e) estopped the petitioner from asserting any ground that (1) was included in PTAB’s final written decision, (2) was not instituted for non-procedural reasons, or (3) was not included in the petition.[x] Any other decision would result in needlessly protracted litigation as petitioners would re-litigate arguments similar to those that it had already lost or strategically chose not to include in a petition.[xi] The court in Douglas Dynamics, LLC v. Meyer Products LLCtook a similar view with respect to non-petitioned grounds, holding that estoppel applies “to grounds not asserted in the IPR petition, so long as they are based on prior art that could have been found by a skilled searcher’s diligent search.”[xii]

SAS Strengthens Patent Owners’ Estoppel Arguments Because a Petitioner is Deemed to be the “Master of its Complaint”

While SAS had nothing to do with estoppel on its face, much of the disagreement regarding the scope of estoppel arose out of the PTAB’s partial institution policy and the effect of estoppel on non-instituted claims. Because the PTAB no longer has discretion as to partial institution, courts will no longer have to struggle with whether a petitioner is estopped from raising non-instituted grounds for unpatentability in a subsequent or parallel district court proceeding. While a few open issues remain, the patent owner will still be able to argue that SAS supports the idea that petitioners should only get one opportunity to challenge patentability—either at the PTAB or before a jury. The Supreme Court directive from SAS, coupled with recent guidance from the PTAB, suggests that the divide between the broad (Biscotti and Douglas Dynamics) and narrow (Shaw and HP) interpretations of estoppel—at least with respect to pre-institution decisions from the PTAB—may be merging.

Moreover, while SAS does not explicitly resolve whether a petitioner is estopped from arguing non-petitionedclaims in a parallel district court case, the premise behind the Supreme Court’s decision—that the petitioner is the master of its own petition—suggests that estoppel should apply. Some commentators have predicted that because PTAB must now choose between full institution and full denial, “petitioners [will] have an incentive to focus their petitions even further—when choosing claims to challenge, grounds to assert, and prior art to cite—in order to ensure that the likelihood of full institution is greater than the likelihood of full denial.”[xiii] But filing a targeted (and therefore stronger) petition may run the risk of estoppel on any non-petitioned claim. As Biscotti and Douglas Dynamics indicate, petitioners should not be permitted to hold arguments in reserve in case of an unfavorable result at the PTAB. Moreover, SAS supports Biscotti’s and Douglas Dynamic’s interpretation of the meaning of “during” the IPR. While Shaw characterized an IPR as not beginning until institution,[xiv]SAS depicts post grant review as a single process that begins with petitioner defining the scope of the proceeding in its petition.[xv]Applying estoppel to non-petitioned claims would not be inconsistent with a courts’ concern “that estoppel applies only to those arguments, or potential arguments, that received (or reasonably could have received) proper judicial attention.”[xvi]

 Further, SAS will still enable patent owners to rely on the same line of cases to argue for procedural estoppel. Before SAS, the PTAB frequently denied institution in view of procedural deficiencies.[xvii] Now, however, the PTAB will be faced with either denying institution for failure to comply with PTAB rules or allowing institution on all grounds even where some of the challenges are procedurally improper. For example, petitioners could present a single procedurally proper argument to open the door to review and evade page limit requirements by packing the remainder of the petition with grounds that must also be instituted under SAS but that are supported only by improper incorporations by reference.[xviii] While denying institution because of procedural failings could preclude the petitioner from filing another (procedurally proper) petition making the same arguments,[xix] the petitioner, as “master of its complaint,” could have drafted its petition correctly from the start.[xx] In short, the petitioner’s failure to follow the rules should not justify a second bite at the validity apple.

 Finally, pending petitions subject to partial institution could have the same consequences depending on the action of the petitioner post-SAS. PTAB guidance indicates that in such cases, “the panel may issue an order supplementing the institution decision to institute on all challenges raised in the petition.”[xxi] If a petitioner fails to seek supplemental institution or fails to appeal the PTAB’s refusal to supplement, estoppel could apply. While some courts might continue following Shaw and HP by holding that non-instituted claims were not raised “during” the IPR, petitioner “could have raised” those claims and arguments “during” the IPR—even under Shaw’s interpretation—given SAS’s holding because the petitioner should have sought to remedy the non-institution.

The Takeaway

While not obvious at first glance, SAS follows recent decisions like General Plastics that tend to protect patent owners’ rights. While the focus of SAS was on institution and the scope of institution, the Court has armed patent owners with another weapon with which they can challenge serial review of the same patent on the same grounds in multiple petitions and district court proceedings.

[i] No. 16-969 (Apr. 24, 2018).

[ii] Id., slip op. at 1, 4-5.

[iii] Id., slip op. at 12.

[iv] Hr’g on H.R. 1249 Before the Subcomm. on Intell. Prop., Competition and the Internet of the H. Comm. on the Judiciary, 112th Cong. (2011) (statement of David Kappos, Dir., USPTO) (“Those estoppel provisions mean that your patent is largely unchallengeable by the same party.”)

[v] 157 Cong. Rec. S1360-94 (daily ed. Mar. 8, 2011) (statement of Sen. Grassley) (claiming that the estoppel provision “ensures that if aninter partes review is instituted while litigation is pending, that review will completely substitute for at least the patents-and-printed-publications portion of the civil litigation”).

[vi] 817 F.3d 1293, 1300 (Fed. Cir. 2016) (quoting 35 U.S.C. § 315(e)(2)).

[vii] 817 F.3d 1339, 1347 (Fed. Cir. 2016).

[ See, e.g., Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 2017 U.S. Dist. LEXIS 7728, at *8-10 (N.D. Cal. Jan. 19, 2017); Illumina, Inc. v. Qiagen N.V., 207 F. Supp. 3d 1081, 1089 (N.D. Cal. 2016).viii]

[ix] 2017 U.S. Dist. LEXIS 144164, at *21-22 (E.D. Tex. May 11, 2017).

[x] Id. at *22.

[xi] Id. at *17-18, *20-21.

[xii] 2017 U.S. Dist. LEXIS 58773, at *15.

[xiii] Saurabh Vishnubhakat, First Steps After SAS Institute, Patently-O (Apr. 27, 2018), https://patentlyo.com/patent/2018/04/first-steps-institute.html

[xiv] 817 F.3d at 1300.

[xv] Slip op. at 6, 9.

[xvi] Verinata, 2017 U.S. Dist. LEXIS 7728, at *10.

[xvii] See, e.g., Shenzhen Huiding Technology Co., Ltd. v. Synaptics Incorporated, IPR2015-01741, Paper 8 at 29-31 (PTAB Aug. 7, 2015) (partially denying institution due to improper incorporation by reference); Bomtech Elec., Co. Ltd. v. Medium-Tech Medizingeräte GmbH, Case No. IPR2014-00138, Paper No. 8 at 32-33 (PTAB Apr. 22, 2014) (same).

[xviii] See 37 C.F.R. § 42.6(a)(3).

[xix] General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017).

[xx] Id.

[xxi] Guidance on the Impact of SAS on AIA Trial Proceedings (Apr. 26, 2018) (emphasis added). 

 

© McKool Smith
This post was written by Scott W. Hejny and Chelsea Priest of McKool Smith.

Patent Damages: How Many Essential Features in a Smart Phone?

On March 20, 2018, the public version of Eastern District of Texas Magistrate Judge Roy Payne’s March 7, 2018 order tossing a $75 million jury verdict obtained by Ericsson against TCL Communication was released.  Ericsson Inc., et al, v. TCL Communication Technology Holdings, Ltd., et al, Case No. 2:15-cv-00011-RSP, Doc. No. 460 (redacted memorandum opinion and order) (E.D. Tex. March 7, 2018) (“Order”).  Judge Payne’s order sheds important light on the damages analysis for infringement of patents covering features of smartphone technology and potentially provides lessons to future litigants seeking damages for smartphone innovations.

After a jury verdict finding infringement, Ericsson also won a damages verdict of $75M due to TCL’s ongoing and willful infringement of U.S. Patent No. 7,149,510 (“the ’510 patent”).  Ericsson contended that the ’510 patent covers smartphone functionality that allows a user to grant or deny access to native phone functionality to a third-party application, which is a standard feature in all Android smartphones.  After trial, TCL moved for judgment as a matter of law on infringement and damages, or in the alternative new trials.  Judge Payne indicated that he was going to uphold the infringement verdict, but ordered a new trial on damages.  Order at 1.

Ericsson’s damages case relied on two experts: Dr. Wecker and Mr. Mills.  Dr. Wecker analyzed a consumer survey that attempted to approximate the apportioned value of the patented feature in the accused products.  Mr. Mills determined a royalty rate based both on that apportionment and on a hypothetical negotiation between Ericsson and TCL.  Dr. Wecker determined that 28% of TCL customers would not have purchased a TCL smartphone if the smartphone did not have the patented feature in the ’510 patent.  This would have resulted in a loss of 28% of TCL’s sales and profits.  From this, Mr. Mills determined that the at-risk profit for TCL was $3.42 per device sold by TCL, which is the average profit per device for all accused devices, after a 28% loss rate discount.  Mr. Mills determined that during the hypothetical negotiation Ericsson would have recovered nearly all of the at-risk profit, likely obtaining a rate of $3.41 per device, but in any event would have secured no less than half of the at-risk profits, or $1.72 per product.  These rates would have justified a damages award ranging from $123.6M to $245M for damages across the life of the ’510 patent.  Mr. Mills further determined that the parties would have negotiated a lump sum payment discount for both pre-trial and post-trial infringement rather than a running royalty. Based on this expert testimony, the jury awarded Ericsson a $75M lump sum.

Judge Payne threw out the jury’s award for two reasons.  First, Judge Payne found error in Ericsson’s argument that TCL would have settled up front with a lump sum covering the entire royalty for the projected future sales of 111 million smartphones during the remaining life of the ’510 patent.  According to Judge Payne these products could not be part of the infringement base because they did not exist at the time of trial and could not have been adjudicated to infringe.  These future products could not be part of a damages order.  See Order at 12-14.

But the real meat of Judge Payne’s order is in his other justification for throwing out the damages verdict.  Judge Payne faulted Ericsson for painting the consumers’ choice of whether to buy a TCL phone as a binary decision based on the presence of the accused feature.  Judge Payne noted that the case originally had five patents and consumer surveys were done which noted that if each feature of three of the asserted patents was missing from TCL products, TCL would have lost 64% of its profits due to sales lost due to the absence of those features.  Judge Payne concluded that each of these features individually could not be responsible for a quarter of TCL’s profits per phone, and noted the following:

It is not difficult to see how this lost profit number quickly becomes unrealistic. Subtracting just three features covered by a mere three implementation patents would have allegedly cut TCL’s profit by more than half. The evidence from both sides suggested that there were at least a thousand implementation patents that might cover a TCL phone.  Regardless of the number, there is no dispute that a phone with an Android-operating system has many patented features, and that, according to Dr. Wecker’s survey results, consumers would likely find numerous features essential. According to Mr. Mills, any one of these allegedly essential features could independently be worth more than a quarter of TCL’s profit on the phone. By removing even three additional features covered by an implementation patent, on top of the features allegedly covered by the ’510, ’931, and ’310 patents, TCL would have lost all its profit (conservatively), according to Mr. Mills’ theory.

Order at 10-11 (emphasis added) (internal citations omitted).  Judge Payne faulted Ericsson for not considering that a consumer’s decision to purchase or not purchase a phone would be based on whether numerous features were included, not just the ones covered by the asserted patents, and that Ericsson’s theory would erode all of TCL’s profits.  See Order at 11.  The judge further noted that:

To conclude that any one of these features—simply because it is considered essential to a consumer—could account for as much as a quarter of TCL’s total profit is unreliable and does not consider the facts of the case, particularly the nature of smartphones and the number of patents that cover smartphone features.

Order at 11.  Put simply, Judge Payne found that a single feature could not possibly account for $75M in damages for TCL’s smartphones, particularly in view of the many other features that are subject to patent protection.  Judge Payne noted that both sides agreed that Ericsson possessed potentially at least a thousand patents covering features of TCL phones.  Order at 10.  To Judge Payne, it could not possibly be the case that each of these patents accounted for 25% of the profits made by TCL.

This decision underscores the importance of securing a defensible damages analysis, especially in the context of the multifaceted technology embodied in modern smartphones.  Judge Payne’s concerns in his non-precedential opinion seemed to flow largely from unstated anxiety relating to royalty-stacking that made the logical extrapolation of the experts’ rubric unreasonable and erroneous.  In this context, it will be interesting to see how Ericsson recasts its damages theory in the next round of this litigation. We will continue to follow this case to see the approach, as we fully expect a notice of appeal to the Federal Circuit from Ericsson.

 

©1994-2018 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

PTO Releases Revised Guidance on Compliance with Mayo/Alice Rule

On April 19, the USPTO released a Memorandum from Robert Bahr, The Deputy Commissioner for Patent Examination Policy, that summarized the support required for a finding if a claim directed to a judicial exception to s. 101 eligibility under Step 2A of the Mayo/Alice analysis chart of MPEP 2106 – a natural phenomenon, an abstract idea or a product of nature [ ed. note “PAIN’]– contains an additional inventive concept that, taken alone or in combination, would not represent well-understood, routine, or conventional [“WRC”] activity. The Memorandum was prompted by the recent decision in Berkheimer v. HP, 881 F.3d 1360 (Fed. Cir. 2018).

At virtually the same time, Director Iancu released a Request for Comments on Determining Whether a claim element is [WRC] for the Purposes of Subject Matter Eligibility, and it pretty much repeats the factors listed in the Bahr Memorandum. For a detailed summary of the factual underpinnings that an examiner must make in order to support a rejection on the basis that a claim directed to a PAIN does not meet the inventive concept requirement because it is WRC, please refer to my post of April 20th.

I criticized the four factors outlined in the Memorandum/Request for using the s. 112 standard that that which is known to the art need not be set forth fully in the specification, as a blaze mark to guide examiners in determining whether the additional elements(s) in the claim are WRC. In other words, if the specification does not give the details of how to measure a biomarker, the examiner can use such facts to support a WRC finding. This relying on material not present in the specification is repeated in Factors 1, 3 and 4. I also criticized Factor 2 as permitting examiners to simply cite to “one or more court decisions discussed in MPEP 2106(5)(d)(2)” as noting the WRC nature of the additional element(s) in the claim, primarily due to the breadth of the summaries of the cases in this section of the MPEP.

The Revised Guidance in the May 8th Presentation (which is available as a slideshow from the PTO) takes these two criticisms to heart. It drops the reference to the value of a s. 112 analysis in Factors relating to the evidence of WRC provided by the specification, the disclosures in the prior art and the ability of the examiner to take official notice of the WRC, which usually will be based upon disclosures in the prior art.

The Revised Guidelines start out by stating that the examiner should conclude that a claim element(s) represents only WRC activity only if he/she can conclude that the element(s) is “widely prevalent or in common use in the relevant industry,” a conclusion that must be supported by factual determinations. Here is a quick run-down of the four “Options” that the examiner can use to demonstrate that a claim directed to PAIN does not contain more than elements that are WRC (These are mostly my words):

  1. Applicant makes a “statement against interest” in the specification or during prosecution that a claim element(s) is conventional, widely prevalent or in common use, or is a commercially available product.

  2. The examiner can cite to one or more court decisions as noting the WRC nature of the additional elements, as reported in MPEP 2106(d)(II). I criticized this as overly broad, especially in view of the fact that there is almost no case law involving diagnostic testing or methods of medical treatment. Interestingly, in Vanda v. West-Ward, the Fed. Cir. stated that the Mayo claims were diagnostic claims. This is a stretch – What condition did they diagnose? The recited patient had been treated with the drug before any sample testing was carried out. However, the revised guidelines make it clear that the additional element in the claim must be the same as the element addressed in the court case, as well as the fact that the case must be on the MPEP list. Vanda v. West-Ward should be added to this list.

  3. The examiner finds prior art publication(s) that demonstrate that the element(s) in questions are WRC, not just in existence at some point in the past. This should come from the prior art located in the search done by the Examiner or disclosed by Applicant.

  4. The examiner is permitted to take official notice of the WRC of the additional element(s) but only to be used when the examiner is certain thereof based upon his/her personal knowledge. For all but the most indisputable WRC, the examiner may be required to provide a declaration under 37 CFR 1.104(d)(2).

If more than one element is present, the examiner must show that the combination of the elements is WRC in the pertinent art. If the examiner cited to a publication not previously of record in response to an argument by applicant, the office action should not be made final.

Comments must be received by Aug. 20, 2018 by submitting them to Eligibilty2018@USPTO.gov.

 

© 2018 Schwegman, Lundberg & Woessner, P.A.
Read more updates on Mayo/Alice on the National Law Review’s Intellectual Property Page.

Getting Closer to put the UPC into Force

April 26, 2018 is a remarkable date: first it’s World IP Day celebrating IP around the world. Second, and this is unique, the British IP Minister Sam Gyimah MP announced that the UK ratified the Unified Patent Court Agreement (UPC Agreement). By doing so the UK agreed to be bound to both the UPC agreement and the UPC’s Protocol on Privileges and Immunities (PPI). The UPC will be a court common to the contracting member states within the EU having exclusive competence in respect of European Patents and European Patents with unitary effect.

In addition to Paris and Munich, London hosts a section of the Court’s central Division dealing with patents in the field of life sciences and pharmaceuticals. The way is now open for discussion about UK’s future within the UPC system after-Brexit. As of today, the UPC Agreement is ratified by 16 countries of the European Union.

To bring the Agreement into force, UK, France and Germany have to ratify the UPC Agreement and the PPI, now everyone is waiting for Germany, as France has already ratified.

Germany’s completion is currently on hold due to a constitutional complaint pending before the German Federal Constitutional Court.  According to rumours abound in the German IP community this complaint might be dismissed and the ratification will be finished during this year.

It’s time to get ready for playing with the new system!

 

Copyright 2018 K & L Gates.
This post was written by Christiane Schweizer of K & L Gates.
Read more on intellectual property on the National Law Review’s Intellectual Property Page.

Are Foreign Lost Profits Really Lost?

On January 12, 2018, the Supreme Court granted certiorari to review the Federal Circuit’s lost profits decision in WesternGeco LLC v. ION Geophysical Corp., 791 F.3d 1340 (Fed. Cir. 2015), marking the first step toward defining the scope of recovery for damages in the form of lost foreign sales. Under the Patent Act, damages are governed by § 284, which provides:

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

While § 284 allows patent owners to recover lost profits and reasonable royalties, the statute is silent as to whether these damages should encompass overseas losses (i.e., from foreign sales or contracts), which could play an important and substantial role in elevating damages – especially for patent holders with international contracts and services.

Background

WesternGeco LLC (“WesternGeco”) is a wholly-owned subsidiary of Schlumberger Limited, a worldwide provider of reservoir drilling and processing technology in the oil and gas industry. Relevant to this case, WesternGeco LLC provides reservoir monitoring and imaging services to help perform seismic surveys. ION Geophysical Corp. (“ION”) offers similar services as WesternGeco and is a competitor.

In 2009, WesternGeco sued ION for patent infringement under 35 U.S.C. § 271(f)(1)-(2). Specifically, 35 U.S.C. § 271(f) provides:

  1. Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent . . . shall be liable as an infringer.
  2. Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use . . . knowing that such component is so made or adapted and intending that such component will be combined outside of the United States . . . shall be liable as an infringer.

The district court found for WesternGeco, awarding it $93,400,000 in lost profits and $12,500,000 in reasonable royalties as damages. On appeal, however, the panel majority reversed the district court’s award of lost profits, observing that the “presumption against extraterritoriality is well-established and undisputed.” Moreover, the Federal Circuit previously stated in Power Integrations v. Fairchild Semiconductor, “[Our patent laws] do not thereby provide compensation for a defendant’s foreign exploitation of a patented invention, which is not infringement at all.” In effect, the majority held that “[u]nder Power Integrations, WesternGeco cannot recover lost profits resulting from its failure to win foreign service contracts.”

WesternGeco’s Petition

WesternGeco filed two petitions for certiorari. Based on the first petition, the Supreme Court vacated the Federal Circuit’s opinion in light of Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016). On remand, however, the Federal Circuit reinstated its opinion and judgment as to lost profits. As a result, WesternGeco filed a second petition for certiorari on February 17, 2017, which presented the following question:

Whether the court of appeals erred in holding that lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases where patent infringement is proven under 35 U.S.C. § 271(f).

In its petition, WesternGeco argued that the majority panel “applied the presumption against extraterritoriality in such a duplicative manner [that] defeat[ed] Congress’ intent in enacting § 271(f).” Therefore, the decision “effectively eliminate[d] lost profit damages where infringement is found under § 271(f), limiting patent owners only to a reasonable royalty.” WesternGeco also distinguished its case from Power Integrations, by arguing that “Power Integrations dealt with infringement under § 271(a)” and therefore “reflects no comparable congressional judgment to target certain extraterritorial conduct.”

In an amicus curiae brief submitted on behalf of the United States, the Solicitor General urged the Court to hear this case, stating that the Federal Circuit’s “approach systematically undercompensates prevailing patentees like petitioner, whose transnational business suffered when respondent infringed petitioner’s patents within the United States.”

In addition, WesternGeco argued that allowing patentees to recover lost profits from international sales would be consistent with copyright law, which has been found by several circuits to permit parties to recover foreign damages so long as those damages are directly linked to a domestic predicate act of infringement.

Implications

Although the Supreme Court, in its 2007 opinion in Microsoft Corp. v. AT&T Corp., previously “[r]ecogniz[ed] [that] § 271(f) is an exception to the general rule that [U.S.] patent law does not apply extraterritorially,” the Court ultimately “resist[ed] giving the language . . . an expansive interpretation.”

Patent holders should be aware that the Supreme Court’s decision in WesternGeco may present an opportunity to expand the scope of damages claims to encompass international losses caused by infringement in the United States.

 

© Copyright 2018 Brinks, Gilson & LioneBrinks, Gilson & Lione.
This post was written by Jeffrey J. Catalono and Judy K. He of Brinks, Gilson & Lione.
Read more Intellectual Property News at the Intellectual Property Page.

IP Litigation: Raising an Ensnarement Defense Defeats the Doctrine of Equivalents

Is the Doctrine of Equivalents (DOE) dead, once again? Effectively, yes.

All an alleged infringer needs to do is raise an ensnarement defense (a claim that a DOE enlarged hypothetical claim reads on the prior art), and then show that the equivalent element was known in the prior art. Most equivalent elements (not considering other claim elements) are known in the art, which is why they are equivalent!

Under current CAFC precedent, all an alleged infringer has to do is offer some prior art. There is no burden on the alleged infringer to show that a DOE enlarged claim is either anticipated or obvious in view of the prior art.For example, if the equivalent element is presented in any prior art reference, the burden then shifts to the patent owner to prove patentability. But patentability cannot be proven. To do that, one would have to present all that is known in order to argue that the prior art does not disclose the invention. And, of course, this is impossible. Could one even begin to present all knowledge in order to show the absence of some knowledge? Certainly not.

That is why, outside of a DOE enlarged hypothetical claim, at either the U.S. Patent Office (PTO) or before any court, someone arguing a claim is invalid first has the burden of at least presenting a prima facie case of anticipation or obviousness. The burden then shifts to the one urging claim validity to refute the prima facie case. Outside of ensnarement, the concept of proving patentability simply doesn’t exist, and for good reason.

The CAFC’s current precedent regarding how to consider the validity of a doctrine of equivalents enlarged hypothetical claim (hereafter hypothetical claim) is summarized In JANG v. BOS. SCI. CORP. & SCIMED LIFE SYS., INC., 2016-1275, 2016-1575, decided: September 29, 2017.

The Court stated:

“The first step is “to construct a hypothetical claim that literally covers the accused device.” Next, prior art introduced by the accused infringer is assessed to “determine whether the patentee has carried its burden of persuading the court that the hypothetical claim is patentable over the prior art.” Emphasis added.

“The burden of producing evidence of prior art to challenge a hypothetical claim rests with an accused infringer, but the burden of proving patentability of the hypothetical claim rests with the patentee.” Emphasis added.

This precedent does not require the alleged infringer to do any more than merely present the prior art. It fails to require the alleged infringer to provide a prima facie case of anticipation or obviousness.

Before Jang, there was an acknowledgment that the hypothetical claim should be one that would have been allowed by the USPTO. “The pertinent question then becomes whether that hypothetical claim could have been allowed by the PTO over the prior art. WILSON SPORTING GOODS CO. V. DAVID GEOFFREY & ASSOCIATES, 904 F.2d 677 (1990).” But the CAFC has failed to recognize that this means the alleged infringer must then first provide a prima facie case of claim invalidity, as would be required at the PTO.

Thus, the Doctrine of Equivalents is for all intents and purposes dead.

 

Copyright Davis & Kuelthau, s.c.
This post was written by James E. Lowe, Jr of Davis & Kuelthau, s.c.

Have you ever used a one-click ordering process online? Then you indirectly paid Amazon.

If you purchased anything from a website using a one-click purchase button, you indirectly paid Amazon for that ability, at least up until September 11, 2017 when Amazon’s patent to this technology expired. As a result, one-click purchasing might become the new norm.

In 1997, Amazon filed for a business method patent to one-click purchasing, which allows return shoppers to purchase items with just a single click of a button instead of having to proceed through a prolonged checkout process. The patent issued in 1999, at which point Amazon sued Barnes & Noble for patent infringement based on a similar technology used during Barnes & Noble’s checkout process. After extended litigation, the two companies settled in 2002. Not wanting to face similar litigation, Apple licensed the patent in 2000 to simplify ordering from the Apple Store.

The patent was extremely contentious, causing multiple calls to tighten patent laws or eliminate business method patents entirely. In response to the numerous attacks on the patent, Jeff Bezos called on the US Patent and Trademark Office to reduce the lifespan of patents to only 3 to 5 years, which prompted the US Patent and Trademark Office to issue an action plan to work with e-commerce companies to strengthen issued business method patents. But despite facing numerous challenges over the years, the patent survived. Thus if you have ordered anything online using a one-click purchase process, that company likely paid a licensing fee to Amazon to be able to provide that option.

Since the patent is now expired, one-click purchasing is now open to every online retailer. Large technology companies, such as Apple, Facebook, and Microsoft, are developing standardized one-click checkout procedures that can be applied internet-wide and that follow you from website to website. Google is likewise developing technology to incorporate one-click purchasing into its internet browser, Chrome.

 

©1994-2018 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. 

Aqua Products Sinks PTAB Decision in Bosch v. Matal

The odd title of this post arose from the fact that defendant Autel U.S., Inc. chose not to appeal its IPR win against Bosch that included invalidation of the claims in suit, and the refusal of the Board to enter an amended claim set proposed by Bosch. With Autel out of the picture, the PTO effectively represented the Board and Acting Director Matal was named as the defendant: Bosch Automotive Service Solutions, LLC v. Joseph Matal (Intervenor), Appeal no. 2015-1928 (Fed. Cir., December 22, 2017).

The technology claimed was directed to an improved device for transmitting data from the tire pressure sensor to the receiving unit in the vehicle, that was “universal” in that the user could check the data when working with different types of tires and receivers (U.S. Pat. No. 6,904,796).

In the IPR judgment, the Board found one set of Bosch’s proposed claims to be indefinite and one set to be obvious. The Fed. Cir. affirmed the Board’s ruling that the original claims were obvious but vacated the Board’s denial of Bosch’s contingent motion to substitute the amended claim set and remanded “for further proceedings consistent with this opinion.” Even though the Board had provided some rationale for why the first group of claims proposed by Bosch was indefinite, the Fed. Cir. ruled as to both claim sets that the Board had impermissibly placed the burden of establishing the patentability of both proposed  claim sets on Bosch, in contravention to Aqua Products.

“See Aqua Products, 872 F.3d at 1311 (‘Where the challenger ceases to participate in the IPR and the Board proceeds to final judgment, it is the Board that must justify any finding of unpatentability by reference to evidence of record in the IPR’).”

Although not argued by the parties, the Fed. Cir. ruled that proposed amended claims could be challenged under s. 112.

Perhaps the most important sentence in the opinion is in the Fed. Cir.’s discussion of the Board’s erroneous holding that it was Bosch’s burden to establish the unobviousness of the proposed claims:

“In its final decision, the Board concluded that it was ‘unpersuaded that Bosch has demonstrated that the proposed substitute claims are patentable’  over the prior art… [Citing an earlier Board decision] the Board stated that ‘[t]he patent owner bears the burden of proof in demonstrating patentability of the proposed substitute claims over the prior art in general, and, thus, entitlement to add these claims to its patent.’”

Of course, this suggests that a failure of the Board or of the challenger to meet this burden of proof to demonstrate unpatentability would entitle the patent owner to add the substitute claims. This decision, strongly affirming Aqua Products,  tilts the legal playing field, to favor the patentee, even as it requires more work by the Board.

The Fed. Cir.’s analysis of the original (affirmed) obviousness rejection contains a very thorough discussion of the secondary factors of commercial success, licensing and acclaim by the industry, that I won’t try to summarize, except to note that these remain very difficult to “prove up” in an obviousness dispute, particularly if the patented technology is complex.

© 2017 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Aglets, Who Knew?

SneakRTech Corp. wants you to defend their patent and challenge BadGuys, Incorporated’s patent at the U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB). The subject matter: aglets.

You run to the internet and find that “aglets” are the metal or plastic component on the end of a shoelace. Even more, you are surprised to find that the science of aglets is varied and deep. There is technology behind the manufacturing of the aglets themselves, the assembly of the aglets to the laces, and the design of the aglets such that they easily insert into the eyelets of the shoe. Chemistry and material science play a role in the technology related to aglets – both metallurgy and polymer science. Some of these disciplines are relatively old (e.g., at least 15 years ago they were well developed), while some disciplines are rapidly evolving (e.g., nanocoatings to provide a color-change depending on the temperature of the environment).

To complicate things further, the patents being defended and challenged have very different applications—one is an aglet for a desert rock climbing shoe, known to be exposed to high heat, low humidity, and abrasive conditions. The other is directed to a snowboarding boot aglet.

So now you face important questions. Do you need two experts? And how do you choose an expert? There are a least four considerations associated with finding the right expert. 

1. Make a wish-list

The first step in selecting an expert is simple – make a wish-list of the ideal traits you want in your expert. This requires answering, or at least thinking about, several questions.

What, and how many, technology spaces are claimed? Consider whether you need multiple experts, based on the variation in technology, including between claims of the same patent. Although Daubert seems to come up less at the PTAB, consider how to position yourself so that any expert you choose will survive a Daubert challenge.

For our example, think about desired attributes of the eventual selected expert. Are we looking for an expert in aglet design, or perhaps manufacturing processes related to attaching the aglets to the lace themselves? Are we looking for industry or academic expertise, or both? Are we looking for a focused specialist in aglets or a broader expertise in understanding the chemistry, material science, and nanotechnology of aglets. Where is the eyelet going to be (e.g., dress shoe, trail runner, hockey skates, etc.)? Does it matter?

What level of education is required to helpfully explain the technology, and relatedly, how are we planning to define the person-of-ordinary-skill-in-the-art? If the technology is relatively developed, how will our expert opine on the state-of-the-art at a time where she may not have even been out of undergraduate school?

Do you need an experienced expert with deposition and court appearances, or will a more novice expert work?

2. Identify potential expert types and sources

Once you have a wish-list of what you want in an expert, you need to determine where to look to find it. A good start can be to research publications, patents, and industry groups in the claimed technology space.

For example, one aglet patent may relate to electroplating processes of aglets specifically designed to be applied after the aglet is attached to the lace, involving complex chemistry and manufacturing concerns. The other aglet patent could be focused on shape design for ease of entry into an eyelet on a shoe.

For the first aglet, the complex chemistry may require a high level of education. The latter aglet may be better suited to a manufacturing engineer having hands on experience in a final assembly plant, or an industrial designer focused on customer experience. These experts may travel in vastly different circles, and may lend themselves to different types of searching. Additionally, consider whether you’re looking for a generalist or a specialist. For specialist experts, several databases are available to search theses/dissertations. This may provide a list of potential experts to consider that have studied your issue deeply.

3. Consider using an expert service – or two

A helpful shortcut to finding your expert and getting them retained early can be utilizing an expert search service. As a practical matter, it can be helpful to use such a service to ensure quick turnaround, especially if you have a good relationship with the headhunter. You can take steps to make the search consultant’s job easier, which will net better results. This includes providing them a list of experts already disqualified, for example based on conflicts, co-counsel or client preference, etc. Coordination with the client and co-counsel is key, and evaluating potential experts and developing the definition of a person of ordinary skill in the art can quickly narrow the list of available experts.

Additionally, provide the expert service your anticipated timeline—it is critical that the expert is available when you need them (e.g., to prepare a declaration, at deposition(s), etc.).

4. Nail the expert interview – gain knowledge and assess quickly

The interview phase needs to include at least three considerations: experience as an expert, substantive background in the technology, and availability now and throughout trial. If an expert has never been deposed before, try to determine whether they have the soft skills needed to be effectively cross-examined. Push them to see how they react to hard questions both substantively and temperamentally. Ask them for some strategy advice for your case to see how they think. Research them – look for skeletons before hiring them. Ask for references.

You now have two experts: Ms. Boot and Dr. Slipper, PhD., to assist on two separate aglet patent cases.

This post was written by Jason D. Eisenberg of  Sterne Kessler., © 2017
For more Intellectual Property legal analysis, go to The National Law Review

Positive Developments – EUTM

Trademark owners should take note of two new types of trademark protection available in the European Community as of October 1, 2017.

1. Certification Marks – although it has always been possible to register certification marks in a few individual EU member states, it was previously not possible to register a certification mark, for certification services, with the EUIPO.  This will change as of October 1, 2017 when it will now it will be possible to register certification with the EUIPO, covering all EU member states.  European Union certification marks are defined as marks that are “capable of distinguishing goods or services which are certified by the proprietor of the mark in respect of material, mode of manufacture of goods or performance of services, quality, accuracy or other characteristics, with the exception of geographical origin, from goods and services which are not so certified.”

2. Marks no Longer Need Graphic Representation – it will now be possible to file for sound, hologram, motion, and multimedia marks; marks can now be represented in any form using generally available technologies.  Unfortunately, it is still not possible to file for tactile, smell, and taste marks in the EU.

This post was written by Monica Riva Talley of Sterne Kessler © 2017
For more legal analysis go to The National Law Review