Category: Intellectual Property

Is the SCOTUS Rule of Reason Unreasonable?

“Not too hard, not too soft,” says the Supreme Court in FTC v. Actavis, 133 S. Ct. 2223 (2013).  The majority tries to reach middle ground by rejecting both the FTC’s argument that any reverse payment in settlement of a patent claim is presumptively unlawful and Actavis’ argument that any settlement within the scope of the patent is permissible, but is the court’s new “rule of reason” approach really “just right?” Let’s see how this plays out in a simple scenario using a product whose success everyone loves to hate—the Snuggie.

Meet Peter.  He has a pug with whom he likes to spend his evenings, wrapped up in a Snuggie, watching movies and sharing popcorn.  Peter was quite dismayed, though, to see his poor little pug shivering and cold without a Snuggie of his own.  So, Peter invented the Puggie.  He used special fibers formulated specifically to maintain heat while resisting odors because no one likes a smelly dog blanket.  Peter even obtained a patent on his Puggie and began producing more to sell around his neighborhood, the Franklin Terrace Community.  Once word spread of Peter’s success, however, several of Peter’s neighbors began producing competing products—the Pug Pelt, the Schnauzzie, and so on–which boasted the same odor-resistant properties as Peter’s Puggie.

Outraged, Peter publicly accused his competitors of patent infringement and demanded that they stop producing their “piddly dog pelts.” But they refused, claiming their fibers were different.  Knowing how costly an extensive fiber dispute could be, Peter offered his competitors $1,000 to stop producing their competing pelts for a period of two years.  The other pelt producers agreed, took the money, and stopped production immediately.  The Franklin Terrace Community, however, was not pleased.  Peter had not only run off the competition, but he had also bumped the Puggie price up afterward, making a killing during the chilly winter as the sole pelt producer.  Community members petitioned the homeowners’ board for some guidance on whether Peter’s payment constituted an unfair trade practice.  Peter opposed the petition and claimed that he had the right to pay whatever amount he deemed fit to protect his patent.

The board found the community’s argument that any “reverse settlement” payment by a patent holder is presumptively unlawful to be too harsh.  Peter’s assertion, however, that any payment is immune from attack so long as it remains within the scope of the patent was believed to be too soft.  Peter complained that the money and time he would have to commit to an extensive patent lawsuit over his odor-resistant fibers would put him out of business, but the board believed that his willingness to drop a grand to keep his competitors at bay was a much more accurate representation of Peter’s confidence in his patent.  Specifically, the board found Peter’s payment of $1,000 to be a “strong indicator of power.”  In an effort to come up with a more “middle of the road” approach, the board created the “rule of reason” to determine the legality of reverse settlement payments.  No real guidance was provided, though, on how to apply the new rule—just not too hard, not too soft.

Without any elaboration on how this new “rule of reason” is to be applied in antitrust lawsuits, did the board cause more confusion than clarity?  And, how large must a reverse settlement payment be to stand as an “indicator of power” and “lack of confidence” in the patent?  If Peter’s patent was iron-clad and his competitors were infringing, should he have had the right to pay any amount he deemed fit to protect his patent, or was $1,000 too much for some piddly pooch pelts?  Does this unfairly prohibit Peter from settling litigation that he may see as too costly or damaging?  Or, does the need to protect consumers from the Puggie monopoly Peter created outweigh Peter’s patent rights?

It is hard to say exactly what effect the Supreme Court’s “rule of reason” decision in FTC v. Actavis will have on future antitrust litigation.  We are likely to see an increase in the number of antitrust suits that are tried as opposed to settled. What do you make of this amorphous, middle-of-the-road approach?

ARTICLE BY Annie Dike of IMS ExpertServices
© Copyright 2002-2015 IMS ExpertServices, All Rights Reserved.

DNA Sequencing Patents: Simultaneous Invention As Secondary Evidence Of Obviousness

I do not usually write about non-precedential Federal Circuit decisions, but I could not let the discussion of “simultaneous invention” in Columbia University v. Illumina, Inc., go without comment. As if protecting patents from a hindsight-based determination of obviousness is not challenging enough, this theory holds that subsequent invention by another relatively soon after the invention at issue can support a finding of obviousness.

The Columbia University DNA Sequencing Patents

The patents at issue were three DNA sequencing patents: U.S. Patent No. 7,713,698; U.S. Patent No. 8,088,575; and U.S. Patent No. 7,790,869. Illumina challenged selected claims of the patents in Inter Partes Review (IPR) proceedings, and the USPTO Patent Trial and Appeal Board (PTAB) found all challenged claims anticipated or obvious over the asserted prior art references.

The Obviousness Issue

The Federal Circuit opinion was authored by Judge Wallach and joined by Chief Judge Prost and Judge Schall.

As summarized in the Federal Circuit opinion, the claims at issue “involve modified nucleotides that contain: (1) a labeled base; (2) a removable 3’-OH cap; and (3) a deazasubstituted base.” Columbia argued that “‘it would not have been obvious … to use ‘a reversible chain-terminating nucleotide with a label attached to the base, rather than to the cap on the 3’-OH group of the sugar.’”

After reviewing the prior art, the court found substantial evidence to support the PTAB’s findings regarding the disclosures of the asserted prior art references and reasonable expectation of success. It is in its discussion of secondary considerations of non-obviousness that the court discusses “simultaneous invention”:

“Independently made, simultaneous inventions, made within a comparatively short space of time, are persuasive evidence that the claimed apparatus was the product only of ordinary mechanical or engineering skill.” George M. Martin Co. v. Alliance Mach. Sys. Int’l LLC, 618 F.3d 1294, 1305 (Fed. Cir. 2010) ….

*****

As a secondary consideration … simultaneous invention is relevant when it occurs within a short space of time from the date of invention, and “is strong evidence of what constitutes the level of ordinary skill in the art.” Ecolochem v. S. Cal. Edison Co., 227 F.3d 1361, 1379 (Fed. Cir. 2000). Unlike the ultimate determination of obviousness, which requires courts to answer the hypothetical question of whether an invention “would have been obvious,” 35 U.S.C. § 103, simultaneous invention demonstrates what others in the field actually accomplished.

On the facts before it, the court noted that “Illumina did not present its simultaneous invention argument to the PTAB,” and because “the record is not fully developed, the evidence of simultaneous invention as a whole weighs only modestly in favor of obviousness.”

Why cite it as a factor at all if it wasn’t raised in the PTAB proceedings on appeal?

Simultaneous Invention

I traced the theory of “simultaneous invention” through the cases cited in the Federal Circuit decision.

In George M. Martin Co., the Federal Circuit already had determined that the district court had “correctly concluded as a matter of law that the differences between the prior art and the claimed improvement were minimal,” before it discussed “simultaneous invention.” Even then, it discussed it with this caveat:

Independently made, simultaneous inventions, made “within a comparatively short space of time,” are persuasive evidence that the claimed apparatus “was the product only of ordinary mechanical or engineering skill.” Concrete Appliances Co. v. Gomery, 269 U.S. 177, 184, 46 S.Ct. 42, 70 L.Ed. 222 (1925). But see Lindemann Maschinenfabrik GMBH v. Am. Hoist & Derrick Co., 730 F.2d 1452, 1460 (Fed. Cir. 1984) (“Because the statute, 35 U.S.C. § 135, (establishing and governing interference practice) recognizes the possibility of near simultaneous invention by two or more equally talented inventors working independently, that occurrence may or may not be an indication of obviousness when considered in light of all the circumstances.”).

In Ecolochem, the Federal Circuit discussed “simultaneous invention” in the context of reflecting the level of ordinary skill in the art, not obviousness per se:

The fact of near-simultaneous invention, though not determinative of statutory obviousness, is strong evidence of what constitutes the level of ordinary skill in the art.” The Int’l Glass Co. v. United States, 187 Ct.Cl. 376, 408 F.2d 395, 405 (1969). “[T]he possibility of near simultaneous invention by two or more equally talented inventors working independently, … may or may not be an indication of obviousness when considered in light of all the circumstances.” Lindemann, 730 F.2d at 1460, 221 USPQ at 487.

In the pre-Patent Act 1925 decision in Concrete Appliances Co., the Supreme Court noted that “[t]he several elements in the petitioners’ claims which we have enumerated embrace familiar devices long in common use, separately or in smaller groups, both in this and in kindred mechanical arts. It is not argued that there is any novelty in such units or groups; and the only serious question presented is whether, in combination in the apparatus described, they constitute an invention.” The Court then discussed numerous examples of similar devices made around the same time as the invention at issue before it explained:

The adaptation independently made by engineers and builders of these familiar appliances to the movement and distribution of wet concrete in building operations and the independent patent applications, within a comparatively short space of time, for devices for that purpose are in themselves persuasive evidence that this use in combination of well known mechanical elements was the product only of ordinary mechanical or engineering skill and not of inventive genius.

This appears to be the genesis of “simultaneous invention.”

Now that U.S. patent applicants are becoming accustomed to the importance of being the “first inventor to file” under the America Invents Act, do they also have to worry about how many file after them?

ARTICLE BY Courtenay C. Brinckerhoff of Foley & Lardner LLP
© 2015 Foley & Lardner LLP

Mixing Things Up: Let’s Talk Recipes, Part Two of a Four-Part Series (Patent)

Discussions about protecting intellectual property often focus on cutting-edge technologies, corporate branding campaigns, and widely distributed artistic works like movies and music.  But let’s mix things up a bit.  Follow us through this four-part series as we answer a question that is sure to hit home for anyone with taste buds—can you protect a food recipe?  In Part 1, here, we examined whether food recipes are eligible for copyright protection.

CupcakeWe concluded that, although a recipe itself is not eligible, you can claim copyrights in certain commentary, illustrations, or other expressive elements used to present the recipe.  Here, in Part 2, we investigate whether patent protection offers a viable solution for chefs, bakers, restaurateurs, and others hoping to safeguard their culinary creations.  Later, in Parts 3 and 4, we will break down whether recipes are eligible for trade secret protection (Part 3) or trademark/trade dress protection (Part 4).

PART 2: Can you Patent a Recipe?

To qualify for patent protection, an invention must be useful, new, and nonobvious. See 35 U.S.C. §§ 101-103. It must also fall into one of the Patent Act’s defined categories of “patent-eligible subject matter” (some things are outright barred from receiving patent protection, such as a mathematical algorithm). See 35 U.S.C. § 101. To warrant patent protection, a recipe must satisfy all four requirements.

On the “patent-eligible subject matter” front, a recipe would need to qualify as either a “process,” a “machine,” a “manufacture,” or a “composition of matter.”  See 35 U.S.C. § 101.  Of those categories, we can safely eliminate “machine” as a potential candidate and focus on the remaining possibilities.

A “process” is “a mode of treatment of certain materials to produce a given result.  It is an act, or series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing.”Gottschalk v. Benson, 409 U.S. 63, 70 (1972). Most recipes are essentially a set of step-by-step instructions for combining specified ingredients to produce a dish or food product. Thus, as a “series of acts” that transforms ingredients into a different end product, a recipe could constitute a patent-eligible “process.”

A “manufacture,” more commonly called “an article of manufacture,” is “an article produced from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by handlabor or by machinery.” Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980). A recipe itself does not qualify as an article of manufacture, but many consumer food products created according to a recipe likely qualify (think Hot Pockets® sandwiches, for example).

A “composition of matter” is “all compositions of two or more substances and all articles, whether they be the results of chemical union, or of mechanical mixture, or whether they be gases, fluids, powders or solids, for example.” Chakrabarty, 447 U.S. at 308.  Most recipes—a basic cake batter recipe, for instance—call for the mechanical or chemical mixture of “fluids” and “powders or solids” (e.g., water and flour).  Accordingly, although a recipe is not a “composition of matter,” the end product could be.

Thus, a recipe can be a patent-eligible process, while a resulting dish or food product can be a patent-eligible article of manufacture or composition of matter. But whether or not a recipe is patent-eligible subject matter is only one of four hurdles along the road to patent protection. The recipe must also be useful, new, and nonobvious.  The bar for what counts as “useful” under the Patent Act is low and, as a result, virtually every recipe will satisfy the usefulness requirement.

When it comes to demonstrating that a recipe is “new” and “nonobvious,” however, the road gets much tougher.  Every recipe seeking patent protection must distinguish itself from the millions of recipes that preceded it (eating is, after all, one of our most basic needs). Not only are multitudes of recipes already known, but in many cases the properties and effects of the underlying ingredients are also well-known. Adding a roux to a soup, for example, will predictably thicken the soup. Adding chocolate chips to a cake recipe will predictably increase the likelihood that the resulting cake will taste like, well, chocolate. When examining patent applications, the U.S. Patent and Trademark Office often views the results obtained from combining well-understood ingredients as having been predictable or obvious to people of ordinary skill in the culinary arts.

But take heart, innovative foodies, because the Patent Office does occasionally grant patents for recipes, dishes, and food products.  Many of them involve an unconventional step, ingredient, or end product.  Check out, for instance, U.S. patent number 5,894,027 titled Milk and protein powder-coated cereal products; U.S. patent number 8,147,893 titled Refrigerator stable pressurized baking batter; U.S. patent number 5,510,137 titled Sweet ice stuffs and jellied foods; or U.S. patent number 8,236,366 titled Flavorful Waterless Coffee. As the Patent Office recently put it, “[i]f you look at most of these patents, you’ll find that the recipe was more likely to have been created in a laboratory than on a kitchen counter.”  Larry Tarazano. Can Recipes Be Patented?  United States Patent and Trademark Office. InventorsEye 4:3 (June 2013). With the popularity of modernist techniques like “molecular gastronomy” on the rise (molecular gastronomy focuses on transforming physical and chemical properties to produce new tastes and textures), we could see a slight uptick in recipe patents in the coming years.

In short, returning to our original question—can you patent a food recipe?—the answer is “yes, if you can overcome the difficult nonobviousness hurdle.” Stay tuned for the next part of our series as we investigate the benefits of safeguarding a recipe under the banner of trade secret protection.

ARTICLE BY Kyle N. Siegal of Lewis Roca Rothgerber LLP

©2015 All Rights Reserved. Lewis Roca Rothgerber LLP

In Light of Supreme Court’s Spider-Man Case, Which Antitrust Precedents are Ripe for Overturning?

On June 22, 2015, the US Supreme Court in Kimble v. Marvel Entertainment LLC declined on stare decisis grounds to overturn a criticized intellectual property precedent on royalty payments. In both the majority and dissenting opinions, the justices said that their respect for precedent would have been less had it been one interpreting the Sherman Antitrust Act. These comments prompt the question: Which old and criticized antitrust precedent might be subject to reversal?

Kimble had a patent on a device that allowed a user to shoot webs—really, just pressurized foam string—from the palm of his hand. Kimble and Spider-Man’s owner, Marvel, reached an agreement that allowed Marvel to sell such toys in exchange for a lump sum payment to Kimble plus a 3% annual royalty that had no end date. After years of payments, Marvel discovered Brulotte v. Thys Co., a 1964 Supreme Court case that had read the patent laws to prevent a patent owner from receiving royalties for sales made after the patent’s expiration. The Court considered such arrangements illegal per se because they were attempts to extend the patent’s monopoly beyond the patent’s life. Relying on that precedent, Marvel convinced lower courts that its payments to Kimble should stop with the 2010 expiration of the patent.

Kimble asked the Court to overturn Brulotte and replace it with a rule of reason analysis. Six justices declined that invitation, saying the long-standing precedent was based on an interpretation of patent statutes that Congress could, but had declined to, amend and that contracting parties might have relied on. The dissent would have overturnedBrulotte because its rationale was based on now-discredited antitrust policy, not statutory interpretation.

Perhaps more interesting to antitrust practitioners, the two opinions discussed the lower level of respect for the Court’s antitrust precedents. As the majority opinion pointed out, Congress “intended [the Sherman Act’s] reference to ‘restraint of trade’ to have ‘changing content,’ and authorized courts to oversee the term’s ‘dynamic potential.’” As a result, the Court has “felt relatively free to revise our legal analysis as economic understanding evolves.” The dissent agreed, saying “we have been more willing to reexamine antitrust precedents because they have attributes of common-law decisions.”

Given that seeming-unanimity on the weakness of antitrust precedents, the next obvious question for antitrust lawyers is which antitrust precedents might be overturned. One candidate is the so-called baseball exemption. In 1922’s Federal Baseball Club v. National League, the Court found that the “business [of] giving exhibitions of base ball” did not constitute interstate commerce and so was not reached by the Sherman Act. Commentators and even subsequent Court opinions have termed the decision an “anomaly” (though refusing to overturn it).  Even retired Justice Stevens criticized the breadth of the exemption in a recent speech. In reaching this conclusion, Stevens relied on his experience on the Court, his early representation of the former A’s owner, and his work for Congress in the 1950s as it studied the exemption. Yet, while lower court decisions and The Curt Flood Act of 1998 have narrowed its scope, the exemption is still very much alive and has been used recently to cut short actions involving both the Cubs and the A’s. The Court could revisit the exemption yet again if it accepts the cert petition from the City of San Jose in the case involving the latest possible relocation of the A’s franchise.

Another candidate is the per se rule against tying, the only remaining vertical restraint to which the per se rule applies. In a tying arrangement, a seller agrees to sell one product (“tying product”) but only on the condition that the buyer also purchase a different product (“tied product”). Early Court cases applied the per se rule and described the arrangements harshly, saying they “serve hardly any purpose beyond the suppression of competition.” More recently, the Court has recognized that tying might be pro-competitive in certain circumstances. It has retained a rule that it calls per se; however, unlike per se rules against horizontal price fixing and the like, the tying per se rule requires proof of the seller’s power in the market for the tying product. If an appropriate case reaches the Court, it might complete the evolution of vertical restraints analysis and make all tying arrangements subject only to the rule of reason.

Finally, the Court’s 1963 Philadelphia National Bank opinion has faced severe criticism. In that case, the Court found that a merger that “produces a firm controlling an undue percentage share of the relevant market, and results in a significant increase in the concentration of firms” is presumptively anticompetitive. While that presumption has been significantly weakened in the various iterations of the DOJ/FTC Horizontal Merger Guidelines, it still plays a role at least when the agencies challenge a merger in court. FTC Commissioner Wright has called it bad law based on outdated economics and has criticized its continued use by the agencies. DOJ Assistant Attorney General Bill Baer, on the other hand, has called the presumption a useful tool for the agencies when challenging mergers in court. Because so few merger cases go beyond the preliminary injunction standard, let alone all the way to the Supreme Court, this precedent might remain safe.

ARTICLE BY Steven J. Cernak, Gregory L. Curtner & William M. Hannay

© 2015 Schiff Hardin LLP

Disparaging Marks: The Washington Redskins Made a Foul Play

Related to our recent blog post on immoral marks, U.S. trademark law also prohibits registration of trademarks that consist of “matter which may disparage … persons, … institutions, beliefs, or national symbols.”  This Section of the Lanham Act is central to the long-running controversy over the name of the well-known professional football team, theWashington “Redskins,” which some critics label as a racial epithet.  Although the team name has been in use since 1933 and was first registered in 1976, at a climactic point in the controversy last year theTrademark Trial and Appeal Board (TTAB) ordered those registrations to be cancelled pursuant to this Section. TTAB held that “redskins” is a racial slur that was disparaging to “a substantial composite” of Native Americans at the time of registration.  Just today, on July 8, a federal judge upheld this decision, not only affirming that the marks violate Section 2(a) of the Lanham Act, but also that Section 2(a) itself does not violate the First Amendment.

The saga over the trademark registrations began when a group of Native American petitioned to cancel the federal registrations for the Washington Redskins’ name.  The litigation has continued for over two decades as the case (and a companion case) bounced around the TTAB, the district court, and the D.C. Circuit.  Most recently, the owner of the registrations, Pro-Football Inc., appealed last year’s TTAB order cancelling its registrations to the District Court for the Eastern District of Virginia.

In today’s ruling, the District Court held that the Native American challengers met the legal requirements to prove that the marks indeed “may disparage” a substantial composite of Native Americans at the time of their registration.  Additionally, the Court addressed the major issue of whether Section 2(a) of the Lanham Act violates the First Amendment by restricting protected speech.  The Court held that it did not, because cancelling the federal registrations under Section 2(a) does not implicate the First Amendment, as the cancellations do nothing to burden, restrict or prohibit Pro-Football’s ability to use the marks in commerce.  Indeed, a federal registration is not required in order for one to use trademarks in commerce, and thus nothing in Section 2(a) impedes the ability of members of society to discuss unregistered marks.  In addition, the Court found that the federal registration program is government speech (as opposed to commercial or private speech) and is thus exempt from First Amendment scrutiny.

The saga is not over, however, until Pro-Football exhausts its appellate options.  Even then, assuming today’s decision stands, will the team adopt a new name that is eligible for federal trademark registration?  Not likely.  Pro-Football can still rely on its long-standing common law rights in the mark, stemming back to its first use in 1933.  The only thing the team will lose is its ability to enjoy the benefits of federal registration, including the ability to use the coveted ® symbol.

ARTICLE BY Beth A. Seals of Squire Patton Boggs (US) LLP

© Copyright 2015 Squire Patton Boggs (US) LLP

New Amendments to USPTO Post-Grant Regulations

OUS-PatentTrademarkOffice-Sealn May 19, 2015, the United States Patent and Trademark Office (USPTO) issued a final rule amending its regulations that apply to post-grant proceedings. These new rules deal with ministerial changes such as increasing page limits and making the regulations reflect the current practices used by the Patent Trial and Appeal Board (PTAB).

A second set of rule changes—to be issued later this year—will be more substantive and issued in proposed form first with an opportunity for public comment. We will issue an On the Subject when the second set of rules is issued, and we will be happy to assist with the submission of any comments. Below is a brief overview of the major provisions of this first amendment to the regulations.

  • Motions to Amend. The page limit for motions to amend, and oppositions to motions to amend, is increased from 15 pages to 25 pages. The required claim listing may now be made in an appendix accompanying the motion to amend, and the appendix is not counted toward the 25-page limit.

  • Petitioner’s Reply Brief. The page limit for the petitioner’s reply to patent owner’s response after institution is increased from 15 pages to 25 pages.

  • Font Style. All filings must be in 14-point, Times New Roman proportional font.

  • Back-Up Counsel. The rules are modified to make it clear that there can be more than one back-up counsel. There may be only one lead counsel.

  • Fees. The rules clarify that you must include in the number of claims in the petition when calculating the required fees each challenged claim as well as any claim from which a challenged claim depends, unless that claim is separately challenged. The USPTO explains that the claims from which the dependent claim depends must be construed along with the dependent claim.

  • Right to Depose. The rules make clear that routine or automatic discovery only includes affidavit testimony prepared for the post-grant proceeding. Consequently, if an affidavit is submitted from a district court proceeding, a motion must be filed to depose that affiant.

  • Objections to Evidence. The rule makes it clear that objections to evidence must be filed with the PTAB and served on opposing counsel.

  • Covered Business Method Proceedings. The rule explicitly provides that a covered business method proceeding may not be instituted where the petitioner filed a civil action challenging the validity of a claim of the patent before filing the petition. The change was made to track the statute.

ARTICLE BY Bernard Knight & Carey C. Jordan of McDermott Will & Emery
© 2015 McDermott Will & Emery

Hold That Pose: Can the Bikram Yoga Sequence Be Protected by Copyright Law?

Over the past decade, the Copyright Office has issued hundreds of yoga-related copyrights for books, videos, and the like —protecting intellectual property for a fitness/spiritual lifestyle that has bent itself into a $27 billion industry. Although yogis have several options to twist themselves into shape, one style in particular has stood off the mat—Bikram yoga.

A type of hatha yoga characterized by a set series of postures and breathing exercises, Bikram yoga is performed in a room heated to a high temperature (roughly 105 degrees Fahrenheit). All Bikram classes run for 90 minutes and consist of the same series of 26 postures (the “Sequence”), including two Pranayama breathing exercises. Popularized by esteemed guru Bikram Choudhury in the 1970s, Bikram yoga is now taught by instructors all over the United States.

The popularity of Bikram yoga appears to have shaken the original founder’s zen. Indeed, Mr. Choudhury has sued several studios, like NYC’s Yoga to the People, for copyright infringement, reaching settlements that have prevented studios from using the Bikram name or copying the Bikram Sequence. Faced with lawsuits, such studios must either sweat it out in court or otherwise capitulate and lie down in savasana (or corpse pose).

One such case occurred in 2011, when Choudhury and Bikram’s Yoga College of India sued Evolation Yoga for copyright infringement and related claims (e.g., trademark infringement and violations of teacher-certification agreements). Codefendants (also husband and wife) Mark Drost and Zefea Samson are former trainees of Bikram’s course of study and became authorized to teach Bikram’s Basic Yoga System. The two eventually formed Evolation Yoga, which uses the same Sequence, prompting a cease-and-desist letter demanding the pair stop teaching Bikram yoga. The plaintiffs argued that the Bikram yoga Sequence should be protected as a compilation and as choreography (and are within the ambit of Choudhury’s various copyrights for his yoga-related books depicting the Sequence).

In December 2012, a California court dismissed Choudhury’s copyright claims, leaving related trademark and breach of contract claims for a future session. The court remained inflexible to the notion that the Sequence of Bikram yoga poses could be protected by copyright law, causing studios everywhere to relax their muscles. (Bikram’s Yoga College of India, L.P. v. Evolation Yoga, LLC, 2012 WL 6548505 (C.D. Cal. Dec. 14, 2012)).  The court held that although books or photographs that depict a compilation of exercises may be copyrightable, the compilation authorship would not extend to the selection of the exercises themselves depicted in the photographs: “There is a distinction between a creative work that compiles a series of exercises and the compilation of exercises itself. The former is copyrightable, the latter is not.”  Moreover, the court found that, as a functional system that promotes physical and mental benefits, yoga postures cannot be registered for copyright. In dismissing Choudhury’s claim, the opinion meditates on a U.S. Copyright Office statement of policy declaring that a compilation of exercise or yoga moves does not fall under one of the Copyright Act’s eight categories of authorship. Consequently, and according to the policy statement, yoga poses are ineligible for copyright protections. (See 77 Fed. Reg. 37605 (June 22, 2012).)

Appealing to a higher power (that is, the Ninth Circuit), Choudhury’s lawyers are trying to get the case sent back to the yoga mat. Last month at oral argument, Choudhury’s counsel argued that, while individual poses are not copyrightable, the guru is trying to protect his “creative vision” in his specific 26-pose Sequence. Balancing yoga positions with ballet poses, Choudhury argued that all such forms of physical movement should be eligible as a protectable compilation or expressive choreographic work, or, at the very least, protectable against verbatim copying.  The appellants also argued that the Copyright Office’s policy statement should not be entitled to any deference by the court.

Remaining firm in tadasana (or mountain pose), the defendants reasserted and stretched the lower court’s ruling that copyright protection extends only to books containing Choudhury’s instructions, not to the routine itself—much like a cookbook author’s inability to protect the actual cooking of a recipe.  Bikram’s arguments also have drawn bad vibes from Yoga Alliance, an international trade association, which filed an amicus brief in support of defendant, finding that Bikram’s position “would be devastating to the yoga community.”

Until the court of appeals releases its decision, Bikram yogis across the country will continue to warrior their way through 105-degree heat. (Don’t try this at Om.)

ARTICLE BY L. Robert Batterman, Michael Cardozo, Robert E. Freeman, Howard L. Ganz, Wayne D. Katz & Joseph M. Leccese of Proskauer Rose LLP
© 2015 Proskauer Rose LLP.

Kimble v. Marvel – Supreme Court Sticks With Brulotte Rule on Royalty Payments

In a rather breezy opinion filled with Spiderman puns and references, Justice Kagan, writing for a 6/3 Court, affirmed that Brulotte v. Thys Co., 379 U.S. 29 (1964) controlled the outcome of this dispute over Marvel’s decision to halt royalty payments on a web-slinger toy that it had apparently agreed to make “for as long as kids want to imitate Spider-Man (doing whatever a spider can).” Slip op. at 2. (A copy of the opinion is found at the end of this post.)

The toy was patented by Kimble, and the patent expired in 2010. The ninth circuit affirmed the district court’s grant of S.J. confirming that, in accord with Brulotte, a patentee cannot receive royalties for sales made after his/her patent’s expiration. Cert. was granted and the Court affirmed that stare decisis was operable to keep Brulotte as controlling law, particularly since the dispute involved statutory interpretation – [as opposed to, e.g., first amendment rights?] – and that Congress had rejected attempts to amend the law.

I posted on the “back-story” earlier – see here– so a lot of repetition seems unnecessary, but the Court spent some time discussing various work-arounds to the Brulotte bar. These include deferred royalty payments, licensing non-patent rights and alternative “business arrangements,” that universities and other developers of early stage technology might use to temper the loss of patent protection prior to the generation of maximum income from the patented technology. Slip op. at 5-6. Nonetheless, as Justice Kagan wrote: “Patents endow their holders with certain superpowers but only for a limited time.”

Click here to read the Supreme Court Decision in Kimble v. Marvel

ARTICLE BY Warren Woessner of Schwegman, Lundberg & Woessner, P.A.
© 2015 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Federal Circuit Issues First Reversal & Remand of an Inter Partes Review in Microsoft Corporation v. Proxyconn, Inc. Addressing Claim Construction and Amendment Standards

The Federal Circuit issued its first reversal and remand of a final decision in an inter partes review issued by the Patent Trial and Appeal Board (“PTAB”). In Microsoft Corporation v. Proxyconn, Inc., No. 14-1543, a panel composed of Chief Judge Prost, Judge Lourie, and Judge Gilstrap (sitting by designation) held that the PTAB’s constructions of the phrases “two other computers,” “sender/computer,” and “receiver/computer” were unreasonably broad, and remanded for further proceedings consistent with its opinion. The Court’s decision marks the first ever reversal of an inter partes review decision by the PTAB, after 18 straight affirmances. Of the 18, fifteen have been affirmances without opinion issued under Federal Circuit Rule 36.

In brief, the Court upheld the PTAB’s use of the broadest reasonable interpretation (“BRI”) standard, but explained that the standard does not justify giving claims an unreasonably broad or legally incorrect interpretation. The Court then examined the statute and regulations governing amendment practice and concluded that the PTAB’s interpretation was not plainly erroneous or inconsistent with them. Last, in reference to the PTAB’s case-by-case interpretation of the same statute and regulations, the Court explained that while “[a] fluid, case-based interpretation by the PTO of its own regulations risks leaving interested members of the public in a state of uncertainty, without ascertainable standards and adequate notice to comply . . . we cannot say that the PTO has abused its discretion in choosing adjudication over rulemaking.”

In the underlying proceedings before the PTAB, Microsoft challenged Proxyconn’s patent directed to a system for increasing access speed in a packet-switched network. The PTAB concluded that all of the challenged claims, with the exception of one, were unpatentable. Both parties appealed. In addition to contesting the merits, Proxyconn challenged the PTAB’s used of the BRI standard, as well as the PTAB’s denial of Proxyconn’s motion to amend. We discuss each aspect in more detail below.

Broadest Reasonable Interpretation

With respect to BRI generally, the Court stated that it was bound by the panel decision in In re Cuozzo – the first appeal of an inter partes review decided earlier this year, which blessed the Office’s adoption of the hundred year old standard for use in inter partes review. In re Cuozzo is pending a decision on Cuozzo’s request for rehearing en banc, and several amici have submitted briefs expressing concern about the outcome. But practitioners troubled by the Office’s adoption and application of BRI can take some consolation. In this case, the panel rejected the PTAB’s construction as “unreasonably broad,” relying on precedent that constrains the Office’s application of the BRI to interpretations that are legally correct under the canons set forth in Phillips v. AWH Corp. Indeed, the panel dropped a footnote stating that its construction would have come out the same under the Phillips standard.

On the merits, the Court reviewed the Board’s claim constructions de novo. The Court carefully analyzed the technical merits and set forth a detailed interpretation of the claim terms appealed by both parties. This suggests that a meritorious claim construction dispute appealed to the Federal Circuit is likely to receive the same careful consideration and attention to detail that appellants have come to expect from the Court. It also shows that “unreasonably broad” claim interpretations that are inconsistent with settled principles of claim construction are reversible on appeal.

Proxyconn’s Motion to Amend

This appeal also presented the question of whether the PTAB impermissibly relied on the requirements it set forth in Idle Free Systems, Inc. v. Bergstrom, Inc., in denying Proxyconn’s motion to amend. In this case, the panel was not troubled by the PTAB’s reliance on its own decisions, like Idle Free, to promulgate standards for motions to amend. The Court agreed with the Office that the regulation itself “is not an exhaustive list of grounds upon which the Board can deny a motion to amend.” The Court also agreed that it is permissible for the Office to use adjudicative decisions like Idle Free, rather than traditional notice and comment rule-making, to set forth all the conditions that a patentee must meet in order to satisfy its burden of amendment. In that regard, the Court recognized that:

Some question the wisdom of the PTO’s approach. Since IPRs were created, they have rapidly become a popular vehicle for challenging the validity of issued patents. Patentees who wish to make use of the statutorily provided amendment process deserve certainty and clarity in the requirements that they are expected to meet. A fluid, case-based interpretation by the PTO of its own regulations risks leaving interested members of the public in a state of uncertainty, without ascertainable standards and adequate notice to comply. Despite such concerns, we recognize that ‘the choice between rulemaking and adjudication lies in the first instance within the [agency’s] discretion.’ . . . [W]e cannot say that the PTO has abused its discretion in choosing adjudication over rulemaking.

Slip. Op. at 24 (internal citations omitted).

The Court ultimately concluded that the PTAB reasonably interpreted the amendment rules as requiring the patentee to show that its substitute claims are patentable over the prior art of record. But the Court also stressed that “this case does not call on us to decide whether every requirement announced by the Board in Idle Free constitutes a permissible interpretation of the PTO’s regulations.” Slip. Op. at 25, n.4. It noted that the Idle Free decision itself was not before the Court, and expressly declined to address the other requirements that the Board relied upon—highlighting in particular Idle Free’s requirement that the patentee show patentable distinction over all “prior art known to the patent owner.” Idle Free, 2013 WL 5947697, at *4.

Practical Takeaways

Microsoft v. Proxyconn demonstrates the Court’s willingness to give appellants a meaningful review of PTAB decisions despite its track record of issuing summary affirmances. This applies particularly to claim construction appeals, which in most cases will be afforded de novo review – subject to Teva.4 This case also clarifies that remands to the PTAB are possible, though it remains unclear how the PTAB will deal with that remand. Those concerned about the PTAB’s use of the BRI should take heart that its application must still be both reasonable and legally correct. The Court acknowledged the uncertainty parties face when the Office uses adjudication rather than rulemaking to set standards and practices in these new proceedings. However, the Court’s willingness to analyze the PTAB’s application of Idle Free suggests that such decisions themselves are reviewable and should be appealed if their interpretation is improper.

ARTICLE BY Jon E. Wright & Pauline M. Pelletier of Sterne, Kessler, Goldstein & Fox P.L.L.C.
© 2015 Sterne Kessler

Federal Circuit Issues First Reversal & Remand of an Inter Partes Review in Microsoft Corporation v. Proxyconn, Inc. Addressing Claim Construction and Amendment Standards

The Federal Circuit issued its first reversal and remand of a final decision in an inter partes review issued by the Patent Trial and Appeal Board (“PTAB”). In Microsoft Corporation v. Proxyconn, Inc., No. 14-1543, a panel composed of Chief Judge Prost, Judge Lourie, and Judge Gilstrap (sitting by designation) held that the PTAB’s constructions of the phrases “two other computers,” “sender/computer,” and “receiver/computer” were unreasonably broad, and remanded for further proceedings consistent with its opinion. The Court’s decision marks the first ever reversal of an inter partes review decision by the PTAB, after 18 straight affirmances. Of the 18, fifteen have been affirmances without opinion issued under Federal Circuit Rule 36.

In brief, the Court upheld the PTAB’s use of the broadest reasonable interpretation (“BRI”) standard, but explained that the standard does not justify giving claims an unreasonably broad or legally incorrect interpretation. The Court then examined the statute and regulations governing amendment practice and concluded that the PTAB’s interpretation was not plainly erroneous or inconsistent with them. Last, in reference to the PTAB’s case-by-case interpretation of the same statute and regulations, the Court explained that while “[a] fluid, case-based interpretation by the PTO of its own regulations risks leaving interested members of the public in a state of uncertainty, without ascertainable standards and adequate notice to comply . . . we cannot say that the PTO has abused its discretion in choosing adjudication over rulemaking.”

In the underlying proceedings before the PTAB, Microsoft challenged Proxyconn’s patent directed to a system for increasing access speed in a packet-switched network. The PTAB concluded that all of the challenged claims, with the exception of one, were unpatentable. Both parties appealed. In addition to contesting the merits, Proxyconn challenged the PTAB’s used of the BRI standard, as well as the PTAB’s denial of Proxyconn’s motion to amend. We discuss each aspect in more detail below.

Broadest Reasonable Interpretation

With respect to BRI generally, the Court stated that it was bound by the panel decision in In re Cuozzo – the first appeal of an inter partes review decided earlier this year, which blessed the Office’s adoption of the hundred year old standard for use in inter partes review. In re Cuozzo is pending a decision on Cuozzo’s request for rehearing en banc, and several amici have submitted briefs expressing concern about the outcome. But practitioners troubled by the Office’s adoption and application of BRI can take some consolation. In this case, the panel rejected the PTAB’s construction as “unreasonably broad,” relying on precedent that constrains the Office’s application of the BRI to interpretations that are legally correct under the canons set forth in Phillips v. AWH Corp. Indeed, the panel dropped a footnote stating that its construction would have come out the same under the Phillips standard.

On the merits, the Court reviewed the Board’s claim constructions de novo. The Court carefully analyzed the technical merits and set forth a detailed interpretation of the claim terms appealed by both parties. This suggests that a meritorious claim construction dispute appealed to the Federal Circuit is likely to receive the same careful consideration and attention to detail that appellants have come to expect from the Court. It also shows that “unreasonably broad” claim interpretations that are inconsistent with settled principles of claim construction are reversible on appeal.

Proxyconn’s Motion to Amend

This appeal also presented the question of whether the PTAB impermissibly relied on the requirements it set forth in Idle Free Systems, Inc. v. Bergstrom, Inc., in denying Proxyconn’s motion to amend. In this case, the panel was not troubled by the PTAB’s reliance on its own decisions, like Idle Free, to promulgate standards for motions to amend. The Court agreed with the Office that the regulation itself “is not an exhaustive list of grounds upon which the Board can deny a motion to amend.” The Court also agreed that it is permissible for the Office to use adjudicative decisions like Idle Free, rather than traditional notice and comment rule-making, to set forth all the conditions that a patentee must meet in order to satisfy its burden of amendment. In that regard, the Court recognized that:

Some question the wisdom of the PTO’s approach. Since IPRs were created, they have rapidly become a popular vehicle for challenging the validity of issued patents. Patentees who wish to make use of the statutorily provided amendment process deserve certainty and clarity in the requirements that they are expected to meet. A fluid, case-based interpretation by the PTO of its own regulations risks leaving interested members of the public in a state of uncertainty, without ascertainable standards and adequate notice to comply. Despite such concerns, we recognize that ‘the choice between rulemaking and adjudication lies in the first instance within the [agency’s] discretion.’ . . . [W]e cannot say that the PTO has abused its discretion in choosing adjudication over rulemaking.

Slip. Op. at 24 (internal citations omitted).

The Court ultimately concluded that the PTAB reasonably interpreted the amendment rules as requiring the patentee to show that its substitute claims are patentable over the prior art of record. But the Court also stressed that “this case does not call on us to decide whether every requirement announced by the Board in Idle Free constitutes a permissible interpretation of the PTO’s regulations.” Slip. Op. at 25, n.4. It noted that the Idle Free decision itself was not before the Court, and expressly declined to address the other requirements that the Board relied upon—highlighting in particular Idle Free’s requirement that the patentee show patentable distinction over all “prior art known to the patent owner.” Idle Free, 2013 WL 5947697, at *4.

Practical Takeaways

Microsoft v. Proxyconn demonstrates the Court’s willingness to give appellants a meaningful review of PTAB decisions despite its track record of issuing summary affirmances. This applies particularly to claim construction appeals, which in most cases will be afforded de novo review – subject to Teva.4 This case also clarifies that remands to the PTAB are possible, though it remains unclear how the PTAB will deal with that remand. Those concerned about the PTAB’s use of the BRI should take heart that its application must still be both reasonable and legally correct. The Court acknowledged the uncertainty parties face when the Office uses adjudication rather than rulemaking to set standards and practices in these new proceedings. However, the Court’s willingness to analyze the PTAB’s application of Idle Free suggests that such decisions themselves are reviewable and should be appealed if their interpretation is improper.

ARTICLE BY Jon E. Wright & Pauline M. Pelletier of Sterne, Kessler, Goldstein & Fox P.L.L.C.
© 2015 Sterne Kessler