The National Law Review is pleased to bring you information about the upcoming Monetization: Harvesting Your IP conference:
April 23-24, 2013
New York
The National Law Review is pleased to bring you information about the upcoming Monetization: Harvesting Your IP conference:
April 23-24, 2013
New York
The National Law Review recently featured an article, East Coast Spotlight on Design Patents: Spanx v. Yummie Tummie, written by Michael A. Cicero with Womble Carlyle Sandridge & Rice, PLLC:
Certainly the recent design patent litigation between Apple and Samsung in the Northern District of California garnered significant media attention. Design patents now reside in the media spotlight once again, but this time through East Coast litigants. The president of a New York-based maker of women’s control tops that is a named owner of several design patents openly declared that she hopes her Georgia-based competitor “is ready for war because [she] will not lie down.” The accused infringer actually started the litigation following its receipt of a cease-and-desist letter from the New York company’s legal counsel.
On March 5, 2013, Spanx, Inc. (“Spanx”) filed a declaratory judgment complaint in the Northern District of Georgia against Times Three Clothier, LLC d/b/a Yummie Tummie (“Yummie Tummie”), requesting the court to declare that three Spanx products do not infringe seven design patentsclaimed to be owned by Yummie Tummie. The lawsuit has already generated a considerable amount of media coverage, including sources cited below and NBC’s Today Show.
The lawsuit pits two prominent entrepreneurs against one another. Heather Thomson, the president of Yummie Tummie, is not only the sole inventor named in each of the patents-in-suit (as Heather Thomson Schindler), but was also one of the “Real Housewives of New York.”[1] Sara Blakely, according to ABC News, “founded Spanx in 2000, introducing what Spanx calls a shaping camisole in 2005,” and is “the youngest woman on Forbes’ billionaires list.”
Referring to an interview Thomson gave to the publication WWD (Women’s Wear Daily),lifeinc.today.com reports:
Thomson told WWD that she first learned of the product this past November when she received an anonymous package containing the Spanx Total Taming Tank and a note saying it was on sale at QVC. “I immediately recognized it as my original Yummie Tummie tank,” Thomson told WWD. The unsigned note said Spanx was selling it at QVC. A spokeswoman for Thomson declined to comment further.
“The Patents-in-Suit are related to one another,” states Spanx’s complaint, “in that [six of the patents] all claim priority to the [oldest] Patent.” Excerpts from two of these patents appear in Figure 1, below, for purposes of illustration.
The complaint alleges that Yummie Tummie’s counsel sent Spanx a cease-and-desist letter on or around January 18, 2013, identifying the accused products as Spanx’s “Total Taming Tank,” the “Top This Tank Style 1847,” and the “Top This Cami Style 1846.” (See Figure 2 below, depicting two of those products.) Spanx responded to that letter on or around February 14, 2013, according to the complaint, “describing in detail significant differences between the Accused Products and the Patents-in-Suit and stating, among other things, that it does not believe the Accused Products infringe the Patents-in-Suit.”
 |
| Figure 1: Depictions of Fig. 1 from Yummie Tummie’s U.S. Patents Nos. D606,285S (left) and D632,052S (right) |
 |
| Figure 2: Two accused Spanx products as shown in its website: Styles Nos. 1846 (left) and 1847 (right) |
Counsel for each party then communicated with one another several times but, states the complaint, Yummie Tummie “continued to maintain that the Accused Products infringe the Patents-in-Suit and expressed a willingness to enforce its patents against Spanx.” Thus, Spanx alleges, it has grounds for seeking a declaratory judgment of noninfringement of the Patents-in-Suit. The complaint requests such declaratory relief plus “costs, expenses, and reasonable attorneys’ fees as provided by law.”
As of the time of this writing, Yummie Tummie has not yet filed a formal answer to the complaint (its allotted time for doing so under procedural rules has not yet expired). Yummie Tummie has, though, already issued a public statement regarding the lawsuit. In a March 14, 2013 letter addressed directly to Blakely and published on Yummie Tummie’s website, Thomson states, among other things: “We brought this to your attention expecting you to stop. Instead you’ve chosen to sue us, no doubt thinking that your massive company could intimidate ours. We have successfully enforced our design patents in the past and will continue to do so.”
The case is Spanx, Inc. v. Times Three Clothier, LLC d/b/a Yummie Tummie, No. 1:13-cv-0710-WSD,filed 03/05/13 in the U.S. District Court for the Northern District of Georgia, Atlanta Division, assigned to U.S. District Judge William S. Duffey, Jr.
[1] Coincidentally, the Northern District of Georgia is also the site of a legal battle between two “Real Housewives of Atlanta,” filed just one week after the Spanx lawsuit. See prior post.
Copyright © 2013 Womble Carlyle Sandridge & Rice, PLLC
The National Law Review is pleased to bring you information about the upcoming IP Law Summit:
The IP Law Summit is the premium forum for bringing senior IP Counsel and service providers together. As an invitation-only event taking place behind closed doors, the Summit offers an intimate environment for a focused discussion of cutting edge technology, strategy and products driving the IP market place.
The one-on-one business meetings provide access to Senior IP Counsel within the largest corporations across the United States. A thorough selection process ensures a qualified audience, which grants unparalleled business and networking opportunities in a luxurious and stimulating environment.
March 21-23, 2013
The Broadmoor, Colorado Springs, CO
The National Law Review recently published an article by Karen Artz Ash, Bret J. Danow, Roger P. Furey, Doron S. Goldstein, Peter J. Riebling, and David B. Sherman of Katten Muchin Rosenman LLP regarding Trademarks and the Global Clearinghouse:
On March 26, 2013, the Internet Corporation for Assigned Names and Numbers (ICANN) will begin to allow trademark owners to submit their marks for inclusion in a newly created Trademark Clearinghouse, which is intended to serve as a single centralized database of verified information that will enable trademark holders throughout the world to better protect their rights on the Internet. This follow-up to “New Generic Top-Level Domain Names: What Brand Owners Need to Know” (June 15, 2012) introduces brand owners (and their licensees, assignees and agents) to several key elements of the Trademark Clearinghouse submission process, and describes the primary benefits that the Trademark Clearinghouse promises to provide to trademark rights holders.
ICANN, the private nonprofit corporation that manages most top-level domains (TLDs) and IP addresses, developed the Trademark Clearinghouse (in connection with Deloitte and IBM) as part of its new generic Top-Level Domain (New gTLD) Program. Generally speaking, the New gTLD Program allows any legal entity to file an application to create a new gTLD—the general domain name address extensions that come after the last dot (such as .com, .net., .org)—and, as a result, has the potential to significantly expand the existing Internet infrastructure by increasing the number of gTLDs to an almost unlimited amount (and simultaneously expanding the potential for online trademark infringement). Amid this expansion, the Trademark Clearinghouse was created to protect trademark rights holders by permitting them to more easily register second-level domain names under new gTLDs (e.g., YOURNAME.example), and to allow gTLD operators and registries to better review and assess trademark claims.
The Trademark Clearinghouse will initially accept and verify for registration (1) nationally or regionally (i.e., multi-nationally) registered trademarks; (2) court-validated marks; and (3) marks protected by statute or treaty. Trademarks that are the subjects of pending applications or are inactive or invalid may not be registered.
Although the specific type of information and documentation required to verify a trademark record will vary depending on the type of mark, the Trademark Clearinghouse will generally require trademark rights holders to submit information regarding the mark itself, details about any applicable registration, court reference numbers or other documentation evidencing rights, the goods and/or services covered and the corresponding Nice classification(s), the country(ies) in which the mark is protected, the name and contact information of the trademark rights holder, and, for purposes of obtaining applicable Sunrise Services, certain verification of proof of use of the mark, which may include a signed declaration and specimen(s) of trademark use (e.g., labels, tags, containers, advertising and marketing materials). All trademark submissions will be subject to verification by Deloitte Enterprise Risk Services.
This verified trademark data will support the two primary benefits that the Trademark Clearinghouse promises to provide to trademark rights holders: Sunrise Services and “Trademark Claims” for all new gTLDs. The cost charged by ICANN for making a submission to the Trademark Clearinghouse will vary from US$95 to US$150 per year for a single mark, with discounted fees available to trademark rights holders who seek registration for three years (US$435) or five years (US$725). The Trademark Clearinghouse’s submission guidelines and basic fee structure are available for download at its official website.
By registering a trademark with the Trademark Clearinghouse, a trademark rights holder will be permitted to register second-level domain names under new gTLDs (e.g., YOURNAME.example) during a “Sunrise” period of at least thirty (30) days before registration of such names is made available to the general public. All new gTLD applicants are subject to this mandatory “Sunrise” period after the registration of the new gTLD with a registry. Access to “Sunrise” registration will provide trademark rights holders with a relatively low-cost means by which to obtain some level of control of, and some ability to safeguard, second-level domain names comprised of their trademarks.
Registering a trademark with the Trademark Clearinghouse will also entitle a rights holder to a “Trademark Claims” service following the “Sunrise” period. This “Trademark Claims” service will extend for at least the first sixty (60) days after a new gTLD is open for registration with the general public. At the outset, the “Trademark Claims” service will provide a warning of potential infringement to any third party attempting to register a domain name that matches a trademark registered with the Trademark Clearinghouse. In the event that the third party proceeds to register the domain name despite such a notice, the “Trademark Claims” service would send an automated notification to the trademark holder alerting it to the potential infringement. Although the Trademark Clearinghouse will not bar registration of the potentially infringing domain name, the “Trademark Claims” notice will expeditiously inform the rights holder and enable it to consider whether to take action.
As a practical matter, the “Trademark Claims” service will only identify identical matches to eligible trademarks. In other words, “Trademark Claims” notices will only be generated if the domain name label consists of the complete and identical textual elements of the trademark registered with the Trademark Clearinghouse. As a result, even a domain name containing a plural version of the mark would not be considered an identical match. Typos and “trademark + generic term” domain name labels also would not be considered identical matches. To the extent a trademark contains any special character that cannot be represented in a domain name, e.g., “@” or “!,” such character may be either omitted, replaced by hyphens, or spelled out with appropriate words of the official language(s) of the country/jurisdiction in which the mark is protected. Accordingly, if a trademark rights holder is interested in obtaining additional protection against the use and registration of infringing domain names, it may wish to work with legal counsel and use a private domain name watching service.
The launch of the Trademark Clearinghouse marks a phase of ICANN’s New gTLD Program that would appear to be particularly significant to brand owners and licensees. In view of the numerous ways in which the New gTLD Program promises to alter the existing Internet infrastructure, trademark rights holders may wish to consider the benefits of early registration with the Trademark Clearinghouse and work with counsel to develop other cost-effective strategies to protect their trademarks and other valuable intellectual property rights.
The National Law Review recently published an article regarding New Patent Laws written by Gregory L. Porter with Andrews Kurth LLP:
The America Invents Act brought a host of changes to U.S. patent law. One of these changes that will take effect on March 16th, 2013 is a change from a “first to invent” system to a “first to file” system. All new applications filed on or after March 16, 2016 that do not claim priority to an earlier application will fall under the new law. Under the new law, the first inventor to file a patent application will normally prevail in obtaining a patent over a second inventor who filed later in time, regardless of which inventor was first to invent. This change will bring the U.S. patent system in harmony with most of the world in this respect.
There are other implications of the March 16th change in the law. Among these implications is that the prior art scope potentially broadens for those new applications filed after March 16th. That is, sales outside of the U.S., as well as any prior public use, may be considered prior art under the new law, whereas these would not have been considered prior art previously. Moreover, published applications (both international and U.S.) will be considered prior art dated as of their earliest filing date, even if such filing date is a foreign application. Therefore, companies should not only ensure they win the race to the patent office after the March 16th date change to the patent system, they should also consider filing applications prior to March 16th when possible.
© 2013 Andrews Kurth LLP
The National Law Review is pleased to bring you information about the upcoming Monetization: Harvesting Your IP conference:
April 23-24, 2013
New York
The National Law Review is pleased to bring you information about the upcoming IP Law Summit:
The IP Law Summit is the premium forum for bringing senior IP Counsel and service providers together. As an invitation-only event taking place behind closed doors, the Summit offers an intimate environment for a focused discussion of cutting edge technology, strategy and products driving the IP market place.
The one-on-one business meetings provide access to Senior IP Counsel within the largest corporations across the United States. A thorough selection process ensures a qualified audience, which grants unparalleled business and networking opportunities in a luxurious and stimulating environment.
March 21-23, 2013
The Broadmoor, Colorado Springs, CO
The National Law Review recently published an article, Administration Launches Strategy on Mitigating Theft of U.S. Trade Secrets, written by Lauren M. Papenhausen with McDermott Will & Emery:
The strategy announced on February 20, 2013, should serve as both a wake-up call from the government and an offer of assistance. Given the losses that can arise from competitors’ purposeful theft of trade secrets, entities should review the announcement and decide whether they need to be more active in protecting their trade secrets. The strategy also offers opportunities for increased collaboration with the government.
On February 20, 2013, the White House announced an “Administration Strategy on Mitigating the Theft of U.S. Trade Secrets.” Companies should view the announcement of this strategy as both a wake-up call from the government and an offer of assistance. Given the losses that can arise from competitors’ purposeful theft of trade secrets, entities should review this government announcement and decide whether they need to be more active in protecting their trade secrets.
The administration strategy articulates a broad governmental commitment to addressing an “accelerating” threat to U.S. intellectual property. The strategy encompasses five action items:
Three main themes emerge from the administration strategy that are important for U.S. businesses.
First, the strategy and its supporting documentation highlight how frighteningly real the prospect of trade secrets theft is. The White House report is peppered with references to household name companies that have been victimized by trade secrets theft over the past few years, often at a cost of tens of millions of dollars or more. Mandated reports from the defense industry to the government indicate a 75 percent increase between FY2010 and FY2011 in reports of suspicious activity aimed at acquiring protected information. Coupled with a recent New York Times article asserting Chinese government involvement in more than 100 attempted cyber attacks on U.S. companies since 2006, these reports warrant sitting up and taking notice. According to a report by the Office of the National Counterintelligence Executive, particular targets include companies that possess the following:
Second, the government alone cannot solve the problem. The administration commits to making the investigation and prosecution of trade secret theft a “top priority” and states that the Federal Bureau of Investigation has increased the number of trade secret theft investigations by 29 percent since 2010. On its face, however, a 29 percent increase in investigations cannot keep pace with a 75 percent increase in attempted trade secret thefts. Historically, as a result of limited resources, the government has been able to address only a tiny fraction of trade secret thefts, and there is no indication that there will be the massive influx of resources necessary to change this dynamic materially. Indeed, the administration strategy recognizes the need for public-private partnerships on this issue and asks companies and industry associations to develop and adopt voluntary best practices to protect themselves against trade secret theft. And, of course, there are significant drawbacks to any after-the-fact solution, whether relying on government intervention or a private lawsuit.
The best solution is to prevent a trade secret theft from ever occurring. Even if that is not possible, having taken strong measures to protect trade secrets will aid success both in any civil litigation against the perpetrator and in any criminal action the government may bring. Entities should consider at least the following types of protective measures:
It also will be important in any future litigation that a company has clearly designated as confidential any materials it may wish to assert are trade secrets.
Third, the new administration approach to trade secrets offers some opportunities for U.S. companies.
The government interest in enhancing law enforcement operations indicates that businesses may have a better chance of encouraging the government to investigate and bring criminal charges under the Economic Espionage Act (EEA) against the perpetrators of trade secret thefts. The possibility of seeking government involvement is a powerful tool that should be considered and discussed with counsel any time there is a significant suspected trade secret theft. Obtaining government involvement in specific instances of trade secret theft can allow businesses to take advantage of information learned via government tactics such as undercover investigations and search warrants. It also can significantly enhance any civil litigation—for example, a finding of criminal liability can make a civil outcome a foregone conclusion.
The administration strategy’s focus on improving domestic legislation and increasing communication with the private sector suggests that there is an opportunity for the private sector to collaborate with government actors in communicating industry needs and shaping policy. For example, it is possible that the time is ripe for an amendment to the EEA (currently a federal criminal statute that offers no private right of action) to create a federal, private cause of action for misappropriation of trade secrets. A bill to this effect was introduced in Congress in 2012 and did not progress, but two other amendments to strengthen the EEA that passed overwhelmingly in December 2012, plus the recently issued administration strategy, suggest there may be gathering momentum for such a change.
In an executive order signed on February 12, 2013, entitled “Improving Critical Infrastructure Cybersecurity,” President Obama outlined government plans to significantly increase the amount of information that the government shares with private sector entities about cyber threats. Specifically, the order directs government agencies to develop procedures to create and disseminate to targeted entities unclassified reports of cyber threats that identify them as targets, to disseminate classified reports of cyber threats under certain circumstances to “critical infrastructure entities,” and to expand the Enhanced Cybersecurity Services program (previously available only to defense contractors to assist in information-sharing about cyber threats and protection of trade secrets) to “eligible critical infrastructure companies or commercial service providers that offer security services to critical infrastructure.” The directives in the executive order are in addition to and complement various information-sharing tactics set forth in the administration strategy designed to provide warnings, threat assessments and other information to industry. Companies, particularly those involved in the power grid or the provision of other utilities or critical systems, should be aware of the possibility of obtaining additional information from the government about threats to protected information.
© 2013 McDermott Will & Emery
On February 8, 2013, the United States Court of Appeals for the Federal Circuit (“CAFC”) reheard CLS Bank International v. Alice Corporation en banc. The en banc CAFC opinion that eventually results may clarify the long-unsettled question of what constitutes an “abstract idea” and is thus unpatentable under Section 101 of the Patent Act. The CAFC’s ruling is expected to have widespread implications, which may affect how courts, the United States Patent and Trademark Office, patent prosecutors, patent litigators, inventors, and patent holders analyze and value certain patents and patent applications. The opinion is expected to be of particular importance in the fields of software and business method patents.
Section 101 of the Patent Act provides, “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101 (2006 & Supp. V 2011). These categories (i.e., processes, machines, manufactures, and compositions of matter) are subject to three exceptions – laws of nature, physical phenomena, and abstract ideas – that, while not apparent from the statute’s text, are judge-made law constituting “stare decisis going back [more than] 150 years.” Bilski v. Kappos, — U.S. —-, 130 S. Ct. 3218, 3225, 177 L. Ed. 2d 792 (2010) (citing Le Roy v. Tathum, 14 How. 156, 174-75, 14 L. Ed. 367 (1853)). Thus, a patent application may be denied, or an issued patent may be ruled invalid, if it is deemed to be drawn to an abstract idea.
Plenty of ink has been spilled and much time has been spent analyzing past cases, yet the CAFC remains split about what constitutes an abstract idea. Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323, 1327 (Fed. Cir. 2011) (“Both members of the Supreme Court and this court have recognized the difficulty of providing a precise formula or definition for the judge-made ineligible category of abstractness.” (citations omitted)), vacated sub nom. WildTangent, Inc. v. Ultramercial, LLC, — U.S. —-, 132 S. Ct. 2431, 182 L. Ed. 2d 1059 (2012). Neither the Supreme Court nor the CAFC has defined the word “abstract.” Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057, 1065 (Fed. Cir. 2011) (citing Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010), and Bilski, 130 S. Ct. at 3236 (Stevens, J., concurring)). As the CAFC put it,
This effort to descriptively cabin § 101 jurisprudence is reminiscent of the oenologists trying to describe a new wine. They have an abundance of adjectives – earthy, fruity, grassy, nutty, tart, woody, to name just a few – but picking and choosing in a given circumstance which ones apply and in what combination depends less on the assumed content of the words than on the taste of the tongue pronouncing them.
MySpace, Inc. v. GraphOn Corp., 672 F.3d 1250, 1259 (Fed. Cir. 2012). The waters are even murkier for business method patents. Id.
The U.S. Supreme Court has stated that “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,” Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. —-, 132 S. Ct. 1289, 1293, 182 L. Ed. 2d 321 (2012). Moreover, while abstract ideas themselves are not patentable, the application of an abstract idea is patent-eligible. Id. at 1293-94 (quoting Diamond v. Diehr, 450 U.S. 175, 187, 101 S. Ct. 1048, 67 L. Ed. 2d 155 (1981)). In addition, there is no per se rule against business method patents. Bilski, 130 S. Ct. at 3228-29. Furthermore, the machine or transformation test – wherein “‘[a] claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing’”– while not the sole test of whether an invention is drawn to an abstract idea, is “a useful and important clue.” Bilski, 130 S. Ct. at 3225-27 (quoting In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008)). Also, an invention that can be performed entirely in one’s head or with pen and paper is unpatentable. CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372 (Fed. Cir. 2011). In addition, a patent may not wholly preempt an abstract idea. Gottschalk v. Benson, 409 U.S. 63, 71-72, 93 S. Ct. 253, 34 L. Ed. 2d 273 (1972). Lastly, once it is apparent that the claims of a patent are drawn to an abstract idea, insignificant post-solution activity or an attempt to limit the claims to a particular technological environment are not enough to render the claims patent-eligible. Parker v. Flook, 437 U.S. 584, 590, 98 S. Ct. 2522, 57 L. Ed. 2d 451 (1978); Bilski, 130 S. Ct. at 3230 (citations omitted). While the foregoing principles are helpful, they have not made it clear for courts how various patent claims should be analyzed to determine whether they claim an abstract idea.
In 2010, Chief Judge Rader, writing for a panel of the CAFC also composed of Judges Newman and Plager, declared: “this court . . . will not presume to define ‘abstract’ beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.” Research Corp., 627 F.3d at 868. The current divide amongst the CAFC judges may center around whether to follow the “manifestly evident” line of precedent, thereby interpreting the abstract ideas exception narrowly (invalidating fewer patents), or whether to disregard it, thereby interpreting the abstract ideas exception broadly (thereby making it harder to satisfy the Section 101 requirements).
In particular, while Judges Rader, Linn, Plager, and Newman have construed the abstract ideas exception narrowly; Judges Prost, Schall, Mayer, Moore, Bryson, Wallach, and Dyk have construed the abstract ideas exception broadly; and Judges O’Malley and Lourie have ruled both ways. For example, in Myspace, Judges Newman and Plager held that it would have to be “clear and convincing beyond peradventure – that is, under virtually any meaning of ‘abstract’ – that the claim at issue is well over the line” for it to be well-advised for a court to address Section 101 in an infringement suit. 672 F.3d at 1261. In addition, in Ultramercial, which the Supreme Court has since vacated and remanded to the CAFC, Chief Judge Rader, writing for a panel also composed of Judges Lourie and O’Malley, held the claims patentable and wrote, “The eligibility exclusion for purely mental steps is particularly narrow.” Id. at 1329-30, vacated sub nom. WildTangent, 132 S. Ct. 2431. Similarly, in Classen, Judges Newman and Rader took a narrow view of the abstract ideas exception and reasoned that claims must be “manifestly abstract” to be found invalid, while Judge Moore, dissenting, would have invalidated claims that the majority held valid. 659 F.3d 1057.
In contrast, in PerkinElmer, Inc. v. Intema Ltd., No. 2011-1577, 2012 WL 5861658 (Fed. Cir. Nov. 20, 2012) (nonprecedential), Judges Bryson, O’Malley, and Wallach found claims invalid without even mentioning the “manifestly abstract” line of precedent. Judges Prost, Schall, and Moore did the same in Fort Properties, Inc. v. American Master Lease, 671 F.3d 1317 (Fed. Cir. 2012). Similarly, in Cybersource, Judges Dyk, Bryson, and Prost viewed the abstract ideas exception broadly. 654 F.3d 1366. Likewise, in Bancorp Services v. Sun Life Assurance Co., 687 F.3d 1266 (Fed. Cir. 2012), Judges Lourie, Prost, and Wallach held claims invalid, after distinguishing Research Corp. In addition, Judge Mayer advocated “a robust application of section 101 at the summary judgment stage” in his dissent in Highmark, Inc. v. Allcare Health Management Systems, Inc., 687 F.3d 1300, 1324 (Fed. Cir. 2012) (Mayer, J., dissenting).
At issue in Alice are Alice Corp.’s four patents, which cover a computerized trading platform for having a third party settle obligations between a first and a second party, thereby eliminating settlement risk – the risk that one or both parties would fail to perform. Alice, 685 F.3d at 1343.
Judges Linn and O’Malley found the claims patentable, and held, “when – after taking all of the claim recitations into consideration – it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101.” Id. at 1352. Judges Linn and O’Malley continued, “Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible ‘abstract idea’ under 35 U.S.C. § 101.” Id. Judges Linn and O’Malley emphasized the importance of viewing the claim as a whole, writing, “nothing in the Supreme Court’s precedent, nor in ours, allows a court to go hunting for abstractions by ignoring the concrete, palpable, tangible, and otherwise not abstract invention the patentee actually claims.” Id. at 1351. Judges Linn and O’Malley continued, “It is fundamentally improper to paraphrase a claim in overly simplistic generalities in assessing whether the claim falls under the limited ‘abstract ideas’ exception to patent eligibility under 35 U.S.C. § 101.” Id.
Judge Prost disagreed. She issued a dissent stating that the majority ruling defied the “Supreme Court’s unanimous directive to apply the patentable subject matter test with more vigor.” Id. at 1356 (Prost, J., dissenting). Judge Prost continued, “Worse yet, it creates an entirely new framework that in effect allows courts to avoid evaluating patent eligibility under § 101 whenever they so desire.” Id. (Prost, J., dissenting). In addition, Judge Prost took a different approach to the claims, analyzing their patentability under Section 101 only after she stripped them of “jargon”. Id. at 1357-58 (Prost, J., dissenting) (setting forth what Judge Prost called a “plain English translation” of the claims). Judge Prost noted, “The majority objects that ‘[i]t is impermissible for the court to rewrite claims as it sees them.’ . . . But that is precisely what courts do in claim construction everyday.” Id. at 1358 (Prost, J., dissenting) (citation omitted).
Importantly, only judges in regular active service and any senior judge who served on the original panel could participate in the en banc rehearing of Alice. See 28 U.S.C. § 46 (2006 & Supp. V 2011). Thus, Judge Bryson, who just assumed senior status on January 7, 2013, and Senior Judges Mayer, Plager, Clevenger, and Schall did not participate in the rehearing, while Senior Judge Linn – who served on the original Alice panel – opted to participate. That left Judges Rader, Newman, and Linn, who have construed the abstract ideas exception narrowly; Judges Prost, Moore, Wallach, and Dyk, who have construed the abstract ideas exception broadly; Judges O’Malley and Lourie, who have ruled both ways; and Judge Reyna, who is so new that he hasn’t yet served on a panel construing the abstract ideas exception.
Despite active questioning from the CAFC judges, the en banc rehearing of Alice did not provide clear guidance as to how the eventual opinion will affect the Section 101 analysis. Rather, the en banc hearing put the CAFC judges’ differences of opinion on display. For example, while Judge Linn maintained his position that it is inappropriate to distill a claim down to its essentials, another CAFC judge (whose identity was not apparent from the audio recording) appeared to do just that, suggesting that the claim was to the goal that Alice Corp. sought to achieve, rather than to any particular way of achieving that goal. Similarly, Judge Moore read the claims in light of the specification, while another CAFC judge appeared to strictly limit his construction to the language of the claims. Several CAFC judges, including Judges Moore and Linn, expressed a concern that Section 101 should not serve the same function of screening for inventiveness as Sections 102 and 103. Other concerns raised by the CAFC judges included preemption, post-solution activity, whether the claims had been construed correctly as requiring computer-implementation, and whether Section 101 had to be addressed before Sections 102, 103, and 112.
The CAFC’s rift has left courts, patent litigators, prosecutors, patent holders, and inventors with no clear rules to define an abstract idea. The opinion that eventually results from the en banc rehearing of Alice may lend some clarity to this long-unsettled area of the law. Interested parties should also keep an eye out for what happens in Ultramercial v. WildTangent, No. 2010–1544, as that opinion may also have widespread implications regarding the fate of the abstract ideas exception. See WildTangent, 132 S. Ct. 2431, granting cert., vacating, and remanding Ultramercial, 657 F.3d 1323.
©2013 Greenberg Traurig, LLP
