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PTAB Designates Two Precedential Opinions for Evaluating Impact of District Court Litigations on Discretionary Denial under § 314(a)

by Paul Devinsky | Jan 7, 2021 | Patents

In the wake of its May 13, 2020, precedential decision in Apple v. Fintiv, Inc., the Patent Trial and Appeal Board designated as precedential two additional decisions that weigh the Fintiv factors. In Fintiv, the Board articulated six factors for consideration when determining to exercise discretion to deny institution of an inter partes review (IPR) petition under § 314(a) in view of a parallel district court proceeding:

Existence of a stay pending IPR
Proximity of the court’s trial date to the Board’s deadline for issuing a final written decision
Expended investment in the parallel proceeding
Overlap between issues raised each proceeding
Whether the petitioner and the defendant are the same party
Other circumstances.

The two new precedential decisions provide further insight as to what circumstances may tip the balance for each factor. In each decision, the Board found that the circumstances of the parallel district court proceeding did not weigh in favor of a discretionary denial of institution.

In Sotera Wireless, Inc. v. Masimo Corp., Case No. IPR2020-01019, Paper 12 (USPTO Dec. 1, 2020 (Chagnon, APJ) (designated precedential as to § II.A on Dec. 17, 2020), the Board weighed the Fintiv factors and declined to deny institution based on the parallel district proceeding. In particular, the PTAB found that the already granted stay weighed strongly against exercising discretion to deny institution under the first factor. The Board rejected speculative arguments that if it declined review, the district court would lift the already granted stay and would set a trial date to pre-date the timeframe for issuing a final written decision in the IPR proceeding. The Board concluded that the second factor also weighed against denial because discovery was not complete and the district court had not issued a claim construction order or any other significant rulings. The Board also found that the fourth factor (issue overlap) weighed against denial because materially different invalidity grounds had been raised in the district court contentions as compared to the grounds at issue in the IPR petition.

In Snap, Inc. v. SRK Technology, LLC, Case No. IPR2020-00820, Paper 15 (USPTO Oct. 21, 2020 (Droesch, APJ) (designated precedential as to § II.A on Dec. 17, 2020), the Board again weighed the Fintiv factors and declined to deny institution based on the parallel district proceeding. Because the district court had not yet ruled on the motion to stay pending the outcome of the IPR, the Board found that the “stay factor” did not weigh for or against denying institution. As for the issue overlap factor, the Board found that a stipulation by the defendant to not pursue in district court any ground raised, or that could have reasonably been raised, in the IPR weighed strongly in favor of not exercising discretion to deny institution.

PTAB Designates Three Opinions as Precedential

by Paul Devinsky | Dec 17, 2020 | America Invents Act, Patents

In RPX Corp. v. Applications in Internet Time, LLC, Case Nos. IPR2015-01750, -01751, -01752 (Oct. 2, 2020) (Boalick, CAPJ) (designated precedential on Dec. 4, 2020), the Patent Trial and Appeal Board (Board) terminated institution of RPX’s petitions for inter partes review (IPR) because Salesforce—served with a complaint more than one year before—should have been named as a real party-in-interest (RPI) to the proceedings. As a result, RPX’s petition was time-barred under § 315(b).

The Board’s determination came after remand from the Federal Circuit, which vacated the Board’s prior finding that Salesforce was not an RPI. (IP Update, Vol. 21, No. 8). The Federal Circuit instructed the Board to use the common law understanding of “real party-in-interest” and a “flexible approach that takes into account both equitable and practical considerations, with an eye toward determining whether the non-party is a clear beneficiary that has a pre-existing, established relationship with the petitioner.” On remand, the Board took additional discovery to examine the relationship between RPX and Salesforce, including RPX’s business model, Salesforce’s relationship with RPX, whether RPX represents Salesforce’s interests in invalidating the patents, and the significance of the fact that Salesforce and RPX had overlapping Board members. After considering the relationship, the Board found the evidence pointed clearly toward a common interest—between RPX and its members—in invalidating the patents in IPR proceedings. It found RPX could not avoid the time bar under § 315(b), or estoppel under § 315(e) for its members, by creating the appearance that RPX acts independently of its members’ interests when filing IPR petitions.

In SharkNinja Operating LLC v. iRobot Corp., Case No. IPR2020-00734 (Oct. 6, 2020) (Melvin, APJ) (designated precedential on Dec. 4, 2020), the Board declined to address—for purposes of institution—the patent owner’s claim that the IPR petition failed to name an alleged RPI under § 312(a)(2)’s requirement that a petition “identif[y] all real parties-in-interest.” iRobot alleged that JS Global was an unnamed RPI because it was intertwined with SharkNinja’s business and was in a position to fund and exercise control over the IPR petition. The Board declined to reach a determination on the issue because it would have no impact on the proceeding, absent evidence that (1) JS Global was a time-barred or an otherwise estopped entity whose addition to the petition would result in its dismissal under § 315 or (2) SharkNinja’s omission of JS Global was done in bad faith. Even if SharkNinja was mistaken in its decision not to name JS Global as an RPI, the Board’s precedent would allow SharkNinja to correct the mistake during the proceeding.

In Apple Inc. v. Uniloc 2017 LLC, Case No. IPR2020-00854 (Oct. 28, 2020) (Quinn, APJ) (designated precedential on Dec. 4, 2020), the Board exercised its discretion to deny Apple’s motion for joinder because it would have resulted in a “serial attack” on Uniloc’s patent. Apple had previously filed an IPR petition on the same patent, alleging various grounds of invalidity. The Board denied institution because it failed to show a reasonable likelihood [...]

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Standard Essential Patent Licensing Practices Do Not Violate Antitrust Laws

by Anthony S. Ferrara and Lisa P. Rumin | Aug 26, 2020 | Antitrust

The US Court of Appeals for the Ninth Circuit vacated a district court decision that found Qualcomm’s patent licensing practices violate antitrust laws and reversed a permanent, worldwide injunction against several of Qualcomm’s business practices. Fed. Trade Comm’n v. Qualcomm Inc., Case No. 19-16122 (9th Cir. Aug. 11, 2020) (C.J. Callahan).

Qualcomm sells modem chips that are incorporated into cellular handsets (i.e., smartphones) made by companies such as Samsung, Huawai, Apple and others. Qualcomm also holds a number of standard essential patents (SEPs) implemented by modem chips that are essential to cellular communication standards. A core part of Qualcomm’s business model is that it only licenses its SEPs to smartphone makers, i.e., its original equipment manufacturer (OEM) customers, not to rival modem chip suppliers—even though its rivals’ chips practice Qualcomm’s SEPs. Doing this allows Qualcomm to maximize its profits by charging royalty rates based on the value of the end-product smartphones rather than just the modem chip. In addition, Qualcomm will not supply modem chips to OEM customers unless they first pay to license Qualcomm’s SEPs (“no license, no chips”). OEMs must pay this licensing fee to Qualcomm even if they source chips from another supplier.

In January 2017, the FTC filed suit against Qualcomm in the Northern District of California, alleging that Qualcomm’s licensing practices violate the antitrust laws and unfairly protect its monopoly power as a modem chip supplier. Following a two-week bench trial, the district court issued a lengthy opinion ruling in favor of the FTC and ordering extensive injunctive relief requiring Qualcomm to change its business practices. The court made a number of findings, including: (1) Qualcomm’s refusal to license its SEPs to rival chipmakers violates both its FRAND commitments to standard-setting organizations (SSOs) and an antitrust duty to deal; (2) Qualcomm’s royalty rates for its SEPs are unreasonably high because they are based on the value of end products and (3) Qualcomm’s royalties, in conjunction with its “no license, no chips” policy, imposes an anticompetitive “surcharge” on the price of its rivals’ chips. Qualcomm appealed.

The Ninth Circuit reversed the district court’s decision in its entirety and vacated the injunctive relief which had been ordered, finding that Qualcomm’s licensing practices amount to “hypercompetitive,” not anticompetitive, behavior. The Court recognized that Qualcomm’s licensing practices are designed to maximize its profits, but concluded that they do not unfairly distort competition within the modem chip markets. According to the Court, the district court improperly extended the reach of the antitrust laws in issuing its injunction.

The Ninth Circuit addressed and rejected each of the district court’s findings. First, the Court concluded that Qualcomm does not have an antitrust “duty to deal” with its rival chipmakers. The Court emphasized that the Supreme Court has recognized only a narrow exception to the general rule that a business need not deal with its competitors, and concluded that the exception was not met here. The Court also concluded that whether Qualcomm breached a FRAND commitment to license its SEPs to rivals was [...]

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Eighth Circuit Cools Off Antitrust Claims Based on Alleged Patent Fraud

by Lisa P. Rumin | Aug 5, 2020 | Patents

The US Court of Appeals for the Eighth Circuit affirmed a grant of summary judgment dismissing antitrust and tortious interference claims based on fraudulent procurement of patents where the plaintiff failed to show a knowing and willful intent to deceive the US Patent and Trademark Office (PTO). Inline Packaging, LLC v. Graphic Packaging International, LLC, Case No. 18-3167 (8th Cir. June 18, 2020) (Smith, J.).

Inline Packaging and Graphic Packaging are manufacturers of susceptor packaging, a specialized food packaging used for microwaving frozen foods. Graphic developed the susceptor design in partnership with Nestlé in 2005. The packaging was redesigned from a prior patent obtained several years earlier. Although Graphic’s computer-aided design drafter was listed as the sole inventor of the redesigned packaging claimed in the asserted patent, Nestlé’s engineer provided feedback that was implemented into the design, including the addition and deletion of certain features of the packaging.

In 2014, Nestlé held an auction to select the next manufacturer of its susceptor packaging. Nestlé originally selected Inline as the supplier of its susceptor packaging, but later awarded 90% of the susceptor packaging business to Graphic after Graphic notified Nestlé that Inline would likely infringe on Graphic’s patents. In June 2015, Graphic initiated patent litigation against Inline. In July 2015, Inline brought an antitrust suit against Graphic alleging that Graphic monopolized the susceptor packaging market using anticompetitive practices in violation of federal and state antitrust laws. To support its antitrust claims, Inline alleged that Graphic fraudulently procured the asserted patents, made baseless litigation threats and engaged in predatory discount bundling through the use of multi-year supply agreements. At the time the lawsuit was initiated, Graphic was the dominant supplier of susceptor packaging, with an almost 95% share of the US market. The district court granted summary judgment in favor of Graphic, dismissing Inline’s claims. Inline appealed.

The Eighth Circuit reviews grants of summary judgment de novo to determine whether a genuine dispute of material fact exists and whether judgment is entitled as a matter of law. Here, all inferences were viewed in the light most favorable to Inline. Section 2 of the Sherman Act prohibits monopolizing, or attempting to monopolize, any part of the trade or commerce among the several states. To prove a violation of Section 2, a claimant must show that an entity possessed monopoly power in the relevant market and willfully acquired or maintained such monopoly power through anticompetitive conduct rather than as the result of fair competition (e.g., by means of a superior product or business acumen).

The Eighth Circuit first considered whether Graphic fraudulently procured the asserted patents. Patent fraud, also known as Walker Process fraud, can support a monopolization claim where the defendant procured the patent at issue by knowing and willful fraud on the PTO, or maintained and enforced the patent with knowledge of the fraudulent manner in which it was obtained. Knowing and willful fraud requires an intent to deceive or inequitable conduct. The Court reasoned that this standard requires clear and convincing [...]

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PTAB Designates Two Opinions Precedential and One Opinion Informative, Further Clarifying the Scope of the Board’s Discretion under § 325(d) to Decline Institution

by Paul Devinsky | Apr 9, 2020 | America Invents Act, Patents

Addressing the scope of the Patent Trial and Appeal Board’s (“Board”) discretion under 35 U.S.C. § 325(d) to deny institution, the Board designated three opinions as precedential or informative.

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Administrative Patent Judges – You’re Fired (At Will and Without Cause)

by McDermott Will & Emery | Apr 2, 2020 | Patents

The en banc US Court of Appeals for the Federal Circuit declined to review its October 2019 panel decision holding the appointment of administrative patent judges (APJs) at the US Patent and Trademark Office (PTO) unconstitutional because APJs are appointed as if they are “inferior officers” but vested with authority that is reserved for Senate-confirmed “principal officers” under the Constitution’s Appointments Clause. Arthrex, Inc. v. Smith & Nephew, Inc., Case No. 18-2140 (Fed. Cir. Mar. 23, 2020) (per curiam) (Moore, J., joined by O’Malley, Reyna and Chen, JJ., concurring) (Dyk, J., joined by Newman, Wallach and Hughes, JJ., dissenting).

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2019 IP Law Year in Review: Patents

by Paul Devinsky | Feb 20, 2020 | Patents

Executive Summary

2019 was another important year in intellectual property law that resulted in hundreds of decisions by the courts and Patent Trial and Appeal Board (PTAB) that may affect your company’s litigation, patent prosecution or business strategy. This special report on patents discusses some of the most important cases from 2019 from the US Supreme Court, the US Court of Appeal for the Federal Circuit and the PTAB.

On January 22, 2019, the Supreme Court addressed in Helsinn Healthcare S.A. v Teva Pharmaceuticals, USA, Inc. the question of whether, under the America Invents Act (AIA), an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention. In a unanimous decision authored by Justice Clarence Thomas, the Supreme Court concluded that such a sale qualifies as prior art.

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Cross-Appeals Fail to Strike a Chord

by Tessa Kroll | May 2, 2024 | Patents

In the latest development in the ongoing litigation saga between competitors Sonos and Google, the US Court of Appeals for the Federal Circuit affirmed the US International Trade Commission’s determination that the original accused audio players and controllers infringed the asserted patents while redesigned products did not. Sonos, Inc. v. Int’l Trade Comm’n, Case No. 22-1421 (Fed. Cir. Apr. 8, 2024) (Stark, Dyk, Reyna, JJ.) (nonprecedential).

Sonos filed a complaint against Google at the Commission, asserting that Google’s importation of certain audio players and controllers infringed Sonos’s patents generally directed to connecting and controlling wireless speakers. The chief administrative law judge made an initial determination that Google’s originally accused products infringed each of the asserted patents but also found that Google’s redesigned products were noninfringing alternatives. After declining the parties’ petitions for review, the Commission issued a final determination adopting the chief administrative law judge’s initial determination and entered a limited exclusion order. Sonos appealed the Commission’s determination concerning the redesigned products, and Google cross-appealed the Commission’s determination concerning the original products.

Sonos argued that the Commission misconstrued disputed claim terms and lacked substantial evidence for its noninfringement findings. First, Sonos argued that the Commission misconstrued claim language reciting “at least a second message containing network configuration parameters,” which “comprise an identifier of the secure WLAN . . . and a security key.” The Commission construed this language as requiring a single second message with both the claimed identifier and security key while Sonos contended that the claim language contemplated multiple second messages that collectively contain the identifier and security key. The Federal Circuit disagreed with Sonos, noting that the specification provided strong support for the Commission’s construction. Because Google’s redesigned product transmitted the identifier and the key in separate messages, the Federal Circuit affirmed the Commission’s conclusion that Google did not infringe.

Sonos next took issue with the Commission’s determination that Google’s redesigned product, which included an incrementing integer counter for synchronizing playback among devices, did not infringe a claim requiring synchronization through “time clock information.” While Sonos framed the issue as one of claim construction, the Federal Circuit reasoned that it was actually a factual issue (whether the accused redesign infringed), which is reviewed for substantial evidence. Because Google’s experts explained that an incrementing counter does not represent a time value, the Court concluded that the Commission’s determination was supported by substantial evidence.

Finally, Sonos contested the Commission’s construction of “equalization” as requiring “alteration of the relative strength of certain frequency ranges in the audio data” by adjusting certain properties of a speaker driver, adjusting amplifier gain in a playback device or using a filter. Finding this construction too narrow, Sonos argued that “equalization” should include any modification to output audio data, including the changing of a channel output without altering strengths of a frequency range. The Federal Circuit agreed with the Commission’s construction, which was based on expert testimony and dictionaries demonstrating that “equalization” is a well-known audio technique used to enhance or diminish specific frequency ranges. [...]

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Unclean Hands Aren’t Just for Toddlers

by Jacob Michael Bass | Apr 25, 2024 | Patents

In an action involving manufacturers of a self-sealing dining mat for toddlers, the US Court of Appeals for the Federal Circuit affirmed a district court’s finding that the defendants were barred from obtaining relief on their counterclaims under the unclean hands doctrine, thereby vacating the district court’s other findings on inequitable conduct, obviousness, attorneys’ fees and costs. Luv N’ Care, Ltd. et al. v. Laurain et al., Case No. 22-1905 (Fed. Cir. Apr. 12, 2024) (Reyna, Hughes, Stark, JJ.)

Luv N’ Care and Nouri E. Hakim (collectively, LNC) filed suit against Lindsey Laurain and Eazy-PZ (EZPZ), asserting various claims for unfair competition under the Lanham Act and Louisiana law. LNC also sought declaratory judgment that EZPZ’s design patent was invalid, unenforceable and not infringed. After the suit was filed, the US Patent & Trademark Office (PTO) issued Laurain a utility patent directed toward self-sealing dining mats. Laurain subsequently assigned her rights to EZPZ, which then asserted counterclaims for utility patent, design patent and trademark infringement.

Following discovery, the district court granted LNC’s motion for summary judgment, finding all claims of EZPZ’s utility patent as obvious in view of three prior art references. EZPZ moved for reconsideration, which the district court denied, indicating that a “ruling providing further reasoning will follow in due course.” Before any such ruling issued, the PTO issued an ex parte reexamination certificate confirming the patentability of the utility patent claims two days before the district court’s bench trial began.

EZPZ did not provide this reexam certificate to the district court prior to the bench trial. During the bench trial, the district court found that EZPZ had not committed inequitable conduct but that EZPZ’s litigation conduct constituted unclean hands. After the district court entered judgment, EZPZ moved for reconsideration of summary judgment based on the ex parte reexamination certificate. The district court denied this motion and found that the evidence did not compel alteration of the prior ruling that the utility patent was invalid. It also denied LNC’s motion for attorneys’ fees and costs. EZPZ appealed.

The Federal Circuit affirmed the unclean hands determination but vacated the district court’s rulings on inequitable conduct, invalidity, attorneys’ fees and costs. As to unclean hands, the Court reasoned that EZPZ failed to disclose patent applications related to the utility patent until well after the close of discovery and dispositive motion practice. EZPZ also blocked LNC’s efforts to discover Laurain’s prior art searches by falsely claiming that she had conducted no such searches and that all responsive documents had been produced. It further found that EZPZ witnesses, including Laurain and EZPZ’s former outside counsel, repeatedly gave evasive testimony during depositions and at trial. The Court affirmed the district court’s determination that EZPZ’s misconduct bore an immediate and necessary connection to EZPZ’s claims for infringement because the undisclosed material was directly relevant to the development of LNC’s litigation strategy and undermined LNC’s ability to press its invalidity and unenforceability challenges. The Court found no clear error in the district court’s reasoning that [...]

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Sole Searching: Trade Dress Hopes Booted as Functional, Nondistinctive

by Keval Amin | Apr 25, 2024 | Trademarks

The US Court of Appeals for the Fourth Circuit affirmed a district court’s summary judgment grant in a trademark dispute, finding that the district court did not err in concluding that a subset of design elements lacked distinctiveness in the public’s view. TBL Licensing, LLC v. Katherine Vidal, Director of the United States Patent and Trademark Office, Case No. 23-1150 (4th Cir. Apr. 15, 2024) (Quattlebaum, Gregory, Benjamin, JJ.)

TBL Licensing is commonly known as Timberland, the prominent footwear manufacturer. Timberland tried to register specific design elements of its popular boot as protected trade dress with the US Patent & Trademark Office (PTO). In its application, Timberland provided a detailed written description of the boot design elements it sought to register as protectable trade dress. Timberland also included a drawing of these design elements.

The PTO rejected Timberland’s application, finding that the design was functional and lacked distinctiveness. Timberland appealed to the Trademark Trial & Appeal Board, which affirmed. Timberland then challenged the Board’s decision in the US District Court for the Eastern District of Virginia. The district court granted summary judgment in favor of the PTO because Timberland’s design was functional and had not acquired distinctiveness. Timberland appealed.

Timberland argued that the district court improperly segmented the design during its functionality analysis. Timberland argued that the district court failed to meaningfully consider the design as a whole, and even if it did, the court erred in considering specific factors, including the availability of alternative designs and the design’s simplicity in manufacturing. The court also relied on inapposite patents and advertisements as evidence to support its functionality finding, an analysis that Timberland argued was improper.

The Fourth Circuit affirmed the district court’s decision. While acknowledging the potential error in the district court’s failure to analyze the design holistically, the Court ultimately found that the limited design elements Timberland sought to register lacked secondary meaning – a crucial element for trade dress protection. The Court employed a secondary meaning analysis to assess public perception of Timberland’s design and considered various factors, including advertising expenditures, consumer studies, sales success, unsolicited media coverage, attempts at imitation and length of exclusive use.

Applying each factor, the Fourth Circuit determined that the district court did not clearly err in finding that the design elements lacked distinctiveness. The Court explained that the district court highlighted flaws in Timberland’s consumer survey, noting suggestive questions and a lack of focus on the claimed design features. The district court also emphasized that Timberland’s advertising expenditures did not effectively link the claimed design features with Timberland in consumers’ minds. Timberland’s arguments regarding sales success, media coverage and attempts at plagiarism were also found insufficient to establish secondary meaning. Lastly, the presence of similar-looking boots from other manufacturers undermined Timberland’s claim of exclusivity in using the design.

Lacking direct consumer survey evidence, the Fourth Circuit determined that Timberland’s circumstantial evidence failed to [...]

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