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Pink Is Not the New Black: See Functionality Doctrine

by | Jan 16, 2025 |

The US Court of Appeals for the Federal Circuit affirmed a Trademark Trial & Appeal Board decision canceling trademarks for the color pink for ceramic hip components, stating that substantial evidence supported the Board’s findings that the color pink as used in the ceramic components was functional. CeramTec GmbH v. CoorsTek Bioceramics LLC, Case No. 23-1502 (Fed. Cir. Jan. 3, 2025) (Lourie, Taranto, Stark, JJ.)

Trademarks cannot be functional. The functionality doctrine prevents the registration of useful product features as trademarks. As explained by the Supreme Court (1995) in Qualitex v. Jacobson Prods.:

The functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm’s reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature. It is the province of patent law, not trademark law, to encourage invention by granting inventors a monopoly over new product designs or functions for a limited time, 35 U.S.C. §§ 154, 173, after which competitors are free to use the innovation. If a product’s functional features could be used as trademarks, however, a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever (because trademarks may be renewed in perpetuity).

CeramTec manufactures ceramic hip components made from zirconia-toughened alumina (ZTA) ceramic containing chromium oxide (chromia). The addition of chromia gives the ceramic a characteristic pink color. CeramTec obtained trademarks for the pink color as used in these components. CoorsTek Bioceramics, a competitor, challenged the trademarks, arguing that the pink color of the ceramic was functional. The Board agreed, finding that the pink color was functional because it resulted from the addition of chromia, which provided material benefits to the ceramic, such as increased hardness. CeramTec appealed.

The Federal Circuit applied the four-factor Morton-Norwich (CCPA 1982) test to determine functionality:

  • Existence of a utility patent
  • Advertising materials
  • Availability of functionally equivalent designs
  • Comparatively simple or cheap manufacture.

The Federal Circuit found the first and second Morton-Norwich prongs were strongly in CoorsTek’s favor, as CeramTec held multiple patents that disclosed the functional benefits of chromia, such as toughness, hardness, and stability of the ZTA ceramic. Similarly, the Court found that CeramTec had multiple advertising materials that promoted its product’s functional advantages.

The Federal Circuit found that there was no evidence of alternative designs that were functionally equivalent to the pink ZTA ceramic, rendering the third factor neutral. The Court also found the fourth factor neutral because there was conflicting evidence regarding whether chromia reduced manufacturing costs.

Finally, CeramTec argued that CoorsTek should be precluded from challenging the trademarks based on the doctrine of unclean hands. The Federal Circuit acknowledged that the Board spoke too strongly in suggesting that the unclean hands defense is categorically unavailable in functionality proceedings but found any error to be harmless. The Court confirmed that the Board had adequately considered the defense and found it inapplicable in this case.



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Bit Swap: Motivation to Modify Prior Art Needn’t Be Inventor’s Motivation

by | Jan 16, 2025 |

Addressing the issue of obviousness, the US Court of Appeals for the Federal Circuit reversed a Patent Trial & Appeal Board decision, finding that the challenged patent claims were obvious because a person of ordinary skill in the art (POSITA) would have been motivated to switch two specific information bits in a 20-bit codeword to improve performance. Honeywell Int’l Inc. v. 3G Licensing, S.A., Case Nos. 23-1354; -1384; -1407 (Fed. Cir. Jan. 2, 2025) (Dyk, Chen, JJ.) (Stoll, J., dissenting).

3G Licensing owns a patent concerning a coding method for transmitting a channel quality indicator (CQI) in mobile communication systems. The CQI, a five-bit binary integer (0 to 30) is sent from user equipment, such as a cell phone, to a base station to indicate cellular connection quality. Base stations adjust data rates using adaptive modulation and coding, assigning higher rates to strong signals and lower rates to weaker ones. CQI accuracy is critical for maximizing data transmission efficiency and ensuring recovery of the original message despite transmission errors.

The challenged claims of the 3G patent relate to a CQI code designed to maximize protection of the most significant bit (MSB) to reduce the impact of transmission errors. The prior art disclosed a method and a basis sequence table that provided additional protection to the MSB, minimizing root-mean-square error. However, the claimed invention differed in that it required swapping the last two bits of the basis sequence table. The Board found that a skilled artisan would not have been motivated to make this modification to enhance MSB protection, nor would a skilled artisan have deemed it desirable. Honeywell appealed.

The Federal Circuit reversed, finding the claims obvious for four primary reasons. First, the Court determined that the Board incorrectly concluded that a POSITA would not have been motivated to swap the last two bits to improve MSB protection. The Court emphasized that the motivation to modify prior art does not need to align with the inventor’s motivation. As a result, the Board’s reasoning that minimizing root-mean-square error was not the patent’s primary purpose should not have been a primary consideration.

Second, the Federal Circuit found that prior art explicitly taught the importance of protecting the MSB through redundancy. A skilled artisan would have understood that swapping the two bits, as claimed, would add redundancy and enhance protection. Honeywell’s expert testimony further supported the conclusion that the prior art would have provided the requisite motivation to arrive at the claimed invention, and 3G’s expert did not dispute that the swap increased MSB protection.

Third, the Federal Circuit concluded that the Board improperly conflated obviousness with anticipation by requiring that the prior art disclose swapping the two bits. Anticipation requires the prior art to specifically disclose the claimed modification, but obviousness does not. The Court found that the Board erroneously treated the two standards as interchangeable.

Finally, the Federal Circuit found that the Board wrongly required that the claimed basis sequence table represent the preferred or most optimal combination. As the Court [...]

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Transparency Is the Best Medicine: Device Parts Don’t Justify Orange Book Listing

by | Jan 9, 2025 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s delisting of patents from the Orange Book because the patent claims did not “claim the drug that was approved” or the active ingredient of the drug that was approved. Teva Branded Pharmaceutical Products R&D, Inc., et al. v. Amneal Pharmaceuticals of New York, LLC, et al., Case No. 24-1936 (Fed. Cir. Dec. 20, 2024) (Prost, Taranto, Hughes, JJ.)

Teva owns the product that Amneal sought to delist, ProAir® HFA Inhalation Aerosol. The ProAir® HFA combines albuterol sulfate (the active ingredient) with a propellant and an inhaler device to administer the drug. Although the US Food and Drug Administration (FDA) approved Teva’s ProAir® HFA as a drug, the ProAir® HFA contains both drug and device components (the device components being the physical machinery of the inhaler). Teva lists nine nonexpired patents in the Orange Book for its ProAir® HFA.

Amneal filed an abbreviated new drug application (ANDA) seeking approval to market a generic version of the ProAir® HFA that uses the same active ingredient. Amneal asserted that it did not infringe Teva’s nine patents listed for the ProAir® HFA. Teva sued for infringement of six of those patents. Amneal filed counterclaims for antitrust and for a declaratory judgment of noninfringement and invalidity and sought an order requiring Teva to delist the five patents that it asserted against Amneal. Amneal moved for judgment on the pleadings on the ground that Teva improperly listed the asserted patents. The district court granted Amneal’s motion, concluding that Teva’s patents “do not claim the drug for which the applicant submitted the application.” The district court ordered Teva to delist its patents from the Orange Book. Teva appealed.

On appeal, Teva argued that a patent can be listed in the Orange Book if the claimed invention is found in any part of its new drug application (NDA) product. Teva argued that a patent “claims the drug” if the claim reads on the approved drug (i.e., if the NDA product infringes that claim). Teva also argued that according to the Federal Food, Drug, and Cosmetic Act’s broad definition of the word “drug,” any component of an article that can treat disease meets the statutory definition of a “drug.” With this interpretation, Teva’s patents “claim the drug” as the claim dose counter and canister components of the ProAir® HFA.

The Federal Circuit rejected Teva’s interpretation as overbroad because it would allow the “listing of far more patents than Congress has indicated.” The Court rejected Teva’s argument that a patent claiming any component of a drug is listable, explaining that Teva cannot list its patents just because they claim the dose counter and canister parts of the ProAir® HFA.

The Federal Circuit also rejected Teva’s argument that even if Teva’s statutory arguments were rejected, the Federal Circuit must remand the case to the district court to construe the claims. In doing so, the Court rejected Teva’s interpretation of the word “claims” in the listing and counterclaim/delisting provisions, [...]

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Motivation MIA? Federal Circuit Sends IPR Back to the Drawing Board

by | Jan 9, 2025 |

The US Court of Appeals for the Federal Circuit vacated and remanded a Patent Trial & Appeal Board decision, finding that the Board erred by failing to explain its holding and reasoning regarding a motivation to combine prior art references. Palo Alto Networks, Inc. v. Centripetal Networks, LLC, Case No. 23-1636 (Fed. Cir. Dec. 16, 2024) (Stoll, Dyk, Stark, JJ.)

Centripetal Networks owns a patent directed to correlating packets in communications networks, introducing an innovative system designed to enhance network security. The patent focuses on packets (small data segments that collectively form larger communications) and their correlation across network boundaries.

Palo Alto Networks challenged the patent’s validity in an inter partes review (IPR) and argued its obviousness based on three prior art references. The first reference described a system using hashing techniques to identify packets traversing network address translation boundaries and teaching how to correlate packets across such boundaries to identify hosts transmitting or receiving them. The second reference detailed methods for detecting unauthorized traffic directed to unused IP addresses, notifying administrators of potential threats, and enabling automated responses, such as blocking or filtering malicious traffic. The reference taught notifying administrators how to manage packets involved in malicious activity after they crossed a network boundary.

Palo Alto argued that combining the packet correlation techniques of the first reference with the notification mechanisms of the second addressed a key claim limitation of the challenged patent. Palo Alto contended that transmitting an indication of a malicious host, as taught by the second reference, naturally followed from the correlation system described in the first. However, the Board found that Palo Alto failed to provide sufficient evidence or argument to show that a person of ordinary skill in the art (POSITA) would recognize the claimed responsiveness between the first reference’s packet correlation and the second reference’s notification mechanisms. Palo Alto appealed.

The Federal Circuit vacated and remanded the Board’s decision, finding that the Board erred by failing to clearly articulate its rationale regarding the motivation to combine the prior art references and whether their combination satisfied the critical limitation of the challenged patent claim. The Court emphasized that the proper inquiry in an obviousness analysis is not whether each reference individually discloses all claim elements but whether their combination would have rendered the invention obvious to a POSITA.

Palo Alto maintained that the Board did not dispute the existence of a motivation to combine and improperly searched for a “bridge” solely within the two references. Centripetal countered that Palo Alto had not established a motivation or provided evidence of a necessary connection – or “bridge” – between the prior art and the claimed invention.

The Federal Circuit determined that the Board’s decision lacked a definitive finding on whether a POSITA would have been motivated to combine the first reference’s correlation techniques with the second reference’s notification step. The Court noted that Palo Alto presented logical and evidentiary support as to why such a combination would make sense, arguing that without a notification step, the [...]

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For Deterrence: Inherent Power to the Rescue to Punish Meritless Lawsuit

by | Dec 19, 2024 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to use its inherent power to award deterrence sanctions for filing a nuisance patent infringement lawsuit. PS Products Inc. v. Panther Trading Co. Inc., Case No. 2023-1665 (Fed. Cir. Dec. 6, 2024) (Moore, Stoll, Cunningham, JJ.)

PSP filed a design patent infringement lawsuit against Panther. PSP voluntarily dismissed the case with prejudice after Panther threatened to seek Rule 11 sanctions for the filing of a frivolous lawsuit. After the case was dismissed, Panther filed a motion seeking its attorneys’ fees under 35 U.S.C. § 285 and $100,000 in deterrence sanctions under the court’s inherent power. The district court found the case exceptional under § 285 and awarded Panther its attorneys’ fees. The district court also found PSP and its counsel joint and severally liable for $25,000 in deterrence sanctions. PSP did not appeal the finding that the case was exceptional or the decision to grant attorneys’ fees, but it did appeal the award of deterrence sanctions under the court’s inherent power.

Design patent infringement requires showing that an ordinary observer would find the accused product and claimed design “substantially the same” such that the observer would be deceived into believing that the accused product was the patented design. However, in some cases the accused product and the patented design are “plainly dissimilar” such that it would be clear to an ordinary observer the two designs were not “substantially the same.”

The Federal Circuit affirmed the district court’s award of deterrence sanctions, finding that the district court did not err by inferring PSP’s bad faith conduct based on the clear lack of legal merit of the case against Panther. The Court found that Panther’s accused product was “plainly dissimilar” to the patented design (shown below), such that PSP’s case was a nuisance lawsuit.

The Federal Circuit found that bad faith was also reasonably inferred based on PSP’s history of filing 25 meritless lawsuits in the same district, even though the district court did not analyze each suit. PSP cited the general venue statute in all 25 lawsuits rather than the required patent-specific venue statute, and PSP did not have proper venue in the lawsuit against Panther.

The Federal Circuit also found no abuse of discretion when the district court imposed sanctions under its inherent power. Rule 11 sanctions were unavailable since the case was already dismissed, but the district court had no other mechanism to sanction PSP’s bad faith conduct of filing multiple meritless lawsuits except the court’s inherent power. Finally, the Court found that imposing deterrence sanctions under the district court’s inherent power was proper even when it had already awarded attorneys’ fees and costs under § 285 because the statute does not preclude separate sanctions.

The Federal Circuit declined to award Panther its attorneys’ fees for the appeal because while PSP’s [...]

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New Year, New Fees: PTO Issues 2025 Fee Schedule

by | Dec 5, 2024 |

The US Patent & Trademark Office (PTO) issued its final rule setting and adjusting patent fees that will take effect on January 19, 2025. 89 Fed. Reg. 91898 (Nov. 20, 2024).

The final rule sets or adjusts 433 patent fees for undiscounted, small, and micro entities, including the introduction of 52 new fees. The fee adjustments are grouped into three categories:

  • Across-the-board adjustment to patent fees.
  • Adjustment to front-end fees.
  • Targeted fees.

Fees not covered by the targeted adjustments will increase by approximately 7.5%. Front-end fees to obtain a patent (i.e., filing, search, examination, and issue fees) are set to increase by an additional 2.5% on top of the 7.5% across-the-board adjustment. Targeted adjustments include increasing fees related to continuing applications, design patent applications, filing excess claims, extensions of time for provisional applications, information disclosure statement sizes, patent term adjustments, patent term extensions, requests for continued examinations, suspension of actions, terminal disclaimers, unintentional delay petitions, and Requests for Director Review of a Patent Trial & Appeal Board decision.

More information, including the new fee schedule, is available on the PTO’s website.



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PTO Proposes Additional Audits to Put “Specimen Farms” Out to Pasture

by | Nov 14, 2024 |

In response to reports that some registrants use fraudulent specimens to prove continued use in commerce, the US Patent & Trademark Office (PTO) proposed an update to its post-registration audit process. Changes in Post-Registration Audit Selection for Affidavits or Declarations of Use, Continued Use, or Excusable Nonuse in Trademark Cases, 89 Fed. Reg. 85,435 (Oct. 28, 2024).

Since its institution in 2017, the PTO’s post-registration audit process has been essentially random. Pursuant to Section 8 of the Trademark Act, trademark owners are required to file documentation in the form of affidavits of continued use indicating that the marks remain in use in connection with goods or services covered by the registration. In turn, the public relies on the trademark register for notice of marks that may be available for use and registration. The PTO conducts random audits of submitted documentation to ensure its reliability.

Since encountering various filings that revealed “systemic efforts to subvert” a trademark’s use in commerce requirement, the PTO has taken steps to expand its audit program. For example, in 2019, the office amended its examination procedures to highlight “digitally created/altered or mockup specimens” that fraudulently indicate continued use in commerce. In 2021, the PTO became aware of “specimen farms,” which are websites designed to create the illusion of commerce without providing actual sales. To combat deceptive maintenance of obsolete marks, the PTO will no longer perform only randomized audits but will also conduct audits “directed” at items that show tell-tale signs of digital alteration or specimen farm website use.

The objective of the directed audit program is “to promote the accuracy and integrity” of the trademark register. This proposed policy is open for public comments on the Federal eRulemaking Portal until November 27, 2024.



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No Need to Call for Backup at the PTAB (Sometimes)

by | Oct 24, 2024 |

The US Patent & Trademark Office (PTO) published a final rule entitled, Expanding Opportunities to Appear Before the Patent Trial & Appeal Board; 89 Fed. Reg. 82172 (Oct. 10, 2024).

The new rule, set to take effect on November 12, 2024, will apply to America Invents Act (AIA) proceedings, which, until now, have required that a party designate lead counsel and backup counsel. Lead counsel was required to be a registered practitioner, and non-registered practitioners could be backup counsel upon a showing of good cause.

The PTO filed a notice of proposed rulemaking on February 21, 2024, in which it proposed amending the regulations to allow the Board to permit a party to proceed without separate backup counsel as long as lead counsel is a registered practitioner. The PTO also proposed to allow a non-registered practitioner admitted pro hac vice to serve as either lead or backup counsel for a party as long as a registered practitioner was also counsel of record for that party, and to allow a non-registered practitioner who was previously recognized pro hac vice in an AIA proceeding to be considered a Board-recognized practitioner and eligible for automatic pro hac vice admission in subsequent proceedings via a simplified and expedited process.

Citing the benefits of flexibility where good cause is shown while ensuring parties are well represented, the PTO has now issued a final rule that will allow parties to proceed without backup counsel. The PTO noted that a party may demonstrate good cause, for example, by demonstrating lack of financial resources to retain both lead and backup counsel. However, the Board will question any claim of lack of financial resources where a party has also elected to pursue litigation involving the challenged patents in other forums. As a result, this rule is more likely to benefit patentees than patent challengers. The PTO also explained that the good cause analysis will center on the party, not on the counsel’s preferences. For example, the PTO is unlikely to find good cause where the lead counsel is a solo practitioner who prefers to work alone.

The PTO also issued a final rule simplifying the process for attorneys who were previously admitted to practice before the Board pro hac vice to gain admission for subsequent matters and to do so without a fee. Any attorney seeking subsequent pro hac vice admission must file a declaration or affidavit stating that all the requirements set out by the Board are met. Opposing counsel also has the opportunity to object.

Finally, the PTO rejected an amendment that would allow non-registered attorneys to serve as lead counsel.



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Don’t Tread on Illinois’ Absolute Litigation Privilege

by | Oct 17, 2024 |

Addressing when Illinois law’s “absolute litigation privilege” bars certain counterclaims, the US Court of Appeals for the Federal Circuit affirmed a district court’s summary judgment finding that the plaintiff lacked a valid trade dress and reversed the district court’s decision that declined to apply the absolute litigation privilege as a complete defense to all of the alleged infringer’s counterclaims. Toyo Tire Corp v. Atturo Tire Corp., Case No. 22-1817 (Fed. Cir. Oct. 4, 2024) (Moore, Clevenger, Chen, JJ.) (nonprecedential).

Toyo and Atturo are competitors in the tire design business. After perceiving widespread copying of its tire designs, Toyo filed a district court action asserting design patent infringement and trade dress infringement against Atturo. Atturo asserted counterclaims, including false designation of origin under the Lanham Act and several state law counterclaims. The district court eventually dismissed with prejudice Toyo’s design patent infringement claims and proceeded with just the trade dress infringement claim.

A primary issue in the case was the description of the asserted trade dress. In its complaint, Toyo identified its trade dress merely as “the overall appearance” of its line of tires. Over the course of discovery, disputes arose concerning Toyo’s failure to distinctly describe its asserted trade dress. Toyo answered an interrogatory that requested this information with a non-limiting definition. The district court compelled Toyo to provide a more specific answer, which Toyo did by providing highlighted images.

Toyo’s fact witness was subsequently deposed under Fed. R. Civ. P. 30(b)(6) and gave answers that were inconsistent with Toyo’s interrogatory response. This led the district court to compel more testimony on what exactly the asserted trade dress contained, and which tire features met the definition of the trade dress, and which did not. On the advice of counsel, the corporate witness declined to answer more than 100 different questions. Toyo’s inability to describe its trade dress continued into expert discovery. When it served its expert reports, Toyo introduced yet another aspect of its trade dress – that the trade dress only included two-dimensional aspects. Toyo introduced this new argument to support the requirement that to qualify as trade dress the designated feature must be nonfunctional.

Atturo moved for sanctions. In granting the sanctions, the district court barred Toyo from asserting only the two-dimensional aspects of the trade dress, precluding Toyo from continually shifting its position because doing so “would effectively lead to trial by ambush.” Having struck the only argument that could save the trade dress from invalidity, the district court granted summary judgment of invalidity on both functionality and lack of secondary meaning.

Trial then proceeded only on Atturo’s counterclaims. The jury returned a verdict in favor of Atturo on six of the counterclaims, awarding $10 million in compensatory damages and $100 million in punitive damages. The district court set aside the jury verdict as it related to counterclaims of defamation and liability under the Illinois Deceptive Trade Practices Act. Both parties appealed.

The Federal Circuit affirmed the district court’s issuance of discovery sanctions, and the grant of [...]

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When Can Same Claim Limitation Have Different Meanings? When It’s Functional, Of Course

by | Sep 26, 2024 |

Addressing for the first time whether a functional limitation must carry the same meaning in all claims, the US Court of Appeals for the Federal Circuit determined that it need not, vacating a district court decision to the contrary. Vascular Sol. LLC v. Medtronic, Inc., Case No. 2024-1398 (Fed. Cir. Sept. 16, 2024) (Moore, Prost, JJ.; Mazzant, Dist. J., by designation).

The seven patents asserted by Teleflex syin this case all come from a common application and are directed to a “coaxial guide catheter that is deliverable through standard guide catheters by utilizing a guidewire rail segment to permit delivery without blocking use of the guide catheter.” The asserted patents all share a common specification. However, the asserted claims differ in how they refer to the “side opening.” Some claims include the side opening as part of the “substantially rigid portion/segment” while other claims recite that the side opening is separate and distal to the “substantially rigid portion/segment.”

This case has a long procedural history involving an initial preliminary injunction motion and multiple inter partes reviews (IPRs). At the second preliminary injunction stage, Medtronic and the district court grouped the asserted limitations into two mutually exclusive groups:

  • Group One, which included the “substantially rigid portion/segment” claim limitation.
  • Group Two, which “required that the side opening not be in the substantially rigid portion” (emphasis supplied).

In denying Medtronic’s preliminary injunction motion, the district court questioned “how a skilled artisan could possibly be expected to understand the scope of a patent when the same device could simultaneously infringe two mutually exclusive claims within that patent.”

The district court then proceeded to claim construction. It rejected both parties’ initial constructions and appointed an independent expert – former US Patent & Trademark Office Director Andrei Iancu – to propose a construction. Teleflex argued that Iancu should adopt a split construction (i.e., one construction for the Group One limitations and another construction for the Group Two limitations). Medtronic argued that the claims were indefinite. Iancu rejected both proposed constructions but agreed with the district court on the mutual exclusivity of the two groups. The district court determined that all claims that included the “substantially rigid portion/segment” were indefinite, and since all the asserted claims included that term, the parties stipulated to final judgment. Teleflex appealed.

Teleflex argued that the district court erred in determining that the boundary of the substantially rigid portion must be the same for all claims. Medtronic argued that the claims were indefinite.

The Federal Circuit concluded that the district court erred when it determined that the Group One and Group Two limitations were mutually exclusive and indefinite. The Federal Circuit cautioned that affirming the district court’s conclusion would mean that claims in a patent cannot vary in how they claim the disclosed subject matter and that independent claims must be entirely consistent with other independent claims, neither of which is a restriction in how patentees may claim subject matter. The Federal Circuit explained that at the claim construction stage [...]

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