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House Rules: Remote Gambling Activity Claims Go Bust

by | Jul 18, 2024 |

The US Court of Appeals for the Federal Circuit applied the Alice/Mayo framework to assess whether claims directed to remote gambling were patent eligible under 35 U.S.C. § 101 and determined that the claims were directed to a patent-ineligible abstract idea and did not otherwise recite an inventive concept. Beteiro, LLC v. DraftKings Inc., Case Nos. 22-2275; -2277; -2278; -2279; -2281; -2283 (Fed. Cir. June 21, 2024) (Dyk, Prost, Stark, JJ.)

Beteiro owned several patents related to facilitating live gaming and/or gambling activity at a gaming venue remote from the user’s physical location so that a user can participate via a communication device away from the gaming venue location. In 2021 and 2022, Beteiro filed at least six patent infringement cases against the defendants. The district court granted the defendants’ motions to dismiss the claims on the grounds that the asserted claims were patent ineligible under § 101. Beteiro appealed.

The Federal Circuit agreed with the district court’s assessment of the claims under the first step of the Alice/Mayo framework and found that the claims “exhibit several features that are well-settled indicators of abstractness”:

  • The claims “broadly recited generic steps of a kind” frequently held to be abstract, such as “detecting information, generating and transmitting a notification based on the information, receiving a message (bet request), determining (whether the bet is allowed based on location data), and processing information (allowing or disallowing the bet).”
  • Claims like these, e., drafted with largely “result-focused functional language” without specifying how the purported invention achieves those results, are “almost always found to be ineligible.”
  • Citing earlier decisions, the Court found broadly analogous claims were abstract as involving methods of providing particularized information to individuals based on their locations. The Court also noted in a footnote that several district courts have found remote-gaming patents analogous to Beteiro’s patents ineligible.
  • The claimed methods were similar to “fundamental practices long prevalent,” an indicia that they are abstract and unpatentable. For example, the Federal Circuit referred to the district court’s analogy to real-world activities, including one step in the claims where “those accepting bets have always had to confirm that the bettor with whom they were dealing was located in a place where gambling was allowed.”

The Federal Circuit also agreed with the district court’s analysis of the second step of the Alice/Mayo framework and its conclusion that the claims failed to provide an inventive concept and “simply describe[d] a conventional business practice executed by generic computer components.” The Court disagreed with Beteiro’s argument that there was genuine dispute as to whether using geolocation and global positing as an “integral data point” in processing mobile wagers was conventional technology at the time of the earliest claimed priority date, 2002. Beteiro only briefly referred to conventional use of GPS in connection with several types of conventional computers but failed to describe differences between equipping GPS on a mobile phone versus any other described conventional computers. The asserted patents did not describe any advanced GPS mobile device technology [...]

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PTO Asks Whether Legislative Action for Experimental Use Exception Is Warranted

by | Jul 18, 2024 |

The US Patent & Trademark Office (PTO) issued a request for comments concerning the public’s views on the common law experimental use exception and whether Congress should enact a statutory experimental use exception. 89 Fed. Reg. 53963 (June 28, 2024).

The experimental use defense for alleged patent infringement has been part of US jurisprudence for more than 200 years. The current state of experimental use exception jurisprudence in the United States is set forth in Madey v. Duke University, 307 F.3d 1351 (Fed. Cir. 2002). In that case, the Federal Circuit proffered a “very narrow and strictly limited experimental use defense” prohibiting an alleged infringer from invoking such a defense for “use that is in any way commercial in nature” or “any conduct that is in keeping with the alleged infringer’s legitimate business, regardless of commercial implications.”

The Madey decision has been met with a mix of opinions, some arguing that the Federal Circuit’s construction encourages innovation and others arguing that it impedes innovation. Limited exemptions have been carved out in the US. For example, 35 U.S.C. § 271(e)(1) established a safe harbor (the Bolar exemption) allowing for the experimental use of a patented invention by parties to collect regulatory approval data for medical devices or drugs. The Plant Variety Protection Act also provides for exemptions allowing the use of protected plant varieties for research and breeding of new varieties.

While many European and Asian nations have statutory experimental use exceptions in place, legislative efforts for codifying a statutory experimental use exception in the US have thus far failed. With the intent to promote fair competition and innovation, the PTO seeks to revisit this issue by collecting the public’s views on the impact of the experimental use exception in all technology areas. Of particular interest, the PTO seeks comments on one or more topics, including:

  • How current US experimental use exception jurisprudence impacts investment and/or research and development in any field of technology.
  • Whether certain technologies are negatively affected by the current experimental use exception jurisprudence.
  • The impact that a statutory experimental use exception would have on the innovation and commercialization of new technologies with respect to research and development, ability to obtain funding, investment strategy, licensing of patents and patent applications, product development, sales (including downstream and upstream sales), competition, and patent enforcement and litigation.
  • The impact of current experimental use exception jurisprudence on decisions made with respect to filing, purchasing, licensing, selling or maintaining patent applications and patents in the US.
  • Reasons for adopting a statutory experimental use exception or maintaining the status quo.
  • How a statutory experimental use exception should be defined to ensure that patent rights are preserved.
  • Recommendations for enhancing and facilitating experimental research on patent inventions in the US.

When responding to the questions, commenters are further asked to identify whether they represent, for example:

  • An inventor, patent owner or investor.
  • A licensee or user of patented technology.
  • An entity representing inventors or patent owners (g., law firms).
  • A recipient of [...]

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European UPC Issues Its First Decisions on the Merits

by | Jul 18, 2024 | ,

Franz Kaldewei GmbH & Co. KG v. Bette GmbH & Co. KG

The Unified Patent Court (UPC) issued its first decision on the merits, granting the first-ever permanent injunction covering seven UPC member states. Franz Kaldewei GmbH & Co. KG v. Bette GmbH & Co. KG (Düsseldorf Local Division, July 3, 2024).

The UPC found that the asserted patent was invalid in its granted form due to obviousness but upheld as valid an auxiliary request on which the injunction is based. Among other things, the Düsseldorf Local Division discussed procedural lapses around a missed deadline (denying the defendant a submission of certain documents one day prior to the oral hearing), jointly hearing the infringement case, and a counterclaim for revocation and inventive step. In this regard, the Court proceeded pragmatically and flexibly, as the UPC Court of Appeal (CoA) did in 10x Genomics, but unlike the European Patent Office (EPO) with its focus on the closest prior art and building a problem-solution approach thereon.

The decision further dealt with claims for information on the scope of infringement, claims for recall or removal from the channels of commerce, and considerations against requiring security for enforcement of a judgment on the merits in the given case.

Regarding so-called contributory infringement (i.e., indirect use of the invention), the UPC held that there is a double territorial requirement: the offer and/or delivery of the essential element must take place within UPC territory, and the invention must also be used within UPC territory. The Court left open the question of whether it is sufficient that the offering/delivery exists in a member state and the invention is intended for direct use in another, different member state. Further case law will have to clarify this point. Regarding the prior use defense, it follows from the decision that there is no “UPC/European” prior use. The existence of a right of prior use must be asserted for each member state according to its national law, and the respective defendant must provide the relevant information for each country individually.

Practice Notes:

  • The UPC has shown that it is capable of dealing efficiently with both infringement and invalidity questions within the short timeframe it has set itself. The UPC delivered on its promise to issue a decision on the merits in just over a year and only a few weeks after the oral hearing.
  • Regarding claim interpretation, the Düsseldorf Local Division referred to the CoA’s decisions on February 26, 2024, and May 13, 2024, stating that the principles of Article 69 EPC apply to both validity and infringement proceedings.

DexCom, Inc. v. Abbott et al.

The day after the UPC’s decision on the merits in Franz Kaldewei granting a permanent injunction, the Paris Local Division delivered its first decision on the merits and declared the patent in suit invalid in 17 UPC member states. DexCom, Inc. v. Abbott et al. (Paris Local Division, July 4, 2024).

The Paris Local Division also ruled on both infringement and validity questions and [...]

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Is Pleading “Generic” Enough to Plead Inducement?

by | Jul 11, 2024 |

The US Court of Appeals for the Federal Circuit held that a branded pharmaceutical manufacturer properly pled a theory of inducement by alleging that the generic competitor promoted its product as “generic” to the branded product and referred to the branded product’s sales for patented uses. Amarin Pharma Inc. v. Hikma Pharmaceuticals USA Inc., Case No. 23-1169 (Fed. Cir. June 25, 2024) (Moore, Lourie, Albright, JJ.)

Amarin Pharmaceuticals sells the drug Vascepa, which the US Food and Drug Administration (FDA) approved for two uses:

  1. To treat severe hypertriglyceridemia.
  2. As an adjunct therapy to reduce certain cardiovascular risks.

In 2016, Hikma submitted an abbreviated new drug application (ANDA) to market a generic version of Vascepa, which at the time was only approved for treatment of severe hypertriglyceridemia. Hikma and Amarin then litigated patents covering Vascepa under the Hatch-Waxman Act, with Hikma invalidating the patent claims covering the severe hypertriglyceridemia indication. After Amarin obtained approval for its second indication, Hikma submitted to the FDA a “section viii carve out” (i.e., prescribing information that purposedly did not include the second indication). The FDA approved Hikma’s product, which was sold with a “skinny label.” After Hikma’s ANDA was approved, Hikma issued a series of press releases that referred to its product as a “generic” version of Vascepa, even though the product was not approved for the cardiovascular risk indication. The press releases also referred to Vascepa’s annual sales as approximately $1.1 billion – the amount of Vascepa scales for all uses – as well as its usage information.

Amarin sued Hikma again for patent infringement, this time claiming that Hikma induced infringement of patents covering the cardiovascular risk indication. The district court overruled the magistrate judge’s recommendation and concluded that Amarin’s complaint did not plead a plausible case of induced infringement. Amarin appealed.

The Federal Circuit reversed. First, it explained its view that the case was a “run-of-the-mill” inducement infringement case, rather than one governed by the Hatch-Waxman Act framework. Emphasizing the deferential plausibility standard applicable at the pleadings stage, the Court held that, combined with allegations that Hikma’s label included warnings that would promote infringement, Amarin’s averments about Hikma’s press releases were sufficient at this stage to plausibly claim that Hikma induced infringement of the cardiovascular risk limitation by its references to the branded product.

The Federal Circuit also rejected Hikma’s claim that a ruling in Amarin’s favor would “effectively eviscerate section viii carve-outs.” The Court explained that its ruling was an ordinary application of induced infringement that promotes scrutiny of generic companies’ communications for clarity and consistency.

Practice Note: This case continues the trend of inducement cases that has received renewed interest after GlaxoSmithKline v. Teva Pharmaceuticals. Branded pharmaceutical manufacturers may be emboldened to sue after launch based on theories of inducement where section viii carveouts were employed.



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What Makes a Trademark Case “Exceptional” in the Fifth Circuit?

by | Jul 11, 2024 |

The US Court of Appeals for the Fifth Circuit affirmed a senior party mark but found that the district court committed clear error in finding that a similar junior party mark was valid. The Fifth Circuit also found that the district court abused its discretion in awarding attorneys’ fees to the senior user. Appliance Liquidation Outlet, L.L.C. v. Axis Supply Corp., Case No. 23-50413 (5th Cir. June 21, 2024) (Smith, Haynes, Douglas, JJ.)

Appliance Liquidation Outlet (ALO), a decades-old appliance store in San Antonio, Texas, brought a trademark action under the Lanham Act and Texas law (which in all relevant aspects tracks the Lanham Act) against Axis Supply Corporation, another San Antonio appliance store that opened in 2021. Axis’s store and social media prominently featured the phrase “Appliance Liquidation”:

ALO noted that Axis’s opening happened to coincide with an influx of customers conflating ALO with Axis. ALO’s storefront had prominently displayed a banner reciting “Appliance Liquidation Outlet” for years:

Although ALO had never registered its mark, ALO had long engaged in a variety of promotional activities to raise brand recognition, including partnering with local sports teams and holding antique exhibitions and car shows.

Soon after Axis opened its store, ALO experienced a rush of customers who failed to differentiate between the stores and believed that ALO operated both. ALO requested that Axis stop using “Appliance Liquidation” and sued Axis in state court when Axis refused. Axis removed the dispute to the federal district court. After a bench trial, the district court held for ALO, enjoining Axis from using “Appliance Liquidation” and “Appliance Liquidation Outlet” and causing confusion between the two businesses. The district court also awarded attorneys’ fees under 15 U.S.C. § 1117(a) to ALO, finding that Axis’s decision to change its name only a week before trial (about 1.5 years into the dispute) amounted to litigating in an unreasonable manner. Axis appealed.

The Fifth Circuit affirmed the district court’s holding that Axis had infringed ALO’s “Appliance Liquidation Outlet” mark but assigned clear error to the district court’s finding that “Appliance Liquidation” was valid mark. The Fifth Circuit also found that the district court had abused its discretion in awarding attorneys’ fees to ALO.

With respect to the marks’ validity, the Fifth Circuit noted that both marks were unregistered and thus were not presumptively valid. The Court found that the record did not support the conclusion that “Appliance Liquidation” was a source identifier and thus found that it was not a valid mark. However, the Fifth Circuit was satisfied that “Appliance Liquidation Outlet” served as a source identifier. The Court found that although “Appliance Liquidation Outlet” was descriptive, the evidence established that San Antonian consumers perceived the mark as conveying information about ALO, not merely reflecting a class of services or businesses, and [...]

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Rum Wars: Lanham Act Doesn’t Preclude Judicial Review of PTO Renewal Decisions

by | Jun 27, 2024 |

The US Court of Appeals for the Fourth Circuit reversed and remanded a district court’s ruling, holding that the Lanham Act does not foreclose an Administrative Procedure Act (APA) action for judicial review of the US Patent & Trademark Office’s (PTO) compliance with statutes and regulations governing trademark registration renewal. Bacardi & Co. Ltd. v. USPTO, Case No. 22-1659 (4th Cir. June 13, 2024) (Rushing, Richardson, Motz, JJ.)

The Arechabala family exported rum to the United States using the registered HAVANA CLUB trademark until the Cuban government expropriated Arechabala’s assets without compensation and let the HAVANA CLUB trademark expire. Empresa Cubana Exportadora de Alimentos y Productos Varios (Cubaexport) then registered HAVANA CLUB as a trademark in the US for itself. Bacardi & Company Limited and Bacardi USA, Inc. (collectively, Bacardi) obtained an interest in the HAVANA CLUB mark from the Arechabala family, filed a US trademark application for HAVANA CLUB and petitioned the PTO to cancel Cubaexport’s registration. Upon the PTO’s denial of Bacardi’s trademark application and cancellation petition, Bacardi filed a civil action challenging these administrative rulings.

Two years later, Cubaexport was required to renew its HAVANA CLUB trademark registration under Section 8 of the Lanham Act. Because of a trade embargo, Cubaexport sought a specific license from the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) to pay the renewal fee, but OFAC denied the request. OFAC’s denial resulted in the PTO denying renewal of Cubaexport’s HAVANA CLUB registration. Cubaexport petitioned OFAC and the PTO to reverse their decisions. Ten years later, once OFAC issued a special license to Cubaexport, the PTO permitted Cubaexport to renew its HAVANA CLUB trademark registration.

Bacardi sued the PTO under the APA, claiming that the PTO Director violated Section 9 of the Lanham Act and the PTO’s own regulations by purporting to renew a trademark registration 10 years after it expired. The district court ruled that the Lanham Act precluded judicial review under the APA and thereby dismissed Bacardi’s lawsuit for lack of subject matter jurisdiction. Bacardi appealed.

The Fourth Circuit reversed, finding that “[n]othing in the Lanham Act expressly precludes judicial review of the PTO’s trademark registration renewal decisions.” In fact, Section 21 of the Lanham Act specifically authorizes, rather than forecloses, parties dissatisfied with certain decisions of the Director or the Trademark Trial & Appeal Board to appeal to the US Court of Appeals for the Federal Circuit or institute a civil action in federal district court. Section 21 of the Lanham Act also does not limit proceedings under sections or statutes such as the APA, and the Lanham Act is silent as to whether a third party may seek judicial review of the PTO’s decision to grant a renewal application.

Having found nothing in the Lanham Act that expressly precludes judicial review of PTO registration renewal decisions or fairly implies congressional intent to do so, the Fourth Circuit concluded that the APA’s mechanism for judicial review remains available.



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PTO Finalizes Rules Promoting Independence in PTAB Decision-Making

by | Jun 20, 2024 |

The US Patent & Trademark Office (PTO) announced a final rule concerning pre-issuance internal circulation and review of decisions within the Patent Trial & Appeal Board. The new rules are designed to bolster the independence of administrative patent judge (APJ) panels when issuing decisions and increase transparency regarding Board processes. 89 Fed. Reg. 49808 (June 12, 2024).

The new rules amend and codify Title 37 of the Code of Federal Regulations (37 C.F.R. §§ 43.1 – 43.6) by adding Section 43 relating to Board proceedings pending under 37 C.F.R. §§ 41 and 42. The final rule was developed in response to a July 2022 request for comments concerning interim processes and standards in place since May 2022, and an October 2023 notice of proposed rulemaking and request for comments. The final rule codifies the interim processes set forth in Standard Operating Procedure 4 (SOP4), which replaced the standards in place since May 2022.

Under the new rules codified in §§ 43.3 and 43.4, prior to issuance of a panel decision, senior PTO management and non-management APJs (as defined in § 43.2) are barred from communicating, directly or through intermediaries, with any panel member (unless they were themselves panel members) regarding panel decisions. Limited communications are permitted for procedural status and generally applicable paneling guidance that doesn’t directly or otherwise influence the paneling or repaneling of any specific proceeding. The rules do not forbid a panel member from requesting input on a decision prior to issuance from non-panel senior APJs, however. The rules further stipulate that it is within the panel’s sole discretion to adopt any edits, suggestions or feedback from non-panel APJs.

The rule is effective July 12, 2024.



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The $X Factor: Demystifying Damages Calculations

by | Jun 13, 2024 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to deny a defendant’s motion for a new trial on damages, finding that the plaintiff’s damages expert sufficiently showed that prior license agreements were economically comparable to a hypothetically negotiated agreement between the parties. EcoFactor, Inc. v. Google LLC, Case No. 23-1101 (Fed. Cir. June 3, 2024) (Reyna, Lourie, JJ.) (Prost, J., dissenting).

EcoFactor owns a patent directed to mitigating strain on the electricity grid by adjusting thermostat settings within HVAC systems. The patent describes a system where thermostats collect internal temperature readings and use them alongside external temperatures to estimate internal temperature change rates, including future predictions. EcoFactor sued Google alleging infringement based on Google’s Nest smart thermostat products.

After discovery, Google sought summary judgment, arguing that claims of EcoFactor’s patent were invalid as abstract ideas under 35 U.S.C. § 101. The district court denied this motion as well as Google’s Daubert motion to exclude the testimony of EcoFactor’s damages expert. At trial the jury found that Google infringed EcoFactor’s patent and awarded damages. The district court denied Google’s subsequent motions for judgment as a matter of law on noninfringement and for a new trial on damages. Google appealed.

Google raised three key issues. First, it argued that the district court erred in denying its motion for summary judgment. Second, Google asserted that the district court erred in denying its motion for judgment as a matter of law concerning the noninfringement of EcoFactor’s patent. Third, Google claimed that the district court wrongly denied its motion for a new trial on damages, arguing that EcoFactor’s damages expert opinion was based on unreliable methodology.

The Federal Circuit upheld the district court’s decision to deny summary judgment because there were genuine issues of material fact warranting a trial. The Court also affirmed the jury’s infringement verdict against Google, finding that it was supported by substantial evidence. Despite Google’s argument that its Nest thermostats did not meet the claims of EcoFactor’s patent, the Court concluded that expert testimony and corroborating documentation demonstrated otherwise.

On the damages issue, Google argued that EcoFactor’s expert testimony was unreliable because there was no evidence that the parties to the three license agreements used by the expert actually applied the royalty rate stated in the agreement. While Google acknowledged that each of the license agreements include a specified royalty rate, Google argued that each also included a “whereas” clause indicating that the licensee would pay EcoFactor a lump sum amount “set forth in this Agreement based on what EcoFactor believes is a reasonable royalty calculation of [$X] per-unit for . . . estimated past and [] projected future sales of products accused of infringement in the Litigation.” Google asserted that while the agreements may have included a stated rate, there was no evidence that the agreements actually applied the rate in calculating the lump sum payment.

The Federal Circuit rejected Google’s argument. The Court explained that the proposed royalty rate was derived from three [...]

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PTO Reopens Comment Period for AI Inventorship Guidance

by | Jun 13, 2024 |

The US Patent & Trademark Office (PTO) reopened and extended until June 20, 2024, the period for public comment on the guidance regarding inventorship in applications involving artificial intelligence (AI) assisted inventions. The guidance was published on February 13, 2024, at 89 FR 10043. The PTO will also treat as timely any comments received between May 13, 2024, and the notice’s June 6, 2024, publication date.

Comments on the inventorship guidance must be submitted via the Federal Rulemaking Portal.

For more information, see our previous report on the February 13 PTO notice and related examination guidance.



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Interference Analysis Is a Two-Way Street

by | Jun 6, 2024 |

On appeal from an interference proceeding, the US Court of Appeals for the Federal Circuit reversed a Patent Trial & Appeal Board decision that found the claims of the senior party’s patent were not invalid as time-barred under 35 U.S.C. § 135(b)(1). The Federal Circuit concluded that the “two-way test” requires looking to see if either set of pre-critical and post-critical date claims contains a material limitation not found in the other and not just looking to see if the post-critical date claims have additional material limitations. Speck et al. v. Bates et al., Case No. 22-1905 (Fed. Cir. May 23, 2024) (Dyk, Bryson, Stoll, JJ.)

35 U.S.C. § 135(b)(1), pre-AIA, provides that “a claim which is the same as, or for the same or substantially the same subject matter as, a claim of an issued patent may not be made in any application unless such a claim is made prior to one year from the date on which the patent was granted.” This has been described as a statute of repose that places a time limit on a patentee’s exposure to an interference, the deadline for which is referred to as the “critical date.” At issue in this appeal was the “long-standing” exception to § 135(b)(1) for instances where the applicant files its claim after the critical period but has already been claiming substantially the same invention as the patentee during the critical period.

This case involves drug-coated balloon catheter technology. Bates is the senior party that filed a patent application, and Speck is the junior party that owns an issued patent. Speck’s patent issued on September 4, 2012, whereas Bates filed his application on August 29, 2013, six days before the critical date of Speck’s patent (i.e., one year after the filing date). Bates amended the application on August 30, 2013 (still before the critical date), and canceled all of the original claims and replaced them with new claims. Bates later amended the claims after the critical date to add a requirement that the device be “free of a containment material atop the drug layer.” The amendment was made to overcome a rejection from the examiner during prosecution.

Speck filed a motion to terminate the interference on the ground that the claims of Bates’s application were time-barred under § 135(b)(1) because Bates amended the claims more than one year after Speck’s patent issued. Speck also moved the Board to find that the claims of Bates’s application were unpatentable for lack of written description.

The Board denied Speck’s motion to terminate under § 135(b)(1), finding that the later-amended claims did not differ materially from the claims in other patents and patent applications Bates owned that were filed prior to the critical date, because “Speck ha[d] not directed [the Board] to a material limitation of the Bates involved claims that is not present in the earlier Bates claims.” Speck filed a motion for rehearing, which the Board denied. The Board also denied Speck’s motion to find that Bates’s claims lacked [...]

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